Sumitomo Life Insurance Co said it plans to invest up to several hundreds of billions of yen in foreign corporate bonds for the year starting in April to boost returns, a senior company official told Reuters on February 10.
Japanese insurers are facing mounting pressure to diversify their portfolios to secure better investment returns amid the Bank of Japan's unprecedented monetary policy easing.
Koji Edagawa, manager of structured and corporate bonds at Sumitomo Life, said the insurer's search for assets other than sovereign bonds was likely to accelerate after the BOJ's surprise move to introduce negative interest rates late last month.
"It has become harder to find yen-based investment in Japan.
We need to accelerate our search for other investment opportunities."
He said dollar-based corporate bonds offer higher returns than US Treasuries, whose yields have also been falling.
Sumitomo Life, Japan's fourth-largest private-sector life insurer with about 27 trillion yen ($235.4 billion) in assets, started investing in dollar-denominated corporate bonds in July last year. It has invested about 40-50 billion yen ($348.5-435.6 million) in such bonds so far. Traditionally, the bulk of investments in the portfolios of Japan's life insurers have been made up of Japanese government bonds.
Insurers, however, have been under pressure to find other assets to invest in after yields on JGBs fell sharply following the central bank's massive monetary easing launched in April 2013.
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