My name is Okumura, Group CEO. Thank you very much for joining us today despite your tight schedule. Today, the reorganization of the group, Sompo Holdings Osame, and Wellbeing. This is the very first I/O meeting after that reorganization. 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. This is the executive summary, actuals of FY 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. We need to continue to increase resilience so that we can achieve health, wellbeing, and financial protection of the other Sompo.
Fortunately, for two consecutive years since the launch of the holdings, we hit the record high profit. We renewed the highest share for 29 times. 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 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 growth investment to achieve absolutely this ROE 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 JPY 500 billion for the adjusted consolidated profit and JPY 6 trillion level for market cap. The increased resilience and connect and be connected, these initiatives should be accelerated. That is important. I am going to talk about that as well. Please look at page five. For 2024, JPY 334.3 billion, 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 JPY 4.2 trillion. The share prices were solid as well. Adjusted PBR is now exceeding 1.0. We are passing that threshold. Page six, please. This is the possible achieving the mid-term management plan targets.
Two of them, ROE improvement and EPS growth. As to ROE, 2025 fiscal year, about 10%. By the end of 2026, we are going to achieve this 13-15% ROE. We still have gap to achieve that level, especially for FY 2024. We sold the strategically held shares faster than the expectation. 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%. We are making very solid progress there. Please look at page seven.
As we looked at the previous page, ROE, EPS growth, we have two goals, and each business unit and the KPIs and the important strategies are reflecting those targets. Sompo Holdings, Osamu Nose, Sompo, and Sompo Wellbeing, with these two businesses, increased resilience is one thing, but not only that, the growth investment and execution of such investment is going to lead us to JPY 500 billion adjusted consolidated profit and JPY 6 trillion of market cap. Such investment is going to increase the probability of achieving these targets. In organic investment, there are always counterparties. 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 eight, 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, both of them should be increased. For financial resilience, this time, we have this Sompo P&C business unit in place. We are going to make our strong balance sheet even stronger. We are going to leverage such a strong balance sheet. Sompo Japan and Sompo International are now operated in an integrated manner so that we can optimize the optimal retention and the usage of the other reinsurance. We are already doing that. Through such efforts, we would like to improve our profitability. In Japan, SJR, through SJR, we would like to improve the business foundation and the profitability improvement.
Sompo Holdings Osame, 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. Sompo Holdings Osame is going to have that benefit. Sompo Wellbeing, 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. To support that effort, Sompo Holdings Osame and Sompo Wellbeing are in place now. As to center of excellence, it is 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 Holdings Osame and Sompo Wellbeing, through these structures, we are going to increase resilience and we are going to realize connect and to be connected.
では。
From now, I would like to hand over to Jim and also Oba-san. First, regarding Sompo Holdings Osame, the CEO, Jim will be presenting about the initiatives for Sompo Holdings Osame. Over to you, Jim. Thank you.
I am responsible for Sompo Holdings Osame, and it's an honor to be here to represent that business and tell you what our plans are. If you turn to slide 10, you will see, as Okumura-san introduced, that Sompo Holdings Osame was initiated as of April 1. It's an ambition to create a truly global P&C company born in Japan. As we look at the goals that have been communicated, both from Sompo Holdings Osame overseas and from Sompo Holdings Osame Japan, they remain unchanged. Our priority is to expand our business outside of Japan with new geographies and new customers. Applicable to all of Sompo Holdings Osame 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's 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. We are 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 divided as two. Vendor relationships, much of what we do across the globe is the same as what we do in Sompo Japan in terms of vendors. However, we were approached as two organizations.
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 Sompo Japan and Sompo 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. 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 Sompo P&C. What's important to note is Sompo P&C includes Sompo North America, Sompo U.K., Sompo Brazil, Sompo Turkey, Sompo Europe. It is the global part of the organization. However, our focus over the first 18 to 24 months is to bring Sompo Japan and Sompo overseas closer together. 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. 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. 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 Sompo 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.
Sompo Holdings Osame 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. We enjoy the diversification, we enjoy the balance, and we continue to focus on that. 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 Sompo International historically operated on a calendar year basis, and so these numbers have been restated on an April 1 basis. For full year 2024, 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. As you can see on the walk, we expect the combination of our increased revenues to translate into a net insurance result.
