Nippon Life books its first impairment loss in current bond rout
Nippon Life Insurance booked an impairment loss on its Japanese government bonds, signaling that some of the paper losses on the debt holdings have climbed to levels that require writedowns.Japan’s largest life insurer wrote down ¥70 billion ($440 million) in the year ended March 31, a charge that a company spokesperson said was its first since the Bank of Japan shifted its policy to raising interest rates in March 2024. The market value of some of the bonds it holds fell more than 50% from their acquisition price, indicating little prospect of recovery and meeting the impairment criteria.Nippon Life isn’t alone in suffering from the rise in debt yields to the highest in decades as inflation, rate hikes and concern that the government will spend more to support the economy weigh on sentiment in the JGB market. Unrealized losses on domestic bonds including government debt held by the nation’s four major life insurers swelled to ¥14 trillion at the end of March, a more than 60% increase from a year ago.
