Japan insurers look to hedge out legacy VA positions

Rise in equity markets makes it less costly for insurers to de-risk

Stock market

The rise in Japanese and global equity markets over the past 18 months has seen a corresponding rise in equity portfolios of existing variable annuity products, with dealers reporting an increase in interest from Japanese insurers to hedge this exposure.

In Japan, a variable annuity is an insurance contract which is principal protected and includes a series of guarantees in addition to any appreciation in a managed portfolio of funds linked to fixed income and equities. The majority of policies