Retirement Benefit Arrangements

12 Months Ended

Dec. 31, 2012

Disclosure - Retirement Benefit Arrangements [Abstract]

Retirement Benefit Arrangements

16. Retirement Benefit Arrangements

For employee retirement benefits, the Company maintains certain defined contributions plans and other active and frozen defined benefit plans. The majority of the defined benefit obligation at December 31, 2012 relates to the active defined benefit plan for the Company's Zurich office employees (the Zurich Plan).

Defined Contribution Plans

Contributions are made by the Company, and in some locations, these contributions are supplemented by the local plan participants. Contributions are based on a percentage of the participant's base salary depending upon competitive local market practice and vesting provisions meeting legal compliance standards and market trends. The accumulated benefits for the majority of these plans vest immediately or over a four-year period. As required by law, certain retirement plans also provide for death and disability benefits and lump sum indemnities to employees upon retirement.

The Company incurred expenses for these defined contribution arrangements of $15.7 million, $16.0 million and $14.8 million for the years ended December 31, 2012, 2011 and 2010, respectively.

Active Defined Benefit Plan

The Company maintains the Zurich Plan, which is classified as a hybrid plan and accounted for as a defined benefit plan under U.S. GAAP. At December 31, 2012 and 2011, the funded status of the Zurich Plan was as follows (in thousands of U.S. dollars):

		2012		2011
Funded status
Unfunded pension obligation at beginning of year	$	25,162	$	17,144
Change in pension obligation
Service cost		6,474		7,141
Interest cost		2,976		3,308
Plan participants’ contributions		1,998		2,174
Actuarial loss		7,046		8,470
Plan amendments		(707)		0
Benefits paid		(8,582)		(248)
Foreign currency adjustments		4,349		(850)
Settlements		0		(13,178)
Change in pension obligation		13,554		6,817
Change in fair value of plan assets
Actual return on plan assets		3,782		3,610
Employer contributions		5,941		6,627
Plan participants’ contributions		1,998		2,174
Benefits paid		(8,582)		(248)
Foreign currency adjustments		3,315		(186)
Settlements		0		(13,178)
Change in fair value of plan assets		6,454		(1,201)
Funded status
Unfunded pension obligation at end of year	$	32,262	$	25,162
Additional information:
Projected benefit obligation at end of year	$	134,710	$	121,156
Accumulated pension obligation at end of year		129,492		116,904
Fair value of plan assets at end of year		102,448		95,994

At December 31, 2012 and 2011, the funded status was included in Accounts payable, accrued expenses and other in the Consolidated Balance Sheets. The total amounts recognized in Accumulated other comprehensiveincome (loss)at December 31, 2012 and 2011 were $22.8 million (net of $6.1 million of taxes) and $19.1 million (net of $5.1 million of taxes), respectively.

The net periodic benefit cost for the years ended December 31, 2012, 2011 and 2010 were $8.3 million, $10.0 million and $6.1 million, respectively.

The investment strategy of the Zurich Plan's Pension Committee is to achieve a consistent long-term return, which will provide sufficient funding for future pension obligations while limiting risk. The expected long-term rate of return on plan assets is based on the expected asset allocation and assumptions concerning long-term interest rates, inflation rates and risk premiums for equities above the risk-free rates of return. These assumptions take into consideration historical long-term rates of return for the relevant asset categories. The investment strategy is reviewed regularly.

The fair value of the Zurich Plan's assets at December 31, 2012 and 2011 were insured funds and cash (Level 2) of $102.4 million and $96.0 million, respectively. The insured funds comprise the accumulated pension plan contributions and investment returns thereon, which are held in an insurance arrangement that provides at least a guaranteed minimum investment return. The insured funds are held by a collective foundation of AXA Life Ltd. and are guaranteed under the insurance arrangement.

The assumptions used to determine the pension obligation and net periodic benefit cost for the years ended December 31, 2012, 2011 and 2010 were as follows:

	2012					2011					2010
		Pension		Net periodic			Pension		Net periodic			Pension		Net periodic
		obligation		benefit cost			obligation		benefit cost			obligation		benefit cost
Discount rate		1.75	%	2.5	%		2.5	%	2.75	%		2.75	%	3.25	%
Expected return on plan assets		0		2.5			0		3.0			0		3.6
Rate of compensation increase		2.5		3.5			3.5		3.5			3.5		3.5

At December 31, 2012, estimated employer contributions to be paid in 2013 were $5.8 million and future benefit payments were estimated to be paid as follows (in thousands of U.S. dollars):

Period		Amount
2013	$	4,435
2014		4,567
2015		4,939
2016		5,030
2017		4,890
2018 to 2022		27,177

The Company does not believe that any plan assets will be returned to the Company during 2013.