Sompo Holdings Inc U/Adr

Very nice to see you all. So today we have business CEOs and I'd like to talk about the whole group first and then each business is going to be explained by each CEO. Let us start with the executive summary. So it's a busy page in short. As far as numbers are concerned, we are on track. That's my understanding. and we have about 15 billion yen upward revision of the the full year forecast compared to the original forecast and risk is reducing but when we look at external factors there are some inflational pressure and there are other factors of headwind, and each business is not complacent, not satisfied with the current status, and we'd like to control both risks. Let's move on. First, share prices. Finally, we have achieved adjusted PBR of one. When I became CEO, I talked with many people about PBR and ROE. I was asked to talk about PBR and ROE. And PBR1, when I was asked about PBR1, I said I didn't really stick to that idea, and I was criticized for that. is that the value of liquidation. And we are just starting point. It's just a yardstick for us. So we will not be complacent about the current status and we'd like to do a good work to raise our share prices. Next one. This page, we'd like to look back 136 years of history. Looking back 136 years, we have come through lots of M&A's, consolidations, and we have come to the current image. In 1888, the Dasompo's original company was established. and we have come through lots of changes since then through consultations and integrations with various companies to come up with the current PNDC business as to nursing care. Today, we have a representative from the SI. Now we have a good presence with that entity in the market, but we had to come through lots of challenges And we withdrew from the business. We divested, exited from the business if we found that there is no fit in terms of strategy. The same applies to Himawari Domestic Life. INA was bought in 2001, INA Himawari, and now the life company has a good presence in the marketplace. but that was after the acquisition and PMI to improve corporate value. For a nursing care business, we bought Watami Nokaigo and Message, and then we integrated the two companies. So we made lots of post-merger acquisition efforts. And we have come up with this very good company with good presence. But in the process, we also exited from some entities. And this page illustrates all that. Let's move on to the next page. It's a busy page, but in short, the message here is as follows. On the left-hand side, we have 2024 forecast market cap pushed by the share price increase. It's now a little bit below 4 trillion yen. And on the left-hand side, pie chart, by 2030, we will both market cap and adjusted profit. We'd like to double both of them Internally, we use the term mid to long term. On mid to long term, we'd like to be more clearer, much clearer by showing exact year. And so 2030, here, this is the to-be state by 2030. In the middle, the specific actions that we are going to take to achieve that, it's a big design. for the domestic PNBC business. It has faced lots of problems and issues and worked on seriously. And based on the business improvement plan, just to implement it will not be enough in this shrinking domestic market. the changing needs of the other customers so we need to regain customers trust and also we need to work on the the earning spaces that's why we are working on SCR and the profit and growth engine is our overseas business disciplined underwriting and investment and And geographical expansion is going on in a very steady manner. For well-being business, the core entity is Himawari Life. And the nursing care business, which makes SOMPO unique, we are going to make it more sustainable. And through that, we are going to improve corporate value. By 2026, the mid-term plan, under the mid-term plan, we'd like to accelerate that effort for P&C business. simple P&C, the concept is explained in the Midtown Plan. Both at home and abroad, we would like to integrate the P&C business. We would like to operate it in an integrated manner. The two strong balance sheets are going to be made stronger and come up with the optimal reinsurance and operation and at the same time center of excellence is to be accelerated both at home and abroad Optimal practice, best practice will be learned from each other. Simple Japan, for example, Turkey and their New York people visit Japan and retail underwriting know-how is not trying to implant it in Japan. That should be done, two-way manner, between Japan and outside Japan. And that's what SOMBU Japan aims for. SOMBU Wellbeing, the Himawari Life, has insured health business, which is to be upgraded, strengthened. And nursing care business, in the shortage of labour force, we'd like to sustain our nursing care business, sustainable nursing care business, future nursing care business. That is not enough. Healthcare data will be connected. so that many customers, users, will be able to think about positively to live long. So that healthy lifespan or improve the concerns of nursing care or after retirement, the fund, and that will be part of the pieces And as a result, by being a companion for our customers, we are going to expand ATV and we are going to make efforts to improve enterprise value. But for the well-being, it is capital right business and the low co-relationship with the rest of the business. So that will certainly improve the value of our corporation. Next. Now, we'd like to talk about the progress in management targets, especially two important ones, LOE and EPS growth. In short, they are on track And in fiscal 2024, we will hit a plateau due to the temporary sluggish growth of profits in the domestic P&C business while strengthening the foundation for the future. But as I mentioned earlier, the earnings are improving, so we think that the things are on track. 2024, as the adjusted The profit has been revised upward by 15 billion yen. And as to for 2026, ROE 13 to 15% and more than 12% for adjusted EPS growth. They are progressing very well. Page 9, please. So the progress toward improving profitability and earnings stability. And I'd like to pick up some big items here. Whether it is LOE, of course, the profits are the key. For domestic P&C, the progress has been made in improving earnings of fire insurance, which has been a long-standing issue. A profit recovery of over 70 billion yen is expected due to rate revisions. And as to from the center of excellence perspective, The portfolio is steadily improving through strengthened underwriting and collaboration. The quality of portfolio itself is improving. For overseas business, disciplined underwriting is the key, and we are working on that steadily. Not just now, but for the future, we are making investments. Namely, we are expanding geographically, as I mentioned earlier, and we are actually making more progress than expected. And we are looking at the revenue increase of over $400 million. In addition, This year, we were exposed to secondary perils, and that impact has been controlled with the members from outside of Japan. We say that we can control portfolio, although we cannot control natural disasters. So the impact coming from NatCat is becoming smaller. Next page, please. The next keyword is the cyclical management of capital. In the Mid-Term Plan, 1.2 trillion and the 300 billion from the risk reduction, the total of 1.5 trillion in capital is to be generated. 1.2 trillion is from the accumulation of profits. And that will be used for our gross investment and striking a good balance, not only for the short term, but to increase the value on the longer term. 2030 adjusted profit is to be doubled and the corporate value is to be doubled.

