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

Good morning, everyone. Thank you very much for joining us today at IR meeting of Sompo Holdings. I am Sakurada of Sompo Holdings. First, I'll explain the overall strategy of the Sompo Group briefly for about 10 minutes, followed by business strategy from COO, Okumura; and Nursing Care RDP from -- Nursing Care and Seniors business, CEO, Endo. Real data platform is finally at the starting line. And we would like to take your questions after the presentation. Although time is limited, we would very much like to have a constructive discussion with you. Please turn to Page 3. Here are today's main points. First of all, regarding our business performance, on November 18, we announced the financial results for the first half of FY '22. Although we have revised our full year forecast due to natural disasters and the impact of the COVID-19, our confidence in FY '22 plan has not wavered. I will explain that in later. Next, regarding shareholder return, we have not changed the initial dividend forecast of JPY 260 per share. We will make decisions on additional supplementary shareholder return in a flexible manner taking into consideration the prospect of gross investment and capital situation, the second half performance, including the impact of snow damage and JPY 130.7 billion in basic shareholder return in the previous fiscal year. Finally, Nursing Care Real Data Platform or RDP. We will launch this business in FY '23 with the aim of resolving serious social issues facing the nursing care industry in Japan. In 2050, we are going to achieve net 0, [ the world ], and Japan is not exception. But in Japan, before that, in 2040, there will be the [ clubs ] of the nursing care industry. So we would like to make utmost effort, and we are going to start this business in 2023. And in FY '20 -- FY '30, the operating income of JPY 10 billion, rather conservative. And the de facto standard position in the nursing care business in the long term, that is our aim. Please look at Page 5. So I will explain the path toward achieving the FY '23 plan. The upper part of the chart shows the plan as it was formulated at the beginning of the fiscal year, and the lower part shows our current assumptions. Although the earnings structure reforms to expand earnings, and expansion of the top line overseas progressed more or less as expected. The original target of JPY 260 billion was revised to JPY 160 billion due to transitory factors, such as natural disasters. However, excluding these transitory factors, the figure will be JPY 245 billion and we will continue to implement various strategic measures to achieve the goal of JPY 300 billion in the next fiscal year. On the next page, I will explain in more detail. Page 6, please. Transitory factors, I mentioned earlier, are broken down on the left-hand side of the slide. The figures are for the impact of natural disasters in Japan and overseas, which greatly exceeded our assumptions at the beginning of the period, the occurrence of large incidents and the impact of the deemed hospitalization benefit due to the pandemic. The figures are shown here. The figure on the right-hand side shows the past to JPY 300 billion using JPY 245 billion, excluding these onetime factors as the launch pad. In addition to the expansion of the top line, an increase in investment income in the Overseas Insurance Business and the earnings structure reform in Domestic P&C Insurance Business, we expect profit increase of more than JPY 20 billion as a result of the creation of conglomerate premiums. We are going to increase our conglomerate premiums. At present, we believe that we were within our target of JPY 300 billion, even taking into account uncertainties, such as the impact of foreign exchange rates, but we will further accelerate our efforts in each business to increase the certainty of achieving this goal. Okumura, Group COO will explain each of these initiatives in more detail later. This page shows the basic strategy of scale and diversification. The Overseas Insurance Business continues to grow steadily and the top line of the 4 businesses combined has surpassed JPY 4 trillion. This is a record high. Even excluding the effect of foreign exchange, business has expanded significantly and risk diversification is progressing in the insurance business as a whole. We'll continue to strengthen risk taking centered on the Overseas Insurance Business, which is a growth area, while expanding diversification in terms of lines of business and regions. On the next page, capital recycling through risk reduction. We will steadily reduce strategic stockholding by JPY 50 billion per share as planned and had begun to consider accelerating the pace of reduction. We have revised upward the reduction for this fiscal year to JPY 70 billion. For domestic interest rate risk, we are also taking into account the current environment and accelerating the pace of the investment in ultra long-term bonds from JPY 300 billion to JPY 500 billion. In this way, in accordance with the strategic direction set at the start of the medium-term management plan with some fine-tuning, we direct risk taking more to growth areas such as overseas insurance to achieve a better risk return profile through the recycling of capital. Please look at Page 9. I would like to talk about growth investment and digital transformation initiatives. As you can see on the left-hand side of the slide, we will continue to invest in growth through both inorganic and organic approaches. For inorganic growth, we continue to consider a wide range of possibilities for both insurance and non-insurance. Regarding organic growth, from the perspective, what is best for the group? We have executed JPY 200 billion capital transfer from Japan to overseas in order to take on additional risk overseas where the profit growth can be expected. Later, Okumura will explain this point later in the conglomerate premium section. In addition, we continue to focus on improving the value of existing businesses through digital transformation, and we are seeing tangible results such as improved underwriting profit. So far, we have been explaining about our initiatives in the midterm management plan. And our portfolio has been transforming as a result of that. At the start of the midterm plan, the ratio of Overseas Business was about 15% and the goal of the plan was to raise 8% to 30% by the end of FY '23. We believe that this has risen to a level of around 40% in terms of actual performance, thanks to the steady expansion of our Overseas Insurance Business, albeit partly due to the effect of foreign exchange. We believe there is still room for improvement in the domestic business, and we will accelerate our efforts. In Japan and overseas, we will make further progress in improving our portfolio through increased diversification and pass through absolute value and stability in our profits. Next page is shareholder return Sompo's shareholder return policy consists basic return of 50% of adjusted profit and additional supplementary return as shown on the left side of the slide. Basic policy is to increase dividends in line with profit growth and to increase the ratio of dividends to total return. As shown in the chart, we plan to increase dividends for the ninth consecutive year to JPY 260 per share. Additional return will be based on business performance, market environment, capital conditions, among other factors. We are pretty aware that one of our objectives is to maintain the previous year's return even in the event of a decrease in profit due to natural disasters or other transitory factors. As stated in the upper part of the slide, we would like to make a flexible decision based on the business situation in the second half of the year. And JPY 130.7 billion of the previous year's basic return amount. So far, I have been focused on the current fiscal, rather, financial value. Now I would like to talk about human capital and the corporate value improvement cycle in the bigger picture and over the medium to long-term horizon. Our analysis is that the pursuit of my purpose increases, challenges and innovation to create financial value and unrealized financial value through inclusion and diversity and improved engagement. We are very sure of that. The current discussion of financial value is about expansion of scale and diversification, which will be specifically presented later as business strategy by COO, Okumura. We also believe that the social impact to be realized over the long term by RDP is unrealized financial value, and we are working on the calculation of its economic value. Later, Endo will explain this together with the Nursing Care RDP. We believe that improvement of unrealized financial value in turn leads to higher engagement, creating a positive cycle, engagement improvement and the improvement of unrealized financial value. This approach of starting with the improvement of human capital is a point that has been highly evaluated externally as well. Finally, and I think this is the most important thing, in my opinion, I would like to explain our challenge to solve social issues through new value creation. We believe, as Mr. Kishida said in the framework of a new form of capitalism, this is our last chance to reconstruct Japan and the Sompo Group believes that the solving social issues is the factor, which really contributes to Sompo's mission. And creating the values will lead us to challenge this national problem and that will improve the midterm corporate value of Sompo. And that is a must. As you know, the gap between the supply and demand of nursing care personnel is a looming social issue in our country, which can be truly called a national crisis. The Nursing Care RDP that we are working on is an effective solution that we have developed with leading partners to solve this issue, and we estimate it's social impact to be at least JPY 3.7 trillion. As in Japan, the aging of society is also progressing in Western countries. And it will certainly have repo effect in Asian countries. We are currently taking on the challenge of developing service portal for family caregivers in North America. We would like to become a platform that contributes to solving social issues, not only domestically, but also globally, leveraging our core competence. 10 years ago -- more than 10 years ago, I became the President of Sompo Japan. And back then, I thought that someday, we would like to be recognized in the society that the Sompo Japan used to be an insurance company. But now RDP, the platform is the position that they would like to leverage to live on this society. Thank you for your support. That is all for my presentation. Here is Okumura, Group COO.

