Tokio Marine Holdings, Inc. (8766) Earnings Call Transcript & Summary

[Interpreted] Ladies and gentlemen, thank you very much for participating. I am Ishiguro, Head of IR Group, Tokio Marine Holdings. So Tokio Marine Holdings regularly holds briefings titled Tokio Marine Insights in which members of our team on the front lines provide easy-to-understand explanations of topics to interest to analysts and institutional investors. Last year, we held briefing sessions on digital strategy and TCFD. But for the first one this fiscal year, we will focus on Tokio Marine Group's contribution and growth strategies for the renewables market, which is expected to develop significantly as we move towards a decarbonized society. So without further ado, please allow me to introduce the speakers today. From Tokio Marine and Nichido Fire, we have Associate Director and General Manager of Commercial Lines Marketing, Mr. Yutaka Akira; and Head of Renewable Offshore Wind, Marine Industry Production, Mr. Hiroaki Kobayashi; and from GCube, the underwriting unit of TMHCC, we have the CEO, Mr. Fraser McLachlan. So regarding what we'd like to do today, first of all, we'd like to provide a presentation from the 3 speakers that I just introduced with the slides that we have already uploaded today on our home page. Then we would like to take your questions from the chat box on the bottom of your screens. Today, we would like to end at around 4:30, but if we have more questions, we can extend until 5 p.m. Now the venue is managed by a minimum number of staff, and infection prevention measures have been thoroughly implemented, but speakers will not be required to wear masks in consideration of the articulation. Without further ado, Mr. Akira, please?

[Interpreted] Yes, my name is Akira. I am the Associate Director and General Manager of Commercial Lines Marketing. Thank you for your time today. And now I'd like you to look at the deck. Slide 2, please. At Tokio Marine Group, we are implementing various initiatives to contribute to building a sustainable society and to increase both social value and economic value at the same time. In this context, the green transformation strategy of Tokio Marine and Nichido and the promotion of renewable energy through GCube, which we -- which joined our group in May last year, are extremely important initiatives. And so that is why we are hosting a session with focus on these topics today. Last year in September, Tokio Marine Group released our climate strategy, stating that we will contribute to the promotion of the transition to a decarbonized society by supporting the spread of renewable energy through our insurance products and services through dialogue with our customers on climate change and environmental issues. Next page, please. In order to promote this initiative powerfully, Tokio Marine and Nichido launched the Green Transformation Task Force or GXTF in February this year. And a total of 100 members, mainly at TMNF, are working on this material social issue with the GX office newly established in June recently as the secretariat. There are 3 things we'd like to achieve through this task force. The first -- please look here on this slide. The first is to support all industries and regions with their efforts to achieve carbon neutrality and transition for a decarbonized society. We will support the needs of all kinds of industries such as large enterprises, small- and medium-sized businesses, local governments and automobile dealers as their green strategy partner and support their transition to a carbon-neutral and carbon-free society. To do this, we will promote a variety of initiatives like developing new insurance products and providing various consulting services, and also as a prerequisite of that, we will work also on boosting the literacy of our employees regarding decarbonization and carbon neutrality. Secondly, as a result of these contributions that we will be making, we will be appreciated and selected by our customers. And thus, we too will grow. This is positioned as a pillar mid- to long-term growth strategy, and we'd like to create a market of at least several tens of billions of yen in premiums written by 2030. Thirdly, we'd like to be widely recognized in association to green as in when it comes to green, Tokio Marine Group comes to people's top of mind. So today, we have leading experts who will speak in detail about offshore wind, one of our particularly advanced task force initiatives and about the strengths of GCube, a leading player in the renewable energy market. So speaking of the offshore wind power, Mr. Kobayashi, please?

