Assurant 2012 Annual Report Download - page 125

Download and view the complete annual report

Please find page 125 of the 2012 Assurant annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 144

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144

ASSURANT, INC.2012 Form10-K F-49
20 Retirement and Other Employee Bene ts
In 2012, 8% of the Plans’ assets were allocated to Mesirow Institutional
Multi-Strategy Fund, L.P. (“MIMSF”). MIMSF is a multi-strategy
product for U.S. tax-exempt investors subject to ERISA. MIMSF
allocates to  ve primary sub-strategies including hedged equity, credit,
event, relative value and multi-strategy. Allocations to these sub-strategies
will shift over time depending upon MIMSF’s investment outlook.
MIMSF is managed to be broadly diversi ed in terms of both strategy
and manager exposures.
In 2012, approximately less than 1% of the Plan’s assets are allocated
to Private Equity Partners XI Limited Partnership (“PEP XI”). PEP
XI is a global diversi ed private equity fund-of-funds providing broad
exposure to partnership investments across a diverse set of strategies such
as leveraged buyouts, growth capital, venture capital, turnaround, and
industry-focused investments. PEP XI expects to allocate approximately
75% of capital available for investment to partnership investments and
up to 25% to direct and secondary investments, of which secondary
investments are not expected to exceed 10% of funds available.
e Investment Committee that oversees the investment of the plan
assets conducts an annual review of the investment strategies and policies
of the Plans.  is includes a review of the strategic asset allocation,
including the relationship of the Plans’ liabilities and portfolio structure.
As a result of this review, the Investment Committee has adopted the
current target asset allocation.  e allocation is consistent with 2011.
Financial Assets
e Plans’ Asset Allocation Percentages
Low Target(2) High
Equity securities(1):
Common stock- U.S. listed small cap 5.0% 7.5% 10.0%
Mutual fund- U.S. listed large cap 22.0% 27.0% 32.0%
Common/collective trust- foreign listed 5.0% 7.5% 10.0%
Fixed maturity securities:
U.S.& foreign government and government agencies and authorities 8.0% 10.5% 13.0%
Corporate- U.S& foreign investment grade 29.5% 32.0% 34.5%
Corporate- U.S& foreign high yield 5.0% 7.5% 10.0%
Investment fund:
Multi-strategy hedge fund 5.5% 8.0% 10.5%
(1) The Plans’ long-term asset allocation targets are 30% equity, 50% fixed income and 20% investment funds. Current target asset allocations for equity securities include allocations
for investment funds. The Company invests certain plan assets in investment funds, examples of which include real estate investment funds and private equity funds, during 2012.
Amounts allocated for these investments are included in the equity securities caption of the fair value hierarchy at December31, 2012, provided in the section above.
(2) It is understood that these guidelines are targets and that deviations may occur periodically as a result of cash flows, market impact or short-term decisions implemented by either the
Investment Committee or their investment managers.
e assets of the Plans are primarily invested in  xed maturity and
equity securities. While equity risk is fully retained, interest rate risk
is hedged by aligning the duration of the  xed maturity securities
with the duration of the liabilities. Speci cally, interest rate swaps are
used to synthetically extend the duration of  xed maturity securities
to match the duration of the liabilities, as measured on a projected
bene t obligation basis. In addition, the Plans’  xed income securities
have exposure to credit risk. In order to adequately diversify and limit
exposure to credit risk, the Investment Committee established parameters
which include a limit on the asset types that managers are permitted
to purchase, maximum exposure limits by sector and by individual
issuer (based on asset quality) and minimum required ratings on
individual securities. As of December31, 2012, 48.1% of plan assets
were invested in  xed maturity securities and 14.7%, 11.8% and 8.3%
of those securities were concentrated in the  nancial, communications
and consumer non-cyclical industries, with no exposure to any single
creditor in excess of 6.1%, 8.6% and 10.4% of those industries,
respectively. As of December31, 2012, 41.0% of plan assets were
invested in equity securities and 58.4% of the Plans’ equity securities
were invested in a mutual fund that attempts to replicate the return of
the Standard& Poor’s 500 index (“S&P 500”) by investing its assets
in large capitalization stocks that are included in the S&P 500 using
a weighting similar to the S&P 500.