Moving on to page 11. Here, we are talking about M&A and the growth investments. Well, after the endurance deal, as a matter of fact, that's been the exit of the canopies of Skoll or Lloyds. So the exits have made the progress. And by utilizing the platform, Simple International has been growing steadily. ROI is 16% and over. Well, regarding M&A, we cannot always make a success. Sometimes it's a good case, sometimes unfortunately not. But we have a track record of achieving sustained growth by aggressively and boldly taking on and succeeding growth investments. As mentioned at the beginning, the stepping stones of how we have been growing. So growth through M&A is something that we have to be actively working upon. for domestic Japan for the differentiations, the investment in JBR, or well-being, connected and be connected, fitness, rise up, chuckles up, the direct investment in those entities, and also for Palantir. It's not only the absolute return, but also the capital, and also the boundary solution that the Palantir has. is going to be used for our business practically, so that Ishikawa-san is going to probably talk for the domestic business and also Narasaki-san for the DX side. But this investment in volunteer has been strategically quite important for us. Moving on to page 12. Well, our main business is of course the insurance. That's the core business for us. So the underwriting profit is an important factor Well, this earnings coming from the underwriting profit is steadily growing, and the fire insurance, which has been the long-term challenge, have been taking up initiatives, not only pricing, but also the underwriting reinforcement and portfolio. And for the automotive insurance, the impact has still been lingering. So the initiatives on the car insurance is going to be ongoing. for the overseas business, as I mentioned earlier. Right now, the underwriting profit and for the investment side of the profit have been steadily growing. But when we look at the future, we have to think about the geography expansion for the further stable business performance. So the geographical expansion is going to continue steadily, as you see on the right-hand side. On page 13, we are talking about the further risk takes. Well, it's about the investment as a group, as a whole. As you may remember from the previous mid-term plan, the capital transfer to SI had increased the AUM and also the underwriting capability was expanded. This was initiatives under the philosophy of one simple project. and the effect is already close to 20 billion yen to bottom up the profit. The 2024 group investment profit is expected to be about 30 billion yen higher than the initial forecast. So we shall continue to strengthen our investment while paying attention to the changes in the investment environment And of course, we have to think about what we need to protect and what kind of rules and regulation we have to abide by. And then think about the appropriate asset allocation to get the profit out from the investment. On page 14 is the well-being business. For the time being, this is going to be coming, the main core is going to be the human life, ensure health business. And the steadily human rights margin is expanding. With that as the core, as I mentioned, We have to think about the expansion of the long-life and also providing the solution for any concerns, and then think about the expansion of the business in terms of the financials. The details will be explained later by Watanabe-san. On page 15, in terms of risk reduction, at the time of the announcement of the meeting plan this year, we were talking about the 200 billion yen. At the minimum, that was what we have said. Right now, we dream that the midterm plan target of 600 billion yen was the target for the initial target of 200 billion. That communication is something that we value still now. or mainly with the sales force. We've been explaining that carefully. And we are also explaining about why it is important for us to make a decision of slowing down of the equities holdings. And the market has started to understand our speed of the risk reduction has been accelerating. The 600 billion yen during the midterm plan target is going to be just canceled and there will be discussed for revision, whichever the case is. The cash generated from the sale of strategic shareholdings. How to use it will make a decision for the future of this company. So that will be done with an emphasis on a balance between investment future growth and the shareholder return with our commitment. Page 16, please. Here we are talking about the shareholder return. During the current mid-term plan, we are going to be accelerating the pace of increasing the ordinary dividends from 12% hike level to 32% hike level year-on-year. And as was mentioned last week, the company announced 155 billion yen share buyback, its largest ever as a company. Well, the level of ESR that we are committed to has to be monitored carefully and also the ROE level that we've been communicating and also the EPS growth commitment. All of those factors need to be considered. and then the return to shareholders to that level was necessary. That was our management decision. So we recognize the most important is to balance short-term capital efficiency improvement with investments in sustainable growth. And on page 17, this is the progress in human resources strategy, the corporate culture change, especially for the domestic business. We have talked about a lot of status quo bias, especially in the domestic operations, so that we shall renew the corporate culture, review code of conduct, and the value standard. We've been working that across the company. For the group, the single largest asset is the human resources, the human capital. So the investment in the human resources is the most essential for the growth of the company. So in the very beginning of the year, we said that spending in the human resources is going to be prepared for 30 billion. That's going to be earmarked to make sure that we have enough people and to spend enough on the human resources. And also for the corporate value increase and the stock performance improvements, we want to make sure that group employees are going to be feeling the same so that we'll consider introducing a stock compensation program for the group employees to increase corporate value in concert with employees. We are going to make some announcement later on. because the staff and the shareholders are going to be in alliance and then move towards the better value creation. On page 18, This is the digital strategy. Narasaki-san is also attending this meeting, and I think he is going to talk about the digital strategy. But this digital and AI, the utilization of those digital have been done by all the relevant parties. And since the beginning of the year, the group CEO, I've asked the group CEOs talking about that the goal for this year is for everyone to benefit from digital and AI. Well, exploration of the edge technology is, of course, important. However, we have 70,000 people under our umbrella. So for all those people, intentionally or unintentionally, if they can feel the advantage of the AI, then that's going to be fabulous. And when it comes to risks, the infrastructure that they feel safe to use is most important. So the specifics will be explained later of how AI has been implemented on site. So lastly for my part is on page 19. Again, there are two indicators that we are paying attention to. Those are EPS growth and ROE. For those two yardsticks, sustainable growth and profit is going to be important, and also the assets that we get from the investors needs to be appropriately managed and controlled. So, as I may be repeating, the profits that we are going to be generating, and also the cash generated from risk-taking is going to be based upon the balance between the return and also the investment. So we are going to walk the talk. As a result of which, the year FY 2030, the profit level and the corporate value will be doubled down, and then we will be taking the measures of increasing resilience and the Also, we are going to be talking about the safety and the well-being for the future for Semple Group. Now that's all about for my part. Now, Ishikawa-san is going to talk about the domestic business.

Now, here is Ishikawa, CEO of Domestic Beyond the Sea Business. Page 21, please. So let us reconfirm based on the reflection of the past year. The basic stance dedicated to customer society and our values. And we are going to realize a new sample Japan that is unique and resilient. And the entire company is now working together to achieve this. As you can see, for that we have SJR. The two axes, first financial one, the reform of the earnings and its foundation, and also the non-financial portion, the two strengthen the culture and the quality on the longer term. Next page, please. So here, I'd like to introduce the overview of the progress made in each initiative of SJR. First, in the area of the financing, the portfolio of underwriting reform is happening through rate revisions based on policy and underwriting control. The key to portfolio reform is segment analysis and portfolio management, which in turn improves pricing and underwriting technology and the qualifying risk appetite. The revision of fire insurance and automobile insurance implemented this year, here we have made it a top priority to improve the portfolio and earnings. And in accordance with earnings status of each segment, And as to the other area, which cannot be covered by pricing alone, we did so through underwriting. And as to in retail sales area, we are focusing on standardizing sales activities, completing the process through agencies and improving productivity through digitalization. We have already started full-scale efforts towards standardization using FSA tools for the second half. In the commercial area, The competitive environment is undergoing drastic changes partly due to efforts to reduce strategic shareholdings to zero. So the key for us to survive and demonstrate value in this environment is to provide expertise and comprehensive solutions based on that expertise. And we have established a training system for all corporate sales staff and have already begun a pilot rollout, advanced specialised training developed in collaboration with external consultants, mostly, in the insurance claims service and its reform. We are in the midst of a pilot rollout aimed at transforming operations into a divided and a concentrated one. We are implementing measures such as expanding the coverage scope of case management and centralizing triage by dividing up the work of fraud detection, and we are making steady progress with a sense of definite change in both areas. Let me also explain the non-financial area. Last fiscal year, we caused a great deal of inconvenience and concern due to a series of problems, but as we have begun to implement various measures, the score on the cultural change survey, which indicates the degree of cultural change at the company, is improving, and we are also beginning to see signs of gradual improvement in customer relations evaluations. such as NPS. And with that, I would say that we have come out of the worst situation. Through NPS, we are also starting the development of human resources. These efforts to strengthen our business infrastructure might not have a high profile, but they are essential pieces of sustainable business operations and strengthening competitiveness, and we will continue to make steady progress. Now, let me shift gears a little bit and explain the progress of our specific plans. First, about LOE. We are aiming for an ROI of 8% or more by the end of the current mid-term plan. And the effect of HJR are yet to be apparent and various upfront investment costs are mounting. So the planned figure was 1.5% for FY2024. For the combined ratio, we are almost on the track. As to strategic shareholding, thanks to the efforts of sales department and others, we have been able to have speedy and careful dialogue with issues, and we have almost achieved our initial target in the first half of the year. So we doubled our full year forecast to a reduction of 400 billion yen. Next page, please. Automobile insurance. As Mr Okumura mentioned, the earnings environment for automobile insurance continues to be extremely severe due to rising repair costs and an increase in secondary periods such as those caused by hail in particular. As we have already announced, The rate revision in January 2025 will be the first and biggest step toward improvement, but we believe that this alone will not be enough to overcome the current severe environment. We will consider further revisions based on the revision of the advisory rate, and at the same time, we will work on individual underwriting measures. And in doing so, we will refer to the specific figure of 5.7%. And as to micro-segment underwriting measures and those which cannot be covered by pricing and strengthening disaster mitigation and full detection in cooperation with the insurance claims service department will happen. At the same time, we are going to achieve early improvement of earnings. Next page, please. Fire insurance. Core underwriting profits of fire insurance are expected to be in the black in FY24, as was the case for 23. And I think it is fair to say that the improvement of earnings is on track. We are also making a steady progress in our pursuit of profitability, agility and stability, which are the concepts of our portfolio reform. For example, Compared to the last revision, in the rate revision most recent one implemented in October this year, we were able to reduce by almost 90% last-minute early renewals just before the revision month, which would have diminished the effect of the revision by controlling various underwriting rules. We are also actively controlling the underwriting of old properties and high-loss industries, which are issues in our portfolio. And the new business ratio of old properties has decreased significantly compared to June 2023, before the implementation of measures. We started to take measures in July 2023. Since then, we have seen improvements.

