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

We would like to invite next Group CEO, Okumura, to say a few remarks. Okumura-san, please.

Thank you very much for joining us today. From April 1, I'm going to be the Group CEO.

Okumura. Very nice to see you.

First, Bigmotor, or the price fixing. Because of these issues, we have caused these inconveniences to you, and I would like to extend my apology for that again. And based on various investigation reports and the results of the investigation, we have taken all of the results seriously to prevent recurrence. But only with that, we cannot enhance our enterprise value. First, we need to regain trust, that's the first thing that we need to do. And for that, customers and business partners, employees, and the stakeholders, they have expectations and we would like to satisfy their expectations to regain trust. And above all, it is important to focus on human resources, employees for us to regain the trust. We need to improve their expertise. And for that, we are going to talk about it more in details. But for that, we need to invest in human resources on a different level and the corporate culture and internal control and the other internal governance, we are going to revamp them and we are going to make speedy actions to enhance enterprise value. Thank you very much.

Next, we would like to invite the new CEO of Sompo Japan, Ishikawa. Ishikawa-san, please.

From February 1, I became the new President, CEO of Sompo Japan. First, what I would like to say is about the price fixing or the Bigmotor issue, that we have taken some inappropriate actions and people here present today and agents and customers, we have caused lots of inconveniences, and I'd like to say sorry about that. And we are now working on the effective plan to -- preventive measures with the guidance from the authorities, and we would like to implement those measures. And the corporate culture and other issues have been pointed out by the authorities. And of course, we are going to make improvements on these points. But I believe that one of the biggest points for us is related to Sompo's business model. There are some structural issues emerging. So for that, we would like to make firm actions on the short term, although we have to work on some issues immediately. And also, on longer term, there might be some structural issues, and we would like to face them directly. My mission, as I understand, is to recreate the Sompo Japan. So this is the second regeneration of the company. And with that, in my mind, I would like to do my best. Thank you.

Thank you. Now we would like to move on to presentation of Okumura-san, please.

