MS&AD Insurance Group Holdings, Inc. (8725) Earnings Call Transcript & Summary

Good afternoon, investors and analysts. Thank you very much for participating in this Information Meeting for fiscal 2022. This is the second Information Meeting of MS&AD Insurance Group Holdings. The moderator will be handled by Kaneko of Public Relations and IR department. Now ladies and gentlemen, let me introduce to you the participants from our company. The presentation will be made by Representative Director and President and CEO of the company, Noriyuki Hara; on the left-hand side as viewed from you, Executive Officer in charge of underwriting and reinsurance Hiroshi Arakawa; Senior Executive Officer and Group CRO, Satoru Tamura; Director and Executive Vice President and Executive Officer and Group CFO, Tetsuji Higuchi; Executive Officer in charge of International Business, Tamaki Kawate; Executive Officer in charge of Asset Management and Financial Services business, Takuma Hayakawa. Good day. First of all, following the presentation material, President, Hara, will make a presentation. And please defer all the questions until the end of the presentation because we have set aside some time for Q&A after the presentation. So let's move on to the presentation without further ado. Mr. Hara, please.

Hello, everyone. I am Noriyuki Hara, the President and CEO of MS&AD Insurance Group Holdings. Thank you for taking the time out of your busy schedule to attend our Information Meeting. Year 2022 was marked by a number of incidents that had a huge impact on the lives of many people and the business activities of many companies around the world, including the Russian military invasion in Ukraine, the seventh and eighth grades of COVID-19, Typhons No14 and No15 that hit Japan with great intensity and Hurricane Ian, the second largest hurricane in history. In addition, the market environment remains unstable with a sharp rise in global interest rates, declining stock prices and rapid fluctuations and foreign exchange rates, the global economy is also fluctuating significantly with inflation and uncertainty about the economic recovery. Unfortunately, the group's adjusted profit for the interim period was JPY 7.4 billion. Net income was negative for the first time in 10 years, and the full year forecast was also lower. In the current fiscal year, there were many incidental factors such as the impact of Russia and Ukraine, the COVID-19, and the impact of mark-to-market accounting due to fluctuations in the international markets, but we have made steady progress in our efforts to strengthen our company's financial soundness and profitability. And we believe we'll be able to steadily achieve our medium-term management plan target of IFRS net income of JPY 470 billion to JPY 500 billion and adjusted ROE of 10% or more in fiscal 2025. To demonstrate our confidence in future earnings growth, we announced at the end of last week that we would raise our dividend forecast by JPY 15 from our initial forecast to JPY 200 per year. Through the steady progress of medium-term management plan, we will continue to contribute to the resolution of increasingly diverse social issues and achieve sustainable growth for our growth. Now let's get into today's explanation. Please turn to Page 4. First, I'd like to explain the financial results for this interim period and the revised forecast for the full year, including incidental factors occurred in the current fiscal year. After that, I will explain 3 points that will be the drivers for improving our profit structure. Profit remediation at MS Amlin, reductions in operating expenses and improvement of profitability in fire insurance. I will then touch on the efforts to achieve ROE targets, such as enhancement of business management and reduction of our peak risks. Finally, I would like to explain the status of capital and shareholder returns. Please turn to Page 6. Firstly, I will explain the interim financial results and full year forecast for fiscal 2022. Group adjusted profit for the interim period decreased by JPY 176.2 billion to JPY 7.4 billion due to several incidental factors, including natural catastrophes in and outside of Japan, the spread of COVID-19, the impact of the Russian invasion in Ukraine and the impact of market fluctuations on asset management. The impact of Hurricane Ian occurred in September. JPY 26.5 billion for overseas subsidiaries was additionally booked in the interim period. In light of this interim period, we have also lowered our full year forecast by JPY 130 billion to JPY 170 billion. Group adjusted ROE is expected to be around 5% for the full year results. On the other hand, excluding several incidental factors that occurred during the current fiscal year, our profit level is JPY [ 379 ] billion. Natural catastrophic risks have become frequent in recent years, even if we exclude domestic and overseas natural catastrophes with recent incidental factors, our profit level is still JPY 279 billion. So we are maintaining a profit level of roughly JPY 300 billion. Natural catastrophes of the current fiscal year are Hail disaster in June and Typhoons No14 and No15 in Japan, and Hurricane Ian and flooding in Australia overseas, and the hurricane details on Page 9. [indiscernible] loss occurred as domestic non-life and life insurance companies and overseas subsidiary in Taiwan as found on Page 10. Next, I will discuss the structure of achieving the quantitative targets of medium-term management plan and the 3 drivers for achieving them. Please see those. In May, we announced that we would achieve high IFRS net income of JPY 470 billion to JPY 500 billion by fiscal 2025, with an adjusted ROE of at least 10% on a consistent basis. So there is no change to the quantitative progress under our medium-term management plan, and we will continue to strive for better achievements. The structure of achieving the FY '2025 targets from the FY '2022 full-year forecast including [indiscernible] is described on Page 13. [indiscernible] for reduction of operating expenses under domestic [indiscernible]. I'd like to talk about MS Amlin Corporate growth [indiscernible]. The full-year forecast for MS Amlin [indiscernible] profit for FY '22 is expected to be negative [indiscernible], mainly due to mark-to-market losses caused by stock market fluctuations. However, the underlying portfolio has changed to a fairly profitable structure due to our improvement efforts including [indiscernible] Russian invasion of Ukraine and improved portfolio. The non-cat risk loss ratio is 55% and the underwriting profit is expected to be GBP 108 million. The MS Amlin has the Lloyd's business as its base and has grown by establishing AAG reinsurance business and acquiring insurance companies in Continental Europe to complement the base business. However, the characteristics of the Lloyd's market where underwriting can be changed based on annual risk appetite is quite different from business characteristics of reinsurers, but the underwriting is based on long-term stable trust relationship with direct insurers. So we have adopted a policy of striving for self-sustained growth by capitalizing on strength of each company. In the current fiscal year, we have completed executive management review, and each company is developing a new business strategy under the new top management. The AUL in charge of Lloyd's business has already been engaged in the selective underwriting of natural catastrophe risks in North America, carving the volatility of our Natcat risks and improving profitability. AUL has made steady progress in improving its portfolio. And in fiscal 2021, it recorded an adjusted profit of approximately JPY 10 billion. On a nonconsolidated basis, this fiscal year has had the impact of Russia and Ukraine and financial market fluctuations, but we plan to expand our portfolio with further improvement of profitability. With regard to natural catastrophe risks, while reducing the exposure, we will increase our rates in line with the hardening of the market and aim for a level that will ensure sufficient underwriting profit even in the event of 1-in-10-year catastrophe. Through these initiatives, AUL aims to further increase profits and restore its position as one of the top syndicates at Lloyd's in terms of both size and profit. Under the new CEO who took office in January 2022, AAG responsible for the reinsurance business will move away from AUL's complementary role and achieved stable growth based on long-term relationships of trust with the primary insurance companies. We will further diversify our underwriting portfolio while limiting natural catastrophe risk and curbing earnings volatility. With respect to Natcat risk in the renewal of North American natural catastrophe in June and July, significantly reduced underwriting exposure, stopped providing insurance cover only for property and concentrate capacity provision on customers who are likely to have multiline transactions. In the Natcat category, we will carefully expand our business, particularly