Hello, this is Tajiri, Group CFO of Sompo Holdings. Thank you all for joining us today.

I'll be walking you through what we have disclosed today: full-year results for FY 2025, full-year forecast for FY 2026, and the shareholder return. I will just give you main points.

I will take questions after the explanation. Without further ado, please turn to page 3.

It says Executive Summary. This page captures the highlights of today's presentation.

Starting with FY 2025, we delivered growth across all business segments. Profitability gains at Sompo P&C, in particular, were the driver of the group profit, lifting adjusted consolidated profit to 535.2 billion yen, up 211.8 billion year on year, and a new all-time high.

Notably, this means we have achieved our FY 2030 target of 500 billion yen well ahead of schedule. Looking ahead to FY 2026, our adjusted consolidated profit on the net nat cat and other normalized basis is projected to grow by further 62.4 billion, again reaching a record high.

The key growth drivers are continued profitability improvements in domestic P&C, along with meaningful earnings contribution from consolidation of Aspen in our overseas insurance business. Our shareholder returns, we remain committed to the policy outlined in our medium-term plan.

Total returns for FY 2025, dividends plus share buybacks, will come to 281.6 billion yen. For FY 2026, we are raising the dividend per share by 33% to 200 yen, which would mark our 13th consecutive year of dividend increases.

The pages that follow will cover each of these points in more detail. Please turn to page 4.

For FY 2025, as I said earlier, adjusted consolidated profit came in at 535.2 billion, up 211.8 billion year on year, and a new record high. In domestic P&C business, profit rose by 95.9 billion yen.

While decrease in nat cat provided some tailwind, the main contributors were a plus 70 billion yen in improved base profitability of fire and casualty and 15 billion yen increase in investment income driven by stronger fund-related returns. Adjusted consolidated profit of overseas insurance business increased by 105.5 billion yen.

While favorable nat cat situation contributed, base profit other than nat cat also improved, for example through better loss ratio contributing 25 billion yen and increased interest and dividend income due to larger AUM bringing 27 billion yen positive impact. Sompo Well-being increased its adjusted consolidated profit by 7.9 billion yen with decreased claims payment and growing nursing care business.

Page 5 shows drivers of change for FY 2026 full-year forecast. In FY 2025, as I mentioned earlier, there was one-off tailwind coming from decreased nat cat losses contributing 97.7 billion yen.

FY 2026 adjusted consolidated profit is expected to be 500 billion yen, up 62.4 billion yen compared to FY 2025 normalized basis excluding the impact of this tailwind. For domestic P&C business, further improvement in underlying profitability of auto insurance and fire insurance will drive profit increase.

Profit growth of overseas business will be driven by not only Sompo International's organic growth, but also full contribution of earnings by Aspen, which was consolidated in February with the acquisition completed. Lastly, on page 6, I explain about shareholder return for FY 2025.

In accordance with the shareholder return policy in the mid-term plan, the total return amount has been set at 281.6 billion yen. Dividend per share is to be 75 yen for the second half, amounting to 150 yen for the full year.

As to share buyback, we have decided to buy back shares worth 69 billion yen for the second half, making the total annual amount 146 billion yen. For FY 2026, dividend per share is to be increased markedly to 200 yen, or plus 33% year on year, outpacing the annual 19% EPS growth in the current mid-term plan.

Dividend is expected to increase for 13 consecutive years. FY 2026 payout ratio is expected to be 39%, but on medium term, we will aim at increasing it to 50% level.

With respect to medium-term management strategy other than shareholder return, the Group CEO will present it at the IR meeting from 3:00 on May 22nd. This is the end of my presentation.

Thank you for listening.

My name is Muraki from SMBC Nikko Securities. I have two questions.

Please clarify how you calculate and define ROE. In re-examining ROE denominator, there's new supplementary remarks this time.

When you consider 13% in ROE target, I'm looking at page 17, bottom footnote 4, can you tell me about this section? Also, as you use ROE as your management KPI going forward, will you continue to use this adjustment or do you plan to introduce new definitions?

What is your view on this? This is my first question.

Along with this question is about share buybacks. Your ESR is beginning to surpass your target quite significantly.