Thank you. Please look at Page 4. We're actually talking about Page 4, or the other issues, I'd like to talk about how we have dealt with the Noto, the earthquake. And I would like to say heartfelt condolences to them. On January 1, 4:10, there was a big earthquake. In dozens of minutes later, we set up disaster management headquarters. And January 4, Shirakawa-san, the former President, and on January 14, Ishikawa-san and myself went to Noto to see the disaster areas and employees working there. And the employees who came from all the corners of the country to Noto or some of them have their own houses destroyed. They're all working together, and I understand again our social responsibility as a group. And in that context, the people helping out other people and there are services for that, leveraging digitization. For example, at Sompo Japan, Palantir's foundry has been used to pay benefits as soon as possible, and we could successfully connect to data for that purpose. And the other number of work has been significantly reduced. And as a result, we are now able to pay benefit much faster. And also for the group as a whole, the nursing care business that exist in Noto, the 50% of the population is over age 65. And at the accreditation sites, there are many seniors living there still now. And so what our group can do in this situation? For example, we can offer senior food or nursing care staff. Their own houses were destroyed, but still helping out senior people. And there are so many people who rushed to the areas of the earthquake. And Sompo and Palantir collaborated and also collaborated with the digital agency in Ishikawa Prefectural Government to integrate the evacuee's information, and this is part of our effort to play our role expected in the society. Please go to Page 5. So there are 3 things, 3 points today. As Mr. Ishikawa-san said, the second time of starting up our business. So it is about regeneration of Sompo Japan, restarting Sompo Japan, that's the first thing. And secondly, the growth -- the past. So we have a forward-looking perspective, and that's how we are going to conduct our business. Where we are now? And in the past, what did we do and what we could achieve and what we could not achieve? So looking back, we would like to look back the path of our growth. And from next fiscal year, we have this new midterm plan. And towards the future, what will be our purpose and targets? Details will be given later on. So we're going to increase our resilience. That's one of the things. And also connect with customers and deliver connected services, connect data. So we are going to provide services beyond insurance to our customers so that we can provide services contributing to [ safetyness ] and healthiness of the society. As a result of that, we are going to pursue the capital efficiency, which is on the level of global peer and double-digit EPS growth. Page 6, please. So there are various issues, including Bigmotor or price-fixing, although we have heard lots of inputs and we have been discussing why they happened. But I think that we need to confirm what is in the scenery as a whole. On the left-hand side, the big market changes. So the preaching the converted, for example, decreasing population, lower birth and aging society and the natural disasters due to climate change and changing customer's values and digital technology advancement and for the domestic PC business, the deregulation of insurance occurred in late-1990. So there are all kinds of market changes. And probably, we are more biased to status quo and the maintenance of the status quo. Maybe we cannot completely adapt ourselves to those changes. I think that is one of the challenges for us. So as I mentioned earlier, we need to satisfy expectations of the stakeholders. And of course, we will hurry to regain trust. But the patchwork kind of preventive measures alone will not be enough to regenerate Sompo Japan, and enterprise value increase of Sompo Group will be difficult as well. The details will be presented in May this year when we announce next midterm management plan. So what we are trying to do at Sompo Japan? We say reborn or revolution. And from that, we call this initiative SJL, and Ishikawa-san, our new President, is going to talk more about that. Let me repeat. The base of those initiatives is people. So we are going to thorough investment and human resources. Please go to Page 7. So there are many challenges emerging. And we have taken some appropriate measures. For example, DRS, we discontinued DRS, we abolished simplified underwriting and also we increased the staff members at the claims services department and also for newly established rule against making contacts with peers and also training about Antimonopoly Act. That said, in our business improvement plan, regain trust, customer-centric and quality will be the keywords. And with that, we are going to revamp governance and we reform mindset and we develop human resources. Specifically, as governance regime, we will be more conscious of how we are perceived outside. And between holdings and Sompo Japan, some people say maybe the communication between the 2 entities was not enough. And to improve that, we are going to have double hatting system or be some exchanges and communication working at the very same physical site, for example, so that we will fill in the gap, if there is any. Page 8. So far, I have covered left-hand side through the middle of this page. Let me repeat again, for us to grow ourselves in a sustainable manner, just working on emerging problems will not be enough. SJL, this new challenge or initiative, in that our values and businesses, and we are also working on the industry practice as well. Now we would like to talk about the path of growth in the past. So what have we been doing, on Page 10. So in 2010, Sompo Holdings was established. And since then, adjusted consolidated profit grew 20% on an annualized basis, and adjusted consolidated ROE grew plus 8%. We are working very hard to achieve it. So the 10% also is even in the reach. So the era of VUCA, that's the phrase that we use very often. And in that, by providing services contributing to security, health and well-being, we protect customers from risks. And we would like to create the society filled with healthy people with smiles on their face. And that is the purpose of Sompo, and we will do our best for that purpose. To realize that purpose, that's one thing. And at the same time, we are going to work on profit growth higher than the peers and the global level capital efficiency. That's the things that we are going to continue to work. Please look at Page 11. So with profit growth, shareholders' return is expanding very steady as well. Since FY 2012, EPS growth rate has been about 30%. It's a more significant growth than peers, and we take pride in doing that. And with this profit growth, the shareholders' return has been increasing. For 10 consecutive years, DPS continues to increase, we're still not growing five-fold approximately. And share buyback is being implemented constantly with total return amount is steadily trading up. So moving on to Page 12. Well, during that due course, I myself has been working upon the improvement of the resilience because that is smart as a very important point in the VUCA era, without which we won't be able to realize our purpose. We won't be able to protect our customers from risks. From that perspective, first of all, the expansion of the group's scale was one thing that we targeted at. So after 2010, we have grown at the CAGR of 5%. And also the top line has grown at the pace of 8% CAGR. In the very beginning, Sompo Japan was the top line growth driver. After 2020, as you see on the right-hand side, overseas business has been driving the growth. Well, top line is growing at the pace of 15%. Well Jim is here from Bermuda. So he will explain about the top line growth and also bottom line or the profitability growth as well. And on Page 13, please. This resilience of the group. In 2010, well, our company is more on the domestic business. The overseas business weight was only about 7% in FY 2010, older population is declining against this domestic market. The natural disaster is becoming more frequent and the damage is becoming much bigger. So that's the risk diversification and the diversification of the profit source were imminent. So as a result, in the forecast of FY 2023, the overseas weighting is expected to occupy about 60%. Sompo Japan's rebirth or SJR initiatives to bring about the better profitability. Meaning that the expansion of the overseas not only mainly going to continue as is, but with the current situation, the risk diversification and also striking a good balance of the business mix. It's going to be the key, and also, by looking at the focus businesses, looking at the overseas business. Even looking at the overseas business alone, the resilience improvement has made progress. In the process of its growth, the weight of the natural disaster is big and probably there is a volatility in the profit itself, the people have talked about that, and that was the situation. But in the last few years, the scale has expanded. Risk has been diversified. And so for the -- because of the inflation, there will be some negative impact to be coming for the contracts that was made years ago. And in order to work on that, we have made the strong -- we have tried to work on the reserves for the balance sheet to be much stronger. We have made some initiatives for the overseas business as well. But for the premiums, the profitability is quite hard to improve, so that within SJR, we wanted to take more initiatives to kick off. Let's move on to Page 14. Progress has also been made in initiatives related to health and nursing care, which are targeted for the medium-term growth. For the domestic life insurance business, in 2017, the healthcare services launched in FY '17 with its user base growing to 1.4 million people. And we continue to launch Insurhealth type of products that combine insurance and health promotion functions since fiscal 2018. And so far, the cumulative sales volume is 1.5 million. Well, in the nursing care business, the high-quality nursing care has been delivered. And we have launched -- we have taken advantage of our #1 position in industry in the number of senior residence rooms, we launched egaku in FY 2023. This Insurhealth and egaku and nursing care has been the cornerstone of the lobbying initiative of the next midterm management plan. So first of all, about the risk reduction, let's look at Page 15. Steady progress in reducing risk in areas of low-capacity efficiencies, significantly enhancing resilience to market volatility. The shareholding of the strategic stocks is the hot topic, but JPY 1.5 trillion of the strategic holding stocks have been sold since the establishment of the holding company. And within the current midterm plan, we're also going to accelerate this to achieve JPY 190 billion over the course of 3 years. For the interest rate risks, we have invested in several long-term bonds ahead of schedule to cease the timing of rate hike. As a result of it, the interest rate risk has already been reduced to about 1/3 of the level compared to the start of the midterm plan. And on Page 16, this is about the capital policy or the capital circulation. In terms of the capital policy, we will balance the allocation of the capital generated by the risk reduction and accumulated profits, as we've already discussed, between the disciplined investment in growth and the returns to shareholders. In investment for growth, the endurance -- well, the current system is impact making so that for the investment of the SI, the Sompo International, its ROI is currently achieving 16%, driving growth of the profit of the group. So regarding the collaboration with the Palantir, is investment -- its business collaboration has progressed in various parts of the group. From the perspective of our shareholding in Palantir, its investment multiple hit more than 4x. As a result of -- by looking at the total payout ratio, which hit 58%, exceeding the basic return ratio that has been delivered as a result of exercising agile share repurchase. So in the following pages, we will supplement details on this some key points in the growth trajectory or the proven track record. And this time from Bermuda, Jim Shea has come because he wanted to talk for the overseas business by himself. So Jim, over to you.

Thank you, Okumura-san. On Slide 17, what you see are the metrics used to measure the overseas business in the 3-year plan that ended in 2023. On the left-hand side, showing the continuous growth of the adjusted profit, this was achieved in the areas of investment in businesses, in people, in service and IT in support of our customers. It was a continuous focus on underwriting results and improved investment climate, strong expense management. And as Okumura-san highlighted earlier, it enabled us to strengthen the balance sheet at the end of 2023. The middle column talks about the gross premium written and the achievement of that target. This was achieved through, as I said earlier, our investment in people, the market conditions, our investments in new products and geographies, achieving more customers. But I would highlight that the top line is not a metric that we use to incentivize our management team. It is the bottom line and the adjusted profit. On the right-hand side, you see the combined ratio. The trend is to continue to reduce the target of 88% set for the midterm plan several years ago, didn't anticipate some of the economic inflation that we saw. I didn't anticipate the increased investment in organic expansion of our business, nor could it have contemplated the impact of the size of our crop business, which historically runs at a much higher combined ratio than the 88%. So I believe that was a success in achieving that over the last 3 years. If we move to Slide 18, please. On the left-hand side, what we're trying to demonstrate is that, as the market rate, and you see on the bottom which indicates pricing, but also more importantly, terms and conditions and risk selection in the portfolio increased, we increased the net retention of our portfolio. As that market and the market tends to stabilize, we will stabilize that net retention. The decrease to 67 is because what we've included is the commercial business in places like Turkey, Brazil and in Asia, which hadn't been included before. Those countries had historically taken a much lower net retention. And as we work through that, we will increase their net retentions to be consistent with the rest of the Sompo International risk appetite. On the right-hand slide, and even in an inflationary environment, the accident loss ratio has continued to decrease. This, again, as I'll reiterate, was a continuous focus on the underwriting and investment in people, tools and our ability to achieve that through the market. I'll turn to Slide 19. This slide is illustrating the resilience of the portfolio to catastrophic events, and I would draw 2 comparisons for you to look at. Number one, would be the 2 largest cat years, which was 2017 and 2022. As you can see, the impact of the loss ratio to our portfolio went from 22.7 to 6.6. And again, that is a result of a diversification of the portfolio, risk selection, terms and conditions and overall portfolio management. The other comparison I would make would be to full year 2020 and '23, which were similar in terms of size and the impact on the loss ratio was almost half. And so this is a demonstration of how the portfolio has grown and the diversification has aided us in the scenario of large cat events. Next slide, please. 21. What we are showing here is the increase in the investment income. On the left-hand side, as a result of the growth of the portfolio, we've been able to generate more income and more assets to invest. And on the right-hand side, it shows that the duration of our investments has allowed us to keep up with the change in the market trend and the market yield. And so with an average of approximately 3 years of our investments, it's enabled us to stay very close to that, which has enabled us to achieve the results that you've heard.

