Meiji Yasuda's bond paper losses jump eightfold as rates climb
Meiji Yasuda Life Insurance said unrealized losses on its domestic bond holdings increased more than eightfold in the last fiscal year, in the latest sign of how rising interest rates are weighing on the portfolios of Japanese insurers.
Paper losses on Japanese bonds held by the Tokyo-based company expanded to about ¥1.386 trillion ($9.7 billion) in the year ended March, compared with ¥161.4 billion a year earlier, it said in a statement Monday. It followed a similar announcement last week by Nippon Life Insurance.
Life insurers across Asia are facing billions of dollars in paper losses from the market rout sparked by reactions to U.S. President Donald Trump's policies. Long-term Japanese debt has been sold off as the central bank pares its holdings in the face of accelerating inflation.
Japan's longest-tenure bonds tumbled last week as the central bank scaled back huge bond purchases and life insurers remain reluctant to buy the notes in a volatile market. Yields on 30-year and 40-year government bonds rose to their highest since they were first sold, though they've pulled back on Monday. Insurers are big investors in super-long debt because they need to match their long-term liabilities from insurance policies.
The insurers may also need to sell bonds if rising interest rates prompt investors to cancel insurance policies to put their cash in assets with better returns. The companies may also unload lower-yielding debt to park their funds in bonds with higher yields.
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