So we recognize the improvement. The expense ratio is the biggest challenge for the long-term survival of the domestic PNC. And as you know, the expense ratio rose significantly in FY2024 due to an increase in various upfront costs, especially the system cost, which is trending up. also needs to be addressed to the Australian support to bring down the system cost. However, that is not going to be enough for the cost reduction so that for the solution, we are currently working on more of the drastic solution to this problem. And for the better efficiency, we're working on ALM, LLM, and the GenAI. For the SOMPO AI chat or Oshiete SOMPO, those systems have been already utilizing those systems and on a regular basis has already been in operation. Let's move on. For the sales transformation, That's another essential piece to improving profitability and competitiveness in SJR. So with regard to the retail sales, we are transforming ourselves into a lean and strong sales force by standardizing sales activities. well for the productivity improvement we plan to sequentially establish the new administration support centers in seven areas nationwide to reduce approximately 15 percent of our sales admin workload by consolidating most of the sales admin work and also we're going to use the tools so much starting from october for 450 sales people we are going to conduct the trial those trials and also with the efficiency We're going to have the high quality agency and also for the SME market. We are going to allocate the resources. Let's move on. The key to the transformation of the commercial sales division is specialization. So by strengthening our expertise, we will transform ourselves by being not merely an insurance provider to a provider of comprehensive risk-related solutions, thereby strengthening our competitiveness. In order to do so, the stronger specialization is needed. So we already expanded its internal learning platform to provide highly specialized training formulated together with external consultants. And also the field underwriter unit which directly proposes highly specialized products to customers. A team of the field underwriters are are going to be formulated. And today that team comprises of 20 team members. And that team is expected to win approximately 6 billion yen in new business this year already. So in the future, we intend to dramatically strengthen the overall capabilities of our entire commercial sales division by expanding such specialist units in other areas too. The next page. Well, in addition to that, we will take steps to strengthen our company uniqueness in turn. In October last year, we signed a business alliance agreement with JBR, whose business domain is home assistance. Japan-based reputation, the risk system, JBR. That could be, for example, together with our products so that there will be value added solutions to offer our customers. And also the partnerships can be, for example, with RiseUp or collaboration with Toyota dealers in my assurance, for example, are also progressing. And the transformation at the claims service department is also steadily making progress. Well, a lot of trials are ongoing today. For example, the optimization of claim allocation process aims to equalize the workload in each organization by broadening the scope of organizations to which claims are allocated so that we do not keep a customer wait for a long time. And the other is the sophistication of the detection of fraud, the fraud detection. Well, until now, the person in charge was responsible for fraud detection and its confirmation, but with multiple cases to deal with, the detection, which requires a lot of time and effort, is not easy. Therefore, we'd like to have the separation of those roles and responsibility. So that's going to be much more enhanced in terms of the claim service quality itself. And the detection rate has already gone up by four percentage points by having the separation of those roles under responsibility. Lastly, I'd like to talk about the progress of the culture change. For the culture, the culture doesn't change overnight. This must be a long-term effort. But we are starting to see the signs of improvement. Well, as you see on the left-hand side, so far to date, we held the dialogue and communication by means of town hall meetings. And the analytics of the questionnaires have had a lot of commentaries about the distrust or the concern about the company, but those voices have been replaced by recommendations or the improvement. So as you see on the down right-hand side, in order to have the culture change to accelerate, the culture change survey is being conducted. And the score has been steadily going up since the beginning. Having said that, the culture change is a long way to walk. And there is a risk that a misstep could lead to a reversal. So as you see on the right hand side, we have made a day to review and that is going to be conducted in November. It was conducted actually. and the lost trust the fact and what had happened we should not let it go under the bridge so that we have established new room for passing down to learn from the past and pass on to the next generation so the culture transformation is something that we want to steadily make the progress that's all from myself thank you jim please