Thank you, Jim. So now we would like to go to Page 22. Starting with domestic fire and allied insurance. Slide 22, please. So from 2020, the underwriting income has been improving very steadily. And in the next midterm plan period, and it is likely that we will return to profitability. Still, there are many challenges to work on. So the simple rate increases that were not remedy, the profitability status. So for example, leverage the Palantir, we are working on high loss ratio countermeasures, portfolio change and underwriting major change that will happen during the 3 years in the past. The underwriting income of the fire insurance has been improving. Page 23, please. Since the change of the bridge system, the automobile insurance profitability has been stable. But recently, it is impacted by inflation, partly because of Bigmotor issue, we have stopped the rate revisions temporarily. And that we are going to seek the right timing to implement rate change. Page 24. So this is about enhancement of productivity. The streamlining of the work is another thing that we have been working on. But with the launch of new system, depreciation expenses will increase. So we are going to drastically review the products to be simplified, for example, or we will consolidate branches. And so that we are going the other way, depreciation expenses with productivity improvement. Page 25. So the casualty insurance is seeing more needs as this slide shows. We are going to continue to capture new needs. And of course, we will continue to work on the profitability as well and the work on the product development and the good underwriting so that we can improve our profit. Page 26, this is domestic business -- life business, nursing care and senior business. It's about new value creation for domestic life business, Insurhealth product lineup improvement through such measures. We already have very superior position compared to the peers in terms of the number of in-force policies. As to nursing care senior business, during COVID and also for the Noto earthquake, we take pride in saying that we are playing our role. But we are not satisfied only with that, we are going to transform ourselves to a platform, and we are going to challenge solution business and data business. With that, we would like to aim at JPY 10 billion of operating profit in the mid-term. Page 27. On the left-hand side, we have the achievements of the current mid-term plan. So this is a summary that I have just said today. Going forward, there are things that we need to do, targets that we need to achieve. That should be our focus. In the next midterm plan period, the external environment will be more severe, and we are bracing for that. And the changes in the environment and even in the tough environment, do we like to improve our enterprise value. And for that purpose, both holdings and the other operating companies, we would like to make concerted efforts. So not just some stakeholders, but for all the stakeholders, we would like to manage our business in such a way satisfactory to all of the stakeholders. That is the track record. So from now on, we'd like to talk about the principles or the direction of the next midterm management plans, starting from Page 29. The first slide, I'm going to explain and I'm going to pass on to Ishikawa-san for the domestic P&C and then Jim-san for overseas. So first of all, this chart, I may be repeating myself, but the environment surrounding ourselves is getting tough, meaning unforeseeable. Against that backdrop, in order for us to walk through our purpose, making the resilience much more solid or stronger is imminent, and we have to walk that through. The other key is to get connected and to be connected with our customers to connect data and to connect services and to be together with the customers or to be there for customers, with that creating a new business model is something that we have to do. As a result of that, ROE will be also at a level of the global peers and EPS growth at the double-digit level. That's what we want to aim for. With that, there are 3 key initiatives, the new Sompo and further overseas growth and then well-being initiatives. The supporting business foundation is going to be the human capital. And also corporate culture and the transformation of it and the capital circulation. All the businesses and all the processes are going to use the digital technology and data. Without that, connection -- or connecting businesses or connecting data or to be connected with customers are not possible. So now about the new Sompo Japan, I'd like to hand over to Ishikawa-san.

What I'd like to explain our efforts in the domestic P&C business, which will be one of the pillars of the group's next midterm plan. In the domestic P&C business, changes in the external landscape had already been clearly identified as a major issue since the previous fiscal year. In the meanwhile, as evidenced by the recent problems, the P&C insurance industry practices that has been kept as a matter of course, namely the bias toward top line and market share or excessive support for the clients' core businesses or strategic shareholdings. Those industry practices or other institutional practice has come to the surface. And we reconnect difficult to overcome these major issues and grow the business and maintain stable and high profitability if we are merely continuing the approach that has been taken so far. To overcome these challenges, thinking about everything from the customers' perspective and doing the right things correctly to evolve into a business that generates the right level of profits, we will start a business as such so that we will firmly work on the project called SJR. Formally, it will be kicked off in FY 2024. We are now in preparation phase. The next page shows you the overview of the SJR initiative. SJR will proceed with 2 pillars. One is business foundation rebuilding to transform corporate culture, quality and governance and the claims payment service division. And -- so that means the change is with the rebuilding of the business foundation itself. The other is the portfolio transformation or the stronger portfolio strategy sales based on the strategy and the IT cost reduction. So that's more like a rebuilding of the profit base. Rebuilding the business foundation itself is closely related to measures to prevent the recurrence of the recent problem. So while maintaining the sense of speech, we will work to ensure that these initiatives do not end up as transitory, but strictly take root in our systems and corporate culture. On the right-hand side is about the profit or the profit base. So the main focus of the focus to transform this profit base is portfolio strategy. We have been taking measures to address segments with profitability issues in the past, such as fire insurance for solar power generation and aged properties. Well, we have taken measures. However, we have only addressed the specific segments and we have not necessarily had a sufficient portfolio strategy from an aspect of our business. So that we want to make sure to do so. So in SJR, in principle, we shall establish profit targets for all segments and control underwriting to achieve them. In addition, to achieve that portfolio, we will formulate and implement sales strategies to make this portfolio in retail and commercial areas, respectively, so that the portfolio transformation will not be any -- initiative of certain areas only. It's quite important to walk that through. And as you see on the bottom part, the data-driven is the key. And as Okumura-san mentioned, the human capital investments to get more expertise is going to be quite important to support that transformation. So literally, we're going to be working this as a company-wide strategy. Page 32, please. I have just explained the overall picture of the SJR. But now I also want to explain separately about one particular factor, which is the reduction of strategically held shares. As we believe is an important part of the transformation of the corporate sales department. And if so, this is drawing quite a lot of attention from investors. At present, the annual reduction target is JPY 70 billion and the midterm goal is to bring the level down to, by the year FY 2030, 20% or less to adjusted consolidated net assets. However, in light of the recent price-fixing issue and our analysis of its true causes or the mechanism or the structure of why that happens, we will consider accelerating the initiatives in the next -- in order to create a fair competitive environment and further improve capital efficiency. So this reduction pace is now planned to be accelerated more. As you see here, our ultimate goal is to get this down to 0. So how to do so undertake the initiatives will be making the steady progress going down the road. And as you see on the right-hand side, we want to strengthen engagement with industry companies, which is quite an important initiative. We are planning to set up an organization specializing engagement. And by giving firmly aligned with corporate sales, our corporate sales activities, per se will be highly specialized and consultation-oriented. That's all for myself.

