Described below is the summary of Q&A session with institutional investors and securities analysts at the 入金 不要 カジノ3 results conference call held on May 20, 2024.
- Q1What impact will the future sale of business-related equities have on your ESR?
- A1
Basically, the sale of business-related equities will realize unrealized gains already included in capital and will therefore have mostly no impact on capital. 入金 不要 カジノhe other hand, it will have a positive impact on ESR mainly through the reduction of risk volume. Please forgive me for not providing detailed figures on its impact, but the rough estimate is that if we sell down all the business-related equities we hold, which are worth approximately JPY3.5tn, we will free up risks worth slightly over JPY1tn.
- Q2According to page 36, you are expecting capital gains of JPY547.0bn from the sale of business-related equities in the fiscal year 2024, but at this stage, you are not factoring in any specific offset between these gains and the legacy portfolio and so on. Is my understanding correct?
- A2
Yes, it is correct. As stated on pages 4 and 37, 入金 不要 カジノne & Nichido Life Insurance (TMNL) is ceding some of their existing policy blocks. This, however, is part of the initiative to diversify and upgrade our risk control methods and its impact on our bottom line is nominal. It is not designed to offset capital gains from business-related equities.
- Q3If the sale of business-related equities continues progressing smoothly and capital gains accumulate, your ESR may exceed 140%, which is the upper limit of your target range. Bearing this situation in mind, I want to reconfirm what your approach to capital policy is.
- A3
As shown on page 10, the ESR of 140% as of the end of March we have recently presented is a figure before factoring in share buybacks. I want to reiterate that our ESR will be 135% when factoring in the JPY200bn share buyback which is our plan for the fiscal year 2024. ESR fluctuates depending on factors such as falls in risk volume including business-related equities, profit growth, and capital policy. We will flexibly examine and implement our capital policy considering the level of ESR, M&A projects in the pipeline, and other factors at different times.
- Q4I want to ask your opinion 入金 不要 カジノhe current valuations of M&As. Also, if there is no suitable project, what kind of risk-taking actions are you going to implement?
- A4
We constantly monitor M&A deals and consider that valuations are still high, especially for large M&A deals, and we need to be patient. Meanwhile, we hope to continue flexibly executing small- and medium-sized bolt-on M&As. In this context, we are currently not thinking of investing capital gains from business-related equities in certain sectors including additional risk-taking in our existing businesses. We will act flexibly and strategically considering risks and returns.
- Q5入金 不要 カジノhe rate environment in North America, if we focus 入金 不要 カジノhe top line of TMHCC, their revenue fell in the fourth quarter of the fiscal year 2023 on a single-quarter basis. However, I understand that you project an increase in revenue in the fiscal year 2024. Can you tell us the background of this in more detail?
- A5
The rate environment in North America generally continued hardening in the fiscal year 2023, although we expect it to slightly slow in the fiscal year 2024. By line, a hard market is continuing for property, while rates are projected to fall for some lines including D&O and cyber. TMHCC was affected by those trends in the fiscal year 2023 as they offer many specialty products. We expect a similar situati入金 不要 カジノo continue in the fiscal year 2024, but we are thinking of expanding A&H and growing Property based 入金 不要 カジノhe rate environment, while continuing to focus 入金 不要 カジノhe bottom line. We plan to increase revenue in the fiscal year 2024 based 入金 不要 カジノhese measures.
- Q6On social inflation, I understand that some North American peers are making additional provisions to their reserves. What is the situation of your North American business?
- A6
Concerns about social inflation are currently resurging and we understand that other companies are taking such actions. With respect to 入金 不要 カジノne’s business, PHLY made additional, forward-looking provisions to their reserves in 2019, although they have since been taking them down. In the fiscal year 2023, we posted reserves for some run-off contracts. We continue to closely monitor the social inflation trend, but the impact of social inflation on our business is presently limited because our business primarily has a small ratio of long-tailed insurance, and we are making progress in our effort to reduce the number of lawsuits.
- Q7I understand that the sale of business-related equities requires negotiations with the issuing companies. What has changed in the situation concerning the negotiations? What is the likelihood of achieving zero business-related equities?
- A7
We have officially announced today our intenti入金 不要 カジノo eliminate all the business-related equities we hold, including the timeline for this. Over the more than 20 years during which we have been working 入金 不要 カジノhe sale of business-related equities, we have continued upfront and patient negotiations with the issuing companies. Based 入金 不要 カジノhese negotiations, we have decided 入金 不要 カジノhis timeline.
- Q8In relati入金 不要 カジノo achieving zero business-related equities explained on page 11, I want to ask your future equity investment policy from the viewpoint of pure investment?
- A8
Firstly, our plan to achieve zero business-related equities is based 入金 不要 カジノhe premise that it only targets listed equities and does not include non-listed equities whose value is nominal at approximately JPY22.5bn. It also excludes our equity investments through capital and business alliances. Going forward, we may invest in equities as pure investment; however, we have no intention of simply changing the labels 入金 不要 カジノhe business-related equities we currently own. As for the formats of equity investment, we may choose ETFs in Japan or global investments as our options.
- Q9As you try to sell all the business-related equities, some companies may start selling your shares in turn. Are you thinking of taking any action about this?
- A9
The impact of this scenario is considered limited given the liquidity of our shares and because the number of our shares held by these companies is small.
- Q10入金 不要 カジノhe bottom right of page 8, it is written, “Favorable FX impact on Japan P&C: c. +JPY46.0bn”. Can you explain its details?
- A10
This refers to the absence of the negative impact of the depreciation of the Japanese yen, which materialized from the beginning to the end of the fiscal year 2023. This negative impact is not included in the fiscal year 2024 and beyond. Aside from this negative impact, any fluctuation in the FX rate from its March 31, 2024 level, which is used for the fiscal year 2024 projections and the medium-term business plan, could affect our profit from the fiscal year 2024 onward. Please refer to page 54 for FX sensitivity.
- Q11After you have sold all the business-related equities, not having any capital gains or dividends from them may have a material impact in the future. What is your view 入金 不要 カジノhis?
- A11
Under the new medium-term business plan that covers the fiscal years 2024 to 2026, we plan to continue the top-tier EPS growth of 8% or more, even excluding business-related equities, as shown as our KPI target on page 8. Although we have not yet prepared our plan for the fiscal year 2027 and beyond, we aim to continue achieving high EPS growth centered on our insurance business, even without business-related equities.
- Q12Will your North American business continue driving this high growth?
- A12
The North American business has so far made a significant contribution. Under the new medium-term business plan, however, Japan P&C is also set to achieve a profit growth of 5% or more as shown on page 8. We expect balanced growth between the Japan P&C and International businesses.
- Q13Given the issues faced by Japan’s P&C industry, I want to ask how you are making plans for your Japan P&C business. Is it correct to understand that you have changed from a top-down to a bottom-up approach?
- A13
As you understand, we are making plans using the bottom-up approach. We will explain the details at our 入金 不要 カジノ4 IR conference. We will steadily implement various initiatives with the aim to transform our company into a new company.
These information materials are prepared based 入金 不要 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.