Sompo Holdings Inc U/Adr

My name is Okamura, Group CEO. Thank you very much for joining us today despite your tight schedule. the reorganisation of the group, Simple Beyond Sea and Wellbeing. This is the very first IRL meeting after the reorganisation and the top business tops of each of the businesses are here with us today to talk about progress that they have made. Please look at page three. So this is an executive summary, actuals of FI 2024 and the progress on the management plan and the long-term vision toward 2030. Starting with the actuals of 2024, for metrics, for numbers, we have made very strong progress. That said, We were helped in many cases by external factors, so we need to continue to increase resilience so that we can achieve health, well-being and financial protection of the other Sumpo countries. Fortunately, for two consecutive years, since the launch of the holdings, we hit the record high, the perfect, and also we renewed the highest share for 29 times. And we would like to maintain this momentum. As to the mid-term management plan, we have two goals, ROE, improvement of ROE, and EPS growth. We are making lots of efforts on these two fronts. As to EPS growth, our pace is faster than our expectation. As to ROE, as I'm going to touch upon later, there's some challenging part left. We would like to take risks while making a gross investment to achieve absolutely this LOE target as well. On the long run, long-term vision, last fiscal year, we made a promise. Namely, by 2030, we are going to double the adjusted profit and double the market cap. The 500 billion yen for the adjusted consolidated profit and 6 trillion yen level for market cap. So the increased resilience and connect and be connected to these initiatives should be accelerated. That's important. And I'm going to talk about that as well. Please look at page 5. So for 2024, 334.3 billion yen, and this is the adjusted consolidated profit record high level, and as to market cap, compared to the end of FY 2023, it increased by about 30% to 4.2 trillion yen. The share prices were solid as well. Adjusted PBR is now exceeding 1.0. So we are passing that threshold. Page 6, please. This is the possible achieving the Mid-Term Management Plan targets. Two of them, ROE improvement and EPS growth. still ROE, 2025 fiscal year, about 10%. And by the end of 2026, we are going to achieve this 13% to 15% ROE. We still have a gap to achieve that level, especially for FY2024. We sold the strategically held shares faster than the expectation, so we think we have some headroom to take more risks. The business profitability improvement is one thing, but in organic investment, investment growth there is also important. I have a very strong feeling about that. As to adjusted EPS growth, more than 12% growth. Currently... we are at the pace to achieve plus 14%, Kega 14%. So we are making a very solid progress there. Let's look at page 7. As we looked at the previous page, so other EPS growth, we have two goals, and each business unit and the KPIs and the other important strategies are reflecting those targets. and simple well-being with these two businesses, increased resilience is one thing, but not only that, the gross investment and execution of such investment is going to lead us to 500 billion yen of adjusted consolidated profit and 6 trillion yen of market capital. Such investment is going to increase the probability of achieving these targets. So in organic investment, there are always counterparties, so we cannot talk about pinpointed manner by when we are going to do it, but we will continue to focus on the increasing pipelines. Page 8, this is the last part of my presentation. Two business units and two keywords, increase resilience and connect and be connected. Let me talk about them a little bit. First, as to increase resilience, so financial resilience and non-financial resilience, most of them should be increased. For financial resilience, this time we have this at the Sumpo P&C business unit in place. we are going to make our strong balance sheet even stronger. And we are going to leverage such a strong balance sheet. And SOMPO Japan and SOMPO International are now operating in an integrated manner so that we can optimize the optimal retention and the usage of the reinsurance. We are already doing that. And through such efforts, we'd like to improve profitability. And in Japan, SJR, through SJR, we'd like to improve the business foundation and the profitability improvement. SOMPO P&C, we are going to support the efforts, for example, that we are going to create underwriting culture, or we are going to learn more about the portfolio management. So SOMPO P&C is going to have that benefit. So SOMPO well-being through connect and to be connected through that initiative, the group's center of excellence now be available for the various business lines. Each entity should learn from each other and to support that effort, SOMPO P&C and SOMPO well-being are in place now. As the center of excellence, it's not only about underwriting, but also governance and AI, how to use AI. and diversified cultures and how to manage those cultures and develop the personnel to manage those different cultures. Going forward, SOMPO Beyond the Sea and SOMPO Wellbeing, through these structures, we are going to increase resilience and we are going to realize connect and to be connected.

So from now, I would like to hand over to Jim and also Obasan. So first, regarding Swampo PNC, the CEO, Jim, will be presenting about initiatives for Swampo PNC. So over to you, Jim. Thank you. Thank you.

