Topic: Insurance-Actuarial & Reserving
Report type: Asset–Liability Structure Optimization in Insurance (保险公司资产负债结构优化研究)

Demographic shifts, declining long-term interest rates, and the ongoing evolution of insurance accounting standards are fundamentally reshaping the asset-liability management (ALM) framework of life insurers. Achieving stable returns and capital resilience under long-duration liabilities has become a core strategic priority for global insurance groups.

Using Prudential Financial as a case study, please write an in-depth research report on the theme of "Optimizing Insurers’ Asset-Liability Structures under Low Interest Rates and Demographic Change," addressing the following key questions:

1. Ex-post Evaluation of Retirement Business Transformation: Prudential accelerated its strategic shift toward retirement solutions in the 2010s. Evaluate the financial outcomes of this transformation: Have PGIM’s alternative asset allocations delivered the expected spread returns? Has the FlexGuard variable annuity business generated returns above its cost of capital across different interest rate cycles?

2. Trade-offs between GAAP and Statutory Accounting: Prudential reports under both U.S. GAAP and statutory accounting frameworks. How do differences in liability measurement and hedge accounting treatments affect the reported profitability of its long-duration annuity book? Where are the key hidden risk exposures?

3. Global Practices and Implications for China: Drawing on international insurance practices, what lessons can be derived for Chinese life insurers in optimizing asset-liability structures, mitigating spread compression risks, and enhancing long-term value management capabilities?

## Evaluation Criteria for *Insurance ALM Optimization: A Case Study of Prudential Financial*

This framework evaluates deep research reports on asset-liability management (ALM) under low interest rates, demographic shifts, and evolving accounting standards. The focus is on assessing strategy effectiveness, understanding accounting impacts on profitability and risk, and deriving actionable industry insights. Total: 100 points.

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### 1. Retirement Business Transformation and Performance (30 points)

#### (1) Strategy and business structure (10 points)
- **9–10**: Clearly explains the rationale, path, and structural changes in Prudential’s retirement shift.
- **6–8**: Captures direction but lacks depth.
- **0–5**: Lacks systematic analysis.

#### (2) PGIM alternative assets and spread income (10 points)
- **9–10**: Evaluates contribution to yield and spread with supporting logic or data.
- **6–8**: Provides direction but limited depth.
- **0–5**: Weak or missing analysis.

#### (3) FlexGuard annuity performance (10 points)
- **9–10**: Assesses returns across rate cycles vs. cost of capital.
- **6–8**: Lacks cycle or cost perspective.
- **0–5**: Superficial analysis.

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### 2. Accounting Differences and Risk Impact (30 points)

#### (1) GAAP, statutory, and IFRS 17 differences (10 points)
- **9–10**: Clearly explains liability measurement and profit recognition differences.
- **6–8**: Generally correct but incomplete.
- **0–5**: Contains major misunderstandings.

#### (2) Impact on reported earnings (10 points)
- **9–10**: Explains how accounting affects earnings volatility and profitability.
- **6–8**: Directionally correct but lacks depth.
- **0–5**: Weak analysis.

#### (3) Risk exposure identification (10 points)
- **9–10**: Identifies key risks such as interest rate risk, duration mismatch, hedging risk, and capital volatility.
- **6–8**: Covers main risks but not systematically.
- **0–5**: Insufficient risk analysis.

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### 3. International Experience and China Implications (25 points)

#### (1) Global experience (10 points)
- **9–10**: Summarizes ALM and product strategy insights from global insurers.
- **6–8**: Some insights but not systematic.
- **0–5**: Weak synthesis.

#### (2) Localization and applicability (10 points)
- **9–10**: Provides actionable recommendations tailored to China’s regulatory and market context.
- **6–8**: Insights lack practicality.
- **0–5**: Generic suggestions.

#### (3) Long-term value and spread management (5 points)
- **5**: Clearly outlines long-term value creation and spread-risk mitigation.
- **3–4**: Directional but not specific.
- **0–2**: Missing analysis.

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### 4. Report Quality and Conclusions (15 points)

#### (1) Structure and professionalism (5 points)
- **5**: Clear and consistent with insurance research standards.
- **3–4**: Mostly complete.
- **0–2**: Weak structure.

#### (2) Conclusions and insights (6 points)
- **5–6**: Clear and strategically valuable conclusions.
- **3–4**: Moderate depth.
- **0–2**: Vague conclusions.

#### (3) Risk and limitations (4 points)
- **4**: Covers key risks such as rates, regulation, and product design.
- **2–3**: Limited coverage.
- **0–1**: Missing risk analysis.