Through the first nine months, we continue to see strong financial performance, and we feel positive about our ability to deliver on our financial targets, and in some cases exceed them should the current market conditions continue. We're forecasting to exceed our 2024 profit target, while at the same time continuing to invest in infrastructure, growth strategies, and people. We're very positive about our growth strategies as well and the objectives that we've set for ourselves in continental Europe, the UK, North America, and throughout Southeast Asia. We continue to see improvements in underwriting, and we believe the most recent underwriting years will continue to remain strong. Our rate environment is stable. We are seeing certain lines under pressure, but the baseline and the performance of those businesses has been strong, and so we feel confident to move through the cycle in these lines of businesses. On this slide, you can see that we are on track to achieve our three external financial objectives. Operating income of $1.5 billion by 2026, over $1 billion of top-line growth coming from our strategic growth regions, and maintaining an operating ROE above 13% across the cycle. When we look at the 2024 numbers, we continue to see an exceeding of our targets for 2024. This is as a result of the first nine months of our performance. We have five more weeks to go in our fiscal year, and we do watch very closely the weather and storms, although cat season is almost behind us. Next slide. On this slide, you can see that the gross premium written is exceeding 9% year-to-date. This excludes Agrisompo, which is our crop business, primarily in the United States, whose pricing is derived from derivative pricing. The growth initiatives of 400 million have seen, sorry, increased premium by 400 million from our growth initiatives, and most lines continue to exceed rate and trend. The operating income is up 25.3% over 2023, the same period, that is driven by both improvement in our loss ratio and the net investment income, which we've seen an increase of 42.6%. Operating ROE, shareholders' equity is up 7%, and we continue to see strong growth coming from all markets, not simply the growth areas that I've highlighted. On the next slide. Thank you. This slide highlights the areas of growth that we targeted for the three-year plan, mostly from North America, which is primarily Canada, and an expansion into new markets within the United States, namely places like Denver, Houston, and Miami. In continental Europe, we've expanded our operations into new countries, such as France and Switzerland, and we've expanded our existing business in Spain, in Italy, and in Germany. Singapore, we've been investing in the market in Southeast Asia by investing in expertise in the commercial space to capture much of the large commercial risks that are placed in Singapore as a hub. We've hired 178 underwriters year to date to support this growth, but as I mentioned earlier, This growth comes not just from these growth initiatives on the insurance side, but strong performance from our global reinsurance business, our business in Brazil, and in Turkey. The next slide. You will continue to see the improvement in our combined ratio with a 4.6 percentage improvement over final combined ratio of 2023. You can see that the majority is coming from the reduction in loss ratio, which, as you recall from last year, had significant prior year development and portfolio reserve strengthening. And we've been able to reinvest this into our growth and continuing to build out on our infrastructure, not only in the new territories, but also in our existing mature markets. The next slide is a slide that I have shown in the past. It shows the difference in the impact that CATs have had on our portfolio. And so when you look at 2017 to 2024, despite the large CATs that we've seen in years in between, because the size of the portfolio, the re-underwriting and the repositioning of the portfolio and the scale have had a much smaller impact on our overall loss ratio and combined ratios. For 2024, there was two very recent hurricanes in the United States. One happened at the very end of the third quarter, and one happened at the very beginning. And so we continue to see those develop. But we are very comfortable with the forecast, as you see here, of between 450 to 500 million in 2024. This compares favorably to a plan of 517 million. What's important to note is that not only the named storms, but a significant amount of losses come from secondary perils. And this would be flooding, tornadoes, and not always named wind events. On the next slide. I mentioned the significant increase in net investment income. You can see that the assets under management in the past three years has increased 56%. This is driven by the strong growth on the insurance and reinsurance side, enabling our investment team to put more money to work. Market conditions have also continued to be favorable in terms of interest rates, particularly in the United States, where it has lasted longer than we had anticipated this time last year, and also from some strategic asset reallocation that was done throughout the portfolio this year to take advantage of the interest rate environment and to lock in on better terms than were expiring. So that being said, I just reiterate, strong performance year to date, a strong top-line growth. Again, commodity pricing is impacting the agri-sample business, but over 9% coming from the insurance and reinsurance business. We are on track with respect to our growth initiatives. We can remain focused on underwriting, not on top-line growth, and we see the market continuing to present favorable opportunities, both in the mature and new markets.

Thank you, Jim.

So for well-being, Watanabe-san, please. This is Watanabe speaking about the well-being business. First of all, the growth model of SMPO well-being, just for the reconfirmation. Okumura-san has mentioned several times, talking about the three concerns, the concerns for health, nursing care and the retirement finances. The business of the well-being is in order to alleviate those three concerns. Within our group, there are some strengths that we can use to address those three concerns. And those strengths will be utilized for connecting the businesses and be connected with the customers. That's the mainstay for the well-being. And then as a platform of the well-being, the contact point will be created and also the forecast engine for the second life planning and also the forecast for the nursing care will be created. And by making those engines, there will be a forecast for the health conditions as well as leading for the changes in the behavior. So that's a customer base. It's going to be created as a part of the well-being business. That's going to be the base for our activities.

So to customers and to families, we are going to prevent those services so that we will have a better and in-depth connection with them. And with that lifetime value, LTV is going to expand by presenting values and services to our customers on a longer term. So internally, we have those services, but there is a marketplace, the players collaborating with us. And in addition, we are going to make some M&A activities to add additional services so that we can solve three concerns. And this cycle is going to be sustainable. Next slide, please. Wellness Communications, the company, they're growth-based. This is the health management cloud. It's combined with ChocoZap. This is a new value package which is launched. for the other corporate clients and also and we have the other will be which is support center for the three concerns and we are going to open some uh the stores poc is now is something that we are currently working on and that is the progress on the well-being next slide So the big resources of earnings for well-being is the Himawari life, and that's what I would like to talk about now. Adjusted profit, IFAS basis, increased by 6.5%, is going to increase by 6.5%. And the new business margin, NP, with additional services, will expand, and that is the sources. for that and as to ROE in the portfolio the variable life variable insurance the new the insurance and with that expansion of business is the sources of the earnings improvement next page please so more specifically at the Himawari what is the growth model We have been providing Insure Health. That's a combination of health care and insurance. In that context, we are going to add the healthy management. And so from 2020, especially the medical and the cancer insurance, and we also added the health challenge. Through that, we have provided cash back to the other customers and we could expand our market. And we are going to accelerate it. And on the right-hand side, we are going to add the health care services, the support for the health to the customers. And that is the to-be state of us, especially for us. get healthy challenge program the successful the people will be able to have the health related expenses and also the retention for those customers tends to be higher that said such as Health Challenge or the Health Up, the number of customers using such services is not so high. So going forward, by combining well-being and businesses, we would like to extend our customer bases using those services. From October this year, My Himawari Up-based service was launched and Rise Up, the customers integrated into that service. And we are talking about 550,000 customers by 2026.

So like this, by having the better healthy life, that's going to be a positive impact on the earnings that we get from the premium business as well. So that is going to be the function of this business. And next is the KPI progress in this well-being business. For the adjusted profit, because of the changes for the incentives and also the inflation, that's been the dip. I'm going to talk about that there is an improvement in the future insurance and also the compensation system itself. We are going to have the improvement in non-billion. And also for the residents' occupancy, we have two types of the facilities. For the SOMPO's home, the occupancy is 96% already, and for Ravile, we are going to make the progress to aim at 95% of the occupancy. So as I said, the new services and also the future nursing services are going to be further deep-dived so that for the business ROE, we want to look at drop percentage plus of ROE by 2026. So specifically for the nursing home services, as I mentioned now, the future nursings, We already have some track record, especially the FY20 for the current fiscal year. For 280 facilities, we have been providing the services, so the total of the profit of $1.1 billion. In addition to the payroll reduction by $1.5 billion, we did some spending so that net profit is $1.1 billion. In addition, the non-insurance services, the private service is an extra service that we can provide. So facility and services are going to be also providing that new services. And for the platform business, that's for the service providers, not ours, but the service providers would do that. And also the meal service and NDS, the ND software, the new products of NDS is going to be also added. So those service expansion is on track. By doing so, the service quality will be enhanced, and the profit is going to be also further expanded. And the well-being, with the business tie-up with RiseUp, we also have the services to support the life itself. It's going to be provided for the operation businesses, so the new business is going to be having much more as a lineup. That's for well-being. Thank you so much. Now, we'd like to move on to Q&A session. SMBC Muraki-san, please.