Your reason for holding back on buybacks is because you have some visibility into investment or changes in circumstances? Can you enlighten us?

Thank you, Mr. Muraki.

Let me answer the first question from me. With regards to the ROE for FY 2026, about some adjustments made on the denominator when we calculated it and adjustments that we made, you're right, as mentioned on page 17, asterisk 4, ROE is adjusted to reflect the financial market assumptions.

The main adjustments include fund-related FVTPL where the unrealized gains have unexpectedly increased and inflated the denominator. Here, we estimate that plus 1 percentage point or more impact.

On a net asset basis, there's approximately 400 billion yen increase. That's the situation.

In addition, if we accelerate the sales of strategic shareholdings set out in the mid plan, if that impact is included, or if we sell off the large shares we own today, that would also have an impact. All together, we estimate that there would be an increase of 800 billion yen in net assets.

That's our calculation. If we adjust the impact, we estimate the ROE for FY 2026 would be 13.1% as stated at the bottom of page 17.

Then the question is, are we going to continue to use this definition? At this point in time, we have not decided on any policy going forward, but we will continue to make sure that the investors understand our true capability from both denominator and numerator, and then set our policy in the future.

Then let me answer the second question. While we basically maintain a total shareholder return ratio of 50%, we want to increase the percentage of dividend in the mid term.

To demonstrate that, we have raised the dividend payout ratio to 39%, and DPS was 33% higher year on year. The rest of the 50% would be used for buybacks.

The 50% of the sales of strategic shareholdings will also be used for buybacks as well. Meanwhile, in terms of mid-term and long-term view, we believe we have room to grow organically as well as also in terms of profitability.

We want to build the capability to achieve 13% in a stable manner. We will maintain 50% in total shareholder return and generate a numerator that allows us to stably generate 13%.

At the same time, we want to start preparing now to do a large M&A, especially at a time that the market is softening. We're beginning to see companies on sale far more than before.

At least I have that feeling. I've been doing M&As and I've been hearing about deals officially and unofficially, different opportunities, and really no specific deals at this point in time, and that is why we're holding back on buybacks.

That's not the case. We could see it happening anytime.

We're beginning to see that sort of situation. That is why we want to be prepare for large M&A, want to secure ample capital and funds.

That's the basic thinking.

I understood well. Thank you very much.

Mr. Muraki, thank you.

The

Here is Watanabe, Daiwa Securities. I have two questions.

The first question is about ESR on page 14. About target range, you set up a limit at 250%.

Am I right to understand that now you have removed this upper limit? As to Aspen's impact on ESR, was estimated 30 points, but now it is limited to 15 points.

Why is that? Second question is about your expected rate increase for auto insurance for FY 2026.

About the first question, let me answer your question. The upper limit of ESR has been removed.

In order to achieve 13% ROE, we thought that the upper limit of ESR should be 250% or so. It is not that once this 250% level is exceeded, then we will make more return on the short term that will not contribute to the improvement of our corporate value.

We thought that we should make it simpler, saying that we would like to aim at ROE 13% in a stable manner. This time, we decided to state that we will aim at ROE 13% in a simple and stable manner.

As I mentioned earlier, for large-scale M&A, we would like to secure a certain amount of capital. We target at 13% ROE organically, while keeping shareholder return ratio of 50%.

Our scenario might not be realized as it is. For example, if share prices fluctuate, then we will consider capital adjustment.

As to your second question, namely Aspen's impact on ESR, as you pointed out, initially we thought that this acquisition will push down ESR by about 30 percentage points. By the time Aspen deal is completed, the Aspen's profit had been accumulated, thus capital had been accumulated.

Also, at the time of acquisition, forecast itself was rather on the conservative side. The actual impact has turned out to be 15 points.

As to auto insurance rate hike for FY 2026 and our forecast, already in January 2026, we raised it by 7.5%, and in July FY 2026, we are planning another additional 1.8% revision. Beyond that, no decision has been made yet.

Given the current inflation, we will continue to raise rates so that on a policy year basis, we can achieve combined ratio of 95%.

Thank you.

First on capital adjustment. Up until now, your target in mid-term plan was to achieve a minimum 13%, and I was under the impression that that was your basic thinking.

As I listen to you today, perhaps that possibility has actually come down quite significantly. That's the sense I have.

