Tokio Marine Hldgs Ord

Good evening. Thank you for joining us today. I am Ishiguro of Global Communications. We will now start the conference call for the FY2024 results and FY2025 projections as announced today. We will start with a presentation from our CEO, Mr. Komiya, followed by CFO, Mr. Okada, by referring to the presentation material posted on our homepage today, focusing on our earnings, and capital policy. The presentation will be for about 15 minutes, after which we would like to take your questions. A disclaimer before we begin. The presentation may include business projections and forecasts based on information and assumptions available to us today and is subject to risks and uncertainties. Please be reminded that actual results may differ from projections. Please note that we have reporting service for this conference call. Let me start. Over to you, Mr. Komiya.

Good evening, everyone. My name is Komiya. Thank you very much for taking time out of your busy schedule to join us today. I would also like to thank you for your continued support towards Tokyo Marine. First of all, I would like to begin by explaining the content of the financial results for fiscal 24 and the message from the management based on these results. Please turn to page 3 of the document. There are three main points I would like to convey to you today. The first point is about fiscal 2024 results. Our management places more emphasis on adjusted net income including gain on sales of business-related equities, i.e., core profit of insurance business, and this figure on actual basis was ¥608.9 billion. This is an increase by ¥27.9 billion over the four-year forecast announced most recently in February. This is due to the appreciation of the yen against the foreign currencies used by Japan PNC in its financial results as of the end of March 25, which reduced the burden of foreign currency-denominated reserves for outstanding claims. Normalized basis adjusted net income, excluding one-off effect, was 679.0 billion yen, in line with the February forecast. This would translate to plus 14% year-on-year growth which is quite high. This was due to the strong performance of major international businesses, as well as the depreciation of the yen against exchange rate used by international business in their financial statements, which is the exchange rate as of the end of December 24. Another reason was due to the rate increase in Japan PNC and a decrease of large losses. Sales of business-related equities amounted to 922 billion yen, exceeding the February forecast by 10 billion yen and 1.5 times higher compared to the initial forecast. Source of dividend will come from actual adjusted net income, including gains on sales of business-related equities, which was 1,215,000,000 yen, an increase of 35 billion yen from the February forecast and 1.7 times that of the previous year. The second point is the forecast for fiscal 25, which is 700 billion yen excluding gains on sales of business-related equities. This would be 3% growth compared to last year's normalized adjusted net income. This growth will be driven by continued strong performance at the major international businesses and also rate increase in Japan PNC. The reported growth rate will be calculated based on the FX assumption we set at the beginning of the year for fiscal year business plan, where international business will be exposed to some impact of FX rate. This assumed rate taken at the end of March 25 is showing yen appreciation compared to the actual rate at the end of last year. Therefore, looking at the actual performance excluding FX factor, I think it is fair to say that the overall growth rate will be positive 7% growth and the underlying trend is favorable. The plan for sales of business-related equities is currently assumed to be 600 billion yen, the same as the initial plan for fiscal 24. And adjusted net income after completion of sales is expected to be 1 trillion 100 billion yen. Adjusted net income, including gain on sales of business-related equities, will be slightly affected by the pace of sales over the next five years until we reach business-related equity holding of zero. We believe that this is not directly related to corporate value. and we will continue to achieve world-class growth with our core insurance business profit. The third point is about shareholder return. We continue to believe that the profit growth of our business and expansion of shareholder return should be consistent. There is no change to that policy. In this context, the DPS for fiscal year 24 will be 172 yen, an increase of 10 yen over the forecast at mid-year based on the further upward revision of profit. This would result in DPS growth of 40%. Furthermore, DPS for fiscal 25 will increase by 38 yen to 210 yen in line with the profit growth I have explained. This will result in DPS growth of 22%. In addition, for capital stock, we will continue to implement a disciplined capital policy. Since last year, we have announced our intention to spend 1% to 2% of EPS growth for share repurchase. Current level of ESR is at an ample level of 149%. We also have several investment opportunities in the pipeline, mainly for bolt-on M&As. Taking all of these factors into consideration, we plan to repurchase 220 billion yen over our own shares in fiscal 25 for now. We will continue to implement share buyback flexibly throughout the year. But today, as its first step, 110 billion yen of share we purchased was approved. Mr. Okada, our CFO, will explain more on the capital policy later. Now, I'd like to explain