SPECIAL REPORT
Special Report: How Have Japanese Life Insurers Coped with Ultra-Low Interest Rates Over Two Decades?

Japanese life insurers have experienced a low interest rate environment since the late 1990s. Over the period, the insurers have coped with increasing pressure on capitalization as they experienced shrinking profit caused by the suppressed conditions in the financial market as well as a stagnated insurance demand. More recently, the Bank of Japan (BOJ) introduced negative interest rates on a certain portion of banks’ reserves it holds and indicated further decreases in rates if necessary. With the recent development in interest rates, the life insurers certainly face a tough environment, which puts immense challenges to their major businesses in the domestic market. While negative rates have never previously been implemented in Japan, it could be compared with the past experiences life insurers went through amid the material decline in interest rates in the 1990s.