TOKYO -- The Japanese postal life insurance system, Kampo, planned an increase of almost 50% in its indirect investment in equities for the year ended March 31.
Figures on the actual investment are not yet available, but Kampo's investment plan for the 12-month period ended March 31 had it adding 2.5 trillion yen ($21 billion) to an outstanding balance of 5.17 trillion yen in lending to the Postal Life Insurance Welfare Corp. -- the system's vehicle for equities investment via trust accounts.
Kampo's assets are categorized as surplus and reserve. Surplus funds are set aside from premium payments during its fiscal year, and are on deposit with the Trust Fund Bureau of the Ministry of Finance. Following the fiscal year-end settlement, surplus funds are transferred to the reserve fund category for management by the Ministry of Post and Telecommunications. Kampo's assets are managed in three ways: invested directly in principal-guaranteed securities; as loans to various central and national government organizations or to policyholders; and as deposits with the Trust Fund Bureau, trust banks or other institutions. Kampo does not make any direct equity investments itself.
No asset-management firms contacted were willing to discuss Kampo, even to confirm or deny business dealings with the system. Kampo and its twin, the postal savings system, are slightly more forthcoming, releasing various statistics on how they manage the assets of what are, in effect, two of the largest pools of financial assets in Japan.
As of Dec. 31, Kampo held 52.5% of its 109.55 trillion yen ($964.3 trillion) in total assets in securities, with 37.8% of that in Japanese government bonds and instruments issues by government-related organizations. The remaining assets are classified as loans and "other."
By February, securities investment was up to 53% of 110.10 trillion yen in total assets. Holdings of foreign bonds make up a growing portion of Kampo's securities portfolio -- 4.1% by Dec. 31, up from 3.8% (3.96 trillion yen) at the end of Dec. 31, 1997.
The available statistics indicate Kampo is moving money out of domestic corporate bonds and into foreign instruments. Its holdings of Japanese corporate bonds and bank debentures totaled 4.53 trillion yen as of Dec. 31, 1997, or 4.3% of assets. That was down to 3.8% by Dec. 31, 1998, three-quarters through the fiscal year in which Kampo had earmarked 6.95 trillion yen for combined investment in domestic and foreign corporate bonds. That represented almost half of the system's planned 14.19 trillion yen in total new investment for the year through March 1999.
Kampo is restricted by law to investing no more than 20% of its total assets in foreign bonds, and to buying only certain types of foreign bonds.