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Benefit Plans | 12 Months Ended
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Dec. 31, 2021
Retirement Benefits [Abstract] |
Benefit Plans | Benefit Plans Pension and Postretirement Health Care Benefit Plans CNA sponsors noncontributory defined benefit pension plans, primarily through the CNA Retirement Plan, covering certain eligible employees. These plans are closed to new entrants. CNA's funding policy for defined benefit pension plans is to make contributions in accordance with applicable governmental regulatory requirements with consideration of the funded status of the plans. Effective January 1, 2000, the CNA Retirement Plan was closed to new participants. Existing participants at that time were given a choice to either continue to accrue benefits under the CNA Retirement Plan or to cease accruals effective December 31, 1999. Employees who chose to continue to accrue benefits under the plan received benefits in accordance with plan provisions through June 30, 2015 as discussed further below. Participants who elected to cease accruals effective December 31, 1999 received the present value of their accrued benefit in an accrued pension account that is credited with interest based on the annual rate of interest on 30-year Treasury securities. These employees also receive certain enhanced employer contributions in the CNA 401k Plan. Effective June 30, 2015, the Company eliminated future benefit accruals associated with the CNA Retirement Plan. Participants continuing to accrue benefits under the CNA Retirement Plan up until that date are entitled to an accrued benefit payable based on their eligible compensation and accrued service through June 30, 2015. These affected participants now also receive enhanced employer contributions in the CNA 401k Plan similar to participants who elected to cease accruals effective December 31, 1999. Employees who elected to cease accruals effective December 31, 1999 were not affected by this curtailment. CNA provides certain postretirement health care benefits to eligible retired employees, their covered dependents and their beneficiaries primarily through the CNA Health and Group Benefits Program. These postretirement benefits have largely been eliminated for active employees. The following table presents a reconciliation of benefit obligations and plan assets.
| Pension Benefits |  | Postretirement Benefits
(In millions) | 2021 |  | 2020 |  | 2021 |  | 2020
Benefit obligation as of January 1 | $ | 2,769 |  |  | $ | 2,661 |  |  | $ | 7 |  |  | $ | 8 |
Changes in benefit obligation: |  |  |  |  |  |  |
Interest cost | 62 |  |  | 80 |  |  | — |  |  | — |
Participants' contributions | — |  |  | — |  |  | 3 |  |  | 2 |
Actuarial (gain) loss | (84) |  |  | 205 |  |  | 1 |  |  | 2 |
Benefits paid | (182) |  |  | (173) |  |  | (5) |  |  | (5) |
Foreign currency translation and other | (2) |  |  | 3 |  |  | — |  |  | — |
Settlements | (2) |  |  | (7) |  |  | — |  |  | — |
Benefit obligation as of December 31 | 2,561 |  |  | 2,769 |  |  | 6 |  |  | 7 |
Fair value of plan assets as of January 1 | 2,420 |  |  | 2,285 |  |  | — |  |  | — |
Change in plan assets: |  |  |  |  |  |  |
Actual return on plan assets | 332 |  |  | 295 |  |  | — |  |  | — |
Company contributions | 10 |  |  | 16 |  |  | 2 |  |  | 3 |
Participants' contributions | — |  |  | — |  |  | 3 |  |  | 2 |
Benefits paid | (182) |  |  | (173) |  |  | (5) |  |  | (5) |
Foreign currency translation and other | (1) |  |  | 4 |  |  | — |  |  | — |
Settlements | (2) |  |  | (7) |  |  | — |  |  | — |
Fair value of plan assets as of December 31 | 2,577 |  |  | 2,420 |  |  | — |  |  | — |
Funded status | $ | 16 |  |  | $ | (349) |  |  | $ | (6) |  |  | $ | (7) |
Amounts recognized on the Consolidated Balance Sheets as of December 31: |  |  |  |  |  |  |
Other assets | $ | 77 |  |  | $ | 2 |  |  | $ | — |  |  | $ | — |
Other liabilities | (61) |  |  | (351) |  |  | (6) |  |  | (7) |
Net amount recognized | $ | 16 |  |  | $ | (349) |  |  | $ | (6) |  |  | $ | (7) |
Amounts recognized in Accumulated other comprehensive income, not yet recognized in net periodic cost (benefit): |  |  |  |  |  |  |
Net actuarial (gain) loss | $ | 763 |  |  | $ | 1,073 |  |  | $ | 1 |  |  | $ | — |
Net amount recognized | $ | 763 |  |  | $ | 1,073 |  |  | $ | 1 |  |  | $ | — |
The accumulated benefit obligation for all defined benefit pension plans was $2,561 million and $2,769 million as of December 31, 2021 and 2020. Changes for the year ended December 31, 2021 include actuarial gains of $(84) million driven by investment returns and changes in the discount rate used to determine the defined benefit pension obligations. Changes for the year ended December 31, 2020 include actuarial losses of $205 million primarily driven by changes in the discount rate used to determine defined benefit pension obligations. For pension plans with a benefit obligation in excess of plan assets, the benefit obligation was $61 million and the aggregate plan assets were $0 at December 31, 2021. The components of net periodic pension cost (benefit) are presented in the following table.