Here is Muraki of SMBC Nikko. Thank you. I have two questions. First, on page 7, Mr. Okamoto explained about the market cap and the profit to be doubled. Six trillion yen of market cap was the other goal, I understand. And am I right to understand that you have revised it up and asked the shareholder compensation program to be introduced? At this moment, you double market cap. Could you please talk about your thinking and discussions behind it? I also want to confirm the numbers. Assessor's profit doubled 540 billion. The breakdown, please collect to me, overseas for this year, 194 billion yen this year, will be 320 billion. And well-being... In 2026, IFAS, 80 billion yen, including nursing care, it will be 110 instead of 80. Am I right? Could you please confirm the breakdown? And then I would like to ask my second question later about M&A. Thank you, Muraki-san. So for this page, The thinking remains unchanged since the issuance of the Mid-Term Plan, but we are becoming more specific and we have reset the numbers here. Currently, the numbers look stronger, so it will be more than 6 trillion yen if we just double it simply. But there is some volatility there on the short term, but the thinking remains the same. Both at home, between at home and abroad, because of the FX conversion, 10 billion, 20 billion yen differences could emerge. But as Mirakusan said, the 300 billion for overseas and the 100 billion plus alpha for well-being and domestic. And organically, how are we going to achieve it? Not only about numbers, but how to deal with the shortage on shortfall on the strategy. We are finalising discussions as to shareholders' compensation scheme. Here, even before the discussion on the mid-term plan, we had been thinking about it. the to raise the dividend level the employees are supporting it and the shareholders also are supporting it and the yardstick should be yes we should be on the same page but we'd like to make it more specific for all the employees though we'd like them to feel the better corporate value And domestically, we have close to 50,000 employees. So we are talking about a big procedure there involved. And that's all I have. Thank you. so the perfect increase has been confirmed so far more than 100 billion for overseas and 30 billion for well-being so in organic part is not really aggressively included in those numbers i think So let me ask about the M&A. I think that you have earmarked quite a bit for M&A on page 15. So the proceeds from the strategic shareholdings, M&A budget is 50% of 1.4 trillion yen, so about 700 billion yen. On page 10, bottom right, you have usable capital and the proceeds are coming from the sale of strategic shareholding and the profit accumulation is rather big. So by 2030 or so, how much budget for M&A can be secured based on what kind of number for M&A you have been making preparation could you please give me some other image there I think you have made some comments on that and in May you came up with a long list You made some adjustments. Per deal, what is the upper side of the M&A budget? Is there any change there? So Hamada-san is going to talk about some numbers. But during the midterm plan period, if there are any opportunities, we have appetite. We'd like to do some M&As. That said, as was the case for the previous plan, we could not find good candidates, nice fits in terms of a strategy. Both at home and abroad, we are now looking at organic and inorganic opportunities. All the other CEOs are thinking about it. So by 2030, Beyond that, of course, we are thinking about sustainable growth beyond 2030 as well. In the trajectory of growth, we talked about some M&As. No M&A will give only benefits. For example, overseas, On page 11, endurance. In that case, 2017. Before that, Canopy has bought, score, stake buying. So we have bought endurance and we changed portfolio. We reset the platform. It took some time to come to the current low eye level. so it would take five to six years i mean the gym is now the leader but it could take like seven years to come to the current status and then nursing care you might remember that when we bought it that we were in negative and to have positive profit, four or five years have passed. So during the mid-term plan, if we take risks, but the benefit will be felt like the 2025 through 2026, even the successful case, the good benefit will come after. So the utilization of the capital, will generate some time lock for us to enjoy benefits. So the risk-taking and the enjoying the benefit returns, there will be some time gap. For the M&A budget, please talk about it, Hamada-san. Please look at page 10. So I'd like to talk about the budget image using this page. On the left-hand side, profits over the three years, accumulation of profits, and about 600 billion yen was the sell-down of the stock. Then that will be 50% of it will be capital, so about 1.5 trillion yen. and 50% is to be paid out as division and dividend rather, so that is 750 billion. So originally we had capital, we had a certain level of capital. When you look at the announcement of the results announcement, you will see one trillion yen of capital originally. So that will increase to 1.6 or 1.7 trillion yen based on the bottom of ESR. This time, a very clear M&A budget is not shown here. But as you can see, we'd like to go over to the next order of the figure. If not, we have to think about capital adjustment. The 6 trillion yen of market cap, we require more. So that will be discussed in the Midterm Plan, next plan from 2027. And with that, I think we can aim at 6 trillion yen size. That's very clear. Thank you.

Thank you very much, Muraki-san. So next is Daiwa Watanabe-san, please. Well, this is Watanabe of Daiwa Securities. I have two questions. One is on page five, you're talking about the adjusted PBR. The 2B level is, which level are you setting as a 2B level? And so this is on a gigabases, I guess, PBR level. your 2B level or the target level for the PB level in the future. And also, assuming IFRS, the current PBR, is at which level? At that time, at the time of the assumption, Are you thinking about the PBR based upon the capital, or do you think about something else just to get to the adjusted level? I want to know the yardstick of the stock price, if you could share any color of that. That's my first question. The second question is about page 25, about the auto insurance pricing strategy. The time frame and the level is my question. In the Q2, the loss ratio was aggravating. So as much as possible, you said that there'll be an additional change at the earliest possibility. So maybe that you are not going to wait until January 26. Is that the case? Well, if so, then what percentage is going to be the likelihood for the change so that you'll be able to? go to the increase in the margin or the profit. So I want to know the magnitude of the increase and also the timeframe for the rate change. Okay, thank you very much. The first question, I will answer the concept and also for the figure-wise, that's our CFO and Ishikawa-san to answer about the strategy. Well, first of all, we have done the simulation sometime in the past and the PBR, The one time should be the floor for our company and ROE, we've been talking about the management target between 13 and 15%. So the next one towards the year FY 2030, the 15 is going to be the floor. In that case, targeting at 6 trillion yen eventually, the PBR of 1 times is going to be tough to achieve that 6 trillion. So we need to aim at maybe 1.2 to 1.5 times. If we can achieve within ROE level to achieve the market cap target, so we'll look at the profitability and the ROE improvement in combination. Well, for the figures, Hamada-san is going to add and build on my concept. Okay. I'm not sure whether I can give you a perfect answer, but the market cap of 6 trillion yen size, PBR is 1.5 times. That's the assumption. So PBR of 1.5 is going to be the target. Well, PBR is almost relevant to the proportion of the ROE. So ROE on the IFRS basis... Well, in the last page of this presentation material, on the reference note, I think we are talking about on page 54 and 55. Well, on the IFR spaces, we are going to be adapting starting from the next fiscal year. So in the fourth quarter meeting, probably we can give you some guidance. On page 54, on the adjusted profit base on the IFR basis, that's going to be increasing from 291 to 340, so that's going to be an increase by 50 billion yen, according to our calculation. But the net asset, it's not mentioned here, but on page 55, for example, for Himawari Life Insurance, on the right-hand side, on the GCAP basis adjusted net asset to IFRS adjusted net asset increases. So by making a transition to IFRS, the adjusted net assets, the conservative part of the life insurance and also the liability in the PNC business is going to be adjusted to the net assets so that the net asset is going to increase on the international account basis. However, OCI is going to be excluded in our company so that the denominator is going to be a bit smaller. Well, numerator is going to be bigger. So as a result, ROE compared to today is going to be up by about 3% after the transition to IFRS. I think that's my answer that I can give you today. Okay, Ishikawa-san. All right, to answer your question about the car insurance. For the automotive insurance, the market is aggravating. So just to give you some briefing, in the FY2024 full year, the loss ratio last year was 67.5%, and there's been an aggravation by 3 percentage points, so that's going to be 70.5%. Well, the repair cost is increasing, so year on year. The cost increase is 6.5%. And also the repair cost of parts and the labor are also increasing. So ear on ear, it's up by 6.5%. The accident rate itself... Well, there's been the revenge drive after the pandemic, so that has already been normalized, and we thought that accident rate has been flattish. However, the accident is actually on increase, so that the rate of the accident itself has been up slightly by 0.3%, so there's been a slight revision that we needed to make. For the cost increase for the repair, that is hiking, but the average for the nationwide is 5.56% increased. That's a nationwide average. So there are some differences place to place. However, there is a big increase in the unit cost for the repair itself. And also, as I mentioned earlier in my presentation, the second peril, the hail peril, the sensitivity to the loss on the car or the impact on the car insurance is pretty big. So including all the public data and so on for the future, we need to have the revision in the pricing or the rate itself. So currently the point that we are considering are, well June this year, the June 24th of this year, the advisory The advisory association has made the commission to the FSA at the level of 5.7% to increase. That includes the impact of the inflation. But this is an advisory rate after all. So the premium to the claim, so the actual price hike, including the cost to be included, is going to be subjective for the discussion and also about the time frame. We cannot give you a clear answer now, but as was mentioned, in January 2025, the core insurance pricing revision is going to take place, because backed by our sense of crisis that the current situation cannot be improved, so that at the earliest possibility, we want to make a preparation to do the pricing, meaning that you're not going to wait for one year. Well, the next price hike after the January 2025, you probably wouldn't wait 12 months after the next hike, which is coming in January. Well, the pricing has to have the impact on all the possible relevant parties like customers and agencies so that we want to, of course, think about the frequency and then accelerate the speed itself. However, the impact is quite wide and big. So we have to look at the comprehensive impact and then make a decision. Okay, thank you very much. Watanabe-san, thank you.

