Low interest rates are making it difficult for life insurers to hit return thresholds, and capital charge costs on private assets are forcing them to head up the credit risk curve, say experts.
Senior executives at the two life insurers shared how they and peers should adapt their investment portfolios ahead of Hong Kong's new risk-based capital regime.
The US-based life insurer has said it might leave the Taiwan market. If it does so, it will follow in the wake of other foreign players such as ING and AIG.
The preferential treatment that reduces the cost of capital for Chinese insurers when they buy reinsurance in Hong Kong could change once the city adopts a new RBC regime.
The FSC exclusively told AsianInvestor that it intends to divide the capital structure of local insurers into two tiers. Analysts believe this will make them more prudent investors.
Paul Carrett says he supports the use of derivatives to hedge risks and execute promptly and hopes the new RBC regime doesn’t limit the investment opportunities available to insurers.