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Insurers embrace derivatives for long-term resilience

Heather Ng
Asian insurers are moving beyond tactical hedging, using derivatives to manage volatility, enhance capital efficiency, and strengthen portfolio construction.
Insurers embrace derivatives for long-term resilience
Key Points
  • Asian insurers now use derivatives for core asset-liability management and capital efficiency, moving beyond basic tactical hedging.
  • Specific instruments are matched to risks—such as swaps for interest rates and currencies, and ETFs for equity exposure.
  • While derivatives optimise portfolios and diversification, they require strict collateral and liquidity management to handle potential margin calls.

Asian insurers are steadily broadening their use of derivatives, moving from tactical hedging into more sophisticated applications that underpin long‑term portfolio construction.

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