Japan’s Mighty Insurers Bet on Dollar Staying Strong for Longer

Japanese life insurers dialed back their protection against a rebounding yen to a decade low and may cut those positions further in coming months.

Nine of the nation’s biggest life insurers had 47% of their foreign securities covered with derivatives that help shield them from losses in case the yen strengthens, according to the companies’ earnings reports as of March 31 compiled by Bloomberg. That’s the lowest since September 2011 and compares with a high of 63% in March 2020.

When insurers aren’t hedging, it likely means they are expecting the yen to either weaken further, or even if it ...