[Interpreted] Yes. I will take it from here on Slide 4. Offshore wind power is the key to making renewable energy the main source of power because, first of all, it can be introduced in large scale for Japan, which is surrounded by the sea; and two, it is expected to reduce costs over the long term; and three, it has a large economic ripple effect due to its broad-based industry. The introduction of offshore wind power is expanding worldwide, especially in Europe, and it is predicted that the amount of offshore wind power installed worldwide will expand from 23 gigawatt in 2018 to 562 gigawatt in 2040. The expansion of offshore wind is also expected to continue in Asia, especially in China, Taiwan, Vietnam and South Korea. At the end of last year, the Japanese government announced its first vision for offshore wind power industry and set ambitious targets for the introduction of offshore wind power that are as good as other companies -- other countries. Currently, there are only a few demonstration turbines in operation. And even in 2022, the total amount of offshore wind power installed in Japan will only total up to about 0.5 gigawatt at the ports of Akita, Noshiro, Nagasaki Goto, Toyama Nyuzen, Hokkaido Ishikari Bay and Kitakyushu Hibikinada. However, the Japan Wind Power Association predicts that 90 gigawatts will be generated by 2050 with offshore wind power. This is the estimate supported also by the Ministry of Economy and the Ministry of the -- Ministry of Land, Infrastructure and Transformation. In the midway, they are trying to expand to 30 to 45 gigawatts by 2040. The current scale of the insurance market for offshore wind power in Japan is more than JPY 1 billion, and even with the addition of overseas projects, premium income from offshore wind is still around JPY 2 billion. But Tokio Marine and Nichido's premium income from offshore wind power will grow significantly as we provide full insurance support for the offshore wind projects across the Japanese waters, including Chiba Choshi, Northern Akita and Yurihonjo and also Japanese companies' investments into overseas projects. Depending on the water depth and the seabed conditions, various types of foundation structures are used to support the wind turbines, including monopile and jacket types. In Europe, where offshore wind is predominant, the seabed tends to be shallow. So most of the foundation structures are fixed to the seabed, although they do also make the floating models such as the ones on the right, too. Japan has been lagging in the development of fixed turbine foundations, but we have high hopes that Japanese companies can potentially lead the global market for floating wind turbines. We will also be involved in developing floating turbines, international standards for risk engineering and assessment so that as the floating type spreads in Japan and overseas, the Japanese technology for floating turbines is adapted and utilized around the world. Now it is said that around 10,000 to 20,000 components are used in offshore wind turbines, and that means there's a growing base in this industry just like the automobile industry. There are plans for overseas wind turbine manufacturers to build assembly plants in Japan, and if Japanese suppliers can deliver various components such as nacelles, generators, gearbox, rotors, bearings, transformers and anemometers, it will help strengthen Japan's industrial base. So when these suppliers build new factories or deliver new equipment, they will need construction and fire insurances. And if they hire more employees, they will need workers' compensation insurance, too. We will continue to provide insurance and risk management so that more Japanese companies can enter the offshore wind industry. A large amount of steel is used for structure foundation building, and bending and welding thick plates requires advanced technology, but we believe domestic production is possible here in Japan with the country's strong base in shipbuilding. We will encourage and support the steel, shipbuilding and engineering industries to enter the offshore wind industry to build strong basic structures that can withstand earthquakes and typhoons for 20 to 30 years going forward. But this is just the beginning for floating foundations. The government's first vision for offshore wind power industry includes strategies for development and international standardization of next-generation technologies for floating turbines and marine construction companies, shipbuilders and electric and gas utility companies are developing the technology. But there is still no international standard for risk examination methods for floating foundations and cable systems used in floating systems, so we will take the lead in establishing international standardization for risk engineering and underwriting in this field. The insurance required for offshore wind power consists of property insurance, liability insurance and profit loss caused by property damage. During the construction period from the start-up to the beginning of commercial operation, various companies, such as the construction company who installs the basic structure, cable makers and turbine manufacturers, will be working on the project, but the power generation company is responsible for making comprehensive arrangements for various insurance coverages throughout the process even after commercial operation is up and running. Marine construction is never easy. It's an area where advanced insurance programming and loss prevention skills are tested to reduce construction errors and prepare for typhoons. And if not insured, project financing will not come through, so we can actually say that insurance is indispensable for the promotion of offshore wind power generation. At the end of last year, Tokio Marine Holdings received the SDGs Strategy and Economic Value Award from Nikkei in recognition of our launch of the insurance package for offshore wind power generation in Japan. This is the news release from Tokio Marine Holdings with a view of the award ceremony. Tokio Marine and Nichido has been involved in offshore wind insurance since 2013 when the first demonstration turbine was built in Japan. Since then, we continue to gain experience by underwriting European offshore wind projects. And so far, we have underwritten about 50 offshore wind project insurance policies in 10 countries and regions, and we have been able to gain lots of knowledge due to this. The introduction of offshore wind power is led by Europe and China, followed by Taiwan, Japan and the United States. And this will continue to expand into Vietnam, South Korea and other Asian countries. Through the underwriting of roughly 40 offshore wind projects in Europe, we have taken this experience and built a trustful relationship with European offshore wind power generators, and they are now hoping to leverage Tokio Marine and Nichido's knowledge and expertise on natural disaster risks such as earthquakes, tsunamis and typhoons when they enter the Japanese offshore wind power market. In the U.S. and Taiwan, we are participating in insurance programs for all offshore wind projects. Some projects in Taiwan are funded by Japanese electric power companies, trading companies and energy companies. We're doing this strategically to learn from these projects and reflect those learnings in the underwriting of commercial projects in Japan, such as preparing for natural catastrophe risks like earthquakes and typhoons and risk analysis for supply chain management and development of local businesses. And in Japan, we have been providing insurance coverage for offshore wind turbine demonstrators since 2013. And in 2020, we became the key lead arranger for the first large-scale commercial offshore wind package insurance project in a port. When structuring an insurance program for offshore wind power in Japan, it is important to reflect the unique circumstances of Japan. Offshore wind power producers expect insurance companies to provide the following services: one, underwriting; two, accident response; three, calculation of probable maximum loss; four, loss prevention; five, risk assessment; and six, insurance procurement advice and others. It is important not only to use our experience in underwriting European offshore wind projects but also to tailor our advice to fit the Japanese situation. And we have the answers to meet each of these needs. Let me introduce 2 examples here. At Tokio Marine & Nichido Risk Consulting, in an industry-academia collaboration with the Nippon Kaiji Kyokai and Kyoto University, we analyzed the structural characteristics of offshore wind turbines and the impact of weather and ocean conditions and developed a PML simulation model for a natural catastrophe that can also be an important risk model for project financing. And this model has been used in a number of port projects and is conducive to the structuring of project finance, too. We have also been focusing on introducing the Marine Warranty Survey into Japan. In Europe, the Marine Warranty Survey has been the prerequisite for underwriting offshore wind insurances. It's an accident mitigation activity used in offshore oil development projects to check whether the work vessels can sail based on the weather or sea conditions or whether materials and components are securely tied down. We also worked on redesigning European guidelines, originally developed for offshore oil development projects, to match the conditions of offshore wind farms in Japan. And actually, we have already started servicing. I would also like to explain the collaboration with GCube. GCube joined the Tokio Marine Group in 2020, but the relationship between GCube and Tokio Marine and Nichido's marine sales department and marine operations department actually dates back to 2013. At that time, Tokio Marine Kiln had a relationship with GCube, and so through that relationship, we contacted GCube. Now Tokio Marine and Nichido's ship and offshore business department started underwriting offshore wind insurance by establishing an underwriting program that utilizes GCube's reinsurance capacity. And it actually can be said that Tokio Marine and Nichido has been able to build up our track record in offshore wind insurance, thanks to this collaboration with GCube. Now since the acquisition last year, we have further accelerated our collaboration with Tokio Marine HCC and GCube, holding these monthly meetings, Tokio Marine Group offshore wind strategy meetings and making joint approaches to European offshore wind power producers and international insurance brokers. And in addition, the 2 companies have signed a contract to participate in an offshore wind power project in Europe. As offshore wind power generation in Japan continues to accelerate, the international offshore wind insurance market is increasingly looking into Tokio Marine and Nichido -- looking to Tokio Marine and Nichido for our knowledge and expertise in Japanese natural disaster risk. The collaboration between GCube, a leading global player, and Tokio Marine and Nichido, a company with extensive knowledge of natural catastrophe risks, will be sure to enhance the presence of the Tokio Marine Group. And now I would like to hand it over to the CEO of GCube, which is key to our strategy to achieve both resolution of social issues and economic growth as one Tokio Marine Group.