I know there will be many questions with respect to these numbers as the terminology is different than we have presented in the past. The result of all of these movements results in an expectation of a 30% growth year on year. What you have already seen from yesterday, however, is some of the highlights from the overseas business is that we are 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 Sompo 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 changes coming through in the numbers.
We are 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 is third parties or whether it is claim settlement. We need to ensure that we operate with both levers, both on the revenue side to ensure that we are getting revenue and rate increase in excess of the rate of inflation, but also that we are managing our expenses in a diligent manner. The expense is the only lever we control 100%, and that is something as we look at balancing, keeping the operation open, but also expanding the operation into different geographies.
We have 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 upfront, 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 Sompo Japan is to continue to remain committed to the business improvement plans that we have put in place. That is our number one priority. We are regaining trust and 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.
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 is important to realize that these investments are not simply in new geographies, but also in existing markets. In the United States and the U.K., we have opened offices in cities such as Denver, Houston, Miami, and in the U.K. in Birmingham and Manchester, which is a focus to attract and gain access to a middle market portfolio that typically does not get placed outside of those geographies. We need to be physically present.
Those investments have proven to be a higher return or faster return because we have established in those marketplaces. We have also seen success in the introduction of Sompo 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. With that, that is the conclusion of my presentation for Sompo P&C, and I look forward to questions at the end. Thank you.
[Foreign language] Thank you, Jean. Next, Obasan is going to talk about Sompo Wellbeing. I'm CEO of Sompo Wellbeing. My name is Oba. Please look at page 22. On April 1, Sompo Wellbeing was renewed. I am CEO of Sompo Wellbeing and life insurance and nursing care, the business, and the 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 and by leveraging those strengths, that is the Sompo Wellbeing's strengths going forward. As to important issues, the management structure is going to accelerate decision-making for important matters for the business. On the more working side, Himawari Life is headquartered in Kasumigaseki, and in this building, Holdings are the planning section of 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 Sompo Wellbeing for us living in the 21st century are that we are exposed to these three concerns. The characteristics of these three concerns are as follows. One day, you find your parent being sick, in need of 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. Those concerns could be realized at the same time, and that will make the problem more complicated. We will look at these concerns in a comprehensive manner so that we can provide the solutions for our customers. 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. For the bright future of the customers, we will stay closer to our customers, providing solutions to them. It is a keyword which is dear for us. We would like to make the society aware that people can feel positive about getting old.
The numerical targets are FY 2030, the 10 million as the number of customers, and the adjusted profit of JPY 100 billion or more. Next page, please. JPY 100 billion of profit is structured this way. At the bottom, the organic growth of each business, and this is one of the focuses. On top of that, we have the products and unique services, the food values that could be increased through Connect and Be Connected, and we are going to expand our markets. It is the value-increasing growth. 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 concern, inheritance, or the health-related services, such a customer basis to fill in the gap will be acquired through M&As. These three-layer approach. Next page, please.
We have been working on these things, and there has been some good reaction, and some examples are shown here. Wellbeing. This is about the nursing care as the donor, and we have the three offices in operation in Tokyo. 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. Now we know that those concerns or problems could spread out in different areas. As to B2B, communication is now working for the corporate health management service and also the chocolate application and the combination of the two. For example, the health support by corporations and the exercise support.
The 29 companies in six months decided to launch these services, and now about 2,000 employees are participating in these programs. Through 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. The driver was the Insure Health. This is the insurance product that advocates improving health and topped 2 million policies. This is a top class in the industry, and the gross premium is roughly JPY 15,350 billion. For this customer group, we have been able to identify customers changing their behaviors and seeing improvement in the hospitalization ratio. In the wellbeing business, we have been able to identify and capture customer base who pay close attention to their health status.
We would like to capitalize on this strength and using the Connect and Be Connected concept. We want to collaborate with the other business services to offer more value proposition. On page 27, another business is a nursing care business. For Sompo Care, to date, we have made steady progress, and now we can foresee a profit of roughly JPY 10 billion in scale. 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. That is the operator business. As a leader in the industry, we would like to leverage on the expertise of Sompo Care so that it can be applied for the operation of the other care providers.