I am responsible for Sampo PNC, and it's an honor to be here to represent that business and tell you what our plans are. So if you turn to slide 10, you will see, as Okamura-san introduced, that Sampo PNC was initiated as of April 1st, and it's an ambition to create a truly global PNC company born in Japan. As we look at the goals that have been communicated that both from a sample overseas and from sample Japan, they remain unchanged. Our priority is to expand our business outside of Japan with new geographies and new customers. Applicable to all of Sampo P&C is how we manage our cycles. We are going through different insurance cycles and face an uncertainty as respect to the geopolitical climate that we operate in. However, we are committed to navigate and continue to deliver on the promises that we have committed to. We will be resilient. We will focus on underwriting, risk selection, and continue to diversify our portfolio across the geographies and products. We will look for efficiencies in how we operate. We will employ AI to allow our underwriters and our managers to be more efficient and spend more time making decisions. We will look to increase the governance across the organization and put in place consistency at the highest level. We will continue to reduce bureaucracy and challenge ourselves constantly if there is a simpler way to do what we are doing. We are going to promote synergies across the group. We are creating a global culture that respects the local culture in which we operate in. And we're going to leverage our size. We are a top 20 global P&C carrier, and we will utilize that position to leverage our position not just with our customers, our distribution partners, but also with our vendors. If you turn to slide 11, please. This details some of the strategic focus, and I'd like to highlight five. The first is reinsurance. We put in place one reinsurance organization 18 months ago, and I'll talk a little bit about the benefits that we've seen in that. However, it has allowed us to position ourselves with our distribution partners and our reinsurance partners as a global organization and not divide it as two. Vendor relationships. Much of what we do across the globe is the same as what we do in Sampo, Japan, in terms of vendors. However, we were approached as two organizations. So whether that's from an IT perspective, whether it's from a finance and investment perspective, we're looking to leverage those relationships and go to market as one. Underwriting expertise. We've been working very closely between Sampo Japan and Sampo International for the past several years. However, we are going to accelerate that, and we're going to utilize the underwriting communities that we have globally to ensure that we have consistency in appetite, in risk appetite as a group, and we deploy capital in the most efficient way possible. Our employees are our most important asset. we see a tremendous opportunity to provide the next generation the tools to lead this organization in the medium to longer term. We're going to utilize the expertise across the globe and look to develop those future talents, regardless of where they come from or where they work today. and we're streamlining our internal process. As I mentioned earlier, looking to simplify how we approach to eliminate bureaucracy and to do things in the simplest way possible. If you turn to page 12, please. This is the current management board of Sampo P&C. What's important to note is Sampo P&C includes Sampo North America, Sampo UK, Sampo Brazil, Sampo Turkey, Sampo Europe. It is the global part of the organization. However, our focus over the first 18 to 24 months is to bring Sampo Japan and Sampo overseas closer together. And as you will see through the management board It represents five nationalities and individuals who have worked and lived in over 20 different countries and cultures around the world. So a truly international representation and something that I'm very proud of to be working with. If you move to slide 13, again, this map tells you who we are and where we operate, a top 20 global organization, But when I see this map, it tells me that there is plenty of opportunity to grow. If you look at all of the countries and geographies which we are not in, we are going to continue to focus on where we can attract new customers and service our existing customers across the globe. Move to slide 14, please. This is the lens that we would like to show you when we talk about sample P&C business. We feel that we have a very large global, as mentioned earlier, 29 operation countries, but a very diversified portfolio with the consumer business being dominant here in Japan, but also in countries like Turkey and throughout Southeast Asia. Sampo Re has operated on a global basis for many years, and the commercial business represents 50%. As you can see, we also have a very close split in terms of premium written across the overseas and domestic Japanese portfolios. So we enjoy the diversification, we enjoy the balance, and we continue to focus on that, and this is the lens through which we would like to present to you our business. On slide 15, what you see here is examples of some of the successes we've had on the reinsurance business. We have effective purchasing power with no duplication and alignment of our risk appetite as one organization to make sure that we have the right net and gross retentions across the portfolio reflecting our capital allocation and the return that we seek to achieve. I know that yesterday several of these numbers were presented, and so I'm not going to go into great detail, but I would like to restate that the results have been restated on an IFRS 17 basis. There are a few highlights that I think that we should note. The most obvious for us is that Sampo International historically operated on a calendar year basis, and so these numbers have been restated on an April 1st basis. For full year 24, the results have been restated to reflect the adoption of IFRS 17. And the adjusted profit, as we describe it, eliminates all effects of discounting and includes a risk adjustment to our central reserving estimate. And as you can see on the walk, we expect the combination of our increased revenues to translate into a net insurance result. And so I know there will be many questions with respect to these numbers as the terminology is different than we've presented in the past. The result of all of these movements results in an expectation of a 30% growth year on year. What you've already seen from yesterday, however, is some of the highlights from the overseas business is that we're going to be more dependent and more reliant upon our underwriting results versus the net investment income results. which is reflective of the current marketplace. We feel very confident in this, and I think as we look to the first quarter of 2024 for Sampo International, but the fourth quarter as reflected here, we saw a five-point improvement in our largest operation, which is the United States, and we continue to see the results of years of underwriting developments changes coming through in the numbers. And so we're very optimistic that we will continue to focus on underwriting and not on the investment income as you see it flattens out as reflective of the current marketplace. Inflation is something that we spend a lot of time looking at, not just in terms of the cost of what it is to employ people and operate, whether it's third parties or whether it's claim settlement. And so we need to ensure that we operate with both levers, both on the revenue side to ensure that we're getting revenue and rate increase in excess of the rate of inflation, but also that we're managing our expenses in a diligent manner. And so the expense is the only lever we control 100%. And so that is something, as we look at balancing keeping the operation open, but also expanding the operation into different geographies. And so we've seen an increase in our expense ratio over the last couple of years, which was anticipated. Even in the first quarter, we see ourselves under by approximately $8 million of expenses. but we do manage and measure the investments closely. We indicated from before, organic growth requires investment up front, and we expect that this will plateau in 2027 and will return to our targeted 28 or sub-30 expense ratio in subsequent years. If you turn to page 19... Some of the opportunities in Sampo, Japan, is to continue to remain committed to the business improvement plans that we've put in place. That is our number one priority. We are regaining trust and we're regaining from our stakeholders, most importantly our customers, and a focus on our employees. The profitability is recovering. You will see that in 2024, we benefited from a benign cat season and lower large losses. And so when you normalize those for 2025, it shows a slight decrease. But we see a real focus on improvement, not just on the underwriting of our motor and fire portfolios, but also on our expense focus and becoming more efficient in all of the operations that we have. If you turn to the final slide, which is slide 20, this is the expansion of the business I talked about in terms of investments. It's important to realize that these investments are not simply in new geographies, but also in existing markets. In the United States and the UK, we have opened offices in cities such as Denver, Houston, Miami, in the UK, in Birmingham, in Manchester, which is a focus to attract and gain access to a middle market portfolio that typically doesn't get placed outside of those geographies. And so we need to be physically present. And so those investments have proven to be a higher return or faster return because we have established in those marketplaces. But we've also seen success in the introduction of Sampo into Canada. on a local basis in continental Europe, and then investing in parts of Southeast Asia to expand our commercial presence through the Singapore hub. So with that, that is the conclusion of my presentation for sample P&C, and I look forward to questions at the end.

Thank you.