Thank you very much. Thank you very much. GCube is a specialist underwriting unit of TMHCC. We underwrite renewable energy-related risk; wind, both on and offshore; solar; battery storage; and hydropower generation. And we joined the group in May 2020. We are widely considered to be the market leader in renewable energy business around the world and centering on the U.S. and Europe with business also written in Australia, South Africa and Asia. Our main segments are construction, transportation cargo, operational or risks, which is the property after the facility has been constructed and business interruption insurance, including the associated liability and casualty lines. Renewable energy is a huge growth market, with year-on-year double-digit growth in many parts of the world. GCube's premium has grown from just $10 million in 2007 to an estimated $140 million for the 2022 year. Our core strengths are: one, underwriting capacity; two, loss servicing capability; and three, our industry presence. More specifically, the strength in our underwriting capacity is built upon the huge volume of loss data accumulated over 3 decades since our founding. Risks involved in the renewable energy business differ from conventional power generation or energy risks in that the loss profile tends to be more attritional. Namely, the business is made up of lots of smaller in quantum but higher in volume losses. This takes a dedicated team of experienced claims handlers and loss adjusters to process and pay claims efficiently. Using our in-house expertise and data, we focus on the technology that will be used and its past performance. We then examine these trends to produce a technical price for the risk taking into consideration the contractors that will be used, the geographic location of the project with a specific focus on natural catastrophe and how the operations and maintenance will be carried out post-construction. renewable energy business includes a variety of technology including, but not limited to, wind, solar, biomass, geothermal, hydrogen, wave tidal and battery storage. Our main focus is on wind and solar with hydro comprising of less than 5% of our portfolio. We do not currently write any biomass or geothermal, as these classes have a different risk profile compared to wind and solar and are more volatile in nature. As a result of our superior underwriting expertise, we can provide up to USD 300 million in capacity for any 1 project. The market has been hardening steadily since 2017, which we have taken significant advantage of. Indeed, we won the first businesses to recognize that -- we were one of the first businesses to recognize the fact that it was not only rate but deductibles, terms and conditions that also need to change after the power generation business entered the Lloyd's Decile 10 in 2018. Since then, we have seen significant increase in overall rate with double-digit rate increases year-on-year, including 2021. In Slide 17, this slide illustrates some of the underwriting process, which considers technology, contractors, suppliers and on-site surveys. These are just some examples of what needs to be assessed when underwriting these risks. Another critical factor is the geographic location of the project site. For example, we use a variety of modeling techniques to ensure that the natural catastrophe risk is priced at an adequate level. Our loss servicing capability is something that we are very proud of. We've paid over 4,000 individual claims over the last 10 years, totaling more than USD 700 million. We have in-house loss adjusters specializing in renewables, who provide loss prevention advice to our clients. In the last 4 years, the severity of claims has increased by 30% and contractor error claims have significantly increased offshore, especially in inter-array cables and foundations. In response, we have been market leading in driving better terms and conditions as well as ensuring that there is more adequate risk sharing across the entire industry. We have been keen to try and share data with our key clients to help them with risk mitigation measures to avoid future losses supported by our experience, which has been appreciated by our customers. Slide 20 illustrates our unique expertise in loss mitigation services, where our in-house loss adjusters, RELA, is a trusted and world-renowned renewable energy claims and risk assessment specialists owned by GCube. Using their expertise, we can provide high added value to our customers, both before and after losses. We've been in the renewable energy space from the beginning, almost 30 years, and we are supported by a strong track record and a brand as a market leader. 8 out of 10 of the world's renewable energy companies are our customers. We have an extremely good relationship with the brokers, and we receive referrals for most of the main projects throughout the world because of our presence in the market. Finally, I would like to talk about the synergy effect of joining Tokio Marine Group. Joining Tokio Marine Group has been strategically very important. We have an excellent working relationship with TMNF offshore team and are currently working together on world-famous offshore wind projects in the U.S., Europe and Japan. We have monthly meetings with TMNF and the team to ensure that we are both educated on industry topics. We have also been successful in working with Tokio Marine America in the United States and have successfully bound and written a U.S. solar project account offering 100% participation as a group working together. We feel these synergies are one of the main benefits of joining TMHCC in the first instance. We would like to contribute to the resolution of a global and social environmental issues of climate change by supporting the spread of renewable energy through insurance and risk consulting and grow our business as a consequence. Thank you very much for your attention.

