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As of 12/31/08, the majority of Guardian's total investment portfolio is comprised of public fixed income (44.3%), private debt (18.7%), and commercial mortgages (13%). Only 1.4% of our total investment portfolio is invested in public equity, and at year end 2008 this amount was 100% hedged. * The majority of our public fixed income holdings are comprised of public corporates (53.3%) and tax-exempt municipals (12.9%). Our portfolio is of excellent credit quality; 91% of our total fixed income is investment grade and 24% of the public fixed income holdings are AAA-rated.
| Asset Class Allocation | As of December 31, 2008 |
| Statement Value | $ Millions | % of Invested Assets |
| Fixed Income (ex Private) | 11,874.2 | 44.3% |
|
| Private Placement Debt | 5,008.8 | 18.7% |
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| Commercial Mortgages | 3,474.7 | 13.0% |
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| Policy Loans | 2,301.2 | 8.6% |
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| Affiliates & Subsidiaries1 | 1,271.9 | 4.7% |
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| Cash & Short-Term Investments | 999.9 | 3.7% |
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| Convertible Securities | 687.4 | 2.6% |
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| Private & Real Estate Equity | 494.5 | 1.8% |
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Public Equity
(Does not reflect hedges)2 | 371.5 | 1.4% |
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| Other Invested Assets | 335.9 | 1.3% |
| Total Invested Assets | 26,820.0 | 100.0% |
1Affiliates and Subsidiaries includes $420 million in affiliates classified as LLC's on the annual statement but are not private equity
2Public Equity has been fully hedged since mid-September 2008. In May 2009, we implemented a dynamic hedge to protect the minimum Cap Ratio floor
| Fixed Income and Convertible Bonds | As of December 31, 2008 |
| Statement Value | $ Millions | % of Invested Assets |
| Public Corporates | 6,323.5 | 23.6% |
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| Tax-Exempt Municipals | 1,536.5 | 5.7% |
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| CMBS | 1,136.3 | 4.2% |
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| MBS Pass-Thrus | 596.0 | 2.2% |
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| U.S. Governments | 493.4 | 1.8% |
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| Collateralized Mortgages (CMO) | 488.5 | 1.8% |
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| Global Bonds (G7) | 484.5 | 1.8% |
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| High Yield Public Corporates | 466.4 | 1.7% |
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| Taxable Municipals | 213.7 | 0.8% |
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| Emerging Markets | 87.2 | 0.3% |
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| Asset Backed Securities | 48.2 | 0.2% |
| Total Public Fixed Income | 11,874.2 | 44.3% |
| Private Placement Debt | 5,008.8 | 18.7% |
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| Convertible Bonds | 609.9 | 2.3% |
| Total Bonds3 | 17,492.9 | 65.2% |
3Total Bonds includes public and private debt and convertible bonds, but excludes commercial mortgages and preferred stock
| Fixed Income and Convertible Bonds | As of December 31, 2008 |
| Statement Value | $ Millions | % of Invested Assets |
| NAIC 1 (Aaa-A/AAA-A) | 9,326.4 | 53.3% |
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| NAIC 2 (Baa/BBB) | 6,631.9 | 37.9% |
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| Investment Grade | 15,958.3 | 91.2% |
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| NAIC 3 (Ba/BB) | 982.4 | 5.6% |
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| NAIC 4 (B) | 467.7 | 2.7% |
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| NAIC 5&6 (Caa/CCC & below) | 84.5 | 0.5% |
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| Below Investment Grade | 1,534.6 | 8.8% |
| Total Bonds3 | 17,492.9 | 100.0% |
3Total Bonds includes public and private debt and convertible bonds, but excludes commercial mortgages and preferred stock
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