Now I would like to talk about our business strategy. First, in terms of insurance business, it is very unfortunate that we had to revise it downward our forecast. But that doesn't mean that the measures we took were wrong. We are very sure of that. So based on that, I would like to talk about the path we took and the path we would take. On this page, I would like to go back 5 years, in the past. As to Domestic P&C Insurance Business, we are working on earnings structure, therefore, appropriate underwriting and the improvement of profit and compared to FY 2017, we have increased net premiums written of fire and [ allied lines ], while keeping the amount of wind and flood risks flat. Overseas Insurance Business, FY '17, we acquired, former Endurance, while controlling natural catastrophe risks. And have expanded the scale of business, especially in the casualty and specialty fields. As a result, not only the size, but the stability of profits was improved. For example, in FY '22, due to Hurricane Ian, that is the second largest loss driver historically speaking. And we expect incurred losses similar to the level in FY 2017. That said, the ratio of incurred loss to earn the premium has been kept at less than 1/3 of the level of FY 2017. This means that the profit is more stable. Our Domestic Life Insurance and Nursing Care and Seniors Business initiatives are also performing well. The details will be given later. Please look at Page 16. So these are key points for each business for FY '23. As Sakurada-san said, the story toward FY '23 and the probability to achieve JPY 300 billion that our confidence has not wavered. I think that the certainty to achieve it is very high. Domestic P&C Insurance Business, JPY 150 billion target of adjusted profit, the hurdle could -- is a bit higher than you could say. But we are making steady effort for earnings reform, and we are going to accelerate our effort, and we have been discussing that with Shirakawa-san and others for that. Overseas Insurance Business. We have been increasing rates and increasing scale and the size, selection and concentration. Market situation is changing all the time. But through the profitability, the improvement we are going to position it as profit driver for the group. Domestic Life Insurance Business. The impact is greatly by COVID-related transitory factors, but our mission is to make our customers healthier. That is Insurhealth remains unchanged, and we are going to make acceleration there. Nursing Care and Senior business. The improvement of profit and productivity or quality, we work on that as well, while paying close attention to the views and opinions of those on the front lines. Next page, Domestic P&C. So the pricing optimization and the price increases, the net premiums written are steadily increasing. The population in Japan is decreasing. It's not just about rates, but the new risks are emerging, and we have been developing new products for such emerging risks. The adjusted profit for FY '22 [ fluctuated ] significantly due to the impact of natural disasters and COVID. But the key driver for performance improvement, namely reform of earnings structure, is progressing better than planned. As to this earnings structure reform, next page, give more details. There are 3 initiatives here: pricing, underwriting and productivity improvement. What is more unique here is, I think, is underwriting, namely Palantir and Palantir's Technology is leveraged to strengthen our underwriting. We started with large cases, and the effect is not clear. So we are expanding this technology to other lines and other market segments as well. As early as possible, we would like to visualize the other customers' condition, agents and the customers will be convinced with our proposals and will lead to the improved profitability, JPY 55.5 billion of total impact. Actually, this is greater than our plan. Compared to FY '22, '23, the last year of the plan, we will see more than JPY 20 billion impact coming from this reform of earnings structure. Next page is about growth. As I mentioned earlier, population in Japan is declining, but there are emerging risks one after another. And the casualty and specialty insurance is satisfying those new risks, especially Business Master. It's not quite completely unique product, but the enrollment is easier with this product from the customer's point of view. And nearly 20% annual growth has been observed. So by developing the products which meet the needs of customers is really important. Going forward, specialty area, including Cyber SJ and SI will collaborate with each other more and more so that we can leverage each other strengths on our platform to meet the needs of our customers. And this initiative is part of the other one Sompo Group. We will give you more details later. Now the Overseas Business. The core of the Overseas Insurance Business is SI Commercial. With a highly specialized underwriting capabilities and also with the capital allocation with an appropriateness, the SI Commercial have had top class revenue growth compared to U.S. peers over the past 5 years, since 2017. By looking at the market environment, its portfolio will be further diversified through geographic expansion and M&A. Well, the result of that is explained on the next page. The left-hand side is the rate hike since 2017. About 75% of the improvement has been seen. As a result, on the right-hand side, you see that the loss ratio is coming down steadily. And because of this rate hike, the geographical expansion has made the contribution to an expense ratio decline. And also, we continue to operate in the industry earning efficiency with a small but powerful operation. In addition, due to the expansion of the top line, asset has nearly grown quite largely. So that's the reason why we have had a good growth in the market yield. So in addition to the underwriting, we want to have the investment expansion as well. On the next page, you can take a look at that for your reference later. It's about one of the unique products, the AgriSompo of SI Commercial. Well the drought impact was being seen, however, the point is that there has been an extension of scale and also diversification. Well, before the acquisition of Diversified, the [ Texas ] has had quite a concentrated risks. However, through that acquisition, that's a more diversified portfolio. But this is not a goal. Well, the further portfolio renewal and the change is going to be taking place. Well, for the last 2 years, one of the consumer business, the Brazil was struggling, so we would like to explain about this. The graph, blue part on the bottom, we hear the scale is expanding and also the earnings is expanding [indiscernible] and also the individuals that has been already been disposed, or we have already concluded the contract for the disposition. And also looking at the current situation, the third quarter and also as of October, the improvement has been seen in earnings. So this Brazil business is no longer going to be a drag for the Overseas Business. That next is the Domestic Life Insurance Business for the current year, post the impact of COVID-19, but the situation improved significantly due to the change in the claim payment criteria for deemed hospitalization. The most important is that we are going to extend the new prospective market with Insurhealth to support the healthy life of the customers by developing the products. The product is going to be high margin, so that the increase in in-force will lead to a steady growth of the bottom line. The next page is showing IRR about the contribution. So you can take a look at that later. On Page 26 is the Nursing Care and Seniors business. Sales growth registered because of M&A and new office opens. And occupancy rate is improving. The occupancy rate is already high, but it's getting higher. Well, we shall aim to look at not sacrificing the quality, but then achieve the plan of 2023 by driving productivity with quality, while tackling with compensation improvement as well. The next is digital. But because of the time, we'd like to talk about the Palantir Japan, which is a joint venture founded in 2019. Through Palantir Japan, we'd like to utilize that for the Domestic P&C Business, and we have done that already making visibility, the integration and the consolidation of data and so on. Through that, we are enhancing our underwriting capability. In addition to that, in SI, in case of the large losses to happen, we've been improving the business through Palantir Technology. By connecting a variety of data, we can have efficiency and the visibility in the business operations. This outcome should go beyond the Sompo Group or not only the large Japanese companies, but to be extended and rolled out to the SMEs who are supporting the economy of Japan. So that we'll be able to provide and offer this solution. In the last page, as Sakurada-san mentioned, this is about the progress of creating a conglomerate premium. At the last IR meeting, we also referred to this, but the variety of businesses are here within the Sompo Group. Assuming that a variety of groups or the variety of entities are pursuing at one company, then we have talked about the multinational reinsurance and the operation of the businesses. So one thing that we look at is the overseas risk taking or taking advantage of the gaps of the interest rate to get the improvement, we have had the flexible additional allotment of JPY 200 billion to SI. By utilizing that capital, first of all, we want to take the risk-taking and the investment, first of all for the improvement of the investment return. But by looking at the market environment, further richer capital will be used for the flexible underwriting for the further risk taking. Regarding retentions and reinsurance, we've been having the working group to observe that. And also regarding the multinational, sometime within the current year, we will be able to issue policies in 175 countries by the end of the fiscal year. So it's not a global company, but we are going to use that Sompo brand as a one-stop solution to the global companies, to the companies that are located in Europe as well. So this time, we are confident about generating JPY 20 billion, and we have described that. But this is just a passing point so that down the road, we shall develop this project to involve the entire group and deliver further outcome by listening to the opinions and feedback. We have reached the halfway of the midterm management plan. And all of us will work together to achieve the FY 2023 plan and beyond that to achieve mid- to long-term growth. Well this is all the message I have to say. Thank you very much for your attention.

