Overseas Insurance Business

The Mission of This Business

The strategic mission of the overseas insurance business is to continue the transformation of all the Sompo Group’s P&C insurance and reinsurance businesses outside of Japan under a single, modern, integrated global structure. Through measured, strategic expansion and profitable growth, Sompo International is well on its way to achieving the stated goal of contributing over 40% of the Group’s overall profits within the next few years. The overseas insurance business continues to outperform the industry, providing profitable growth and increased market share through a diversified P&C portfolio, vast underwriting expertise, deep broker and client relationships, and world-class claims handling. The integration of our retail insurance businesses, located throughout 30 countries around the world, into a single, powerful, globally integrated platform continues as we grow our significant client base by utilizing modern technology and providing superior customer service and support. Our goal of establishing the high-quality Sompo retail brand globally and becoming a market leader in every country that we operate in will be achieved by maximizing the expertise and strengths of the organization across the entire platform.
At the core of the success of the overseas insurance business is a talented and experienced leadership team that is integrally aligned with Sompo Holdings. This structure provides strong corporate governance and alignment of underwriting, operations, strategy, and risk management. Focusing on strategic risk selection across the business’ global, integrated footprint, Sompo International continues to identify and onboard strategically targeted acquisitions supporting the continued profitable growth of a well-balanced, attractive portfolio of global risks.

Business Environment and Basic Strategies

In 2019, the global P&C insurance industry experienced substantial rate increases driven by historically low interest rates, reduced capacity and risk appetites among major insurers, a rise in the frequency and severity of catastrophic events, increasing loss costs related to court settlements, and a growing number of insurance companies struggling to create and maintain profitable risk portfolios. Rate increases were most notable in the U.S. market throughout the year and across nearly all lines of commercial P&C business.
Heading into 2020, the unprecedented COVID-19 pandemic is contributing to significant levels of uncertainty within the risk management industry and throughout the global economy. As the industry adjusts to the new normal created by the pandemic, the overseas insurance business continues to operate from a position of strength. Sompo International is well-positioned to continue to meet the needs of its global employees, brokers, and customers and will leverage opportunities that have emerged as a result of disruption in the market, including aggressively hiring top talent and entering new lines of business.

Progress of the Mid-Term Management Plan

Results over Four Fiscal Years

In fiscal 2019, the fourth year of the Mid-Term Management Plan, adjusted profit in the overseas insurance business was ¥50.1 billion, up ¥17.1 billion from fiscal 2018.
The acquisition of Sompo International has significantly increased the Sompo Group’s business scale and geographical diversification. Net premiums written and adjusted profit have risen 1.7 times and 2.5 times, respectively, compared with four years ago. The top lines in North America and Europe, in particular, have grown significantly, accounting for about 70% of the total portfolio of the overseas insurance business. We have built a foundation to earn stable profits and grow in developed countries while increasing business scale as well as profitability in emerging countries over the medium-to-long term.

Tasks for the Final Fiscal Year

In fiscal 2020, the last year of the Mid-Term Management Plan, through the optimization of premiums written, growth of specialty insurance, and the sharing of expertise among retail companies, we plan to attain adjusted profit of ¥51.0 billion, which is more than that in fiscal 2019. If self-restraint with regard to the activities in our countries and regions of operation is prolonged, net premiums written may decrease due to reduced activity and purchasing by individuals and companies, while claims incurred may increase. We will continue to monitor the ongoing impact of COVID-19 closely.
Regarding the commercial P&C business, we plan to hedge the risks associated with traditional business lines by growing our business in specialty insurance and maximize underwriting profit in view of the deterioration of the investment environment. For retail business, we shall share business resources to the greatest extent possible and further promote the sharing of expertise among Sompo Group companies to accelerate their growth and profitability.
We will also move forward with efforts to reorganize our retail companies under Sompo International Holdings and strengthen our system so as to be able to make decisions quickly in line with our overall strategy, as well as to implement a flexible capital policy.

