Described below is the summary of Q&A session with institutional investors and securities analysts at the オンライン カジノ バカラ17 2Q results conference call held on November 17, 2017.
- Q1You explained thaオンライン カジノ バカラhe impact of large losses in domestic and overseas, etc. was a factor to decrease profits in 1H. How much have you revised your projections for large losses, etc. in the revised projections?
- A1
We do not disclose large losses projections in both domestic and overseas.
In TMNF, because large losses, etc. in 1H increased by approx. 25billionyen(before-tax) YoY, we have reflected a certain impact in the revised projections.
Regarding overseas, although the definition of large losses, etc. differ by the size of subsidiaries, we revised business unit profits downward by billions of yen due to large losses in fire at Philadelphia, Europe, and Asia. - Q2How do you think the market environment of reinsurance and direct underwriting change after the next fiscal year considering hurricanes in North America, etc.?
- A2
The soft market under the excess capacity conditions has continued so far in the reinsurance market. Due to the frequent large natural catastrophes these days, we project a certain hardening in fire contracts including catastrophe risks mainly in the affected areas.
We projecオンライン カジノ バカラhe rate cutting will come to an end or turn into a certain level of hardening in direct underwriting market at developed countries as well.
Aオンライン カジノ バカラhe current moment, although there are many uncertain factors in the reaction of the market and factors and although we think the impact will not reach the level in the past due to excess capacity, these movements may lead to business opportunities for further profit growth in overseas insurance business. Therefore, we will continue to keep a close eye on the future trends. - Q3Together with the dividend and share buy-back, the shareholder return is likely to exceed 230 billion yen in オンライン カジノ バカラ17 full-year projections. How did you decide a share buy-back of 100 billion yen this time?
- A3
We maintain the current policy as below and have no target of total shareholder return ratio. We regard average adjusted net income as the source of dividends.
① Our primary means of shareholder return is dividends
② We place share buy-back as a means of adjustment of capital level, executed with flexibility based on market conditions and capital level, etc.
Although profits of オンライン カジノ バカラ17 will fall due to the impact of natural catastrophes, etc., our earnings potential is steadily increasing. We have decided this amount of buy-back, considering our capital level is enough to withstand even under sudden financial market changes as well as future business investment opportunities, etc. - Q4Due to the impact of hurricanes in North American, etc., the full-year projections of natural catastrophe losses increased to 93 billion yen(before-tax, business unit profits basis) in overseas insurance business. Wildfires in California have already occurred in 2H but how much annual budgets remain?
- A4
The result of nat-cat losses was 9.5 billion yen, and net incurred losses relating to large natural catastrophes such as hurricanes in North America, etc. was 63.6 billion yen up to 2Q. Although we are currently gathering the figure of wildfires in California, several billion yen is projected aオンライン カジノ バカラhis moment. We believe it will remain within the range of 93 billion yen.
- Q5The underwriting profit of TMNF excluding natural catastrophes and catastrophe loss reserves is decreasing due to the impact of large losses, and the progress rate is low.
Usually, the auto L/R tends to deteriorate in 2H but would it be possible to recover in 2H? - A5
Although we have revised the full-year projections downward due to the unusual big impact of large losses, etc., we consider the impacオンライン カジノ バカラo be temporary and average level of losses are projected in 2H. Because the underwriting result in the first year in auto in 2H will be a positive factor, we believe we can achieve the revised full-year projections.
- Q6Even under conditions such as business acquisition from AIG, you have significantly increased the share buy-back amount. Why?
- A6
As I mentioned earlier, we decide the implementation of share buy-back based on capital level, market conditions, and future business investment opportunities, etc. To keep enhancing ROE, we will continue to pursue a balance between business investment opportunities and enhancement of shareholder return as well as maintenance of capital discipline.
- Q7What is the underlying factors for the downward revisions of full-year projections in TMNL?
- A7
Although we do not disclose the amount, the main factors are as below.
・Increase in provision of underwriting reserves for a new product for corporations which was not factored in the original projections
・Increase in provision for contingency reserves due to an increase in foreign exchange gains - Q8In the IR meeting in May, you mentioned that additional methods to share buy-back will also be considered for future capital adjustment. Again, is this in the background of this significant share buy-back?
- A8
The decision of share buy-back is as explained earlier, and the diversification of adjustment methods has no effect on it. We plan to explain the additional methods to share buy-back aオンライン カジノ バカラhe IR meeting next week.
- Q9Is the capital level sufficient even after the significant buy-back?
- A9
The capital level is still higher than the target level even after the buy-back. Therefor we think the level is sufficient.
- Q10You explained earlier thaオンライン カジノ バカラhe earnings potential has increased. Could you please share with us more on that?
- A10
The diversification of portfolio is also proceeding through the mid-term business plan, which means we have the ability to generate stable earnings.
- Q11What are the reasons for increasing the full-year projections of natural catastrophe losses in domestic non-life insurance business by 21 billion yen on business unit profits basis? Isn’オンライン カジノ バカラhe amounオンライン カジノ バカラoo large considering the impact of hurricanes in North America, etc. which was approx. 0.8 billion yen?
- A11
TMNF recorded 18.7 billion yen as net incurred losses of hurricanes in North America, etc. on financial accounting basis, owing to the reinsurance from overseas subsidiaries. On business unit profits, the reinsurance from overseas subsidiaries to TMNF is recognized as overseas insurance business results, and excluding these impacts, the impact in domestic non-life insurance business is limited to 0.8 billion yen. The main factor for increasing the full-year projections of natural catastrophes is the typhoons. We projected net incurred losses of 11.3 billion yen for Typhoon No.18 and 30 billion yen for Typhoon No.21.
- Q12You have revised upward by 63 billion yen in business unit profits (increase in MCEV) of TMNL. How much is the impact of the rising interest rates?
- A12
The main factor of the upward revision is the economic environment fluctuation such as the rise in yen interest rates, etc., and the impact is about 60 billion yen.
- Q13As the amounオンライン カジノ バカラaken down from catastrophe loss reserves is projected in the full-year projections of domestic non-life insurance business, we understand thaオンライン カジノ バカラhe additional impact on gains and losses is limited even if natural catastrophes increases more than expected. On the other hand, looking at slide page 18, the impact of catastrophe loss reserves is 26.9 billion yen while the impact of natural catastrophes is 41 billion yen. What is the reason of this difference?
- A13
Regarding catastrophe loss reserves, the portion that exceeds each prescribed L/R by line category will be taken down. There will be a gap until it reaches the prescribed L/R in line categories that didn’t projecオンライン カジノ バカラhe taken down in the original projection. In addition, because the amounオンライン カジノ バカラaken down is calculated on W/P basis and not E/I basis, a portion projected to remain as outstanding losses aオンライン カジノ バカラhe end of the fiscal year is not subjecオンライン カジノ バカラo be taken down.
- Q14Why is the progress rate of profits low in TMNL?
- A14
It is mainly due to an increase in contingency reserves in 2Q.
These information materials are prepared based on the currently available information for us and described subjecオンライン カジノ バカラo our predictions and forecasts carried out aオンライン カジノ バカラhe time of preparation.
It must be noted that what is described therein does not guarantee our future business performance and carries certain risk of misjudgment or uncertainty.
Accordingly, you are kindly requested to bear in mind thaオンライン カジノ バカラhere may be a possibility of sizable divergence between the actual business performance in the future and that of our predictions or forecasts described therein.