The third pillar is by Connect and Be Connected. We leverage on the other type of contact points to expand the earnings opportunity for the wellbeing business. For example, the trust service or consultation for the end-of-life advices. We would like to expand into these new business areas. We would like to increase the proportion of the second and the third pillars of business. In closing, we want to be unique at Sompo. We want to leverage on the strength of our Sompo group, and we believe we can do that and expand our opportunities in the wellbeing business. That is how we would like to be successful. Okumura-san, Chetan, Oba-san, thank you for the presentations. Now, we would like to entertain questions from the participants. Without further ado, I'd like to go to the first question. Mr. Muraki from SMBC Nikko, please. Oh, thank you.
I have two questions. On page 14, for Sompo P&C, what is the goal for Sompo P&C? Listening to your presentation, I think you want to expand geographically. Thinking about the scope of the market you want to expand, it's more commercial rather than consumer. U.S. and Europe might be the scope. You also want to build an underwriting culture across the organization. That was the impression I got from the presentation. Is that your goal? What is the ultimate vision for Sompo P&C? Also, do you benchmark other insurance companies or groups? For the commercial business, I guess the largest player will be Chubb. We understand that, Jim, you still work for Zurich and also there's AIG. Which insurance companies do you benchmark to build a new organization? That's my first question.
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. What is your priority for investment? Are you looking for the commercial business in Europe or U.S.? What is the size that you envision for M&A? This time, your capital level with the strategic equity director, you will be getting some cash proceeds, and also capital will be released. I think you have presented that in the material. Conscious of that, can you give us the priority of M&A strategy and also the size? Yes, Mureksan, thank you for your two questions.
The first question was the vision of Sompo P&C, the geographical target, the market. Today, we have Jim, the CEO of Sompo P&C. Jim can elaborate on the vision he has for Sompo P&C. 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 CFO, Mr. Hamada, will respond to that part of the question. 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, 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 did not feel our size and the opportunity in that market gave us a market-leading position. We continue to look at the different geographies and where we can have a market-leading position, either through organic or inorganic growth. Generally speaking, the focus on the expansion in geographies is on the commercial business. 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 difficult. We do look at the companies that you mentioned, plus several others across Europe and other places, including in Japan. As you see, we have a significant reinsurance business. The crop agrisample business in the United States runs in a very different way than many of the regular normal P&C business. Having a comparison to companies that don't have an agriculture business becomes difficult.
We look at it in many different ways, but it would be the basket of the probably 12-15 companies that you would expect it would be.
[Foreign language] Thank you. Also, moving to your second question. Before we rolled out the new midterm 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. To sustainably enhance the corporate value, we want to pursue that mission. During the new midterm 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. For the domestic business, transformation is required. We have multiple factors that we have to pay attention to.
Jim, Oba-san, and Ishikawa-san are going to work to enhance corporate value in a sustainable manner. To achieve that, inorganic growth will be required. Of course, there is going to be a counterpart to those transactions. In the past, we have challenged ourselves in various M&A opportunities. We cannot compromise on discipline. We also need to do the deals. Rather than compromising on the discipline, we want to make sure that we grow our pipeline both in terms of quantity and quality. We are now exerting our efforts to establish that structure to be able to do so. Last year, we mentioned about JPY 1 trillion as a rough size. At this point, to Jim and Oba-san, I am saying do not be bound by amount to the figures.
Because if you see opportunity for new growth, let's first consider to challenge that. Then let's consider if that's available for the group or feasible for the group. After that, the Group CFO and the Deputy CFOs will be involved for discussion. Hamada, do you have any additional comment regarding that thought process and the size of M&A? Yes, this is Hamada, CFO. As Mureksan mentioned, I think you were talking about page 35. As you can see here, a year ago, from the time of building up the midterm plan, we were able to sell more strategic equity holdings than planned. We have additional buffer on the capital level. If you add those up, I think the latest figure will be like JPY 2.4 trillion.
From there, we deduct the three-year worth of shareholder return, and that will be the capital available for us to put to work. We have not decided on the shareholder return exactly. Roughly speaking, if you do the math, JPY 800 billion or JPY 900 billion, I think, will be the rough figure. You deduct that, and we come to the figure, which will be the capital available. That is just a calculation of the capital. We need to have a plan on the cash. Also, in 2024, for the last 12 months, we did not have any major symbolic M&A, but just for Sompo International, they took about JPY 100 billion worth of risk, additional risk. We have been using capital in many different ways. That said, we also have some idea regarding M&A.