Sakurada-san, Okumura-san, thank you. Now I would like to move on to the Nursing Care and Seniors Business. So Endo-san, please?

Well, I am Endo, CEO of Nursing Care and the Seniors Business. Well, I talked in May's meeting about the commercialization of the Nursing Care RDP. So I'd like to talk about that, please watch the video in the beginning. [Presentation]

The egaku, shown in the video, is the name of the Nursing Care RDP service. So let me, first of all, explain the background of development. Sompo made a full-scale entry into the Nursing Care Business in 2015 in order to make the industry more sustainable and attractive. And the business integration, compensation improvement and the staff training have proceeded so that the business has grown to generate the stable profits. On the other hand, as the aging of the society accelerates, it is -- there is a limit to the number of elderly people that Sompo can support as a nursing care provider. And we recognize that our all reforms alone would not be sufficient to change the future of nursing care. Therefore, with egaku, in which Sompo's know-how will be applied to the entire nursing care industry, we have decided to transform ourselves into a business operator that supports many elderly people and nursing care industry by entering a new stage of discontinuous growth. So moving on to Page 31, egaku consists of the 3 types of services, as you see here. Well, not only the software we saw in the video, but also digitalization support services and also, our professional services to support the operation of nursing care facilities will be provided. It's been said about 60,000 business operating companies are there in this industry, but the digitalization is not taking place in full industry. So inclusive of its supporting the companies and also the RTD (sic) [ RDP ] software, we need to think about how the entire improvement can be delivered by providing good professional services, so all of that needs to be provided. So let's move on to Page 32. The video showed how the deployment of egaku has improved the quality of care for users. We'll hear -- I will show you the example of a facility with a capacity of 60 people, which is the average size of Sompo Care facilities, and explain the economic benefits to the Nursing Care Business operators. The introduction of business systems and technology and the optimization of our patients and the personnel by using data is expected to reduce workload by about 15%, which is equivalent to about JPY 600,000 a month in labor costs. In addition, by utilizing data to optimize the level of care required and smoothly obtaining additional nursing care investment, but because there are a lot of investment to be added, the calculation will be done quite smoothly. So the -- an approximately 15% improvement in earnings is expected, which is equivalent to the increase of income of about JPY 100,000 per month. So that is going to be about JPY 8.4 million difference per facility. In addition, we are creating new value by providing independent support for the elderly and improving staff engagement. So please see the next page. Well, starting from FY 2023 in April, egaku will finally go into business. During the first 2 years of the launch, we will work with early adopters, who have nursing care facilities to refine the service and to build up our track record at Sompo Care. So here is the actual commercialization starting point. Subsequently, we will expand to at-home care providers and from other than early adopters aiming to achieve by FY 2023, revenue of JPY 30 billion, operating income of JPY 10 billion and number of facilities that use egaku to about 13,000 facilities. Furthermore, by 2040, we aim it to be the de facto standard in the industry with enhanced services and market expansion. Well, of course, we'll be able to work ahead of the schedule as much as possible. So with that, we aim to improve the sustainability of the nursing care industry, which is said to number some 60,000 companies and to create a society in which those who need nursing care are well supported by professionals, thereby minimizing the impact of caregiver attrition and other problems on the lives of the people. The challenge is to close the supply-demand gap of caregivers. We aim to create an impact on society by taking on the challenges of closing that gap. So please move on to the next page. As you see on the graph on the left-hand side, there will be a shortage of 690,000 caregivers in 2040 according to the calculation of authority. As a matter of fact for the nursing care facilities, there is a regulation of the number of the staff employed, meaning that 1 person will be necessary per 3 elderlies. That is a requirement, so that's 1 to 3. In the Sompo, what we are trying to do is inclusive of the [ RDP ] and the technology, we want to mitigate that to 1 to 4 instead of 1 to 3 so that we can mitigate and do not worsen the quality or the burden on the staff. So the mitigation of the restriction on the -- or the workload of the workers is something that we are trying to do. In the pilot case that is done by the Ministry of Health, we are working upon that. If the burden is going to be mitigated on the staff working in this industry, then the gap -- the supply-demand gap of 690,000 people is going to be reduced by 150,000. So next, we will improve the engagement of workers by using the resources came from increased productivity to improve their compensation and have them focus on services that only people can provide. By doing so, we would expect to increase the attractiveness of nursing care work and attract more people from other industries and the new graduate to the nursing care industry, thereby increasing the number of caregivers by 70,000 people. With that initiative, we think we'll be able to increase the 220,000 people as the caregivers. So with that, this is just an assumption and based on the assumption that egaku market penetration is at 30% of home care providers and 10% at-home care providers. But if we can expand egaku further, de facto will be even greater. Well, just for your information, if there is a 220,000 person supply-demand gap for human resources and one caregiver provides care for 4 people, then that will mean that 880,000 seniors would have access difficulty to care. In the worst scenario, their families would have to leave their jobs to care for their family instead. So if the gap of the shortage of 220,000 can be closed, then its impact in terms of GDP per capita is JPY 4.26 million or equivalent to JPY 3.7 trillion. Just yesterday, we saw the article that the nursing care and at-home caregivers in 2021, 95,000 people needed to leave their current job because of providing care for their families so that this is a big social issue. To solve this issue, we want to tackle with this imminent task. And the last page is an overview. I just wanted to explain how this is going to -- that the egaku is going to increase the number of the people at the nursing care field. Well, given the current situation where the working age population is declining and the ratio of effective job offers for nursing care workers is extremely high, it is very challenging to increase the number of caregivers. However, we need to increase, and we think we can increase the number of people who want to come into this industry because, for example, if a new manager comes to a facility, let's say that this facility with visible nursing care service, they will be able to have lot of the information, as an integrated information, like what kind of service is needed and what kind of work the staff is doing. Well the facility with the capacity of 60 people, well, situation will be changing quite a lot and the QOL and also the [indiscernible] situation or the nutritions, all those things, which is happening today, will be changing in 3 months. And based upon that projection, they have to think about the optimal plan to make for the operation, so that will go into the PDCA cycle. And also the alarm system is going to show the information of what time the drug administration has to take place and so on. Those optimal information will be coming on. And also, the Ministry of Health has a new system that is called Life. And there is a system that also has the information about the worker's work itself and then compensation and the system. If that is connected to our system, then our facility residence information will be automatically connected and uploaded to the authorities or the Ministry's system, so that is going to reduce the workload of the staff working at the facility. The staff and the caregivers motivation will be improved so that egaku is an initiative to create not only economic value, but also social value. We are convinced that the creation of social value will increase the number of partners who empathy with egaku and the increased number of customers who chooses Sompo and also improve employee engagement. Well, we are confident that this will bring a financial value eventually to the group in the future. This concludes my explanation. Thank you very much for your attention.

