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ITEM 8 / NOTE 22. EMPLOYEE BENEFITS.....................................................................................................................................................................................U.S. Pension Plans..............................................................................................................................................................................................The long-term strategic asset allocation is reviewed and revised approximately every three years. The plans’ assetsare monitored by the investment committee of our Retirement Board and the investment managers, which includesallocating the plans’ assets among approved asset classes within pre-approved ranges permitted by the strategicallocation.The following table presents the asset allocation percentage by major asset class for U.S. pension plans andthe target allocation:Target Actual ActualAt December 31, 2013 2012 2011Asset class:Equity securities 45% 44% 52%Fixed maturity securities 30% 29% 30%Other investments 25% 27% 18%Total 100% 100% 100%The expected long-term rate of return for the plan was 7.25 and 7.50 percent for 2012 and 2011, respectively. Theexpected rate of return is an aggregation of expected returns within each asset class category and incorporates thecurrent and target asset allocations. The combination of the expected asset return and any contributions made by usare expected to maintain the plans’ ability to meet all required benefit obligations. The expected asset return for eachasset class was developed based on an approach that considers key fundamental drivers of the asset class returnsin addition to historical returns, current market conditions, asset volatility and the expectations for future marketreturns.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 inequities 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 plansand the target allocation:Target Actual ActualAt December 31, 2013 2012 2011Asset class:Equity securities 28% 36% 38%Fixed maturity securities 43% 43% 39%Other investments 28% 6% 6%Cash and cash equivalents 1% 15% 17%Total 100% 100% 100%The expected weighted average long-term rates of return for our non-U.S. pension plans was 2.91 and 3.14 percentfor the years ended December 31, 2012 and 2011, respectively. The expected rate of return for each country is anaggregation of expected returns within each asset class for such country. For each country, the return with respect toeach asset class was developed based on a building block approach that considers historical returns, current marketconditions, asset volatility and the expectations for future market returns.Assets Measured at Fair Value..............................................................................................................................................................................................We are required to disclose the level of the fair value measurement of the plan assets. The inputs and methodologyused in determining the fair value of these assets are consistent with those used to measure our assets as noted inNote 6 herein...................................................................................................................................................................................................................................AIG 2012 Form 10-K 325