Four major Japanese life insurers reported strong results for the fiscal year ended 31 March 2019, but that asset risk will rise as the four increase their overseas investments, says Moody's Japan K.K.

The four insurers are The Dai-ichi Life Insurance (financial strength rating A1 stable), Meiji Yasuda Life Insurance (financial strength rating A1 stable), Nippon Life Insurance (financial strength rating A1 stable), and Sumitomo Life Insurance (financial strength rating A1 stable).

“Core profit for the four insurers increased 6.2% during the year, as income from their domestic stock and foreign bond holdings offset the impact of ultralow domestic interest rates,” said Mr Soichiro Makimoto, a Moody's vice president and senior analyst. “At the same time, the insurers' growing exposure to foreign assets remains a key source of risk, with foreign bonds and equity holdings rising to 30.4% of total general account assets from 29.2% a year ago, although part of the rise is accounted for by increasing sale of foreign currency-denominated products,” added Mr Makimoto.

Moody's expects the insurers will continue to gradually increase their investments in overseas assets in pursuit of higher yields.

All four insurers also continue to diversify both their product mix and their distribution channels as they adapt to aging demographics and ultra-low domestic interest rates in their domestic market. This shift in product mix should help maintain product margins, while new distribution channels and acquisitions should help drive topline growth.