Evaluating Asset Allocation for Insurance Companies

XYZ Life Insurance Company is reviewing its current asset allocation strategy in light of changing market conditions and regulatory considerations. The company has a large portfolio that includes fixed income securities, equities, and alternative investments. As part of this review, the company's investment committee is considering adjustments to its asset allocation to better align with its liabilities and improve overall risk management.

Discuss the key factors that XYZ Life Insurance Company should consider when evaluating its asset allocation strategy. In your response, be sure to address the unique characteristics of insurance liabilities, the impact of interest rate fluctuations, and the need for regulatory compliance.