Is that the right understanding? Because you're also considering large M&As.

That's my first question. The second question is on domestic loss ratio trend.

I forgot the page. No, I think it's page 23, bottom left.

You see FY 2026 forecast. Nat cat is included in here.

I'm not quite sure if nat cat is excluded, what is the year-on-year changes? Would you be able to explain that?

Thank you very much. Then let me answer the first question.

In FY 2025, there's one reason which is less nat cat, but because numerator got bigger, we temporarily achieved 13.4% or above. FY 2026, due to absence of the lower nat cat in 2025, we're forecasting the level of below 13% at this point in time.

Meanwhile, in terms of numerator, the level assumed in mid term will be achieved, but in terms of denominator, market changes not assumed in the mid term caused the denominator, including unrealized gains, to get bigger. There were factors that were not included in the numerator, and only the denominator was increasing.

If you look at the single year in 2025 increasing above 13% in a single year, we would not be doing the buyback. That's not what we are considering right now.

Let me answer the second question about domestic loss ratio excluding nat cat and the changes. With regards to the forecast in FY 2026, if you look at the main line of business in terms of automobile, to give you the breakdown, for FY 2026, we're forecasting 66.9%.

In 2025, was 68.9%. This is approximately 1.9% improvement year on year, approximately 2%.

Of course, at the basis, the backdrop is that there's a price increase and effect is taking into place. Next is with regards to fire.

In FY 2026, the forecast of loss ratio is 28.7%. In FY 2025, it was 25.9%.

On a year-on-year basis, this is increase in plus 3% or less. The main factor is that, like I said earlier, we do expect improved base profitability going forward.

Meanwhile, the gains from the release on the onerous contract will be gradually decreasing, because of that impact, the base loss ratio would be impacted. I hope you would understand it in that way.

That is all from me. Thank you for the explanation.

Going back to the first question, in terms of capital adjustment, if you were to apply that in this fiscal year, what would be the trigger? What would allow you to make that capital adjustment?

That's a difficult question to answer because it's difficult to assume if this happened, we would do a capital adjustment. We don't decide in that manner, it's quite difficult.

In terms of basic thinking, we don't make small adjustments or fine-tuning just because it's less than 13% in a single year, but we look at on a perpetual basis. If this situation remains we will not be achieving 13%, then we may consider capital adjustment.

Also, if there wasn't any large investment taking place in the near future, then we may need to do a capital adjustment.

Understood. Thank you.

Thank you, Ms. Tsujino.

Harie Sato from JPMorgan. I have one question, and my question overlaps with Tsujino-san's question.

In this mid-term plan, there's a statement about additional return policy explaining if ESR exceeds its upper limit continuously, or it is judged that other capital efficiency measure should be taken. As to the first one, this upper limit has been removed, and as to the latter, if all the unexpected factors are adjusted, that means that the net asset would move only as expected, then the additional return will happen only when profit does not increase as far as the current framework is concerned, that's my understanding.

Is that correct? Also as to this ROE 13% that we have been hearing, that level is to be maintained in the next mid-term plan?

Yes. If buyback happens only when profit become to smaller, that means that there will be no additional return.

Partly because denominator has turned out to be larger than our expectation, rather than buying back our shares worth hundreds of billions of yen, we'd like to secure it for future growth investment for the growth, and that will contribute more to corporate value. On the longer term, as I mentioned earlier, organically, we are going to improve our growth and profitability so that we can achieve 13% ROE in a stable manner.

Once a big M&A deal is completed and a new portfolio is in place, and after that, this yardstick figure would be higher. In how many years?

It depends on what kind of deals are there, at this moment, I cannot say anything for sure.

I have one follow-up question. Among the items adjusted for the denominator, the accelerated portion of sales of strategically held shares, the gains there are included in 50%, so that's okay.

As to the market factor, which is included in FVTPL, you cannot control it, so that is okay as well. Disposal of shares held by Holdings increased net asset, and that has come with incoming cash.

To remove it from the definition of capital, I feel a little bit uncomfortable. What kind of internal discussions happened about it?

As to the shares held by Holdings and that is used for the adjustment, well, about that,

first of all, as you pointed out, it came with cash. You're right.

