Overview of Business Results and Forecast

Overview of Results of Operations for the fiscal year ended March 31, 2017

During the fiscal year ended March 31, 2017, the global economy continued to gradually recover as a whole. Emerging countries such as China experienced a slowdown in the first half of the fiscal year, but started to trend upward in the second half. The Japanese economy remained on a moderate recovery path as a whole, supported by signs of a rebound in exports and production in the second half of the fiscal year, despite some signs of weakness in personal consumption amid ongoing improvement in employment and income levels.

Under these circumstances, the consolidated financial results of operations of Sompo Holdings Group (“SOMPO HOLDINGS”) for the fiscal year ended March 31, 2017 were as follows:
Ordinary income increased by 163.3 billion yen to 3,419.5 billion yen compared to the previous fiscal year, the components of which were underwriting income of 3,050.5 billion yen, investment income of 232.8 billion yen and other ordinary income of 136.1 billion yen. Meanwhile, ordinary expenses increased by 138.4 billion yen to 3,177.8 billion yen compared to the previous fiscal year, the components of which were underwriting expenses of 2,515.1 billion yen, investment expenses of 41.2 billion yen, operating, general and administrative expenses of 506.5 billion yen and other ordinary expenses of 114.9 billion yen.
As a result of the foregoing, Sompo Holdings, Inc. (the “Company”) reported ordinary profit, calculated as ordinary income minus ordinary expenses, of 241.7 billion yen, an increase of 24.8 billion yen from the previous fiscal year. The Company posted net income attributable to shareholders of the parent, after extraordinary items, net of income taxes and deferred income taxes and others, of 166.4 billion yen, an increase of 6.8 billion yen from the previous fiscal year.

Business results for each of SOMPO HOLDINGS' reporting segments were as follows:

(a)Domestic P&C insurance business
In the domestic P&C insurance business, net premiums written amounted to 2,212.2 billion yen, a decrease of 47.3 billion yen from the previous fiscal year, due to decreased net premiums written in fire and other lines of insurance. The domestic P&C insurance business posted net income attributable to shareholders of the parent of 153.7 billion yen, an increase of 21.2 billion yen from the previous fiscal year. This increase was due mainly to increases in underwriting profit and gross investment margin from the previous fiscal year.

(b)Domestic life insurance business
In the domestic life insurance business, life insurance premiums written amounted to 317.3 billion yen, an increase of 23.6 billion yen from the previous fiscal year. The domestic life insurance business posted net income attributable to shareholders of the parent of 7.6 billion yen, a decrease of 3.2 billion yen from the previous fiscal year.

(c)Nursing care & healthcare business
Ordinary income increased by 107.7 billion yen to 119.1 billion yen compared to the previous fiscal year, as the profits and losses of a subsidiary that was newly included in the scope of consolidation in the previous fiscal year were included from the beginning of the fiscal year. Net loss attributable to shareholders of the parent decreased by 5.9 billion yen from the previous fiscal year to a net loss of 6.8 billion yen compared to the previous fiscal year.

(d) Overseas insurance business
In the overseas insurance business, net premiums written amounted to 338.1 billion yen, an increase of 45.5 billion yen from the previous fiscal year. The overseas insurance business posted net income attributable to shareholders of the parent of 12.8 billion yen, a decrease of 3.2 billion yen from the previous fiscal year.

Overview of Financial Condition as of March 31, 2017

Total assets as of March 31, 2017 amounted to 11,931.1 billion yen on a consolidated basis, an increase of 1,744.3 billion yen from March 31, 2016, due mainly to the new consolidation of Endurance Specialty Holdings Ltd.Cash flows for the fiscal year ended March 31, 2017 were as follows:
Cash flows from operating activities resulted in a net inflow of 362.9 billion yen, an increase of 96.4 billion yen from the previous fiscal year, due mainly to a decrease in net claims paid.
Cash flows from investing activities resulted in a net outflow of 526.6 billion yen, a decrease of 357.4 billion yen from the previous fiscal year, due mainly to payment for the acquisition of Endurance Specialty Holdings Ltd.
Cash flows from financing activities resulted in a net inflow of 363.8 billion yen, an increase of 420.6 billion yen from the previous fiscal year, due mainly to an increase in payables under securities lending transactions and proceeds from issuance of bonds.
As a result, cash and cash equivalents at the end of the period were 773.4 billion yen, an increase of 196.6 billion yen from the end of the previous fiscal year.

Outlook for the fiscal year ending March 31, 2018

For the fiscal year ending March 31, 2018, the Company is forecasting consolidated ordinary profit of 259.0 billion yen and net income attributable to shareholders of the parent of 183.0 billion yen, based on the following assumptions:

  • Assumptions for net premiums written are based on the Company’s own projections based on extrapolation from past trends and other factors.
  • The Company is forecasting 43.0 billion yen for net incurred losses (excluding household earthquake insurance) due to domestic natural disasters that occur in the fiscal year ending March 31, 2018, taking into account past trends and other factors.
  • The Company assumes no major change in market interest rates, exchange rates and stock prices from their levels at March 31, 2017.
The above forecasts were prepared based on information available as of the date of this release. Accordingly, actual results may differ materially from projections depending on various factors.