[Interpreted] Thank you for the presentations. Now we would like to take the questions. [Operator Instructions] Now today, we have these experts here, but if you have questions out of their scope of specialties like coal-fired power plant stations or ESG investments, then the IR group would like to take those questions to answer later on. We may have a time limit as to how many questions we can answer today, but if we cannot answer anything, IR group will also answer later on. The first question is for Mr. Akira from Otsuka-san from JPMorgan. So in this question, in your explanation, you said that you will create a market of a few tens of billion yen, but this amount of premium seems a little bit small compared to other fields, for example, petrol industry. So what is your thinking here?

[Interpreted] Yes. So to have a premium written of tens of billions of yen in 2030, I -- my nuance that I have communicated earlier was that it would be at least tens of billions of yen at least. And the reason why we say that is because the amount of premiums written that we have estimated already, that we have good visibility in, is already there. But on top of that, we are asking more to customers' needs and other initiatives that we can possibly do, and we're doing this at an accelerated pitch. And these will all become upsides on top of the tens of billions of yen, which will form a figure that we can submit to you in more concreteness in the future. But first of all, we have renewable energies such as solar power generations plants and also storage batteries are increasing as well, so we need to come up with other insurance systems for that and also alternative energy that does not increase carbon footprint. Again, we would have insurance there for building plants as well and of course, offshore wind power generation as well. These all are things that we have good visibility in, and that's why we say at least tens of billions of yen. But on top of that, we can still work on other things like VPP, carbon pricing and we're studying these topics as we speak. So as soon as we have better visibilities on these areas, we will be able to add our estimate here.

[Interpreted] So next, we would like to hear -- we would like to ask this question to Mr. Kobayashi. Muraki-sama from SMBC Nikko. So regarding the premiums written for offshore wind currently is JPY 2 billion. But what is your estimate for the scale for solar power and also coal-fired plant? So you said for the power generation facility per 1 megawatt premium insurance -- premiums written. When you look at that number, is there a difference between coal-fired plants and offshore wind? And what kind of high-spec underwriting know-how do you need? And how will that impact profitability?