Okay. Thank you very much. Let's move on to the growth strategy for overseas. So, Jim, over to you.

Thank you very much. Our objective over the next midterm plan is to continue to increase our adjusted profit. Our goal is to generate a double-digit return every year. Now there are many levers that we can pull to achieve this. We can change our reinsurance structure. We can focus on our expense ratio. We can continue to try to reduce the loss ratio, but there's a floor in that and what the market will sustain. So ultimately, we need more customers. And we're going to achieve that through writing more customers, and I'll explain in the different geographies, but that will help to generate the organic growth that we're going to need to continue to generate the growth in the operating income. On the right-hand slide -- side of the slide, it's really talking about how we anticipate the market changing to become what we call a softer market, not a soft market, but a softer market than what we've experienced in the last several years. And so we still anticipate that rate increases and pricing will continue to cover loss trends. We continue to retain the premium that we've shown on the reinsurance basis. But we will not focus on top line growth or expect to see the same level of top line growth that we've seen over the past 3 years. We will continue to expand our global footprint and thus generating more -- working with more customers and continue to improve the profitability. Our reinsurance business is global, but our insurance business has historically been dependent on the United States and the United Kingdom. If we turn to the next slide, please. As you see the map of the world, I think it's important to distinguish between how we will continue to grow organically and where we will invest to grow organically. In countries like the United States and the United Kingdom, we focused on certain geographies within those marketplaces. And so I'll use the United Kingdom as an example, we were very much focused on the London market. But there's very large market outside of London that we have historically not focused on. And so we will continue to invest in those mature markets. In the United States, we continue to open offices in different cities, whether it's Houston, Miami, investing in different -- expanding our footprint in existing cities, to access different markets and to grow in those mature markets. In addition, we have been investing in expanding into new markets, and that would be within Continental Europe, focusing on Spain, Portugal, France, Germany, Switzerland and Italy, as well as into Canada, which is one of the, I think, the -- I believe it's the seventh largest P&C market in the world in which we have virtually 0 presence. And so we will continue to make these investments. We will also maintain a focus on M&A opportunities. And so the focus over the next years in order to expand our customer footprint will be both from an organic and inorganic perspective.

Thank you, Jim. And moving on to Page 35. The other initiatives, the third axis is the well-being initiative. The purpose of that or the objective maybe I don't need to but for the Japan and other advanced markets, we are entering into the era of the -- the age of the nursing care for and by all citizens. In the last 50 years, the number of the people who are in need are getting more in the number and the Insurhealth that we have talked about, that the combination of the health promotion and the insurance. Well, we won't be able to bring the solution to this social issue by having those 2 respectively. So in order to have the age of the aging society, Japan has been becoming much less active because there are a lot of concerns. The concerns of health, nursing care and retirement finances. For those 3 concerns, we're going to tackle directly. So what we want to do is, as you see on Page 36, as people grow, aged, we want to create a society where people will be positive and people will be able to live positively. That's what we want to do. With that evidence, we're going to establish the business model to be extended to overseas market where the aging society will probably be hitting as well after Japan. So group and business partners, number of the customers will be expanded, and also the database of the customers will be connected. Insurhealth and healthcare services and from the services of the medical checkup, for example, together with the customers, we will promote the behavior change among the customers and the build of services that meet the needs for the long time. By using the data, by using technologies, we shall create the business model of the sustainable nursing care. So by doing so, we'll be able to provide and build up services that meet the customers' needs for a long time and in depth. By doing so, we'll expand lifetime value per customer, leading to mid- to long-term base. So lastly, I will touch on that foundation, which is going to support the next midterm plan. As I mentioned earlier, the capital circulation management is going to be enhanced, specifically, the enterprise value will be enhanced through ROE enhancement, so that we're going to be working on both denominator and the numerator. The concept is that the 100% base remittance ratio was that the company will consolidate excess capital into the holding company and then do the allocation of that capital. Two areas of high capital efficiency. And also, we're going to continue investing in human capital. By doing so, we want to grow sustainably. The details of this plan is going to be shown in the IR meeting come in May. Our various stakeholders, including customers, business partners, employees and shareholders and societies, we want to meet the expectations in all of them and to achieve sustainable growth even in a difficult business environment and the main contribution to the society. That concludes my presentation. Thank you.

Thank you. Now we would like to take your questions.

So Muraki-san, followed by Watanabe-san and Sakamaki-san.

