Overview of Business Results and Forecast

Overview of Results of Operations for the fiscal year ended March 31, 2019

During the fiscal year ended March 31, 2019, the global economy continued to gradually recover as a whole due to steady recovery in the U.S. economy, despite rising uncertainty for growth resulting from the trade dispute, gradual slowdown in Chinese economy and Brexit deal negotiation. The Japanese economy remained on a moderate recovery path, supported by improvement in corporate earnings and employment conditions as well as a rebound in personal consumption, despite of slowdowns in manufacturing and logistics due to a string of natural disasters, including heavy rains, earthquakes and typhoons, and some signs of weakness in exports and production.

Under these circumstances, the consolidated financial results of Sompo Holdings Group (“SOMPO HOLDINGS”) for the fiscal year ended March 31, 2019 were as follows:
Ordinary income decreased by 127.0 billion yen to 3,643.0 billion yen compared to the previous fiscal year, the components of which were underwriting income of 3,220.0 billion yen, investment income of 273.2 billion yen and other ordinary income of 149.7 billion yen. Meanwhile, ordinary expenses decreased by 184.0 billion yen to 3,444.0 billion yen compared to the previous fiscal year, the components of which were underwriting expenses of 2,737.9 billion yen, investment expenses of 35.7 billion yen, operating, general and administrative expenses of 540.5 billion yen and other ordinary expenses of 129.7 billion yen.
As a result of the foregoing, Sompo Holdings, Inc. (the “Company”) reported ordinary profit, calculated as ordinary income minus ordinary expenses, of 198.9 billion yen, an increase of 57.0 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 146.6 billion yen, an increase of 6.8 billion yen from the previous fiscal year.

Business results for each of the 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 2,198.7 billion yen, a decrease of 19.7 billion yen from the previous fiscal year, due to decreased net premiums written in fire, compulsory automobile liability, and other lines of insurance. The domestic P&C insurance business posted net income attributable to shareholders of the parent of 139.8 billion yen, an increase of 27.0 billion yen from the previous fiscal year. This increase was due mainly to an increase in gross investment margin from the previous fiscal year.

(b)Overseas insurance business
In the overseas insurance business, net premiums written amounted to 519.4 billion yen, a decrease of 116.8 billion yen from the previous fiscal year. This decrease was due mainly to the impact of exclusion of Canopius AG from the scope of consolidation. Net loss attributable to shareholders of the parent decreased by 26.9 billion yen to a net loss of 6.0 billion yen compared to the previous fiscal year.

(c)Domestic life insurance business
In the domestic life insurance business, life insurance premiums written amounted to 345.0 billion yen, an increase of 3.0 billion yen from the previous fiscal year. The domestic life insurance business posted net income attributable to shareholders of the parent of 14.7 billion yen, an increase of 7.2 billion yen from the previous fiscal year.

(d) Nursing care & healthcare business
Ordinary income decreased by 0.3 billion yen to 127.5 billion yen compared to the previous fiscal year. Net loss attributable to shareholders of the parent increased by 1.2 billion yen to a net loss of 0.2 billion yen compared to the previous fiscal year.

Overview of Financial Condition as of March 31, 2019

Total assets as of March 31, 2019 amounted to 12,018.2 billion yen on a consolidated basis, an increase of 69.9 billion yen from March 31, 2018, due mainly to an increase in other assets, despite a decrease in securities.
Cash flows for the fiscal year ended March 31, 2019 were as follows:
Cash flows from operating activities resulted in a net inflow of 78.7 billion yen, a decrease of 167.6 billion yen from the previous fiscal year, due mainly to an increase in claims paid due to domestic natural disasters.
Cash flows from investing activities resulted in a net inflow of 13.4 billion yen, an increase of 45.3 billion yen from the previous fiscal year, due mainly to an increase in proceeds from decrease in money trusts.
Cash flows from financing activities resulted in a net outflow of 19.1 billion yen, an increase of 47.4 billion yen from the previous fiscal year, due mainly to an increase in payables under securities lending transactions.
As a result, cash and cash equivalents at the end of the period were 991.2 billion yen, an increase of 60.2 billion yen from the end of the previous fiscal year.

Outlook for the fiscal year ending March 31, 2020

For the fiscal year ending March 31, 2020, the Company is forecasting consolidated ordinary profit of 250.0 billion yen and net income attributable to shareholders of the parent of 168.0 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 53.0 billion yen for net incurred losses (excluding household earthquake insurance) due to domestic natural disasters that occur in the fiscal year ending March 31, 2020, 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, 2019.
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.