South Korea’s four major life insurers reduced their government and public bond holdings by 13.8633 trillion won ($10.4 billion) from the end of last year to 151.3175 trillion won at the end of June. Their combined equity holdings more than doubled to 189.9461 trillion won from 81.594 trillion won, following a stock-market rally that began in the second half of last year. The Financial Services Commission eased insurance investment rules in April, including lower risk coefficients for the National Growth Fund, venture capital, renewable energy and artificial-intelligence infrastructure, with the changes expected to channel 24.2 trillion won into corporate financing. The retreat from bonds is unusual because life insurers have traditionally been anchor buyers of long-term government debt to match liabilities from products such as annuities and death benefits. Their duration gaps turned positive across the board in the second quarter, meaning further rate increases could pressure K-ICS solvency ratios and force sales of ultra-long bonds. The 10-year government yield rose to 4.36% from 3.385% at the end of last year, while the 30-year yield increased 1.37 percentage points. Heavy fiscal issuance and weaker insurer demand are contributing to a bear-steepening bond market, raising concerns about higher government, corporate and household borrowing costs.