To enhance our ROE to between 13%-15%, we have to figure out how much profit growth we need to achieve, the numerator. If possible, it will make our life easy if we can achieve a few tens of billions of JPY of incremental profit. 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%. For Sompo P&C, on a blended basis, I think the ROE will just barely reach 10%. Where is this gap coming from? For you to raise the ROE, what needs to be done at Sompo P&C? As Group CEO, I have my perspective, and Jim has a perspective as the CEO of Sompo P&C.
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. Through multiple opportunities, we augmented the capital. Also, when we discussed at Sompo International, when we reach a mature stage, and if we try to optimize the equity base, the ROE at glance will be going up. I still feel that the overseas business will be the vehicle for growth, both organically and also inorganically. In a market with high volatility, we can get underwriting flexibility and investment flexibility when we have some buffer on the capital. Intentionally, we have built up some capital. 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?
Thank you again for the question. When we look at the ROE, I'm speaking now of the Sompo International overseas business, you have to remember that it's virtually unleveraged in comparison to some of our peer groups that you referenced. When you add back in what that typical increase would be, then we come pretty much in line with the average of our peers. Not to say that that is our goal, but we continue to improve it. I think, Nick, from your perspective. Yes,
Jim said if we were to lever, 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 agrisample 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 Sompo International Holdings perspective. 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. [Foreign language]
If I may add one more thing. Thank you very much. Sompo Japan ROE enhancement is also needed in that perspective. By FY2026, we have the target.
But beyond that, with our portfolio management and also improving the expense ratio, we would like to raise the ROE for the domestic operation. [Foreign language]
Mr. Muraki, thank you. Ms. Tsujino from BOA Securities. Can you hear me?
Here is Tsujino. My first question. It is not included in today's materials. The page 58 of yesterday's materials, the 2026 goals 13%-15% adjusted the ROE. And the 2025, it is 10% or so. It might depend on the domestic business. 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. My second question about M&A, the non-life business, P&C business, with lots of things going on in Japan. I think it's a very good business, both at home and abroad.
Sometimes you have to deal with the goodwills after the acquisition of servicing companies. The real benefits sometimes are not completely visible. The impairments of the acquisition last year are going on this year, I suppose. I think there are lots of lessons to learn. 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 other business, you have made lots of efforts, and those efforts are paying off. That is reflected in the numbers, results, and the rate increases, and so on. Not only that, there will be more benefits next year and on.
But auto insurance, because of the other inflationary environment, there is no improvement because of the inflation. Are you just waiting for the inflation to be gone, or are you going to change the UOA to make improvements? Thank you. Tsujino-san, thank you. That is your first question. Page 58 of yesterday's materials. Mr. Hamada, Group CFO, will answer that question. For the second part, I would like to make some comments. For the third question, the domestic P&C, especially auto insurance. Mr. Ishikawa, the President of Sompo Japan, will answer your question. Mr. Hamada, please.
Tsujino-san, thank you for the question. Page 58, yesterday's material, some of you might not have that material. ROE for the group 2025 fiscal year, about 10%. That is the target. For fiscal year 2026, as we promised one year ago, 13%-15%.
For the time being, for FY2026, for the time being, organic growth with organic growth, just 10% could be risen to 11% or so, or 11.5% even. The other capital is available for more usage. For M&As, for example, if we cannot do M&A, do we need to think about our own capital policy? In terms of ROE, we still have headroom for 1% strong. At least we'd like to achieve 13% of ROE. 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 at our investment activities. Some of them are 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, the winning, the probability becomes lower. As Mr. Oba said, for the Sompo Wellbeing, to connect businesses or to have expertise, for example, insurance, the area, or the other digital area, we are also making disciplined the way of investment. We have successes and other failures when we look at individual cases. 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. How to respond to inflation. As to auto insurance in the Japanese market, first, we are revising the rates, and we are increasing the rates by changing the periodic cost. The rate revision, we can do the rate revision, not just once a year, but multiple times in the year.