Muraki from SMBC Nikko. I have 2 questions. First question with the strategically held shares. On Page 32, you are showing your thought. Starting with assumptions, I'd like to have some clarification. Why are you reducing those shares? In the past, as I understand, is that, say, from a risk perspective, there is some concentration of risks? And from capital efficiency, we are going to reduce strategically held shares. But going forward, this type of shares, as you said, will inhibit fair competition in the market or through your client, the companies, the overall Japanese governance is in the question. So that's why you would like to aim at 0 of this type of shares. So depending on purposes, objectives, I think the meaning is different. So the positioning of the statistically held shares will be different going forward? That is the first question. And on Page 7, the governance for domestic operating companies. My question is as follows. So the group management regime and governance. And Mr. Okumura, new CEO, would it change because the holdings resources or the CEO and the management interest was overseas rather than domestic and nursing care and also digital business? And this issue of double standard, I think, also exist. I mean, there are other companies saying that they are integrating their businesses. But sometimes what is not admitted when it comes to overseas P&C business, it's admitted in domestic P&C. So SJ and Holdings, you were talking about double hatting. So that would reduce the gap between -- or distance between the holdings and the domestic P&C. And but what about with the overseas insurance business and how you conduct business overseas? And also the development of human resources? Are there any changes from what you have explained so far? That's my second question?

Muraki-san, thank you for the questions. As to strategically held shares and how we consider this type of shares, it's not that there has been a big change. But holding those shares, there are some disadvantages or some governance issues. And we have reorganized them. So as a group, as each company, efficiency and risk reduction should continue. But because of this issue adjustment of premiums and there have been some challenges emerged as issues for the whole industry. And overall, Japanese governance issue, which is said to be deformed, and we have recognized those issues. And as Ishikawa-san said earlier, we know our principles. We know our direction. We aim at 0 of these shares. But how to do it and what is the schedule for that? And for that, now the problem is there, obvious. So I think that we should not hesitate to decrease it. But in the reality, how are we going to proceed? So it's not only about Sompo Japan, but as a group, we would like to have some discussions on how to do it. And of course, after the discussions, we will take actions. And that is my responsibility. And Hamada-san, do you have any additional comments?

Here is Hamada speaking. Okumura-san is right completely. Every year that we have been discussing how to reduce strategically held shares on the capital efficiency and risk reduction and corporate governance and the transparency of governance in Japan. So as far as transparency is concerned, then the strategically held shares should not exist. That said, we thought, and that's why we came up with this issue, which is disforming, if you like the practice in the industry. So we have been lenient to ourselves in the past, but now that era is gone, and that's how we came up with this new direction. But it's not that our direction or our way of thinking has drastically changed. We are committed to this initiative. So operating company, the Sompo Japan, and I'd like to make some supplementary comments about Sompo Japan. And of course, strategically held shares is one thing, but it is premium adjustment issue. The fact is that there is no appropriately competitive market out there. So the mechanism to produce those issues, for example, the rule to contract with the peers was not clear or coinsurance, the rules were vague and we -- they did not offer appropriately the price, the product to the customers. So there were all of the issues. And one of them is kind of dictated by holding those shares of client companies, and that it was kind of a trade-off the opportunity for the other premiums. So to set the premiums at the appropriate level, then the reducing strategically held shares will contribute to creating appropriately competitive market, and that's how we decided to reduce the shares, it's my understanding.

As to your second question, namely group governance and how we think about it. So the things that were pointed out, including communication or the internal control in the context of Bigmotor and other issues. So there are newly recognized issues. And to connect with customers connected services and so on. So we have been operating in such a way that each operating company is doing things on their own. But for example, between Sompo Japan and Sompo International, the underwriting center of excellence and what about reinsurance or the Sompo Japan's database and well-being, how are we going to coordinate all that. So between businesses, there should be more the collaboration to improve enterprise value. So at this time, the holdings and Sompo Japan. Now that we are clearly seeing what the problems are, so the concurrent servicing or the dual-hatting this idea that came out. I myself think -- how we can improve the enterprise value most in terms of how we utilize our time. So currently, between Sompo Japan and Holdings, we would like to make the distance between the 2 entity to shorter, and we would like to regain trust. And I would like to use my own time for that purpose, and also growth driver, SI. I would like to have more communication with team, and I'd like to be more committed to overseas business. So it's not that the governance itself that will change for the governance significantly, but maybe the time allocation and small things could change.

As to strategically held shares, I'd like to have some financial clarification. On Page 37, 100% remittance will be the basis you said. Meaning that, that Sompo Japan you sell strategically held shares and you have excess capital. Basically, 100% of it will be collected by the Holdings company. Is that what you mean? Or would it be remitted to shareholders 100%? So with this sentence, am I right to understand that the strategically held shares proceeds will also be subject to this comment?

Hamada-san?

Hamada-san, 100% remittance ratio in the next midterm management period. That's what we would like to achieve. We are still reviewing details. The real 100% remittance will not be achieved overnight. So while Holdings has the money, how will it be managed for AgriSompo on the life side, the 100% that will be difficult to be achieved. So as that concept, 100%, the Holdings company that will collect it. The -- back in May, when we talk about our new plan, we would like to give more details. As to strategically held shares, as a concept, of course, excess capital will be [ reflected ] by the holdings. As is written here in the middle, ROE global peer level, it says. That we have been targeting at 10%, but in the next plan, we will go beyond that, much higher than that. So for example, ESR range ceiling should be lower than the current level. So we'd like to make some specific actions. The preaching the converted, so we sell strategically held shares, the numerator of the ROE will be smaller than using the denominator or the -- you make an adjustment or the other numerator itself, that should be reduced. The ESR range going down and then the capital adjustment will increase more than in the past. So when it comes to additional return to shareholders, we were not hesitant even if it is not at the ESR under limit, we were not hesitant to give additional return. That sounds we'll continue. But 100% or not here, I cannot make any promise. We would like to strike a good balance.

Muraki-san, thank you very much. Now let's move on to Watanabe-san.

This is Watanabe of Daiwa Securities. I have two questions. First one is regarding that disposal gain of the strategically held shares and the return. I think that is going to be positive for the returns, but the other companies are saying like 50% for the shareholder returns. Well, in that case, I think the impression that I get from yourself is actually lower, and that is making the difference in terms of the stock price compared to the competitors. So what's going to be -- can you quantify how much of the update that you will be able to add by coming from the disposal gain? And the second is the domestic P&C's forecast. Can you grow the P&C -- domestic P&C? Page 23 in the auto insurance, you were talking about the premium increase. Can you talk about the timing and the size? The second is about the initiatives that you're going to enhance for the claim payment division, in order to work on the countermeasures. And on Page 31, the segment information for the profitability. In the reporting, you said that you wanted to make adjustment of the values from the customer-centric perspective, and you're talking about the ratings and so on. Are you able to manage it?

Okay. Thank you very much. First of all, what's the strategically held shares, Hamada-san is going to answer. And for the domestic initiatives, Ishikawa-san. And also, I am going to answer your questions. So Hamada-san, please go ahead. .