Now we'd like to take your questions, but please use the raise hand button to ask your question. We will call your name. So if possible, please turn on your camera and please do not forget to unmute. And you can ask a question in Japanese. Starting with Muraki-san of SMBC Nikko Securities.

Muraki, SMBC Nikko Securities. I have 2 questions. First question, Domestic P&C Business and the second question is about the conglomerate premium. Page 17, next fiscal year, for the profit next year and what is the assumption? That is my question. As to auto insurance, benefit increased JPY 14 billion. Here, you say it is a onetime factor. Why is it a onetime factor? Even you excluded it, you need JPY 60 billion increase in the profit to achieve your target. The auto, fire insurance and cost reduction and the impact there is more than JPY 20 billion. But what about the remainder of JPY 40 billion? How are you going to cover the remaining JPY 40 billion to achieve your target? That is my first question. Second question is Page 28. Conglomerate premium that you talked about in the previous IR. Conglomerate premium, Tokio Marine & Fire and also MS&AD, JPY 20 billion in fiscal year 2025 as the investment synergy, they said. I think the different companies have different situations here. Next year, profit of JPY 20 billion, you said. What is the breakdown from Domestic P&C to Overseas, the transfer of capital of JPY 200 billion? Including that and also for fiscal year '24, what is your plan? Could you please elaborate on that point?

It's Shirakawa, the CEO of Domestic P&C Insurance Business. JPY 150 billion for the next fiscal year, I would like to give you a breakdown in details. First, FY '22, the downside, the revision factors are the JPY 33 billion natural cats and JPY [ 22 billion ] for large incidents and COVID, JPY 10 billion. So the total is minus JPY 55.5 billion or so. That is onetime factors. According to the calculation, about JPY 90 billion is [indiscernible] by 2022, the adjusted profit in an ordinary basis. On some technical notes, for '22, other factors, onetime factors, fire in premium increase in October. And right before that, there were some -- the policies, sales increase and so that increased the agent commission and economic activities are recovering. So Marine insurance, in particular, the top line increase happened and temporarily, the underwriting reserve increased about JPY 7 billion, among which JPY 5.5 billion will be absent for '23. So excluding that, JPY 95.5 billion is the launching pad for 2023. And from '22 to '23, the fire insurance premium increases that will emerge in '23, the impact will be seen in '23, and currently, we're optimizing the headcount, and that will give impact of about JPY 20 billion on the profit. And it is reform of earnings structure, FY '22, JPY 1.5 billion vis-a-vis the beginning of the year. So increase -- the fire premium increased, I think the numbers for the next year are very firm. And in January 2023, auto insurance premiums will be revised. Right now, the unit price is increasing. Based on that revise down, the range is now assumed. So the impact for 2023, JPY 3 billion to JPY 4 billion after tax, there will be the impact of baseline growth and top line growth. For the casualty specialty SME packages included and fire, the insurance increases. Given all that, FY '23, JPY 95.5 billion being the launch pad, the positive JPY 30 billion will be accumulated, and I am very confident in that. What about the remainder of the picture? The one Sompo Project and FY '22, the full year forecast is rather conservative, but auto insurance repair unit price increases for 2023, what will be the development there? And based on that, if it goes as planned, then that will help us to achieve JPY 150 billion. As to the rest of your question, auto insurance, JPY 40 billion, if this number is transitory or not, it's true that repair unit price for highways because the accident situation has changed and there the more sophisticated vehicles impacted for this fiscal year. That's for sure. That said, the add-on portion because of the inflation, I don't know if the add-on is appropriate word or not, but the pure inflationary factor needs to be looked at very carefully at this moment, inflational impact is not so visible. That's my opinion. Thank you.