At Sompo Direct, it's partially already introduced. We have changed existing philosophy or policy significantly so that the underwriting will be done in a more disciplined manner. The segment where we have been rather on a conservative side as to the other segment that we need to discard as a business, we would like to change our portfolio of automobile insurance by clarifying the segment and by controlling the average cost, so that we can return to our customers by lowering the premiums. As to the claim side, from this year, close fire review 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 our claims payment more appropriately.
According to the other 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 JPY 4 billion, and for the year 2024, the JPY 14 billion, the improvement is possible. Upfront portfolio structure and at the exit, namely claim side at appropriateness on both sides by working on both sides, we would like to improve the profitability of automobile insurance. Thank you very much. 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 of benefit coming from those initiatives? Yes. Do you think that the benefits coming from those initiatives will be visible from outside as 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 initiatives, and we will do that in a hurry.
Thank you, Tsujino-san. Yeah.
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%. Can we expect a 14% dividend growth? 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?
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, Watanabe-san. The first question is the sustainability of the dividend hikes in line with the EPS growth. This will be responded by the Group CFO. For the investment strategy, the situation is different in Japan and overseas. We will have the Group CFO, and also for the overseas investment, I will have Nick, the Deputy CFO, respond to the questions. Please, Mr. Hamada, respond to the first question.
Yes, regarding the dividend policy, yesterday, as I presented, we are planning JPY 150. Compared to JPY 132 in FY2024, it's a growth of 14%. For the EPS growth, we are projecting 12%, or we have raised the outlook from 12% to 14%. This is something that we need to realize over the medium term. For the base return, the 50% 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. On the second question, Nick, can you respond to the question around the investment strategy overseas and also the outlook for investment profit? Hamada-san can answer about the domestic situation later. Yeah,
this is Nick Burnet from Deputy CFO.
As it relates to Sompo 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. 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 assets under management to grow. As Jim stated, in the first quarter, we grew the top line by over 7%. That outlook seems very consistent with the full-year outlook. We expect the assets under management.
That is 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 have shared with you, growing operating income by 10% over the cycle, that is still the expectation. In 2024, if you look at Sompo International on a standalone basis, we accelerated some of that growth because we grew operating income by 20%. Off of a higher base, we still expect that compounding of 10%. As you can see there on the slide, since we grew over 20%, we are not going to grow as 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.
[Foreign language] 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. For FY2025, roughly JPY 8 billion will be a negative impact from the sales of the equity holdings, but a little less than JPY 7 billion will be reinvested into private debts and also credit instruments. At this point, the decline is just quite modest. I see. Thank you very much. [Foreign language]
Watanabe-san, thank you. Next, from JP Morgan. Sato-san, please. Hey, Sato, JP Morgan Securities. Can you hear me? Yes. My first question is about ROE 13-15% target and the risks involved in there. The 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. If JPY 400 million 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, the adjusted net asset that is on the upside. It seems that maybe you should be tighter on the capital. 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 is my first question. The second question, domestic P&C that you explained very in detail about various initiatives. A series of the revisits about the commercial practices and including a relationship with the distributors, agencies, and other stakeholders.
Do you see any of the preferable changes happening in this area, especially the two of your peers that announced that they are going to merge? There have been some adjustments of the other 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 ROE and second question, the market environment of the Japanese P&C industry. As to your first question, as you pointed out correctly, the denominator is greater than expectation. That's right. As to the numerator, it doesn't include an inorganic element. Continuously, we need to improve our corporate culture in an inorganic manner, taking risks. As to the cash policy, we'd 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 P&C business. I myself would like to say the following. The reorganization of the peers 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. For that, we need to hurry to make the various improvement measures. Hamada-san, do you have any comments?
As Okumura said, one year has passed since the start of the midterm plan, and the net asset increased. If 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 decrease by about JPY 300 billion. As a result of that, the denominator increased. Compared to one year ago, ROE, we need to make additional 0.2 percentage points or so efforts. At this moment, we do not have any cash constraints. We are not concerned about that. Ms. Kawasanan, 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 co-insurance. We need to make it sure that we are not going to violate the anti-monopoly law.
