* Dai-ichi to keep unhedged foreign bond holdings steady
* Still not ready to resume active risk asset investment
* Wants to increase super-long JGB holdings if yields rise
* Stance on fx-hedged foreign bonds depends on mkt conditions (Adds comments, details)
By Masayuki Kitano and Yuka Obayashi
TOKYO, April 13 (Reuters) - Japan's Dai-ichi Life Insurance said on Tuesday it will either keep risk asset holdings steady or trim them this financial year, adding that it plans to keep its unhedged foreign bond holdings steady.
"Risk tolerance has been improving but our belief is that this is still not an environment where we can actively resume investment in risky assets," Takashi Iida, manager of Dai-ichi Life's investment planning department, told Reuters in an interview.
Dai-ichi Life is Japan's second-largest life insurer and manages 29.3 trillion yen ($314.3 billion) in assets. It made its debut on the Tokyo Stock Exchange this month following an $11 billion initial public offering.
Iida said Dai-ichi plans to keep its holdings of unhedged foreign bonds steady in the year ending in March 2011, after having cut them in the wake of the financial crisis.
Taking into account Dai-ichi Life's risk tolerance, he said the insurer's current level of unhedged foreign bond holdings is appropriate.
"I am not sure if we would go as far as increasing them but for now we would like to control the holdings near current levels," Iida said, adding that Dai-ichi had reduced holdings of unhedged foreign bonds in the six months to March by reducing bond holdings and by hedging against foreign exchange risk.
Last year, Dai-ichi gained solid income from yen fixed-income assets, helped by currency-hedged foreign bonds, Iida said, adding that Dai-ichi regards currency-hedged foreign bonds as a type of yen fixed-income asset.
"Hedged foreign bond investment contributed to stable earnings ... supported by stable and historically low levels of hedging costs," he said.
Dai-ichi Life had 4.62 trillion yen of its assets invested in foreign bonds as of September.
Lower hedging costs, or a narrower spread between Japanese and overseas short-term interest rates, encouraged top insurers to move aggressively into hedged foreign bonds last year as an alternative to low-yielding JGBs.
Asked about Dai-ichi's stance on currency-hedged foreign bonds this financial year, Iida said it depends on the situation. It often tweaks its allocation between JGBs and currency-hedged foreign bonds depending on market conditions, he said.
Iida said Dai-ichi Life wants to increase its holdings of super-long Japanese government bonds (JGBs) if yields rise, referring to 20- and 30-year JGBs.
Dai-ichi expects the 10-year JGB yield to move between 1.3 and 1.8 percent in the year to March 2011.
Iida stopped short of giving specific levels for 20- and 30-year JGB yields that Dai-ichi would find attractive, but said there would be buying opportunities if the 10-year yield moved in line with the insurer's current forecast.
Asked about rising JGB issuance and fiscal policy risks, Iida said Dai-ichi Life would welcome a rise in super-long JGB yields as long as it was not too severe.
"It's hard to think that super-long bond yields will rise all of a sudden toward levels comparable to emerging market bond yields," Iida said.
"Since our strategy is to buy super-long bonds when their yields rise, if conditions in the market tilt toward over-supply and yields were to rise, we would welcome it, as long as the rise is mild," he said.
"But since the super-long sector is our main playing field, we need to keep a close watch on the relationship between fiscal conditions -- both revenues and spending -- and bond yields."
Dai-ichi Life sees the dollar trading between 85 and 105 yen this financial year, Iida said, adding that the insurer's forecast is for the Federal Reserve to raise U.S. interest rates in the January-March quarter of 2011.
Dai-ichi expects the euro to trade between 120 and 140 yen in the year to March 2011. ($1=93.21 Yen) (Editing by Michael Watson) masayuki.kitano.reuters.com@reuters.net; +81-3-6441-1872))