Next one, as to conglomerate premium. Let me take up that question. First of all, on the short term, the investment profit and the retention, we are working on that because we can get the effects much sooner and risk diversification is progressing and the interest rate is so different between Japan and overseas, so the JPY 20 billion transfer from 2 overseas from Japan. As to '23, JPY 10 billion for the investment profit. And as to the retention, it depends on how to look at the cat risks and reach the market. January 1, April 1 renewals timing, that should be observe it quickly. But to the real degree speaking, the mid, the several billions of yen impact is expected. So the first step, JPY 20 billion impact for the investment and retention. And now the multinational, the contribution to the bottom line, it's not very, very clear yet, but the cyber and D&O, the global underwriting is now becoming available. I cannot talk about specific names, but those with which we do not -- did not have business are now emerging in a global business. So the several billions of yen, the increase in top line is expected. On the longer term, was the overseas part in small letters, the regional expansion. Canada, for example, is written here. The hiring, underwriting team, hiring, that is organic growth and JPY 200 billion to support that and both on the activities, risk taking, JPY 200 billion to support that. And as the cat market, we are going to look the situation very carefully. Dozens of percentage of rate increase is almost for sure. Of course, the decision to actually do it or not will be finalized after the discussion with [ Jim ]. But to be flexible, we need some capital allocated. So our strength is flexible. Professional underwriting is to be leveraged we have transferred JPY 200 billion. And as to one super initiative, there's no end for that. Both at home and abroad, we develop products, meeting needs of the customers and the more professional teams. So simple initiatives, we'll continue to advance and we are going to explain about that at later date.. As to JPY 14 billion for auto, you said, yes -- so you actually do not treat it as a onetime expense. So JPY 200 billion for organic and another JPY 200 billion for bolt-on and for cat, you might increase underwriting. Is that what you said? Already JPY 200 billion is transferred to SI, and that's my understanding. So what has already been done, and also another JPY 200 billion for bolt-on. What is the relationship? I'm sorry. I have to clarify that. Organic or bolt-on or additional risk take for all of these things, the total of JPY 200 billion was transferred. That's clear.

Now let's move on to Tsujino-san of Mitsubishi UFJ.

First of all, well, reinsurance and overseas nat cat exposure. Well, at this time, Sompo International's hurricane impact was because of the weaker -- the yen was weaker. But compared to last year, the loss here itself was probably to some extent had helped the market or the market loss is about 2x bigger compared to last year. But in your case, that's bigger than that. So I just want to know what you think about that. And also like a homeowner of the risks. I think you have an exposure to the homeowner risks in Florida or somewhere. Well, this year, you just consider this year as unlucky. Or are you going to just change your gears for the risk-taking from now on? And also, the reinsurance rate is set to up as a big jump next year. So at SI, well, you have reinsurance business in SI. So what kind of a positive are you expecting? Well, in the meantime, the ceding cost in Japan is going to be -- significantly going up. It's probably going to be more than JPY 10 billion. So how are you going to deal with that? Well, this is a big chunk of the question -- the first question. And that leads to my second question. You were talking about JPY 150 billion of the next year, and you talked how you're going to walk up to that figure. Now if you have the ceding cost increase, that is a negative impact or the negative factor to kick in for next year, then is it going to be JPY 10 billion or JPY 15 billion? What you're going to do? And also, the assumption of the natural disaster in year 2018 and '19, those big sized typhoon is probably once in 20 years. But something like this year could happen. I mean, like 3 typhoons can come at once, and that could happen like at the size as the same as one in 20 years. And that could happen with the frequency of like once in 3 years or 5 years or so. So the assumption of the natural disaster, how are you going to sketch the scenario? Maybe I'm asking the same question every year, but that's the second question. Well, there are some overlaps from my question number 1 and 2, so you could explain. And also ESR of 242%, it's declining. So I have not analyzed enough of the reason for that decline. Please provide some color on that. And if you're going to be changing the assumption of the natural disasters, do you think this ESR is going to further go down?

Thank you very much. The questions 1, 2 and 3, where we have SI owners and also the other business owners, so would like to respectively address to your question. The question number 1 and 2, there are some overlaps, I think, as you said. So recently for the nat cat risks, for the mid- to long-term basis, within the business portfolio, we thought that we should reduce our exposure to that. So the way to do that is the diversification of the region and also the control of the limit. Or if something happens under the inflation situation, still, the claim could go up so that we should make a withdrawal from the contract, which is not that profitable. So compared to last year, the amount has become bigger. However, that does not mean that compared to the gross claims, the cat exposure is not that growing. To answer your second question, well, this is the discussion we have with the management team. When it comes to the reinsurance business, the rate is expected to go up high, and we think we can undertake that at a highlight rate. The undertaking rate is going to be high. And the underwriting business and nat cat for Japan are going to be ceding to upside so that it's going to be a cost increase. We would in net-net, what kind of exposure we should take and which part we should cede out to reinsurance? That has to be thought as a group best. So that's one of the initiatives that we do under one simple initiative. Coming to the calculation in a certain pace is quite hard to do, but the market is becoming quite fluid now. So by looking at the market, we need to get the best solution to this. Is the case -- in the short term, we might for the cat risk more? Or we might just avoid the risks by paying more for the reinsurance cost. Well, for the CSR, I think Shirakawa-san can answer, but for the SI, Jim and Ken are also here. So we could ask for the comments. But for the reinsurance cost, the JPY 150 billion is not that easy, right? So that was the question. So Shirakawa-san -- I think Shirakawa-san can answer that question.

Okay. First of all then, what's happening now is that in October 2022, there was a rate change. The further optimization of the underwriting and also the nat cat -- the natural disaster is happening very frequently. So thinking about that, at the time of the rate revision, next time, we have to have the price hike based upon this kind of margin that we can deliver. For the improvement of the margin, we have to look at the net to retain. The fire is going to sling into profit in 2022. And the ceding cost that you mentioned, as Okumura-san mentioned, based upon one simple concept, we have been discussing. And also at SJ as an individual business, how it's going to take the risk? How it's going to burden the reinsurance costs have already been examined. However, just on examination and the study may not be enough. So we probably need to think from the different aspects, like business transformation and then think about how we would work. That probably needs to be tackled. And its plan is currently in the meeting. So with that, April next year and beyond, we should respond to the reinsurance and the natural disasters. Well, the fire insurance compared, to the past, is becoming more of a risk type. Recall, as the other categories, there's been some more claims and then paid. And for this risk, is it really necessary or not to cover? We need to have the dialogue with the market to find that out. But the for the individual fire insurance coverage and the content of that coverage needs to be reexamined. That's my understanding.

Comments and questions with respect to the overseas business. I think I broke it down into 3...

I think about the policy on catalyst and your prospect going forward?

Yes. I think there was a question about an exposure to Florida homeowners, and I would state that we do not write for the homeowners on our insurance portfolio. The only theoretical exposure we could have would be with respect to some reinsurance business of some large multinationals. But to date, I have not seen or heard of that as being an issue. So I just to make sure that, that point was clarified. In terms of the going forward market, with respect to reinsurance, I believe Okamura-san indicated that there are a number of dates and the market is very fluid at this point. The major dates are the 1st of January, where we see approximately 1/3 of our reinsurance business will renew. We have our insurance business where we deal with individual insurers that we'll have renewals every month -- throughout every month through until June, which will have exposure to the U.S. cat market as well as the renewal of our own reinsurance treaties, which would be April 1. At this point, we're probably about 3 weeks to really give a great indication of where we see this market will go. What we are seeing are substantial rate increases in many markets waiting in terms of quoting portfolios and committing capacity. And so I believe that we will -- as this market moves, we will see certain accounts move. We will see us retaining certain accounts with significant increases, but it's really too early, at this point, to really give an accurate prediction in terms of the impact across the portfolio. But I can say that early indications of what accounts that we've quoted that will renew on the 1st of January. We are quite positive with respect to the reaction we've been receiving, both from the customers and the market at large. So my view is that the -- we will see continuous rate improvement, but not simply rate, but terms, conditions, attachment points across the reinsurance portfolio. When I look at the deployment of capital across the overseas business, our return and performance comes with respect to cat is significantly better on the reinsurance side than it is on the insurance side. And so as we look to favor different markets and where we will deploy the capital, it will be more towards the reinsurance side of the business.

