Release Date: November 19, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tokio Marine Holdings Inc (TKOMF, Financial) reported strong underlying performance in its international underwriting business, particularly in North America and Brazil.
- The company exceeded its original projection by divesting JPY606 billion in business-related equities in the first half of the year.
- Profit projection including sales of business-related equities was revised upward by JPY40 billion due to accelerated sales.
- The company announced an increase in dividend per share (DPS) from JPY159 to JPY162, reflecting strong profit growth.
- Tokio Marine Holdings Inc (TKOMF) plans to increase its share buyback budget from JPY200 billion to JPY220 billion, indicating a strong capital position.
Negative Points
- The company faces challenges with CRE loans due to high interest rates and inflation, leading to increased provisions.
- Life insurance premiums decreased by 32.9% due to block reinsurance, impacting the top line.
- Adjusted net income excluding sales of equities was revised down by JPY82 billion to JPY528 billion.
- There is an increase in the loss ratio of auto insurance, although a rate increase is planned to address this.
- Valuation of large M&A opportunities remains high, requiring patience and potentially limiting growth through acquisitions.
Q & A Highlights
Q: Can you elaborate on the impact of FX factors on your earnings and how it influenced your projections?
A: (CEO) The FX factor worked in our favor, particularly in our international business segments like North America and Brazil. Excluding FX, our underlying performance remains strong. However, due to the FX impact, our adjusted net income projection for fiscal 2024 was revised upward by JPY40 billion.
Q: What are the main reasons for the revision of your full-year profit projections?
A: (CFO) The revision is due to strong underwriting performance in international markets and accelerated sales of business-related equities. However, we are also increasing provisions for CRE loans due to challenging market conditions, which led to a reduction in the actual basis profit projection by JPY82 billion.
Q: How are you addressing the increase in the auto loss ratio in Japan?
A: (CEO) We have observed an increase in the auto loss ratio, but we have a plan to counter this with a rate increase scheduled for January next year. This should help stabilize the loss ratio moving forward.
Q: Could you provide more details on your shareholder return policy and any changes to it?
A: (CFO) Our policy remains consistent with profit growth. We have revised the dividend per share (DPS) upward from JPY159 to JPY162 due to the upward revision of our income projection. Additionally, we have increased our share buyback budget from JPY200 billion to JPY220 billion.
Q: What is the strategic rationale behind the TOB on ID NE Holdings?
A: (CEO) The acquisition of ID NE Holdings, a top-class engineering consultancy firm, aligns with our strategy to offer comprehensive solutions in disaster prevention and mitigation. This capital-light consulting business enhances our corporate value and complements our existing operations.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
