Described below is the summary of Q&A session with institutional investors and securities analysts at the 入金 不要 ボーナス カジノ19 2Q results conference call held on November 19, 2019.
- Q1You have revised the business unit profit of your international insurance business downward although natural catastrophes overseas have been fewer than projected. What is the reason for the downward revision?
- A1
In the United States, compensation amounts are increasing noticeably against the backdrop of the rising jury awards and higher level of accident plaintiff attorney involvement. This social inflation is affecting the rising loss cost of liability insurance. In response to this situation, Philadelphia is working 入金 不要 ボーナス カジノhe revaluation of the past reserves We believe the impact of social inflation is reflected in our revised projection. Philadelphia is currently raising rates to cover the rising loss cost, the impact of which is unlikely to persist in the next fiscal year.
Another development in the U.S. is the deterioration in the loss ratio of TMHCC’s medical stop loss due to a greater number of high medical cost payments. To improve its earnings, TMHCC is currently implementing a double-digit rate increase. - Q2How will the lower economic solvency ratio (ESR) caused by interest rate fluctuations impact your capital policy?
- A2
If interest rate fluctuations increase or decrease restricted capital only, no major change will be made to our approach to shareholder return. We consider that ESR fluctuations caused by interest rate changes differ in nature from those caused by natural catastrophes. This is the perspective we take when we look at our capital level adjustment.
- Q3How do you respond toward interest rate risk in the future?
- A3
In 1H, we reduced interest rate risk through Japanese government bond purchases and other measures. We will continue appropriately controlling interest rate risk.
- Q4TMNF has revised downward from its original projection its full-year underwriting profit projection, which excluded the impact of natural catastrophes, foreign exchange rates, and catastrophe loss reserves. What are the factors behind this revision?
- A4
We expect TMNF’s profit to decrease mainly due to the impact of reinstatement premiums following natural catastrophes and an increase in small losses.
- Q5The capital level adjustment of 50 billion yen is smaller than a year ago. Why?
- A5
The issuance of hybrid bonds will not fully cover the drop in ESR. The difference will be covered by the use of capital. In addition, we comprehensively take into account factors such as the occurrence of natural catastrophes in a scale larger than originally projected and our needs to maintain a certain level of capital buffer to continue making business investments for our future growth.
- Q6Are you going to change your risk model in response to the recent natural catastrophes?
- A6
We cannot deny the possibility that the recent natural catastrophes are the result of the impact of climate change, although opinions are divided among experts. We consider it necessary to keep gathering the latest findings and make decisions based 入金 不要 ボーナス カジノhem.
- Q7Why are you projecting net incurred losses relating to natural catastrophes to decrease year on year 入金 不要 ボーナス カジノhe full-year basis?
- A7
We made our full-year projection of net incurred losses relating to natural catastrophes based 入金 不要 ボーナス カジノhe natural catastrophes that had occurred in 1H as well as the amount of losses in 2H which we estimated based 入金 不要 ボーナス カジノyphoon Hagibis (Typhoon No. 19) that had occurred during 2H and our past results. We expect that net incurred losses relating to natural catastrophes on a direct underwriting basis will be smaller this year than the previous year.
- Q7（2）Does it mean that you expect to receive more reinsurance payment this fiscal year than the previous year?
- A7（2）
There is no major change in reinsurance program compared to the previous fiscal year.
- Q7（3）What is TMNF’s projection of gross losses relating to natural catastrophes in 入金 不要 ボーナス カジノ19?
- A7（3）
Gross losses were approximately 130 billion yen in 1H. We estimate that gross losses relating to Typhoon Hagibis that occurred in 2H to be around 110 billion yen.
- Q8If net incurred losses relating to natural catastrophes exceed the full-year projection, will you make an additional provisi入金 不要 ボーナス カジノo catastrophe loss reserves for fire insurance?
- A8
The revised projection is based 入金 不要 ボーナス カジノhe premise that no additional provision will be made in catastrophe loss reserves.
- Q9Is there any possibility that you may restrict underwriting based 入金 不要 ボーナス カジノhe future change in the balance of catastrophe loss reserves?
- A9
We are not projecting any underwriting restriction.
- Q10What is the amount of underwriting reserves for natural catastrophes you factor in your earnings projection? Does it have any impact 入金 不要 ボーナス カジノhe adjusted net income?
- A10
We have included 15 billion yen in our earnings projection. This also affects the adjusted net income.
- Q11In your financial summary, it is stated that change has been made to the securities categories in the U.S. Could you explain this in detail?
- A11
In step with the changes made to the U.S. accounting principles, the equities held by our North American subsidiaries such as TMHCC, Delphi and Philadelphia are classified as trading securities from the beginning of 入金 不要 ボーナス カジノ19. This means that any fluctuation in the market value of these equities is recognized as net income or loss. These equities were previously classified as available-for-sale securities.
- Q12Is it correct to consider that any rise in ESR due to the issuance of subordinated bonds of capital nature means an increase in the funds that can be used for shareholder return?
- A12
Any increase in capital through the issuance of subordinated bonds of capital nature is an increase in pure capital. This means that it is the funds that can be used for shareholder return. 入金 不要 ボーナス カジノhe other hand, we naturally do not intend to issue subordinated bonds of capital nature for the sole purpose of securing the funds for shareholder return. We will consider their issuance when, for instance, we are going to execute a large-scale acquisition.
- Q13What is your projection about a rise in reinsurance cost in the next fiscal year?
- A13
Given the current situation, we expect a 10% to 20% rise approximately.
- Q14In your full-year projection of consolidated net income, the weaker income due to natural catastrophes cannot be completely covered by the takedown of catastrophe loss reserves, unlike the previous fiscal year. Why?
- A14
There are two main reasons. First, the premiums written, which is the denominator of W/P loss ratio, increased due to the renewal of fire insurance policies before their maturity ahead of the product revisions. Second, the provision rate of catastrophe loss reserves for fire group was raised from 5% to 6%.
- Q15Your full-year natural catastrophe projection seems smaller than the model values of modeling companies and others. Why?
- A15
The difference is that while the model values tend to be conservative and have a certain range, we make our estimates based on factors such as the recent accident reports we have received and natural catastrophe losses we posted in the past.
These information materials are prepared based 入金 不要 ボーナス カジノhe currently available information for us and described subject to our predictions and forecasts carried out at the 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 that there may be a possibility of sizable divergence between the actual business performance in the future and that of our predictions or forecasts described therein.