[Interpreted] Yes. So we have these marine-related insurance, including offshore wind. So I actually am not in the position to answer questions regarding solar power and coal-fired plants. But when it comes to offshore wind power plants, the biggest difference is that we have construction works on the sea. And if we have accidents, we need to use work boats to work on the repair. Even if it is a small break in the cable, the places where the cables are broken, even if we can fix that itself by JPY 1 million or JPY 2 million, what happens is that we have accretive impact on top of that because we have seawater that seeps into that gap. And so it creates more damages and more costs. And in order to fix it, we need to charter the boat, and that is JPY 10 million per day. And on top of that, if we have bad weather and the boat had to be idle for 10 days, then we will have to pay for 20 days' worth of chartered fish. So if an accident happened, in a few hundreds of millions of yen, the same accident on the sea will be about JPY 200 million. So you can see how the scale of the damage in yen amount would be much bigger. That is the difference between land and offshore, and that's why the premium is much higher. And we also need to work on risk control and loss prevention. This is where we need very advanced underwriting know-how. I'll stop here.

[Interpreted] And now we have a question for Fraser from Mr. Watanabe from Daiwa Securities. This question is for you, Mr. McLachlan. And so the GCube loss ratio over the long time, how much has the percentage -- has it progressed regarding the renewable energy market insurance underwriting?

The loss ratio really is driven by a number of factors. It's driven by the market cycle. So whether the market is a soft market, a competitive market or a hard market as we are currently experiencing and very much by supply and demand. So our budgeted gross loss ratio is 45%, and we're probably overachieving on that insofar as it's currently less than that. Previously, it's been higher than that. And it does go up and down, but the -- for us, because we hold quite a lot of data or an awful lot of data, it enables us to have a significant competitor advantage over some of our peers, who actually want to try and enter this market. So we use our historical data and our industry knowledge to keep our loss ratio actually quite low, which differs to some of our competitors who, as I say, are entering the market and are trying to gain market share by writing sometimes underpriced business. So it really does vary from year to year. But as I said, our budgeted loss ratio is 45%, and we're currently overachieving on that.

[Interpreted] Thank you very much. So the next question is also for you, Fraser. So [ Greenhill ] from [ Bearing ] -- [ Mr. Greenhill ] from [ Bearing ] has a question. So could you please discuss some of the issues that you consider in relation to the service and maintenance agreements when you decide the pricing coverage? So what are the key factors here, please?

Certainly, I mean that's a very wide topic, and so I'll try and keep my answer as concise as I possibly can. The service and maintenance agreements, especially in the wind energy sector are very wide and they're very varied. And you can buy short-term contracts or long-term contracts. We always insist on seeing those contracts and actually understanding those contracts because it very much depends on how much risk a manufacturer or supplier is prepared to take versus how much risk the project actually wants to pass to an insurer's balance sheet. And that does have a -- quite a big driving factor in us pricing and assessing the overall risk. So you will have some suppliers and manufacturers in their agreements take an awful lot of risk, and indeed, the buyer of that equipment will pay a significant amount of premium to the manufacturer to pass on that risk, and the insurers will take not as much risk. Conversely, there are people who prefer to limit those supply and service agreements to some very narrow terms and pass most of that risk onto the insurers, and that's what obviously would increase our price. So seeing those agreements and understanding those agreements, understanding the sort of the contract interface between insurers, suppliers, manufacturers and the actual project is key to actually getting the price right. So I hope that answers your question.

[Interpreted] Yes. Thank you very much. Next, we have another question to Fraser. If you could please answer this one, too, from Ms. Tsujino from Mitsubishi UFJ Morgan Stanley. So in this renewable market -- renewable energy market, you are the leading player. But how much is GCube's share? I mean just roughly, if you can give us an indication, that will be great. And another question is we understand that for offshore wind power, the premiums are extremely expensive, so I would imagine that reinsuring -- reinsurance is essential. So what is the rate of reinsurancing for you?

Well, what I would say on offshore wind, from a pricing perspective, I wouldn't call it extremely expensive. I would call it well priced, and it's priced for the actual risk that it represents. And my view is that offshore wind premium at the moment still represents very good value to our clients and to our customers. With regards to market share, that's a more difficult question to actually answer because it very much depends on which country you're talking about. As I said at the beginning of my presentation, there are -- we are mainly domicile in Europe and also North America. So if you took North America, as an example, I would be confident in saying that our market share is close to 50%. However, if you were to take China as an example, I would be very confident in saying that our market share is close to 0%. So the market share question really does very much depend on which country you're actually talking about. But there's a bigger answer to your question insofar as it was one of the core strategies and one of the core reasons that we came to TMHCC, was to join up and allow us to have a more global footprint that we didn't have before. So being able to get involved with the Japanese market and the Asian market has been absolutely critical for us. And therefore, that's going to increase our market share in our view, exponentially, and that's really the goal to have a more global platform and a more global presence for the overall business.

