Key Considerations in Insurance Company Portfolio Management

Consider an insurance company that operates primarily in the life insurance sector. The company has a large portfolio of liabilities that are long-term in nature, reflecting the long maturity of life insurance obligations. These obligations require the company to manage its investments prudently to ensure that it can meet policyholder claims.

Discuss the key considerations that an insurance company must take into account when managing its investment portfolio. Please focus particularly on aspects such as asset-liability matching, regulatory requirements, and the impact of interest rate changes on their portfolio management strategies.