WESTFIELD CENTER, Ohio — Focusing on dividends paid big dividends — literally and figuratively — for Westfield Group's $135 million pension plan in 2002.
The Ohio-based property and casualty insurance company earned -5% on its defined benefit investments last year, Chief Investment Officer John M. "Marty" Haney said. That's 419 basis points better than the median rate of return for corporate pension funds in 2002, according to Wilshire Associates' Trust Universe Comparison Service.
Westfield Group also finished the year slightly overfunded, an anomaly in 2002. Only 11% of 320 corporate pension funds surveyed by Wilshire Associates as of Dec. 31 had assets that met or exceeded liabilities.
To be sure, Westfield Group has seen most of its pension fund surplus dry up in the past three years. "We have felt the pain, no doubt," Mr. Haney said. "There's no place to hide."
But Westfield Group, which manages all of its assets internally with a staff of five people, uses what Mr. Haney described as a defensive investing strategy. The company has 60% of its assets in equities and 40% in bonds, he said, making it a "plain vanilla" portfolio. Ron Stephonic manages the bond portfolio and George Wiswesser manages equities.
Of the equity portion, 82% is invested in large-cap value companies that pay dividends. These are companies like General Electric Co., Pfizer Inc., Eli Lilly & Co., Abbott Laboratories and Bristol-Myers Squibb Co., Mr. Haney said.
The remaining 18% is invested in so-called "specialty mandates" — about 8% in two international mutual funds, 4% in small-cap value equities, 4% in small-cap growth and around 2% in Standard & Poor's MidCap 400 Depository Receipts, also known as the MidCap SPDR, Mr. Haney said.
The entire bond portfolio is in investment-grade securities, and 45% are rated AAA.