Life insurers buy foreign bonds at slower pace

Alarmed by the prospect of US interest rate hikes, Japanese life insurance companies are purchasing foreign bonds at a much slower pace and shifting more of their investment focus to real estate and infrastructure.

Japan’s 10 major life insurers are expected to increase their holdings of foreign bonds by JPY2.9 trillion to JPY3 trillion (USD25.9 billion to USD26.8 billion) on a net basis, according to their fiscal 2017 asset management plans shared with The Nikkei. That would be down roughly 70 percent from growth of JPY8.8 trillion in fiscal 2016.

Domestic insurers continue to shy away from Japanese government bonds due to their rock-bottom yields. JGB holdings are forecast to fall by over JPY3 trillion on a net basis. Nippon Life Insurance and some other insurers plan to add more stocks to their portfolios.