Key facts
- Japanese life insurers are increasing real estate investments to secure stable returns amid inflation.
- Meiji Yasuda aims to double its property holdings to $13 billion by 2040.
- Dai-ichi Life, Taiyo Life, and Daido Life have reduced foreign debt.
- Yields on Japan's 30-year government bond have risen above 3.28%.
Japanese life insurers are increasing their real estate investments to secure stable returns amid a prolonged period of inflation and rising domestic bond yields. Meiji Yasuda plans to double its property holdings to $13 billion by 2040. This strategic shift aims to improve investment performance and reduce foreign exchange risk associated with overseas assets.
Yields on Japan's 30-year government bond have surpassed 3.28%, a significant increase for the country where yields have been suppressed by the Bank of Japan's ultra-loose policy for decades. This rise in domestic yields makes local investments more attractive than some international alternatives, especially when considering the cost of hedging dollar exposure.
Consequently, several major life insurers, including Dai-ichi Life, Taiyo Life, and Daido Life, have reduced their foreign debt holdings. This move simplifies their investment processes, improves returns on yen-denominated assets, and lowers earnings volatility from foreign assets. Shares of Dai-ichi Life, Japan's largest listed life insurer, have risen 30% from their April low.