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Postretirement Health Care and Life Insurance Benefits | 12 Months Ended
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Dec. 31, 2019
Postretirement Health Care and LIfe Insurance Benefits [Abstract] |
Postretirement Health Care and Life Insurance Benefits | Postretirement Health Care and Life Insurance Benefits The Company currently provides health care and life insurance benefits to qualifying salaried and hourly retirees of its current and certain former subsidiaries and their dependents from benefit plans established by the Company. Plan coverage for health benefits is provided to future hourly and salaried retirees in accordance with the applicable plan document. Life insurance benefits are provided to future hourly retirees in accordance with the applicable labor agreement. Net periodic postretirement benefit cost included the following components:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
| (Dollars in millions)
Service cost for benefits earned | $ | 4.8 |  |  | $ | 8.2 |  |  | $ | 6.9 |  | $ | 2.3 |
Interest cost on accumulated postretirement benefit obligation | 25.1 |  |  | 28.3 |  |  | 24.2 |  | 8.4 |
Expected return on plan assets | (0.5 | ) |  | — |  |  | — |  | — |
Amortization of prior service credit | (8.7 | ) |  | — |  |  | — |  | (2.3 | )
Amortization of actuarial loss | — |  |  | — |  |  | — |  | 5.5 |
Net actuarial loss (gain) | 78.3 |  |  | (128.4 | ) |  | (22.0 | ) | — |
Net periodic postretirement benefit cost | $ | 99.0 |  |  | $ | (91.9 | ) |  | $ | 9.1 |  | $ | 13.9 |
In connection with fresh start reporting, the Company made a policy election to prospectively record amounts attributable to actuarial valuation changes currently in earnings rather than recording such amounts within accumulated other comprehensive income and amortizing to expense over applicable time periods. The following includes pre-tax amounts recorded in “Accumulated other comprehensive income”:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 | January 1 through April 1, 2017
| (Dollars in millions)
Prior service credit arising during year | $ | — |  |  | $ | (51.7 | ) | $ | — |
Amortization: |  |  |  |  |  |
Actuarial loss | — |  |  | — |  | (5.5 | )
Prior service credit | 8.7 |  |  | — |  | 2.3 |
Total recorded in “Accumulated other comprehensive income” | $ | 8.7 |  |  | $ | (51.7 | ) | $ | (3.2 | )
The Company amortizes prior service credit over an amortization period of the average remaining service period to full eligibility for participating employees (4.9 years and 5.9 years at January 1, 2020 and 2019, respectively). Prior to April 2, 2017, the Company amortized actuarial gain and loss using a 0% corridor with an amortization period that covered the average remaining service period to full eligibility for participating employees (10.3 years at January 1, 2017). The estimated prior service credit that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit cost during the year ending December 31, 2020 is $8.7 million. The following table sets forth the plans’ funded status reconciled with the amounts shown in the consolidated balance sheets:
| December 31,
| 2019 |  | 2018
| (Dollars in millions)
Change in benefit obligation: |  |  |
Accumulated postretirement benefit obligation at beginning of period | $ | 595.4 |  |  | $ | 783.3 |
Service cost | 4.8 |  |  | 8.2 |
Interest cost | 25.1 |  |  | 28.3 |
Participant contributions | 2.3 |  |  | 0.5 |
Plan amendments | — |  |  | (51.7 | )
Benefits paid | (47.7 | ) |  | (44.8 | )
Actuarial loss (gain) | 80.0 |  |  | (128.4 | )
Accumulated postretirement benefit obligation at end of period | 659.9 |  |  | 595.4 |
Change in plan assets: |  |  |
Fair value of plan assets at beginning of period | 15.0 |  |  | — |
Actual return on plan assets | 2.2 |  |  | — |
Employer contributions | 62.4 |  |  | 59.3 |
Participant contributions | 2.3 |  |  | 0.5 |
Benefits paid and administrative fees (net of Medicare Part D reimbursements) | (47.7 | ) |  | (44.8 | )
Fair value of plan assets at end of period | 34.2 |  |  | 15.0 |
Funded status at end of period | (625.7 | ) |  | (580.4 | )
Less: Current portion (included in “Accounts payable and accrued expenses”) | 32.3 |  |  | 32.7 |
Noncurrent obligation (included in “Accrued postretirement benefit costs”) | $ | (593.4 | ) |  | $ | (547.7 | )
During October 2018, the Company announced an amendment to its postretirement health care benefit plan that, after December 31, 2018, (a) limits eligibility for retiree medical allowances based upon attainment of certain age and service criteria at December 31, 2018, (b) reduces the annual retiree medical allowance benefits earned by eligible employees and (c) establishes maximum limits on the amount eligible employees may earn and annual benefit payments. Employees with existing retiree medical allowance balances that lost continuing eligibility due to the amendment were awarded one-time discretionary contributions to their respective employee retirement accounts based upon years of service. The impact of the amendment on future benefits reduced the Company’s accumulated postretirement benefit obligation by $51.7 million. Of that amount, $50.2 million was attributable to the annual benefits and the maximum balance limits and $1.5 million was attributable to the limitation of eligibility based on age and service criteria. The reduction in liability was recorded with an offsetting balance in accumulated other comprehensive income, net of a deferred tax provision, of $44.6 million, which is being amortized to earnings over an average remaining service period to full eligibility for participating employees of 5.9 years. The weighted-average assumptions used to determine the benefit obligations as of the end of each year were as follows:
