Japan's life insurance market 'blueprint' for managing low interest rates

Written by Adam Cadle

21/08/2020

The Japanese life insurance market is a "blueprint" for managing low interest rates, Fitch Ratings has said.

The ratings agency stated "Japan's life insurance market provides insight into the future of insurers elsewhere" as they have been faced with ultra-low interest rates "for much longer than their global peers".

"Japan's early 1990s stock market and real estate crashes contributed to the failure of several large Japanese insurers in the late 1990s and early 2000s. In most cases, their liabilities were restructured after being seized by Japan's insurance regulator and the insurers were acquired, often by foreign companies.

"Interest rates were pushed down by the Bank of Japan in response to the economic stagnation that began in the early 1990s, and have remained low ever since. Japanese life insurers have adopted various product, investment and business strategies to mitigate the effects, while generally maintaining their credit ratings."

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