these aforementioned points in a little more detail. Please Go to page four. First is top line. Fiscal 2024 results. As you can see on the left, net insurance premiums increased by 10% year on year, as announced in February. And excluding foreign exchange effect, it was an increase by 6%. For life insurance premiums on the right, Due to the additional implementation of block reinsurance by Unseen Life in March, life insurance premium decreased by 44% from the February announcement. In this context, our four-year forecast for fiscal 25 is for a steady increase in net premiums within by 3% year-on-year and by excluding foreign exchange factor, an increase by 5% year-on-year, driven by rate increases and underwriting expansion. Life insurance premium is expected to be 45% year-on-year growth due to the impact of the block-seeded reinsurance program implemented by iSEEN Life in fiscal 24 and also in April of 25. Next is the adjusted net income. The actual profit for fiscal 24 is shown on page five. As I explained earlier, we believe that analyzing and evaluating the normalized basis profit is more important in terms of measuring the strength of our business. So, please proceed on to page six. Normalized adjusted net income excluding gains on sales or business-related equities for fiscal 24 is 679 billion yen, an increase by 82.5 billion yen year-on-year and 14% growth compared to the previous year. We would like to evaluate this for different businesses. First, in Japan PNC business, there were some profits declining factors such as higher auto loss costs, higher natural disaster budgets, as well as prior year reserve development for liability insurance in North America. However, we also had other factors such as rate increase in automobile and fire, a decline in large losses, and reaction from an increase in foreign currency denominated reserve for our outstanding claims in connection with the yen depreciation in fiscal year 23. Japan P&C business unit profit increased by 28.8 billion yen from last year.

In international business, profit decrease in Asian life due to drop in interest rates and decrease in prior year reserve takedowns partly offset strong insurance underwriting and income revenues, especially in key entities, and profit boosted by yen depreciation resulting in an increase in profits of 29.7 billion yen compared to the previous year. Our full-year earnings basically naturally hedge against the impact of exchange rates. In other words, yen-denominated profits in the international business and Japan's BNC, foreign currency-denominated loss reserves, cancel each other out. But it is also true that the exchange rates used for financial results differ depending on the business. In light of this, exchange rate fluctuations in FY24 were quite volatile, and the exchange rates used for financial clothing of each business were all favorable to us. And as a result, the management's honest assessment of FY24 profits is that there was a wind-aided element to it, and all in all, we believe that a plus 5% growth is a reasonable view. We also factored in a large capital loss on CRE loans in November of last year. To be honest, we were not exactly familiar with the CECL practice, and from our lessons learned, we have revised our average yearly expected capital loss from minus $265 million, it was revised to minus $440 million. Please turn to page 7 for FY25 projections. Adjusted net income for FY25 excluding capital gains from sale of business-related equities is projected to be 700 billion yen, and our planned sales amount of business-related equities is 600 billion yen in adjusted net income, including gain from sales of business-related equities, projected at 1.1 trillion yen, as I explained at the beginning. Let's look at the breakdown by business. Japan PNC will have a 7% growth, despite factors such as decrease in profits due to a decrease in dividends from sale of business-related equities and an increase in IT costs. There are positive factors such as absence of prior year loss reserve development for liability insurance in North America and the rate increases for OTO. International business appears flat growth year over year compared to the previous year due to the strong yen, but excluding exchange rate impact, It is plus 5% growth due to steady growth in key entities and a rebound in the Asian life insurance year over year. That is all for me. As seen in the recent tariff policy, the global economy is becoming ever more uncertain and the business and management environment is by no means easy. Yet, our company, Tokyo Marine, remains resilient. We will continue to achieve world-class EPS growth with a high degree of certainty, driven by globally diversified, low volatility, robust underwriting, and the strong income profits that come from this. By balancing EPS growth and disciplined capital policy, we will further increase our OE. We will manage and run the business with a strong will. Your continued support is very much appreciated. Thank you very much, Mr. Komiya. Let me turn to Mr. Okada for capital policy. This is Okada, CFO. Let me cover shareholder returns and capital policy on page 8. Once again, as we have stated before, the basis of our shareholder return is dividends, and our policy is to realize DPS growth consistent with profit growth. the actual adjusted net income for FY24, including the gains on sales of business-related equities, which constitutes the source of dividend, as explained by Mr. Komia earlier, were revised up. DPS for FY24 has also been revised up by 10 yen from the midterm forecast