Sompo Holdings, Inc. (8630) Earnings Call Transcript & Summary

So thank you very much for this opportunity. I'd like to follow through the slides, but we have already provided the business performances earlier, so I'd like to skip those numbers presentation, and I'd like to keep my presentation as brief as possible. So turning to the first page of the slide. So in response to COVID-19, this is how I wanted to start off my presentation. As you can see on the slide, so the -- it shows the Sompo's response to COVID-19, the logo that we have designed. So as you can see the word, keep distance. It doesn't mean to say that Sompo is going to be separated, so please do not misunderstand. But I just -- we just wanted to express our effort to keep distance. So I'd like to provide further explanation. But as to this response to COVID-19, we had explained our details on the website, so please refer to it some other time. So please move on to Page 4. Now first, on the group strategy. This year, as you know, marks the final year of the 5-years long midterm management plan. So there were a number of things. And in the last year, we had experienced this COVID-19 outbreak. So over the past 5 years of the current midterm management plan, while we expanded overseas business and preceded transformations, including digital strategy in all our effort. On the other hand, in 2018, as well as in 2019, in 2 years in a row, we were greatly affected by major natural disasters here in Japan, and it goes without saying that the impact was pretty significant. So as a result, the size of profit as well as the targeted level of ROE in this fifth and final year of midterm management plan, we, in fact, have to conclude that it is behind by 2 years than initially expected. And for this fiscal year, we plan to counteract against the negative impact of reinsurance cost rise due to natural disaster by price adjustment and by cutting corporate expenses. All the efforts have been exerted, so that we'll be able to achieve JPY 205 billion of a minimum profit target. That was our plan. But unfortunately, we were affected by COVID-19 from the beginning of this fiscal period. So therefore, JPY 17 billion, in fact, has been incorporated or reflected as a negative impact. And as a result, for this year, the profit forecast is JPY 187 billion. Now as for the impact of COVID-19 to our business, please refer to the following slide, which was a part of the slide show we disclosed on the 20th at the time of our financial result announcement. And please turn to Page 6 for the changes we foresee taking place due to COVID-19 outbreak. At Sompo, we have been aiming to become a company that can employ a strategy to win through the time of VUCA, V-U-C-A, through promoting digitalization, entering nursing care business and through enhancement of synergy with dementia as the key focus and to become a theme park for the security health and wellbeing. We believe that COVID-19 outbreak will accentuate the characteristics of VUCA. We also believe that a mindset and behavior of a society and people with COVID-19 or post COVID-19 will change greatly, impacted not only by the megatrend that had been apparent. And I don't think there will be no returning to where we were. We may be able to describe this to be an accelerated front-loading of what we expected to happen in some years' time, such as remote business model, necessity, enhanced importance placed on data, work site transformation that we were expecting to happen in 5 to 10 years. So there was an acceleration of the front-loading, of what we had expected to happen. So we feel that the phenomenon also held us to prove that our vision to become a total service provider with strong resilience, a theme park for the security, health and wellbeing was not wrong as a direction. I think it was proven that our vision was correct. So in other words, the era, in fact, is supportive of the theme park for the security health and wellbeing. So please move on to Page 7. The major direction hasn't changed from what we have presented so far through scale and also diversification. We would like to enhance resilience of the existing insurance business. And also beyond the insurance business, we would like to expand our services using new businesses. That's our dual transformation. Also we can obtain a lot of real data for many different businesses, such as nursing care business, and we can provide new value to meet the customers' needs. And also we can provide total solutions, so that we can solve social issues in Japan. That is something we would like to challenge as well. These are based on the work-style reform to enhance productivity and transformation to focus on output. This fiscal year is very important preparatory year for the next midterm plan, and we would like to especially focus on these 4 points. The next page and onwards please. First, we would like to enhance resilience by scale and diversification. We have portfolio reformed and also appropriate preparedness for natural disasters. We qualitatively advanced our challenges and changes accordingly. Right now, we are evolving qualitatively to be stronger against the external environment changes. The bar chart that shows the starting point to the current situation, this is a performance progress. Even though we have downward pressure from the external environment, we have implemented a lot of initiatives in the midterm. For example, we reviewed the productivity enhancement and the reinsurance business strategy, and we conducted a large overseas M&A for geographical distribution and diversification. And also we entered nursing care business for diversifying the source of income to support digital strategy. And also we conducted corporate culture reform. And by doing so, we could push up the downward pressure by tens of billions of yen. And those initiatives in the short term became a driver to overcome the impact of COVID-19. And in midterm to long term, in the post COVID-19 world, we have the foundation for competitive advantage. Next page, please. And to enhance resilience, we have this largest business in the group, the domestic P&C. We have conducted such reforms here as the effect of optimization of premium rates since FY '19 gradually appears. We thoroughly make the utmost effort to improve loss ratio for corporate clients. And by taking this pandemic as a trigger, we further improve the productivity. And we would like to reduce the headcount as well through structural reform of sales network. And by doing so, we are estimating JPY 20 billion or so of the pushup effect of the profit, and key to that is utilization of digital strategy that we have been focusing on. Page 10, please. The second prioritized initiative is to expand business field for the 5th and the 6th pillars beyond insurance business. We have those 3 prioritize these areas, and we would like to expand our business areas, such as health care, with security, health and wellbeing. It's not only to enhance services as a group, but this could lead to promotion of real-data strategy. In an environment where value of data is reinforced under the influence of COVID-19, as you know, we aim to create a virtuous cycle of analyzing the increasing volume of data as we expand our businesses and use that result to add further value to our services within our group. As one of such example, if I may, we formed our partnership with Paramount Bed to make use of sleeping data acquired through our nursing care business by combining sleeping data with our nursing care service data. And by leveraging the analytical capabilities of Palantir Japan, we aim to improve efficiency of nursing care business and also to lead ourselves to developing new nursing care services. And in so doing, we aim to propose a new business model for nursing care business that will be sustainable as part of our social infrastructure and thereby offer solutions to social issues of Japan. So similar to this example, we plan to provide solutions for social issues in areas other than nursing care as well based on real data. So please turn to the next page. So this is to do with the transformation of the way we work. We have been upholding a model of mission drive result oriented from the past to improve productivity through promoting transformation of corporate culture and the way we work in order to enhance productivity, that is. Now on the other hand, by implementing remote work with majority of employees because of COVID-19 impact, we started to understand that people management or HR management, mission allocation could be the key to enhance productivity. By tackling with these issues from top to bottom, we intend to enhance the productivity in an overwhelming manner. So this remote work, or telework, I'm sure, is going to be an important tool going forward, and I'm sure this is going to be part of our way in which our works will be carried out in our day-to-day activities. And I'm sure this will be reflected to the evaluation of the individuals as well, their performance evaluation that is. And towards that end, we are carrying out transformation, and I have given out the instruction to all the group offices. So as a result, moreover, if we can -- we would be able to generate innovation by being made up of diverse talent who are exposed to performance-based culture. I believe that this will become the foundation to support the group-wide transformation. COVID-19 has also allowed us to reconfirm that there are real services that cannot be offered through remote work, only through real works. So we created future care lab in our nursing care business in order to enhance productivity by utilizing cutting-edge technology. We believe that by enhancing the productivity further, our business can become an indispensable part of our society by overcoming some of the challenges, such as shortage of labor. So the slide shows our capital policy and our idea to shareholder return on the following page. So the basis of the capital policy remains unchanged. That aims to strike a right balance between investment for growth, financial soundness and attractive shareholder returns. No changes are made to shareholder return policy. In line with the policy, we plan to increase dividend for FY 2020 that will mark the seventh year of increase. As for total payout ratio for FY 2020, that includes the year-end dividend. Investment for growth opportunities and natural disaster impacts will be taken into consideration, along with the impact of COVID-19, in arriving at a decision at the management level within the range of 50% to 100%. Now shareholder return track records are shown on the following slide, so please refer to it later. This concludes my presentation on our group strategy. I would now like to explain the progress made by each business domain. So please go all the way to Page 20. Now the first, the largest business that is domestic P&C insurance business, that takes into the account the JPY 20 billion worth of positive impact from structural reform to enhance profitability in FY 2020, the plan we shared last year. As a result of the initiative, we managed successfully in offsetting the increases of a reinsurance cost, natural disaster related cost as well as negative impact from consumption tax hike and revision of law of obligations by price optimization, profitability improvement of corporate business and by reduction of headcounts and corporate expenses. Now furthermore, as we have said, the negative impact is B2B offset. And furthermore, the number of cases reported through LINE platform, through collaboration with the company LINE, important contact point with our customer status has exceeded 300,000 cases. Just like the example of LINE usage, we would like to structuralize new technology as our largest group engine. And by successfully adapting to changing environment, we would like to ensure continued growth of our businesses. On the following page, we share our response to natural disaster risks, so please refer to the page data. We conservatively factored the impact of climate changes in our basic assumption, while reinsurance scheme is designed to stabilize profit generation as well as focusing on protection against multiple numbers of sizable natural disasters. In the last year, recoverable ratio exceeded 70% and proved that our reinsurance strategy is working effectively. So please turn to Page 24. This is about the overseas insurance business. The long times of market hit the bottom and the market is getting harder. In Sompo International, we have exceeded the pace of getting harder market. And safely, we were able to raise the rates. In 2020 -- fiscal year 2020, we -- I can assume the decline of demand. However, we estimate around 88% of the rate increase. And our strength of Sompo International is agricultural insurance. And to deploy AgriSompo, we have an alliance with ATLAS in Portugal, and the progress is stable. And the integration of the retail platform has been very stable, Sigorta in Turkey and Seguros in Brazil. Such retail companies came under the Sompo International umbrella, and we reorganized our business. And to share best practice, we transferred know-how of Sigorta in concrete. They have auto insurance know-how, which is high growth and high profit, and that is being transferred to Brazil and Indonesia to improve their profit. And in FY 2020, we are assuming the profit increase of about JPY 1.5 billion year-on-year. And our valuation is still getting higher. However, in the expectation of normalization, we would like to leverage our financial strength. And continuously, we would like to be selective to capture opportunities for M&As. Page 26 is the domestic life insurance business. There is an integration of the life insurance and health support function under the concept of Insurhealth in last fiscal year. For diabetic patients, we launched the medical insurance product with a service to prevent serious conditions, as was released yesterday. The next month, we are going to launch a new medical insurance product. Hypertension and hyperglycemia is the target. And as a medication as a trigger for claims to be paid. This is the very first one in this industry. And also prior to the launch, for every customer, we already started to receive applications online. In this pandemic, we can utilize the awareness of health and prevention of the public, so that we can disseminate this new value of Insurhealth. The next page is about nursing care business. We would like to utilize high-quality brand and technology, and we were increasing occupancy rate and productivity in this business, which has been very successful. As I mentioned before, we have an alliance with Paramount Bed. And we can utilize real data and also accumulate at high quality in the nursing business and technology. It can be provided to third-party nursing care providers as business process support service that started in April. That means we can provide our know-how of nursing care business to third-party nursing care providers. And by supporting nursing care businesses, we can contribute to solve social issues in Japan. At the same time, we will enhance our resilience against issues, such as shortage of labor in nursing care. At the same time, we would like to enhance our productivity. After this, this is for your reference, the information is about our share price, investments and ERM and so on. Please refer to this later. Thank you very much. This is it for my explanation.

