Core Viewpoint - Japanese life insurance companies are reducing their yen appreciation hedging efforts to the lowest level in 14 years, indicating a weakening expectation for the yen to strengthen continuously [1][4]. Group 1: Hedging Trends - As of the end of March, the nine major Japanese life insurance companies decreased their yen bullish hedging ratio from 45.2% six months ago to 44.4% [1]. - The continuous decline in hedging ratios over the past three years suggests that life insurance companies believe the likelihood of the yen returning to historical strength is low [4]. Group 2: Economic Factors - The Bank of Japan's policy interest rate remains 3 percentage points lower than domestic inflation, with the next rate hike likely to be further delayed [1][4]. - The market currently anticipates a 72% probability of a 25 basis point rate hike by the end of the year, down from a 27% probability for a 50 basis point hike earlier in January [4]. Group 3: Foreign Investment and Risks - Life insurance companies have net sold 756 billion yen of foreign bonds over the past six months, marking the seventh consecutive fiscal year of net selling [6]. - There is a potential risk associated with unhedged positions, as a depreciation of foreign currencies could completely offset capital gains and income from overseas assets, prompting life insurance companies to increase foreign exchange hedging urgently [4].