The Hartford 2012 Annual Report Download - page 233

Table of Contents
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

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Investment Strategy and Target Allocation
The overall investment strategy of the Plan is to maximize total investment returns to provide sufficient funding for present and anticipated future benefit
obligations within the constraints of a prudent level of portfolio risk and diversification. With respect to asset management, the oversight responsibility of the
Plan rests with The Hartford’s Pension Fund Trust and Investment Committee composed of individuals whose responsibilities include establishing overall
objectives and the setting of investment policy; selecting appropriate investment options and ranges; reviewing the asset allocation mix and asset allocation
targets on a regular basis; and monitoring performance to determine whether or not the rate of return objectives are being met and that policy and guidelines are
being followed. The Company believes that the asset allocation decision will be the single most important factor determining the long-term performance of the
Plan.
The Company’s pension plan and other postretirement benefit plans’ target allocation by asset category is presented in the table below.

 
(minimum) (maximum) (minimum) (maximum)
Equity securities 10%32%15%35%
Fixed income securities 50%70%65%85%
Alternative assets 10%25%—%—%
Divergent market performance among different asset classes may, from time to time, cause the asset allocation to deviate from the desired asset allocation
ranges. The asset allocation mix is reviewed on a periodic basis. If it is determined that an asset allocation mix rebalancing is required, future portfolio
additions and withdrawals will be used, as necessary, to bring the allocation within tactical ranges.
The Company’s pension plan and other postretirement benefit plans’ weighted average asset allocation at December 31, 2012 and 2011 is presented in the table
below.






   
Equity securities 20%20%23%22%
Fixed income securities 60%62%77%78%
Alternative Assets 20%18%—%—%
 
The Plan assets are invested primarily in separate portfolios managed by HIMCO, a wholly-owned subsidiary of the Company. These portfolios encompass
multiple asset classes reflecting the current needs of the Plan, the investment preferences and risk tolerance of the Plan and the desired degree of diversification.
These asset classes include publicly traded equities, bonds and alternative investments and are made up of individual investments in cash and cash
equivalents, equity securities, debt securities, asset-backed securities and hedge funds. Hedge fund investments represent a diversified portfolio of partnership
investments in absolute-return investment strategies.
In addition, the Company uses U.S. Treasury bond futures contracts and U.S. Treasury STRIPS in a duration overlay program to adjust the duration of
Plan assets to better match the duration of the benefit obligation.
Investment Valuation
For further discussion on the valuation of investments, see Note 5.
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