First of all, the policy of the shareholder return in the next midterm plan, the policy itself is still in examination. We want to talk about the foreseeability and we want to see much more high visibility. The adjusted profit, however, the definition of that, we do not have a plan to change it. If we can adopt the IFRS, then -- well of cource that we have to discuss that -- but for the time being, we currently have no intention of changing it. So the disposal gain is not going to be included in the return for the shareholders. So that's the current situation. But the profit from -- the base profit from the life insurance, the definition of the adjusted profit is different. So that the total share or the total return or the dividend ratio, we want to come to the level, not that bad compared to the competitors. So in that regard -- well, of course, there are a lot of difference in the definitions. However, the [ reaching ] or the reflection into the return to shareholders from the disposal gain, we want to make sure to see to that, but that is not going to be including the adjusted profit. What we wanted to make it easier for people to understand of the underlying reason for what we have come up for the level of the return. Okay. Let's move on to the next question about the profitability for the auto and also the countermeasures for the recurrence of the issues. Maybe we could talk about the digital for that questions. And also the behavioral change and the human resources systems in order to bring about the transformation. Okay. Ishikawa-san?

First of all, regarding the auto insurance, as Okumura-san mentioned in the very beginning, the Bigmotor issue and the response to that, we need to prioritize on the people, who cut the hit or the impact, so that we decided not to have the rate hike for that reason. In the meantime, for this rate hike or the rate change in the mid- to long-term basis, when we look at the current environment, we have to seize the opportunity to do the price hike sometime. So the tolerance from the society needs to be judged first of all. If we think there is intolerance from the society, we want to take that action. For example, in accordance with the inflation, the repair cost per unit is going up. It's up by about 3%. Well, in the performance reporting, to the 5.3% of projection, the level of 5% was within the scope. So we can say the increase was somehow in line with our projection. However, the unit cost -- the repair cost is up. The other one is the accident rate, which is also rising. Our assumption was about 3% increase. Well, after that in the post pandemic, the [ revenge ] driving has already had an impact and the impact is not that been appearing and the traffic is already back on the street. So that accident rate is up by about 3%, including that the premium should be hiked. So I may be repeating, but -- it really -- we have to see the tolerance of the society for the price hike. And to get that, we need to make sure the response to that Bigmotor issue, first of all, I think that's about the auto side. Now about the prevention of the recurrence of what had happened as an event. Well, as I mentioned earlier, this is the first priority that we have to take up. Otherwise, we won't be able to regain the trust. So this is the priority issue that we have to tackle with. But the cost for these countermeasures to prevent this from handing again. The impact on the financial term is not that big. The staff of about 250 people are working on, for example, the process for the contracts or changing the agent -- the agencies. And in their responses or in the workflow, are there any big impact. When we think about that, for example, the excessive claims to come. If there will be any revision to be made or the change to be made, then what happens is that we have to return the premium back because the claims is not going to be used. Sorry, correction. When the claim is not being used, then the grade is not going to be damaged, so that the premium is not going to be there, but there will be offset because the claim is going to be paid back. So that's the mechanism. Such a response to the customers is -- does exist, but the impact -- the financial impact is not likely to be that big. But the human talents, whether we have enough, we're thinking about the culture to change and to transform. I think the human capital is deeply related to the culture. Well the sudden change in the culture is not likely to happen. However, cultural change have to happen, and we have to work on this. Well -- the cure will be, first of all, to change the MERIT system. For example, the sales top line or the market share has been highly prioritized and that was -- the big issue that we needed to refocus that think about. And also, we have to sophisticate the expertise. If something wrongly is happening or something strange happening, we need to have an expertise to detect that something wrong or something strange, so that the claims -- the claims side, or the claims department team will be able to also detect that. We wanted to make sure that to happen. Or sometimes the -- for example, the human resources rotation maybe the opportunity or the job type kind or the career -- the middle career hiring will be another thing to think about and also more diversity. So is something wrong, some people -- the people has to speak up when they find out something wrong.

Well, I wanted to add something here then. At the back of a lot of events that have happened recently, we need to allocate some human resources to respond to those issues. As Ishikawa-san mentioned, without regaining of the trust from the customers, we won't be able to take on any initiatives. Well, Narasaki-san is going to talk about this from the underwriting by utilizing digitals, for example, or what kind of digital technology are going to be implemented to get a higher efficient business model. Well he's going to talk about this. But talking about the human resources, the appropriate KPI setting is very important. With that, each business unit and the business entities do have their merit rating system or the valuation system to promote the behavioral change among the staff, and the [indiscernible] the Sompo Holdings does the support and supervise the businesses and then also set up the appropriate KPI. So it's not only about top line or the bottom line, but for various stakeholders, what has been done, what kind of trust to regain what kind of branding, what kind of employee engagement needs to be done. Those things needs to be clarified more so that we'll be able to make a clear revision or revisiting of the KPI. Narasaki-san, please.

Yes. This is a digital business owner Narasaki. Okumura-san just mentioned about the utilization of the digital for underwriting. Well, in the financial, which was released today, I just saw the article relating to this subject. Just simply say, as you may know, the underwriting judgment for each prospective business or contract is -- well, we have data analytics system called the Foundry of the Palantir. And the role-based AI is also deployed. In the past, when we do not have this analytics system or tools, the average of 4 hours were taken from making the judgment for underwriting. The underwriters, the experts in the underwriting division, were working on making the decision and the judgment or whether to underwrite a particular case or not and also do the test calculation of the premium. Now that is down on the role-based AI and also the Foundry. So the average of 4 hours that it took for us is reduced down to almost 0. We have seen a lot of those cases. We have not utilized and deployed this system for all the way through. However, although we have a lot of dependence in the human manual intervention, still, we want to expand more of this system. And also, this is going to be an augmented intelligence. This is not the replacement of the human labor, but this is going to be a support and the augmentation of the human labor, especially the innovation by using the foundry and the AI. For the -- a lot of lines of businesses and also the other business units, we'll also be able to leverage this advantage and that is going to be much more better underwriting environment for the people, who are working this area and also the prospective customers as well. That's what we are doing as the digital initiatives.

Watanabe-san, thank you very much. Sakamaki-san, please.

