The Hartford 2013 Annual Report Download - page 228

F-92
Plan Assets
Investment Strategy and Target Allocation
The overall investment strategy of the Plan is to maximize total investment returns to provide sufficient funding for present and
anticipated future benefit obligations within the constraints of a prudent level of portfolio risk and diversification. With respect to asset
management, the oversight responsibility of the Plan rests with The Hartford’s Pension Fund Trust and Investment Committee composed
of individuals whose responsibilities include establishing overall objectives and the setting of investment policy; selecting appropriate
investment options and ranges; reviewing the asset allocation mix and asset allocation targets on a regular basis; and monitoring
performance to determine whether or not the rate of return objectives are being met and that policy and guidelines are being followed.
The Company believes that the asset allocation decision will be the single most important factor determining the long-term performance
of the Plan.
The Company’s pension plan and other postretirement benefit plans’ target allocation by asset category is presented in the table below.
Target Asset Allocation
Pension Plans Other Postretirement Plans
(minimum) (maximum) (minimum) (maximum)
Equity securities 10% 25% 15% 35%
Fixed income securities 50% 70% 65% 85%
Alternative assets 10% 25% —% —%
Divergent market performance among different asset classes may, from time to time, cause the asset allocation to deviate from the
desired asset allocation ranges. The asset allocation mix is reviewed on a periodic basis. If it is determined that an asset allocation mix
rebalancing is required, future portfolio additions and withdrawals will be used, as necessary, to bring the allocation within tactical
ranges.
The Company’s pension plan and other postretirement benefit plans’ weighted average asset allocation at December 31, 2013 and 2012
is presented in the table below.
Percentage of Pension Plans
Assets
At Fair Value as of December
31,
Percentage of Other
Postretirement Plans
Assets at Fair Value as of
December 31,
2013 2012 2013 2012
Equity securities 23 % 20 % 31% 23 %
Fixed income securities 57 % 60 % 68% 77 %
Alternative Assets 20 % 20 % 1% —%
Total 100% 100% 100% 100%
The Plan assets are invested primarily in separate portfolios managed by HIMCO, a wholly-owned subsidiary of the Company. These
portfolios encompass multiple asset classes reflecting the current needs of the Plan, the investment preferences and risk tolerance of the
Plan and the desired degree of diversification. These asset classes include publicly traded equities, bonds and alternative investments and
are made up of individual investments in cash and cash equivalents, equity securities, debt securities, asset-backed securities and hedge
funds. Hedge fund investments represent a diversified portfolio of partnership investments in absolute-return investment strategies.
In addition, the Company uses U.S. Treasury bond futures contracts and U.S. Treasury STRIPS in a duration overlay program to adjust
the duration of Plan assets to better match the duration of the benefit obligation.
Investment Valuation
For further discussion on the valuation of investments, see Note 5.
Table of Contents THE HARTFORD FINANCIAL SERVICES GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
18. Employee Benefit Plans (continued)