Mr. Sato from JP Morgan, please. Here is Sato from JP Morgan. I have two questions. First, I'd like to talk about numbers. On page 8, IPOS based adjusted EPS or adjusted ROE the numbers are greater compared to May numbers IFRS adjustment is rather big and I think adjustment is here. I mean, in six months from May, is it more sophisticated number? And 340 billion yen of IFRS adjusted profit and the CAGR of 10%. then the actual target of the last year is not disclosed, but I would say that they will be more than 450 billion. Am I right? In that context also, But you're going to accelerate to sell strategic shareholding and think you're going to come up with a new plan for that. And along with that, the dividend payout could come down. I mean, and how can you compensate for that? Do you have a plan for that? So the first question is about the adjusted profit target. Madasan, please. I'm sorry, I could not hear you very well toward the end. So in the assumptions for the plan, you're going to renew, revisit the plan to reduce strategic shareholding, adjusted to profit basis. That would mean that the dividend could go down, right? but I don't need to care about that gap against the planned figure. Well, first, the LOE for FY2023 has become greater, and this is a result of sophistication. I said that it would be an increase of 50 billion yen. That was not the case six months ago. The definition of adjusted profit To what extent should we adjust based on IFAS? We are still discussing it. So please understand that this gap is the result of the sophistication. As to reduction of strategic shareholding and the proceeds, and based on the proceeds, part of it will be added to the dividend payout. And by 2030, even when the authentic shareholding becomes zero, we can still increase the dividend. That's why we came up with 20 yen. Are you talking about the impact on the 20 yen? No. The dividend, the revenue will come down because you have sold all the other strategic shareholding. And how are you going to compensate for that? Because the launchpad is higher than before. Sorry. So the strategic shareholding is being reduced, and with that, the dividend revenue is decreasing. But fortunately, we are still holding the shares providing good dividend. Of course, with the time, there will be more impact. But as I mentioned before, Credit risk in North America mainly. We are challenging, for example, private debt as well. So the impact is very limited, like point something in the order of billions of yen in terms of the reduction in profit. And of course, we are making preparation to make recoveries. Thank you. Second question is about overseas business. All in all, you are making good progress, you said. But looking at the revised portion, underwriting the profit goes down a little bit, which is offset by the investment return, I think. My question is, especially underwriting profit for the property line and revisiting the property line retention, the level or line, In the next mid-term plan, you have the other growth targets. Are there any impacts coming from that? And the investment return is better than the other forecast. And that trend will continue in the next plan as well. So could you please talk about your forecast for the next year and onwards? Thank you. So, of course, Jim is going to talk about it, about overseas business. But let me say this. When I was involved in SI, underwriting cycle and investment cycle, how to manage those cycles is one thing. And by line of products, the rate cycles are different. So for each line, there are different accents. and the primary, and the reinsurance, and the property, and the casualty. There are different colors. So as you said, investment is doing very well, and we are prolonging the duration, expanding the investment return, and underwriting is kind of flattish. Still, we are respecting underwriting the principles and we are expanding our business geographically. Of course, we respect the underwriting portion, but the question is how to build the optimal portfolio for the entity. So let me ask Jim to talk about some of the business ideas.

Yes, you point out the underwriting profit has declined, particularly in North America from year on year. It's driven by a number of, I won't go into all the specifics, but there were two or three large unanticipated losses at the beginning of the year, which also triggered a reinstatement premium. on our treaties, despite only days left in the treaty year. So that had an impact of approximately two points. We had changed, we saw PYD overall, it's very stable. We have some in and some out, as we do each year. And so we took the opportunity to strengthen some of the years in the United States, the more recent years. And the business mix has changed. So the business mix, we see opportunity As property rates flatten or decline, we're seeing opportunities in certain liability classes in the United States, and that carries a higher acquisition ratio, and it carries a higher planned loss ratio. And so those are some of the contributing factors, but I see this as being flexible both in geography and product and segment. So I'm not overly concerned by it. I think the loss ratio overall for the year might go up But we're certainly seeing it as an improvement in the CAT underwriting and accident year from that perspective. So I'm comfortable. It's part of the strategy that we have, and we monitor it very closely. So that could change next year. as the market conditions present different things. Without going into forecasting 2025, our average duration on our investment portfolio is roughly three years, and so where we've been able to lock in at those rates will continue in the coming years. the prediction of where rates will go next year. As I said earlier, I think it's been prolonged longer than we had anticipated last year. So it would be wrong for me to try and predict how that will go. But we feel confident that the portfolio and the mix and the investment strategy, that will continue.

That was very clear.