[indiscernible] you may want to explain to Ms. Tsujino-san that SI's competitiveness vis-a-vis our peer companies, particularly regarding cat risk has not been reduced or even strengthened even after the Katrina -- Hurricane Ian. Same will applicable to your competence, relative effectiveness going forward vis-a-vis peer companies? Can you...

No I think -- thank you, Sakurada-san. I think that Okumura-san gave a very good example when you compare it to the last 2017, where the similar sized event had almost a 22% impact on our combined ratio, where this year, it was only 7. We've made significant changes in our reinsurance strategy in terms of where we deploy capital away from U.S. cat and more towards European exposure and longer-term liability. When we look at our peer group, we think that we came in where we expect to come in and we have no concerns with respect to our size of that marketplace. It's a volatile business, and we continue to be a leader in the commercial space, and we are well prepared for such risks. So I don't believe that our comparison to -- comparison to our own performance of prior years, we've substantially improved the portfolio both through size and diversification and through underwriting. And I think that we are well positioned within our peer group in this space.

So this is Hamada speaking, CFO. I'm explaining about the ESR. The 242% is correct, where it was 254%, so that has been a decline by 12%. The reason is that risk volume is about JPY 20 billion increase. Equity capital is -- declined by about JPY 120 billion. The interest risk and the equity -- strategic equity holding reduction, there's been an improvement by about 4 percentage points. The large measures are likely capital. The net loss and the dividend income -- dividend has pushed down by about 9%. Other than that, the risk take of the overseas business, about 3% and then interest hike, all those that have had the impact. The largest last -- and also the interim dividend of 9% in total, well, JPY 20 billion is the loss and the dividend is about JPY 40 billion, so that half is the dividend. Well, after the dividend payment, ESR comes down. So when we look at March and September, compared to the previous quarter, those are 2 quarters, the March end and the September end, it seems to be slower. So the 12% is down in ESR, but that does not mean that you have to be very or for us to reconsider the strategy of the capital allocation.

Watanabe-san, Daiwa Securities.

Here's Watanabe, Daiwa Securities. I have 2 questions. First, Page 5, adjusted profit on ordinary years. Why did you lower it? It is related to [indiscernible] question as well. Other factors, the domestic auto and fire decreased, the revenge type and the lightning, they are anti-factors. Why do you think them as structural elements? Compared to 6 months ago, your yardstick is lower for auto and the fire. Have you changed your thoughts on rate increases? The second question, Page 11, shareholders' return. So the basic the return of, last year, JPY 130.7 billion. So this means that they cannot expect the JPY 40 billion additional return and the JPY 200 billion transfer of capital to SI. As to JPY 600 billion of the capital earmarked for investment, how much progress have you made?

As to auto and fire and allied lines, why are we not looking at onetime factors? That's your question. So we are looking at the first the performance and the forecast for full year due to the total support by government and so on, that will increase traffic. So first half, minus 2 points. And conservatively, second half, 0% or flat, so minus 1 point on a cumulative basis. As to repay our unit price, we'll have some impact here. This unit price fluctuates year-on-year. So the question is to what extent can we call it the one factor -- onetime factor? Well, we are rather on a conservative side to present this interpretation. As to fire and allied lines, as I mentioned earlier, nat cat risks and associated with that linear rain build-related damage, lightning, and small water damages and the frequency of such damages is increasing, but we cannot make anything sure that -- if it is onetime. So that we -- made, whether the conservative classification.

Next, here is Hamada to talk about shareholder's return and the investment for growth.

Since the announcement of results, looking at our company's share price, shareholders' return specific -- specifics and disclosure of them. And the market seems to value that. And of course, we cannot say -- there are things that we cannot say, but I would like to go into details as much as possible as to have share buyback. As I mentioned last year, every year, we do the simulation of excess capital. And if it is more than we expected, for example, last year, the Palantir, the share sales, then there was a reverse process. And this year, the performance is revised down, and the unrealized gains went down. So unfortunately, capital is less than we planned. So we did not make a decision to have buyback in the first half. And for a full year basis, shareholders' return, an additional return as is the case for every year. We look at the situation investment in performance to the end of the year to make a final decision. As you already know, Page 11, the bottom left, supplementary return criteria is described. These 4 triggers the second of them nat cat, and we maintain the level of return of the previous year. We are very cautious of that. Our CEO said, JPY 130.7 billion is the amount we are talking about. That would translate into more than JPY 40 billion of share buyback. Today -- I'm sorry, we cannot make any promise that we are going to make that kind of buyback. Second bullet point. Based on these factors, we look at the risk capital situation and forecast. And based on that, we make a decision. Risk and capital will depend on the performance in the second half as well as investment or the financial market situation. Looking at all that, we make a final decision. So JPY 130.7 billion buyback, JPY 43.6 billion, that would be the maximum. And toward that range, how much actual buyback will happen? We are still discussing it. We are going to continue the discussion towards the end of the year. Within that range, what will be the level? I think that's what you want to know today. But on that point, unfortunately, we cannot say anything for sure. But for example, just one example, here is what I think. So the background of making this criteria is as follows. What is our actual performance? And when that performance goes up, that will make our shareholders happy. And if it goes down, the shareholders will share the pain with us. So as to fluctuations of such onetime factors -- due to onetime factors, should be shouldered by shareholders, maybe not. So when the profit goes down because of those onetime factors, it's strange to make decision to reduce return as well. So JPY 85 billion of other onetime factors are explained in this material. And for that point, we might add back some amount to think about share buyback. That could be one of the options. I'm not saying anything for sure here. And the final decision will be made after the discussion at the Board of Directors meeting. And that's all I can say today. Please bear with me. As to the capital for growth investment, already, we used up digit -- for digital and the small M&As overseas, about JPY 80 billion. And then -- although we have not made any decisions yet and we wouldn't know if it happens or not, but there are some pipelines. Including all that, it would be about JPY 150 billion. That is visible. And the JPY 200 billion, the capital transfer overseas, will be added to that. But of course, where we are going to use it, we don't know yet. The max will be JPY 200 billion. Just roughly speaking, it is likely that we are going to use, say, 50% of the capital earmarked for investment growth. Some supplementary comments about JPY 200 billion for overseas growth. So the background is as follows. This is our company's commitment, the growth overseas and the commitment for that. Overseas, the geographical expansion, will happen. That said, for each different line, as you know, when you look at in details, in some regions -- in some lines, the situation is getting better, and not always. And there will be some declines as well. But still, the rates exceed loss cost. And the question for us is where we would like to take the risks, including nat cat? Related to Tsujino-san's question, the secondary perils of nat cat. Other than that, the risks are increasing, that's a fact. So scale and diversification of risks, the improvement of profitability is the objective there. So the secondary perils that should be well looked at. And based on that, we are going to have reinsurance strategy of ours. So my greatest interest is the nat cat, the onetime -- then onetime we will not be onetime anymore. And that possibility is not zero. But when it is not onetime anymore, still we can produce, and we can make profits. And for that, we building the business portfolio. And for that, we transferred the JPY 200 billion overseas.

