Fukoku Life cautious on dollar assets

By Masayuki Kitano

TOKYO (Reuters) - Japan's Fukoku Mutual Life Insurance Co is wary of investing in dollar-denominated assets due to a slowdown in the U.S. economy and concerns about the currency's long-term prospects, the insurer said on Wednesday.

Fukoku, the nation's ninth-largest insurer, reduced its exposure to dollar-denominated assets while increasing allocation to euro-denominated assets in the business year that ended in March.

"We are still cautious about increasing exposure to the dollar," Yuuki Sakurai, Fukoku's general manager for financial and investment planning, told the Reuters Investment Summit in Tokyo.

Fukoku, which manages 5.7 trillion yen ($53.77 billion) of assets on behalf of policy holders, may increase its exposure to the Australian dollar and may slow the pace of any reduction in its allocation to euro-denominated assets, Sakurai said.

"If you look at the current situation in the United States, the economy is worsening faster than in Europe," he said, adding that the euro was holding up pretty well despite signs of weakness in the French and German economies.

Japan's top nine insurers held roughly $1.6 trillion in assets as of September 2007 -- nearly the size of the economy of Italy -- and their investment plans are closely watched in the market.

Sakurai said he harbored doubts about the dollar's longer term prospects.

"If you think that a paradigm based on the dollar may be starting to change and that the euro's weight globally may come close to matching the dollar's presence, the dollar might fall to 80 yen in the future," Sakurai said.  Continued...