AIG 2014 Annual Report Download - page 328

ITEM 8 / NOTE 22. EMPLOYEE BENEFITS
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The following table presents the asset allocation percentage by major asset class for the U.S. qualified plan and the
target allocation:
Target Actual Actual
At December 31, 2015 2014 2013
Asset class:
Equity securities 42 % 55 %56 %
Fixed maturity securities 27 % 28 %25 %
Other investments 31 % 17 %19 %
Tota l 100 % 100 %100 %
The expected long-term rate of return for the plan was 7.25 percent for both 2014 and 2013. The expected rate of return is an
aggregation of expected returns within each asset class category and incorporates the current and target asset allocations.
The combination of the expected asset return and any contributions made by us are expected to maintain the plan’s ability to
meet all required benefit obligations. The expected asset return for each asset class was developed based on an approach
that considers key fundamental drivers of the asset class returns in addition to historical returns, current market conditions,
asset volatility and the expectations for future market returns.
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, 2015 2014 2013
Asset class:
Equity securities 35 % 50 %45 %
Fixed maturity securities 45 % 35 %37 %
Other investments 19 % 8 % 6%
Cash and cash equivalents 1 % 7 % 12 %
Tota l 100 % 100 %100 %
The assets of AIG’s Japan pension plans represent approximately 55 percent and 60 percent of total non-U.S. assets at
December 31, 2014 and 2013 respectively. The expected long term rate of return was 1.24 percent and 1.15 percent, for 2014
and 2013, respectively, and is evaluated by the Japanese Pension Investment Committee on a quarterly and annual basis
along with various investment managers, and is revised to achieve the optimal allocation to meet targeted funding levels if
necessary. In addition, the funding policy is revised in accordance with local regulation every five years.
The expected weighted average long-term rate of return for all our non-U.S. pension plans was 2.93 percent and 2.60 percent
for the years ended December 31, 2014 and 2013, respectively. It is an aggregation of expected returns within each asset
class that was generally developed based on the building block approach that considers historical returns, current market
conditions, asset volatility and the expectations for future market returns.