Mr. Sakurada, thank you very much for the presentation. This concludes the presentation by Mr. Sakurada, so we would like to move on to Q&A section where we can entertain your questions.

So let us entertain the first question. SMBC Nikko Securities, Mr. Muraki, please.

So I'm Muraki from SMBC Nikko. I have 2 questions. On Page 18 -- on Page 15, I'm sorry, so towards the next midterm plan, what kind of image do you have in terms of the numbers, as shown on Page 15? So domestic P&C, it says JPY 96.5 billion, but without COVID-19, it was not for the COVID-19, it was up by JPY 100 billion. So overseas is JPY 51 billion. So if we were to put back, if it was not for COVID-19, by JPY 60 billion or so, I think it is still slightly behind even without COVID-19. So the 2 major businesses of domestic P&C as well as the overseas insurance business, what is your thought and your expectations in terms of numbers? And the second question is the usage of your capital. On Page 14, you had indicated your idea to do with the shareholders return. And you had given us the range of 50% to 100%, which is quite a broad range. Six months ago, the natural disaster, in fact, had affected you 2 years in a row. So therefore, M&A, in fact, was one of the aggressive strategy that you have employed in order to distribute or diversify the risk. But even if it was not for COVID-19 or even if -- with the COVID-19 impact, do you feel the necessity of carrying out M&A activities in a more increased manner or less? So if I could confirm with you as to the way of approach that you will be making towards M&A activities.

