Japan Special: Insurers search for yield

Japanese insurers are broadening their hunt for yield and pushing into more offshore private equity.

With a population of almost 130 million, Japan is one of the world’s largest life insurance markets. Assets in the industry reached about ¥381.3 trillion ($3.4 trillion; €3 trillion) as of fiscal year 2017, growing about ¥10 trillion annually since 2013, according to the latest data from The Life Insurance Association of Japan.

Japan Post Insurance started its alternatives programme in 2017 and has made a ¥30 billion anchor commitment to Japan Post Investment Corporation. JPI wants to deploy as much as 1.5 percent of its total assets under management – about $10 billion – in private equity, real estate, infrastructure and hedge funds by 2020 and has invested about a third of its target in alternatives to date.

Nippon Life Insurance’s private equity fund commitments, meanwhile, can be traced back to the late 1990s, according to PEI data. The ¥67.1 trillion insurer has made capital commitments to funds managed by TPG, Apax Partners, 3i Group, Bridgepoint and Palatine Private Equity.

Dai-ichi Life Insurance Company, with ¥38.1 trillion of assets, has been an active investor in European private equity. It has backed Carlyle’s Europe fund, Swedish firm EQT’s seventh flagship fund and third infrastructure fund and Montagu Private Equity’s fifth fund. Daido Life Insurance, which has a ¥66.9 trillion pool of capital, has in recent years invested in Alternative Investment Capital’s third fund, Rising Japan Equity’s second fund and CEJ Capital’s debut cyber excellence fund.