TABLE-Japan life insurers to tiptoe back to foreign bonds

Thu Apr 25, 2013 5:46am EDT

TOKYO, April 25 (Reuters) - Japan's life insurers signalled they may boost their net buying
of foreign bonds without currency hedges to the highest level since the global financial crisis
five years ago, which could drive down both overseas bond yields and the yen.
    Below is a summary of the investment plans of Japan's biggest life insurance companies for
the financial year to March 2014, as obtained by Reuters in interviews and at news conferences
this month. 
         
 FOREIGN BONDS   
----------------------------------------------------------------------------------------  
 Nippon Life    to raise hedged/unhedged foreign bonds if Japan rates stay low
 Dai-ichi       to keep holding steady but will be flexible 
 Meiji Yasuda   to increase by almost 500 billion yen, most with currency hedging
 Sumitomo       to consider unhedged investment in foreign bonds, may increase foreign bonds 
 Taiyo          to increase holdings but no explicit plan to reduce currency hedging 
 Daido          to increase holdings but did not tell how much. It added 120 billion worth
foreign bonds last fiscal year ended March 2013  
 Fukoku         to think about purchasing foreign bonds now that risks of yen appreciation have
faded but waiting for domestic conditions to settle down
 Asahi          steady, but may buy foreign bonds at dip, may cut hedging ratio a bit more if
further yen weakness looks certain
 Mitsui         to increase bond investment by 50-60 billion yen, including foreign bonds, but
has no plans for major allocation shift  
         
 JAPAN BONDS  
 -----------------------------------------------------------------------------------------  
 Nippon Life    to slow pace of increase in buying  
 Dai-ichi       its stance will depend on level of bond yields 
 Meiji Yasuda   to increase holdings, but cautious on timings
 Sumitomo       to increase holdings but also to wait until yields rise 
 Daido          to continue purchases, mostly 20-year debt but also such long-term debt as
15-year debt and 30-year debt
 Fukoku         to invest around 140 billion yen in FY 
 Taiyo          to take a cautious stance 
 Asahi          to raise holding around Y150 bln in yen bonds, but may slow buying if yields
continue to stay low 
 Mitsui         to increase overall bond investment by 50-60 billion yen, including yen bonds,
and will slow pace of purchase of long-term bonds
     
 JAPAN STOCKS  
 ---------------------------------------------------------------------------------------- 
 Nippon Life    to keep holdings steady or may reduce
 Dai-ichi       to trim holdings 
 Meiji Yasuda   to cut holdings 
 Sumitomo       to maintain holdings 
 Daido          to keep combined holdings of domestic and foreign stocks steady at 5 percent of
total assets
 Fukoku         keep holdings steady 
 Taiyo          to keep holdings steady, no rebalancing sales planned
 Asahi          to reduce holdings further 
 Mitsui         no plan to increase holdings 
                     
 FOREIGN SHARES, ALTERNATIVE INVESTMENTS  
 ----------------------------------------------------------------------------------------  
 Nippon Life    to keep holdings steady or may reduce
 Dai-ichi       to increase holdings in foreign shares, especially in emerging economies 
 Meiji Yasuda   to increase investment in emerging market shares, but cut alternative assets and
properties
 Sumitomo       to take a cautious stance on foreign stocks  
 Daido          to keep combined holdings of domestic and foreign stocks steady                 
at 5 percent of total assets
 Fukoku         n/a 
 Taiyo          n/a 
 Asahi          to keep holdings in hedge funds steady 
 Mitsui         n/a 
   
 EXPECTED MARKET RANGES 
 -------------------------------------------------------------------------------  
                  Dollar/yen   Euro/yen        NIKKEI      JGB 10-yr    US 10-yr 
 Nippon Life     Y93 - 103     Y117 - 137   10,500 - 15,500  0.3 - 0.9%   n/a 
 Dai-ichi        Y95 - 115     Y120 - 145   12,500 - 16,000  0.3 - 0.7%   1.5 - 3.0%  
 Meiji Yasuda    Y85 - 105     Y110 - 135    9,000 - 14,000  0.3 - 0.8%   1.5 -2.5% 
 Sumitomo        Y88 - 115     Y108 - 145   10,800 - 15,800  0.2 - 1.0%   1.5  - 2.75%  
 Daido           Y90 -  120    Y105 - 145   11,000 - 16,000  0.30 - 0.70%  1.40  - 2.80% 
 Fukoku          Y90 -  110    Y110 - 140   12,000 - 15,000  0.4 - 0.9%   1.5  - 2.8% 
 Taiyo           Y90 -  110    Y110 - 140   11,000 - 15,000  0.3 - 0.8%   1.5  - 2.5%         
 Asahi           Y90 - 110     Y112 - 143   11,000 - 14,500  0.3 - 0.9%   1.5  - 2.6% 
 Mitsui          Y90 - 105     Y120 - 135   11,500 - 15,000  0.4 - 0.8%   n/a
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