to 172 yen, with a DPS growth of 40% year-over-year. For FY25, we expect a moving average growth in the source of dividend on the back of continued favorable profit levels. So we will increase DPS by 38 yen to 210 yen and the DPS growth to 22%. Next, please turn to page nine. Our thinking towards capital-level adjustment and share buybacks as a means to achieve this remains unchanged. In other words, capital generated through organic growth and portfolio review will first be used for M&A and risk-taking that will contribute to improving our ROE. And if such opportunities do not arise, we will carry out share buybacks as we have no intention of unnecessarily accumulating capitals. Also, since last year, we have announced that we will achieve 1% to 2% of EPS growth through share buybacks. In light of this, we have taken into consideration the effect on EPS growth. In other words, the ratio against our current market capital of 11 trillion yen, the ESR level, our current pipeline of bolt-on M&As, and the risk-taking opportunities due to environmental changes. and have decided to set the amount of share buybacks for fiscal 2025 at 220 billion yen for the year at this point in time. And today, buyback of 110 billion yen at the first step was approved. And finally, regarding the sales of business-related equities, please turn to page 10. In FY24, we ended up with a sale of 922 billion yen, far exceeding our initial plan of 600 billion yen today. as we reached agreement to sell from various customers' counterparts. We plan to continue accelerating sales in order to achieve the milestone of halving the balance at the end of FY23 by the end of FY26, as set out in the current midterm plan, and achieving zero by the end of FY29. Therefore, for F-125, although the overall market, for example, topics, has fallen by about 4% compared to the beginning of last year, we have set a sales target of $600 billion, the same amount as last year, as our initial plan. We will continue to execute our business strategy to raise both EPS and ROE and thereby respond to the expectations of the capital market, such as yourselves. That is all for me. Thank you. Mr. Okada? In the remaining time that we have, we would like to take your questions. Explanation is currently being given on how to ask questions in Japanese. Let us start the Q&A session. Any questions?

So the first questioner from SMBC Nikko, Muraki-san, please. My name is Muraki from SMBC Nikko. Regarding the impacts of inflation, please teach me. So this time, for liability, the social inflation-related lines of business in North America, I believe the provisioning was made, and it was quite a large provisioning. And also, unit repair costs were also, compared to the most recent assumption, I guess it has increased, versus the year beginning, the repair unit cost had increased. So in the U.S. social inflation, and also in Japan, the inflation of the unit repair costs Why is there a deviation between your assumption versus the actual result? And also, for creating this year's business plan, the assumptions that you have for the plan, does it assume that the inflation is going to exacerbate? Isn't that the risk part of your assumption for this year? Thank you for the question. Regarding the social inflation situation in North America and also for domestic auto situation, I'd like to separate your question into two. So first, social inflation in North America. Let me answer you the question. So on that part, in Japan PNC, the policies that we have assumed in Japan PNC for Japanese global companies, It's a global scale, global plan contract where in 2024 we have to be provisioning additional reserves. For the policies we underwrite, It's the additional portion on top of the primary policy available in local market. Of course, we do business in North America. So for the primary policy, we do some underwriting there too. And we do have the lost cost increase that's factored into the assumption of the business. So from quite a while ago, we had been provisioning additional reserves. However, for the excess policy, which was underwritten by a Japanese entity, For the primary policy, we discover what is happening there, and then we do the case reserving as well. And most recently, for this particular fiscal year, it exceeded the primary policy. So based on that, we decided to make additional provisioning. And rather than us being late in reacting, we look at the primary policy, and then we look at the excess policy, and there was a gap between the two. We tried to fill the gap. However, the social inflation issue in North America, we still need to keep to the further development, so we will continue to keep our eyes on the trend. And then regarding the domestic auto, cost to increase our inflation, Kuroda-san will be answering your question. From TMNF, from Personal Minds Underwriting Department, my name is Kuroda. I'd like to answer your question. So regarding the unit claim paid due to the enhancement and also modularization of the auto, it has turned to increase, and that increase is even going up further. And in a chronological manner, in 24, in the first half and second half, the unit claim growth exacerbated in the second half of 24. That was the trend we saw last year. As you may know already, there is cost increase or inflation. It's the repair cost where it's impacted the most because 60% of repair cost is the parts cost. And parts cost increase had exceeded CPI even, but most recently. it's going up even further compared to the past. So that is one major factor. Another point is