(For table on Japanese insurers' foreign bond holdings, click
By Naomi Tajitsu
TOKYO Nov 26 Japan's biggest life insurers said
on Monday they have only limited exposure to the U.S. subprime
mortgage market, in which turmoil has triggered a global credit
The top nine insurers also said they had no plans to
significantly change their foreign bond investment allocations
despite a surge in the yen to a 2-1/2-year high against the
dollar, which has made overseas investment more attractive.
They said investments in collateralised debt obligations and
products related to U.S. subprime mortgage loans have been
limited, and the impact of credit problems has been small.
"We have zero direct investments in subprime mortgage-related
products," said Yoshinobu Tsutsuji, a managing director at Nippon
Life Insurance, Japan's biggest insurer.
"Some of the funds we invest in deal with subprime-related
products but the amount is very small, and those funds as a whole
are turning a profit."
Most of the nation's top nine insurers increased their
foreign debt holdings in the April-September fiscal first half,
when overseas yields surged, but many said they would stick to a
neutral stance until March despite the yen's rise against the
Japanese life insurers are buy-and-hold investors interested
in absolute yields, and tend to favour longer maturities. The top
nine insurers manage roughly 158.203 trillion yen ($1.459
trillion) in assets on behalf of policyholders, close to the size
of Italy's economy.
They held a total of around 15 trillion yen in foreign debt
as of September, roughly half of which was unhedged. Given such
massive holdings, the insurers are a major force in the currency
NEUTRAL ON FOREIGN BONDS
Many of the top officials at the insurers kept mum on
specific figures relating to their exposure to subprime mortgage
loans, with the exception of firms such as fifth-ranked Mitsui
"One of the securities in which we have an outstanding
balance of 3 billion yen ($27.66 million) comprises some
subprime-related debt," said Yukiteru Yamamoto, executive
managing officer at Mitsui Life, which managed 7.3 trillion yen
in assets on behalf of policy holders as of September.
"The losses on that at the moment are 1.6 billion yen."
Asahi Mutual Life Insurance, ranking No.7, said that of its
6.16 trillion yen in assets it had 500 million yen in
collateralised debt obligations, on which it suffered 300 million
yen in losses by September.
Meanwhile, the insurers said they had not made any big
changes to their foreign bond investment plans to March, even as
persistent weakness in the dollar pushed it to 107.55 yen JPY=
last week, its lowest since June 2005.
Many insurers remain interested in picking up foreign bond
investments, which offer returns that dwarf those on domestic
bond holdings with the Bank of Japan keeping its key interest
rate near zero.
But overseas yields have plummeted since the summer, dimming
the appeal of foreign bonds, and some insurers said they would
wait until further yen strength before considering picking up
Ninth-ranked Fukoku Mutual Life Insurance expects the yen to
resume its downward trend as the financial sector begins to
recover from credit problems and recent volatility, but said
ongoing strength in the currency may prompt foreign bond buying.
(Additional reporting by Hideyuki Sano, Editing by Michael