Tokyo, Oct 15: Japan’s life insurers plan to keep pouring funds into higher-yielding foreign bonds in the second half of this business year, but their investments could be less aggressive due to the uptrend in domestic yields. Japan’s 10 biggest life insurers plan to pump at least 700 bn yen ($6.4 bn) into foreign bonds in the second half of the financial year that began on October 1, officials from the insurance firms said. About half of the investment will be unhedged against currency exposure as the yen, already around three-year highs against the dollar, is expected to strengthen further.

In the first half of the year to September 30, the insurers together boosted foreign bond holdings by more than 2 trn yen, outstripping their initial full-year plans for 1.5 trn yen. They plan to allocate far less new money to Japanese government bonds (JGBs) in the second half, and will also trim domestic stockholdings even further.
Total new investment in yen bonds is likely to be flat after purchases of about 1trn yen in the first half. Insurers are increasingly interested in domestic bonds that carry higher risks but yield more than JGBs. Mitsui Mutual Life Insurance Co plans to keep dumping low-yielding JGBs after reducing its holdings by 100 bn yen in the first half to seek higher returns elsewhere. Bureau Report