Overview of Business Results and Forecast

Overview of Results of Operations for the fiscal year ended March 31, 2020

During the fiscal year ended March 31, 2020, the global economy slowed sharply as the economic activities were suppressed due to the COVID-19 pandemic, despite gradual recovery of the economy as a whole. The Japanese economy is in severe situation, extremely depressed by COVID-19, despite improvement of employment conditions and a rebound in personal consumption.

Under these circumstances, the consolidated financial results of Sompo Holdings Group (“SOMPO HOLDINGS”) for the fiscal year ended March 31, 2020 were as follows:
Ordinary income increased by 117.3 billion yen to 3,760.3 billion yen compared to the previous fiscal year, the components of which were underwriting income of 3,334.6 billion yen, investment income of 266.7 billion yen and other ordinary income of 158.9 billion yen. Meanwhile, ordinary expenses increased by 123.8 billion yen to 3,567.9 billion yen compared to the previous fiscal year, the components of which were underwriting expenses of 2,839.2 billion yen, investment expenses of 48.1 billion yen, operating, general and administrative expenses of 539.1 billion yen and other ordinary expenses of 141.3 billion yen.
As a result of the foregoing, Sompo Holdings, Inc. (the “Company”) reported ordinary profit, calculated as ordinary income minus ordinary expenses, of 192.4 billion yen, a decrease of 6.5 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 122.5 billion yen, a decrease of 24.1 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 2,235.8 billion yen, an increase of 37.1 billion yen from the previous fiscal year, due to increased net premiums written in fire and automobile. The domestic P&C insurance business posted net income attributable to shareholders of the parent of 95.4 billion yen, a decrease of 44.3 billion yen from the previous fiscal year. This decrease was due mainly to a decrease in gross investment margin from the previous fiscal year.

(b)Overseas insurance business
In the overseas insurance business, net premiums written amounted to 589.6 billion yen, an increase of 70.2 billion yen from the previous fiscal year. Net income attributable to shareholders of the parent increased by 27.6 billion yen to a net income of 21.5 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 348.3 billion yen, an increase of 3.2 billion yen from the previous fiscal year. The domestic life insurance business posted net income attributable to shareholders of the parent of 15.9 billion yen, an increase of 1.2 billion yen from the previous fiscal year.

(d) Nursing care & healthcare business
Ordinary income increased by 6.9 billion yen to 134.4 billion yen compared to the previous fiscal year. Net income attributable to shareholders of the parent increased by 1.5 billion yen to a net income of 1.3 billion yen compared to the previous fiscal year.

Overview of Financial Condition as of March 31, 2020

Total assets as of March 31, 2020 amounted to 11,977.8 billion yen on a consolidated basis, a decrease of 40.4 billion yen from March 31, 2019. Total net assets as of March 31, 2020 amounted to 1,612.5 billion yen on a consolidated basis, a decrease of 167.3 billion yen from March 31, 2019.
Cash flows for the fiscal year ended March 31, 2020 were as follows:
Cash flows from operating activities resulted in a net inflow of 356.4 billion yen, an increase of 277.6 billion yen from the previous fiscal year, due mainly to improving underwriting result.
Cash flows from investing activities resulted in a net outflow of 140.1 billion yen, a decrease of 153.6 billion yen from the previous fiscal year, due mainly to an increase in purchase of securities.
Cash flows from financing activities resulted in a net outflow of 230.6 billion yen, a decrease of 211.4 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 967.7 billion yen, a decrease of 23.5 billion yen from the end of the previous fiscal year.

Outlook for the fiscal year ending March 31, 2021

For the fiscal year ending March 31, 2021, the Company is forecasting consolidated ordinary profit of 223.0 billion yen and net income attributable to shareholders of the parent of 150.0 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 60.0 billion yen for net incurred losses (excluding household earthquake insurance) of Sompo Japan Insurance Inc. due to domestic natural disasters that occur in the fiscal year ending March 31, 2021, 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, 2020.
  • The Company calculates the effects of the spread of COVID-19 on the forecasts by using only the effects which are reasonably calculable and of which the likelihood of occurrence is high at the present moment. The Company plans to reflect other effects to the assumptions of forecasts when the estimated amounts of these effects can be scrutinized. The Company will announce the revised forecasts accordingly.
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.