Dai-ichi Life Insurance and Nippon Life Insurance have confirmed with Nikkei Asia that they are taking a more cautious approach to investing in US Treasurys, opting instead to increase their holdings of Japanese government bonds (JGBs).
It’s widely expected that the Bank of Japan will begin to tighten its monetary policy. Japan’s Financial Services Agency has also said that market risk is the biggest risk for insurers. Within this context, a strengthening yen and hedging costs are key concerns for Japanese insurers, so they are adopting a more conservative approach with their investments.
Ten leading life insurers announced plans to invest in bonds last month, so the confirmation from Dai-ichi Life and Nippon Life comes as no surprise. However, it does provide evidence the shift to safer havens is coming to fruition and demonstrates an increased appetite for JGBs.