that the remainder of the repair cost, or 40%, this is labor cost. And for labor cost, there is an increase in CPI and also appropriate pass-through to the labor cost. There is a trend to increase the labor cost or wage in Japan. As a result... The parts and the labor combined, the total repair cost is in excess of CPI. It's above CPI. And as you know, for fiscal 24, at the beginning of the year, we were expecting positive 4% as an assumption. Actually, at the end of the year, we discovered that it was 7% increasing cost at the end of fiscal 25. The CPI expectation by BOJ from 24 to 25, they're expecting some slowdown in the rate of hike, and so we are expecting positive 6% growth in 25 in cost. However, in any case, considering the current economic situation, we still have a lot of uncertainties ahead of us. and therefore we need to continue to monitor the situation and we need to be proactive and also react quickly whenever a situation changes. That concludes my question, or my answer. Muraki-san, I hope that answered your question. Thank you. The reserve released by the international entities I guess there is about 8 billion yen of reserve release. But overall, do you still have ample reserve? And was that your judgment? Or do you think there's no more room for further reversal to take place? Okay, so from Honjo-san from IBDD, we'll answer the question. My name is Honjo from IBDD. As an answer to your question, right now we are adequately provisioned And therefore, next year, the reversal, et cetera, of course, we don't have that plan, but I can say to you that we are well-reserved at this point in time. I understood well. Thank you for all the answers. Thank you.

Next question, field A, Tsuchino-san, over to you. Page 44 of the handout, about CRE loans. I think things have passed the peak. But in your projections, there is a big drop. And in capital, last year was big, but there was a decrease. And so net-net is improvement. But in income, why is there a big drop? And what is the balance, outstanding balance? I think you're working on workouts and so forth. What are the fruit of your initiatives? Thank you for your question. I would like to ask Mr. Kawano to respond to your question from financial planning. Thank you. This is Kawano speaking. The reason why there is a decrease in income for two reasons. One is the decrease in outstanding balance and the impact of a decrease in interest rate. As for outstanding balance, if I 24, end of March 24 to 25, sorry, correction, from end of 24 to end of 25, $11 billion to $9 billion. This is how much there will be a decrease. And the big reason for that is associated to this decrease in outstanding balance. And as for the workouts that have been conducted, according to what we have disclosed the other day, there has not been any major changes. The underlying trend remains the same. for real estate loans, it has not deteriorated nor improved. The situation differs by project, by deals, but the overall trend remains the same. Another point, if I may, is forfeitures are occurring at a certain level, but since our loans are single lenders and therefore we are able to actively conduct workouts and we will exit from these foreclosed properties at an appropriate timing and we're making efforts on that end. So postponing or extending the maturity. I think you have done that once with renovation. You've done that during COVID. Are you going to do it again, extending the maturity twice? What would that mean? What would that entail? Well, extending maturity, as a borrower, there are two challenges. One is More than what we expected, interest rates have remained high, and especially for office loans after COVID, people are working more and more from home, and therefore less people are going to the office, and therefore demand for offices are going down. So these are the two reasons. And starting from the latter, demand for office, this is a structural change, and therefore we cannot expect a dramatic recovery in a short period of time. However, higher for longer interest rate situation, we will enter into negotiations with the borrowers so that borrowers can pay back the interest rate and rewrite their business plan and work out together while we wait for the recovery of the economic conditions. And also, the interest rate to be given, we will give discounts for interest rates. And if we are able to sell at a reasonable price at the exit, some premium or premium that we can generate after that will be utilized and therefore we want to maintain return as much as possible. So you will need to incur impairment loss and as soon as you conduct deductions and you so we should assume that this should work out. Well, of course, it will depend on the market conditions. Therefore, we cannot say anything for sure. But capital loss for CRE loans, $230 million is expected for the full year. And under the current market environment, we believe that this reserve should be enough. I see. Thank you very much. This is Ishiguro speaking. If I may supplement a few points. As you know, our international business closes in December, and therefore we are looking at the flash report for the first quarter. And if you look at page 39, first quarter results, compared to initial profit is plus $8 billion, of which $1 billion is from underwriting. And $7 billion is from investment. There's an upside vis-a-vis the original plan. And a part of that is the RE loan. And therefore, compared to what we expected, things have not deteriorated. And therefore, I think it's fair to say that we are on track. Next question?

