Nippon Life scouts for bonds, alternative funds

Japan’s Nippon Life Insurance Co, which recently struck a deal with US investment firm TCW Group, is scouting for opportunities to buy boutique managers of bonds and alternative assets, its president said.

“Asset management is a business that can generate synergy with life insurance and it needs to be operated globally. We have been looking widely for potential partners,” Yoshinobu Tsutsui told Reuters in an interview.

Japan’s insurers are increasingly shifting money away from Japanese government bonds (JGBs), their main investment, into riskier but higher-yielding ones such as foreign corporate bonds to diversify their returns.

Insurers in Japan have been hurt by diminishing investment returns after the Bank of Japan launched aggressive monetary easing in April 2013.

Tsutsui said potential targets are likely to be asset management companies with bond investment expertise, as the insurer’s portfolio has been traditionally made up of fixed-income products.

He also said the company is looking for specialists in alternative investments, whose real estate and other portfolios offer diversification from conventional bond and stock investments.