[Interpreted] Thank you very much. I would also like to ask a question, if I may, to Mr. Kobayashi. So in today's explanation, you have talked about the fact that the offshore wind insurance is a growing market. So that would mean that the other companies, that other 2 mega companies will be focusing on expanding the market, too. So how can Tokio Marine and Nichido win this market? What are the strengths that other companies cannot imitate overnight? Mr. Kobayashi?

[Interpreted] Yes. Thank you. So when it comes to offshore wind power insurance, we can utilize the technology for the fossil fuel type of insurance. We actually have put together a special team from a long time ago so that we understand how to review the contracts for construction on the sea and also the control of the marine survey as well. So with this kind of backbone that we have in construction on the sea, we were able to catch up very quickly in this kind of offshore wind market insurance business, and that's why we were able to gain this presence early on. Now when it comes to the 21 years, the experience in 21 -- the 21 years of experience and also 8 years of experience in offshore wind power, this has been very helpful in allowing us to get 50 projects so far. Now the other 2 competitors that you mentioned, in order for them to catch up on the experience, I would say that they would need at least 5 years to catch up. During that time, we can use those years while they try to catch up to gain more underwriting cases and also accumulate our experience as the lead arranger for the domestic commercial deals. Now the offshore wind projects are very large in scale, and so there are scenarios we can estimate as large as few tens of billions of yen when an accident happens. And so that's why we will be using reinsurance technology and make sure that we will participate in the international scheme. But in order to do that, we need to be trusted by the international offshore wind insurers. So that's why when we build these Japanese systems on the Japanese seas, getting the funding from Japanese banks and using Japanese contractors, we would like to make sure that we become the leading Japanese insurer for accident measures and loss prevention so that we can fight equally with global competitors like Lloyd's Syndicate, Swiss Reinsurance alliance, AXA, these major global players. We would like to make sure that we would like to be the key player in and outside of Japan.

[Interpreted] Thank you very much for that as well. Next, I have a question for Fraser. So we have a question from Sasaki-san from Bank of America. So regarding the premium, if you can give us the allocation depending on the region, please, regarding especially America, China, India and how dominated is the market here? And how is the premium different by the country? So maybe you can talk about it from the GCube perspective or the industry data, whatever suits you well to answer this question.

Thank you. Again, a big question. It's the -- it's very difficult to ascertain what the market premium is like globally and also in various countries because we can only look at it from the amount of business that we actually underwrite. So as I said in my presentation, it's $140 million of gross written premium that we write throughout the world; and currently, that's predominantly Europe and also North America. What we do, do when it comes to actually rating that business as we look at country and country risk very, very differently, and as I think some of my colleagues have alluded to today, we look at natural catastrophe risk very, very carefully. But we also go beyond that, and we look at other things like natural weather phenomena, which has been more and more prevalent in places like the United States in our view, principally as a result of global warming. So what the world is now seeing is a very, very different makeup in terms of weather-related exposure compared to what it was probably 10 years ago, insofar as we started to see things like tornadoes and hail exposure in parts of the world where traditionally we wouldn't have seen those sorts of events. And therefore, what we need to do is stay one step ahead as an industry and as a company and actually build in adequate pricing for those sorts of perils in parts of the world that, 10 years ago, you probably wouldn't necessarily have actually wanted to rate for or needed to rate for. So we do look at not only country risk. We look at actual region around the world where projects are specifically located. We look at natural catastrophe events historically in those parts of the world. We use quite sophisticated rating tools. But we also drill down below that, and we look at other events, which may actually impact the project's success. As I said, things like tornado and hail all have a very large impact on renewable energy projects just because of where they are and what they're exposed to and all of that built into our overall pricing structure.

[Interpreted] Thank you very much. So we have one question also from Sasaki-san, and this is for Fraser and Mr. Kobayashi. So this one is regarding -- well, when it comes to offshore wind power, there are criticism from marine produce research or ecology impact perspectives. And they say go away from the land, go farther when making a construction, and that leads to more cost and delay in the projects. This seems to be a global trend. So what does this do to your business? For example, does the premium increase or the loss ratio change? All right. So this is the question. And Mr. Kobayashi, you can take it first, and then, Fraser, please.