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. I think the same applies to the peers as well. As Okumura said, NSNAD, 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, NSNAD, and of course, that will bring the cost to decrease and the reinvestment of the profit. On our side, we need to make efforts so that we will be more lean than the operating company. There will be the big changes. I would like to say that there are two things here. One is about the brokers, how to utilize brokers going forward. 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. 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, the basis that should be there in place. For that, we would like to give support. We need to be on the supply chain for the other corporate clients, and that will allow us to provide risk management-related services. That is what we would like to offer to our corporate clients. Lastly, as to comparison, for example, dealers' channels, we would like to make sure that they are going to be the basis for the comparison among different insurance entities. Of course, that will come with cost and workload.
I suppose that there will be the 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. For one thing, we would like to simplify the solicitation and the application process for our customers. Thank you. Follow-up question for the second half of your comments. 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 relationships based on financial economic relationships. Do you think that it is already happening that you are chosen by the other clients by offering normal underwriting conditions? Ishikawa-san is going to answer your question.
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? I cannot talk about specific company names. Maybe significantly would be too much to say, but those old financial conglomerates 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 or 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 a contract from them. I could feel that the corporate market, wholesale market, is changing very rapidly through those examples. There is more headroom for us to capture, and of course, we need to be profitable.
At the same time, we need to protect our existing business. We would like to develop our employees so that they can provide good risk management capability to our customers. That is very clear. Thank you.
[Foreign language] Sato-san, thank you for your questions. Next question is from Niwa-san from Citi Group. Yes, this is Niwa from Citi Group. Can you hear me? Yes, we can. Regarding the strategic shares, the sales of that, and also shareholder return policy, that is 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?
For this fiscal year, I think your plan had some conservatism reflected, expecting some slowdown in the pace of the sales. What's really happening in the market? Can you also give us some additional data, such as how much counterpart has given you consent to sell? Regarding the total shareholder return rate in FY2025, I think last year's JPY 390 billion, 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. Last year, in the second half, you decided to forgo the adjustment of the capital. Is it okay for us to consider this JPY 390 billion as a floor for shareholder return? Yes, thank you, Niwa-san, for your questions.
Regarding the strategic equity holdings, from the beginning, we have been closely communicating with the counterpart, and we plan to reduce that balance to zero by FY2030. Some of Japan's sales reps have made a tremendous effort and have communicated with the counterpart. Also, the market was dynamically moving. The customer's behavior and the mindset have also changed a lot. That was one of the reasons why we outpaced our plan to sell the strategic equity holdings in FY2024. We saw acceleration in FY2024. What's going to happen in FY2025 and FY2026? Our people on the ground are working effortlessly to achieve this. Maybe Ishikawa-san can explain about that. Also, regarding the floor of the total return rate, I am repeating myself, but ROE target of 13-15% is the commitment we have made.
Having said that, my hope is that I want to expand the numerator, continue to enhance our enterprise value. It is difficult for me to say what exactly we plan to do, but maybe the CFO has additional comment. On the first question, Ishikawa-san, can you respond to what is happening in the market and on the ground? Yes. Listening to my people with a series of business improvement orders, the strategic equity holdings were seen as hindering fair competition. That was true for us and also for the other P&C companies. That is why all the P&C companies announced that they are going to reduce their balance to zero. That was big. Also, media supported this trend. Also, the salespeople closely communicated deeply with the clients and the counterpart to build mutual understanding.
The counterpart also are mindful about the reputation vis-à-vis the corporate governance. Customers also did not want to hold on to many strategic equity holdings. We were also approached by the customers to reduce these cross-holdings. What's increasing recently is the customers say that they want to do share buyback. Maybe we can submit our holdings because they want to increase their retail investor base. They want the P&C companies to agree to sell the holdings. We see that kind of conversation in an increasing number of occasions. That is not happening across our board. There are also concerns about activists holding on to the company's shares. 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.
On the shareholder return, I, Hamada, will respond to that. The floor guarantee of a shareholder return policy is what we call the base shareholder return. That will be the floor. Last year, the shareholder return was roughly JPY 390 billion, out of which base return was about JPY 167 billion. For that, as I commented yesterday in the earnings call for fiscal year 2025, I first consolidated profit base. Looking at the last three years, it is going to be roughly JPY 170 billion. That is what I said yesterday. Maybe by just a modest degree, but we probably can raise the floor guarantee level. On top of that, the 50% of the after-profit tax proceeds of the equity sales is something that we can return. Compared to last year, that is going to be smaller compared to last fiscal year.