Thank you, Jim. Next, Obasan is going to talk about sample well-being. I'm CEO of Sump Wellbeing. My name is Oba. Please look at page 22. On April 1st, Sumpo Wellbeing was renewed. I am CEO of Sumpo Wellbeing, and life insurance and nursing care, the business presidents are here on this page, and we have this management structure, management board. Each business entity has its own unique strength. By combining these strengths, By leveraging those strengths, that is the sample well-being, the strengths going forward. And as to important issues, the management structure is going to accelerate decision-making for important matters for the business. and more working side, Himawari Life is headquartered in Kasumigaseki. And in this building, holdings, the planning section of the SOMPO Wellbeing and other planning-related members will be here as well, so that we are going to strengthen the collaboration among us. Three concerns of sample well-being. For us living in 21st century, we are exposed to these three concerns. The characteristics of these three concerns are as follows. One day you find your parent, they're being sick, in need of the nursing care. And the reasons for that could be very different. The characteristic here is that it's something that we develop day in, day out. For example, lifestyle, the diseases are the examples. And those concerns could be realized at the same time, and that will make the problem more complicated. And we will look at these concerns in a comprehensive manner so that we can provide the solutions for our customers. And as far as I know, we are the only one which is providing solutions for those concerns, first time in Japan as well as in the world. And for the bright future of the customers, we will stay closer to our customers, providing solutions to them. And it is a key word which is dear for us. We would like to make the society where the people can feel positive about getting old. So the numerical targets are FI 2030, the 10 million as the number of well-being customers, and the adjusted profit of 100 billion yen or more. Next page, please. And 100 billion yen of profit is structured this way. So at the bottom, the organic growth of each business. And this is one of the focuses. And on top of that, we have the products and unique services. whose values could be increased through Connect and Be Connected, and we are going to expand our markets. So it is the value increasing growth. And then on top of that, On the service side, for example, there are areas which cannot be filled in where there is a gap remaining. For example, the financial, the concern, inheritance, or the health-related services, such customer, the basis to fill in the gap will be acquired through M&As. So these three-layer approach. Next page, please. So we have been working on these things, and there has been some good reaction. And some examples are shown here. This is about the nursing care as the Donoka. And we have the three offices in operation in Tokyo. And we did not run any large advertisement, but we had 200 people who came to ask about this service. For example, how to get lump sum money, or to sell their own houses. We have received many questions about these concerns in many areas. So now we know that those concerns or problems could spread out in different areas. As to B2B, well, it's communication. is now working for the corporate health management service and also the ChocoZap application and a combination of the two. So, for example, the health support by corporations and the exercise, the support. And the 29 companies in six months decided to launch these services, and now about 2,000 employees are participating in these programs. So to connect and to be connected, we can have multi-layer opportunities of getting earnings.

Next page, page 26, please. For Himawari Life, we are increasing our customer base, outpacing the market average. It was the driver was the Insure Health. So this is the insurance product that advocates improving health, and it topped two million policies. This is a top class in the industry, and the gross premium is roughly 15, 350 billion yen. So for this customer group, we have been able to identify customers changing their behaviors, and seen improvement in the hospitalization ratio. So in the well-being business, we have been able to identify and capture customer base who pay close attention to their health status. So we would like to capitalize on this strength in using the Connect and Be Connected concept. We want to cooperate with the other business services to offer more value proposition. On page 27... Another business is a nursing care business for simple care to date. We have made steady progress and now we can foresee a profit of roughly 10 billion yen in scale. And as for the future growth, the first pillar is the operator business providing the nursing care services. We would like to maintain a high quality of service level and also maintain a high occupancy rate and a high customer satisfaction level to grow our earnings. So that's the operator business. And as a leader in the industry, we would like to leverage on the expertise of sample care so that it can be applied for the operation of the other care providers. The third pillar is by connecting, be connected. We leverage on the other type of contact points to expand the earnings opportunity for the well-being business. So, for example, the trust service or consultation for the end-of-life advices. And we would like to expand into these new business areas. And we would like to increase the proportion of the second and the third pillars of business. In closing, we want to be unique and simple. We want to leverage on the strength of a simple group, and we believe we can do that and expand our opportunities in the well-being business. And that's how we would like to be successful. Okumura-san, Shei-san, Oba-san, thank you for the presentations. Now we would like to entertain questions from the participants. So without further ado, I'd like to go to the first question. Mr. Muraki from SMBC NICO, please. Thank you. I have two questions. On page 14, for SOMPO PNC, what is the goal for SOMPO PNC? Listening to your presentation, I think you want to expand geographically. And thinking about the scope of the market you want to expand, it's more commercial rather than consumer. So U.S. and Europe might be the scope. And you also want to build an underwriting culture across the organization. So that was the impression I got from the presentation. Is that your goal? What is the ultimate vision for Simple PNC? And also, do you benchmark other insurance companies or groups? For the commercial business, I guess the largest player will be CHUBB. And we understand that, Jim, you still work for Zurich and also there's AIG. So which insurance companies do you benchmark to build a new organization? So that's my first question. So should I pause here, or should I also ask my second question? You can ask your other question as well. Thank you. My second question is regarding M&A. I'm sure that the timing will be key, and I had an impression that you are actively seeking M&A opportunity from the comments you made yesterday. So what is your priority for investment? Are you looking for the commercial business in Europe or U.S.? And what is the size that you envision for M&A? This time, are your capital level with the strategic equity divestiture, you will be getting some cash proceeds and also capital will be released. And I think you have presented that in the material. So, conscious of that, can you give us the priority of M&A strategy and also the size? Yes, Marek-san, thank you for your two questions. The first question was the vision of SOMPA PNC. the geographical target, the market. So today we have Jim, the CEO of Asompo PNC. So Jim can elaborate on the vision he has for Asompo PNC. And regarding the second question on the M&A topic, I will share how I think about M&A and also regarding the size. The group's CFO, Mr. Hamada, will respond to that part of the question. So for the first question, Jim, can you respond to the first question, please?

Thank you for the question. You are correct that when we look at geographic expansion, that the focus is on the commercial marketplace. That is our first priority. However, we do see opportunities to expand in the consumer space. Two, three years ago, we sold our consumer business in Brazil because we didn't feel our size and the opportunity in that market gave us a market-leading position. And so we continue to look at the different geographies and where we can have a market-leading position, either through organic or inorganic growth. But generally speaking, the focus on the expansion in geographies is on the commercial business. So I would see over time... that division and split of the portfolio to shift and lean more towards the commercial? In terms of your question about ultimate vision, for a company that's been around for 130 years and will continue, I don't know if there's an ultimate vision, but the next vision and next stage is how we operate in a more seamless global way of sharing of best practices, sharing of people, and how the market and the third parties view us in terms of a market in that space. In terms of your question on peer groups, it's always a difficult... We do look at the companies that you mentioned, plus several others across Europe and other places, including in Japan. But as you see, we have a significant reinsurance business. The crop agri-sample business in the United States runs in a very different way than many of the regular normal PNC businesses. And so having a comparison to companies that don't have and agriculture business becomes difficult. And so we look at it in many different ways, but it would be a basket of the probably 12 to 15 companies that you would expect it would be.

Thank you.

