Group CEO message regarding the COVID-19 pandemic (for Group executives and employees)[Topics]
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May 20, 2020
Kengo Sakurada, CEO of Sompo Holdings, Inc. delivered the following message today to Group executives and employees regarding the COVID-19 pandemic.
FY2019 Financial Results and Future Plans
1. Introduction
Today, I would like to deliver a message to Group executives and employees around the world upon the announcement of FY2019 financial results of the SOMPO Group.
The novel coronavirus disease (COVID-19) has been exerting overwhelming influence on many countries around the world. Although some countries and regions have decided to reopen their economy, the COVID-19 pandemic has not yet ended and continue to pose a major threat to people's lives and economic activities. I would like to extend my deepest sympathy not only to our Group executives, employees and their families, but also to all people who have been infected. Also, I would like to express my heartfelt respect to everyone making strenuous efforts every day in the fields of nursing care and healthcare, and to everyone striving to support social functions and economic activities.
2. Gratitude for the Efforts of Group Executives and Employees
SOMPO is a global corporate group with a long history, aims to realize "A Theme Park for Security, Health and Wellbeing”, and has overcome various crises. And also now, all executives and employees are working hard to play their full part to fulfill our social mission as lifelines of people and companies.
In the nursing care business, everyone at the facilities is making tremendous efforts with a strong sense of mission to protect the lives and livelihoods of residents and users. Also in insurance and other various businesses, operations that are indispensable to corporate management, such as customer service including the customer center, policy management, and settlement of accounts, have been carried out steadily. And I would like to express my sincere gratitude to many executives and employees for their forward-thinking efforts in various ways, including the endeavor towards work style reform such as operational reviews and working from home, with inventive approaches.
3. Overview of FY2019 Financial Results
Next, I will explain about Group financial performance. Today, we announced FY2019 financial results.
SOMPO Group’s consolidated adjusted profit and ROE for FY2019 were JPY150.8 billion and 6.4%, respectively. Initial targets (JPY185 billion, 7.5%) were not met due to a succession of natural disasters, but results exceeded the revised earnings forecasts (JPY128 billion, 5.3%) announced in November 2019 by JPY22.8 billion mainly due to a decrease in claims paid as a result of warm winter and less snowfall. I would like to once again thank everyone in the domestic and overseas insurance business, nursing care business, peripheral business, and Group companies for your hard work during the year.
In FY2020, COVID-19 will certainly affect financial performance, but SOPMO has built a portfolio of insurance and other businesses that stabilizes profits, and will continue to demonstrate high resilience even in the post COVID-19 world. It is necessary to refine our assessment of the effects of COVID-19, but our policy is to ensure sufficient tolerance by managing the balance of “risk”, “profit” and “capital” at appropriate levels through strategic risk management.
[Reference] ESR as of the end of March 2020: 227% (Financial soundness indicator, target range is 180-250%)
4. Preparing for the Post COVID-19 World
With the outbreak of COVID-19, the systems, needs, and values in the world have changed dramatically. As I have been saying we are in the era of VUCA and uncertainty has heightened due to the destabilization of financial markets, protracted ultra-low interest rates, and changes in international affairs. In addition, remote and non-face-to-face communications will increase substantially and become the norm around the world, and because of this, digital technologies and data utilization will quickly become an important infrastructure. While Japan and other developed countries try to address the social issue of declining birthrate and aging population, other social issues, such as healthcare collapse and widening supply and demand gap for healthcare and nursing care became apparent. The world has certainly started to change with the introduction of online medical consultation, smart education and services, technological innovation, and progress on deregulation.
Amid ongoing discontinuous changes, it is important not to be obsessed with the past or customs, but to figure out the real nature of things and take action with courage. This situation should provide us an opportunity to substantially change the way we think and act not only for ourselves and our company, but also for the whole society. Nothing will change if we do not take action. SOMPO Group will also reexamine, redefine, and rebuild existing business models with respect to customers, channels, and work styles, and seriously move forward with corporate culture reform and business transformation towards the realization of “A Theme Park for Security, Health and Wellbeing”.
Needless to say, the power of 80,000 "people" around the world supporting the Group is absolutely essential. I suppose many of you are already recognizing changes through the alteration in everyday life, active use of remote work, and review of operating procedures. We should not regard such changes as one-off measures for crisis prevention, but see them as opportunities to fundamentally reconsider our values regarding everyday life and work styles. SOMPO Group welcomes and provides maximum support to all of these changes.
5. Rare Opportunity Presented by COVID-19 for a Better Company and Society
I think that one way to turn the changes brought by COVID-19 into an opportunity to evolve into a better company and contribute to the society is through a shift to thoroughly "output-oriented” organization. I would like you to improve emotional quotient (EQ) to accurately identify the needs of diverse and rapidly changing stakeholders, take actions with a strong awareness of productivity, and accelerate "quality improvement" and "work from anywhere” to this end. In the United States, we already started to see companies avidly search for new business opportunities from the viewpoint of coexistence "with COVID-19". Senior management will implement necessary investments with different levels, time frame, and order of priorities from those that are simply extrapolated from the past, so that we face the changes and will not be left behind.
And I believe each and every one of you have good ideas in your mind. I would like you to look around your customers, local communities, people's lifestyles, etc., and proactively communicate the changes identified and what you noticed to the Group. By bringing together the voices and ideas from all over the world, let's work altogether to build the one and only ecosystem in the world that is unique to SOMPO.
6. Conclusion: Strong Sense of Ownership Needed
As stated before and demonstrated by the financial results announced today, SOMPO Group’s performance has been solid even amid the COVID-19 pandemic. I would like you to concentrate on fulfilling your mission with peace of mind, think and act for yourself with a strong sense of ownership.
I can see a bright future ahead for SOMPO. More complex social issues will await us in the post COVID-19 world, but I believe SOMPO will be a leading solution provider. Let's work altogether to overcome the difficult situation with the aim of becoming a valuable and indispensable entity by meeting stakeholder expectations.