Years ended December 31 |  |  |  |  |
(In millions) | 2021 |  | 2020 |  | 2019
Net periodic pension cost (benefit) |  |  |  |  |
Interest cost on projected benefit obligation | $ | 62 |  |  | $ | 80 |  |  | $ | 100 |
Expected return on plan assets | (154) |  |  | (155) |  |  | (142) |
Amortization of net actuarial (gain) loss | 46 |  |  | 45 |  |  | 39 |
Settlement loss | 1 |  |  | 3 |  |  | — |
Total net periodic pension cost (benefit) | $ | (45) |  |  | $ | (27) |  |  | $ | (3) |
The following table indicates the line items in which the non-service cost (benefit) is presented in the Consolidated Statements of Operations.
Years ended December 31 |  |  |  |  |
(In millions) | 2021 |  | 2020 |  | 2019
Non-Service Cost (benefit): |  |  |  |  |
Insurance claims and policyholder's benefits | $ | (13) |  |  | $ | (8) |  |  | $ | (1) |
Other operating expenses | (32) |  |  | (19) |  |  | (2) |
Total net periodic pension cost (benefit) | $ | (45) |  |  | $ | (27) |  |  | $ | (3) |
The amounts recognized in Other comprehensive income are presented in the following table.
Years ended December 31 |  |  |  |  |
(In millions) | 2021 |  | 2020 |  | 2019
Pension and postretirement benefits |  |  |  |  |
Amounts arising during the period | $ | 262 |  |  | $ | (67) |  |  | $ | (112) |
Settlement | 1 |  |  | 3 |  |  | — |
Reclassification adjustment relating to prior service credit | — |  |  | — |  |  | — |
Reclassification adjustment relating to actuarial loss | 46 |  |  | 45 |  |  | 39 |
Total increase (decrease) in Other comprehensive income | $ | 309 |  |  | $ | (19) |  |  | $ | (73) |
Actuarial assumptions used for the CNA Retirement Plan and CNA Health and Group Benefits Program to determine benefit obligations are presented in the following table. The interest crediting rate is the weighted average interest rate applied to the individual pension balances for employees who elected to cease accruals effective December 31, 1999.
December 31 | 2021 |  | 2020
Pension benefits |  |  |
Discount rate | 2.750 | % |  | 2.350 | %
Interest crediting rate | 3.000 |  |  | 3.000 |
Postretirement benefits |  |  |
Discount rate | 2.250 | % |  | 1.600 | %
Actuarial assumptions used for the CNA Retirement Plan and CNA Health and Group Benefits Program to determine net cost or benefit are presented in the following table.
Years ended December 31 | 2021 |  | 2020 |  | 2019
Pension benefits |  |  |  |  |
Discount rate | 2.350 | % |  | 3.150 | % |  | 4.250 | %
Expected long term rate of return | 6.750 |  |  | 7.250 |  |  | 7.500 |
Interest crediting rate | 3.000 |  |  | 5.000 |  |  | 5.000 |
Postretirement benefits |  |  |  |  |
Discount rate | 1.600 | % |  | 2.300 | % |  | 3.550 | %
To determine the discount rate assumption as of the year-end measurement date for the CNA Retirement Plan and CNA Health and Group Benefits Program, the Company considered the estimated timing of plan benefit payments and available yields on high quality fixed income debt securities. For this purpose, high quality is considered a rating of Aa or better by Moody's Investors Service, Inc. (Moody's) or a rating of AA or better from Standard & Poor's (S&P). The Company reviewed several yield curves constructed using the cash flow characteristics of the plans as well as bond indices as of the measurement date. The trend of those data points was also considered. In determining the expected long term rate of return on plan assets assumption for the CNA Retirement Plan, CNA considered the historical performance of the benefit plan investment portfolio as well as long term market return expectations based on the investment mix of the portfolio and the expected investment horizon. The CNA Health and Group Benefits Program has limited its share of the health care trend rate to a cost-of-living adjustment of 4% per year. For all participants, the employer subsidy on health care costs will not increase by more than 4% per year. As a result, the assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligation for the CNA Health and Group Benefits Program was 4% per year in 2021, 2020 and 2019. CNA employs a total return approach whereby a mix of equity, limited partnerships and fixed maturity securities are used to maximize the long term return of retirement plan assets for a prudent level of risk and to manage cash flows according to plan requirements. The target allocation of plan assets is 40% to 60% invested in equity securities and limited partnerships, with the remainder primarily invested in fixed maturity securities. Alternative investments, including limited partnerships, are used to enhance risk adjusted long term returns while improving portfolio diversification. The intent of this strategy is to minimize the Company's expense related to funding the plan by generating investment returns that exceed the growth of the plan liabilities over the long run. Risk tolerance is established after careful consideration of the plan liabilities, plan funded status and corporate financial conditions. As of December 31, 2021, the Plan had committed approximately $160 million to future capital calls from various third-party limited partnership investments in exchange for an ownership interest in the related partnerships. Derivatives may be used to gain market exposure in an efficient and timely manner. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies and quarterly investment portfolio reviews. Pension plan assets measured at fair value on a recurring basis as well as cash are presented in the following tables.
