Ms&Ad Ins Grp Hldgs Ord

Ladies and gentlemen, esteemed investors and analysts, thank you very much for taking time out of your busy schedule to join today s earnings conference call for MSNAd Insurance Grp Hldgs Inc. My name is Hayashi from the IR department, and I will be moderating today s session. Also participating are Mr. Nagayama, general manager of the accounting department, together with the colleagues from both the IR and accounting departments. The presentation materials are available on our company's website under the Investor section, specifically in the IR events area listed alongside the earnings release and other related disclosures for the fiscal 2026 first quarter results. Please have these materials ready as we proceed. As with our previous conference calls, we have included a summary of today's presentation in the materials. Therefore, at the outset, I will focus only on the key points, and we will dedicate most of the session to the Q&A. We aim to conclude the entire meeting in approximately 45 minutes, and we appreciate your understanding. Furthermore, please be aware that today's presentation may include forward-looking statements based on our current forecast. Such statements are subject to risks and uncertainties, and actual results may differ materially from these projections. We kindly ask for your understanding in this regard. Now, let me briefly outline the key points of our financial results. The key highlights for today are shown on page 4 of the presentation materials. First, adjusted profit for the first quarter of fiscal 2026, excluding gains from the sales of strategic equity holdings, was 251 billion yen, an increase of 64.7 billion yen year-on-year. This represents solid progress at 47.2% of our full-year forecast. In addition, Grp Adjusted Profit, which serves as the basis for shareholder returns, increased by 71.1 billion yen year-on-year to 310.6 billion yen. This also represents very strong progress at 38.8% of our full-year forecast. Breaking down adjusted profit by business segment, the domestic non-life insurance business recorded 126 The domestic non-life insurance business recorded 124 billion yen, an increase of 4.2 billion yen year-on-year. This was mainly due to improved loss ratios in automobile insurance, reflecting the positive impact of rate revisions. In the international business, adjusted profit increased by 52.9 billion yen year-on-year to 108.8 billion yen. This strong growth was driven by continued low loss levels, higher revenues across all regions, particularly in Europe, and the inclusion of equity earnings from W.R. Berkeley Corporation, which began this quarter. In the domestic life insurance business, insurance service profit improved to ¥16.5 billion and increased of ¥4.4 billion year-on-year. This was mainly due to a reduction in losses on honors contracts, following a review of key assumptions such as mortality rates.

Next, I will explain insurance revenue in each business segment. Please turn to page 8 of the presentation materials. Insurance revenue for the first quarter of fiscal 2026 was 1,615,800,000,000 yen, an increase of 208.8 billion yen year-on-year. Breaking this down, insurance revenue from the domestic non-life insurance business increased by 31.4 billion yen year-on-year to 819.3 billion yen. This growth was mainly driven by higher automobile insurance revenues, reflecting the positive impacts of late revisions. In the international business, insurance revenue increased by 169.7 billion yen year-on-year to 707.7 billion yen, driven by growth across all regions, particularly in Europe, as well as the positive impact of foreign exchange rates. Next, I'll provide an update on natural catastrophe losses. Please turn to page 9 of the presentation materials. In Japan, although natural catastrophe losses for the two domestic companies increased by 5.8 billion yen year-on-year, mainly because there were no major events in the same period of the previous year, the figure remains within our full year forecast range. Overseas, natural catastrophe losses decreased by 1.3 billion yen year-on-year, as there were no significant events in the first quarter. This is also within the range of our full year forecast. With regard to natural catastrophes that have occurred since July, Including the Kumamoto earthquake, detailed information is not yet available at this time. However, we currently expect these losses to remain within our full year forecast. Next, I'll explain the status of our sales of strategic equity holdings. Please turn to page 13 of the presentation materials. Gains on the sale of strategic equity holdings in the first quarter increased by 6.4 billion yen year-on-year to 59.6 billion yen. showing steady progress toward our full-year target of 268 billion yen. Finally, I will provide an update on our ESR. Please refer to page 11 of the presentation materials. ESR rose by one point from the end of March to 215%, reflecting the accumulation of retained earnings, including those earmarked for shareholder returns. We continue to maintain a sound financial position. As for the denominator, integrated risk volume, while we continue to sell strategic equity holdings, it increased due to factors such as our business investment and bearings, which was closed in May, and rising domestic stock prices. As for the numerator, net assets at market value, as mentioned earlier, these have increased due to the accumulation of retained earnings. As a result, the level remains roughly unchanged from the end of March. That concludes my remarks. We will now begin the Q&A session.

To begin, I'd like to invite Takemura-san from Morgan Stanley. Hi, I'm Takemura from Morgan Stanley and UFC Securities. Thank you very much for the opportunity. I have two questions. My first question is slide number seven. I'd like you to give us more detailed explanation. On year-on-year basis, profit is increasing. And especially international business, it seems that the profit growth was big. So could you please give us more color? Hldgs Ord Hldgs Ord Hldgs Ord Hldgs Ord Hldgs Ord Hldgs Ord Hldgs Ord Hldgs Ord Thank you. Slide number 7, Adjusted Profit Breakdown, especially the international business. The explanation on the numbers, I think, is your question. I am Nakayama from the Accounting Division. Thank you very much for your participation. And talking about the international business adjusted profit, please refer to page 21.