Consulting revenue in 2018 increased 5% compared with 2017, reflecting a 3% increase on an underlying basis, 1% growth from acquisitions and a 1% increase from the impact of foreign currency translation. The adoption of the new revenue recognition guidance did not have a significant impact on the timing of revenue recognition or the year-over-year amount of annual revenue in the segment in 2018.
The year-over-year change in the funded status of the Company's pension plans is impacted by the difference between actual and assumed results, particularly with regard to return on assets, and changes in the discount rate, as well as the amount of Company contributions, if any. Unrecognized actuarial losses were approximately $1.9 billion and $2.6 billion at December 31, 2018 for the U.S. plans and non-U.S. plans, respectively, compared with $1.8 billion and $2.6 billion at December 31, 2017. The increase in the U.S. was primarily due to a decrease in asset values partly offset by the impact of an increase in the discount rate used to measure plan liabilities. The actuarial loss related to the non-U.S. plans was unchanged as a decrease in the value of the plans' assets was offset by the impact of increases in the discount rate used to measure the plans' liabilities, the impact of the U.K. settlement in the fourth quarter of 2018 discussed above and by the impact of foreign exchange translation. In the past several years, the amount of unamortized losses has been significantly impacted, both positively and negatively, by actual asset performance and changes in discount rates. The discount rate used to measure plan liabilities
events, including, but not limited to, future returns on plan assets and changes in the discount rate used to measure the liabilities. The above does not include the remaining transitional tax payments related to the TCJA of $171 million. The above does not include expected payments related to the pending acquisition of JLT. The amounts of estimated future benefits payments to be made from pension plan assets are disclosed in Note 8 to the consolidated financial statements. In 2019, the Company expects to contribute approximately $28 million and $65 million to its U.S. and non-U.S. defined benefit pension plans, respectively.
Management also makes significant judgments and estimates to measure the progress toward completing performance obligations and realization rates for consideration related to contracts as well as potential performance-based fees in the Consulting segment.
Revenue: The Company provides detailed discussion regarding its revenue policies in Note 2 to the consolidated financial statements
quarter end and include directly identified assets and liabilities as well as an allocation of those assets and liabilities not recorded at the reporting unit level. As discussed in Note 6, the Company may elect to assess qualitative factors to determine if a step 1 test is necessary. Other intangible assets, which primarily consist of acquired customer lists, that are not deemed to have an indefinite life, are amortized over their estimated lives, typically ranging from 10 to 15 years, and reviewed for impairment upon the occurrence of certain triggering events in accordance with applicable accounting literature. The Company had no indefinite lived identified intangible assets at December 31, 2018 and 2017.
In the Risk and Insurance Services segment, certain pre-placement costs to fulfill are now deferred and amortized into earnings when revenue from the placement is recognized. These costs were previously expensed as incurred. As such, the recognition of costs shifted among quarters.
The Company adopted the new guidance effective January 1, 2018, using the modified retrospective method, which applies the new guidance beginning in the year of adoption, with the cumulative effect of initially applying the guidance recognized as an adjustment to retained earnings at January 1, 2018. The Company elected to apply the modified retrospective method to all contracts. The comparative financial information included herein has not been restated and continues to be reported under the legacy accounting standards that were in effect for those periods.
In Consulting, the Company incurs implementation costs necessary to facilitate the delivery of the contracted services. These costs are capitalized and amortized over the initial contract term plus expected renewal periods.
Risk and Insurance Services revenue includes insurance commissions, fees for services rendered and interest income on certain fiduciary funds. Insurance commissions and fees for risk transfer services generally were recorded as of the effective date of the applicable policies or, in certain cases (primarily in the Company's reinsurance broking operations), as of the effective date or billing date, whichever is later. A reserve for policy cancellation was provided based on historic and current data on cancellations. Consideration for fee arrangements covering multiple insurance placements, the provision of risk management and/or other services was allocated to all deliverables on the basis of the relative selling prices. Fees for non-risk transfer services provided to clients are recognized over the period in which the services are provided, using a proportional performance model. Fees resulting from achievement of certain performance thresholds are recorded when such levels are attained and such fees are not subject to forfeiture.
Valuation allowances had net increases of $36 million and $9 million in 2018 and 2017, respectively and a net decrease of $8 million in 2016. Adjustments of the beginning of the year balances of valuation allowances increased income tax expense by $1 million and $11 million in 2018 and 2017, respectively, and decreased income tax expense by $7 million in 2016. Approximately 53% of the Company’s net operating loss carryforwards expire from 2019 through 2037, and others are unlimited. The potential tax benefit from net operating loss carryforwards at the end of 2018 comprised federal, state and local, and non-U.S. tax benefits of $3 million, $42 million and $57 million, respectively, before reduction for valuation allowances.
During 2018, New York State and New York City closed the examination of tax years 2007 through 2009. New York State and New York City have examinations underway for various entities covering the years 2009 through 2014. Outside the United States, there are ongoing examinations in Italy for the tax year 2015, Canada of tax years 2013 through 2016, and in Singapore for the tax years 2014 through 2016. During 2018, the United Kingdom concluded an examination of tax years 2014 and 2015, and an examination of year 2016 is ongoing. During 2018, examinations in Germany for the years 2009 through 2012, and in France for the years 2011 and 2012 were concluded. The Company regularly considers the likelihood of assessments in each of the taxing jurisdictions resulting from examinations. The Company has established liabilities for uncertain tax positions in relation to the potential assessments. The Company believes the resolution of tax matters will not have a material effect on the consolidated financial position of the Company, although a resolution of tax matters could have a material impact on the Company's net income or cash flows and on its effective tax rate in a particular future period. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between zero and approximately $10 million within the next twelve months due to settlement of audits and expiration of statutes of limitation.
The payout of shares in 2018 with respect to the PSUs awarded in 2015 was 117% of target based on performance for the three-year performance period. In aggregate, 203,590 shares became distributable in respect to PSUs vested in 2018.
During the year ended December 31, 2018, there were no assets or liabilities that were transferred between any of the levels.
The Company's investments in private equity funds were $82 million and $76 million at December 31, 2018 and December 31, 2017, respectively. The carrying values of these private equity investments approximates fair value. The underlying private equity funds follow investment company accounting, where investments within the fund are carried at fair value. The Company records in earnings, investment gains/losses for its proportionate share of the change in fair value of the funds. These investments are included in other assets in the consolidated balance sheets. The Company recorded net investment income of $16 million and $14 million for the years ended December 31, 2018 and 2017, respectively, related to these investments.