Korea lifers set to increase hedging as accounting shake-up looms

Bond forwards likely to be favoured instrument, but interest rate swaps market could develop

Traditional-Korean-sundial
Time to hedge: rule changes may usher in new methods of risk transfer for Korean insurers

Dealers predict an increase in interest rate hedging by South Korean life insurers over the next couple of years as two key deadlines approach: the introduction of accounting standard IFRS 17 and the rollout of a new solvency capital framework. Both of these changes are due to take place at the start of 2023.

The revamp of accounting rules aims to address a mismatch in the way that Korean insurers calculate assets and liabilities. Currently, companies apply a larger discount to the value of

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