Dai-Ichi Life loses 140 billion yen from selling long bonds

Dai-Ichi Life loses 140 billion yen from selling long bonds


(Bloomberg) — Dai-ichi Life Insurance Co. lost about ¥140 billion ($890 million) in selling bonds with longer maturities to prepare for higher interest rates.

The insurer sold about ¥500 billion of Japanese government notes, mainly 20- to 40-year bonds, in the first half of the fiscal year ending in September. Company President Toshiaki Sumino said in an interview that sales were concentrated in the first half of the fiscal year and would be “more controlled” in the second half.

“We will continue to undertake replacement work, paying close attention to the impact on profit and loss for the next financial year and beyond,” Sumino said. “I don’t think this loss will have any impact on our financial strength,” he said. Dai-Ichi holds 18.9 trillion yen in yen-denominated bonds.

Sumino expects the Bank of Japan to raise rates this month as the country’s economy continues its recovery. The policy board led by Governor Kazuo Ueda opted to leave rates unchanged in December as it waited to assess the actions of US President-elect Donald Trump, who will take office this month.

Sumino was in the US during Trump’s first term and expects both positive and negative aspects from the incoming administration. He is also concerned about signs of polarization between strong and weak companies, as some major Japanese companies have begun to report significant declines in profits.

“I have some doubts about whether we can maintain an inflation rate of 2%,” Sumino said. For this reason, he expects the upper bound to be around 2.5% for a 30-year bond and 1.5% for a 10-year bond.

Sumino, who will take over as chairman in April 2023, has focused on boosting sales after the company was hit by a scandal involving a former sales employee in 2020. In the first half of fiscal 2024, annual premium from new contracts was 55.9 billion yen. , 2.5 times more than the same period last year. This was the highest level since the first half of 2016.

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