I am Tanigaki Kunio, President of Japan Post Insurance. Thank you very much for attending our Financial Results and Corporate Strategy Meeting today. Please turn to page one. Today, I will provide an explanation in two parts: review of the Previous Medium-Term Management Plan and new Medium-Term Management Plan. First, under review of the Previous Medium-Term Management Plan, I'll explain our initiatives and results from FY 2021 through FY 2025, as well as our current market valuation. Next, I will explain the overall framework of the New Medium-Term Management Plan, key targets, and our specific strategic initiatives. Afterward, I would like to answer any questions you may have. Please turn to page three. First, I will provide a review of the Previous Medium-Term Management Plan.
To begin with the aim of retaining and expanding the customer base, we have been working to provide products and services that meet customer needs, such as the launch of lump sum payment whole life insurance in January 2024. As a result, the number of new policies increased significantly in fiscal year ended March 2025. However, the number of new policies declined in fiscal year ended March 2026, following the revelation of the improper use of private financial information, et cetera. In response, the entire group has been working to prevent recurrence and strengthen our systems. From May 15th this year onward, we have resumed efforts to attract customers to post office counters and are once again offering insurance proposals to customers. We have also improved the attractiveness of our flagship level payment products through revisions.
We will continue to work toward a bottoming out and reversal in the number of policies in force. Please turn to page four. As the second initiative of the Previous Medium-Term Management Plan period, corporate culture reform has made steady progress, and employee engagement score has improved significantly. Regarding the third initiative, asset management, positive spread for fiscal year ended March 2026 reached a record high of JPY 255.5 billion, driven by diversification of asset management, et cetera. Regarding the fourth initiative, diversifying sources of revenue, we have made steady progress in generating revenue from overseas insurance markets through strategic partnerships with KKR and Global Atlantic, as well as from the asset management business through our investment in Daiwa Asset Management. We expect the results of these initiatives to contribute even more significantly to our performance during the New Medium-Term Management Plan period.
Regarding the fifth initiative, achieving stronger business foundation, we achieved a reduction in workload equivalent to approximately 2,000 employees through operational streamlining driven by digitalization. We also improved capital efficiency through the utilization of reinsurance and the issuance of subordinated bonds. As a result of addressing these five challenges, adjusted profit for fiscal year ended March 2026, the final year of the Previous Medium-Term Management Plan, rose significantly to JPY 171.5 billion, far exceeding the Previous Medium-Term Management Plan's target of JPY 97 billion and achieving a record high. Please turn to page five. This page shows our shareholder returns. During the period of the Previous Medium-Term Management Plan, we introduced adjusted profit as a source of shareholder returns starting in fiscal year ended March 2025, and we have worked to strengthen shareholder returns based on improvements in that level.
For fiscal year ended March 2026, we increased the dividend per share by JPY 20 and implemented the acquisition of treasury stock not exceeding JPY 45 billion. As a result, the level of shareholder returns improved, and the total payout ratio for the Previous Medium-Term Management Plan period was approximately 47%, exceeding the median of the medium-term average of 40%-50% set in our shareholder return policy. Please turn to page six. As a result of the improved profit levels and enhanced shareholder returns, our current relative TSR improved significantly. Please turn to page seven. Driven by improved profit levels, adjusted ROE for fiscal year ended March 2026 reached 10%, exceeding the cost of capital. Adjusted PBR has remained near 1.0 x recently, indicating a steady improvement in market valuation. On the other hand, adjusted PER and PEV remain at undervalued levels, and we recognize that there is potential for improvement.
Through the initiatives under the new Medium- Term Management Plan, we aim to achieve our immediate target over market capitalization of JPY 2 trillion as soon as possible and pursue further growth. Please turn to page 10. Based on the review of the Previous Medium- Term Management Plan just explained, we will implement a New Medium- Term Management Plan covering the three-year period from FY 2026 to FY 2028 to further improve market valuation. This page shows an overview of the Medium- Term Management Plan. We position this New Medium- Term Management Plan as the "Growth & Challenge Phase," and we will strive to achieve sustainable growth by implementing three key strategies. The first key strategy is the establishment of the JPI Value Delivery Model to meet the many latent insurance needs of Japan Post Group customers.
