I am Tanigaki Kunio, President of Japan Post Insurance. Thank you very much for attending our Financial Results Corporate Strategy meeting today. Please look at page 1. Today, I will provide an explanation in two parts: recognition of the current status and initiatives to improve market valuation. First, as recognition of current status, I will explain efforts to recover business performance to date, achievements of the efforts, and the market valuation of the company. Second, as initiatives to improve the market valuation, I will explain pursuing truly customer-oriented insurance services within the growth strategies that leverage our strengths. Then, Mr. Tachibana, Senior Managing Executive Officer, will explain the asset management utilizing our massive asset scale, and Mr. Onishi, Deputy President and Representative Executive Officer, will explain diversification of the revenue sources, management efficiency, enhancement of the shareholder returns, and achieving a stronger business foundation.
Afterwards, I would like to answer any questions that you may have. Please look at page 4. First, I would like to explain efforts to recover the business performance to date and most recent results. We have taken various measures to address the five issues of retaining and expanding the customer base: corporate culture reform, asset management, capital policy, and achieving a stronger business foundation and more streamlined business, and have generally progressed as planned. First, regarding retaining and expanding the customer base, higher interest rates, and lump sum payment, Whole Life Insurance launched in January 2024, which met customer needs, have vitalized the sales activity. As you can see in the graphs on the right, the number of the new policies in fiscal year 2025 March has increased by 27% year-on-year to 795,000 policies.
Also, employee engagement score is improving each year with the effect of the second initiative, corporate culture reform. Please look at page 5. Regarding the third issue, asset management caused by an improvement in the market environment and the others, positive spread in fiscal year 2025 March increased by 55% year-on-year to JPY 142.5 billion, and in fiscal year 2026 March, it is expected to reach JPY 200 billion, a record high for the company. Fourth, regarding the capital policy, we are steadily promoting the initiatives to diversify the revenue sources by obtaining the revenue from the overseas insurance market and from asset management business, and also working on improvement of the capital efficiency, such as utilization of reinsurance. Fifth, regarding achieving the stronger business foundation and more streamlined business, we have achieved the workload reduction equivalent to 1,500 people to date through digitization.
As a result of our efforts on five issues that I have just mentioned, adjusted profit, which we introduced from fiscal year 2025 March, as a source of funds for shareholders' returns increased considerably. Please look at page six. This page shows an enhancement of the shareholder returns. In light of an increase in adjusted profit, we forecast a total dividend payout around JPY 46.0 billion for fiscal 2025, which will hit a record high for the company, and a total payout ratio of about 55% for a single fiscal year. Please look at page seven. This page shows the market valuation. Although the stock price rose after the announcement of the fiscal result forecast and shareholder returns for fiscal year 2025 on May 15, 2025, adjusted PBR has continued to be at low levels.
We believe that although the Adjusted ROE increased and has been above 8%, PER remains at low level due to the concerns about the sustainability of our profits and the others. We aim to improve the stock price by continuing to promote the growth strategies and the others we explained today. Please look at page nine. This page shows an overview of the initiatives to improve the market valuation. Leveraging our strengths, we implement the three growth strategies of pursuing truly customer-oriented insurance services, the asset management utilizing our m inassive asset scale, and diversify the revenue sources, and work on improvement of the management efficiency to improve the capital returns.
Along with that, we promote the enhancement of the shareholder returns and the achievement of the stronger business foundation, and we will improve our market valuation firstly to achieve the market capitalization of JPY 2 trillion, which we have indicated as our immediate guideline. Please look at page 10. Now, I'm going to explain our growth strategies. First, I will provide the summary of the first pillar of our growth strategies, which is pursuing truly customer-oriented insurance services. By meticulously providing the services to each customer, we will fulfill our social mission as a life insurance company of protecting customers' lives through the power of insurance. This means we will continue to protect each customer's life by providing the careful after-sales follow-up through such channels as our nationwide network of the post offices, as well as the use of digital technology and also ensuring the payment of insurance claims.
