How insurers can hedge currency risk when investing in non-euro bonds

European insurers can achieve higher yields and diversification by tapping into international fixed income markets. But accessing these benefits presents challenges, because foreign bonds provide exposure to currencies and interest rates that diverge from the insurer’s home environment. This can generate economic and regulatory balance sheet volatility. Tailored currency hedging allows the investor to manage these risks, such as additional Solvency II capital requirements, and other key sensitivities.