Japanese life assurance companies are looking to alternative investments such as hedge funds to boost their returns. They have traditionally put the bulk of their assets – which are worth Yen 180 trillion ($1.68 trillion) – into JGBs, domestic equities and foreign bonds. Targets include asset-backed on bonds as well as hedge funds.
Japan’s life insurance industry, the world’s biggest behind the United States, has seen seven business failures since 1997. The top insurers have cut their equities portfolios by Yen 9 trillion to around Yen 16 trillion over the past four years.
Falls in stocks and low yields on Japanese bonds have left most with a big gap between their returns and guaranteed payouts to policyholders that average around 1.5 percent.