Japan's Nippon Life Insurance has reserved ¥40bn ($360m) for new commitments to infrastructure equity funds.
The insurer, together with its subsidiaries Nippon Life Global Investors Americas and Nippon Life Global Investors Europe, will target investments in utilities (such as power and water), transports (such as airports, roads and ports) and social infrastructure (such as schools and hospitals). It will do so through its own fund selection platform –a first for a Japanese life insurer, the company said.
In its previously announced plan for 2015-2017, Nippon Life said it would invest a maximum of ¥1trn in emerging investment areas such as infrastructure, the environment and emerging markets.
"Infrastructure, with its public nature and longevity, is viewed as a good match with a life insurance company's investment portfolio," the insurer said. "Furthermore, Nippon Life views infrastructure as an asset class with significant growth potential due to the strong demand for repairing existing infrastructure and the increasing need for utilising private capital as a consequence of the tight fiscal situation in the public sector. Nippon Life intends to further accelerate its investments in infrastructure going forward in both the domestic and overseas markets."
The insurer has about ¥62trn ($560bn) in total assets. In its financial results for the nine months ending 31 December 2015, Nippon Life said its investment income amounted to ¥1.12bn, compared to ¥1.31bn the previous year.
Some 80% of the ¥614bn general account portfolio is in securities, of which 26% in foreign securities. According to the Wall Street Journal, Nippon Life's investment in foreign securities is above the industry average of 20%.
In addition to its asset management operations in Asia at Nissay Asset Management Corporation and Singapore-based investment advisory group Nippon Life Global Investors, the insurer has asset management companies in the US (Post Advisory Group and PanAgora Asset Management), and India (Reliance Capital Asset Management), in which it invested in the last fiscal year.
Separately, Nippon Life has just issued ¥100bn worth of yen-denominated subordinated notes, to be settled by 27 April.