in agriculture and financial lines, where risk diversification is highly effective with the aim of improving profitability. Next, I'd like to talk about reducing business expenses. Please turn to Page 18. The current medium-term plan aims to reduce operating expenses by JPY 46 billion compared to fiscal 2021. A 28% or JPY 13 billion reduction is planned for the current fiscal year. By fiscal 2025, the company are expected to reduce the total number of employees by 6,300 and consolidate or eliminate approximately 300 organizations. In light of event of reduced workload resulting from the reform of DX and also the reduction of clerical works, we are trying to hire the new graduates. And also considering that natural attrition, we believe we'll be able to steadily attain this target. We further reduced operating expenses [indiscernible] on the One Platform strategy [indiscernible]. Based on the strength of this company, we will identify areas to retain the differences as indicated here and promote standardization, collaboration and integration of the other areas. For example, in fiscal 2025, we will complete the merger of our claims services system [indiscernible] the study to integrate claim service operations. We also plan to integrate contact centers and promote the One Platform strategy in a wide variety of fields, such as integrating the CALI desks and standardizing education and training. Some areas require a certain level of system development to improve efficiency. And while it will take some time for actual cost reductions to emerge, we will achieve further reductions in operating expenses over the next midterm plan period. Page 20 shows the projected improvement in the operating expense ratio of the domestic non-life insurance business. As a result of our rigorous efforts to reduce operating expenses, we expect the operating expense ratio for fiscal 2022 to be 33.4%, 0.3 percentage points lower than our initial forecast. In addition, [indiscernible] in the fiscal 2025 and 30% level during the next Medium-Term Management plan 2. Next, [indiscernible]. Please refer to Pages 21 and 22. In order to recover the profitability of fire insurance and to supply products and services sustainably, we have taken various measures, including revision of product run rate and provision of disaster prevention and mitigation services. From October 2015 till October this year, we have revised our products and risks on the total of 4 occasions. And as a result, we have made steady progress in improving our portfolio. [indiscernible] after this year's revision are expected to account for approximately 40% of all claims after fiscal 2025 and 70% in fiscal 2030. In addition [indiscernible] business, we are making [indiscernible], reinforced underwriting, and revise products for condominium union policies with the [indiscernible]. We plan on a roughly JPY 49 billion improvement by fiscal 2025. The profitability on Fire insurance, which tend to be long-term policies, has been a challenge for the growth of our group. However, we expect the share of policies with revised products and rates to greatly increase during the Medium-Term Management Plan period so the speed of improvement will steadily increase. Next, I would like to talk about the efforts to achieve our ROE goals. Please turn to Page 23. The interest company's ROE consists of the inverse of ROR and ESR. Therefore, we believe it is important to improve ROR while maintaining an appropriate level of ESR. To improve ROR, we regularly monitor ROR by business, company and line of business and promote ROR improvement measures in each area. Unfortunately, due to various incidental factors, this year's ROR is expected to decline, but the group's overall ROR has improved steadily from about 12% in 2013 to 15% in fiscal 2021. In order to further improve capital efficiency, we will optimize capital allocation during the current medium-term plan period. First, we will allocate capital to more efficient businesses by increasing sophistication and business management and flexible capital flows. This will increase profits and capital, which will then be used to make more efficient business investments. Through this capital cycle, we will increase returns to shareholders. This effort to enhance the sophistication of business management was initiated by overseas subsidiaries. This chart shows the ROE and profit profile of each company. The left side is the average during the previous medium-term plan period and the right side, the average during the current plan period. We check the ROE of each company. And for those businesses that do not achieve 10% ROE, we clarify issues and correlate and implement action plans to resolve those issues. Through this, each company is expected to improve ROE steadily and continue to grow earnings. Specifically, we aim to improve ROE by increasing dividends from companies with solvency ratio exceed the target level and for which we do not expect high growth using their capital. Alternatively, we may consider withdrawing from businesses with no prospect of capital efficiency improvement and with low-growth potential, and we'll withdraw capital and allocate it to more efficient businesses. We recently announced a business investment in Transverse in the United States, a business with a high growth rate and expected ROI of more than 10%. And this plan will ascertain the capital efficiency of each business and increase capital allocation to businesses with higher capital efficiency in order to improve ROE for the entire group. We'll also work to reduce the risk and lower the required capital level. Please turn to Page 27. Regarding the strategic equity holdings, we have sold a total of approximately JPY 2.4 trillion since 2003. But due in part to rising stock prices, it still remains the big risk accounting for the larger share of the total integrated risk. One of these is the acceleration of our strategic equity risk reduction. We intend to accelerate this. In the current period, we accelerate the sales and we set the target of sales of JPY 150 billion, and we would like to keep a similar pace of sale as the current fiscal year. Furthermore, we would like to have the market value of our strategic equity holding at the earliest time. The timing of realization is currently under scrutiny. And if this is achieved, the ratio of equity holdings to [indiscernible] consolidated net assets is expected to be reduced by around 20%. Next, I will talk about efforts to reduce the risk of natural catastrophes. [indiscernible]. In order to reduce the volatility of earnings, we have adopted a policy to reduce the risk volume of overseas natural catastrophe with a 10-year recurrence period of 20% compared to the previous year. I'm constantly promoting this initiative. As a result, we were able to reduce the North American natural catastrophe risk which is the largest overseas Natcat risk by approximately 50% for AUL and AAG combine and by about 40% for the AD headquarters reinsurance returns. Moreover, we will continue to expand [indiscernible] while controlling the amount of risks [indiscernible]. Finally, I'd like to talk about the status of capital and shareholder returns. At the end of September 2022, ESR was 223%, decreased 5 points from the end of March due to market environment, fluctuations and reduction in internal reserves. We continue to keep sound group EBITDA levels. Please see Page 31. As announced at the end of last week, we have decided on a dividend of JPY 200 for fiscal 2022, an increase of JPY 15 from our initial forecast. The interim dividend was JPY 100, an increase of JPY 17.5 from the previous fiscal year. As a result, the total annual dividend was planned at JPY 107.1 billion, about 63% of the group's adjusted profit forecast of JPY 170 billion. The shareholder return policy for the first medium-term management plan is 50% of group adjusted profit. However, for the current fiscal year, our group has decided to increase the dividend, including additional returns because the profit decline was caused by transient factors, such as the impact of Russia and Ukraine and COVID-19 and the mark-to-market due to international market fluctuation. [indiscernible]. Our group wants to grow together with society and a platform provider of risk solutions as stated in the subtitle of medium-term management plan. Another important mission of our company is to show our true work by supporting the lives and business activities of many of our customers and contributing to the development of society on various [indiscernible] in this current year. At the same time, we have established a solid financial base through steady profit improvement initiative. For this reason, we believe we can continue to provide our shareholders with stable returns. As a risk solution platform holder, we will continue to steadily grow together with society while resolving risk for all our customers. We look forward to the continued understanding and support of our investors. Thank you very much. [Operator Instructions]