By lifting the customer satisfaction as a result, we are able to provide our services to even more customers, not just to that one customer, but to their families and acquaintances through referrals. In this way, we strive to retain and expand the customer base. Four specific initiatives are described on the following pages. Please look at page 11. I will explain the product improvement to meet the customer needs. We will advance the various initiatives to expand and enhance the appeal of product lineup so that we can provide the products and the services that meet expected diverse needs of all kinds of customers. Please look at page 12. I will explain the enhancement of the appeal of our products enabled by higher interest rates within product improvement.
With the transition to positive interest rates, we launched a new product to meet the customer needs, and the number of the new policies and the value of new business have improved considerably. By enhancing the appeal of level payment products with a high percentage of the medical riders added, we will continue to strive to improve the product portfolio and to increase the value of new business further. Please look at page 13. I will now explain further develop and secure the sales employees. The training and securing of the sales employee through the proactive investment is essential to provide our insurance services to the nationwide customers. Our unique and generous training system has improved the skills of our sales employees. We aim for further enhancement by improving the system.
Regarding securing the sales employees, we have substantially increased the recruits by strengthening the recruitment of the experienced sales staff and the others in April 2025. Going forward, we aim for further increase in our sales employees. Please look at page 14. Then, I will explain strengthening the cooperation with the Japan Post Group companies. Post Offices, with their nationwide network and firmly rooted presence in local communities, have a unique brand and a considerable number of customers. Backed by Japan Post Group's unique business model of being able to offer mail, banking, and insurance services to customers as the need arises, we seek to further increase the customer numbers by pursuing stronger alliances and synergies with group companies. Please look at page 15. Lastly, I will explain utilizing the digital technologies to strengthen the connections with customers, etc., within pursuing the truly customer-oriented insurance services.
The company has contact points with the customers based on trust and a sense of proximity with the post offices. Additionally, by investing in and utilizing the digital technologies, we have enhanced the contact points with the customers and achieved greater convenience. In the future, we will again work to enhance the quality of customer service utilizing AI and seek greater improvements in customer satisfaction and expand the coverage capturing customer needs. This concludes my explanation. Please look at page 16.
I'm Tachibana, Senior Managing Executive Officer. From here, I will explain the second pillar of our growth strategies, which is asset management. Please look at page 17. The company has total assets of about JPY 60 trillion, one of the industry's top level of total assets, and is based on ALM management under the framework.
We have gradually increased the proportion of the return-seeking assets and are seeking enhanced returns relative to asset management risk. We decided on the investment plan portfolio in light of portfolios with the optimal risk return and also our risk tolerance and others. We continue to focus on investments in real estate and the credit assets and the others, which are expected to provide the high effect of the risk diversification to improve the overall returns relative to the risk while taking into account the market conditions. Please look at page 18. I will now explain about increased investment earnings from benefits of the asset management diversification. Return-seeking assets, which have been expanding gradually, are expected to contribute considerably to increased investment earnings through lower hedging costs for the hedged foreign bonds and alternative assets entering a phase of the revenue collection and the others.
We seek to improve the returns further by continuing to increase the balance while diversifying risk. Please look at page 19. Here, I will now explain earnings improvement anticipating growth with positive interest rates. In an environment of rising interest rates, the company has cumulatively improved the investment earnings by improving the yields on our holdings of Yen-denominated bonds through reinvestment and replacement trading. While paying heed to the impact of the capital gains or losses, we seek to improve our portfolio and enhance the investment earnings in anticipation of rising interest rates. For hedged foreign bonds, we have reduced the balance gradually to date, but are maintaining some of the balance while improving the portfolio through replacement trading. Earnings are expected to improve due to lower hedging costs and the foreign interest rate. Please look at page 20.
