Nippon Life aims to invest in ESG bonds

21 March 2017   Category: News, Asia, Global, Japan   By Asia Asset Management

Nippon Life Insurance (Nippon Life), one of the largest life insurers in Japan, has pledged to commit itself to environmental, social, and governance (ESG) investing with plans to invest around 200 billion yen (US$1.78 billion) in ESG bonds through its next four fiscal years.  

Nippon Life outlined its aims in its mid-term management plan last week (March 17). The company intends to secure long-term investment yield and strengthen its risk-response capabilities through globally diversifying investments in the four fiscal years ending in March 31, 2021. It is looking to further enhance ESG investments and finance through initiatives that are in line with the United Nations Principles for Responsible Investment.   

The insurance company says it will commit as much as 1.5 trillion yen to growing sectors, which will include the previously mentioned 200 billion yen in ESG bonds, until the fiscal year ending March 31, 2021.

Janet Li, director, investments, Greater China at Willis Towers Watson, tells Asia Asset Management that she is not surprised to see Nippon Life being engaged in ESG investing as Japanese institutional investors have been at the forefront of this in Asia.

“We’ve seen the country’s largest pension, the GPIF (Government Pension Investment Fund), set up a Stewardship & ESG division [last year]. Many fellow private institutions such as insurance companies have been following [suit] to put more emphasis on ESG mandates. That said, apart from investing in ESG bonds, there are many ways to incorporate ESG elements in their portfolios such as setting up ESG stewardship codes,” Ms. Li says.

Meanwhile, Nippon Life is targeting to achieve net income of 70 billion yen by the end of the 2020 fiscal year, from 26.3 billion yen between April and December, 2016.

The company is also aiming for an 8% growth in annualised premiums in force and to reach 14 million policyholders at the end of the 2020 fiscal year, up from 5.3% and 11.74 million as of December 31, 2016.

“Based on the achievements under the current three-year plan (ending March 31, 2017), the company will accelerate growth of existing businesses and M&A (mergers and acquisitions) in order to make progress on its global profit diversification,” the company says in its management plan.

According to Insurance Asia News, Nippon Life is planning to spend roughly 500 billion yen on M&A in the next four years beginning fiscal 2017.