So moving to your second question. Before we rolled out the new business plan, we were always saying that M&A will not be conducted just for the sake of executing M&A, and this policy remains unchanged. But to sustainably enhance the corporate value, We want to pursue that mission, and during the new mid-term business plan, we want to be committed to improved ROE and EPS growth. On the other hand, leading up to 2030, we will complete the sales of the strategic equity holdings, and we have declared that. And for the domestic business, transformation is required. So we have multiple factors that we have to pay attention to, and Jim Obasan and Ishikawa-san are going to work to enhance corporate value in a sustainable manner, and to achieve that inorganic growth will be required. And, of course, there's going to be a counterpart to those transactions. And in the past, we have challenged ourselves in various M&A opportunities. But we cannot compromise on discipline. but we also need to do the deals. So rather than compromising on the discipline, we want to make sure that we grow our pipeline, both in terms of quantity and quality. And we are now asserting our efforts to establish that structure to be able to do so. So last year, we mentioned about 1 trillion yen as a rough size, but at this point, to Jim and Oba-san, I'm saying do not be bound by amount of the figures because if you see opportunity for new growth, let's first consider to challenge that. And then let's consider if that's available for the group or feasible for the group. And after that, the group CFO and the deputy CFOs will be involved for discussion. Thank you. Hamada-san, do you have any additional comment regarding that thought process and the size of M&A? Yes, this is Hamada, a CFO. And as Meraki-san mentioned, I think you were talking about page 35. As you can see here, a year ago, From the time of building up the mid-term plan, we were able to sell more strategic equity holdings than planned. Also, we have additional buffer on the capital level. So if you add those up, I think the latest figure will be like 2.4 trillion yen. And from there, We deduct the three-year worth of a shareholder return, and that will be the capital available for us to put to work. Also, we have not decided on the shareholder return exactly, but roughly speaking, if you do the math, 800 billion or 900 billion yen, I think, will be the rough figure. And then you deduct that, and we come to the figure, which would be the capital available. So that's just a calculation of the capital. We need to have plan on the cash. And also in 2024, for the last 12 months, we did not have any major symbolic mandate, but just for a simple international mandate. They took about 100 billion yen worth of risk, additional risk. So we have been using capital in many different ways. And that said, we also have some idea regarding M&A. And to announce our ROE to between 13% to 15%, we have to figure out how much profit growth we need to achieve, the numerator. And if possible, it will make our life easy if we can achieve a few tens of billions of yen of incremental profit. So we would be considering those moving factors to consider opportunities. Thank you. On the first point, when you benchmark against other peers, I think you're looking at companies with ROE of 20% or more. In the overseas business, the ROE is 14%, and for sample P&C, on a blended basis, I think the ROE will just barely reach 10%. So where is this gap coming from? And for you to raise the ROE, what needs to be done at sample P&C? Well, as a group CEO, I have my perspective and Jim has a perspective as the CEO of a simple PNC. And there might be some slight difference, but let me first respond to your question. When we acquired Endurance and after that, the overseas business became the engine of growth for the group. Also, through multiple opportunities, we augmented the capital. Also, when we discussed at Semple International, When we reach a mature stage and if we try to optimize the equity base, the ROE at glance will be going up. But I still feel that the overseas business will be the vehicle for growth, both organically and also inorganically. And in the market with high volatility, we can get underwriting flexibility and investment flexibility when we have some buffer on the capital. So intentionally, we have built up some capital, and that may be the reason why we are slightly lower in ROE compared to the other global peers. Jim, do you have any additional comments you'd like to make?

It's thank you again for the question. When we look at the ROE, I'm speaking now of the sample international overseas business. You have to remember that it's virtually unleveraged in comparison to some of our peer groups and that you referenced. And so when you add back in what that typical increase would be, then we come pretty much in line with the average of our peers. So not to say that that is our goal, but we continue to improve. I think, Nick, from your perspective...

Yeah, as Jim said, if we were to lever or take on similar levels of leverage to some of our peers, we would have a few points of additional ROE associated with that. As you look at sort of our blended mix, as Jim said prior, The relationship between our business to some of our peers is different from a mixed perspective. Specifically, we have about 30%, which is the agro-SAMPO business from a top-line perspective, which comes with a different perspective. In addition, we're more levered towards the reinsurance business in addition to that as a SAMPO International Holdings perspective. So when you take and blend all those together, and if you were to put... leverage on top of that i think we're in line with our peers as we look at it and as we do the analysis and if i may add one more thing

Thank you very much. And some for Japan, ROE enhancement is also needed in that perspective. Also by FY26, we have the target. But beyond that, with the portfolio management and also improving the expense ratio, we would like to raise the ROE for the domestic cooperation. Mr. Muraki, thank you.

