AIG 2011 Annual Report Download - page 364

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. Pension Plans
The long-term strategic asset allocation is reviewed and revised approximately every three years. The plans’
assets are monitored by the investment committee of AIG’s Retirement Board and the investment managers,
which can entail allocating the plans assets among approved asset classes within pre-approved ranges permitted by
the strategic allocation.
The following table presents the asset allocation percentage by major asset class for U.S. pension plans and the
target allocation:
Target Actual Actual
At December 31, 2012 2011 2010
Asset class:
Equity securities 45% 52% 60%
Fixed maturity securities 30% 30% 22%
Other investments 25% 18% 18%
Total 100% 100% 100%
The expected long-term rate of return for the plan was 7.5 and 7.75 percent for 2011 and 2010, respectively.
The expected rate of return is an aggregation of expected returns within each asset class category. The expected
asset return and any contributions made by AIG together are expected to maintain the plans’ ability to meet all
required benefit obligations. The expected asset return with respect to each asset class was developed based on a
building block approach that considers historical returns, current market conditions, asset volatility and the
expectations for future market returns. While the assessment of the expected rate of return is long-term and thus
not expected to change annually, significant changes in investment strategy or economic conditions may warrant
such a change. The expected asset return and any contributions made by AIG together are expected to maintain
the plan’s ability to meet all required benefit obligations.
Non-U.S. Pension Plans
The assets of the non-U.S. pension plans are held in various trusts in multiple countries and are invested
primarily in equities and fixed maturity securities to maximize the long-term return on assets for a given level of
risk.
The following table presents the asset allocation percentage by major asset class for Non-U.S. pension plans and
the target allocation:
Target Actual Actual
At December 31, 2012 2011 2010
Asset class:
Equity securities 36% 38% 57%
Fixed maturity securities 41% 39% 28%
Other investments 12% 6% 10%
Cash and cash equivalents 11% 17% 5%
Total 100% 100% 100%
The expected weighted average long-term rates of return for the non-U.S. pension plans was 3.14 and
3.75 percent for the years ended December 31, 2011 and 2010, respectively. The expected rate of return for each
country is an aggregation of expected returns within each asset class for such country. For each country, the return
with respect to each asset class was developed based on a building block approach that considers historical
returns, current market conditions, asset volatility and the expectations for future market returns. While the
assessment of the expected rate of return is long-term and not expected to change annually, significant changes in
350 AIG 2011 Form 10-K