Japan insurers look to hedge out legacy VA positions

Legacy variable annuity portfolios have come back to par making it less expensive to hedge this risk than previously

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

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