Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Group adjusted profit increased by 42.2% year-on-year to JPY40.6 billion, showing strong progress towards the full-year forecast.
- Sales results of new policies for all three life insurance companies performed well compared to the plan.
- Group MCEV increased by JPY124.8 billion from the end of the previous fiscal year to JPY4.228 trillion.
- Adjusted EPS increased by 46.9% year-on-year, exceeding the growth rate of adjusted profit.
- The company expects to record approximately JPY9 billion in Q2 of FY 2024 as adjusted profit related to Fortitude's financial results.
Negative Points
- Surrender and lapse rates have risen, impacting the stability of policy retention.
- Adjusted profit for T&D United Capital decreased by JPY2.1 billion year-on-year due to a reaction to gains on change in equity.
- Capital gains declined at Taiyo Life and Daido Life due to decreasing gains on sale of foreign stocks and increased losses on sale of foreign currency-denominated bonds.
- Annualized premiums of new policies for T&D Financial Life decreased year-on-year due to a drop in sales volume of foreign currency-linked products.
- The company remains cautious about the second half of the year due to potential uncertainties, including the impairment of commercial mortgage loans.
Q & A Highlights
Q: How is the surrender and lapse rate trending compared to the plan, and what are the current ideas to address this?
A: An unidentified company representative explained that both Taiyo and Daido Life have seen a rise in surrender and lapse rates. For Daido Life, the peak of zero-zero financing repayments in April led to higher-than-expected surrenders. However, the situation stabilized in May and June, and they expect to meet the full-year plan of 7.9%. For Taiyo Life, the in-house sales reps channel is slightly above budget, and the agency channel has seen an upside compared to last year. The impact of interest rate conditions on EV is about JPY1 billion. The mass surrender risk has increased in line with the growth of the value of in-force and EV.
Q: Are we seeing an upside in Fortitude's profit levels for Q1 and Q2?
A: An unidentified company representative confirmed that Fortitude's profit levels are above budget due to favorable payment conditions in Q2. However, they maintain a cautious outlook due to potential uncertainties in the second half, such as commercial mortgage loan impairments and insurance assumption revisions.
Q: What is the reason behind the high profit progress on the positive spread for Taiyo and Daido, and is there an expected upside for the full year?
A: An unidentified company representative attributed the performance to a weaker yen and strong alternative investment performance. While there will be some currency impact, they do not expect a significant upside for the full year. The FX assumption is based on the end of January levels, and current currency levels do not deviate significantly from the business plan.
Q: Given Fortitude's strong performance, does this mean they did not need additional provisioning for CRE loans?
A: An unidentified company representative confirmed that no additional provisioning was needed for CRE loans, and the full-year projection remains cautious for the second half.
Q: How does the market fluctuation impact your business performance from Q2 onward?
A: An unidentified company representative stated that despite the market drop, the impact on unrealized gains and losses was minimal. They have accelerated stock sales, and the currency impact is significant but within expected ranges. The full-year guidance remains achievable, and the shareholder return policy will not recede.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