from Daiwa Securities, please. It's your turn. I'm looking at the page 10, the conservativeness over the sales of business-related equities. And so you are expecting 600 billion yen, and then 240 billion yen, Mitsubishi Corporation, Suzuki, some names have been announced. What's the percentage of progress so far? Because I thought it was less than the number that you have announced, but what's the actual progress From our CFO, Mr. Okada, he'll answer your question. So for fiscal 25, the 600 billion yen is a number that we have already announced, and including some of the stocks where we have already received the agreement. And so at least there's 600 billion yen to be sold for this fiscal year. In terms of the progress in the midterm plan, By the end of 25, we want to achieve 40% achievement ratio on book value basis. And so towards halving it by 26, we are making a healthy progress. So 600 billion yen of sales. What is your progress so far? What's the percentage of the progress so far? Do you mean at the end of April, et cetera? Yes. I don't have the number with me, but I would like to get back to you separately. Our team will get back to you. Okay, thank you very much. Let me add, so progress, I will get back to you later. In our plan, how we plan for this is that when we have the agreement from the share issuers, and then we multiply that with the stock price at the end of March, So we know the actual names when we create a plan and we also know the book value associated with those names. That's why we have announced 600 last year and also 600 this year. But then the capital gain is going to be higher by 10 billion yen because the book value of each name is different. And last year, we started with 600 billion yen, but then there were additional agreements we were able to gain in the middle of the year, and so it ended as 900 billion yen, where it will go this year. We will continue to negotiate. It depends on how much agreement we can get, but this 600 billion yen, this is the amount that we will definitely be able to execute. Next question. JP Morgan, Staple Times.

This is Santa from J.B. Morgan. Page 43, North America investment. There was an explanation about CRE loan earlier, but on page 43, income for CRE loans is going to decrease, whereas here you are expecting an increase. Which asset classes are expected to be covered and also under capital. According to the top box, based on the current market situation, it says, but from what we heard from Komiya-san earlier, there were lessons learned from last year, and therefore you have raised the amount to be covered. expected at the beginning of the year. So if you could explain once again how you come up with these expectations, what were the expectations, and if you could also briefly comment about infrastructure funds or any other specific exposures that vis-a-vis the average could underperform So if you could highlight those points, I'd very much appreciate it. I see. So the reason why income will increase, and what are the assumptions for capital loss, and the buying asset class, anything that we should keep note of, any colors on that. So Kawano-san is going to explain. Yes? Reason why there is an increase in income. is because of the outstanding investment. CRE loan is going to decrease, but overall investment amount is going to increase. Asset under management is going to increase, and that is the biggest factor. And so $170 million increase in light of the market conditions. But in 2024, FY 2024 original projections, a year has passed since then. And so from fall of last year, we have set aside quite a large CSEO provision. And the reason for that, to give some context, is in looking at our portfolio, there were an increased number of properties that require workouts. And therefore, toward the second half of the year, we brought holdings on board to look at the CRE loan properties one by one and looked at the property value of each of the properties and came to the decision of setting aside more provisions for CACL. So that is reflected in this number. And asset classes that you should be aware of. Well, for us, It's not that there is any particular asset class that we should be aware of, that we should monitor closely, but CLOs with the relatively high exposure and high yield corporate bonds and private credit with the slowdown in economy or inflation progressing and high interest rates, that could impact the repayment capability of the borrowers. And so whether there will be an impact of that, we are monitoring on a daily basis. But COE and the corporate bonds, we're looking at the spread. But beginning of April, after the announcement of tariffs, it widened. But since then, it has tightened significantly. and therefore it's not that we have anything in particular of grave concern. I see. Moody's sovereign rate reduction, any concern about that? Well, with regards to Moody's, it's kind of following the trend of other credit rating agencies in rate cuts, And therefore, we kind of factor that in. That was expected. And therefore, our investment activities are not affected by Moody's rate cuts. I see. Thank you very much.

