FACTBOX-Three Japanese Life Insurer Portfolio Investment Plans for Fiscal Year 2021/22
TOKYO, April 22 (Reuters) – Dai-ichi Life and Sumitomo Life plan to increase their investments in domestic bonds in the current fiscal year through March, officials said on Thursday.
Here is a summary of the portfolio investment plans of three Japanese life insurance companies, closely watched due to their impact on global bond markets.
– Plans to increase yen bond holdings to reduce mismatches between its long-term yen assets and liabilities.
– Also plans to reduce holdings of Japanese stocks.
– The measures are aimed at risk management before the new solvency regulations to be implemented in 2025.
– Its position in foreign bonds depends on market levels.
– Expects the prices of risky assets to rise until 2022, as the United States is expected to maintain an expansive fiscal policy ahead of the midterm elections.
– sees the risk that a rise in inflation will trigger discussions on reducing the Federal Reserve’s quantitative easing and disrupt financial markets.
– But the impact could be lower than in the “taper tantrum” in 2013, said Akifumi Kai, general manager of investment planning.
– “The Fed had an experience, perhaps bitter, in 2013, so we think any shrinkage will be through dialogue with the markets. Also with regards to the currency market, we had a big rally in the yen in 2013, but today short positions in the yen are not as extended. So we see less impact. “
– Targets full ESG integration by FY2023 / 24. Broadens the use of ESG indices for its benchmark.
THE LIFE OF SUMITOMO
– Plans to increase yen bond holdings, consider the use of interest rate swaps.
– Expects the holding of its foreign currency hedged bonds to drop to around 100 billion yen due to a large amount of repayment expected this year.
– It will continue to buy corporate bonds, mainly high quality products in the United States and Europe, while limiting investments in low yielding sovereign debt.
– Plans to increase the holdings of foreign bonds without currency hedging. “We expect the US dollar to strengthen as the US economy recovers strongly,” said Toshio Fujimura, general manager of investment planning.
– Seeks to increase holdings in national and foreign stocks.
– In the previous fiscal year which ended on March 31, the company increased the holdings of yen bonds by 640 billion yen and those of foreign bonds by 960 billion yen, anticipating some of its purchases planned for this year
– Extends ESG investment to all assets. Expands negative testing to manufacturers of inhuman weapons.
THE LIFE OF TAIYO
– Does not plan to radically change its asset allocation, including yen bonds and foreign bonds. In the previous fiscal year, the company increased the holding of yen assets by 140 billion yen.
– “Yen bonds would become a little attractive if the 20-year JGB yield was around 0.5%,” said Takahiro Honda, general manager of investment planning.
– Within foreign bonds, the company plans to limit investment in US Treasuries while continuing to purchase government guaranteed mortgages and investment grade corporate bonds.
– Can buy domestic and foreign stocks when prices fall. Seeks to increase alternative assets by around 20 billion yen, including private equity and private debt.
– Plans to increase ESG investments by 20 billion yen.
Reporting by Hideyuki Sano, Tomo Uetake and Mariko Sakaguchi; Editing by Shailesh Kuber