Bloomberg News

Nippon Life Plans to Invest $5.3 Billion, Mainly in Japan Bonds

October 25, 2011

Oct. 25 (Bloomberg) -- Nippon Life Insurance Co., Japan’s biggest life insurer, plans to invest about 400 billion yen ($5.3 billion) in the fiscal second half, with a focus on buying yen-denominated bonds for stable returns.

Nippon Life, with 47 trillion yen in assets, will focus on Japanese government bonds with longer maturities and corporate debt in the six months ending March 31, said Yosuke Matsunaga, general manager of the finance and investment planning department. The insurer invested 1.3 trillion yen in the fiscal first half, with the majority in yen-denominated bonds, it said.

Nippon Life joins smaller rivals Meiji Yasuda Life Insurance Co. and Sumitomo Life Insurance Co. in betting on the relative safety of fixed-income investments on prospects that global growth will remain weak with Europe’s debt crisis, and a slump in U.S. consumption and employment. Japan’s sovereign bonds earned 2.4 percent in the fiscal first half ended Sept. 30, according to Bank of America Corp.’s Merrill Lynch index. The Nikkei 225 Stock Average slid 11 percent.

“We continue to allocate our money to yen bonds that offer stable returns,” Matsunaga said at a press conference in Tokyo yesterday, outlining the insurer’s fiscal second-half investment plan. “The main focus will be super long-dated bonds, mixing 20-year and 30-year bonds.”

Nippon Life has investments only in Italian sovereign debt among the five debt-burden nations of Portugal, Ireland, Italy, Greece and Spain, said Matsunaga, who declined to give details on the size of investments, citing possible market impact.

Increasing Loans

Among the yen-denominated assets, Nippon Life expects to “slightly” increase loans to companies in the second half, while overseas bonds with currency hedges will probably be unchanged or increase, he said.

Nippon Life said it expects holdings of domestic and overseas equities and foreign bonds without currency hedges to be unchanged or increase. Real estate investments may rise slightly, depending on the availability of deals, he said.

In the fiscal first half ended Sept. 30, Nippon Life boosted investments in Japanese bonds by 640 billion yen, while loans outstanding increased by 110 billion yen, Matsunaga said. Overseas bonds with currency hedges decreased by 170 billion yen, he said.

Foreign bonds without currency hedges increased 180 billion yen, while domestic equity holdings rose 70 billion yen and real estate investments climbed 10 billion yen, he said. Holdings of overseas stocks increased 200 billion yen, including its investments in a unit of Allianz SE.

Following are Nippon Life’s market forecasts for the fiscal second half through March 2012. The ranges refer to where the insurer expects securities to trade during the period.

--With assistance from Shigeki Nozawa in Tokyo. Editors: Andreea Papuc, Linus Chua

To contact the reporters on this story: Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net; Komaki Ito in Tokyo at kito@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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