I have 2 questions. Question number one, which relates to the adjusted net profit of next fiscal year, the certainty with which you can achieve this JPY 400 billion. According to this presentation material, there are various screws as to. On the adjusted basis, the profit for the current fiscal year is JPY 329 billion, which means the profit increase of around JPY 70 billion is required. Looking at Page 13, the improvement of profitability of fire insurance, this refers to the past 3 years, which totals JPY 44 billion, which means around JPY 15 billion per year. And for casualty, profit, it's JPY 15 billion per year. And moving on to Page 20, this is one point where we focus, that is expense ratio decreased by 0.6 percentage points. So on the after-tax basis, this means around JPY 12 billion, I guess. And overseas business, JPY 28 billion profit increase is expected. So adding all those, that adds up to JPY 400 billion. Is it that simple? The cost of reinsurance, for example, that could be negative compared with the current fiscal year. There may be certain areas like that. And in the case of international business, in many cases, the plan has not been achieved in the end of financial year because of various factors. So what is the risk of achieving this? So could you describe the risk and also the challenges for attainment of those plans? Second question relates to the improvement of ROE and your efforts to achieve that. The business with ROE below 10%, and I'm referring to Page 25. With respect to those businesses, you said you're going to formulate the plan and also implement those plans. That's what you said. But at the moment, how many companies have ROE below 10%? How many companies are on that list? And what sort of improvement efforts are underway? And if the solvency is enough and if the growth prospect is very low, you mentioned that you're intending to increase dividend from those companies. But when do you intend to start absorbing or capturing those capital in existence of some companies? You also mentioned that you would even consider exiting or withdrawing from some of those companies. But with respect to businesses with ROE below a certain level, how many years do you intend to allow before you finally decide on the withdrawal or exit? Could you share with us the standards you use?

Thank you very much. You just asked 2 questions. With respect to the first question, which related to the adjusted profit of next fiscal year, how certain we are to attain the JPY 400 billion in adjusted profit? And what are the risks in achievement? The second question related to ROE improvement and how many companies have ROE below 10% and when we are intending to absorb the excess capital in some of the companies? And how many years are going to be allowed before the final decision for withdrawal is made? So these are the concrete questions. With respect to the first question, Mr. Higuchi will give you the answer, first of all. And with respect to overseas business, Mr. Kawate will make additional comments on that.

Thank you very much for the question. For the next fiscal year, this JPY 400 billion, we plan, as you pointed out, the improvement of profitability of fire insurance and also the expansion of profit of casualty and also the expense reduction and also international business, those are major items, as you pointed out. And in terms of the volume, the numbers you cited are quite proper, shall I say, or in line with our intentions. Now compared with that, there are various factors that we have been carefully monitoring, and we need to monitor very carefully some of the factors to take account of measures if necessary. With respect to reinsurance market, what is the trend of the reinsurance market is one important point. For the current fiscal year, we obtained a rather substantial amount of reinsurance coverage. And therefore, for natural catastrophes, we were able to recover some of those losses from reinsurance payments. So that could result in higher prices for the next fiscal year. But if we use the same program for reinsurance, well, we are not quite sure whether we can use exactly the same scheme of program as the current fiscal year for the next fiscal year. So this is quite fluid. So it depends on the market conditions, the market trend and also negotiations with the reinsurers. So in that context, as much as possible, we will try to contain the impact of increase in reinsurance pricing. And by doing so, we intend to obtain effective reinsurance coverage properly. So that's what we have in mind. And furthermore, with respect to international business, as you partly pointed out, for every fiscal year, well, we were hit by various incidental factors that have not been expected, anticipated at the beginning of the fiscal year. And that was repeated year after year. But for the current fiscal year and as was explained in the presentation for Natcat business risks, we restructured the portfolio substantially and properly. And at the same time, for natural catastrophe risks, risk exposure has been contained, reduced. And when hit by the Hurricane Ian, the claims payment compared with the payment related to Hurricane Aida last year, despite the fact that the size of the Ian was much bigger, but we were able to contain and reduce the actual payments. So we've been able to control the cat business -- cat risk substantially. But what we have been doing in the international business steadily needs to be translated into the actual good results, and we intend to do that steadily and property. In addition to that, with respect to financial market, the exchange rate fluctuation, where is it going to move vis-à-vis exchange rates, we have been using some hedging for grains payment. And for primary life when yen depreciates, it receives the positive benefit. So that's the characteristics of its business. With respect to ForEx rate and interest rate movement, they offset each other. U.S. interest rates increased, and that caused yen depreciation. So the exchange rate alone cannot cover everything. But with respect to financial markets, we will constantly monitor it very carefully and be always ready to take flexible actions and measures. So while we are faced with those various factors, but as I mentioned earlier, we will accelerate the sales of the strategic pre-held equities, we'll maintain discipline of underwriting, especially in Japan relating to the commercial business. In terms of underwriting conditions and also pricing including those factors, we intend to take very strong measures. So we intend to be proactive in addressing those risks. That's all. With respect to international business, Mr. Kawate will be giving you additional explanation.

