Major life insurers in Japan are reported to be set to swap low-yield domestic bonds for higher-return issues in the second half of the fiscal year ending March 2026.
A recent Reuters report said ten unnamed domestic life insurers, collectively managing close to JPY 300tn ($2tn) as of March, indicated in interviews that larger players are shifting their yen bond strategies towards rebalancing, anticipating a reduction in total holdings.
For context, Japanese government bond (JGB) yields began to surge in late May following weak results at debt auctions due to declining demand.
Pressure on the JGB market was also attributed to reduced purchases by the Bank of Japan, as well as concerns over potential fiscal deterioration. The rise in yields prompted insurers to take measures to lower the risk of losses and improve portfolio quality by replacing older, lower-yield bonds.
Many insurers have also focused on trimming their domestic equity positions, which had risen to record valuations.