Ms. Tujino from the BOA Securities. Can you hear me? Here is Tujino. My first question. It is not included in today's materials. The page 58 of yesterday's materials, the 2026, the goals, 13 to 15% adjusted. And the 25, it is 10% or so. It might depend on the domestic business. But at this moment, what do you think about the certainty to achieve this goal? What is the current status to achieve this goal? That is my first question. And my second question about M&A. The non-life business, P&C business, where there are lots of things going on in Japan, I think it's a very good business, both at home and abroad. But sometimes you have to deal with the goodwill after the acquisition of servicing companies. and the real benefits sometimes are not completely visible. So the impairments of the acquisition last year are going on this year, I suppose. And I think there are lots of lessons to learn. And to buy non-P&C business, For that, maybe you need to have additional discipline in M&As. Do you think that way? My second question is that do you think that you need some additional disciplines for M&As? My third question... For domestic P&C business, yesterday you said that for fire and allied business, you have made lots of efforts, and those efforts are paying off, and that is reflected in the numbers, results, and the rate increases, and so on. And not only that, there will be more benefits next year and on. But auto insurance, because of the inflationary environment, there's no improvement because of the inflation. Are you just waiting for the inflation to be gone, or are you going to change your way to make improvements? Thank you. Thank you. That's your first question. Page 58 of yesterday's materials. So, Mr. Hamada, Group CFO, will answer that question. And for the second part, I'd like to make some comments. For the third question, the domestic beyond the sea, especially auto insurance. So, Mr. Ishikawa, the President of the Super Japan, will answer your question. Mr. Hamada, please. Thank you for the question. Page 58, yesterday's material, some of you might not have the material. LOE for the group, 2025 fiscal year, about 10%. That's the target. For FY26, as we promised one year ago, 13% to 15%. For the time being, for FY2026, For the time being, organic growth, with organic growth, this 10% could be rising to 11% or so, or 11.5% even higher. And the other capital is available for more usage. And for M&As, for example, if we cannot do M&A, do we need to think about our own capital policy? So in terms of ROE, we still have headroom for 1% strong. So at least we'd like to achieve 13% of ROE. And for that purpose target, we'd like to make efforts Your second question, investment discipline or lessons learned. On a regular basis, we look back our investment activities, some of them successful and others are not. The financially successful, those which are not, or the other strategically successful and those which are not. All in all, unsuccessful cases have some common element. For example, in areas where we do not have expertise, then the winning probability becomes lower. So as Mr. Oba said, for the simple well-being, to connect businesses or to have expertise, for example, insurance area or the digital area, that we are also making disciplined way of investment. We have successes and the failures when we look at individual cases. But from those examples, day in, day out, we are making improvements where we need to focus more, for example. Your third question, the auto insurance. Ishikawa-san, please. And how to respond to inflation. As to auto insurance in the Japanese market, the first, we are revising the rates and we are increasing the rates by changing the periodic cost. The rate division, we can do the rate revision not just once a year, but multiple times in the year. And at the sample direct, it's partially already introduced. We have changed existing the philosophy or policy significantly so that the underwriting will be done in a more disciplined manner. So the segment where we have been rather on a conservative side As to the segment that we need to discard as a business, we would like to change our portfolio of automobile insurers. By clarifying the segment and by controlling the average cost, And so that we can return to our customers by lowering the premiums. And as to the claim side, from this year, closed file review, that will be up and running. As to the other cases where we already paid benefit, we are going to check what we have done after the payment. so that we are going to have a stronger check and balance, and so that we can make the claims payment more appropriately. According to the CFR so far, appropriate premium, and in some cases we saw some discrepancy from the best practices. With the CFR becoming more solid, we can make the benefit of 4 billion yen, and for the year 2024, the 14 billion yen, the improvement is possible. So upfront portfolio structure and at the exit, namely claimant side and appropriateness on both sides. By working on both sides, we would like to improve the profitability of automobile insurance. Thank you very much. So you have new systems to work on various things. I think, do you think that how much progress that you have made can be visible from outside? Are you talking about the effect or benefit coming from those initiatives? Yes. Do you think that the benefits coming from those initiatives will be visible from outside as well? Well, I think we need to make the effort to that effect. As to CFR... to what extent we will confirm and reflect the appropriateness of each case. We do not have particular opportunities to report on that externally, but let me say that we are committed to implementing these measures, initiatives, and we will do that in a hurry.

Thank you, Tsujino-san. Next question is Watanabe-san from Daiwa Securities, please. Sorry, this is Watanabe from Daiwa Securities. Can you hear me? Yes, now we can. I have two questions. First is the sustainability of the dividend hike. On page 6, during the MTP, you say EPS growth of 14%. So can we expect a 14% dividend growth? And also... Over the short term, if the growth rate of the EPS deviates and if the growth of adjusted profit slows down, would you be adjusting the dividend? And also regarding the investment profit and losses on page 16, for this fiscal year, you're expecting negative, both in Japan and overseas. But six months ago, you mentioned that for the group investment profit, you were expecting over 10% growth. I guess given the reduction in the dividend and interest income and also rate cuts overseas, is this trend going to continue? What's your outlook on the investment profit? Yes, thank you for your questions. So the first question is the sustainability issue. of the dividend hikes in line with the EPS growth. This will be responded by the Group CFO. For the investment strategy, our situation is different in Japan and overseas. So we will have the Group CFO and also for the overseas investment, I will have Nick, the Deputy CFO, to respond to the question. So please, Mr. Hamada, respond to the first question. Yes, regarding the dividend policy, Yesterday, as we presented, we are planning 150 yen. So compared to 132 yen in FY24, it's a growth of 14%. So for the EPS growth, we are projecting 12% or we have raised the outlook from 12% to 14%. So this is something that we need to realize over the medium term. And For the base return, 50 percent of the three-year average of the adjusted profit If the dividend continues to increase at this pace, we will check if the dividend level with the payout ratio will be exceeding our KPI and target. So on the second question, Nick, can you respond to the question around the investment strategy overseas and also the outlook for investment profit? And then Hamada-san can answer about the domestic situation later.

Yeah, this is Nick Burnett from the Deputy CFO. And as it relates to Sampo International Holdings, as it relates to net investment income, I think as we've modeled it out, we're looking at the additional rate cuts that are potentially coming, most notably from North America and the expectation for rate cuts over the course of the year. As modeled, we would have expected three rate cuts, and I think that has twofold effects. The first effect is obviously reinvestment rates would be coming down as the investments mature. And then the second impact associated with the B, anything that we have from a floating rate perspective would also be impacted on sort of a delayed area. We continue to expect asset center management to grow, as Jim stated earlier. In the first quarter, we grew the top line by over 7%. That outlook seems very consistent with the full-year outlook. So we expect the assets under management. But that's as modeled depending on what happens and what actions are taken and how central banks, that outlook could be changed. That keeps us relatively flat from an investment income. As it relates to the three targets that we've shared with you, growing operating income, by 10% over the cycle. That is still the expectation. But in 2024, if you look at Sampo International Holdings on a standalone basis, we accelerated some of that growth because we grew operating income by 20%. So off of a higher base, we still expect that compounding of 10%. But as you can see there on the slide, since we grew over 20%, we're not going to grow as fast largely in 2025, but the expectation is still to grow on a compounded annual growth rate of 10% over the midterm cycle. I hope that answered your questions.

Yes, then Hamada-san, can you answer regarding the domestic situation? Yes, in Japan, we are selling the strategic equity holdings, and with that, the dividend and the interest income will be coming down, and this is inevitable. And for FY25, roughly 8 billion yen will be a negative impact from the sales of the equity holdings, but a little less than 7 billion yen will be reinvested into private debts and also credit instruments. So at this point, the decline is just quite modest. I see. Thank you very much.