[Interpreted] Thank you. So when it is closer to the shore, we have people from the local communities who voice their opinion, and due to that, yes, there is a trend where our plans are altered due to these voices. So we go farther from the shore, deeper into the seas. So that means when it comes to the floating type, these will become more and more prevalent because we go farther and deeper. What this means is currently, mainly in Europe and globally, too, there is the type of solid base turbine, which is quite popular. Now Japan is lagging behind in the introduction of this type. However, we can fight back with the floating type of turbine going forward to catch up and maybe lead the world. So I believe that the Japan floating type has an opportunity to become the global leader. Now which has more risk? Solid-based? Floating? We don't think floating has more risks because in the research of this kind of area, when we compare the floating type and the solid base type, we don't see a conclusion that indicates that there is a different loss ratio between the 2. So if we just carefully analyze the elements, we believe that we can promote floating.

[Interpreted] Mr. Kobayashi, from [ Greenhill-san ] from [ Bearings ]. We have another question. Now in Japan, there are no major providers of offshore blades or windmills or et cetera. So would it not be lower risk to use the global majors' products rather than new local makers? This is related to underwriting. Mr. Kobayashi, please?

[Interpreted] Yes. Thank you. So when it comes to developing turbines for offshore wind, we have Vestas, Siemens and GE, these 3 strong global companies, designing the turbines. So it's very difficult to create these turbines, these mills that are safe, and so that's why safety becomes a crucial element and allows these 3 players to take the lead. But when it comes to components, we have the windmills for onshore. We have a lot of technology, a lot of suppliers that can cater technology to those kind of components. So we believe that we have much leeway to catch up. On the other hand, in the beginning, when they start to develop it for offshore wind power, there is a possibility that the cost will be higher, at least the early part of the curve. But then again, if you import it from overseas, the logistics cost would become higher, so it's really to find the right balance here. But in any sense, for the Japanese players to participate in the offshore wind market, if we should not give up because when we have the 90-gigawatt type of offshore wind in 2050, are those turbines going to be made by foreign makers? We don't want that to happen. We want to make sure that the Japanese companies provide the components and the parts for the Japanese offshore wind. So that's why we would like to support this with the help of the government as well.

[Interpreted] Thank you very much. So another question first because this one is for Mr. Akira. I would like to ask this one. So in our IR briefing in May 27, actually our CEO, Mr. Komiya, mentioned that TMNF aims to increase revenue by JPY 100 billion. We're going to do JPY 100 billion with the specialty insurance in the new midterm plan. So how much revenue do we plan to increase in the renewable energy market?

[Interpreted] Yes, I would like to take this one. So when it comes to new specialty type of insurances, we are expecting JPY 4 billion. So this GX Task Force overall is looking at a growth of JPY 10 billion. But we have -- we're basically looking at JPY 4 billion as a more concrete number for insurance, mainly around construction insurance. But again, we have things on top of that, for example, covering the virtual power plant, VPPs, and other types of coverages that we can provide, and all of those will be an upside.

[Interpreted] Yes. Thank you. So we will definitely achieve this midterm plan, and there's more to come, you're saying. That's very encouraging. Now Mr. Kobayashi, this is a question from Mr. Watanabe, the analyst from Daiwa Securities. Here's the question. So when it comes to offshore wind insurance, is it usually the case that several companies underwrite it together? Or is it solo? What is the business model here? Is it the direct and reinsurance style or not?

[Interpreted] Yes. Thank you. So when it comes to offshore wind projects, it starts from the port -- around the port recently, but it will become farther and farther from the shore going forward. And as this trend accelerates, this will be much more of a scale, for example, construction of JPY 300 billion or JPY 400 billion going forward, and that would be such a scale that the -- us, Tokio Marine as a group, cannot shoulder alone. And this would be the case where the 3 major players in Japan will share the bearing of the risks here and go procure the reinsurance from outside. And the thing is, when we work with these global reinsurance parties, we don't want to be controlled and told about how we should be working this through. We would like to be the leader in understanding how to handle the risks and how to provide the insurances, and that is the way we would like to take the lead in working together with these global reinsurers.

[Interpreted] So let us move on. Now I would like to ask a question to you, Mr. Akira. So regarding the GX Task Force, so you are aiming -- we are aiming in the midterm plan that we do about JPY 10 billion growth versus the fiscal year 2020. So what is your initiative here? Can you talk in detail?

