Classical Immunization - Switch to Immunization

Hi guys, when the current portfolio value is less the amount needed to fund minimum target under contingent immunization, a switch to immunization is needed. What does switch to immunization meaning here? Switching to a fixed income securities that will have higher interest rate, which match with the terminal value, in view of the high interest environment? Thanks

immunization - you have a bond portfolio which is “immune” to parallel interest rates changes - where the reinvestment income offsets the price change.

if the immunization target rate of return on your portfolio is lower than the rate of return you earn on your portfolio - you have a cushion which you can use for “active” management - earn higher returns and ensure you satisfy the liabilties better.

however if the interest rate environment changes - rises - so you can no longer have such a large cushion - you have to abandon the “active management” part of the plan, and SWITCH TO ORIGINAL IMMUNIZATION - where you depend on passive management and the fact that you still can offset price change with reinvestment income - and still satisfy your liabilities.