So this is Hamada, group CFO. Mr. Muraki, thank you very much for your question. First of all, as to the next years, so numeric target, with regard to domestic P&C as well as overseas insurance business, so P&C domestic has been explained in the presentation. So 6 months ago, I think during the same session, the resilience for -- the reinforcement of resilience, JPY 60 billion, in fact, was to be topped up over the course of multiple numbers of years recorded as structural transformation -- or structural reform. In actual fact, we have started back in 2019. And although it was the year that marks the spot, but the JPY 7 billion after tax, in fact, was the top-up amount as compared to the initial plan. And in 2020, of course, there will be some revision of the rates, underwriting as well as corporate expenses and the top line. So all those items taken into account on a year-on-year basis: JPY 22 billion, pretax; JPY 16 billion, post-tax -- after tax is our expectation. But other than the structural transformation, there are some other negative factors that we have to take into account on that basis as compared to the prior year. Another, as compared to the expectation a year ago, if we were to compare against the initial expectation that was announced a year ago, by -- as a result of the impact that comes from the natural disaster, the cost of insurance had risen and also the budget, in fact, had expanded for other reasons, JPY 16 billion. And by all the initiatives, we're trying to offset all those negative factors. And of course, assuming that the normalization of the natural disaster, these are the expectations of the numbers, as I have just shared with you. As for the overseas businesses, about a year ago, as compared to the numbers a year ago, especially in the emerging countries, the decline of the interest rate, the business profit, unfortunately, was to decline even before COVID-19 impact. So these are the reduction factors that has been taken into account. And of course, there is a decline of the -- of course, asset management, of course, as a result. So these are some of the factors that are being taken into account. So with the risk rising, so the underwriting hardening, which they are -- the proven expertise, so therefore, both the domestic P&C as well as overseas, I think we'll be able to achieve this target for 2020. And as to the second question, and that is the usage of our capital, and especially in light of M&A activities, so as of now, we are working on the midterm management plan that would start in 2021. So M&A activities, we will be engaging ourselves in vigorous discussion going forward that we incorporated in this midterm management plan. Of course, we will be seeking for organic growth, but also, at the same time, we remain to be unchanged in terms of having -- maintaining a strong appetite for M&A activities in achieving inorganic growth as well but, of course, in a disciplined manner. Now the overseas market, the market is pretty chaotic right now. But once the market starts to kind of settle down and with the yen remaining to be at a high level, there could be an opportunity for M&A that could be carried out, perhaps, and also the fifth and the sixth pillar to be established here in Japan as well. And for the sake of becoming a theme park for health, security and wellbeing, we do have a strong appetite, if there was to be an attractive deal. However, a year ago, we have determined the shareholders' return policy, which we remain to maintain. And they could perhaps be a larger payout ratio of more than 50%, as we have said, while there will be a strong appetite maintained in M&A activities. But also at the same time, we would maintain this payout ratio that we had set by to achieve of minimum of 50%.

After 2021, so the numbers that you have shown, so I think the starting point is pre -- going back to normal time -- ordinary times pre-COVID-19, do you think that the growth will be slightly more moderate than what you had expected initially? What is your expectation?

So the COVID-19 impact, of course, we are in no ways optimistic about the impact that will be -- that would come from COVID-19. But in 2020, what kind of impact? It is just like natural disaster. It is hard to kind of anticipate. And of course, we would have to think about it though. So if this COVID-19 is to persist for mid- to long term and -- which would eat into our profit generation, then after 2021 -- even after 2021, I think we would have to come up with tough decisions. So we have not taken into such risk factor into -- account as of now, so JPY 60 billion of profit generation. So we should be able to achieve maybe 50% by 2020. And I'm sure there are some more space for further improvement, and I'm sure we'll be able to continue to grow organically as well in the overseas locations. Thank you.

Muraki-san, this is Tsuji, the group COO. Thank you very much for your question. So Hamada, CFO, as he had explained, first of all, with regard to FY 2020, as you know, in every market, every industry, inclusive of our industry, different companies are reacting in different manner against what is happening right now in the market. So the COVID-19 risk, so far as we can foresee, what could happen to us or the impact that we will be receiving, we have reflected that to our numbers. So far as the midterm management plan is concerned, in fact, FY 2020, the certainty or the likelihood, in fact, in so far as this midterm management plan is concerned. So domestic P&C, the top line, so it is -- it has a high correlation with the GDP of the country, which of course is apart from the argument to do with the profit generation. So we have to continue to oversee the development. But I'm sure we'll be able to start generating a little more -- the profit that will be a high -- a little higher probability of achieving -- achievement.

This is Sakurada, Muraki-san. Thank you very much for your question. The 2 CXO had just responded to your question through the numbers. So with the joint Chairman, I had engaged myself in a teleconference just yesterday. And then -- and also with Misawa-san as well. And I would like to give you some idea from a qualitative perspective. So the domestic market, first of all, if COVID-19 is to persist for next -- the next 2 years or so, the impact that is given to the insurance market, inclusive of P&C, I don't think it would be very different from what we are currently foreseeing happening in terms of the implication that gives to our business performances. In the new product, how can we incorporate the risk of COVID-19? It is a strategic decision. I will not be able to give a straightforward answer to that, whether it is a yes or no. But in any case, if this is going to continue for the next 2 to 3 years, in other words, this is not what we anticipate. Although it is not just a one-off event, but based on the experiences this time, I think we will be able to leverage on this experience by becoming more resilient and becoming more profitable. So the market in the next 1 to 2 years, I think the hardening of the market is likely to continue. And the market, as compared to the upward trend of the market, relatively speaking, Sompo's trend, the upward trend, whether we'll be able to outperform the market or not, I'm sure, is going to be the focal point. And we have confidence in fact of outperforming. As compared to the peer company, we have a pretty sound P&C businesses, so event insurance as well as liability insurance as well. So COVID-19, whatever that may hit by COVID-19 directly, so we have -- either we have the protection for the underwriting on that. I think we are beginning to see the implications in a more detailed manner. So we don't foresee a downward trend hitting us in a great manner. So therefore, just as he mentioned by COO, so we will be affected very much by the GDP growth or the macroeconomic growth. And we cannot expect the V shaped, of course, recovery in terms of the top line growth. But so far as the bottom line is concerned, there could be an opportunity for us to grow our business.

Thank you very much, Mr. Muraki. The next person is Mitsubishi UFJ Morgan Stanley, Tsujino-san, please.

