DWS analyses how Asian insurers are responding to rising interest rates

After more than a decade of ultra-low interest rates, most central banks globally have started to tighten their monetary policy to fight high levels of inflation, according to DWS.

Even though not all central banks in Asia-Pacific have started to aggressively hike interest rates, many insurers in the region are still affected by the sharp rise in interest rates in the United States given their significant exposure to the U.S. fixed income market. The gap in interest rates has also resulted in higher FX hedging costs for U.S. dollar-denominated assets. This is especially true for Japanese insurers where the demand for U.S. dollar-denominated fixed income investments has dropped significantly on the back of significantly higher FX hedging costs.

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