Also, last fiscal year, we did a capital adjustment of JPY 110 billion or so. As Okumura-san has been saying, if we see good opportunities, we want to first consider growth investment. If not, we will be looking at the ESR level to consider the options that are available. Thank you. That is very clear. Thank you very much.
[Foreign language] Niwa-san, thank you very much. Next question is from Sasaki-san of Nomura Securities. Just one question, Sasaki from Nomura Securities. Question to Mr. Okumura. When you make a big investment, do you think the current environment is good for big investment? I am not an expert of insurance, but for example, if the premium level is at the peak or the variation is still high, then maybe you might make different investment decisions.
My question is whether the current environment is good for you to make a big investment or not. If you go for a big investment, then in the short run, that would increase your business risks, and that could be a negative impact on your business. Even with those risks, do you not hesitate to make the decision on big investment if that is going to be the raising of the stock price, for example? On the timing, there are various factors involved: external environment and internal environment as well. FX is one thing, and also not only underwriting, but also the investment in the interest rate cycle. Of course, we cannot ignore these factors, and we need to have disciplined action. Our mission is to increase corporate value on the mid to long term.
I myself think that the certain timing at the 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 risks. On the short run, we would like to make good communication so that the actions will not be misunderstood. If there is a deal which will certainly make our corporate value higher, I would not hesitate to make such an investment. Thank you. That is clear. Thank you. [Foreign language]
Thank you, Sasaki-san, for your question. Next, Sakamaki-san from Mizuho Securities, please. Yes, this is Sakamaki from Mizuho Securities. Can you hear me? Yes, we can. I have two questions. 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. Listening to you today, it feels like the M&A appetite has gotten stronger. 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? 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. The combined ratio improvement is, I think, one of the KPIs. Is SJR effective enough for you to be able to achieve this? Elsewhere, do you have some additional benefit you can reap to further improve the combined ratio? Yes, Sakamaki-san, thank you for those questions. Regarding M&A, have we changed your appetite, I guess, was your question?
Especially overseas, was what you mentioned in the question. Also, Jim, after being appointed as the CEO of Sompo P&C, I've been working very closely with him. M&A cannot be done unilaterally. We cannot commit to M&A opportunity and reflect that in our business plan. Basically, we need to focus on the organic growth to think about the business plans. When we look at the global map, we have further room to grow geographically and also make further diversification in the portfolio. That is what we have been doing under Jim's leadership. When we started the midterm plan, one additional extra factor was the sales of the strategically held equities.
That said, with Jim and Oba-san, 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. Maybe slightly we have a stronger appetite, but we are not able to close any deals in FY2024. I want to make the pipeline more robust, both in terms of quantity and quality. For that, I think we need to invest into our internal resources, including talent. For the overseas inorganic opportunity, I would like to ask Jim to make some additional comment later. For SJR, Ishikawa-san is exerting his leadership. As you point out, the biggest risk is inflation. Also, inflation leads to an increase in loss cost and also deterioration in the expense ratio.
That may wipe out all the efforts we made. In order to avoid that, we want to use AI to achieve productivity gains. It is 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. 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? After that, Ishikawa-san can make additional comment regarding SJR. Jim,
Very much. I think we have demonstrated we have the ability to grow organically. We have 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 a 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. We have to remain disciplined in terms of how we evaluate the businesses. The market feels like it is changing. Maybe that's how you get a sense of a greater appetite. The appetite internally has remained the same. We see the external market changing in a different direction. 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 are aligned. As we look for opportunities, we need to maintain that discipline and continue to drive the organic growth. I think we 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. Since there weren't any opportunities, we decided to drive the organic growth. Jim, I think we're aligned on that, and we continue to evaluate and look at all markets, all opportunities. I don't think our appetite has changed over the last two years. Yeah. [Foreign language]
Ishikawa-san, please. Ishikawa-san, please. Yes. For the auto policies, the repair unit cost is increasing.