Thank you very much for your question. With respect to international business, for the current fiscal year, we had various incidental factors. The biggest one was the Amlin, which has been using mark-to-market accounting, and it was hit by asset management and the company was hit by Russian invasion into Ukraine. Also the COVID-19 caused loss in Taiwan company. And those factors will disappear next fiscal year. Those are the trends and the factors only for the current fiscal year. Right now, the insurance market and reinsurance market, both are hardening and the cause is also related to the capital of reinsurance of companies reduced because of the asset management market, and that was also hit by the hurricanes. And therefore, the capacity crunch is existing in the reinsurance market. Especially with respect to natural capacity risks, the capacity relating to Natcat has been very tight especially -- and especially in AUL and AAG and Amlin. For the next fiscal year as well, continuing from this year, the Natcat risk exposure will be reduced. But because of the reduction in capacity, it can lead to the underwriting of a non-Natcat underwriting. So because of the hardening progressing quite substantially in the market, the profit improvement in Amlin can be expected for the next fiscal year and beyond. This is one of the factors. In addition to that, especially in Asia, after the COVID-19 with the settlement of that, the economic recovery is underway. And the growth achieved by that will be added to our business results. And also in the United States, Transverse that we acquired will contribute to our profit. And using Transverse as a leverage, we'll expand MGA business. So for the next fiscal year, the profit growth is quite certain, I think. I think we can achieve this profit increase with a great certainty for next fiscal year.

Allow me to add some words as well. With respect to AUL, it has caused concerns on your part, but starting in January, we now -- Andrew Carrier, who is going to assume the CEO's position in January next year. He has been working in the Lloyd's market for over 30 years. And I had a discussion with him some days ago. And various measures have been implemented over the years. And the remediation efforts are now underway, and it is now in the face of capturing profit. The Lloyd's corporation also allowed the expansion of the business and portfolio for fiscal 2023. The Lloyd's Corporation allow the company to expand risk-taking by 15%. Because unless the positive profit is achieved, the Lloyd's Corporation does not allow increase in risk exposure, but the company is now in the position to be allowed to do that. And therefore, there will be full-fledged profit improvement here. And as Mr. Kawate mentioned and responded earlier, the hardening of the reinsurance market is underway in a very significant manner, especially with respect to natural catastrophe risks. According to him, 9/11, well, the situation is very similar to the year that followed the 9/11. And the hardening of the market is likely to continue quite significantly, especially risk exposure, especially in North America, we intend to reduce that. But at the same time, we will increase the business further. So the cat business profitability is expected to be improved quite significantly. So including that, while it contained risk exposure, we will continue with our efforts to improve profitability. So that's what AUL is going to do going forward. Let us move on to the second aspect of your question. With respect to ROE improvement, Mr. Higuchi will talk about the overall framework, and specifics will be described by Kawate.

With respect to our efforts to improve ROE, in the overseas business and overseas locations initiated those efforts. As I mentioned in the presentation, the cost of capital is one of the big factors to be considered. And the businesses, the ROE, which is below -- which has -- the businesses with ROE below our cost of capital will be identified. And we will analyze the reason why that is the situation, and we'll take various measures to address that. And whether those efforts are appropriate or not, it's confirmed as we continue with our improvement efforts. That's one of the points. And secondly, with overseas subsidiaries and locations, the solvency ratio that is required -- the range of that solvency requirement is discussed and confirmed with overseas subsidiaries. And of course, it depends on regulatory authorities, the regulations in each country. So for each of those subsidiaries on the individual basis, we need to confirm what the range is. But if the actual solvency is above the required level, that is considered to be excess capital, and that will be absorbed by the company so that it can be directed to the business with higher capital efficiency. Now the subsidiaries of actual capital efficiency below the cost of capital is not more than 5 but less than 10, so to speak. And so we are confirming the number of those subsidiaries with lower capital efficiency. With respect to absorption of excess capital, starting in the current fiscal year with respect to the capital, we have initiated our efforts to expand those capital. We expect the criteria for withdrawal or decision to withdraw or exit, it's not uniform. Let us say, we have not set any specific date for how many years to be allowed. It is decided on a case-by-case basis. But there are some subsidiaries or locations where we have decided that withdraw or exit. Now when we talk about withdrawal or exit, basically, it will take the form of a sale of those business and which means it requires negotiating with the potential buyers of those business. So the decision cannot be made and action cannot be completed right away, but there are several subsidiaries where the study is underway in that direction.

Is Mr. Kawate going to make any supplementary additional remarks?

Yes. Thank you very much. As of this moment, as Mr. Higuchi has just mentioned, the businesses or international subsidiaries with ROE below the required level and in terms of the number, it is around 5. And during the current medium-term plan for 2025, those subsidiaries are expected to attain 6%, which is scheduled for 2025. And most of those companies are likely to attain that 6% level. There is one company which cannot attain that level. And so we have initiated the study of withdrawal of that. And with respect to the payment of a higher dividend for 2 subsidiaries, the head office received JPY 5 billion additional dividend from them. That's all. Thank you very much.

Watanabe From Daiwa Securities, and I have 2 questions. First is about Page 31 about returns to shareholders with [indiscernible] of pay-out ratio and -- or at least more returns, but in terms of JPY 160 billion as the total, are you going to keep that in mind? And what about the additional buyback of shares? So I'd like to ask for your comment on that. That's one helpful. Second question is on Page 12. ROE, the adjusted ROE estimate. At the many information meetings, was targeting about 11%; this time, around 12%. So you raised the percentage. And what is the background. What kind of adjustment did you change? So that is the second question I'm asking.

Thank you for all to questions. And first question is about shareholder return and the total return inclusive of additional return, what is our view. And second is with regard to adjusted ROE, 11% versus 12%. So what was the adjustment here? So Higuchi-san will give the answer here.

Yes. So with regards to the return to shareholders, as you have just indicated, the dividend estimate right now for group adjusted profit after adjustment of JPY 170 billion and 63% or so. And so already, it's exceeding 50%. So it's an additional zone. And at the end of the year, what will happen will be the key point here. And going forward, in terms of additional return, whether that will be implemented. Well, we would like to think about this positively, [indiscernible] possible. And at that time, what about the share price situation and capital liquidity and ESR status, we will be looking at all of this to make the adjustment. And for the full year, what about the full year profit, what will be the level, and that will also be another point to consider. And so share buyback, we have been doing this in the past. And in terms of our share price right now, it's undervalued, we feel. That's our understanding. So we will be considering all of these in our study, but we would like to consider this in a positive manner. That's one question. And about the adjusted ROE, so for the initial year, in the first quarter of the year, we did do an investigation, and 12%. This number was the more precise number. So what we did was to refine the calculation.

