Meiji Yasuda Life Insurance has reported a sharp increase in unrealized losses on its Japanese bond holdings, reflecting growing pressure from rising interest rates. The Tokyo-based insurer said paper losses on domestic bonds surged to about ¥1.386 trillion ($9.7 billion) in the fiscal year ending March, up dramatically from ¥161.4 billion the previous year.
The announcement comes just days after Nippon Life Insurance issued a similar warning, highlighting a broader trend among Japanese insurers. Rising interest rates and market volatility have caused significant drops in the value of long-term bond holdings across the industry.
Life insurers in Japan and across Asia are now facing billions of dollars in paper losses. These losses have been worsened by global financial uncertainty, including market reactions to policy moves by U.S. President Donald Trump and ongoing inflation concerns.
Japanese government bonds with the longest maturities have been especially hard hit. Last week, yields on 30-year and 40-year bonds rose to their highest levels since those securities were first introduced. The Bank of Japan has been reducing its massive bond purchases, a shift that has added more pressure to the bond market. Although yields eased slightly on Monday, the broader trend remains upward.
Life insurers are major holders of super-long-term bonds because they need to match their long-term policy obligations. However, in today’s volatile environment, many insurers are hesitant to buy more of these securities.
Analysts warn that insurers may be forced to sell bonds if policyholders begin to cash out in search of better investment returns elsewhere. Companies might also look to replace older, lower-yielding bonds with newer ones offering higher yields, even if that means realizing losses on current holdings.
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