December 31, 2021 |  |  |  |  |  |  |  |
(In millions) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |
Corporate bonds and other |  | $ | — |  |  | $ | 645 |  |  | $ | 8 |  |  | $ | 653 |
States, municipalities and political subdivisions |  | — |  |  | 30 |  |  | — |  |  | 30 |
Asset-backed |  | — |  |  | 110 |  |  | — |  |  | 110 |
Total fixed maturity securities |  | — |  |  | 785 |  |  | 8 |  |  | 793 |
Equity securities |  | 732 |  |  | 141 |  |  | — |  |  | 873 |
Short term investments |  | 45 |  |  | — |  |  | — |  |  | 45 |
Other assets |  | — |  |  | 8 |  |  | — |  |  | 8 |
Cash |  | — |  |  | — |  |  | — |  |  | — |
Total assets measured at fair value |  | $ | 777 |  |  | $ | 934 |  |  | $ | 8 |  |  | 1,719 |
Total equity securities measured at net asset value(1) |  |  |  |  |  |  |  | 20 |
Total limited partnerships measured at net asset value (1) |  |  |  |  |  |  |  | 838 |
Total |  |  |  |  |  |  |  | $ | 2,577 |
December 31, 2020 |  |  |  |  |  |  |  |
(In millions) |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |  |  |
Fixed maturity securities: |  |  |  |  |  |  |  |
Corporate bonds and other |  | $ | — |  |  | $ | 643 |  |  | $ | 9 |  |  | $ | 652 |
States, municipalities and political subdivisions |  | — |  |  | 32 |  |  | — |  |  | 32 |
Asset-backed |  | — |  |  | 98 |  |  | — |  |  | 98 |
Total fixed maturity securities |  | — |  |  | 773 |  |  | 9 |  |  | 782 |
Equity securities |  | 666 |  |  | 137 |  |  | — |  |  | 803 |
Short term investments |  | 20 |  |  | 38 |  |  | — |  |  | 58 |
Other assets |  | — |  |  | 8 |  |  | — |  |  | 8 |
Cash |  | 13 |  |  | — |  |  | — |  |  | 13 |
Total assets measured at fair value |  | $ | 699 |  |  | $ | 956 |  |  | $ | 9 |  |  | 1,664 |
Total limited partnerships measured at net asset value (1) |  |  |  |  |  |  |  | 756 |
Total |  |  |  |  |  |  |  | $ | 2,420 |
(1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table for these investments are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Plan's Statement of Financial Position. The limited partnership investments held within the plan are recorded at fair value, which represents the plan's share of net asset value of each partnership, as determined by each limited partnership's general partner. Limited partnerships comprising 65% and 75% of the carrying value as of December 31, 2021 and 2020 employ hedge fund strategies that generate returns through investing in marketable securities in the public fixed income and equity markets and the remainder were primarily invested in private debt and equity. Within hedge fund strategies, approximately 76% were equity related, 19% pursued a multi-strategy approach and 5% were focused on distressed investments as of December 31, 2021. For a discussion of the fair value levels and the valuation methodologies used to measure fixed maturity securities, equities, derivatives and short term investments, see Note C to the Consolidated Financial Statements. The table below presents the estimated future minimum benefit payments to participants as of December 31, 2021.
(In millions) | Pension Benefits |  | Postretirement Benefits
2022 | $ | 182 |  |  | $ | 1 |
2023 | 179 |  |  | 1 |
2024 | 177 |  |  | 1 |
2025 | 175 |  |  | — |
2026 | 173 |  |  | — |
2027-2031 | 798 |  |  | 1 |
In 2022, CNA expects to contribute $5 million to its pension plans and $1 million to its postretirement health care benefit plans. Savings Plans CNA sponsors savings plans, which are generally contributory plans that allow most employees to contribute a maximum of 50% of their eligible compensation, subject to certain limitations prescribed by the IRS. The Company contributes matching amounts to participants amounting to 100% of the first 6% of eligible compensation contributed by the employee. In addition, eligible employees also receive a Company contribution of 5% of their eligible compensation, referred to as a basic contribution. Company contributions vest ratably over participants first five years of service. Benefit expense for the Company's savings plans was $65 million, $70 million and $71 million for the years ended December 31, 2021, 2020 and 2019.

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