Assurant 2015 Annual Report Download - page 143

ASSURANT, INC. – 2015 Form 10-K F-57
21 Retirement and Other Employee Benets
The assets of the Plans are managed to maximize their long-
term pre-tax investment return, subject to the following
dual constraints: minimization of required contributions and
maintenance of solvency requirements. It is anticipated that
periodic contributions to the Plans will, for the foreseeable
future, be sufcient to meet benet payments thus allowing
the balance to be managed according to a long-term approach�
The Investment Committee for the Plans meets on a quarterly
basis and reviews the re-balancing of existing fund assets and
the asset allocation of new fund contributions�
The goal of our asset strategy is to ensure that the growth
in the value of the fund over the long-term, both in real and
nominal terms, manages (controls) risk exposure. Risk is
managed by investing in a broad range of asset classes, and
within those asset classes, a broad range of individual securities.
Diversication by asset classes stabilizes total fund results
over short-term time periods� Each asset class is externally
managed by outside investment managers appointed by the
Investment Committee. Derivatives may be used consistent with
the Plan’s investment objectives established by the Investment
Committee� All securities must be U�S� dollar denominated�
In 2015, 7% of the Plans’ assets were allocated to Meisirow
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�
The Investment Committee that oversees the investment of
the plan assets conducts an annual review of the investment
strategies and policies of the Plans� This 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 adopted the current
target asset allocation� The allocation is consistent with 2014�
Financial Assets(1)
The Plans’ Asset Allocation Percentages
Low Target(2) High
Equity securities:
Common stock- U�S� listed small cap 5�0% 7�5% 10�0%
Mutual fund- U�S� listed large cap 10�0% 15�0% 20�0%
Common/collective trust- foreign listed 5�0% 7�5% 10�0%
Fixed maturity securities:
U�S� & foreign government and government agencies and authorities 6�5% 9�0% 11�5%
Corporate- U�S� & foreign investment grade 31�0% 33�5% 36�0%
Corporate- U�S� & foreign high yield 5�0% 7�5% 10�0%
Alternative investment fund:
Multi-strategy hedge fund 5�5% 8�0% 10�5%
Commingled real estate fund 3�5% 6�0% 8�5%
Private equity fund —% 6�0% 8�5%
(1) The Plans’ long-term asset allocation targets are 30% equity, 50% fixed income and 20% investment funds. The Company invests certain plan assets
in investment funds, examples of which include real estate investment funds and private equity funds. Amounts allocated for these investments
are included in the alternative investment funds caption of the asset allocation at December 31, 2015, 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 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, 2015, 49% of plan
assets were invested in xed maturity securities and 15%, 12%
and 9% of those securities were concentrated in the nancial,
communications and consumer non-cyclical industries, with
no exposure to any single creditor in excess of 4%, 6% and 7%
of those industries, respectively. As of December 31, 2015,
33% of plan assets were invested in equity securities and
52% 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