Travelers 2008 Annual Report Download - page 244

THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
by $17 million and the aggregate of the service and interest cost components of net postretirement
benefit expense by $1 million for the year ended December 31, 2008.
Plan Assets
The percentage of the fair value of pension plan assets held by asset category is as follows:
(at December 31,) 2008 2007
Equity securities ........................................ 49% 63%
Fixed maturities ........................................ 18% 30%
Cash(1) .............................................. 32% 5%
Other ................................................ 1% 2%
Total ............................................... 100% 100%
(1) Cash assets at December 31, 2008 exceeded the maximum target of 20% due to
$450 million of additional funding in the second half of the year.
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
position. 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, 2008 by asset category were
as follows:
Asset Category Plan Assets
Equity securities .......................................... 25 - 75%
Fixed maturities .......................................... 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
$36 million at December 31, 2008.
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