Thank you. Next, from JP Morgan. Sato-san, please. Here it's Sato of JP Morgan Securities. Can you hear me? Yes. Yes. My first question is about ROE, 13% to 15% target and the risks involved in there. And second question is about domestic, the P&C business, especially the competitive scene or environment. Both numerator and denominator, you have been thinking about various aspects, you said. But if 400, meet 400 billion yen profit, if that level is realized in line with the plan, then when it comes to capital, maybe the capital is greater than the original expectation. I first, the briefing time compared to that is, the adjusted net asset that is on the upside. So it seems that maybe you should be tighter on the capital. Well, when that happens... The cash constraints, there are constraints on cash, and is there a risk that you cannot control the other capital the way you want to? Is there a risk of that sort? That's my first question. And the second question, domestic P&C, that you explained very in detail about various initiatives. a series of visits about the commercial practices, including a relationship with the distributors, agencies, and other stakeholders. Do you see any other preferable changes happening in this area, especially the two of your peers announced that they are going to merge? So there have been some adjustments of the share, of the commercial share in this industry. Do you see any opportunities to increase your own share under the current circumstances? Sato-san, thank you. Two questions. One question about Aloe and second question. at the market environment of the Japanese beyond the sea industry. As to your first question, as you pointed out correctly, the denominator is greater than expectation. That's right. But as to the numerator, doesn't include inorganic element. So, continuously we need to improve our corporate culture in an inorganic manner, taking risks. As to the cash policy, we would like to take various measures. For example, not only the remittance policy of the group as a whole, we would like to take various measures to avoid the situation where we cannot control capital. Maybe CFO might have some comments on that later. As to your second question, Ishikawa-san is going to talk about what is happening in the domestic I myself would like to say the following. The reorganization of the peers, the leading to the share adjustment and increasing our own share, I'm not interested in that. The value disciplines or the criteria or the lack of such criteria led to various problems. We need to offer real value added. to increase the corporate culture and value, whatever the external environment is. And for that, we need to hurry to make the various improvement measures. Hamada-san, do you have any comments? As Okamura said, So one year has passed since the start of the Midterm Plan, and the net asset increased. It was based on the denominator. There will be some deduction of OCI, and this OCI is related to the acceleration of the disposal of strategically held shares, and the decreased by about 300 billion yen. As a result of that, the denominator increased. So compared to one year ago, we need to make additional 0.2 points or so efforts. So at this moment, we do not have any cash constraints. We are not concerned about that. This goes on, please. Thank you. In light of various things that happened in the industry, the regulation will change because of that, and we are responding to that as to coinsurance. We need to make sure that we are not going to violate the anti-monopoly law. And for that, we have the rule controlling the segment so that we will have the complete understanding of what regulations are expecting us to do. And I think the same applies to the peers as well. as Okamura said, NS&AD, this merger deal of the two peers. I think we are not living in an age where we need to focus on the top line. This merger, NS&AD, And, of course, that will bring the cost to decrease and the reinvestment of the profit. So on our side, we need to make efforts so that we will be more lean in the operating company. There will be the big changes. I would like to say the two things here. One is about the brokers, how to utilize brokers going forward. And that is one of the topics in the discussions for the deregulation. The broker channel is one of the important channels for us to explore the new corporate clients. So we would like to strengthen the collaboration with them. That said, the environment surrounding the corporate wholesale market, of course, the risk management or the self-sustaining basis should be there in place, and for that we would like to give support. So we need to be on the supply chain, for the other corporate clients, and that will allow us to provide risk management-related services, and that's what we would like to offer to our corporate clients. Lastly, as to comparison... for example, dealers' channels. We'd like to make sure that they're going to be the basis for the comparison among the different insurance entities. And, of course, that will come with cost and workload. So I suppose that there will be a selection process of the insurance companies, and we would like to offer services and products so that we will be the insurance company to be chosen by the customers. And for one thing, we would like to simplify the solicitation and the process, application process for our customers. Thank you. Follow-up question. for the second half of your comments. So you are trying to make some changes, especially for corporate clients. Do you think that the good changes are happening so that you will be the one to be opted for by the corporate customers? For example, in the past, there are some relationship financial, based on the financial economic relationships. Do you think that it is already happening that you are... chosen by the other clients by offering normal underwriting conditions? Well, Ishikawa-san is going to answer your question. But, of course, we cannot talk about specific corporate companies' names. But I'm hearing that there are such changes happening. Ishikawa-san, could you please explain about that? Again, let's talk about specific company names. Maybe significantly would be too much to say, but those owed the financial congruent merits with whom we did not have business so much. Sometimes they refer to us to ask about the worldwide program. I mean, they are interested for us to be part of their worldwide programs. as to the contracts in their groups, that they invite us to be on the competition, and we turn out to be the leading company to get contract from them. So I could feel that the corporate market, wholesale market, is changing very rapidly through those examples. So there is more headroom for us to capture, and of course we need to be profitable. And at the same time, we need to protect our existing business. And so we would like to develop our employees so that they can provide a good risk management capability to our customers. That's very clear. Thank you.

Sato-san, thank you for your questions. Next question is from Niwa-san from Citigroup. Yes, this is Niwa from Citigroup. Can you hear me? Yes, we can. Regarding the strategic shares, the sales of that and also shareholder return policy, that's my question. Regarding the strategic equity holdings, I have a question around the two perspectives. I think you were able to sell a lot last year, but what went well compared to what you expected at the outset of the year for you to have been able to sell more than expected? And for this fiscal year, I think your plan has some conservatism reflected, expecting some slowdown in the pace of the sales. But what's really happening in the market? And? Can you also give us some additional data, such as how much counterpart has given you consent to sell? And also regarding the total shareholder return rate in FY25, I think... Last year, it was 390 billion yen. Can we see this as a floor? If you are to emphasize ROE, you do not want the capital to build up, and you also probably want to invest for growth. But last year, in the second half, you decided to forego the adjustment of the capital. So is it okay for us to consider this 390 billion as a floor for shareholder return? Yes, thank you, Niwa-san, for your questions. So regarding the strategic equity holdings, from the beginning, we have been closely communicating with the counterpart, and we plan to reduce the balance to zero by FY2030. So Sample Japan's sales reps have made a tremendous effort and have communicated with the counterpart. And also the market was dynamically moving. So the customer's behaviors and the mindset has also changed a lot. So that was one of the reasons why we were out of pace, our plan to sell the strategic equity holdings in FY24. So we saw acceleration in FY24, so what's going to happen in FY25 and FY26? Are people on the ground working effortlessly to achieve this? And maybe Ishikawa-san can explain about that. And also regarding the floor of the total return rate, I am repeating myself, but ROE target of 13% to 15% is a commitment we have made. But having said that, my hope is that I want to expand the numerator, continue to enhance our enterprise value. So... It's difficult for me to say what exactly we plan to do, but maybe the CFO has additional comment. So on the first question, Ishikawa-san, can you respond to what's happening in the market and on the ground? Yes. So listening to my people with a series of business improvement orders, the strategic equity holdings was seen as a hindering fair competition. That was true for us and also for the other PNC companies. And that's why all the PNC companies announced that they are going to reduce their balance to zero. So that was big. And also media supported this trend. And also the salespeople closely communicated deeply with the clients and the counterpart to build mutual understanding. And also the counterpart also are mindful about the reputation vis-à-vis the corporate governance. So customers also did not want to hold on to many strategic equity holdings. So we were also approached by the customers to reduce these cross holdings. And what's increasing recently is the customers say that they want to do share buyback, so maybe we can submit our holdings because they want to increase their retail investor base. So they want the P&C companies to agree to sell the holdings. So we see that kind of conversation in an increasing number of occasions. But that's not happening across our board. and there are also concerns about activists holding on to the company's shares. So for the sales of the strategic equity holdings, there are a group of customers who do not want to discuss deeply about the sales of the strategic equity holdings. Yes, and on the shareholder return, I, Hamada, will respond to that. The floor guarantee over shareholder return policy is what we call the base shareholder return. So that will be the floor. Last year, the shareholder return was roughly 390 billion yen, out of which the base return was about 167 billion yen. And for that, As I commented yesterday in the earnings call for FY25, I first consolidated profit base. Looking at the last three years, it's going to be roughly 170 billion yen. That's what I said yesterday. So maybe by just a modest degree, but we probably can raise the floor guarantee level. And on top of that, the 50% of the after-tax proceeds of the equity sales or it's something that we can return. But compared to last year, that is going to be smaller compared to last fiscal year. And also, last fiscal year, we did a capital adjustment of 110 billion yen or so. And as Okamura-san has been saying, if we see good opportunities, we want to first consider growth investment. And if not, we will be looking at the ESR level to consider the options that's available. Thank you. That's very clear. Thank you very much. Thank you very much.

