* Plans to curb investment in JGBs amid low yields
* Plans to expand foreign bonds and other debt instruments
(Adds official's comments and detail)
By Taiga Uranaka
TOKYO, April 25 Sumitomo Life Insurance Co
plans to buy more of riskier but higher-return assets
including aircraft finance loans, as yields on Japanese
government bonds (JGBs) remain too low to meet promises to
insurance policy holders.
"Our investment theme this financial year is to take
appropriate risks and achieve solid returns," Iwao Matsumoto,
general manager for the insurer's investment planning, told
reporters at its investment strategy briefing on Tuesday.
For this fiscal year starting in April, Sumitomo Life plans
to increase holdings of foreign bonds with currency hedges,
while curbing investment in super-long JGBs.
Matsumoto said his company would consider buying 30-year
JGBs if their yields rise beyond 1 percent. Yields on 30-year
JGBs were moving at around 0.775 percent on
Sumitomo Life is Japan's fourth-largest private-sector life
insurer with about 30 trillion yen ($272.4 billion) in assets.
With more than $3.3 trillion in their investment
portfolios, Japanese life insurers are among the country's
biggest institutional investors. Market watchers pay attention
to how top insurers allocate money in their biannual investment
Following the Bank of Japan's massive stimulus measures
launched in 2013, life insurers have effectively stopped buying
JGBs, which had made up for the bulk of their investment.
Sumitomo Life and rival Japanese life insurers have been
shifting into foreign assets, where the biggest challenge is how
to secure enough returns even after paying for costs to hedge
against the negative impact of currency swings.
Matsumoto said his company plans to expand investment in
credit instruments, such as bank loan funds, aircraft finance
loans and project finance, which generate big enough returns
after deducting currency hedging costs.
Sumitomo Life would consider buying foreign bonds without
currency hedging when the dollar falls below 110 yen, Matsumoto
said. It expects the greenback to eventually be on a rising
trend against the yen on the back of an increasing interest rate
gap between the two countries.
Without hedging, foreign bond investments are subject to
currency moves but insurers stand to gain if the dollar rises,
as it pushes up the value of the investment when repatriated
home and converted to yen.
($1 = 110.1200 yen)
(Reporting by Taiga Uranaka; Editing by Chris Gallagher and