Management Message

April 2024

Mikio Okumura
Group CEO, Director, President and Representative Executive Officer
Sompo Holdings,Inc.

History of SOMPO Group’s growth

The reason for existence of SOMPO Group is to continuously deliver services that are beneficial to “security, health & wellbeing” of customers through diverse businesses, even in a rapidly changing and unpredictable business environment, protect people against risks, and contribute to creating a healthy and affluent society.
SOMPO Group has continued to proactively change the business portfolio over the last 135 years since founding by adapting to changes in the business environment. While having at the core the domestic P&C insurance business, the founding business of the Group, we actively allocated resources to the international market with strong growth prospects as well as entered the nursing care market which is expected to expand with population aging.
As a result, the Group has grown to be able to fulfill a wider range of needs in “security, health & wellbeing”. The overseas (re)insurance business has expanded to drive the Group’s growth, Insurhealth^® products that help extend healthy life expectancy were launched in the domestic life insurance business, and Sompo Care in the nursing care business grew to become top ranked in terms of the number of senior care home rooms.

Changes in the business environment and customer needs

Our business environment is changing dramatically. SOMPO Group will continue to go all out to deliver solutions for new risks and social challenges emerging due to the changes.
A notable example is rapid demographic change in Japan. The number of births declined from 1 million in 2016 to 750,000 in 2023. Both total population and working age population are likely to decrease further. The labor supply and demand gap in healthcare and nursing care widened since more people need care while less people are working, and associated challenges such surging social security expenditures, became evident.
To address these challenges, Sompo Care, a leading company in the nursing care industry, is working on supply-side reform, such as improvement in quality and operational efficiency by utilizing data and technologies. On the demand side, Sompo Himawari Life Insurance is leading efforts to develop products and services that help extend healthy life expectancy.
Increasing frequency and severity of natural disasters due to global climate change is another factor that significantly affects the P&C insurance business. Thus, we will increase resilience through portfolio optimization and work on disaster prevention and mitigation by leveraging risk management know-how to stably provide insurance coverage and protect customers against risks.
The important point is that customer needs are constantly changing in accordance with social changes.
For example, the concept of mobility is changing in the mobility industry due to advances in technologies, and cars have become something to share rather than own. Also in healthcare, the focus is shifting to preventive and pre-symptomatic medicine from protection against diseases.

Change and evolution of SOMPO Group by adapting to changing customer needs

For SOMPO Group to grow sustainably in a rapidly changing and unpredictable business environment, there is no other way but to accurately understand changes in the business environment and change ourselves accordingly.
SOMPO Group has built business foundation and connections with customers over 135 years of history, but we cannot adapt to dramatic changes in the environment without breaking away from conventional wisdom and successful experience.
SOMPO Group needs to change and evolve the business model so as to accurately understand changes in customer needs and deliver new products and services in accordance with such changes.

Strategy for increasing resilience and connecting customers and services

The key is the strategy for increasing resilience and connecting customers and services under the Mid-Term Management Plan starting from FY2024, and the three pillars of growth to accomplish these.
The first pillar is efforts toward reborn Sompo Japan in the domestic P&C insurance business. We will conduct zero-based reviews of industry practices and conventional wisdom, build an operational framework and earnings structure that accommodates social changes, and achieve a high level of capital efficiency.
The second pillar is expansion of the overseas (re)insurance business. We aim to grow profits through geographical expansion, including in the U.S., Canada, Europe, and Asia, while maintaining underwriting discipline, so that the business contributes more to Group profit as the driver of the Group’s growth.
The third pillar is the Wellbeing Initiative. While the “age of nursing care for/by everyone” feels more real as a result of low birthrate and population aging, various concerns are emerging, such as about retirement finances due to longevity, and inability to receive adequate nursing care services due to shortage of facilities and labor. To alleviate three concerns related to health, nursing care, and retirement finances among others, Sompo Group will not only enhance nursing care service and Insurhealth^® products, but also increase service lineup to fulfill a wide range of customer needs over a long period by connecting services and data. We aim to increase life time value (LTV) of each customer through this, and grow profits in the medium to long term.