So first of all, about acquisitions, before you were talking about the concept for acquisitions. When you have room to acquire more, it really depends on the goodwill. So what's the assumed PV for your room to acquire more companies? Or maybe it hasn't changed so much, but could you please tell us about it? That's one. And the second one, Slide 5. You say you didn't include this at this time, but you might think some impact, and that is listed up here, about 6 of them. And of course, during the stay-home order, we have less traffic and the loss ratio can be lower, and that's a positive thing. And after that, it's not -- we are not really sure. So looking at this, I think most of them are negative factors. Overall, as a worst-case scenario after tax, only JPY 30 billion. Is that your message here? So there are 6 factors also here, which one is larger? And then which -- it's hard to ask. But what we hear from the industry is that for corporate customers, they have correlations with the sales. And of course, that's the impact. But how much impact do you have, actually, that should be included here and the others? So before tax, it should be more than JPY 30 billion. So what's the image here? Could you please explain?

This is Hamada, CFO. Thank you very much for the question, Mr. Tsujino. So the first one about our room to acquire more companies, in terms of the relationship between the risk and also our capital, about PBR, twice as much, supposed this is acquisition project. And so far, about JPY 400 billion is our room. But still, having said that, we have some room to procure capital as well. That means the maximum would be a little bit less than JPY 600 billion. That should be our maximum budget right now. And out of the other COVID-19 factors, well, on certain factors, you are talking worst-case scenario, JPY 30 billion, if that's your question. According to the estimates, we have a range of estimates, and the JPY 30 billion could be the worst. That is correct. But each one of them is very uncertain, so that is why we haven't included them in the plan. So we do not commit to this JPY 30 billion. This is not a definitive number. Please understand this. And as for the factors, for example, right now, you are talking about the top line. And for corporate, the corporate performance should have an impact on the premiums. Probably in FY 2020, there is a deterioration of the company performance, so the impact on the insurance business should be a little bit later, especially outside of Japan because of the hardening market. As for the top line, we might have some opportunities, rather. And in terms of the top line, what we are focusing on right now is the auto manufacturers in Japan have closed some of the factories, so the sales of new cars, that would have a great impact on our business. But all in all, still, each factor is very uncertain. As for premiums, just roughly speaking, the premiums -- the impact on the premiums that have an impact on the bottom line, maybe JPY 10 billion and over is our estimate. And also we have the impact from the benefit claims and also cost expenditures and also investment. And all in all, up to JPY 30 billion -- from 0 to JPY 30 billion. Is this answering your question?

So corporate performance, if it's deteriorating, at the closure of the fiscal year, you might see the situation. And usually, outside of Japan, they adjust premiums at the time. So what about Japan? When you have such assessment, for example, is that going to be included in FY '20 estimate and the policies for the next year, if the economy is recovering for the next fiscal year? So first, you estimate the premiums according to their worse year. And are you going to adjust the premiums later?

Well, they have -- we have a lot of different methods. At the time of the maturity, based on the year's performance, we estimate sometimes. Or in many different methods, we estimate every year. So of course, some impact would come on the FY '20 or FY '21, depending on how we estimate and calculate.

So the next person is from Daiwa Securities, Mr. Watanabe, please.

So I'm Watanabe from Daiwa Securities. I have 2 questions. First of all, so what -- your vision for the future, what you would like to be? So in the early stage of 2020, JPY 300 billion of adjusted profit was to be generated. I think there was a slide that we used to see in the past, but you had taken away that slide. So as a result of COVID-19, the -- so I think there will be some delay in terms of the time line of the achievement. But data usage, nursing care, the business portfolio breakdown, I kind of feel that there could be some changes made to your direction. So in light of the mid-term management plan, what would be the changes that will be given especially to your strategy and the management plan? And on Page 9, with regard to the resiliency reinforcement of P&C domestically that is, and the changes that is to be brought about in terms of the structural changes to the profit generation. So JPY 20 billion, in fact, was the indication. After 2021, so JPY 30 billion pretax profit improvement. So how long would it take for you to realize this? This JPY 30 billion of a top-up of the profit, how long will it take?