Watanabe-san, thank you very much. The next one is Sasaki-san of Bank of America.

This is Sasaki of Bank of America. I'd like to ask a question about our nursing care business. Well, this time, you made an introduction of this system, Egaku? Well, the business owners when they want to use this, how are they going to do with the system or devices? What kind of arrangement are you going to provide? Can you give me some color on that? And also, a question I have is that for the nursing care problem that we have here in the society of Japan, whether it is malnutrition, meals health. If the necessity for the nursing care gets reduced, then the amount that the reinvestment that is going to be paid for the nursing care is going to be also reduced. So by using this Egaku, those people who receive the service, if they see an improvement in their health, then the reinvestment for the payment for the nursing care is going to be reduced. So can you give us some what can be -- what has been seen in the pilot case. Okay.

For this nursing therapy. In the expansion phase, what's needed is the vendors. Those vendors need to use the data. And our question is whether those vendors would agree to provide their data to us or not? That's subject to their own decision. But as you saw in the video, there is a partner in [indiscernible] area so that we need to have some discussion with them and the vendor and then get them provide their data to us. But the benefit of the Palantir platform is the data is stored at various places, and that could be integrated into one place. That is a big attraction. We get the record of financing care in one system, and the staff, like personnel and the human resources data. On the other system, although there are different systems and the information just scattered around, it can be integrated into one place. So that's the structuring of that system, structure itself, not only the application providing the provision. Otherwise, the system won't be able to work efficiently so that we are going to be -- coming into that phase because that is the first issue to solve. To answer the second question, well, the people who need the nursing care severely, if they get to like share a symptom, then, of course, the reimbursement will be smaller. That life, the new system that was kicked in by the ministry, they have a calculation system for the nursing care reinvestment and that is for providing the support of the independence of the elderly people so that they will have less nursing care services or those people might eat more and they have a healthy meal. So there will be an evaluation and assessment of the improvement of the health situation of the elderly people and their quality of life, and that could be also taken into consideration in the reinvestment calculation if that kind of the service provider increases, then what has just been mentioned by Sasaki-san is going to be a positive incentive. However, this life system is quite complicated because we need to get the data on a daily basis, get the record. And that will be in addition to the routine work that the staff and the caregivers have to do. So within the application, we have an assessment system. And this assessment system going to be providing help for those caregivers in the data recording and so on. So to answer your question, the reimbursement amount is going to go down. If the elderly people's health condition goes up and improve, however, the Ministry side is giving a consternation about how to get the incentive before the caregivers as well. So there are some structural problems, but -- we are working together with the Ministry side, and then trying to solve this issue. So Narasaki-san could probably address to this.

Well, this is Narasaki speaking, in charge of digital business. Well, [indiscernible] answered the first question. So I'd like to build on his idea. How each business operator can deploy the system, Igaku, at their own facility. Well, the Palantir Foundry is a product, and that it's using the size, using the form of cloud. And as you see on the screen, there is a software for the data use service, starting from the care plan addition system and so on. So when the service provider uses this system, they do not need to download or use very heavy system or anything. As Endo-san said, the data is already there. The vendors already have it. So we get the connection to that and the system will be there. So it's just like a Salesforce, either on smartphones or PC, whoever uses it, it's just open and user-friendly for whoever will use it. So it's not a waterfall large science development needed. Even those people who are not very well versed in the system development, they can use them because a lot of facilities do not have the system engineers within house. So based upon that understanding and assumption, we have thought about the system that can easily start using with the professional service, and we also provide this service for the deployment, the first step of the introduction of the system. So that is my additional comment.

Well, if the key data or -- some paper data is also there. So that's going to be read through AI, OCR or something that kind of the initial labor is going to happen, right? So that is going to be done by your engineer?

Yes. Well, our sample care facility, we did based upon paper to get the data. So we are using the AI for processing that data.

So we have several people who already raised your hands. Next one is Majima-san from Tokai Tokyo Research Center.

Here is Majima. So from June, the new form of capital initiatives started in this material. What kind of the human capital policy that will be explained? That is my other interest. You used one page to talk about how to develop human resources. Other 2 companies of your peers, they not even have 1 page to talk about it. And in your financial statements, the human resources related the disclosure, I think it's great in the financial industry. So question is about your financial statement, about my purpose. So you take my purpose and engagement gets better reflected in financials to achieve results -- good results. According to your integrated report, the trainees of my purpose is only 2/3. So 1/3 of employees are not trained yet. Can't you speed it up a little bit? And the engagement at home -- engagement is lower -- is low it seems, especially nursing care area. Is it low? Maybe. So how are you going to raise the level of engagement at home? That's my question.

That's a very important question. Thank you for the question. The integrated report, we spend a lot of time for that report, thinking how to convey what we are doing, how -- to stakeholders, especially the directors, especially the Chair of the Nomination Committee. Not just myself and other CXOs. Interviews are also described in the report. We're setting that aside. It's my purpose -- when a person talks about my purpose, that is not enough at all. The middle-level managers or the sales office managers. When you have time, please think about my purpose. That kind of approach will just promise to fail. So town hall meeting, hosted by myself. I think yesterday, we marked eighth time more than 2,000 people participate in the town hall meeting. So probably a little bit less than 20,000 employees already participated in the town hall meeting. 2 out of 8, if I remember correctly, it was held globally. Actually, yesterday, the meeting was with that people Asia and in Japan. What we are doing is as follows: It's not the classroom training, it is in the form of town hall meeting. We think about why Sompo has decided on this purpose. And also how is it linked up with each other's purpose to live their own life? Was it with Sompo itself and each employees my purpose? Should they be in March or not? And if they are not in March, what should we do? Our message is simple. More than 40 years ago, when I joined Sompo, this company, there was a purpose for the country to reform -- transform this whole country. For example, and the economy grew very fast in this country. And to support that process, each company has something which is similar to purpose. So the company's purpose and each other's purpose should in coordination completely when you have the company's purpose and when you have to live with that purpose with your own purpose. So your own purpose should equal the purpose of the company after the war. Only in 20 years or so, we became one of the strongest economies. But that era is gone, and we did not work on the -- that decline. And the [indiscernible] model that we started in 2016. The most important thing is my purpose for each other, for each employee and product as a tool or as a theater, you can use this company called Sompo. That's the message that we are conveying to the employees who was surprised at the beginning with that message. Because if you stretch to coordinate your purpose with company's purpose, then the morale, you will be demoralized or you even leave the company. Well, I think the so-called revolving door type HR policy is not a bad thing for us. And we actually have introduced that system before our peers. If there is any misunderstanding about purpose, we should do a better work explaining about my purpose. Every month, or several times in a month, we have to have such meetings like town hall meetings, and I think that's one of the most important missions as CEO to implement purpose-based management, and that will increase the possibility of creating innovation. You might be surprised, but in my purpose meeting, at least one panelist comes from each section like from domestic life, domestic P&C, nursing care, digital and overseas. In Japan alone, I think that nothing care and followed by the domestic life, the people -- then I'm talking about the number of the participants in the my purpose meeting. So actually, it is in the nursing care sector, where the company's purpose and the individual's purpose are in match. So the -- in other sections, people are struggling -- have been struggling. Why did I choose to work for this company? People struggled, and each one of them came to his or her own -- the understanding through that process. So in different countries, in different sections, there are different kind of people who can give stimulus to each other. That's a good synergy. So it will contribute to the utilization of one sample. And I'm sure our people will increase the value this group. I might have talked too long, but it's a very important mission for myself.

