Release Date: November 19, 2024

For the complete trani style="display:none;" of the earnings call, please refer to the full earnings call trani style="display:none;".

Positive Points

• Sompo Holdings Inc (NHOLF) reported an increase in adjusted consolidated profit by JPY22.3 billion to JPY155.6 billion, driven by growth in the overseas business.

• The full-year earnings forecast for 2024 has been revised upward by JPY15 billion to JPY270 billion, indicating strong financial performance expectations.

• The company announced a significant share buyback of JPY155 billion, contributing to a total shareholder return of JPY209.4 billion.

• Sompo Holdings Inc (NHOLF) achieved a reduction in strategically held shares by JPY197.8 billion, nearly reaching the initial target of JPY200 billion.

• The annual dividend is expected to increase from JPY12 to JPY32, with a full-year dividend of JPY132 per share, reflecting a commitment to returning value to shareholders.

Negative Points

• The domestic P&C business faced a negative impact of JPY12.5 billion due to a rise in accident rates and unit repair costs for auto insurance.

• The North American business experienced a downward revision in underwriting income due to multiple large claim incidents and higher-than-expected natural catastrophe losses.

• The pace of growth investment is not keeping up with the sales of strategically held shares, indicating a potential imbalance in capital allocation.

• The company faces challenges in maintaining the rate increase for the property business, which was lower than expected, impacting underwriting income.

• The ESR (Economic Solvency Ratio) remains above the target threshold of 250%, indicating potential capital inefficiencies that may require further adjustments.

Q & A Highlights

Q: How did Sompo Holdings decide on the unprecedented shareholder return amount, and what discussions took place regarding the dividend per share (DPS) increase? A: The CFO explained that the decision was based on three layers for share buybacks: basic return, sales gain on strategic stock holdings, and capital adjustment. Despite not revising up adjusted profit significantly, they raised the DPS by JPY20, using 50% of the sales gain from stock sales. This decision was made after discussions with investors, balancing sustainability and shareholder preferences.

Q: Can you explain the factors behind the downward revision in the North American business and global market segments? A: The CEO noted that the revision was due to market and rate environment adjustments, large claim incidents, and natural catastrophe losses. The North American market saw higher-than-expected NIA losses, and the property business had lower rate increases than anticipated, leading to increased reinsurance and a negative impact on underwriting income.