Strategic Investment Reevaluation for Insurance Liabilities

As the Chief Investment Officer of a large insurance company, XYZ Mutual Insurance, you are responsible for overseeing the investment portfolio, which is primarily designed to meet the liabilities associated with your life insurance products. Due to recent fluctuations in interest rates, regulatory changes, and evolving market dynamics, there are significant pressures to reevaluate your investment strategy.

The company's investment portfolio currently comprises a mixture of fixed income securities, equities, and alternative investments. However, the risk-return profile of these assets is being challenged by increasing inflation and interest rate sensitivity. In addition, the company's liabilities are long-dated and require a careful matching strategy to ensure that they can meet obligations over multiple decades.

In your analysis, you must consider the implications of liability-driven investment (LDI) strategies, the impact of changes in asset-liability management (ALM), and the regulatory landscape affecting investment decisions. Discuss how you would adjust the investment strategy to better align with the company's long-term liabilities, mitigate risks, and exploit potential market opportunities.