Thank you for the question. Sakurada, CEO, here. And this is my personal opinion, but let me answer to the first question and allow Mr. Hamada to answer to your second part of your question. Now the reason why I have said it is personal opinion is because we have not concluded, and at Global Executive Committee, we have just started to engage ourselves in discussion. So therefore, it has not been escalated to the Board. So this is why I have -- I want you to assume that this is going to be my personal opinion. So I think your question, having is -- that having experienced COVID-19 and in -- of course, imagining what kind of impact be given to us as a result of COVID-19, so what kind of implication would it lead to the midterm management plan? Would there be any changes made to the strategy? Or in terms of the numbers, any changes by breakdown of different businesses, I think was your question. With regard to COVID-19 impact, in the presentation, I think I have made a mention, to begin with, the things that we wanted to kind of execute much earlier, I think, had come to -- become aware in a front-loaded manner. There was a global financial crisis. And of course, there was this great earthquake taking part in the Eastern part of Japan. And the supply chain fragility, in fact, was displayed as well. So therefore, we were not able to leverage on the experience that we have had back on March 11. So society-wide, of course, unfortunately, we -- my number card, in fact, after all this time, people are saying how important the introduction of my number card was. So on a decade basis, I think we may be behind from those that are most advanced in the world. So -- but on the other hand, there are some strength that we were able to display as a country. So Sompo Group, in light of all this -- I don't know how to express this, but we -- of course, we will not be -- of course, we cannot go unaffected by this because we have businesses here in Japan and outside of Japan as well, which means that we would, for sure, be impacted by COVID-19 in all regards. So one of the things that was, I think, become apparent as a result of COVID-19 is the review or revisitation of this business model. Digital may be the keyword, or telework, making use of digitization or telework. How can we review our business model? It is not just a face-to-face contact, but not -- or contactless engagement. How can we enhance this CX, not just admitted to insurance, but also nursing care and also the digital businesses as well? And one other thing, that is very much the way with productivity or efficiency. So my view may not be correct. But so far as the domestic P&C and the life insurance business is concerned, of course, we cannot expect an expansion of the market in a dramatic manner, for sure. But because -- but we are behind in terms of productivity as compared to our peer countries of the world. So this is why, as a result of COVID-19, we really want to focus on the productivity side, so that we'll be able to, at least, come close to a lot of our peer in the world in terms of the level of productivity. So from that perspective, I think there are some further space for us to occupy in terms of the improvement that could be made. And also, corporate expenses, one of which, of course, is the HR cost, it doesn't mean to say laying off people. But P&C, as well as life insurance, whereas it was only done by people, there are some that could be replaced by machines with -- so therefore, the manpower will not be laid off. But rather, it will be reallocated. The headcount will be reallocated to other services that we could with -- other than the ones that will be replaced by the machines. So the productivity as well as added value, and so -- and of course, we will be compensating our people in accordance with the performances that they'll be able to achieve. So in any case, we would like to push up our productivity thereby. So in terms of the overseas, I think same thing can be said true to a lot of extent. As I have been saying, more than before, the underwriting, especially the insurance overseas, that is, more than before, the underwriting characteristics, I'm sure would be displayed. So the strength will be displayed more. So as compared to the peer company, are we beaten, are we performing or are we underperforming? We -- and I'm sure the midterm business plan would allow us -- management plan will allow us to display our strength. Especially in the United States, we are at the top of the rank. And as a result of COVID-19, this time around, underwriting, we have -- there are some who are remaining to be pretty conservative. So I think we'll be able to prove our advantage. So therefore, revision of the business model, and also at the same time, we will be more focused on the bottom line. And as to the domestic P&C, the key would be the improvement of the productivities as a result of COVID-19. The transformation of the way we work, will be -- would certainly become the focus. And for sure, we do have some more space in terms of improvement of the productivity. Maybe 1/3 can be working remotely, staying at home and by making use of telework perhaps from here down the road as well. So as to nursing care as well as digital, so as a result of COVID-19 outbreak, I'm sure there will be a lot of impact that is given to various different types of industry. And of course, in return, it would affect this. So I think the highest likelihood exists in which we have engaged in the discussion with external directors is the nursing care as well as digital. As for nursing care, the market is already sized at JPY 10 trillion. And very soon, it will reach to JPY 20 trillion. So we foresee the biggest growing market to exist in nursing care. But the problem is profitability. To be enjoying a profit from premium income, in fact, this is something like -- that is similar to that of enjoying profit generation from CALI. So what we intend to do, of course, to enjoy profit generation such as dispensing pharma, for example, or like mixed nursing care, making use of other affiliated businesses around nursing care would be possible. So I think brand, as well as trust, is something that we should, of course, leverage on. And that would allow us to enjoy the business expansion as the market expand from JPY 10 trillion to JPY 20 trillion. And one other thing, and people would, of course, look up to the brand of Sompo. It is, I think, estimated that there are about 60,000, 70,000 vendors of nursing care businesses. So the know-hows, the knowledge is to be provided from Sompo to -- whether it is regarded to be a peer company. But in any case, if we can contribute to the enhancement of the productivity of the nursing care businesses through the means of consulting services. So therefore, it is not free of charge, quite naturally. So these will be an opportunity that we will be able to enjoy. So nursing care and telework, or remote work, so I think what is common as an ammunition, of course, will be digital. So to begin with, the Sompo laboratory that we have -- we have been owning from long time back, so Palantir, world #1, data analytical capability that is equipped by the company, in fact, is to be leveraged. So Sompo Care, the real data is to be referred. So with network, we will be able to identify any problems that may occur in a network in a matter of, at a glance, was put together in a matter of 3 days, so -- which was outstanding and phenomenal. I would not be able to share with you how they did that. But in any case, it goes beyond one's imagination. So they are that capable, the company. And it is not just limited to nursing care business, but we'll be able to apply it to other areas, inclusive of insurance businesses. So the nursing house could be deployed. And so the next round of midterm plan, the dual transformation for the existing line of major businesses, bottom line would be the focus for us. And we'll be very committed in terms of the improvement of the bottom line and as for the dual transformation, the other side. As to the future businesses, nursing care, health care and digital will be the focal point area for us. That is our direction. In terms of the numbers, we need to scrutinize it from here down the road. And it's not the case whereby we'll be able to generate much of the profit from the new businesses. But in any case, the direction, I think, is correct. As for the second question, Hamada, would like to answer to the second part of your question.

So Sompo Japan, in terms of structural changes to our profit generation capabilities, by when are we to achieve this, I think was your question. How long would it take? So we have an internal target, but we would like to limit ourselves in sharing with you that it will be achieved in several years' time. But it is not as long as one may perhaps imagine. As to the content, maybe 45% of which is attributable to the changes of the premium rates, or the adjustment as of last year. Although we are starting from what was not determined as of last year, such as fire insurance back in October, which was excluded. So all others after that have been reflected. As to the changes of the premier rate, of course, it is a matter of making decision and the press the button, and that would bring about some positive impact, that is. And the rest of more than 50%. As we have said a little earlier, the underwriting reinforcement and also the curtailing of the corporate expenses and the expansion of top line. So all those are quite diligent and building up the bits and pieces of the building blocks and the telework promotion and we may be able to reduce down the physical outlets, the sales offices, for example. So in other words, it is all building little pieces of building blocks, as we have said. So it is not something that just by pressing a button, we'll be able to enjoy a large amount of benefit, but it will be built over time bit by bit. But the final goal, in fact, has been set. But we haven't come out with any broke -- breakdown by year-by-year.

Thank you very much, Mr. Watanabe. The next person is Mizuho Securities, Sato-san please.

This is Sato from Mizuho Securities. I have 2 questions too. The first one, it's about reinsurance, domestic reinsurance coverage. This time, 2 years in a row, there were natural disasters, major disasters. And they really show good effect of your preparation. Meanwhile, in other countries, the market is hardening. So that means, well, this trend is negative for your company. Based on that, going forward, what is your stance for the production? How much was catch and the balance with cost? When you look at that, what kind of thoughts do you have? That's my first question. And my second question, I think it was included in your explanations. M&A, it's one of the means that to buy time, when you consider that and compare it to the situation before COVID-19 in terms of stance and speed, do you have any business areas where you would like to be in a hurry to go into? In terms of valuation, sometime in the future, I can imagine that it's going to come down to normal. But this time, we are in pandemic unprecedented situation, no one imagined this could happen. And now we can recognize that there is this impact of how much with this kind of unprecedented situation. With this, we have changed people's attitude and maybe some new risk is going to arise. And to buy time, you could think about M&A. If you are thinking about it, could you please tell us about this?

Thank you very much. The first one, Hamada is going to explain.

