April 24, 2018 / 5:45 AM / 3 months ago

Japan's Mitsui Sumitomo Insurance to mainly invest in foreign credit products this FY

TOKYO (Reuters) - Japan’s Mitsui Sumitomo Insurance Co [MITSID.UL] plans to mainly invest in foreign credit products for this fiscal year, a senior company executive said on Tuesday.

The main arm of MS&AD Insurance Group Holdings (8725.T) will invest about 30 billion yen ($275.81 million) in U.S. credit products in particular for the financial year ending March 2019, Tomonori Mano, manager of the investment planning department at Mitsui Sumitomo, told Reuters in an interview.

“Since this is the beginning of our mid-term business year, we want to establish a solid investment plan, and start managing foreign credit products and monitoring their performances,” Mano said.

The insurer, which had 6.7 trillion yen in total assets as of March 2018, does not plan to increase investment in foreign government bonds and foreign stocks this fiscal year, after investing about 25 billion yen and 20 billion yen, respectively, in the previous year.

“Foreign stock prices have risen sharply. We are not expecting them to keep rising, so we will be taking profits gradually,” Mano said.

The insurer plans to invest 100 billion yen in domestic corporate bonds this fiscal year, the same amount it invested last fiscal year. The total asset in this category will stay the same as most of them will be redeemed.

Mitsui plans to invest in 10-20 billion yen in domestic bonds this year but the total balance has been decreasing. It added that it will cut its investment in super-long bonds due to falling demand in long-term insurance products.

Mitsui Sumitomo Insurance plans to continue cutting holdings of domestic stocks as it is now in the second year for MS&AD Insurance Group Holdings’ five-year plan to reduce such exposure by a total of 500 billion yen.

Many Japanese insurers have been slowly unwinding their cross-holdings of shares, recognizing the risk they pose to their financial health.

The insurer expects the 10-year Japanese government bond yield JP10YTN=JBTC to trade between minus 0.05 and 0.1 percent for this fiscal year.

It also expects the dollar to trade between 105 and 112 yen.

($1 = 108.7700 yen)

Writing by Ayai Tomisawa; Editing by Sam Holmes

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