Thank you. Sato, thank you. Thank you very much. So next is Mizuho Sakamaki-san. This is Sakamaki of Mizuho. I have two questions too. One is about the domestic P&C, the growth opportunities left. On page seven, For 2030, it represents 20% domestic PNC for 20%, meaning that you are not expecting much of the growth and the profit level. Well, going forward, you're talking about the improvement in the rate for the cars so that the car insurance is going to have the better margin, the expense ratio is going to be down, and also the interest gain is going to be probably increasing. However, you are probably having some kind of a missing piece to project the future growth. Are there anything that you're not factoring in or anything that you are actually setting aside? Can you give some more color on it? The second question is that this time you're going to reduce the Palantir stock. Well, I think thinking about the dependence on the one exposure to a certain stock, I think you have just reduced for the risk mitigation. But when we think about the business alliance with the Palantir going forward, to what extent can you reduce your holding of the Palantir? Well, you have joint venture in Japan, so that... Do you think that you do not need to have an exposure to the Palantir stock as a Palantir headquarters or you still need to have it for the business opportunities? I just want to know to what extent you can reduce it or you are intending to resource it. Well, Sakamaki-san, thank you very much. So first of all, the first question is about the domestic and the Palantir is about myself and then Murasaki-san, I think. So first of all, about the domestic business, this year we wanted to regain the trust. I think that was the most important factor that we needed to work upon for this year. So revision in the strategies and then working on the progress of the SJR strategy. Until 2026, we want to just accumulate the basics of the basics and then see where we are going to be landing at. One is a better margin in the fire insurance and the reduction in the expense ratio. For the automotive insurance, as Ishikawa-san mentioned, because of the inflation, the situation is quite challenging. So when we factor in everything, then for the year 2026 and beyond, what kind of profitability... Can we achieve? We think that it's still subject to the further discussion, but Ishikawa-san, please build on later on. Regarding the holding of the Palantir stock, there is not a set rule, but I myself have a conversation with Palantir on a regular basis. and Nagasaki-san, the CEO of the company, have been engaged in a dialogue. But for this investment, it's not really for the absolute return. It's not for the strategic shareholding, but this is like a symbol or icon of our partnership. So the risk volume is going to be controlled for us to think about the risk reduction. Well, the communication was that it's not really subject to the nature of having the communication with the issuer, but are we really pressed to sell more in a significant level? We don't think so. So first of all, for the profitability for the year FY2026 and beyond, Ishikawa-san, please. Okay, during the current meet and plan period, As you see on slide 24, SJR is going to be completed, so we will see the 8% and the plus with the combined ratio of below 95% are the targets that we have to achieve. And then for SOMPO Japan, the domestic P&C targets are, first of all, Well, as a snapshot, we may have some numbers, but instead of thinking about that, we want to make initiatives to continuously working our target so that the higher profitability will be achieved by SJR initiatives. As a group target, we have adjusted ROE from between 13% and 15% and adjusted EPS of 12% on the CAGR. So for the domestic PNC business, we can be a drag. So on a steady basis, we're going to implement SJR. And then look at this mid-term plan KPI of 8% to go beyond and then combined ratio of below 95%. I think the largest factor for SDR is the pricing. The rate change, the impact is going to be 70 billion yen. In addition, the upside is the liability or specialty and the claim payment service process, the disciplined payment of the claim is also factored in. Well, the rate range and the pricing is going to benefit the margin or profit. So I think the highly probable This is going to be highly probable so that the rate change is going to push up the profit. In the meantime, also important, over-important is in October this year, we have the hike in fire and also the hike in January for the automotive insurance. Well, the customer base cannot be damaged with that. However, if that happens, then the impact of the rate change is going to be limited. So the sales capability needs to be reinforced. What kind of a unique service we can provide and offer to the customers is going to be the key so that we can get the best advantage or the benefit from that rate change. And also the growth trajectory that we have as a scenario beyond the current meeting plan. We're thinking about the consolidation of the branch offices and so on. And also we're going to be thinking about the... setting up of the seven area admin centers. And the impact of that is probably going to be starting from FY26 and beyond. So by utilizing those newly set up centers, we want to expand the improvement, the result from the improvement measures. Well, we are yet to have the full discussion, but in the mid-to-long-term basis, the combined ratio to stay at somewhere between 92% to 93%. That's what we are assuming for the domestic P&C business. Regarding the Palantir stock, this is Narasaki speaking. Our strategic partnership with the Palantir is that we have JV. In 2019 in November, we set up the JV. So a strategic partnership started from that time. And in June 2020, we had $500 million investment fund. A lot of the portion has already been disposed of, but as you see on slide 11 chart, The realized gain is there, but also there are unrealized gains from that Palantir stock. Of the importance in order, of course, investment is important. However, the JV, we need to have win-win to gauge the success. I think how much of the success we are making is the most important. Fortunately, it's growing and then performing quite well with the delivery of a profit. the advantage that we had assumed had already been harvested by the win-win relationship. So in a nutshell, it's not the relationship of the strategic shareholding. We don't need to necessarily have it. I think the success of the JV and for the further success and growth out of that JV has already come to the step for the next growth. So it's not really a strategic spending or strategic investment in the headquarters. I think the reinforcement of the relationship through the GB has been established and then growing in the last five years since the establishment of the entity. There's no obligation that we must keep having that stock. However, as was said, as Okamura-san said, this is not a risky stock that we have to just sell it now. The stock price is about $64 now, today, and it is growing. So in terms of seizing the growth, I think there'll be much more expectation for the further growth. With that, as an investor, we might as well just keep it. It's not going to have a negative impact on us. So for us, we of course reserve the flexibility to think how to deal with it, but this generates some profit. Unrealized gain is quite visible, so we are not necessarily negative to keep that stock. That's all. Thank you. Okay, well understood. Thank you.

Sakamaki-san, thank you. Mr. Majima, Motokai Tokyo Intelligence Lab, please. Here's Majima, thank you. I have a question about the systems of SOMPO Japan. So you're making the recovery of the investment in the systems of SOMPO Japan, including AI, Generally speaking, the company's system and AI services do not go very well together. So AI services do not nicely match with the other company's needs. What about your case? What about the case of Sumpa Japan? My second question is, 30 billion yen acquisition of RiseUp 30 billion yen is not such a big number for you but that's a very high profile acquisition so it is listed so that their share prices change day in day out and post-merger phase more than the customer attraction, the fact that the rise up is listed, are there any initiatives to raise the share prices of rise up? Because if not, there could be some impairments. In order to raise their value, of the rise up, I think you have to increase the number of members, the troubles up. What is your thought on that? Are you supporting, are you doing something to improve their share prices? Majima-san, thank you for your first question about the systems and AI issue for domestic beyond the sea. We have been making lots of investments in the systems and the systems cost. And its increase is one with the big management issues. That said, we are using AI and digital technology to achieve better efficiency of the operation. Currently, we are making investment in systems. And as to AI usage, we are also making the advancements. If, Ishikawa-san, do you think that there is a good match between the two? There's a good chemistry between the two. Please look at page 27. Let me explain about this one. So in this SJR project, we are doing lesser POCs using Palantir's technology, for example. Well, at SOI, at Sompo International, we are learning from what they are doing. The P&C business and AI have a good chemistry between them. That's my personal thought. On page 27, we have some good examples. In February, there was a release of SOMPO AI Chat and Oshiete SOMPO. What are they? Well, for example, SOMPO AI Chat, in April, February this year, we released it. And now we have rolled out nationwide. We have about 20,000 employees and users. Already 9,600 people registered as users. Our employees are registered as users. So after the release, about 4,000 people are active users. They are using this AI chat on a daily basis. And as to Oshiete Sonpo, This is LLM based as well. About 15% of the sales admin are related to the agency's questions. And using LLM, we develop automatic answers for agents. This is to free up more time of the other people working at sales offices. And also, I think this will contribute to solve the double structure problem of the other agent-related structure. So that's how we are using LLM-related tools. As to your second question, the collaboration with RiseUp, which is listed, it's 10 billion yen or so. We are talking about 10 billion yen or so. So it's not acquisition, it's just a minor investment. And it shows up the 20 billion yen stake investment. And of course, those partners, we'd like to see their value to increase and we'd like to work together. for that, but what we have to do most, fastest, is to support healthy management, healthy life. Give some advices, for example, what kind of exercises will help you to be more healthy. The Sompu Japan or Himawari or the CARES assets are being used for that purpose. There are various ideas of collaboration. through collaboration. As a result of the collaboration, we want to see the increase in Rise Up's value. Thank you.

