Overview of Business Results and Forecast

Overview of Results of Operations for the fiscal year ended March 31, 2018

During the fiscal year ended March 31, 2018, the global economy continued to gradually recover as a whole. The U.S. economy tracked a steady recovery path, while emerging countries centered on China showed signs of an upturn in economic activity. The Japanese economy remained on a moderate recovery path, supported by a rebound in exports and personal consumption, amid ongoing improvement in corporate earnings and employment conditions, along with gradual increases in production and capital investment.

Under these circumstances, the consolidated financial results of operations of Sompo Holdings Group (“SOMPO HOLDINGS”) for the fiscal year ended March 31, 2018 were as follows:
Ordinary income increased by 350.5 billion yen to 3,770.0 billion yen compared to the previous fiscal year, the components of which were underwriting income of 3,369.7 billion yen, investment income of 254.3 billion yen and other ordinary income of 145.9 billion yen. Meanwhile, ordinary expenses increased by 450.3 billion yen to 3,628.1 billion yen compared to the previous fiscal year, the components of which were underwriting expenses of 2,868.0 billion yen, investment expenses of 29.2 billion yen, operating, general and administrative expenses of 608.4 billion yen and other ordinary expenses of 122.4 billion yen.
As a result of the foregoing, Sompo Holdings, Inc. (the “Company”) reported ordinary profit, calculated as ordinary income minus ordinary expenses, of 141.8 billion yen, a decrease of 99.8 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 139.8 billion yen, a decrease of 26.5 billion yen from the previous fiscal year.
During the fiscal year ended March 31, 2018, profits decreased due mainly to an increase in net incurred loss due to natural disasters outside Japan, including Hurricanes in North America, etc., and an increase in extraordinary losses due to an increase in losses on disposal of fixed assets, despite reflecting the recording of a gain on liquidation of subsidiaries resulting from a reorganization of overseas consolidated subsidiaries as extraordinary gains, as well as a decrease in tax expenses in associated with reorganization.

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 2,218.4 billion yen, an increase of 6.1 billion yen from the previous fiscal year, due to increased net premiums written in voluntary automobile and other lines of insurance. The domestic P&C insurance business posted net income attributable to shareholders of the parent of 112.7 billion yen, a decrease of 41.0 billion yen from the previous fiscal year. This decrease was due mainly to decreases in underwriting profit and gross investment margin from the previous fiscal year.

(b)Overseas insurance business
In the overseas insurance business, net premiums written amounted to 636.3 billion yen, an increase of 298.2 billion yen from the previous fiscal year. This increase was due mainly to the consolidation of profit and loss items from the beginning of the fiscal year ended March 31, 2018 for a subsidiary that had been included in the scope of consolidation in the previous fiscal year. The overseas insurance business posted net income attributable to shareholders of the parent of 20.8 billion yen, an increase of 8.0 billion yen from the previous fiscal year.

(c)Domestic life insurance business
In the domestic life insurance business, life insurance premiums written amounted to 341.9 billion yen, an increase of 24.6 billion yen from the previous fiscal year. The domestic life insurance business posted net income attributable to shareholders of the parent of 7.4 billion yen, a decrease of 0.1 billion yen from the previous fiscal year.

(d) Nursing care & healthcare business
Ordinary income increased by 8.7 billion yen to 127.8 billion yen compared to the previous fiscal year. Net loss attributable to shareholders of the parent increased by 5.3 billion yen from the previous fiscal year to a net loss of 1.4 billion yen compared to the previous fiscal year.

Overview of Financial Condition as of March 31, 2018

Total assets as of March 31, 2018 amounted to 11,948.3 billion yen on a consolidated basis, an increase of 17.1 billion yen from March 31, 2017, due mainly to an increase reflecting growth in insurance business worldwide, despite a decrease arising mainly from the transfer of shares in Sompo Canopius AG.
Cash flows for the fiscal year ended March 31, 2018 were as follows:
Cash flows from operating activities resulted in a net inflow of 246.4 billion yen, a decrease of 116.4 billion yen from the previous fiscal year, due mainly to an increase in income taxes paid.
Cash flows from investing activities resulted in a net outflow of 31.8 billion yen, an increase of 494.8 billion yen from the previous fiscal year, due mainly to the rebound from acquisition of stocks of subsidiaries recorded in the previous fiscal year.
Cash flows from financing activities resulted in a net outflow of 66.5 billion yen, a decrease of 430.4 billion yen from the previous fiscal year, due mainly to a decrease in payables under securities lending transactions.
As a result, cash and cash equivalents at the end of the period were 931.0 billion yen, an increase of 157.5 billion yen from the end of the previous fiscal year.

Outlook for the fiscal year ending March 31, 2019

For the fiscal year ending March 31, 2019, the Company is forecasting consolidated ordinary profit of 290.0 billion yen and net income attributable to shareholders of the parent of 210.0 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 48.0 billion yen for net incurred losses (excluding household earthquake insurance) due to domestic natural disasters that occur in the fiscal year ending March 31, 2019, 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, 2018.
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.