Travelers 2006 Annual Report Download - page 229

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
217
12. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
Plan Assets
The percentage of the fair value of pension plan assets held by asset category is as follows:
(at December 31,) 2006 2005
Equity securities. ........................................... 65% 62%
Debt securities.............................................29% 27%
Cash ......................................................4% 8 %
Other..................................................... 2% 3 %
Total ................................................... 100% 100 %
Pension plan assets are invested for the exclusive benefit of the plan participants and beneficiaries and
are intended, over time, to satisfy the benefit obligations under the plan. Risk tolerance is established
through consideration of plan liabilities, plan funded status, and corporate financial condition. The asset
mix guidelines have been established and are reviewed quarterly. These guidelines are intended to serve as
tools to facilitate the investment of plan assets to maximize long-term total return and the ongoing
oversight of the plan’s investment performance. The investment portfolio contains a diversified mix of
equity and fixed-income investments. Equity investments are diversified across U.S. and non-U.S. stocks.
Other assets such as partnerships and real estate are used to enhance long-term returns while improving
portfolio diversification. Investment risk is measured and monitored on an ongoing basis through daily and
monthly investment portfolio review, annual liability measurements, and periodic asset/liability studies.
Maximum and minimum targets for asset allocations at December 31, 2006byasset category were as
follows:
Asset Category
Plan
Assets
Equity securities. ................................................... 25 – 75%
Fixed maturity securities. ............................................ 15 – 75%
Cash .............................................................. 0 – 20%
Other............................................................. 0 – 10%
Equity securities include 797,600 shares of the Company’s common stock with a market value of
$43million at December 31, 2006.
The Company’s otherpost-retirement benefit plan weighted-average asset allocations at
December 31, 2006 and 2005 by asset category were as follows:
Asset Category 2006 2005
Fixed maturity securities. ...................................... 68% 75%
Cash ........................................................ 28% 25%
Equity securities. ............................................. 4% —