Next question is from Sasaki-san of Nomura Securities. Just one question. Sasaki from Nomura Securities. So question to Mr. Okumura. So when you make big investment, do you think the current environment is good for big investment? I am not an expert of insurance, but for example, the premium level is at the peak, or if the valuation is still high, then maybe you might make different investment decisions. So my question is whether the current environment is good for you to make a big investment or not. And if you go for a big investment, then on the short run, that would increase your business risks and that could be a negative impact on your business. But even if with those risks, Do you not hesitate to make the decision on big investment if that is going to be the raising the stock price, for example? And mandate timing, there are various factors involved, external environment and internal environment as well. So effects is one thing, and also not only underwriting, but also the investment in the industry cycle. Of course, we cannot ignore these factors, and we need to have disciplined action. But our mission is to increase corporate value on mid to longer term. And I myself think that the certain timing at M&A is indispensable. I have a strong belief in that. As to business risks, as long as you are engaged in business risks, there are always – you are engaged in businesses, there are always risks involved. but on the short run, we would like to make a good communication so that our actions will not be misunderstood. But if there is a deal which will certainly make our cooperative value higher, I would not hesitate to make such an investment. Thank you. That's clear. Thank you.

Thank you, Sasaki-san, for your question. Next, Sakomaki-san from Mizuho Securities, please. Yes, this is Sakamaki from Mizuho Securities. Can you hear me? Yes, we can. I have two questions. So sorry for focusing on this, but regarding M&A, what you have explained is that for the overseas business, you can grow even without M&A. I think you implied that. in the past, but listening to you today, it feels like the M&A appetite has gotten stronger. So looking back at the last six months or so, internally or externally, have there been any changes that made you have a stronger appetite for M&A? And the second question is around SJR, the domestic P&C business. How do you evaluate the progress? When you made the midterm plan, I think in some areas the business environment has deteriorated, but the combined ratio improvement is, I think, one of the KPIs. But is SJR effective enough for you to be able to achieve this? Or elsewhere, do you have some additional benefit you can reap to further improve the combined ratio? Yes, Sakamaki-san, thank you for those questions. So regarding M&A, have we changed your appetite? I guess was your question. Especially overseas was what you mentioned in the question. Also, Jim? Jim? After being appointed as the CEO of Sunbook P&C, I've been working very closely with them, but M&A cannot be done unilaterally, so we cannot commit to M&A opportunity and reflect that in our business plan. So basically, we need to focus on the organic growth to think about the business plans. So when we look at the global map, we have... you know, further room to grow geographically and also make a further diversification in their portfolio. And that's what we have been doing under Jim's leadership. But when we started the midterm plan, one additional extra factor was the sales of the strategically held equities. And that said, with Jim and Obasan, if there are opportunities and looking at the changes, I was saying that we need to further increase the pipeline so that we can have a better probability of achieving a medium to long-term corporate value enhancement. So maybe slightly we have a stronger appetite, but we are not able to close any deals in FY24. So I want to make the pipeline more robust, both in terms of quantity and quality. And for that, I think we need to invest more. into internal resources, including talent. So for the overseas inorganic opportunity, I would like to ask Jim to make some additional comment later, but for SJR, Ishikawa-san is exerting his leadership. But as you point out, the biggest risk is inflation. Also, inflation leads to increase in loss cost and also deterioration in the expense ratio. And that may wipe out all the efforts we made. But in order to avoid that, we want to use AI to achieve productivity gains. So it's not just a simple business re-engineering. It has to be more than that to achieve further productivity gains so that we can overcome the changes happening in the environment. So now regarding the overseas M&A opportunity and the appetite, can Jim or Nick share their thoughts about the outlook and how they think about the M&A opportunities? And then after that, Ishikawa-san can make additional comment regarding SJR. So Jim?

I think we have demonstrated we have the ability to grow organically. And so we've demonstrated that over the last couple of years. Our appetite internally for M&A has not changed. What I think we have seen is the external market has changed. There's been very limited number of M&A activities in the industry over the past couple of years. We've had some very good results, and I think many sellers feel that the price should be at a premium as if those good results would continue in perpetuity. And so we have to remain disciplined in terms of how we evaluate the businesses. And so the market feels like it is changing, and so maybe that's how you get a sense of a greater appetite. But the appetite internally has remained the same. but we see the external market changing in a different direction. So maybe, Nick, you want to add more to that?

No, Jim, I think you covered most of it. I mean, as we look at the elements, we want to make sure that we continue the discipline of underwriting, that we have the management of the expenses, making sure that cultures align. So as we look for opportunities, we need to maintain that discipline and continue to drive the organic growth. I think we've said before... If there were those opportunities in M&A in the areas where we decided to drive and build versus buy, we would have done those. But since there weren't any opportunities, we decided to drive the organic growth. So, Jim, I think we're aligned on that, and we continue to evaluate and look at all markets, all opportunities. But I don't think our appetite has changed over the last two years. Thank you.