Sakamaki, Mizuho Securities. I have two questions. First about strategically held shares. So at this timing, you're saying that you aim at 0, and that is written in the presentation materials, but there are some the barriers to do that regardless of your intention. In a discussion, why couldn't you reduce those shares and because there are counterparties. Is it really possible to reduce it to 0? What is your thought on that right now? That's my first question. And the second question is about overseas business, the growth in the next midterm plan period. So could you please elaborate on the bottom, the growth? Because in the past 3 years in organic growth strategy, though was not so many. Do you think the organic growth alone can you achieve the -- growth target? Could you please elaborate on how you achieve the target growth for double-digit growth? And what kind of support do you expect from the holdings for you to achieve double-digit growth?

Sakamaki-san, thank you. As to your first question, strategically held shares, myself and Hamada-san will answer your question. And for the second question, Jim will answer your question. Let me repeat, theoretically speaking, it should be 0. And as you pointed out, the question was that there are many reasons for us not to make it, and they probably still exist. As each company, we will not hesitate to do whatever we have to do. And in the industry level, there are some discussions that are going on about the reduction of strategically held shares. So rather than saying that we could not do it. We have no other way to go. Not thinking like that, we are going to watch closely the trend in the industry and in other industries, and we are going to aim at 0. And how to do it, that design is yet to be developed.

As is written here, eventually, it is -- it should be 0. We aim at 0 and the management has confirmed that, and we would like to review the time line to do that. And on a technical side, the definition should be worked out as well probably. What is the definition of strategically held shares? Do we need to have more discussions. There are some unlisted shares and then there are some work collaboration or alliance-related the strategically held shares. So we need to clarify the definition. In any case, whatever we call strategically held shares will be reduced to 0 and the time line is yet to be determined. Thank you.

Now Jim, could you please talk about the future growth strategy and probability of achieving targeted growth.

Well, I think the probability of achieving it is very strong as I wouldn't have put it as my target. I would not put a growth initiative that was based upon M&A activities and inorganic growth. Those would be on top of that. I think that the organic growth that we've seen in the markets that we're in today, we still have a relatively small market share. And we still differentiated ourselves from our competitors through the people and relationships that we have and the services that we provide. And so we continue to see that as an opportunity for us to grow and to grow the portfolio and in turn, the investment -- or the operating income. In the markets that we expand in, we're already seeing substantial growth in those markets simply because those markets are looking for alternatives and the brokers that we have relationships with and the customers already. And so I'm quite optimistic about our ability to achieve the plan. I wouldn't sit here at the beginning of a 3-year plan and say, I was concerned. So I think that the foundation that we've put in place, the people that we have and the relationships that are established, I think it's an achievable goal. What I would look towards holdings is to help and continue to provide the capital that we need to grow that continues to maintain the ratings that we have and the surplus we have vis-a-vis the local capital requirements in the different legal entities and the support that we've received through Okumura-san, Hamada-san and others who sit on our Board of Directors and continue to monitor closely and work closely with the management team to continue to invest.

Thank you. Next year and onwards, the growth, I think probability is very high. I myself very confident. Preaching the converted. So the written the part is the increasing and under Jim's leadership portfolio management is happening. And the environment rating s are increasing and for reinsurance attachment point it can be raised. And for investment, AUM is increasing and the yield is going up. So if the market yield becomes flat our yield will continue to increase for another 1 to 2 years. So in 10 years to 20 years' time, would it be okay? Well, of course, I would not know. But for the several years to come, I think the probability is very high. Thank you.

This is Sasaki of Nomura Securities. Well, first one is a question to Jim. In the presentation, you were talking about the softer market, not that the market is soft, but it's a softer market as a projection. Meaning that the rate is going to increase. However, the increment is going to be slower than the past? That's my confirmation. If that's the premium cycle projection, then a large-sized acquisition may be difficult. Am I right to understand that? That's the first question. And on the global base, the PVAS chemical has been quite important for the risk management TAM. So for the overseas business, is it going to have an impact on your business? Is it going to be an opportunity for the overseas business? So 2 questions to you, Jim. So first of all, the second one is -- to Ishikawa-san. When Jim making the presentation, the explanation was very simple, the focus on the bottom line, not top line. Well, Ishikawa-san, are you thinking the same? As simple as that? If that's the case, the loss-making underwriting can be stopped, so that is going to hike the bottom up -- the bottom line. The [indiscernible] or some companies that are just to make an exit out of certain underwriting. So can Jim make the same kind of an action?

Okay. So first of all, let's over -- take, Jim take an attempt, the meaning of the softer market and also the possibility of the M&A. That was the first set of the question and the second set of the question was later. Okay, Jim, please.

Thank you. Very good question. I did indicate it was a softening market, but not a soft market. And so in a soft market, we see terms and conditions expanding and we see prices decreasing. What we are seeing today is that the -- over the last, say, 2 to 3 years, the terms and conditions have gotten to a place that we're -- the market is comfortable with. The rate increases have slowed down. And so we will still see -- what I could still see in the first quarter was certain rate increases around the one-one, not as high as we'd seen in the past. However, if you look, it varies from line to line -- line of business to line of business. And so you may see, for example, directors and officers liability premiums were decreasing quite a bit in 2023, and we're seeing them still decreasing, but not to the same extent. And so it seems to moderate in that sense. And so do I think -- it makes it more difficult for an M&A transaction? I don't think so. I think that when the market was growing and people were looking at different market opportunities, the price was quite high because the expectation was of the strong earnings going forward. And I think while it varies on different companies, business models and portfolios, I don't think it changes, and I think that there will still be opportunities. The question is, is it a good fit to our business and does it make sense, and that's what we continue to look at. If you could repeat the second question, sorry?

Sorry, I did not clearly understand, but you were talking about the PFAS, the chemical, like U.S. and Europe, there's a nitrogen kind of the chemical is getting much tighter for the regulation, so that -- that is going to have some impact in the insurance business. So I just wanted to know whether there will be any impact on your business?

As of today, that's something -- but that's something I would get back to you on. We can come back to you. Yes.

And the second question is for Ishikawa-san, about initiatives for the loss-making underwriting or the businesses.

