Major Japanese insurer looking to make acquisitions in the US

Firm to cut down on investing in its home market’s government bonds due to negative interest rate and low yield

Major Japanese insurer looking to make acquisitions in the US

Insurance News

By Gabriel Olano

The president of Nippon Life Insurance Company (NLI) has said that his company is looking to make acquisitions abroad, especially life insurers and asset management companies in the United States.
NLI president Yoshinobu Tsutsui said that the US has a wide range of firms with strong growth prospects. He added that asset management companies are having an increased role amid lowered interest rates worldwide. This suggests that Nippon Life may prioritize buying asset management firms over life insurance companies. He also hinted about doing business in Europe and other markets.
Meanwhile, Tsutsui revealed that Nippon Life will stop investing in Japanese government bonds (JGB).
“We can’t invest in Japanese government bonds on a sustainable basis unless they offer yields of at least about 1 percent,” he told The Japan Times.
The insurer has been cutting back on investing in JGBs due to lower returns caused by the Bank of Japan’s negative interest rate policy.
JGBs have a long life until maturity and have been a traditional investment vehicle for life insurers in Japan. However, many companies have reduced JGB investments due to returns have fallen below 1%.
Instead, Tsutsui mentioned that NLI would shift focus to investing in US Treasury bonds. These bonds’ yields are rising due to investor hopes regarding the economic policies of incoming US President Donald Trump.

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Moody’s downgrades Japan life insurance industry outlook to negative
Japanese and Chinese insurers emerge as major players in M&A arena
Insurance industry needs to rethink expansion plans

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