We will work to enhance the value of our physical channels through collaboration with remote and digital channels. At the same time, we will enhance the appeal and expand our range of insurance products, providing easy-to-understand products tailored to each individual customer, as well as convenient and comprehensive services that leverage AI and digital technologies by establishing this optimal customer-centric business model, one that combines with quality and quantity, and by firmly addressing our customers' needs. We aim to achieve over 1.2 million new policies in FY 2028 and realize a bottoming out of the total number of policies in force and reversal in the number of post-privatization policies in force during the Medium- Term Management Plan period. The second strategy is asset management that responds to changes in the investment environment and resolution of social issues.
Through asset management that adapts to changes in the interest rate environment and other factors, we will continuously improve our adjusted spread, aiming for JPY 290 billion in FY 2028. Additionally, we will contribute to solving social issues and the development of local communities by expanding our impact investing. The third strategy is Take on the Future. We will strive to expand the value we provide through inorganic growth and other initiatives. We expect contributions to profit from partnerships, investments, and other initiatives to exceed JPY 25 billion by FY 2028. Furthermore, we will pursue business transformation by leveraging AI and digital technologies, and we will work to transform our services and restructure our business through growth investments totaling JPY 90 billion. By advancing these key strategies, we aim to achieve a record-high adjusted profit and realize sustainable growth under our New Medium- Term Management Plan.
Please turn to page 12. As explained earlier, we have set quantitative targets to achieve sustainable growth. Further details are provided on the following pages. Please turn to page 13. I will explain the intent behind the key targets in this Medium- Term Management Plan and our approach to achieving them. First, regarding profit levels, we achieved a record-high adjusted profit of JPY 171.5 billion in FY 2025, and our EPS has also improved significantly since our initial public offering. in FY 2026, we expect profits to decline temporarily due to increased costs associated with acquiring new policies and the impact of a decrease in the number of policies in force.
However, in FY 2028, the final year of the plan, we expect to achieve a record-high adjusted profit of approximately JPY 190 billion by further strengthening our asset management initiatives, which we have been advancing, and diversifying our revenue sources through partnerships and investments. Additionally, we will further improve EPS through the acquisition of treasury stock. Please turn to page 14. During the Previous Medium- Term Management Plan period, we worked to strengthen shareholder returns against the backdrop of the improved profit levels I explained earlier. Under the new Medium- Term Management Plan, we will continue to expand shareholder returns backed by further improvements in profit levels and stability. The target total payout ratio during the Medium- Term Management Plan period is approximately 55% on average, which is an increase from the average of approximately 47% during the previous Medium- Term Management Plan period.
In addition, assuming we achieve our adjusted profit target of JPY 190 billion, we aim to increase the dividend per share for FY 2028 to JPY 62 or more, targeting a dividend growth rate that exceeds that of the Previous Medium- Term Management Plan period. Please turn to page 15. In this Medium-Term Management Plan, with a view to improving market valuation, we focus on enhancing our valuation indicators and have therefore adopted EV growth per share as a key performance indicator, or KPI. Along with aiming to achieve value of new business of JPY 170 billion or more in FY 2028 through increasing new policies and improving profitability, also by improving returns on asset management and investments, we strive to raise our EV level.
At the same time, by implementing acquisition of treasury stock in accordance with our shareholder return policy for the Medium-Term Management Plan period, we aim to achieve a target EV growth rate per share of 8% or more as the Medium-Term average, thereby enhancing our market valuation. Please turn to page 16. Among the key targets and initiatives of our Medium-Term Management Plan, we recognize that bottoming out and reversing the number of policies in force is a critical challenge for reversing the trend in our business scale and achieving sustainable growth. Our policy continuation rate remains at an industry-leading level by establishing the JPI Value Delivery Model, which we have identified as a key strategy.
We will maintain our industry-leading policy continuation rate while increasing new policies, achieving a turnaround in post-privatization policies in force to 11.5 million or more by FY 2028, and a bottoming out of the total number of policies in force at 16 million or more. Please turn to page 17. Based on the key targets I have just explained, by working to achieve a bottoming out of the total number of policies in force and reversal in post-privatization policies in force, improve profitability, and implement appropriate capital policies, we aim to achieve an adjusted ROE exceeding the cost of capital and thereby improve our market valuation. Please turn to page 19.
As specific initiatives to establish the JPI Value Delivery Model, our first key strategy, I will explain enhancing the value of physical channels through collaboration with remote and digital channels, enhancing the appeal and expanding the product lineup, and convenient and attentive service utilizing AI and digital technologies, et cetera. Please turn to page 20. I will explain how we are enhancing the value of our physical channels through collaboration with remote and digital channels. By increasing customer touchpoints through remote and digital channels and further enhancing our attentive after-sales follow-up, we provide opportunities for customers to recognize their insurance needs. We aim to double the number of insurance consultation opportunities by guiding customers with a high interest in insurance to physical channels.
