Huan Qiu Wang·2025-12-25 06:02Core Viewpoint - The insurance industry is facing unprecedented challenges in asset-liability management due to a prolonged low interest rate environment, which has significantly altered the operational landscape for life insurance companies [2][3]. Group 1: Asset-Liability Management Challenges - Asset-liability management is crucial for balancing long-term liabilities and asset returns, serving as a defense against systemic risks [1]. - The current low interest rate environment has intensified the risk of interest spread losses for existing high guaranteed interest rate policies, prompting a shift in product strategy from traditional fixed income to guaranteed returns plus floating dividends [2][3]. - The majority of insurance funds come from policy liabilities, which have long durations, necessitating long-term asset allocation [2]. Group 2: Regulatory Developments - The new "National Ten Articles" and the draft "Insurance Company Asset-Liability Management Measures" emphasize the need for enhanced asset-liability linkage regulation [6][7]. - The draft measures establish regulatory indicators for life insurance companies, including effective duration gap and net investment income coverage ratio, with minimum standards set to ensure financial stability [7][8]. Group 3: International Responses to Low Interest Rates - Internationally, life insurance markets have adapted to low interest rates by adjusting investment strategies, such as increasing allocations to low liquidity assets for higher liquidity premiums [4][5]. - In the UK, companies have reduced guaranteed dividend levels and shifted towards investment-linked products to share investment risks with policyholders [4]. Group 4: Strategic Recommendations for Insurers - Insurers are advised to construct a robust asset-liability management system to effectively mitigate interest spread loss risks, moving away from reliance on high guaranteed yield products [3][9]. - Companies should focus on enhancing their asset allocation strategies by increasing investments in high-quality long-term bonds and high-dividend equities, while also exploring alternative investments to match liabilities and improve liquidity [9][10]. - Smaller insurers face greater challenges compared to larger firms due to limited capital and investment channels, necessitating a strategic focus on stable cash flows and diversified asset portfolios to survive in a low interest rate environment [9][10].