Especially about reinsurance strategy, we do not have any specific formula. However, of course, we have to reduce cost and also within the balance of that with stable profit, 2018 and 2019. As we have mentioned before, we had 2 natural disasters domestically for each year. And because of that, for example, we need to reduce cost as much as possible, and we have to hedge risks. And we have to create scenarios and we have to go into details about which scenario to be focused first and which is second. And we have to look at details for negotiations. And also, we need to look at the balance between reinsurance and also catastrophic loss reserve. And our share price, it's not really at the level of satisfactory for us compared to peer companies, volatility data is still high. So the volatility of profit is still high. That is indication. So basically, we have to contain that kind of situation. And about M&A. First, overseas M&As, as we have mentioned before, bolt-on type M&A opportunities are ongoing. We are exploring opportunities. And other than that, for major M&As in terms of targeting, as I mentioned before, probably because of COVID-19 globally insurance companies' operation environment is deteriorating. And those economic slowdown would contribute to the decline of the valuation even after the recovery. So opportunities will arise for us going forward in Japan. Last fiscal year, we had a discussion about company management, in which we talked about we should be selective for M&A., and also we have to contribute to people's health and well-being and health care and wealth. And also MARs and smartphone, they are very close to our P&C business. And also digital business, for example, cyber, those are our focus for M&A opportunities. Thank you.

So as for the second half, that means, in a sense, your target, so far, already matched the opportunities. And in post COVID-19 situation, you're not going to really change your target in that regard. Is that correct?

Right now, that's true. Right now, we are working on the next midterm plan. And we might have new plans during the process. But right now, we haven't changed so much.

And the next person is from Merrill Lynch Securities, Sasaki-san, please.

I'm Sasaki from Merrill Lynch. I have 2 questions. First of all, mid to long term, digital was one of the key words that you have mentioned. So system investment, what is your idea to system investment as of now? So focus on mainframe system, so you're going to be discarding that and migrating to cloud. So by discarding mainframe and migrating to cloud, is this your idea? I'd like to ask the management the question. That's the first question. So the second question that I'd like to ask, I know that this time, you are focusing very much on prevention or preventive medicine that you would like to reflect that to insurance product. So quite recently, making use of C. elegans or nematode, I know that you have engaged in relations with Hirotsu Bio Science. So making use of technology in your insurance businesses, how are you going to leverage on such technology? And especially this cancer diagnosis, how are you going to reflect this technology of making user C. elegans of this company?

So Mr. Sasaki. The second part of your question, making use of nematodes or C. elegans, the cancer diagnosis, I think was the question?

I know that you had entered into a relations with Hirotsu Bio Science. How are you going to be making use of the technology of Hirotsu Bio Science? What is your strategy for this?

So let me answer to your question. This is Hamada. So mainframe-related IT investment, are we going to discuss that? So as to the mainframe, so we are proceeding with a project to an open system. And in that effort, as you have mentioned, cloud, in fact, has been developing further. So as much as possible, on the application side, we would like to make use of cloud so that we would become more flexible, and we will become more agile as a result. So the financial institution, including a total migration to cloud, seems to be still risky. But I think from an application perspective, I think we would be migrating more towards usage of cloud. As to the second question, I don't have enough knowledge about -- with regard to the question that you have asked in the second part. So Nose will answer to your question.

So Sasaki-san, this is Nose from IR department. So the second part of your question, making use of nematodes or C. elegans, the product of ours. So at our company, at our Life Insurance businesses, in offering the cancer insurance, making use of nematode C. elegans, the cancer diagnosis, in fact, is to be provided as insure health as a service that comes along with the policy.

So I think it was a little too early for me to be asking this question, but if you could be so kind enough to share with me your idea as of now. So to align to insurance policy bias, so in proceeding with such a service provision, so if you were to identify many, those who are -- who have cancer cells, perhaps, by making use of medical insurance, by carrying out the treatment by making use of the claim, there could be a case whereby there will be a lot of claims that will be forwarded to you. So in relations with underwriting risk, so is there any kind of idea as to how you can neutralize it by providing the new services, whereas the cost implications, that may increase?

So this is a very difficult question to answer. So based on the strategy, of course, we'll be designing our product or we'll be revising the product or providing new services, for sure. So it doesn't mean to say that the order design or idea of the products we derived from enhancement of the profitability, of course, be it cancer or whatever, we need to identify for the sake of furthering the health conditions of individuals. And as a result, we may be able to save their lives and contribute to the recuperation. And that is, in fact, central to our idea of becoming a theme park for health, security and well-being. So therefore, we may be considering those services from that such perspective. With regard to the premium rate, the rates and also at the same time, all other terms and conditions, we haven't gone as far as scrutinizing all the T&C. But because I think it goes along with ensuring health and contributing to one's well-being and how to make use of technology, so you see connecting technology to insurance product directly will not allow us to differentiate ourselves against the competition. Because I'm sure, it will be caught up by other -- the competition, and it will become just like a car race. So this is why I'm sure there are numerous numbers of competition out there, making use of different types of technology. So insurtech, in fact, is a word, which I'm -- I do not concur very much because that does not allow us to differentiate our self in the competition. So this is not something essential to our strategy because, by ways of, of course, making use of the technology, we'll be able to provide new services, and it will not be a direct. Of course, I think this is secondary, making use of technology is our idea. But not directly connecting the technology to insurance product is not the idea that we want to pursue. So we are working on establishing a new pillar of our businesses. So that, in fact, is going to remain to be our -- the main focus, of exerting our efforts going forward.

Tokai Tokyo Investigation Center, Majima-san please.

This is Majima. I have 2 questions under COVID-19 situation. New normal, how are you going to address this, and also the new amended ForEx-related law? So new normal in this situation. And right now, there is a TV commercial by a cell phone company. So we are reducing working hours. So people come to our store and they are closed. And when you call the call center, and they are very busy, you can't really be put through. So you have to look for information on the Internet. And from April, a chat pod is used by some other insurance company. So for benefit payment, we have a lot of inquiries. And well, very small questions, petite questions. And if we can reduce that we could reduce cost so much. But even though customers call the call centers, they are directed to the Internet. And so the impression of the customers wouldn't be very good. So this kind of initiative, to lead the customers to the Internet in the end and about customer satisfaction, what do you think about this? And the second question is the amended ForEx-related law. So when international investor acquires more than 1% of the stock of a company, out of 518 companies, you have to notify that. And your company is included and the other companies are not. So cyber -- the cybersecurity-related software development is the criteria, I believe. So you are selected as 1 of the 100 -- 513 companies. So when a foreign investor wants 1% of your share, he or she needs to notify beforehand. And because you have an alliance, well, this 1% of the share is held by someone else, and you have to notify that. And do you have any benefit from that? I think there is a negative aspect in this rather.