Ishikawa-san, please. Yes. For the auto policies, the repair unit cost is increasing. And also, as Okuma-san mentioned, the inflation has a big impact. And looking at those external factors, as SJR, we are focused on sophisticating the pricing and also portfolio management, reinforcing underwriting, and also optimizing reinsurance scheme. So building up on those efforts one by one, on page 51 of the presentation deck, the SGR impact is 39 billion yen compared to the previous year. So that's what we project for FY25. But we will not be satisfied with that alone, and we will continue to reduce the business expenses For example, as one big initiative, one is reducing the IT cost. It's a huge challenge that we need to address. But for that, The low-performance systems, the systems which are not frequently used, are being scrapped out. But not just that. We are also trying to look at revising the IT architect with the project. is involved in that. And also SMPO International, Daniel from SMPO International is engaged so that together we are working closely to further reduce the operating expenses of SMPO Japan. So that is reflected in SJR. And as you can see on this page, on page 57, For us, branches, system, and personals and fee, these actions will be the key initiatives under SJR. And within Sampo PNC, we are collecting a lot of ideas and exchanging opinions to achieve this. So additional impact of 39 billion yen is just a passing milestone. So we would like to further maximize the impact of SJR.

That's clear.

Thank you. Thank you, Sakamaki-san. Next question is Otsuka-san, SBI Securities. Otsuka, SBI Securities. Can you hear me? Yes. I have two questions. One by one, please. My first question is In the Q&A section, you said that the comments on ROE, especially for sample P and C. In your comments, so you do not have leverage or with leverage, ROE would be higher. It's a simple question. Why you do not have leverage right now? And of course, it's part of the strategy, I suppose, or as Okamura-san said, for the capital issue. But the peers already leveraged ROE and the numerator is increased. So could you please talk about your strategy? So Okumulasan said. When Okumulasan talked about LOE, still more to do, I didn't quite understand. So the leverage for the group and the capital allocation for different businesses and the leverage in each business. So the numbers here for SI, based on the capital allocated to SI, we have ROE. And SI itself is not putting leverage. So compared to the peers, the ROE looks a bit smaller or lower. Do you have any comments from Nick first?

Yeah, I think the comment was made as reference to our peers and our ROE relative to our peers. Most of the leverage is held at the holding company level. At the segmental level, we don't have a high level of leverage. So the point we were making were that if we had leverage relative to our peers... And if we were levered relative to our peers, our ROE would be higher and it would be more in line with the peers that we look against ourselves to reference ourselves. So the comment of leverage at the segmental level was just in relation to our peers and what our ROE looked like relative to our peers. When we put the implied leverage of our peers on there synthetically and we look at our ROE, we find ourselves performing relatively well or in line with a lot of our peers when we take a look through that lens. That doesn't imply that we should take more leverage at the segmental level. It just implies on a relative basis we would be higher if we did lever up the balance sheet at the segmental level.

Probably, I think for the group level, leverage is actually higher than the peers because hybrid bonds, we have leverage there. So the capital nature of the leverage exists to strengthen our capital. For the denominator, SOMPO Japan balance sheet has it. And on the group level, we have leverage. So compared to the peers, I think it's in line with the peers. I'm sorry. So for the holdings level... to come closer to our target, you increase return part, right? So compared to the peers, if the leverage on the same level as peers is appropriate one, then your focus is to make our part higher. Yes. My second question, a question about simple P&C. Could you please talk about synergy? At the beginning, you said the synergy that is going to come around for the other reinsurance, for example. But the quantitative manner, what kind of KPIs do you have as targets? For example, top line synergy or the synergy in terms of cost or underwriting. I think that you can have all kinds of synergies both at home and abroad. Could you please talk about quantitative aspects of synergy? Thank you. As to SOMPO P&C, from April 1st that there was a launch, And in January through the March, we had some meetings for the preparation, but the actual official start was April 1st. Every month, the team being the head, we have the committee, management committee, and the quantitative and qualitative targets discussed for quick wins, and the mid-term, the value increase. For example, for reinsurance, we are already seeing some benefits to some extent. Actually, last week in Toronto, the management board of Sunfo P&C was held. So the current discussions, maybe Jim can talk about the discussions, current discussions at the management board.

As Okamura-san mentioned, this has been in place since April 1st. And so we are working together on looking at short-term, mid-term, and longer-term initiatives. I think we have not put in place KPIs in the last six weeks, as we still work together to identify them. But certainly on a short-term basis, I see it... On the reinsurance, we're already seeing that benefit to the organization. I also see a benefit in the finance and investment side as we look to bring those departments together to the best interest of the organization. I will see KPIs on we've set certain targets and expense reductions in line with SJR plan. And so those plans are our KPIs and working together to see how we can not only achieve but exceed those. But it's still early for us to put in financial KPIs based upon some of the synergies. I hope to do that at future meetings.

Understood.

Thank you. So there's some copy on the seat. Now you have this new mechanism. So from outside, we'd like to see and confirm how significant it is. So I'd like to ask you to share the other KPIs in the future. Thank you very much.

Thank you, Otsuka-san. So we have overrun the scheduled time, so we would like to take the last question from Tokai Tokyo Intelligence Lab. Mr. Majima, please. Yes, can you hear me? Yes, we can. Regarding governance, so now you have a new organizational structure, and you have the only P&C company with the nominating committee. So I think you have three internal board members who participate in the nominating committee. And the group CEO is an executive officer. So I think this probably will be discussed at the group management meeting. But then you have another layer, management board. So is the executive matters done at this management board? But then for the CEO and the management board? I wonder if there is a good governance. So what is your thoughts on the governance structure? Yes, thank you, Majima-san. Yes, so we have the three committee-based structure, and we have three internal board members who are part of the board composition. And I, as the group CEO, the authority that I held has been transferred to Jim and Obasan. I think the biggest risk is that I need to make sure that I have close communication with Jim and Obasan. So as a structure, the group, there may be mirroring of Sunpo Japan and the holdings. So we make sure that we have close communication. And we make sure that we don't need to hold the meetings just for the sake of having communication or meetings. But with this organizational structure, We are aware of the communication cost that will be happening, but we are striving to achieve a higher return. But regarding the duplication that you see as concern, we also acknowledge that, and we are closely monitoring that structure. I see. Thank you very much. Majima-san, thank you for your question. So with this, we would like to close the session today. For any additional questions, please reach out to our team. Thank you very much for joining the call today.