Japanese life insurers to continue raising foreign bond investments

June 8 2015 by InsuranceAsia News Staff

Fitch Ratings expects Japanese life insurers to continue increasing their allocations to high-grade foreign bond investments as domestic bond yields remain lacklustre.

In a statement, the rating agency said the shift to foreign bond investment will likely increase the investment income of Japanese life insurers.

However, Fitch stressed that adding more foreign bonds into their investment portfolio also increases the exposure of Japanese life insurers to foreign currency risk.

In the statement Fitch Ratings said overseas operations of Japanese life insurers will become more important drivers of growth although it emphasised that underwriting profits will remain flat over the next few years.

Additionally, Fitch said that if the current favourable conditions in the financial markets are maintained for some time, the capital adequacy of Japanese life insurers is likely to improve further.

MORE FROM: Asset Management