Thank you very much for the question. This is Hamada, CFO. The first question. So in post COVID-19, how we have new risk, new business, a new way of working. Well, everyone can't think of, well, in the life insurance business right now, well, we have solicitation without face-to-face discussions. There is a requirement, too. So is everything going through the Internet? Or do we use distributors or agencies? Or at least -- and contactless policy contract is something we have to consider first, and we have to establish solid business processes for that. And for convenience of our customers and the quality of services, well, we can't get to only one answer, because the Internet automotive insurance was liberated, it's been 10 to 20 years or so more. But because of the complexity and the ease of use, it's not really growing. That's the key word. Well, I'm not really saying that the Internet is not kind to customers, and I'm not saying that face-to-face is only the ideal situation. We have to adjust every situation accordingly. And the second point about the ForEx-related law, the amendment, we have been given the information before, and we had discussions as well. And in conclusion, because we have cybersecurity-related business, so we are the only company among the peer P&C companies. But I don't know if this is an honor for us or not, but we were selected. But before this, we were confirmed, because related to this law, there were many discussions and negotiations between foreign investors and the government. So if investors -- well, unless investors want to acquire our company, as investors, for our company just to hold shares, it's not a problem. So even though we are selected as one of them, we don't incur any such impact from this. Thank you very much.

So next, Mr. Niwa from Citigroup Securities.

I am Niwa from Citigroup Securities. I'd like to ask questions with regard to midterm and long term and also with regard to shares repurchase. So with regard to midterm to long term, so I know there will be some redundancy, perhaps. But other than insurance business, the fourth pillar, such as nursing care, as well as digital data, the fifth pillar, so the profit contribution, so do you think that you can foresee some contribution made to profit generation from those 2 pillars? So as compared to competition, do you think that you're going to be pursuing the path of becoming a noninsurance type of business expansions? I don't think it may have progress as much as one may have expected. So is this -- so this is going to be #1 within the parenthesis. And the second, in relations with COVID-19, the overseas insurers may be quite attractive because the valuation may be declining. But there could also be an attractive -- attraction in noninsurance businesses. So first question is the contribution that comes from non-insurance businesses, so what do you foresee happening? And the second, so the shares repurchase program, what kind of processes that you would be following this time, because things remain to be uncertain in the western countries? So the shares repurchase announcement was not to become too, I think, exposed in light of uncertainty in the political arena as well. So this 3 -- JPY 30 billion of announcement, how was it made, the process that you have followed and your idea behind it as well? And so that would be a help in thinking about your idea going forward.

Thank you very much, Mr. Niwa. In [ one word ], the transformation, in fact, may not have progressed as much as one -- we may have expected, I think is the question. And how do we define the progress of the transformation? First, the top line, the share and also, at the same time, the adjusted profit generation. Yes, we are behind our schedule for sure, but then if we do not offer such an option, so P&C as well as life insurance business, do we need to just concentrate on those 2 major businesses? That is another option, of course, for sure. Well, for what purpose does the group exists, Sompo Group exists? I think it's one of the most important thematic that we need to consider. And also stakeholder capitalism, the new capitalism, I think, is perhaps, to a lot of extent, demanded. So are we just a profit generator as a company? Is it the mission of the company? I don't think that is the only mission. And also at the same time, we would have to think about profit generation and revenue generation by the insurance business. But also at the same time, by carrying out new businesses, we may perhaps transform into a company that could not just be described as an insurance company. And this is why we have described ourselves to become a theme park. You see that's what it is in terms of the explanation of our standing. And with regard to the growth of the market, so the mother market of Japan, because of -- because it is -- and of course related very much to do with the population of Japan, so therefore, we cannot expect a dramatic growth taking place. And as for M&A, up until now, the multiple was too high. And if we were to carry out the acquisition, the share -- it would affect our share price in a negative way. So for what purpose are we to carry out an M&A? We have to ensure growth that will be enjoyed in the future. And so that kind of opportunity was something that we were trying to identify. But we have not been able to do so, so far, but we look forward to future opportunities. Now as to -- so as we have been saying about the dual approach. So the insurance business, of course, we would just continue to do whatever we obligated to carry through. And on the other hand, as to the M&A and thinking about the corporate value going forward, what kind of value can we provide or contribute to the society as a whole, employees, the stakeholders, the distributors? I think we need to answer to what mission is held by Sompo Group companies. And that's what I have been explaining to the Board members. So this is why nursing care and also digital, for sure, especially in the post COVID-19 time, so it has suddenly appeared in front of our very eyes. And this, I think I would like to capture it as a great opportunity. As for the numbers, nursing care, over the past several years, it has been outperforming our initial expectation as to the market share. From the top line perspective and also at the same time, the occupancy, we are ranked to be #1 or #2 in the Japanese market. So in the Japanese market, I think we have already established an overwhelming position in the nursing care space. So the profit may be in single-digit billions as of now. Whether we'll be able to perhaps expand it to double digit, not under the current regulations and laws. So -- but you see we have told you that the market is likely to expand from JPY 10 trillion to JPY 20 trillion. And the nursing care business, I'm sure there will be a lot of opportunity for us to enjoy the growth of the market, and this is what we are targeting to achieve. Whether we'll be able to expand the business to tens of billions of yen, I will not be able to give you a straightforward answer, but I'm sure there are a lot of other potential. And of course, insurance connected to nursing care, of course, is only natural. But in terms of the digital, such as cybersecurity business, Palantir, and also our own proprietary businesses, how can we connect that, not just limited to Japan, that is, the solution that is needed globally? I think there are a lot that we can contribute at Sompo. So we have become 1 of the 500 or so company, whether it is an honor or we are troubled by this, that was the comment that was made by CFO. But because of the digital, because we are so serious in our commitment, and this is why we were chosen out of the 513 or-so companies. So I think personally, I take it as an honor. So I'm sorry to go kind of back and forth and all over the place, but that's what I think.