Nomura Securities, Sakamaki is my name. We also ask 2 questions. Question number one relates to the sales of strategically held equities. And when you announced the medium-term plan in May, you said JPY 100 billion. But after 0.5 year, you raised that and you're going to accelerate the sales by JPY 150 billion. Could you explain to us the factors in the background? What are the issues you had in mind to decide the acceleration of the sales? Second question relates to expense ratio reduction. In May, you talked about plus of reduction -- the additional reduction of expenses. Could you also elaborate on that and give us a follow-up explanation?

Thank you very much for 2 questions. Question number one relates to the sales of acceleration of sales of strategically held equities. And second one relates to additional reduction of expenses. The first question will be explained by Hayakawa. And the second question will be responded by Tamura. So Hayakawa-san, please?

Thank you very much for your question. With respect to the sales of strategically held equities, the amount of sales, the reason behind the increase of that and also the issues that we consider as challenges. First of all, for the full year basis, the target was raised from May. And the reason behind that is, first of all, as it turned out, the progress of sales was quite fast compared with the total assets and also 30% of our risk exposure. Those are the targets of the current medium-term plan, and we attained those targets actually. So we started considering the next phase. That was what triggered this discussion. Roughly speaking, for one thing, for the current fiscal year, since the beginning of the current fiscal year, the strategic equities, how it is perceived by the society at large, has become more seriously severe. Even during the last fiscal year, we felt that severity with which the critical eyes are turned to the holding of the strategic equities. We have already sold more than JPY 1 trillion. But even after those sales, many people voiced a very stringent views with this factor, the holding of strategic equities. And we did have the similar issue in mind. So in that sense, but then in terms of the next -- the amount of our next sales target need to be considered. And furthermore, for the current fiscal year, we have been discussing with the corporate customers and trying to receive their consent for sales. And of course, based upon those consent, we start selling and the progress was made in discussing with those corporate customers whose shares we hold. So that also resulted in good progress made and that resulted in increase in annual target of sales. Now in terms of our recognition of the challenges in the background, there are 2 factors. I talked about the society having rather severe or stringent views and also the total amount of strategic equity held as a percent of the total asset we hold was quite large. And Mr. Hara talked about having that market value of holdings. And if we actually make [ ROE ] calculation compared to the global insurance companies and their holdings of equities as a percent of total assets. And there, if we have our strategic equity holdings, more or less, is part with equity holdings of international insurance companies. And also currently, the equity risk is actually the peak risks of the company and exchange rate risks, credit risks and equity risks, those are the major risks that we are confronted with. And those 3 factors total about the same amount or a similar amount. So if we have the market value of the equity holdings, it is quite easy to make it comparable to other risk factors we're confronted with. And that's why we have decided to have it. Second question will be explained by Tamura-san. In terms of expense reduction in Pages 18 and beyond, it is described as [indiscernible] countermeasures or initiatives, the progress made according to the plan. And especially with respect to one-platform strategy, the measures not described here are actually implemented. So those initiatives and activities are making good progress. With respect to investment in IT systems, which is described in Page 20, the investment in major systems, the actual investment and introduction of those investment is according to the plan. So we intend to carry through the existing plan. And in terms of potential addition to that, as we implement those existing countermeasures, we will give consideration to potential for making additional reduction. With respect to one-platform strategy, we have not assigned any specific number or figure and therefore, that could represent additional amount. With respect to one-platform strategy, that will produce good benefits and savings during the current medium-term plan period and some will start generating good benefits in the next fiscal year -- next medium-term plan. So that's why we do not have any specific figure for that. So it's not that this additional reduction is not eliminated, but that rather it is going to be generated by one-platform strategy.

All right. Thank you very much, Mr. [indiscernible] . First of all, about Amlin, Page 14, that is -- so this is an estimate about a non-cat risk and including Ukraine it's 55%. So there's an improvement. And compared to the beginning of the year, this 55%, what is this about? And also this non-cat loss ratio, what is included that's not here? And so there's been a lot of natural disasters, and dollar/pound moves and Russia and Ukraine. So if you include that [ noise ] for that full year, Amlin's net profits and its contributions, what is it? In other words, in terms of first half or full year estimates and also, I think I can understand to an extent that from the loss ratio, but if you could explain further. And second question is related to my first question about the expected profit for next fiscal year or your target, JPY 400 billion broken down into JPY 200 and [ JPY 135 million ] international, JPY 115 billion. And so at a glance, I haven't been completely able to analyze our numbers. But in international business, JPY 115 billion. It is -- I'm thinking it's going to reach us for the domestic JPY 235 billion will come down to [ 239 billion ], but has the COVID impact of 15 million. And for this year, there was a lot of large policy, large profits, so maybe it ends up about JPY 28 billion. And as the fire insurance improvement, but some are with the adjusted profit and you added off and subtracts the cost. But this JPY 235 billion, if doesn't reach that number. so can you give your feel that is maybe you can add a bit more to international business. So this JPY 235 billion in Japan, may not be approaching JPY 400 billion, perhaps you could elaborate further on all of the business. Thank you for the question. Last question is about Amlin and 55%, that is excluding Russia-Ukraine impact, 55% and loss ratio compared to the beginning of the year is [indiscernible]. And non-cat risk, what is included, what is not included. If [indiscernible] give us the [indiscernible].

So non-cat beginning of the year plan was 53%. And therefore, 55%, that's the result. That will be a bit higher. And in AUL, in the middle of the year, there is a bit of increase in results and also there was the large claim of the current and so the reserving was the benefit, a little bit higher. And as a whole, if you exclude AUL or AAG and AISE for MS&AD as a whole, it's pretty much underwriting profit as planned at the beginning of the year. And as for the Natcat [ insurance ] , other than the catastrophe, everything is included. Therefore COVID-19, Ukraine, that's also reflected in Natcat. That's partly [indiscernible] With regards to the natural disasters, that's the disasters that is included in the general property. We divide in terms of the large scale and small scale JPY 20 million or less. So that one is in the non-cat. So the first question, does that answer your question?