I will explain about the further promotion of the diversification of the asset management. Alternative assets have continuously been in a period of full-scale revenue collection, and the incomes are expected to increase. Going forward, expecting for the effect of the inflation proof and in light of the diversifying risks, we will increase the balance focusing on the infrastructure and the real estate. Thus, anticipate the further contribution to the earnings by improving ROR. Please look at page 21. I will explain the strengthening of our asset management capabilities through alliances. Aiming to strengthen our asset management capabilities, we have established alliances and investments with Mitsui & Co, Ltd in 2022 and Daiwa Asset Management Co, Ltd in 2024. In March 2025, Daiwa Securities Group Inc, Japan Post Insurance, and Mitsui & Co, Ltd concluding a capital and a business alliance with the field of alternative asset management.
We intend to further expand the revenue over the medium to long term by increasing our asset management capabilities through our alliances to date and further advance our collaborative strategy. This concludes my explanation. Please look at page 22.
I am Onishi, Deputy President. I will now explain the third pillar of our growth strategies, which is diversification of the revenue sources. Please look at page 23. The diversification of the revenue sources through alliances and investments are positioned as a key pillar of our growth strategy. We currently capture the revenue in new fields, mainly the overseas insurance market and the asset management business.
We will continue to explore a wide range of the domains that have an affinity with the life insurance business and can be expected to generate the synergies and contribute to earnings, while maintaining the life insurance and the asset management businesses as our focus and aim to obtain the profit that exceeds the cost of the capital of 7%-8%. Please look at page 24. Now, I will explain about the management efficiency. Personnel costs for the sales employees have risen after bringing in consultants in fiscal year 2023 March, but we have reduced the overall necessary expenses through measures for streamlining operations. We have achieved the target of necessary expenses of JPY 5.20 billion in the midterm management plan one year ahead of the schedule, and in fiscal year 2026 March, we expect the necessary expenses to be flat year-on-year.
While continuing to invest in the priority areas, we will take measures to cut expenses, seeking to achieve more efficient business operations. Please look at page 25. I will explain upgrading liability management and the others. To improve the capital efficiency, since fiscal year 2023, we have reinsured policies with poor risk return rates among policies in the whole life insurance category that have a high rate of the policyholder dividends. In order to increase the ESR and improve returns, for now, we will closely monitor the market environment and reinsurance market trends while we continue to utilize reinsurance. Please look at page 26. I will now explain the management behavior corresponding to the ESR standards. The graph on the left shows the transition of ESR.
The ESR as of March 31, 2025, decreased from March 31, 2024, to 204%, while the capital amount increased due to the issuance of the subordinated bonds. The integrated risk amount increased due to the increase in mass lapse risk caused by higher interest rate and the others. We continue efforts to ensure the appropriate ESR with good stability, and if we exceed an appropriate ESR, we will consider further risk-taking, such as increasing the share of the return-seeking assets and the investment for growth, or additional shareholder returns, such as treasury stock acquisition. Regarding the risk amount, we aim to increase the share of the insurance underwriting risk in the future by sustaining the current recovery trend in sales and also maintain the asset management risk-taking while considering the return relative to the risk to enhance returns. Thus, aim for an efficient risk distribution.
Please look at page 27. I will explain about the shareholder returns. In accordance with the shareholder return policies during the period of the midterm management plan, we provide the returns to shareholders. As for dividends for shareholders for fiscal year 2025 March, no change is being contemplated to JPY 104 per share as scheduled. Dividends to shareholders for fiscal year 2026 March are scheduled to be JPY 124 per share. In addition, for fiscal year 2026 March, the company aims to achieve a total payout ratio for this single fiscal year of approximately 55% on the basis of the adjusted profit. Please look at page 28. Lastly, I will explain about achieving stronger business foundation. Along with enhancing the corporate governance, we promote the human capital management to strengthen our business foundation.
Thus, we aim to ensure the success of our growth strategy, leveraging our strengths and initiatives for more efficient management and the others so that we can improve our market valuation. This concludes my explanation. Thank you.