So as to the second question. So allow me to answer to the question with regard to the shares repurchase from CFO, Hamada, myself. And we have been hearing what is going on in Europe as well as North America. I have been hearing all the news and here in Japan as well, in light of the business performance expectation as well as shareholders' return. There are quite a number of companies that are trying to delay or postpone their plan. And basic, of course, stance is the one that is cautious. And also, we, of course, intend to hold on to as rich capital as possible. And as to the return at the global Executive Committee, which in fact, is the top management committee and also the BoD that followed, there were a number of objections, as a matter of fact, in the decision that we have made. But why did we finally decided on this JPY 35.3 billion worth of repurchase program? That reason is quite simple. This JPY 35.3 billion is, of course, based on our business performance of 2019. And as for FY 2019, at the time of interim, at the time of revision that was conducted, so unfortunately, we had to downward revise our forecast. And instead, we have committed that we're going to be maintaining the shareholders' return policy, with investment community that is. And as a result, as compared to this revision, we had warm winter. And as a result, 2019 had turned out to be better than our expectation at the time of the interim. So of course, it was only natural for us to keep to our commitment, inclusive of this upside that we were able to enjoy in terms of the profit generation. But in terms of natural, of course, the COVID-19 impact, if there was to be any kind of negative implication that we are beginning to see such as cash management, crunches, of course, we would have to reflect that. But at the moment, everything remains to be uncertain. So this is why it is only natural for us to keep our commitment. On the other hand, in fiscal year 2020, the dividend as well as the shares repurchase at the moment, everything remains to be uncertain. So the policy of shareholders return that we have, of course, announced, we have not reached the extent of making any changes to the shareholders' return as of now. And this is why it would remain to be intact, the policy. And the same thing can be said, too, with the shares repurchase. Of course, we are going to continue to engage ourselves in vigorous discussion over the topic. But just because we were affected in a negative manner in a single year because of COVID-19. But if it was be just an impact for a single year, how does it differ from natural disaster that we have experienced in the past? So of course, it is dependent on the magnitude. But this is going to be what we are going to be taking into consideration. But on the midterm, if the insurance industry is going to be receiving a major negative impact. Then, of course, we may have to, of course, change our shareholders' return policy. But of course, it is very much dependent on the discussion going forward.

So Mr. Niwa, this is Tsuji, COO of the group. With regard to shares repurchase program, the decision for the size of the program, just as has been explained by Mr. Hamada, the CFO, there was an internal processes that we have gone through. But at the end, CFO come up with a motion. And at the BoD, we had arrived at the conclusion, which was chaired by Mr. Sakurada. But at the time of MAC, what I have said, the risk of pandemic has started to come to surface. And I think we have entered into a situation where it could be described as a crisis. And just as been said by Sakurada-san, so the stakeholder capitalism, in fact, was mentioned at the time of roundtable. But I think we may have to set a certain priority to the stakeholders, the shareholders, investors and the customers that we want to prioritize. So the investors, the shareholders group and also the customers, so these group of individuals as well as organization, the interest parties, are the group of people that we want to be prioritizing. And this is what I have mentioned, and it was agreed by the members. And from the customers, if we are not supported by the customers or the investors, our business would not be viable. But if we are supported by them, we can remain to be viable. So this is why we felt the need to place a lot of importance on the shareholders, investors and the customers. That's what I have, in fact, mentioned at the time of this discussion.

Next is Jefferies Securities, Mr. Ban.

Just one question. In today's presentation, you were talking about in normal time, you would like to have 1/3 of people working from home. So including your company, I suppose, less than 30% of expense ratio, you are doing it. And by increasing stay home and work from home, you can reduce the cost for real estate. And also work from home should be important to reduce the expense ratio. I think it's -- and also, you are talking about digital today. And when you look at peer companies, you are ahead of them, and digital is part of your business. My question is, well, those should be the KPIs for the future so that you can commit as to management, and how serious you are in the direction? Well, if you have any comments right now, could you please add some comments?

Thank you very much for the question. Well, 1/3 of the employees, well, maybe I was too early to say that, well, that's my -- just my impression, maybe 1/3 is not enough. But what we are having as a situation right now is this time because of the stay-at-home order and during the declaration of state of emergency, 80% of reduction of contacts with people was the initiative by the government, and we were striving for that. And in the headquarters, we were able to achieve 80%. And in some of the offices and also in the field, we're above 50% because they needed contracts and also sometimes 60% depending on the offices. But what happened was before, we needed paper. We were paper-based company. Without paper, we were not able to do some of the work. But by introducing this new system, we solved this. All of a sudden, and in the headquarters, 80% of people work from home. And still, there are some challenges, and some people who are not feeling comfortable. But right now, we have positive reaction. And COO, Mr. Tsuji, is the chair of an organization called MAC. This is an executive committee called MAC. And actually, after we did remote work, and we talked about what kind of challenges we had and also kind of good things we experienced, and now we are compiling those opinions. And from CHRO and CSO, they are saying that productivity out of these efforts, so in that regard, how effective it was labor costs and also property cost, nonlabor and also, we are analyzing the factors. And going forward, we have to prioritize this. But at least, it's possible that we can use those as KPIs. So to some extent, we can restrict the contacts so that we can go forward. Thank you very much. Now maybe 1/3 was maybe too early for me to say.

So we were not able to identify the person who asked the question, the telephone number ends with 2046. So if you be so kind enough to tell us who you are from where?

So from JPMorgan, I'm Otsuka.

Yes, we can hear you.

I only have 1 question. So just 1 more question, if you could entertain. So Sakurada, CEO, had explained the JPY 300 billion portion in a qualitative manner. If you could answer to my question, I know that you have been mentioning this number over and over again. So the -- I'm not asking the size of achievement or the timing, but in this COVID-19 pandemic, the breakdown of JPY 300 billion may have changed. Or in order to achieve JPY 300 billion, I kind of feel that the approach may be different than before. So am I correct in thinking so? Nursing care as well as digital, you will be perhaps expediting the process, accelerating? And I think you have been using the word COVID-19 as an opportunity -- or for trigger -- as a trigger. And I'm sure you have been using this expression. So if you could be so kind enough to tell me your intent.

Otsuka-san, I think I have to say what you have described is true. Overall, so we want to create a theme park, as we have said, so I think we were able to confirm that our direction was correct. So I think it was proven by making use of the expression by our external director, one of our external director. So this breakdown of JPY 300 billion, may have slightly, perhaps, or have shifted towards new businesses, more so. So external director had given us some direction. So the time allocation by the CEO, based on such priority, would have to be allocated. The time has to be allocated accordingly. In other words, the talents, so not to be shifted from the traditional side of the business, I think we need to enrich the lineup of that talent in the areas of like nursing care as well as digital businesses. So in other words, that was an external director's direction that was given to me, not an instruction as such. But the direction that was indicated, that I should be spending more time on this new business side of the businesses, such as digital as well as nursing care.

When would we be able to achieve this JPY 300 billion?

So I think we have said 100, 100 and 50, 50, I think that was the split that we have said. But we would -- so CFO, CSO, is working. The same person, the CSO, the CFO, but he is in discussion with various different departments. But in terms of the direction, what has been described by Mr. Otsuka is correct.

Now we're past the time to close. But with this, we would like to close this session. If you have any additional questions, please contact our IR team. Thank you very much for your participation. [Statements in English on this transcript were spoken by an interpreter present on the live call.]