That said, this sale of shares are basically for the acquisition of Aspen. Of course, money doesn't have color, but timing-wise, that is what happened.

Rather than carving it out alone and make a return, we thought that we should look at the overall capital base and watching closely the growth investment and M&A deals and so on, we manage the whole capital basis. As to ROE, the prices went up, and along with that, we made selling transaction, and we used the proceeds for Aspen, and that has become one of the items subject to the adjustment.

Understood. Thank you.

Thank you, Sato-san.

My name is Sasaki from Nomura Securities. Please tell me about overseas insurance business as I'm looking at top line.

According to this year's guidance, if you exclude the effect of Aspen, the percentage decline seems to be slowing down. That is my impression.

What is the impact of softening? How do you view this?

What is your view on the top-line trend going forward? Secondly, in your explanation today, you mentioned about M&A.

When you acquired Aspen, you said that you will prioritize PMI, therefore you will not do any big M&A. Because the market is changing quite significantly, and is that correct to assume that maybe your risk appetite itself is increasing?

Thank you.

With regards to your first question about overseas insurance and our outlook for that, as you point out, the rate is softening in all lines of business excluding casualty. I think we continue to see that trend, and that's our assumption.

If you exclude Aspen's consolidated effect and on Sompo International standalone basis, their increase in top line, we're expecting plus 6% increase in top line this year. This is slightly slower than the pace of increase in top line from before, but this incorporates the difficult rate increase environment excluding casualty that you have referred to.

We don't want to push too hard on the top-line growth on the back of weaker profitability. That's something that we absolutely want to avoid.

That is the market environment, taking that into consideration. Meanwhile, in case of Sompo International, they are aiming for geographical expansion, and they're targeting volume growth next year as well.

In that sense, this will sustain the top-line growth to a certain level. That's the plan.

The second question on M&A. Sompo International, the people there today are prioritizing PMI.

There's no doubt about that. Meanwhile, what about their M&A appetite?

Has it been low before and now getting stronger? No, it's always been strong and it continues to remain strong.

M&A deals in case of overseas, we may have opportunities to do bolt-ons by buying similar businesses as current SI, or we can buy businesses with different market cycle and with different risk. In those deals, for example, maybe there'll be less PMI work compared to Aspen, they are looking at wide opportunities.

Meanwhile, we don't want to do deals that would disturb PMI, but I think we're still open to other opportunities. PMI, we don't want to take 6 months, 12 months, we don't want to go many years.

It's just a matter of time. Now, M&A is not only about overseas, but also opportunities in well-being exist.

We are thinking of offering solutions one platform, and we can assume filling in the hole with M&A as well.

Thank you. If possible, I have one follow-up question.

For example, in Europe, whether it be life insurance or pension risk or domestic life, do you find that that is anything that is more interesting to you, more so than before?

I am not able to comment on the individual cases. With regards to your question, do we have more heightened interest compared to before?

No, it remains unchanged from before.

Thank you.

Appreciate it. Mr.

Sasaki, thank you.

Here is Sakamaki, Mizuho Securities. I have two questions.

First, about ROE and how to think about it. Without any adjustments, for this fiscal year's ROE, it's at 11%, there's a big gap with the target 13%.

As you continue to sell strategically held shares, there will be more downward pressure on ROE. You're saying that organically, you would like to target at 13% in a stable manner.

Organically alone, to what extent that you can use your capital, you think? That is the first question.

The second question is about rate hike of automobile insurance. On page 50, on a J-GAAP basis, 102.2% is your forecast, and there is a gap also with the 95%, for example.

Is there any room to accelerate the rate hike pace? Because you are rather on the conservative side because of the peers.

Is there any possibility of change in the stance as to rate hike? Organically, can we really target at 13%?

I think that's the question.

This year, we exceeded 13%. We were lucky.

Without overseas business, it's around 11%. Next year, it will be in the order of 11% as well.

To be honest with you, there are so many things that can be done by Sompo Japan and Sompo International to improve ROE organically. If we work on these things, maybe not in 1 year, but in mid to longer term, we will surely achieve around 13% ROE in a stable manner.

