(Re)in Summary
- AAC2026 panellists urged Asian insurers to treat AIR and alternative capital deals as long-term partnerships, choosing reinsurers on track record and expertise, not price alone.
- Private credit is growing in insurer portfolios, but demands disciplined credit selection and pricing that reflects illiquidity.
- AIR is expanding across Asia, with Japanese lifers using it to shed long-tail interest risk, sidecars are drawing insurer capital, and regulators including MAS are stepping up scrutiny.
- Recapture is the key blind spot: insurers may lack the accounting systems to take back non-traditional collateral if a treaty unwinds.
Insurers in Asia should approach alternative capital deals with a long-term partnership mindset, rather than treating collateral and recapture terms as the primary safeguard, panellists said at the Asia Actuarial Conference (AAC) 2026 in Singapore.
The selection of a reinsurance partner is “like a bit of a marriage… You’re in the long run together and you’re partnering on a long-term liability together,” said Helbert Tsang, Capital Solutions Leader for APAC Life and Health at Aon at a panel about innovations in new capital on Thursday (Aug 20).
Insurers looking at asset-intensive reinsurance (AIR) and financial reinsurance (FinRe) will need to consider factors beyond pricing competitiveness and consider it as a whole package, Tsang said.
“We always advise our clients to think about the reinsurer’s profile… what the transaction track record would be. Have they ever transacted in Asia? Do they actually have expertise in terms of writing this type of transactions?”
As the use of asset-intensive reinsurance, private credit and alternative structures grows, insurers are becoming more comfortable engaging in discussions about non-traditional asset classes.
A survey from alternative asset manager KKR showed global insurers holding roughly 28.9% of non-traditional allocations in their portfolios, with 64% of insurance CIOs expecting alternatives to drive overall portfolio returns in future. Insurers are pursuing this for asset-liability matching and to diversify the assets that they own.
“We’re in a market right now where you can either pick the risk you want to invest in or the return you are kind of chasing, and you can’t have both,” said Oh Chin Yu, Director of Credit at KKR during a separate panel on liquidity risks and capital trade-offs. “Private assets and private credit really add to that dimension.”
It is important for alternative private assets and private credit to be part of the pricing conversation, Oh said. But the illiquidity of private assets will impact underwriting and compensating for it means that insurers have to build a “robust underwriting process”.
“It really starts from credit selection… I think having that discipline and rigour and being very, very disciplined on investment selection is, first of all, part of the game here,” Oh said.
Insurers can think of liquidity in how they structure private credit investments, underlying assets, and the cash flows that they’re getting from their positions. “We don’t really see private assets necessarily as completely illiquid assets,” Oh said. “There’s usually a distribution and syndication element to it… so there is a degree of liquidity. These aren’t 100% purely illiquid positions.”
“What we (KKR) really focus on is how we generate that alpha and how we generate that incremental return,” said Oh. “You can do that by trying to create a premium through illiquidity, through additional term and duration, and through complexity, and a combination of the three.”
Rise of AIR
Asset-intensive reinsurance has grown alongside risk-based capital regimes, as insurers seek capital relief, manage risks tied to specific liability blocks, and look for capital to support competitive new business.
“Besides making writing in business more capital efficient… reinsurers can also offer returns in excess of what the insurers are able to generate themselves,” said Tsang.
Japanese insurers have taken to using AIR to hedge long-tail exposure. With some life liabilities extending to 50 or 60 years, AIR helps move long-tail exposures off balance sheets, said Takahiro Kobayashi, senior actuary at Dai-ichi Life.
“So, to reduce those kinds of interest risks, we need alternative solutions,” Kobayashi said.
Asian life insurers are also increasingly interested in setting up sidecars — third-party capital vehicles that sit alongside a reinsurer or insurer’s own balance sheet — as part of their asset allocation strategy, said Vincent Lien, SVP, Corporate Development at RGA.
“We have seen a strategic pivot where life insurers are actively deploying capital into our space from their own balance sheet capital.”
In July 2025, Japan Post Insurance finalised a US$2 billion investment in a Global Atlantic-linked sidecar; Fortitude Re and Carlyle also launched a $700 million Asia-focused sidecar in October last year, targeting Asian life and annuity markets.
Alternative asset management partners are also starting to proliferate in Asia, with Asian life insurers setting up their own captives in Bermuda, said Tsang. “So, while it’s not as prevalent in Asia yet, we are seeing this development.”
Regulators in the region are beginning to take note and increase AIR-specific guidance — with MAS saying at the start of the conference that it will review its reinsurance management framework as AIR develops.
The number one motivation is on policyholder protection, said Tsang, but there’s a varying level of scrutiny across different regulators, who have other factors to consider.
“For example, some regulators may not be as friendly towards capital leaving their markets,” Tsang said. “There are different views around AIR across the different Asian regulators, but I think as this becomes more prevalent, it’s just a matter of education, a matter of time.”
Like a pre-nup
The use of AIR might lead to operational risk on recapture: if a treaty is unwound, insurers must bring the underlying assets back onto their own balance sheet and may lack the accounting infrastructure to book non-traditional holdings such as private equity or private debt, said Kobayashi.
“Recapture risk is a very hot issue for insurance companies,” Kobayashi said. “If we set collateral as very traditional assets like JGB (Japanese Government Bonds) or something, there will be relatively less problem. But if we use non-traditional assets such as private equity or private debt as collateral… we don’t have the accounting system to book those kinds of non-traditional assets.”
To mitigate counterparty risk, insurers are also spending “most of their time and effort” negotiating collateral packages, said Tsang.
“They need to think about what assets they will be recapturing, whether they will have the ability to take control of these assets, and if they are to be liquidated, then how much can actually be realised.”
But recapture and termination clauses shouldn’t be the primary focus at the start of the deal, said Ivo Bloodworth, Head of Solutions, Hong Kong and Singapore for RGA.
“Thinking about this is almost like a pre-nup in some ways,” he said. “We should be thinking that this is going to be a long-term partnership that we’re going to go and work through… If we think too much about termination and recapture clauses, you know sometimes that’s kind of like a sign that the deal may not be that great in the first place, or at least the mindset may not be that great.”
