house 
insurance
Dyslin, CIO Global and Head of Global Investments, The Lin Exposure Department discusses the role of private investments in Insurance giant 100 billion dollars, and large insurance M & as.
Global financingThe investment portfolio in AFLAC is supervised by about $ 100 billion, and the largest part of it is in Japan, where the company has a large presence. What are the big changes you have seen there in recent years?
Brad Deslin: Nearly three quarters of all things related to Japan, because they are related to my global-profit, cash flow and investment assets. The biggest change we have seen over the past few years in Japan was interest rates. It has been very low over the past 25 years, even before the financial crisis. Upper Egypt’s interest rates were for ten years less than 2 %, after which they became negative in 2016. This also happened in a few places in Europe, but Japan kept the interest rates very low for a very long time as it tried to motivate the economy and revive inflation.
Today, we finally see that this is happening. It has regained inflation in many parts of the world, including Japan. This caused the bank to raise interest rates for the first time in at least a generation. In only two years, bonds have decreased for 10 years from 0.4 %, or 40 basis points, to about 1.5 %. We have a large amount of our portfolio and a large amount of cash flowing in the yen, and it is clear that it is welcome newS For higher returns.
GF: What is the assets allocation framework you use to manage the preservative in Japan?
Dislin: I will highlight two things we have done to update our assets customization in the past few years. The first is how we used the assets of the US dollar to the Japan portfolio. The second, like a lot of industry, is how we used private assets in the wallet, especially private credit and private stocks.
For assets in US dollars, this is driven by allocating strategic assets and our approach to the management of asset assets. You can think of our wallet in Japan consisting of two large pieces. The first part is the amount of capital that we set aside for future policy demands. These claims will be in the yen for our Japanese customers. We returned to that responsibility with the origins of the yen. Support this is the capital of our owners – the organizational and economic capital to ensure that there is a strong financial base to support those obligations. This belongs to our shareholders in the United States, so we reserve this capital in US dollars
The bottom line, the money owed to policy holders is in the yen wallet. The money that belongs to our shareholders in the United States is in the US dollar wallet. It seems very simple today, but it becomes more complicated when you start to get in objects like organizational capital and all the regulations that the insurance company needs to manage.
GF: What is the effect of definitions imposed by the Trump administration?
Dislin: Definitions are an issue that many business leaders, political leaders and investors wrestle. All indicators we saw indicate that they will be inflated, but the size to be seen remains. As users based on return, we generally love the higher returns, but not at the expense of the economy that can deal with high inflation.
We have seen the market responding to the definitions of low returns. The market tells us that it is more concerned about the economy’s slowdown than inflation coming from the definitions. This is one field that we see closely. At the level of security, some companies will be more affected than others. Some have more ability to adapt to the tariff system more than others, and here comes our team of about 20 professional credit investors. They focus on understanding these companies. This requires understanding their management teams, capital structures, and cash transfer courses for all these individual credits. This level of analysis makes the difference for us really.
GFThere were some prominent activities in the integration and purchase operations in which asset managers acquired insurance companies. For example, KKR acquired the Global Atlantic Financial Group last year. What do you think of this direction?
Dislin: This included some alternative managers who buy insurance companies directly, in addition to creating strategic partnerships. I was a manager of insurance money throughout my career, so I find all this very cool. It is a pleasure to see these alternative managers concerned with the assets of the insurance company, and I expect this trend to continue. This is exactly what Warren Buffett did with Berkshire Hathaway-using stable cash flows and long-term capital for insurance to support the investment platform. We have seen an explosion of growth that created some great managers focusing on these different alternative origins.
I expect the alternative asset managers to continue forming partnerships with insurance capital. It is much easier to invest when you have regular and repeated insurance funds of installments and cash generation, rather than having to collect new money. With the insurance company, you have a basic work that generates frequent money.
GF: How can you integrate the variable macroeconomic factors in the operation of the portfolio?
Dislin: We do not re -put the wallet actively based on total conditions such as interest rates or currency fluctuations. The way we tried to neutralize our exposure to us by creating these two wallets. Therefore, it is a yen portfolio of the yen opponents and a dollar portfolio of the dollar, or the surplus of the dollar, which I consider responsibility for our shareholders. This is how we do this in our institution. Each investment manager runs a kind of responsibility. Performance can be against the standard. It can be a retirement commitment. In our case, they are future insurance claims. Therefore, the investment to meet or overcome the expectations of this responsibility is the key, and this is what we really focus on when we set the allocation of strategic assets and make allocation decisions.
I know you asked how to change the portfolio based on the movements in the yen or interest rates. If we do our work properly-we have a good management of strong assets-it does not matter much of this, or does not matter much. It will not have a major impact on our wallet. You will not suddenly see that the wallet is turning only because interest rates are 50 basis points.
We make tactical decisions, and we aim to be opportunistic, but this is done at the level of safety more than the level of the broader allocation.
GFAre most of your government bonds?
Dislin: We have a large group of Japanese government bonds, or JGBS. Returning to the laine wallet that I mentioned earlier, we prefer more credit assets from the yen, but it is very difficult to find acceptable investments that meet our needs. So we have a lot of JGBS, partly because we need an outlet for yen investments. JGBS also provides liquidity, which is very long assets in maturity, often 30 years. This helps us to match our long obligations against long assets. We also have a very important general bond wallet, which not only provides liquidity but also an additional income on the basis of the dollar.
GFDo you have any high -yielding bonds?
Dislin: It is about 1 % of the wallet. Most of our high exposure through direct lending on the private intermediate market, which we believe provides a much better value of risks.
As far as the merits of the securities that we keep, they are already in all fields and vary according to the asset category. For our basic outlet for a lower investment degree – medium market loans – those who are generally shorter, often with a merit of five to seven years. Our JGBS tends to have a 30 -year longer bond. A credit category that focuses on A-FOOCAGED A usually has 10 to 15 years.
