[Verse 1] Insurance companies hold your trust Managing risks is what they must Assets and liabilities side by side ALM keeps them balanced with pride Surplus is the safety net they keep When claims come calling, promises to meet [Chorus] Asset Liability Management, ALM Match the duration, that's the gem Surplus strong, protects the day Interest rate risk, keep it at bay ALM, ALM, balance the flow Surplus management, watch it grow [Verse 2] Life insurance has a longer tail Thirty years of payments without fail Property casualty, shorter in time One year policies, claims in their prime Duration matching is the key Assets and liabilities in harmony [Chorus] Asset Liability Management, ALM Match the duration, that's the gem Surplus strong, protects the day Interest rate risk, keep it at bay ALM, ALM, balance the flow Surplus management, watch it grow [Bridge] When rates go up, bond values fall Duration mismatch hurts us all Convexity and immunization Protect against rate fluctuation Economic surplus tells the tale Mark to market, will we sail [Verse 3] Regulatory surplus, book value shown Economic surplus, market value known Risk based capital sets the floor Solvency ratios, we need much more Portfolio optimization is the goal Managing surplus, staying in control [Chorus] Asset Liability Management, ALM Match the duration, that's the gem Surplus strong, protects the day Interest rate risk, keep it at bay ALM, ALM, balance the flow Surplus management, watch it grow [Outro] Insurance ALM, the guardian's way Protecting surplus every day Match those durations, manage the risk Financial stability, quick and brisk
← Target-Date Funds and Glide Paths | Bank Portfolio Management Fundamentals →