Thank you very much. Next will be Sakamaki-san from Mizuho Security, please. My name is Sakamaki from Mizuho. I have one question. If I go to Phase 11 on the assumptions for natural catastrophes, For 25 on business unit profit basis, I believe the California wildfire is included. And considering that, the natural catastrophe related the claim payment expectation, isn't it too low? So including Japan, I want to see versus the medium term management plan, versus last year, why you have created this budget for natural catastrophes for Japan and international. So for the overall budgeting, that will be answered from corporate accounting, and then for the international business, there will be further answers from Honjo-san of IBDD. From Tokyo Marine Holdings, my name is Komatsu from corporate accounting. I'd like to answer your question. So first of all, if you go to page 11, regarding the NACCAP budget, there was a question. And originally, for domestic business, for under two, we had 74 billion yen as a part of the budget for midterm plan. In 23, it was 62. But because of the worsening of the secondary apparel, we have increased the budget amount. And now, in the midterm plan, it's set at 74 billion yen. And for 25, Because of the increase in exposure, we have set the budget to be 76 billion yen, increased by 2 billion yen. And for international insurance business, in every year, we consider the actual exposure as we set the budget. In the mid-term plan, it was set at 69 billion. For 2025, the year beginning, budget, it's 73, an increase of 69 considering the amount of exposure. And now regarding California wildfire and the actual amount related to fire and also relationship to the budget. My name is Honjo from YBDD. As you mentioned, the LA wildfire, it did happen in the first quarter. That is included in the first quarter results. And the payment expected claims payment and incurred loss. On top of the LA wildfires, there is also a natural catastrophe situation. At other entities, which is an increase of 4 billion yen, we have strong wind, flood, and other secondary power. To the profitability, we are tearing of the policies. And for the low profit policies, we are increasing rates. and also reviewing the terms and conditions and also sometimes a non-renewal of some of the problematic policies. And this is our effort in trying to reduce the risk and also improve profitability. Through those efforts, overall, we have decided to increase the amount by 4 billion yen. So other than LA-1 fire, the risk exposure by international, it was being cut. It was being reduced. Is that correct? In terms of risk exposure, we were able to reduce it, including those risk mitigation measures. I believe some of them will surface. Thank you.

Sasaki-san from Nomura. This is Sasaki from Nomura. One question about international business. I would like to ask for your, tell me how to see it. Impact of tariffs and with the Trump administration. drug prices to be reduced, and guidance has been revised down by the pharmaceutical companies in the United States. I think the trend has kind of changed. And for your international business, impact from Trump administration or tariffs, are you factoring it in, in this fiscal year's guidance, or are you not factoring in at all? How is it factored into your budget? I see. Thank you very much. Impact of Trump. So I want to ask Honjo-san of IBDD to respond to this question. This is Honjo from IBDD. Thank you for your question. Policies of President Trump is not implicitly factored into our plan. Half of our business profit is from North American business, but there are certain uncertainties We cannot deny that. But tariffs could lead to goods and services and inflation and therefore to lost cost. However, North American business for us is Property, OTO, where tariff impact effect is relatively small, we are focused on properties, and therefore impact from economic policies of President Trump should be limited. But, of course, we do underwrite property, which would require increase in rate higher than inflation or rising costs. Thank you very much for that. And how about drug prices or benefits are rising rapidly with the pharmaceutical industry trends? We do not have to worry too much about that? Well, thank you for that question. It's not that we don't have to be concerned at all. There will be a certain impact. But when it comes to medical insurance or impact of drug prices, is, as I said, rate increase more than loss cost. It should be enough to cater for such trends. I see. Thank you very much for that. Thank you very much.

