rewrite The new director has little knowledge of the life insurance industry all investments moved immediate to the short-term assets is not a good suggestionInvestment strategies should consider The

The new director's lack of knowledge in the life insurance industry makes it unwise to immediately move investments to short-term assets. Instead, investment strategies should be carefully considered to ensure that assets align with the nature, term, and currency of underlying liabilities. Regulatory restrictions and the ability of assets to contribute to solvency calculations should also be taken into account. The level of free assets and risk appetite should be considered when deciding whether to mismatch assets to maximize overall return.

Different types of benefits require different investment approaches. Fixed benefits can be matched by fixed-income bonds, such as government bonds. Index-linked benefits can be matched by index-linked bonds. Discretionary benefits should consider policyholders' reasonable expectations and maximize investment return within the company's risk appetite. Equities and property are likely choices, but investments will depend on the amount of free assets available.

For unit-linked assets, the assets in the fund selected by the customer are likely to be held. Non-unit reserves require liquid assets like cash or suitable bonds to cover any shortfall between charges and expenses. Expenses can be matched with index-linked bonds that track the expected inflation driver. Bonds with a variety of terms should be chosen to match the timing of expected liability cashflows.

Finally, the company should hold some cash for liquidity. The long-term nature of life insurance liabilities means that assets with short terms cause mismatch and investment risks. Therefore, careful consideration should be given to investment strategies to ensure that assets align with liabilities and maximize overall return