As to your second question, the pricing of Japanese automobile insurance, as you mentioned, on a J-GAAP basis, combined ratio for FY 2026, 102.2% is our expectation. As because of inflation and accident ratio, well, the actual numbers are not necessarily in line with our expectation.

For example, FY 2026, in July, we are planning to have additional rate hike in a flexible manner. Or this year, what will be the level of unit price or the accident ratio, and what will be the gap between expectation and actuals?

In any case, if we think that the profitability is getting worse, then we will offset it by raising rates, or more than that, by applying more detailed segmentation so that we can take only good risks. In other words, by applying some various risk selection measures, we will be able to achieve 95% level of combined ratio, and we will target at it on the mid term, and that policy remains intact.

Supplementary comment for automobile insurance. The inflation continues for a while, and then the unit price starts to go up, and to follow that trend, we raise our rates.

If that's the only thing we do, then we would lose our customers someday. That's our concern.

Not just raising the premiums, because in the past, there used to be 2,000 different risk segments, and now we have 15,000 risk segments. To apply appropriate rating depending on the level of risks, and we take pride in saying that we have made lots of progress compared to the peers, and we have changed the operation using AI to avoid fraudulent cases, and the detection rate is also improving.

For example, DLS with whom we have now tie-up as we announced the other day, and there's a hail this for the secondary peril, for the 10 billion yen or 20 billion yen level hail damage to which there is no reinsurance, and actually, something like that happened 2 years ago, using DLS services and technology, we can repair the property damaged by hails instead of replacing the whole roof, we can take such measures. By doing so, we can reduce the claims payout by about 30%.

That's very helpful. Thank you.

Thank you, Sakamaki-san.

I'm Majima. I have one question.

On page 4, you have FY 2025 results and guidance. You had domestic P&C investment income plus 15 billion, overseas insurance plus 15 billion.

Meanwhile, on page 5, this is FY 2026 forecast. There's no numbers on the contributions from investment income, but you said earlier that there's a significant increase in unrealized gains from the funds.

How are you pricing in investment gains and losses for domestic and overseas in FY 2026?

Mr. Majima, thank you.

With regards to domestic P&C, please look at page 19. We have a waterfall chart.

For domestic investment gains and losses, it is almost all flat or slight increase is what we are forecasting. As you rightly understand, sales of strategic shareholdings will bring less dividends year by year in billions of yen, but this will be offset by gains from funds.

We have incorporated that. With regards to overseas, please turn to page 34.

We show you the net investment income there. For this fiscal year, this is in dollar basis, but we are forecasting approximately $240 million increase in investment income.

This is primarily due to the consolidation of Aspen's AUM increase, which will contribute on a full-year basis. This is the major factor.

I hope this helps your understanding.

Here is Niwa speaking. I have two questions.

The first question is about ESR on page 14. I'd like to ask you about two points of view.

For March 2027, what is your forecast about ESR? For March 2026 and how you evaluate it, compared to the peers, probably your ESR seems to be the highest.

Do you really need so much capital? Because I heard in this meeting that you do need this level of capital.

As to adjusted profit and IFRS, the gap there meaning in terms of the proceeds of sales gains of the stock and shares, for this year or next year, is it possible to make some adjustments so that you can channel the sales gains more to shareholders return?

Niwa-san, thank you for the question. As of March 2027, what is the forecast for ESR?

Of course, there are some variables involved: accumulation of profit and the reduction of strategically held shares, they are positive for ESR. While the basic return and the return coming from the proceeds of sales of strategically held shares are negative.

On the netting basis, it is possible to see 10 points to 20 points the increase of ESR, with other elements being constant. As to your second question, do we really need so much capital?

Assuming a large scale of M&A, rather than making big return right now, we'd like to secure the capital for future investment, but it is not the case that we can use all the excess capital for M&As. Fungibility included, we'd like to secure the certain amount for the future investment rather than making big share buyback right now.

Thank you. I don't know if you can answer this question, but do you think that you have the highest capital ratio in this country?

Or are there any elements that we should take note, such as model revision, or any elements in terms of comparison with the peers?

We know that we are relatively at a high level. As to ESR calculation model, basically, it is not the case that we are using special model, there is no special factor or element involved.

Sorry for asking so detailed questions. Thank you.

Thank you, Niwa-san.