Medium-Term Target Profile

As we continue our ongoing transformation, Sompo International is well-positioned to capitalize in providing relevant products and services to our clients, many of which face unprecedented challenges in an increasingly volatile economic environment. We have a strong track record of growing our business profitably while adapting to a changing risk landscape, and we will continue to push forward, investing in market-leading talent and technology.
Looking forward, we are steadfast in our commitment to creating the first truly global agriculture insurance business while seeking other opportunities through the development of new and enhanced products. We will expand our industry vertical strategy and increase our portfolio of industry solutions, and our core property, casualty, professional, and specialty products will continue to grow significantly in the U.S., while building relevance and scale in targeted products and markets.
We will continue to build an international market position, by developing the London & Bermuda market wholesale platform, expanding our distribution capabilities and management teams. Our reinsurance business will remain relevant to our market, employees, and cedents through a consistent approach to our business partners. We will continue to grow our geographic footprint, in locations such as the U.K., Europe, Asia Pacific, South America, and Mexico while entering new market spaces.
Our retail platform will further enhance our capability of data analysis and usage, not only in pricing but also in claims handling and digital marketing. We will be able to continuously transform our processes through data and analytics, utilizing our unique skill-transfer structure, which will lead to innovative products, and services. The integration of all retail companies under Sompo International will drive an optimal organization structure, consolidated governance, the efficient use of capital, and expanded opportunities.
Sompo International P&C has a reputation as a market leader known for its financial strength and the ability to attract and retain the best people. We will deliver on our goal of becoming a leader in each country that we operate in and a top-10 Insurance organization globally.

Commercial P&C Strategy

Our strategy is to become one of the top-10 industry leaders within the next five years defined by scale, capability, and profitability. In order to achieve that, we will continue to deliver strong historic growth by attracting and retaining top talent, focusing on strategic risk selection, expanding geographically, and creating operating scale while maintaining core profitability globally in both insurance and reinsurance. Through long-term partnerships with brokers and clients, our leadership and experienced teams generate attractive returns for the risks we assume by utilizing tailored risk management solutions and leveraging top claims talent.
Going forward, the overseas insurance business will continue with a selective specialty underwriting focus and strategic efficiencies, such as the decision to create one platform in London, ceasing all insurance underwriting business with Lloyd’s as of January 2021. With interest rates remaining historically low and as the COVID-19 pandemic continues to create market and economic uncertainty, our commercial P&C operation is ready to maximize new opportunities that these current market challenges are likely to create, while maintaining strong risk management strategies and a superior balance sheet to help drive profitable growth.

Retail Strategy

Our retail companies deliver a wide range of high-quality personal lines, small-to-medium enterprise, and corporate insurance solutions tailored to local markets. Operating mostly in emerging markets, where a high rate of premium growth is expected over the medium-to-long term, our retail platform helps retail companies achieve sustainable and profitable growth by sharing technical resources and transferring knowledge and expertise. Integrating all retail companies under Sompo International Holdings will drive an optimal organization structure, consolidated governance, the efficient use of capital, and expanded opportunities to help deliver on our goal of becoming a leader in each country that we operate in.

M&A Strategy

We continue to take a disciplined approach to strategic M&A activities to build scale and scope in support of Sompo Holdings’ vision of becoming a top-10 insurance company which contributes to the quality of life of stakeholders through “A Theme Park for Security, Health & Wellbeing."
The markets are experiencing extreme volatility with the uncertainty of the COVID-19 which we expect creating slowdown in transactions. Along with economic turmoil, we are seeking opportunities to diversify and expand our overseas insurance platforms, whether through acquisitions, investments, or strategic partnerships, by closely monitoring the impact and duration of the outbreak through the Global Transaction Committee, which was established in fiscal 2019, along with the Transaction Core Team, to centralize high-level transaction management system.