Current year prior service cost

  
A reconciliation follows of the funded status for our qualified plan and SERP at the end of the measurement period to the amounts recognized in the consolidated balance sheets at December 31:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in millions) |  | At December 31, |
|  |  | 2021 |  | 2020 |
| Pension amounts recognized in the consolidated balance sheets: |  |  |  |  |
|  |  |  |  |  |
| Other assets (liability)  |  | $ | 35  |  |  | $ | (30) |  |
| Total |  | $ | 35  |  |  | $ | (30) |  |
|  |  |  |  |  |
| Pension amounts recognized in accumulated other comprehensive income: |  |   |  |   |
| Net actuarial (gain) loss |  | $ | (27) |  |  | $ | 41  |  |
|  |  |  |  |  |
| Total |  | $ | (27) |  |  | $ | 41  |  |
|  |  |  |  |  |

 Below are the components of our net periodic benefit cost, as well as other changes in plan assets and benefit obligations recognized in other comprehensive income for our qualified plan and SERP at December 31:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (Dollars in millions) |  | Years ended December 31, |
|  |  | 2021 |  | 2020 |  | 2019 |
| Net periodic benefit cost: |  |  |  |  |  |  |
| Service cost |  | $ | 10  |  |  | $ | 9  |  |  | $ | 8  |  |
| Non-service costs (benefit): |  |  |  |  |  |  |
| Interest cost |  | 10  |  |  | 12  |  |  | 13  |  |
| Expected return on plan assets |  | (21) |  |  | (21) |  |  | (20) |  |
| Amortization of actuarial loss and prior service cost |  | 6  |  |  | 3  |  |  | 1  |  |
| Other |  | 1  |  |  | 3  |  |  | 1  |  |
| Net periodic benefit cost |  | $ | 6  |  |  | $ | 6  |  |  | $ | 3  |  |
|  |  |  |  |  |  |  |
| Other changes in plan assets and benefit obligations recognized in other   comprehensive income: |  |  |  |  |  |  |
| Current year actuarial (gain) loss  |  | $ | (62) |  |  | $ | 38  |  |  | $ | (5) |  |
| Amortization of actuarial loss |  | (7) |  |  | (6) |  |  | (2) |  |
| Current year prior service cost |  | 1  |  |  | —  |  |  | —  |  |
|  |  |  |  |  |  |  |
| Total recognized in other comprehensive (income) loss |  | $ | (68) |  |  | $ | 32  |  |  | $ | (7) |  |
| Total recognized in net periodic benefit cost and other comprehensive   (income) loss |  | $ | (62) |  |  | $ | 38  |  |  | $ | (4) |  |
|  |  |  |  |  |  |  |

 The 2021 change in the amount recognized in other comprehensive income from 2020 is largely due to changes in the actuarial gain resulting from actual return on plan assets being greater than expected and increases in discount rates.  
Service costs and non-service costs (benefit) are allocated in the same proportion primarily to underwriting, acquisition and insurance expenses line item with the remainder allocated to the insurance losses and contract holders' benefits line item on the consolidated statements of income for 2021, 2020 and 2019. Defined Benefit Pension Plan AssetsThe pension plan assets are managed to maximize total return over the long term while providing sufficient liquidity and current return to satisfy the cash flow requirements of the plan. The plan’s day-to-day investment decisions are managed by our internal investment department; however, overall investment strategies are discussed with our employee benefits committee. Our investment strategy is to weight our portfolio towards large-cap, high-quality, dividend-growing equities that we have historically favored. As our plan matures and interest rates normalize, we expect a greater allocation to fixed-income securities to better align asset and liability market risks. Our fixed-maturity bond portfolio is investment grade. The plan does not engage in derivative transactions.  Cincinnati Financial Corporation - 2021 10-K - Page 164
