Travelers 2014 Annual Report Download - page 240

Table of Contents
THE TRAVELERS COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
14. PENSION PLANS, RETIREMENT BENEFITS AND SAVINGS PLANS (Continued)
The assumptions made for the Company's foreign pension and postretirement benefit plans are not materially different from those of the
Company's U.S. qualified domestic pension plan and the postretirement benefit plan.
Plan Assets
The U.S. qualified domestic 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. Investment risk is measured and monitored on an ongoing basis through daily and monthly investment portfolio reviews,
annual liability measurements and periodic asset/liability studies.
The Company's overall investment strategy for the U.S. qualified domestic pension plan is to achieve a mix of approximately 85% to 90% of
investments for long
- term growth and 10% to 15% for near - term benefit payments with a diversification of asset types, fund strategies and fund
managers. The current target allocations for plan assets are 55% to 65% equity securities and 20% to 40% fixed income securities, with the
remainder allocated to short
- term securities. Equity securities primarily include investments in large, medium and small - cap companies primarily
located in the United States. Fixed income securities include corporate bonds of companies from diversified industries, mortgage
- backed securities,
U.S. Treasury securities and debt securities issued by foreign governments. Other investments include two private equity funds held by the
Company's qualified defined benefit pension plan. One private equity fund is focused on financial companies, and the other is focused on real
estate
- related investments.
Assets of the Company's foreign pension plans are not significant.
Fair Value Measurement—Pension Plans and Other Postretirement Benefit Assets
For a discussion of the methods employed by the Company to measure the fair value of invested assets, see note 4. The following discussion
of fair value measurements applies exclusively to the Company's pension plans and other postretirement benefit assets.
Fair value estimates for equity and bond mutual funds held by the pension plans reflect prices received from an external pricing service that are
based on observable market transactions. These estimates are included in Level 1.
Short - term securities are carried at fair value which approximates cost plus accrued interest or amortized discount. The fair value or market
value of these is periodically compared to this amortized cost and is based on significant observable inputs as determined by an external pricing
service. Accordingly, the estimates of fair value for such short
- term securities, other than U.S. Treasury securities and money market mutual funds,
provided by an external pricing service are included in the amount disclosed in Level 2 of the hierarchy. The estimated fair value of U.S. Treasury
securities and money market mutual funds is included in the amount disclosed in Level 1 as the estimates are based on unadjusted market prices.
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