This chapter examined the relationship between Japanese life insurers’ investment in IT stocks and conventional financial statistics, such as ROE and dividend yield, in the period from 1996 to 2003. It demonstrates that Japanese life insurers do not necessarily formulate their portfolios based on these statistics. In particular, insurers who invested in low-ROE stocks tended to be financially unstable. These findings may confirm that even after the Japanese financial crisis of the late 1990s, the primary objective of stock investment by Japanese life insurers continued to be the maintenance of business relationships with client firms, and not the maximization of investment performance.