From SBI, Otsuka-san, please. My name is Otsuka. Can you hear me? Thank you very much. Yes, we can hear you. If I go to page 39 for this year, the international business unit profits for Europe and Assyria, Middle East on local currency basis, and also I think you're assuming yen appreciation, so yen basis, the profits have lackluster growth prospects for 2020. Five, what is the background behind the clustering growth for some of the international businesses? So excluding FX, they are expected to have some negative growth or shrinkage. And so Honjo from IBDD will answer that question. Hello, my name is Honjo. I'd like to answer your question. And so Latin America and Asia, in Brazil, including Latin America and Brazil in 24, as well as in 23, they had all-time high profit. And we are still having profit close to that level. And so the profitability is high. Combined ratio is in the latter part of the 80%. And so high profits are coming from the Brazilian business in those years. However, due to the exacerbated competition, et cetera, in recent years, The loss expectation is now back to the normalized level, and this is contributing to declining profit. However, for Brazilian business, combined ratio being in the first half of 90%, which is already highly profitable, and that will continue. For Asia, for 24%. Asia, Oceania, within this region, for 24, it was negative. And it's because it was the reaction from the reversal reserve related to COVID in Taiwan in the prior year. In Malaysia, Thai, and Indonesia, and Singapore, they had all-time high profits. So they are still marking growth. And also, for the highest... Profit and also low loss ratio were corrected, and so we are expecting some decline in profit for Asia and North Asia. That concludes my answer. Additionally, for life insurance, is it that you are assuming rate hike and you're expecting recovery by 39 billion yen? The 39 billion yen of change, the reaction, in the prior year, it was a lot of decline, and then it's a reaction from down, so it's not that we are expecting high interest rate hike. Okay, I got you. Thank you very much.

Niwa-san from Citi Group. This is Niwa from Citi. Kind of digressing from earnings. But I have a question on M&A pipeline. For the past year, how have you been contemplating towards realizing M&A? And how do you plan to go forward? You often talk about M&A pipeline in your comments, but I don't think there are any M&As since ID&E. So what is the situation? And after selling of divesting the business-related equities, how will you be able to achieve organic growth? I really want to have a better view. For your question, I would like to ask Dr. Okada, our CFO, to respond to this question. Thank you for your question. With regards to M&A, there are three disciplines that we will apply in considering M&A, and the M&A pipeline that you briefly mentioned, I think, we basically refer to bolt-on M&As. Large M&As, because of the enhanced uncertainty of the financial market, valuation still remains high, and therefore, in North America and for Europe, our group companies in those regions will look at their own existing businesses and the local situation and the bolt-ons of MTAs and local insurance companies are currently being contemplated in the M&A pipeline. So organic growth plus bolt-on, especially in the specialty business in North America, is what we would like to grow. Our basic thinking has not changed, and the plans that were presented today does not factor in any growth from the M&A pipeline. So if there is M&A or bolt-on M&A that will be realized throughout this fiscal year, that will be an add-on factor. I see. Thank you very much for that.

Thank you very much for that. Any other questions from the participants? I don't see any hands up. If not, I would like to conclude. Since it's time, if you think of any additional questions, do not hesitate to contact the IR team of the Tokyo Marine Holdings. Thank you very much for your participation. That concludes the fiscal 24 financial announcement as well as the forecast for fiscal 25. This is the end of the telephone conference. If you have any questions or concerns, please contact the IR team. Thank you very much. This is the end of the meeting.