Also, as Okumura-san mentioned, the inflation has a big impact. 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. Building up on those efforts one by one, on page 51 of the presentation deck, year on year, the SJR impact is JPY 39 billion compared to the previous year. That is what we project for FY2025. 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 is a huge challenge that we need to address. For that, the low-performance systems, or the systems which are not frequently used, are being scrapped out. Not just that. We are also trying to look at revising the IT architect with the project.
Sompo P&C is involved in that. Also, Sompo International, Daniel from Sompo International, is engaged so that together we are working closely to further reduce the operating expenses of Sompo Japan. That is reflected in SJR. As you can see on this page, on page 57, for us, branches, system, and personnel, and fee, these actions will be the key initiatives under SJR. Within Sompo P&C, we are collecting a lot of ideas and exchanging opinions to achieve this. Additional impact of JPY 39 billion is just a passing milestone. We would like to further maximize the impact of SJR. [Foreign language]
That's clear. Thank you.
Thank you, Sakamaki-san. Next, the 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.
In the Q&A section, you said that the comments on ROE, especially for Sompo P&C, in your comments, you do not have leverage, or with leverage, ROE that would be higher. The simple question, why do you not have leverage right now? Of course, it's part of the strategy, I suppose, or as Okumura-san said, for the capital issue. The peers already leveraged ROE, and the numerator is increased. Could you please talk about your strategy?
Okumura-san said, when Okumura-san talked about ROE, still more to do, I didn't quite understand. The leverage for the group and the capital allocation for different businesses, and the leverage in each business. The numbers here for SI, based on the capital allocated to SI, we have ROE. SI itself is not putting leverage.
Compared to the other peers, the ROE looks a bit smaller or lower. Do you have any comments from Nick first?
Okumura-san. 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 do not have a high level of leverage. The point we were making was 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. 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 does not 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. [Foreign language]
probably, I think for the group level, leverage is actually higher than the peers because hybrid bonds we have leverage there. The capital nature, the leverage exists to strengthen our capital. For the denominator, Sompo Japan balance sheet has it. On the group level, we have leverage. Compared to the peers, I think it is in line with the peers. I'm sorry.
For the holdings level, to come closer to ROE target, you increase the return part, right? Compared to the peers, if the leverage on the same level as peers is the appropriate one, then your focus is to make our part higher. Yes. My second question, question about Sompo P&C. Could you please talk about synergy? At the beginning, you said
the synergy that is going to come around for the reinsurance, for example. In 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 1, there was a launch.
In January through March, we had some meetings for the preparation, but the actual official start was April 1. Every month, with Jim being the head, we have the committee, management committee, and the quantitative and qualitative targets discussed for quick wins and the midterm value increase. For example, for reinsurance, we are already seeing some benefits to some extent. Actually, last week in Trent, the management board of Sompo P&C was held. The current discussions about the current discussions, maybe Jim can talk about the discussions, current discussions at the management board.
Thank you. As Okumura-san mentioned, this has been in place since April 1. We are working together on looking at short-term, midterm, and longer-term initiatives. I think we don't have, we have not put in place KPIs in the last six weeks as we still work together to identify them.
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. Those plans are our KPIs and working together to see how we can not only achieve but exceed those. 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. [Foreign language].
Understood. Thank you. This Sompo P&C, now you have this new mechanism. From outside, we'd like to see and confirm how significant it is.
I would like to ask you to share the other KPIs in the future. Thank you very much.
Thank you, Otsuka-san. We have overrun the scheduled time. 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, now you have a new organizational structure and you have the only P&C company with the nominating committee. I think you have three internal board members who participate in the nominating committee. The group CEO is an executive officer. Also, I think this probably will be discussed at the group management meeting. Then you have another layer, management board. Is the executive matters done at this management board? For the CEO and the management board, I wonder if there is a good governance.
What are your thoughts on the governance structure? Yes, thank you, Majima-san. Yes, we have the three-committee-based structure and we have three internal board members who are part of the board composition. I, as the Group CEO, the authority that I held has been transferred to Jim and Oba-san. I think the biggest risk is that I need to make sure that I have close communication with Jim and Oba-san. As a structure, the group, there may be mirroring over Sompo Japan and the holdings. We make sure that we have close communication and we make sure that we do not need to hold meetings just for the sake of having communication or meetings. With this organizational structure, we are aware of the communication costs that will be happening, but we are striving to achieve a higher return.
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. 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.