Yes. Thank you. Going on to the second question. That is the domestic non-life JPY 139 billion to JPY 235 billion and the structure of achieving this [ September only ].

Thank you for the question. Yes, it's true that it's a big of recovery and as explained that the offset, there is a lot of incidental factors, which will disappear as we get profits. And also underwriting profit, in terms of that, MS&AD total 2023 will be about a recovery of JPY 80 billion or so. And so centering on that, and incidental factors will disappear and also with regards to not JPY 235 billion for domestic insurance companies, we feel that this is achievable. However, as mentioned earlier, the reinsurance market trends and there is some downward pressures. So that has to be taken into consideration and we'd like to thorough investigate going forward. Once the [ profits ] this year and the [ profits ] next year and our initiatives, something new planned. Thank you for those questions. And this year, there are a lot of large natural diasters the largest [indiscernible] which was higher than the planned, that was the big factor. And in companies, there are various diasters and naturally in terms of underwriting. We have taken various perspectives in the past too, but there were -- it's the half that exceeded our expectations. So going towards the next step, we have to investigate the large claims and come up with the countermeasures to deal with them with [indiscernible] , and that would be the countermeasure or [indiscernible] And casualty, increasing volume. With regards to that volume, there are 2 perspectives. We have our strength, that is SMEs. We could increase the scale and there's lot of a new risk market. Again, we can expand the scale. So with those 2, we would like to increase volume. And also for casualty, as I said like fire, for this fiscal year, there is large claims which is a bit increasing and inclusive of the new risk, there are various patterns of incidents occurring. And so in the same way with regards to the perspective of new risks, new underwriting schemes [indiscernible] need to be considered some more.

Tamura speaking. I want to correct something. What [indiscernible] said, yes, we're taking those efforts and underwriting profit before taxes, JPY 150 billion to [ JPY 150 billion]. I'm sorry, I don't think I have corrected the numbers I mentioned earlier. [ JPY 150 billion to JPY 170 billion ] and you've included the disappearance of the incidental factor this year.

Can you explain the content of this JPY 150 billion?

Well, Higuchi will add some remarks.

Yes, Higuchi speaking. So JPY 100 billion has to be [indiscernible] this fiscal year. There are incidental factors so get this for natural disasters and the [ JPY 50 billion ] and the COVID loss is about JPY 20 billion. So that makes the JPY 70 billion and [indiscernible] the year and that is also a big factor and also they increased the fire and operating expense reduction in casualty, profit expansion and also operating expense and recoveries will be added on. So there are other factors, too. But as [indiscernible] said, JPY 139 billion becoming JPY 235 billion, that might be rather difficult as you indicated. But the incidental factors mentioned earlier will disappear. So if you think about that, to an extent, I think that we can realize these numbers. Thank you. Does that answer your question?

Thank you very much. Probably, the image of the large claims, JPY 20 billion after tax then, they were actually much beyond. That's probably [indiscernible]. But the large claim is about equal to your calculation.

Yes, I see. And also the exchange rate, if we talk about insurance underwriting, the setting for the products and so as a whole is not having an impact. The exchange rate impact and I said there are other factors. So there various other factors. But in terms of the large loss is about JPY 20 billion against the plan. So it's roughly [indiscernible] to your [indiscernible]. Thank you very much.

Thank you, [ Ms. Tsujino ]. So I now invite somebody from participating from Mizuho, Mr. Sato of Mizuho Securities. So please turn on the video and also do [indiscernible] yourself. Mr. Sato of Mizuho Securities, can you hear me?

Yes, we can. I have 2 questions. It's been discussed earlier, it relates to reinsurance, and you said you're going to make a decision based upon your monitoring of the market. But could you elaborate on what sort of scenario could be conceivable for example, in the first half of this fiscal year? Other 2 major nonlife companies, they didn't have to use reinsurance at all. The situation was like that they didn't use reinsurance. And I think they had a rather substantial work line. And unless they increase the prices in order to breakeven their business, I think they are approaching that level. But looking at the current market conditions, as far as your company is concerned, probably you might have to increase attachment level or ELC or for aggregate, probably you may not be able to purchase the reinsurance for aggregate risks. So including the reinsurance market conditions, could you just describe in greater detail what sort of scenario is conceivable. Second, when it relates to the business investment and the current environment surrounding that. But transfers, the deal was already visible when the medium-term plan was formulated, but in this medium-term plan, probably it can contribute -- it has incorporated [ JPY 18 billion ] for profit contribution for the target range for ESRs raised by 30 points which also means that risk taking of JPY 700 billion was examined, and that must be the basis for increasing the ESR target range. And therefore, for the period covered by the medium-term plan, some business investment has been incorporated or considered. And compared to those, the existing environment, is it the tailwind or is it representing a headwind for you? So I'm interested in an investment environment and conditions.

Thank you very much for your 2 questions. The first question related to the reinsurance, the likely scenario going forward of the reinsurance and [ Ohkawabata ] will respond to that question. And the second question, which related to the business environment -- business investment environment and our take of that and Higuchi-san will respond to that. So [ Ohkawabata ] will respond to your first question.

Thank you very much for your question. Well, you said you're interested in greater details or specifics. But as you mentioned and we mentioned earlier, we'll continue to monitor the market conditions before making any decisions, and I cannot draw any further. That's the actual situation. First of all, as far as our group is concerned, and especially based upon our own stance, while containing and restricting, suppressing risk as much as possible. We intend to capture secure the reinsurance capacity which allows us to do that. The basic countermeasures will be retained and will not be changed. But at the same time, we have to address the market and reality of that market. The Japanese market [indiscernible] in January and going forward in the United States and Europe, after going through the market conditions in the United States and Europe, the Japanese market will face the renewal negotiations. So we'll decide on our measures by looking at those conditions. And with respect to inflation, the situations are quite different between Japan and the global market and reinsurers are becoming aware of that. I'm not underestimating the difficulty of negotiations, but we intend to capture more efficient reinsurance scheme while trying to restrict the cost related to that as much as possible. So that's where we stand at this moment. Did I answer your question?

Well, in the case of our group, we value very much our relationship with reinsurers. We are trying to keep and build a stable relationship over a long-term period. AD is also taking outward in business as well. But mostly, we focus on relationship, which value very much with reinsurance as much as possible. As far as MS is concerned, we have been emphasizing good relationship to be maintained by reinsurers over a long period of time. So Mr. Kawate will make additional comment on that.

