Japan’s four largest life insurance companies (Nippon Life, Dai-ichi Life, Sumitomo Life and Meiji Yasuda Life) are holding a record 96 billion dollars in unrealized losses on domestic bonds, totaling 15.13 trillion yen, up 7 percent in just one quarter. These losses stem from rising Japanese government bond yields since the Bank of Japan ended its negative interest rate policy in March 2024. In two years, these unrealized losses have tripled: they rose from approximately 67 billion dollars in mid-2025 to 86 billion dollars by end of 2025, then to 96 billion dollars in June 2026. The scenario feared by regulators is a wave of simultaneous policyholder withdrawals, which would force insurers to sell bonds on the market and convert these unrealized losses into real ones. Japan’s Financial Services Agency has accelerated its reviews of insurers’ balance sheets, signaling it is preparing for a scenario where the situation could worsen before it improves.
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