| December 31,
| 2019 |  | 2018
Discount rate | 3.40 | % |  | 4.35 | %
Measurement date | December 31, 2019 |  |  | December 31, 2018 |
The weighted-average assumptions used to determine net periodic benefit cost during each period were as follows:
| Successor | Predecessor
| Year Ended December 31, 2019 |  | Year Ended December 31, 2018 |  | April 2 through December 31, 2017 | January 1 through April 1, 2017
Discount rate | 4.35 | % |  | 3.70 | % |  | 4.10 | % | 4.15 | %
Expected long-term return on plan assets | 5.00 | % |  | — | % |  | — | % | — | %
Measurement date | December 31, 2018 |  |  | December 31, 2017 |  |  | April 1, 2017 |  | December 31, 2016 |
The expected rate of return on plan assets is determined by taking into consideration expected long-term returns associated with each major asset class based on long-term historical ranges, inflation assumptions and the expected net value from active management of the assets based on actual results. Effective January 1, 2020 the Company increased its expected rate of return on plan assets from 5.00% to 7.00% reflecting the impact of the Company’s asset allocation and capital market expectations. The accumulated postretirement benefit obligation exceeded plan assets for all plans as of December 31, 2019 and 2018. The accumulated postretirement benefit obligation for all plans was $659.9 million and $595.4 million as of December 31, 2019 and 2018, respectively. The following presents information about the assumed health care cost trend rate:
| Year Ended December 31,
| 2019 |  | 2018
Pre-Medicare: |  |  |
Health care cost trend rate assumed for next year | 6.75 | % |  | 6.55 | %
Rate to which the cost trend is assumed to decline (the ultimate trend rate) | 4.75 | % |  | 4.75 | %
Year that the rate reaches the ultimate trend rate | 2023 |  |  | 2023 |
Post-Medicare: |  |  |
Health care cost trend rate assumed for next year | 6.35 | % |  | 6.15 | %
Rate to which the cost trend is assumed to decline (the ultimate trend rate) | 4.75 | % |  | 4.75 | %
Year that the rate reaches the ultimate trend rate | 2023 |  |  | 2023 |
Assumed health care cost trend rates have a significant effect on the expense and liability amounts reported for health care plans. A one-percentage-point change in the assumed health care cost trend would have the following effects for the year ended December 31, 2019:
| One Percentage- Point Increase |  | One Percentage- Point Decrease
| (Dollars in millions)
Effect on total service and interest cost components | $ | 2.5 |  |  | $ | (2.3 | )
Effect on total postretirement benefit obligation | $ | 57.3 |  |  | $ | (50.9 | )
Plan Assets The Company has established two Voluntary Employees Beneficiary Association (VEBA) trusts to pre-fund a portion of benefits for non-represented and represented retirees. Assets of the Peabody Investments Corp. Non-Represented Retiree VEBA Trust (the Non-Represented Trust) are invested in accordance with the investment policy established by the Peabody VEBA Retirement Committee after consultation with outside investment advisors and actuaries. The asset allocation strategy for the Non-Represented trust is 50% in equity and 50% in fixed income assets, which are designed to balance the needs of having growth and stability in the portfolio. This asset strategy may vary over time based on changes in the status of the Non-Represented Plan, the Company’s risk posture and other factors. The Peabody Holding Company LLC Represented Retiree VEBA Trust (the Represented Trust) is unfunded at December 31, 2019 and 2018. A financial instrument’s level within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Following is a description of the valuation techniques and inputs used for investments measured at fair value, including the general classification of such investments pursuant to the valuation hierarchy. U.S. equity securities: The Non-Represented Trust invests in U.S. equity securities for growth and diversification. Investment vehicles include various domestic large-cap publicly traded common stocks and mutual funds. All common stocks are traded on a national securities exchange and are valued at quoted market prices in active markets and accordingly classified within Level 1 of the valuation hierarchy. The mutual funds are traded on a national securities exchange in an active market, are valued using daily publicly quoted net asset value (NAV) prices and accordingly classified within Level 1 of the valuation hierarchy. International equity securities. The Non-Represented Trust invests in international equity securities for growth and