Core Insights - Meiji Yasuda Life Insurance Company reported a significant increase in unrealized losses on domestic bonds, rising over eightfold from 161.4 billion yen to approximately 1.386 trillion yen (about 9.7 billion USD) as of the end of March this year [1] - Other major Japanese life insurance companies, including Nippon Life and Sumitomo Life, also reported substantial unrealized losses, with Nippon Life's losses reaching 3.6 trillion yen (doubling year-on-year) and Sumitomo Life's losses increasing over twofold to 1.518 trillion yen [3] - The total unrealized losses for Japan's four largest life insurance companies amounted to 8.5 trillion yen (approximately 60 billion USD), marking a threefold increase year-on-year [3] Industry Overview - The unrealized losses reported by these insurance companies do not reflect actual losses, as they typically hold bonds until maturity [4] - Japanese life insurance companies are major buyers of ultra-long-term bonds, holding significant amounts of 30-year and 40-year Japanese government bonds to match long-term policy payout needs [4] - Recent declines in long-term Japanese government bonds have led to a surge in unrealized losses for insurance companies, exacerbated by market volatility triggered by U.S. policies and rising inflation [4] - The Bank of Japan's reduction in large-scale bond purchases and the reluctance of life insurance companies to buy bonds in a turbulent market have contributed to a sharp drop in ultra-long-term bond prices, with yields on 30-year and 40-year bonds reaching historical highs [4] - Rising interest rates may force insurance companies to sell bonds, as higher rates could decrease the attractiveness of insurance policies, prompting customers to shift funds to higher-yielding investments [4] - The potential for further bond sales by insurance giants to free up cash for higher-yielding new bonds could lead to additional bond depreciation and greater unrealized losses if interest rates continue to rise [4]