Nippon Life to increase yen fixed-rate assets in H2

* To boost investment in H2 by 400 billion yen

* Most of increase to be in yen fixed-rate assets

* May also raise hedged, unhedged foreign bond holdings

By Shinichi Saoshiro and Takeshi Yoshiike

TOKYO, Oct 21 (BestGrowthStock) – Japan’s Nippon Life Insurance Co
said it plans to place most of its new investment for the second
half of the fiscal year until March 2011 in yen fixed-rate assets
due to the slow pace of economic recovery.

The country’s largest life insurer by assets managed a total
of 47.1 trillion yen ($580 billion) — roughly the size of
Indonesia’s economy — on behalf of its policy holders at the end
of September 2010. Around 72 percent of that was in yen
fixed-rate assets.

The company plans to increase its assets by 400 billion yen
in the second half, centred on yen fixed-rate assets that include
Japanese government bonds (JGBs) and hedged foreign debt.

“Economic recovery across countries remains subdued and we
will keep yen fixed-rate assets, which offer stable returns, as
our core investments,” Yosuke Matsunaga, general manager of the
firm’s finance and investment planning department, told reporters
on Wednesday.

It classifies currency hedged foreign bonds as yen fixed-rate
assets as they are protected from foreign exchange rate
fluctuations.

The insurer said much of the increase in yen fixed-rate
assets will be in superlong JGBs and corporate bonds. It said it
could increase its hedged foreign bond holdings depending on
exchange rates.

The firm said it boosted its hedged foreign bond holdings by
900 billion yen to 5 trillion yen in the first half through to
September.

It said it would also either keep its unhedged foreign bond
holdings steady in the second half or increase them if conditions
were favourable.

“We may buy more unhedged foreign bonds in the second half if
foreign exchange levels make these assets relatively cheap,”
Matsunaga said in comments that were embargoed until Thursday.

TAKING ADVANTAGE

Taking advantage of the yen’s appreciation, the insurer
lifted its unhedged foreign bond holdings by 380 billion yen to
2.59 trillion yen in the first half.

Nippon Life expects the dollar to move between 75 yen and 95
yen (JPY=: ) and the euro between 100 yen and 120 yen (EURJPY=R: )
through March 2011.

On Thursday the dollar was at 81.12 yen after hitting a
15-year low of 80.84 yen this week. The euro stood at 112.95 yen
after marking a nine-year low below 106 yen in August.

The insurer said it expects the benchmark 10-year JGB yield
(JP10YTN=JBTC: ) to range between 0.7 percent and 1.2 percent
through March 2011.

The 10-year JGB yielded 0.880 percent after hitting a
seven-year trough of 0.820 percent earlier this month.

Nippon Life sees Japan’s Nikkei stock average (.N225: ), which
closed at 9,376 on Thursday, moving between 9,000 and 13,000 in
the second half.

“We have to take a cautious stance towards equities given
uncertain prospects towards the economy. We plan to keep our
foreign and domestic stock holdings unchanged for the second
half,” Matsunaga said.

As of the end of September, Nippon Life held 5.9 trillion yen
in domestic stocks and 860 billion yen in foreign stocks.
(Editing by Joseph Radford)
([email protected]; Reuters Messaging:
[email protected]; +81-3-6441-1774))

Nippon Life to increase yen fixed-rate assets in H2