Well, the bottom is -- well, I think the concept is basically seen as what Jim said. We want to focus upon the bottom line. Because in the past, top line or the market share, those 2 have been quite biased. As a result, the contract was quite questionable in terms of the profitability. And sometimes, we did not really think about the profitability and then underwritten so that the loss was made. And that was something that we have learned has lessened. So there were some inappropriate competition in the top line. So the appropriate underwriting is something that we were not able to have. And as a result, we have some losses. So going forward, the bottom line will be the basis to expand the profit from insurance business. In relation to that is for the loss-making lines, are we going to exit from that? Well, for example, that's what the overseas are doing from, for example, the loss-making or the low-profit geography. We're not thinking about pulling off from those market or the business unit -- the line of business -- line of businesses. Because when we think about the Japanese line of businesses, we have the social responsibility or the social mission to pursue. At the same time, well, before even thinking about that, as I mentioned at the explanation of the SJR, we need to, first of all, review our portfolio to think about the appropriate coverage or appropriate premium to charge to make sure the appropriate profitability to gain from the portfolio. Did we not do that in the past? Well, we did tackle with that. But for the reasons that we mentioned earlier, we weren't able to pursue that in full swing. And as Narasaki-san explained, the usage of the Palantir's Foundry, we need to work upon the countermeasures against the high loss ratio items, and we want to work upon that. The countermeasures started by using the Palantir in 2021 to fight against the high loss ratio. So there was a merit of about JPY 10 billion site in 2021. So we had expanded that to other lines of businesses. And in 2023, over JPY 20 billion of the improvement was seen. So that human capital and also the foundry were the new combination or the new technology perspective that we incorporated to find against the losses and fight against the high loss ratio.

Well, you were talking about the strategically held shares. I just want to have one further questions. What you are saying that you want to target to bring this level down to 0. So your target is to bring this down to 0. Because your judgment is that realistically, 0 is hard, but now your description is -- what's more appropriate to say that target is 0. Is that what you have thought?

Well, just Hamada-san mentioned that there are a lot of things that we have to decide, but we will aim at bringing this down to 0. Well, the methodology definitions and so, one needs to discuss further. To what extent -- whatever we would do in our portfolio, whether we'll be able to do this down to 0 or not? The feasibility, we don't think there will be this is not going to be impossible. It's not that portion. We thought that because there are a lot of things that we have to solve now, we won't be able to say bringing down to 0 firmly. That's what we said.

Well, it's already time. But from the online participants, we have received some questions. Sato-san of JPMorgan.

This is Sato of JPMorgan. Well, time is running out. So I just have one question. Today, you would like to get out of the old -- the trade practice, and I think that you showed that commitment. And along with strategically held shares, another unusual practice is the other agent system within the other company. And when that system is revamped, what would happen? Already, the FSA is requesting for that according to the media. As to the limitations on the other contracts, that which only exist in the form, there will be the revamped and low-quality agents, you pay commissions that will be absurd to continue to pay the commissions to them. So once it is normalized, the expense side that will be slimmer will be reduced. Could you please elaborate on that publicly talking also about the productivity?

Sato-san, thank you. So that is double structure. And we did have some discussions, but we could not take board actions. But the challenges are clear. Issues are clear. So there are things that should be discussed in the industry level and those discussed on the company level. It's not that all the corporate agents are not good. That's not the case. And the things that should be discussed on the industry level? And Ishikawa-san, do you have any comments?

Thank you for the question. As to this issue internally, and of course [indiscernible] and the other property, other department is discussing that, but as to specifics, the end of this month, business improvement plan will be presented. So I refrain myself from talking about specifics today. But as Okumura-san said, as the whole industry because there isn't -- there wasn't a request from the FSA, the industry level, there have been some discussions on this issue. There are different grades of qualities of the corporate agent. As an agent, they should function as an agent. Not just sticking to the other agents within the corporation. The overall practice of the industry should be changed, as I said in the presentation. There should be some -- the repelling effects toward, for example, shares in the coinsurance. But if we work appropriately on the industry practice, then I expect that we can achieve of ideal the picture, and that would lead to improved profitability. So we talked about the Palantir and digital and human resources development, those things included the commercial or retail insurance market should be changed based on these -- the elements. I don't know, if I have answered your question. Again, I cannot talk about specifics today, but we are going to take necessary actions for improved productivity, for improved profitability. And for that, we are going to take steps using digitalization and human resources development. May I? I mean the -- have we answered your question? Yes, if you have any supplementary comment? To the question of Sasaki-san, Jim would like to answer your question as well.

Thank you. Just with respect to that and the food issues, it's an industry issue that we don't see any issue today, but we continue to monitor it. We participate in industry panels. We share information and there will be industry-wide exclusions moving into portfolio into policies. But as of now, we don't see the issue in our portfolio.

So that the risk of asbestos, for example. Could it be something like asbestos, which was in the past?

Wrong for me to say that this is the new asbestos. But I think the industry has gotten ahead of it. And I think that as of today, you could say the same thing about the opioid issue in the United States? And is that -- was that the new asbestos? And I think the industry has responded faster than it has in the past. But we'll keep you informed.

Lastly, Niwa-san because you're in floor, do you want to ask questions?

This is Niwa of Citigroup. I have one question then. On Page 29, corporate culture. Well, there were some discussions, I think, that you have had. When you talk about the corporate culture on the group base, what is the image that you want to have? Or anything that you want to change? I think the point is, for example, to sell down of the shares or the global peer level of the ROE, you are probably passing the [indiscernible]. But you are only showing the overall picture or so. But when you talk about the sketching the scenario of the next mid-term plan, according to what you have said, it does not only give me an impression of a whole change compared to what happened in the past. So do you think the corporate culture is going to be something that is going to be a real benefit for you?

Well, I think this is going to be the real cornerstone for our company. When we talk about the transformation of the corporate culture in the broader way, we are not really -- it's not going to be the enterprise culture or not. But first of all, we have to think about the backdrop of why the problems had happened. I think there are things that are changing drastically, and there are things that have changed little by little. There are a lot of diversity in the change of speed. But we weren't sensitive to see that. Probably the reason is because we did not have enough diversity. We are not able to respond enough to the change. For example, being open so that we are able to be able to speak up or the diversity and the -- it was not really enough. It's not only about the nationality, not about the gender, not about the age brackets, but the uniqueness of each and every person and also respect for each and every person. Including myself, I think the people are like we're -- just getting together we had the -- we were joined by the overseas people, and we have a lot of people like the nursing care businesses as well. A lot of the diversity. However, we just wanted to make sure, where we had the barrier of not being able to utilize those diversity, so that by changing ourselves, by tackling was the social needs, we need to come up with the launch of the new products to meet the needs. So the initiative of the wellbeing is going to be going beyond the boundary of what we have done. And also the silo that we have worked upon will be able to have the vertical connection and to deliver the new policy or the new value.

Okay. Niwa-san, thank you very much. We do not see any more questions from the online participants, either. So let us close and wrap-up the meeting with this. If you have any further questions, please contact IR department. So thank you very much for your participation today, and this is the end of the meeting.