As [ Ohkawabata ] mentioned earlier, that's exactly what we're doing. Moving towards the 1st of January of renewal, the market is quite disruptive. And once that is offered to our -- moving toward the renewal for April 1, we are expecting some improvement in conditions. And with respect to the approach we take for purchasing reinsurance, the European reinsurers are placing good confidence and trust in us. That is to say we do not set reinsurance in a manner that we will capture reinsurance but move on to other reinsurers right away. We do not take such an approach, hopping from one company to another. And after the earthquake in 2011, with the revision of product in Japan, the commercial business for reinsurance has started improving quite substantially and generating profit. And that expectation has improved. And so the profitability of improvement of domestic fire insurance, while expecting on that, reinsurers expect that Japanese insurance companies will not take such a drastic actions as European or American insurance companies would. So with that expectation, I guess, we will be able to obtain a cooperation from reinsurance so that we can capture appropriate reinsurance coverage, which can contribute to the profit generation of our company in the next fiscal year. The second question will be responded to by Higuchi-san.

In terms of the -- your question for the environment surrounding business investment, that's how I understood your question to be. In North America, we don't have any major entity in North America in operation. And while we are taking some natural catastrophe risks there. So in North America, in the manner the entities that do not take any natural catastrophe risks, we are focused on specialty companies or the MGA market as presented by Transverse. So those are the potential target for our investment. And in addition to that, in Asia, we would consider business investment, which could further strengthen our position in Asia. In the global perspective, stock market remains quite soft at this moment. But when it comes to insurance companies, the valuation has not come down at all whether the insurance company's valuation remains quite steady and solid given today, even in the soft stock market conditions. And therefore, with respect to individual names and companies, and we examine specifics of those individual names, the environment is not easy for us to make any substantial investment yet. So in that sense, the Board of either investment or the investment that will produce good strategic benefits or the company that could generate substantial synergy in the context of our business overall. So focusing on those, we would like to take risks in the investment area.

Does Mr. Kawate have anything to add to that?

Thank you very much. First of all, we are focusing on PMI of Transverse. That's what we are dedicating our efforts and also we are cultivating MGA market in North America. And through that, we intend to pursue further profit and also looking at the conditions of the stock market improvement. As we do that, we would like to consider the next investment for business. For the overall perspective, Mr. Higuchi already explained to you the good companies continue to have very high valuation and that has not changed. But the sort of M&A also depends a great deal on what the potential target considers and what are sort of ideas and approach we are going to take. So we will have to take the exquisite timing in making investment decisions, especially in the next fiscal year or around that period, partly due to the slowdown of economic activities, there may be various actions taken in the market. But as far as we're concerned, we will only give thoughts to the companies that matches our strategy as well as the opportunities that allows us to keep discipline in reinvestment as well. Does that answer your question?

Yes.

Niwa from Citigroup. Two questions. First about risk and also the shareholder return against that. But for risk looking at the [indiscernible] AUL, the return period of 10 years and there are 2 perspective that I'd like to ask about. For the 10 years, is that an industry average? Or did you set this 10-year period? And in terms of the issues, is 99.5 for the group as a whole. So the gap, why is there a difference? And also for the group as a whole, so 99.5, is there something different that you see compared to this 99.5? And second, I'm sorry to ask again, but looking at Page 96, when the margin [indiscernible] if my view is correct. And stability and flexibility and with regards to stability, what is it that we should be looking at? That will be my direct question. So to which extent you can comment, I'd like to hear that. And with regards to the flexibility, you talked about your owned shares and some of the conditions. But I mean the second part, is there some uncertainties? In other words, whether it be second quarter or third quarter, you're not going to make the decision. So why the final quarter? And so with regards to flexibility, can you elaborate?

Thank you for those 2 questions. First question is the return period of 10 years that is new, is it general in the industry? Or is it unique to our group. So Mr. Kawate will answer that and with regards to shareholder returns, Higuchi-san please. The first, Mr. Kawate.

Thank you very much for the question. So as we have indicated, well, yes, the return period of 10 years, 98% value at risk giving you 99.5 as a value of risk. We use that together, 99.5 is for fiscal [indiscernible] used as the benchmark. And then this return period of 10 years, it's risk volume indicator and monitoring the stability of profit, the risk volume of 10 years is the natural catastrophe and non-Natcat. And from before internally, we have been using this indicator. And the other major tweaks in overseas, they have been [indiscernible] there earnings stability and one in 10 years, I think they probably use this [indiscernible].

And second question about shareholder returns.

Yes, shareholder returns and stability and flexibility was what you were asking about. As part to stability, when it comes to dividend, stable increase of dividends is the trend that we would like to -- the path that we would like to take. So that's one factor for stability. In terms of the flexibility, the share buyback will be conducted flexibly as we have said. And we talked about the end of the year earlier about this does not necessarily have to be end of the year, as you say. And there are various situations that will be taken into consideration. We might not wait until the end of the year. And so we don't negate the possibility of the things earlier. Now the uncertainty in the second half, the business will experience so many non-cats in the past. At the end of the year, there's lots of snow, snowstorms and many snowfall and that will have an impact on profit at the end of the year. Some years were like that, so in that sense, for Japan for Natcat, it's something that we cannot fully predict. And so we have certain fund for that because we don't know what will happen. So I believe that uncertainties are [indiscernible] . Did that answer your question?

There is [indiscernible] from Daiwa Securities, [ Watanabe ] is my name. I also have 2 questions. The first question related to the domestic non-life business. The net premium income growth rate for the first half and I'm looking at 3 lines with respect to fire insurance compared with the plan, it seems to be higher than the plan. Whereas the casualty, I think you're planning to increase revenue there. But the actual growth at the end of the first half was more or less flat. So I would like you to describe the premium income growth rate by line. In addition to that, the pricing for automobile insurance on the bottom left-hand side of Page 44, you refer to the frequency and also the unit payments, but the orange line shows a different movement. So you're not considering increasing in pricing for motor insurance. Is that the case? I would like you to comment on that. So that's the first question. The second question relates to Page 8. Revenue showed, excluding incidental factors, the groups -- adjusted group profit, there is no much adjustment. But of course, the acceleration of strategic equity sales and there are other factors contributing to the profit increase. So compared with those increasing factors, if there are any factors that depressed or decreased from the planned level. I would like to bundle that. And you also referred to JPY 20 billion in large claims.

