Japan Insurers Cut Hedging by Most in Decade Amid Weak Yen (1)

Japanese life insurers have cut currency hedging by the most in more than a decade, signaling receding concern of a rebound in the yen that would wipe out returns from overseas assets.

Derivatives including forwards, swaps and put options protected 47.8% of foreign securities held by life insurers at the end of September, down from 52.7% six months ago. The drop of nearly five percentage points in this hedge ratio is the biggest since at least 2011, based on earnings reports from nine of the nation’s largest life insurers compiled by Bloomberg.

The life insurers’ holdings of overseas assets rose ...