We will enhance the value of our core physical channels by developing an environment in which post office counter staff and retail service division staff can focus on insurance consultations, providing AI support for insurance consultations, and accurately and courteously proposing easy-to-understand products tailored to customers. Please turn to page 22. I will explain how we are enhancing the appeal and expanding the product lineup. Recognizing that rising interest rates and other factors have created an environment conducive to offering products that meet our customers' needs, we are working to enhance the appeal and expand our product lineup in order to respond precisely to the needs of customers across a wide range of age groups. We believe that by providing insurance products that meet customer needs through various channels, including post office counter, retail service division, and wholesale division, we can increase the number of policies and improve profitability.
We will continue to explore asset-building products for safe and secure preparation, new protection products, and enhancing the appeal of existing products by accurately responding to the environment that makes it easier to enhance product appeal and the growing latent needs of our customers. Please turn to page 23. I will explain our convenient and attentive services leveraging AI and digital technologies. By leveraging AI, digital technologies, and marketing strategies based on customer data, we provide accurate and courteous proposals for easy-to-understand products that are best suited to each individual customer, attentive after-sales follow-up, and convenient procedures, all services unique to Japan Post Insurance to achieve high customer satisfaction and policy continuation rates. Please turn to page 26. I will now explain our second key strategy about asset management that responds to changes in the investment environment and resolution of social issues against the backdrop of a world with interest rates.
We will achieve the sustained renewal of record high adjusted spread by promoting portfolio restructuring through the active investment in yen-denominated bond and rebalancing of return-seeking assets while controlling risk and expanding revenues. Please turn to page 27. Actively promote replacement and new investments in the medium- to long-term zones, as well as the super long-term zone under an attractive interest rate environment exceeding liability cost. Furthermore, we will promote the transition of return-seeking assets from the accumulation phase to the portfolio restructuring phase, including active investment in yen-denominated bonds by rebalancing to contribute to the improvement of adjusted spread and returns relative to risk, with the aim of achieving a sustained improvement in adjusted spread. Please turn to page 28. Alternative assets continue to enter a period of full-scale revenue collection and are expected to contribute to income growth as a key revenue pillar.
We aim to sustainably expand revenues by accumulating the balance under appropriate risk management while seeking diversification in terms of timing, continuously closely monitoring the financial markets, et cetera, going forward. Please turn to page 30. I will explain our third key strategy, Take on the Future. We will deepen collaboration with our existing partners while continuing to seek high-quality opportunities that are well aligned with our business and that are more accretive to EPS than share buybacks. By broadening our business activities, we aim to further expand earnings. Please turn to page 31. This slide shows the framework for investment in the reinsurance sidecar. When investing in the reinsurance sidecar, we appropriately monitor the status of assets and liabilities and the business environment and confirm that operations are being conducted with a focus on diversification. Please turn to page 32.
We will restructure operations with AI and digital technologies as a given, reducing the workload while shifting employees to higher value-added tasks. In addition, we are improving system productivity and allocating resources to investments that drive growth. Please turn to page 34. As part of our efforts to establish a business foundation in support of our three key strategies, I will explain our approach to appropriate capital management. Even under the new regulations, management actions based on the ESR target range and level will continue to apply, and the appropriate range remains 150%-220%. As of March 31st, 2026, the ESR stood at 181%, a 15-point decrease from March 31st, 2025, due to the impact of the Mass Lapse Risk. Nevertheless, it remains within the appropriate range. Looking at ESR, excluding a Mass Lapse Risk, it is 220%, reaching at the upper limit of the appropriate range.
In addition, we see no increase in the cancellation rate at this point in time. We will continue to strive to maintain a stable level within the appropriate range and aim for the medium- to long-term improvement of the level through appropriate capital management. Please turn to page 35. Lastly, I will explain how we will ensure profitability by achieving a balanced risk profile. We will strive to achieve a balanced risk profile by restructuring our investment portfolio with a focus on risk-adjusted returns and increasing the proportion of insurance risk through the acquisition of new policies. Based on our enterprise risk management or ERM framework, we aim to maintain sound business operations while appropriately allocating capital across each risk area to ensure profitability that exceeds the cost of capital. This concludes my explanation. Thank you.