Japanese life insurers saw a notable rise in core profits during the first half of 2024, fueled by stronger investment returns and a strategic shift toward Japanese government bonds (JGBs), according to CreditSights.
The insurers’ investment strategies included increased allocations in longer-dated bonds, with Dai-ichi Life raising its JGB holdings by ¥193.5 billion ($1.25 billion) to manage interest rate risks effectively.
Solvency levels remained robust, with the majority of insurers maintaining strong solvency margin ratios (SMRs) and economic solvency ratios (ESRs), ensuring financial stability.
Despite this, premium growth was varied across the sector. While many insurers benefited from the introduction of new products and expansion into international markets, Nippon Life reported a decline in premiums.
Looking ahead, the outlook for fiscal 2024 is positive, with expectations of continued core profit growth. However, potential regulatory changes and market volatility could present challenges to the industry’s performance.
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