AXA Life Asia eyes derivatives

MANILA, Philippines - The Asia (ex-Japan) division of French insurer AXA Life has increased its portfolio-hedging activity since 2009.

That has helped it navigate the extremely volatile markets of the past year, Alistair Brown, chief financial officer for Asia ex-Japan, told FinanceAsia. AXA Life Asia will use derivatives to lengthen the duration of its portfolio due to a dearth in long-duration bonds.

The French insurer has had difficulty matching their assets to their liabilities (ALM). It built up its hedging team was to help risk-manage the variable-annuity (VA) product it launched in Hong Kong in the second quarter of 2008. These relatively complex products have met with success in the US and Japan and are also increasingly appearing in Europe.

The hedging team in Hong Kong is also leveraging the expertise of Axa Hedging Services in Singapore, says Brown. This is a dedicated resource of the Axa group that manages VA-hedging programs around the region, including Australia and Japan.

The VA product has become a significant contributor to Axa Life’s Hong Kong business.