Thank you very much. So next is City Niwa-san. Please go ahead. This is Niwa of Citi. Thank you. Overseas and the well-being are the two questions I have. About the overseas, the necessity for the... the geographical expansion. In the long-term basis, the combined ratio is 93.8% is the target for overseas business. If possible, US, Europe, and Singapore or Asia, when we think about those three regions, what's your target for each of them? I think the concern we have is that it seems that the US business is quite strong, but the other regional any necessity to diversify those geographical concentration? I think there are a lot of assets that you can talk about. So the qualitative analysis and possibility of the diversification of the overseas market. That's the first question. The second question is about well-being. Well, just thinking about how to think about the corporate value of this company, because you have that life insurance and also the well-being business that is going to push up the entire profit. But is that the case? Because the lifetime value, LTV, how can we calculate that? If you have a calculation, how much is that? And how much is it going to be in the future? Well, Watanabe-san is good at the non-financial part, I think. So should we look at that from the perspective of the profit? Or do you think that the corporate value is higher if we look at something else? Okay, thank you very much. Well, Jim and Watanabe-san are not going to answer. For the overseas, as the graph showed you in the very beginning, we bought insurance. Well, that was a very edgy kind of a characteristic with the company. When the NATCAT happened, then the impact was big. So based on that, we need to think about the capital efficiency and have an exposure on the agri-sample, change the portfolio. But by geography, by region, what kind of strategy are there? Well, Jim can talk about that. And for LTV, for the World Bank, whether we have an accuracy with the figures, Watanabe-san is going to talk about it. So, Jim, please.

Thank you. When we looked at how we were going to continue to grow the overseas business, the real answer of how we're going to do it is to write more customers. We need to access more customers. The likelihood of reducing a loss ratio by 50% was not realistic. And so in order to attract new customers, we either have to offer new products to our existing customers, We have to access new customers in existing geographies, whether that's North America or others, or we have to find new pools of insurance. And so we decided that we are going to pursue all of that. We are looking at 50% of the growth is coming out of North America, or 50% of the targeted new business. Now, that includes Canada, which is the seventh largest P&C market globally, where we have virtually no presence. Continental Europe, collectively, is probably in the top five. So Germany, I believe, is the top five on its own. We had no presence in these markets. And so we wanted to make sure that we were acting like a global organization to support not only our customers here in Japan as they move overseas, but our customers in the United States as they move around. And so we have embarked on this strategy to expand our customer base. It also gives us diversification of portfolio and exposure to different risks, different legal environments. And what I questioned when we looked at this was growing into what was considered a soft market, into markets where we didn't have a brand other than our reinsurance business. And so we are growing fairly prudently and slowly. Many of these markets are relationship markets. They're based on distribution, 90% plus by intermediaries, brokers. of which we already have significant global relationships which we can leverage and gain their support to enter those markets. And so I'm very conscious of the lines of businesses we write, the growth, the investment, and we're making sure that we do it slowly and responsibly. We're not looking for immediate success and dominance in any of these markets. And we continue to incentivize people by the bottom line, not on the top line. And so I feel that in order to continue to achieve what Sampo purchased Endurance and now Sampo International, what we need to contribute to the organization is we need to get more customers. And this is the way that we see as the best way to do it. Thank you. Thank you.

So this is Watanabe speaking, talking about the LTV, lifetime value, for the entire business. Rather than calculating LTV for business, we are looking at, for example, on page 41 describes that we're thinking about the long-term relationship so that we have a long-term cycle for the customer to use our services so that we can also have the profit pool to accumulate for business carers. or those people who are using the facility services, how many services are we going to use in this cycle is going to be the point. So that it's not really the value of the LTV, but also the frequency of the visit or the relevance to our service. How is it going to be increasing is the point that we have to be keen to. So as a result of that, we get the adjusted profit. So I think the landscape is that by having the long-term relationship and the broader basis, as a frequency coming to visit our platform or this circle as many as possible and also the SOMPO brand to be selected. I think this is a new concept among the industry but if that's the case then people will be able to consult to us in terms of their funding needed after the retirement or the nursing cares or after the second life and so on. I think we can be selected Thank you very much.

Thank you. Any questions? Mr. Takemura of Morgan Stanley MEFG, please. Thank you. Here's Takemura, Morgan Stanley MEFG Securities. I have two questions. First question. It's about adjusted the profit for the next fiscal year as much as possible. Could you please talk about your forecast? So CAGR of 10% growth is your target. In that context, what will be the drivers to achieve it? Or this year, the results may be too good. So the next year, you do not expect the same level of growth. Could you please talk about that as well? That's my first question. And the second question about ESR. I would like to know more about your thinking about ESR. So you are going to consider M&As going forward. So basically... It will be a little bit over the upper level of the ESR target range. Is that what you really target for or do you want to put it within the target range? Thank you for the questions. So about the plan for next fiscal year? So overseas, the year will close in December. And we are looking at the full year results. And the prospects for the next year overseas, they will be finalized next month. And at the BOD, I will be participating. And we are going to give the approval. And my understanding is that there is no surprise so far. Domestically, we are accelerating our discussions for next year. The domestic PNC, there are positive parts and some negative. as to the facewind part. But it is not completely negative. It's something that we need to think about and we are currently finalising numbers. As to ESR, as to technical part, Mr. Hambada will take me over. But we have a very strong growth appetite in the future. And I could not say this when we heard Raksan's question. The capital generated, though we might have changed, Our yardstick, I mean, overseas, there's a committee with Jim being the head. At least compared to the same time last year, we are now trying to be more aggressive. And so we are revisiting. the list of hours. So the balance sheet, the committee, if you have any other comments, we would like to welcome the team's comments. But let us start with Hamada-san first. For the next year, Of course, we are yet to finalize numbers. As to overseas, the things are going very smoothly. And at home, the revisions in October and January for fire and automobile respectively will be effective. And we are going to see some of our efforts to pay off. And of course, next year, we need to achieve good, big growth. As to ESR, it's based on target range. So basically, it should be within 250. Currently, it is over 250%. And we are not saying that that is the right picture, that it's because of our investment appetite. But if good M&A comes around, then the ESR will certainly come down to 220 or 230. So it is in the balancing act with the investment activities.

Do you want to say something about balancing the committee?

I will, yes. And I also wanted to comment on the growth because when you look at the portfolio, the portfolio earns out over 12 months, virtually the entire portfolio. And so we're almost halfway through the earnings for next year by just knowing what we've written this year. We need to look at the CAT load. We need to see that one thing we know, that whatever we plan for CATs will be wrong. but it'll be close. It will never be precise. And so this year, when you reset however we finish, you have to reset the cats to normalize them to see that growth. So having that 10% over a very low cat year would be challenging, but at a high cat year, it would be a smaller hurdle. In terms of the committee that Okamura-san and Hamada-san mentioned, we do meet on a regular basis, colleagues both in the United States, in Europe, here in Japan, and we review opportunities both that are large and small. that are complementary, that are counter-cyclical. But as I've said in the past, the pricing and the opportunity, we didn't feel were a good fit. We're still not going to make an acquisition just to spend money and make an acquisition. It has to make sense. But we are extremely active in looking at all the opportunities that we see, both emanating from Asia, Europe, and North America.

Takemura-sama, thank you.

Takemura-san, thank you. Well, we've come to time, so with that, we'd like to wrap up today's conference. For any additional questions that we are not able to answer, please feel free to call to our IR. So thank you very much for joining today.