Thank you very much, Majima-san. Well, there are 2 more people. So thank you for waiting. Niwa-san of Citigroup.

Can you hear me? I'd like to ask about the midterm prospective from 2 perspectives. One is about the next midterm plan. But looking at that, ROE 10%, do you think you still have room to improve? If you still have a headroom to improve, then, as you commented, it's going to be mainly from SI, first of all, for JPY 200 billion, and then a further increase. Is that the direction that you're going to go through? And the next ROE, how should we look at that?

Well, my point is the global P&C Tier ROE is between 15% and 20%. So it's going up. That's my impression. And maybe that the insurance cycle is showing that level, it could be like a cycle peak. Or as you mentioned, well, mainly in overseas, are you going to be just diverting our resources so that cycle and there should be profit mix. I would probably decide the direction of ROE? That's my first question. The second question is more like abstract. On Page 10. Well, sometime down the road, people would call you as the company who used to be insurance company. I think you need to quantify that and show the image of what you are trying to achieve. As a risk volume, well, other than the insurance is 4%. And the product -- in the profit mix, U.S. and Japan P&C is mainly generating the profit. And that trend is probably going to continue. In the meantime, the nat cat is big. Its role is quite big, so the discontinuity of that it's not very easy to see. So -- so your core market in U.S. and Japan and you're playing in the P&C company? Or is that the way that I should look at your company? Or based upon the possibility of large alliance are you going to seek the big -- something as a bigger picture, it was a discontinuity?

So your question is about the mid- to long-term basis. Well, how should we define that, whether that's 5 years or 10 years let's set aside that discussion because we can't wait a decade? But the RoE is a very important yardstick and P&C business or the insurance business is capital intensive, needless to say. So the improvement of ROE, if that leads to our company value to improve, then we have to make entry into the small business, right? But rather than thinking about that, I should really think about what the value the company can create, especially when we have the outside directors, we have that kind of in-depth discussion. So the happiness that we can provide or the create value in the insurance business and also the solution to the social issues. Well, I think there are those things that we can address otherwise, our [indiscernible] will be decreasing. What could be a top player in the insurance business in the global market. However, its value is -- when we think about the sustainability of the stakeholder capitalism. We are not going to be the core player or the bigger player in the market. So given that situation for the entire global society. We want to provide a happiness. So we have the [indiscernible] theory, meaning that we cannot have full dependence on the insurance business. So in the mid- to long-term business, we will be engaged in insurance business, but the possibility is that we might create value in other than outside the insurance business. So what is that others? Well, the Igaku can be one of them. And also Nigel is here with us. He is the -- any overseas business. And I have been working upon the health care and overseas platform that I am asking him to work upon so that Nigel could probably have some talk about this. But we are in the insurance business, but we're going to go outside of that insurance framework, whether that's going to be a value profit to go after. That's a good question. We want to have a discussion with that because cash flow is a value. So something that does not make a contribution to the cash flow is not a value. If that's the discussion, then the [indiscernible] -- the value that we have for the Tokyo Stock Exchange is going to be just a drop. However, it's not the case, right? I'm not going to be making a remark made by the person who has deferred it, but as Endo-san mentioned, if the time is allowed, then I'd like to pass on to Nigel and ask him to talk about what he can share with you, just in some brief comments.

We are developing. Sakurada-san mentioned in his opening remarks to developing a business for caregivers in North America, and it could well be North America, it could well be in the U.K., it could well be in Australia, anywhere where there's a super aging society. And our focus is really to build on the work that Narasaki and Endo-san have been dealing with in the nursing care business and to export and Westernize quite a lot of what is going on because it's a massive market. It is certainly white space. And we're putting resources behind, and we should be in a position to make a more full announcement in the next few months. Basically, what this does as a problem in that as Sakurada-san has said, insurance is capital intensive. We get judged -- all insurers get judged on the PBR whereas the high multiples are in SaaS-related products. And a lot of what we're doing for the elder care market is not in the regulated market as such. We're not making pharmaceuticals, we are not making medical devices. We're not giving medical advice. We're providing a concierge service. So very briefly, that's what we're doing. But it's to try and bring some diversification and a different earnings stream, which is valued differently to just pure insurance. There's no doubt that Sompo, the core is an insurance company of qualities, but we're using our connections and the social good to move into a diverse and different stream of earnings to balance out the ups and downs that you get with a very large insurance company. There are a lot of things that we cannot share with you at this point of time, but the scale is quite big. And we have been stitching this scenario, and we have search we have such partners and we have to ask for your patient for the next few months, but whichever the cases. Well, the question is about the mid- to long-term basis, and the question was quite big. So I needed to answer in an abstract way, but we are working full swing.

Last question is from Tsujino-san.

So far -- one question -- so far dividend, every year, not -- maybe not every year, but the user it will go up by JPY 40 per year at the beginning of the year. It was raised to JPY 50 per year. And during this midterm plan, you are going to continue JPY 50 increase. I think you said that in May, if I remember correctly. And many things happened. And right now the high-paced dividend increase is sustainable. What is your thought?

Tsujino-san, thank you for that question. Here is Hamada.

6 months ago, we said that the JPY 260 or JPY 15 dividend increase I don't know will happen next year. But we did the simulation that we can continue JPY 50 pace next year as well, and that remains unchanged. And our policy, part of it is to increase dividend. I mean, the shareholders' return is basically on dividend payout. So we are going to the increase the dividend every year. And we would like to think about to accelerate that effort as much as possible. So we can say is that every year, we aim at increasing dividend. We are an insurance company in the second half. I mean the -- in the 6 months performance might have been causing some concerns on your part, but our dividend policy remains unchanged.

So with that, we would like to close this IR meeting. As to additional questions, please make contact with IR team. Thank you very much for your participation. Thank you.