 "Insurers may prefer bond")
Insurance companies are likely to move towards forward trading in bonds (bond forwards) from forward-rate agreements (FRAs) with the regulator allowing them to undertake transactions in the former for hedging interest-rate risks, according to industry participants.
In a circular, the Insurance Regulatory and Development Authority of India (Irdai) has said in view of the Reserve Bank of India’s (RBI’s) directions and considering insurers’ requests for introducing bond forwards, insurers are permitted to undertake transactions in them.
At present, insurers are allowed to use FRAs, interest-rate swaps, and exchange-traded interest rate futures to hedge interest-rate risks.
Generally, whenever an FRA is