diversification. Investment vehicles include various international publicly traded common stocks, exchange traded funds and mutual funds. All common stocks are traded on a national securities exchange and are valued at quoted market prices in active markets and accordingly classified within Level 1 of the valuation hierarchy. The exchange traded funds and mutual funds are traded on a national securities exchange in an active market, are valued using daily publicly quoted NAV prices and accordingly classified within Level 1 of the valuation hierarchy. Corporate bonds. The Non-Represented Trust invests in corporate bonds for diversification, volatility reduction of equity securities and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominantly investment-grade corporate bonds. Fair value for these securities is provided by a third-party pricing service that utilizes various inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. Corporate bonds are classified within the Level 2 valuation hierarchy since fair value inputs are derived prices in active markets and the bonds are not traded on a national securities exchange. U.S. government securities. The Non-Represented Trust invests in U.S. government securities for diversification, volatility reduction of equity securities and to provide a hedge to interest rate movements affecting liabilities. Investment types are predominantly U.S. government bonds, notes, agency securities and municipal bonds. Fair value for these securities is provided by a third-party pricing service that utilizes various inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads and benchmark securities as well as other relevant economic measures. If fair value is based on quoted prices in active markets and traded on a national securities exchange, U.S. government securities are classified within the Level 1 valuation hierarchy; otherwise, U.S. government securities are classified within the Level 2 valuation hierarchy. Cash funds. The Non-Represented Trust invests in cash funds to manage liquidity resulting from payment of participant benefits and certain administrative fees. The investment consists of a U.S. Government money market fund which is classified within the Level 1 valuation hierarchy. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The inputs or methodologies used for valuing investments are not necessarily an indication of the risk associated with investing in those investments. The following tables present the fair value of assets in the Non-Represented Trust by asset category and by fair value hierarchy:
| December 31, 2019
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Dollars in millions)
U.S. equity securities | $ | 13.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 13.0 |
International equity securities | 4.0 |  |  | — |  |  | — |  |  | 4.0 |
Corporate bonds | — |  |  | 9.2 |  |  | — |  |  | 9.2 |
U.S. government securities | 2.6 |  |  | 4.5 |  |  | — |  |  | 7.1 |
Cash funds | 0.9 |  |  | — |  |  | — |  |  | 0.9 |
Total assets at fair value | $ | 20.5 |  |  | $ | 13.7 |  |  | $ | — |  |  | $ | 34.2 |
| December 31, 2018
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Dollars in millions)
Cash funds | $ | 15.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 15.0 |
Total assets at fair value | $ | 15.0 |  |  | $ | — |  |  | $ | — |  |  | $ | 15.0 |
Contributions Annual contributions to the Non-Represented Trust are discretionary. During the year ended December 31, 2019, the Company made a pre-funding contribution of $17.0 million to the Non-Represented Trust. Estimated Future Benefit Payments The following benefit payments (net of retiree contributions), which reflect expected future service, as appropriate, are expected to be paid by the Company:
| Postretirement Benefits
| (Dollars in millions)
2020 | $ | 46.1 |
2021 | 46.0 |
2022 | 45.6 |
2023 | 44.9 |
2024 | 44.1 |
Years 2025-2029 | 205.8 |

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- Definition Postretirement Health Care and LIfe Insurance Benefits [Abstract] + References No definition available. + Details
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- Definition Disclosure of accounting policy for plans, other than pension plans, that provide postretirement benefits (including both defined benefit and defined contribution plans). This accounting policy may address (1) the types of plans sponsored by the entity, and the benefits provided by each plan (2) groups that participate in (or are covered by) each plan (3) how plan assets, liabilities and expenses are measured, including the use of any actuaries and (4) significant assumptions used by the entity to value plan assets and liabilities and how such assumptions are derived. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 80 -URI http://asc.fasb.org/subtopic&trid=2235144 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 60 -URI http://asc.fasb.org/subtopic&trid=2235172 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -SubTopic 70 -URI http://asc.fasb.org/subtopic&trid=2235116 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=84158767&loc=d3e18780-107790 + Details
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