Variable annuities offer mixed opportunities in Asia

Derivatives dealers seeking variable annuity-related hedging opportunities in Asia-Pacific are focusing on South Korea. While some players have sold hedges based on structured variants of constant proportion portfolio insurance, dealers hope that the prospect of new regulation in Asian markets could prove beneficial for derivatives-based solutions. By Joti Mangat


With a broadly ageing population and a rapidly developing insurance market, the Asia-Pacific region should be an increasingly attractive prospect for bancassurance and investment-linked insurance products. Japan, for example, is home to the world's second largest variable annuity market with ¥18 trillion of assets under management, according to Nomura.

Despite the attractive underlying market fundamentals for guaranteed investment products, however, dealers say the region's variable annuity

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