[Interpreted] Yes. So we're leading in the offshore wind projects, as Mr. Kobayashi mentioned. We believe that this is a very hopeful market, and we believe strongly that it will develop. Now at the GX Task Force, we are looking at the advancement of technology and also the change in the market. So regarding these 2 trends, what kind of changes do insurance products have to reflect and how can we cater to these changing needs? These are the perspectives that we have; and according to that, we have defined key areas to focus on. First, regarding technology advancement, it is not just offshore wind power, but it is also solar power and storage batteries as well because these are the areas that will accelerate going forward. So fire insurance is related and liability insurance, construction, work insurance and also new forms of insurance will be a growth area for us. And furthermore, going forward, we have hydrogen and ammonium. These is an area -- these are areas where companies would like to invest probably going forward. And so we would be asked of how we can help ensure those as well. And also CCUS, this also is an area that will grow dramatically going forward. Yes, so these are the areas where we would like to continue to provide new insurances for the renewable-energy-power-related areas. When it comes to the market, decarbonization is their initiative. For the manufacturers, they are also working on that in the market going for carbon neutrality, including their supply chain network and their trade partners as well throughout the whole value chain. They are working on carbon neutrality. So we would like -- we can help there. And also, in order to proliferate this thinking of decarbonization, We can work on the promotion of that as well together with our customers. We can do this on buildings, residences, commercial facilities, making sure that these buildings are also carbon neutral as well. These are all the areas where we can come up with businesses and solutions. We work very closely together with our sales department to listen to our customers' voices thoroughly. Also, there is a change in the society as well with the legal and regulatory changes, for example, what are the new risks that will arise when a regulation changes regarding carbon neutrality. These are all the areas that we can aim for as we go for this JPY 10 billion increase going forward and more.

[Interpreted] Okay. So we are going beyond the time a little bit more. We are going beyond the time, but we have some more questions. Now -- so we would like to take some of the questions that we would like to ask Fraser. So the agenda was that regarding the plants, there are complaints and criticisms because the marine produce players and the ecology impact gives us these criticisms, taking us farther and farther away from the shore. So -- and also increase in cost and delay in introductions. So we are wondering, how would this impact your business in terms of premium and loss ratio?

It's an interesting question. I think way back when offshore wind energy was conceived, there was a lot of concern amongst environmentalists and amongst fishermen that it would have an adverse effect on marine life. And indeed, there were people who didn't necessarily think that wind turbines at sea visually looked very nice. And what we've learned over the last sort of 15 years is that the converse is actually true. Marine life is actually attracted to wind farms. In a strange way, they form a certain amount of natural reef, and so fish and shellfish and things like that actually congregate around offshore wind farms. The -- with regards to the second part of the question, which is sighting, to me, it's just a more natural evolution of the industry, and it almost follows the format of the oil and gas industry as it moved further and further offshore and started to drill in deeper and deeper waters. As the technology has progressed and as it's evolved, so has the ability to move further offshore with things like floating wind turbine installations and things like that. So I think that it's not necessarily an environmental consideration as much as people like to actually make out. Is it a good thing that you can put wind farms so far offshore now that you can't actually see them? Yes, absolutely, it probably is. Equally, I know a number of people who don't mind wind turbines being on the horizon. And certainly, they would much rather see wind turbines out at sea on the horizon than a large utility-grade fossil generating power facility onshore. So it's an energy mix. It's a balance. But I just feel that as the technology progresses, it is going to just naturally go into deeper water and go more offshore. So it's an evolution thing rather than an environmental thing.

[Interpreted] So we have the next question, which is the last question. And this question is for Fraser. This is from Mr. Watanabe from Daiwa Securities. So regarding GCube, in your explanation, Fraser, you talked about your predominant market, which is North America and Europe. And so if you can just give us some figures about how many projects you have participated so far? Maybe how many in the States and how many in Europe? And how much is it in the net figures maybe, in any way you can comfortably answer and also the reason why you're able to acquire so many projects, please?

The number of projects is in its thousands and it all depends on how you want to define an actual project because we have many clients and many insureds, who you may actually own themselves 100 or 200 projects. So if I were to take it up a layer from the number of projects, I would say, in terms of number of clients, about 220 clients who are building or operating renewable energy all over the world. And some of those clients will actually only operate in one country, and some of those clients will actually operate on a international basis. But it's a lot of projects in a lot of different countries and as I -- or as you said -- as I said, predominantly in Europe and North America but not exclusively. So we have clients in Australia, in Asia and in Japan. And we have clients in South America and South Africa as well. So it's a reasonably good spread of business, but it's many, many thousands of projects from very large-scale wind and solar installations down to some very small-scale wind and sometimes rooftop solar installations as well.

[Interpreted] All right. Thank you very much. So thank you all so very much for participating today. So with this, we would like to conclude our briefing session on Tokio Marine Group's contribution and growth strategy for the renewables market. Now at the very end, we have a request, and that is, please let us hear your opinion and your request about what kind of theme you would like to hear going forward from Tokio Marine Insights. If you can just enter that in the chat box or send us an e-mail, that would be great. Thank you very much for today. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]