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Japan-Update

Japanese life insurers take hit from BOJ's negative rate policy

Nippon Life's premium income down 16% in fiscal 2016

Yuji Mikasa, an executive at Nippon Life, announces the company's earnings.

TOKYO -- The Bank of Japan's negative interest rate policy dealt a blow to Japanese life insurance companies last fiscal year, with premium income shrinking at 11 out of 15 major players.

Basic profit -- a measure of profitability from core operations -- decreased at seven groups for the year ended in March.

As market interest rates have fallen following the introduction of the negative rate policy in January 2016, life insurers have seen their investment returns suffer. Many have resorted to raising premiums and suspending sales of products promising high returns.

"This was the year when the impact of negative rates started kicking in," Yuji Mikasa, an executive at Nippon Life Insurance, said Thursday, lamenting a harsh business environment.

Nippon Life has added Mitsui Life Insurance and an Australian insurer to its list of subsidiaries. Still, its premium income decreased 16% to 5.23 trillion yen ($46.8 billion), marking the sharpest drop ever of more than 1 trillion yen. Basic profit slid 3% to 685.5 billion yen.

Meiji Yasuda Life Insurance and Dai-ichi Life Holdings managed to increase profits thanks to overseas operations, even though premium income shrank.

Meiji Yasuda's premium income dropped 15% to 2.86 trillion yen. But including a U.S. life insurance subsidiary in its group earnings helped Meiji Yasuda boost basic profit 6% to 496.2 billion yen.

Dai-ichi Life logged 2% growth in basic profit to 588.4 billion yen, buoyed by U.S. operations. Its premium income fell 20% to 4.46 trillion yen.

Sumitomo Life Insurance, meanwhile, enjoyed increases in both premium income and basic profit, which rose 13% and 7%, respectively.

(Nikkei)

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