With a new regulatory regime in the making, the lifers’ relatively high allocation to domestic equity will incur a higher cost, and selling off can be either boom or bust.
As interest rates have started to move, the larger Japanese life insurers consider either unhedged US investments, or aiming for the eurozone.
Domestic agencies tend to rate domestic firms more favourably than their foreign peers, but the difference is particularly striking in China.
The country insurers' offshore asset allocations will likely remain much lower than the regulatory limit of 15% this year, despite their need to locate higher levels of return.
Moody’s and Fitch Ratings say that emerging market defaults are increasingly likely to hit record highs, with Asia-Pacific corporates looking particularly vulnerable.
Japanese life insurers are well-suited to weather long-term global turbulence as the coronavirus spreads, but certain investment strategies might turn sour, say rating agencies.
Korean securities companies will continue to supply domestic asset owners with new overseas alternative investments, but they are taking increasingly higher risks in the process.
Although new themes are emerging in portfolios, the overall risk approach remains fairly conservative, ratings agencies tell AsianInvestor.
The rating agency is appealing against sanctions imposed by the Hong Kong regulator for a negative report on Chinese companies. If the decision is upheld, price discovery will suffer.
Issuance in Formosa bonds has crashed following regulatory changes, but insurers still desperately need higher-yielding products to meet their obligations to policy holders.
Rating agency Moody’s says offshore renminbi bonds will be marginalised by the imminent China-Hong Kong trading link. Andy Seaman of Stratton Street Capital disagrees.
The only real surprise about Moody’s cut in China’s rating was the timing. But some see the move yesterday as a signal of doubt that may stall the opening of mainland bond markets.