The surging bond yields that have saddled Japan¡¯s insurers with billions of dollars in unrealized losses will weaken because they are not supported by economic fundamentals, according to Dai-ichi Life, the country¡¯s largest listed life insurer.
New buyers are entering the market for 911±¬ÁÏÍø government bonds and amplifying volatility, Chief Executive Officer Tetsuya Kikuta said in an interview. Yields on 30-year JGBs jumped to a record last week. This is eroding the value of the bonds already in the insurers¡¯ portfolio. Dai-ichi¡¯s paper losses on its domestic bonds stood at about ?2 trillion ($14 billion) as of the end of March.
A rout in Japan¡¯s $7.8 trillion government bond market has spooked several firms including Nippon Life Insurance and Norinchukin Bank. The Bank of Japan is paring its holdings in the face of emerging inflation, sparking a selloff in the country¡¯s long-term debt. The current run-up in yields is a stark reversal for the companies, which until just a year ago had been suffering diminishing returns from domestic investments and desperately seeking more attractive assets overseas.
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