Thank you for your question. The first question related to the growth rate of net premium income for different lines. Fire insurance showed growth, but the casualty remained flat. And in addition to that, you also asked about the pricing increase of motors. [ Ohkawabata ] will respond to that question.

Thank you for your question. As we pointed out, that is quite great, that is the sale of fire insurance in October 2022, we changed the products. But before the actual product revision is made, some people just try to capture the purchase insurance before the changes made. So that resulted in increase. But in terms of the basic trend, it is more or less in line with the plan. But the actual rush to the purchase of insurers exceeded that plan. Just last, with respect to casualty insurance, in terms of package for SMEs, the MS is showing good sales growth there. And the AD is also trying to do the same for retail, but it is very close to the negative range. This reflects the upward reinsurance and decreased retention and increased outward reinsurance that affected this improvement at the end of first half. With respect to the pricing for motor insurance, the advisory premium rate was lower than the most recent period. And in January 2023, the revision is expected, and that's what we are aiming at, the pricing revision in January '23. And for both MS&AD, we will either keep the premium flat or maybe reducing a little bit. And that's the current plan. Going beyond that period, one of the factors increasing loss ratio related to the return of COVID-19 and also the inflationary trend, which is -- has not had certain major impact in Japan yet. But what is going to happen with respect to the potential impact of inflation, that need to be examined very carefully in deciding on the future pricing because the inflation will affect the unit payment per claims.

With respect to the second question, that is other than major claims, what are the factors depressing profit for the current fiscal year, and Higuchi will respond to that question.

Thank you very much. Earlier we talked about these large claims in response to the previous question. And other than those major claims, in terms of different lines, there are different trends observed, but the marine insurance showed some increase in losses. And in addition to that, although it's not really a substantial large losses, it's not in the large loss category, but maybe medium loss. Some not large but medium-sized loss happened to a significant extent. And those total around JPY 10 billion, but those amounted to JPY 10 billion approximately in terms of the scale. That's all. Did that answer your question?

For instance, in the case of motor insurance, the frequency because of COVID-19, decreased up until last fiscal year, but it returned to the previous level. How should we interpret that?

We do expect that to peak, reach a peak at the end of the fiscal year and to go back to the level of fiscal '19. And also, the[ unit payment ] claim has increased, and those are included in the factors. So those are not large claims, but those factors not large enough, but differencing our profit is included here.

[indiscernible] can you hear me?

Yes, we can.

Just one question. And I'm sorry to persist on this, Page 96. And we also have a [indiscernible] around shareholder return and the total return -- stability of total returns. We did have that view among management. On Slide 96, Slide 97, [indiscernible] with the total shareholder return stability, I would think that from this figure, you are thinking about that. So can you talk about that? And if this time, the total shareholder return goes down, unfortunately, then may they include DOE. And again, the management, if you include things and incidental factors, the group profit will be around JPY 300 billion. So I understand that. But actually, you don't know [indiscernible] 15 was 50%, but it's JPY 170 million, a bit more than 50%. That will be the returnable. So as an outsider, what is the profit level that I should be looking at?

Thank you for that question. Total shareholder returns [indiscernible] being the quantitation view and Higuchi-san will give the explanation.

Okay. That means to the stability of total shareholder return. Yes, we are cautious of that. And when we talk about this total shareholder term, naturally, yes, that we are very cautious on [indiscernible] and Page 8 for this. If you look at this graph and we talked earlier about JPY 300 billion this year, but this is not clear yet. It's all about the future. So this year -- this fiscal year, at the close of this fiscal year, what will be the profit that will depend on the next half year or the next few months? So the result will be -- that was important standards. But excluding the incidental factors, you talked about this graph, that will naturally be taken into consideration. And also in actuality, one is being group adjusted profit. That will be at [indiscernible] 1.2. And basically, the group adjusted profit -- well, we are talking about 50% of group adjusted profit. And so the criteria would be -- what will be the result in terms of the end of the fiscal year. And there could be additional returns that could be studied. And what will happen if we exclude the incidental factors. That will be also part of the consideration. Does that answer your question?

May I ask additionally, Higuchi-san, you were talking about using Page 8, the Natcat during winter, that would be higher in Japan. And that would be considered an incidental factor from a [indiscernible] point of view, so that's the case. So that additional question around the snow disaster and what will be discussed in here?

Well, let's say we talk about snow damages and if it's snow damage -- then how should I put it. In terms of the Natcat factor, that will increase. So JPY 170 billion against that -- the snow damage will be acting as a temporary factor. So snow disaster. You have Natcat funds in various companies, and there are differences depending on the company. Natcat life in 2014. Yes, if that is that large, [indiscernible] the Natcat fund, but it is not as big as that. Maybe more traffic accidents or maybe something that comes in not just in one big sweep. Like after April, it comes out gradually as snow damages. And in our group, that is not included in this Natcat fund. And that will be in the IBNR on fire insurance to a certain extent. But there are differences between companies and therefore, it's not necessarily identical on all the companies.

Good day. In one of the materials, you talked about ESR and the sensitivity of ESR is described there. And the credit spread and the sensitivity to that seems to be much higher than the previous figure. Is this due to a change in the approach or thinking? I don't think it is due to substantial increase in credit risk in the company. So could you enlighten me on that. And also in response to earlier question with respect to the response to that, when you talked about the improvement in adjusted group profit on the pre-tax basis, you mentioned there will be improvement of JPY 50 billion. But in the inward reinsurance overseas according to this, that will be included in international business, I suppose. So for the international business, that total improvement may be included for international business as well. So that might make it easier to attain the tariff for international business. That's how I understood that, but am I right in having such an understanding?

The first question relates to ESR, and Tamura will respond to the question.

Thank you for the question. In terms of the sensitivity, and you said sensitivity has increased was your question. Because of the interest rate conditions and exchange rate conditions, the unrealized gains decreased because of those changes. And it tends to be vis-a-vis various metrics, the factors increased that's the reality. And this also reflects one of such. Could you repeat the second question once again, please?

It relates to international business and profitability of that. In terms of adjusted profit basis, you described domestic situation in details and that facilitated my understanding. You said there will be improvement of JPY 50 billion for Natcat -- but with respect to inward reinsurance of AD from overseas, since that is included in international business that must be counted as a part of the international business. I'm seeking confirmation on that.

You're quite right. It is included as a part of the international business. Thank you very much. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]