🤯Japan's life insurers are sitting on massive bond losses: Unrealized losses on domestic bonds at Japan's major life insurers surged +60% YoY to a record ~$194 billion in Q2 2026. This is surpassing their unrealized gains on domestic stocks, which rose +48% YoY to ~$190 billion. This comes as 30-year JGB yields rose to ~4.0%, close to the highest level on record since the bond was introduced in 1999. This is up ~2.7 percentage points from July 2023, when insurers' combined position last flipped from gains to losses. Nippon Life and Meiji Yasuda already booked $280 million and $160 million in impairment losses, respectively, last quarter, after some bonds bought during the late-2010s low-rate era breached the threshold requiring recognition. Policy cancellations are the bigger risk, since a wave of surrenders could force insurers to sell bonds still classified as held to maturity to fund payouts. Sony Life's cancellation rate rose to 1.4% in Q2, while T&D Financial Life's climbed to 1.56%, partly driven by Yen depreciation prompting cancellations of foreign-currency policies. Japan's insurers are facing massive unrealized losses as bond yields surge.