Assurant 2013 Annual Report Download - page 140

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ASSURANT, INC. – 2013 Form 10-KF-54
20 Retirement and Other Employee Benefi ts
Financial Assets
The 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 2013. Amounts allocated for these investments are included in the equity securities
caption of the fair value hierarchy at December 31, 2013, 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.
The assets of the Plans are primarily invested in fi xed maturity
and equity securities. While equity risk is fully retained,
interest rate risk is hedged by aligning the duration of the
fi xed maturity securities with the duration of the liabilities.
Specifi cally, interest rate swaps are used to synthetically
extend the duration of fi xed maturity securities to match
the duration of the liabilities, as measured on a projected
benefi t obligation basis. In addition, the Plans’ fi 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, 2013, 44.4% of
plan assets were invested in fi xed maturity securities and
14.7%, 10.8% and 8.3% of those securities were concentrated
in the fi nancial, communications and consumer non-cyclical
industries, with no exposure to any single creditor in excess
of 5.6%, 6.4% and 7.7% of those industries, respectively. As
of December 31, 2013, 43.6% of plan assets were invested
in equity securities and 64.2% 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.
The fair value hierarchy for the Company’s qualifi ed pension plan and other post retirement benefi t plan assets at December 31,
2013 by asset category, is as follows:
Qualifi ed Pension Benefi ts
Financial Assets
December 31, 2013
Total
Level 1 Level 2 Level 3
Cash and cash equivalents:
Short-term investment funds $ 33,750 $ 0 $ 33,750 $ 0
Equity securities:
Common stock- U.S. listed small cap 60,770 60,770 0 0
Preferred stock 2,674 2,674 0 0
Mutual funds- U.S. listed large cap 220,185 220,185 0 0
Common/collective trust- foreign listed 59,242 0 59,242 0
Fixed maturity securities:
U.S. & foreign government and government agencies and authorities 95,813 0 95,813 0
Corporate- U.S. & foreign investment grade 203,542 0 203,542 0
Corporate- U.S. & foreign high yield 50,131 0 50,131 0
Investment fund:
Multi-strategy hedge fund 59,977 0 0 59,977
Private equity fund 1,525 0 0 1,525
Derivatives:
Interest rate swap 3,106 0 3,106 0
TOTAL FINANCIAL ASSETS $ 790,715(1) $ 283,629 $ 445,584 $ 61,502
(1) The difference between the fair value of plan assets above and the amount used in determining the funded status is due to interest receivable
which is not required to be included in the fair value hierarchy.