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

Hello. I am Yuasa, CFO. Thank you for joining today on short notice. As you have already heard, at 3:00 p.m. today, the company made an announcement regarding share repurchases worth JPY 30 billion. This will be the first execution under the new capital adjustment method that was announced on May 20. As this was the first time under the new methodology, we have decided to hold this conference call to help you and the others in the capital market understand how we make decisions on the timing and the size of our capital level adjustment and execute on the plan. There are mainly 2 points I'd like to highlight. The first point is about the timing and the amount. We have already announced that we had set the annual budget of JPY 100 billion of the capital level adjustment. In the past, we made the decision of capital level adjustment twice a year, May and November, but we had to change that and make decisions flexibly, as we think we need by looking at the circumstance, which we announced on May 20, as you know. With regards to the amount, we make decisions depending on the M&A pipeline for small- and medium-sized deals. With regards to the timing, we made decisions comprehensively by looking at mainly the share price. We have announced JPY 30 billion capital adjustment today, considering that we don't have immediate upcoming M&A deals that require your immediate announcement and there is a gap between what we think we were and the current share price. We made a decision comprehensively at the first execution based upon factors I mentioned, including the buyback period, which is up until the end of August at the longest. We will continue to make decisions flexibly on the capital level adjustment going forward. The second point is to reiterate our policy on investments and the return to shareholders. Our philosophy of capital policy has not changed from the past as we have been mentioning in various events so far. In the new medium-term business plan, we are targeting to achieve medium- to long-term targets of adjusted net income of over JPY 500 billion and adjusted ROE of 12%, purely by organic growth. Therefore, there is no circumstance that rushes us to do M&A. When we do M&A, it will be to make the profit of over JPY 500 billion more stable and implement the deals only when we see attractive investment opportunities for the risk diversification. In other words, if we don't encounter any attractive opportunity, we would return the capital back to our shareholders with discipline. This is applied not only to capital level adjustment budget of JPY 100 billion for FY '20-'21 but also a separate reserve for large M&As. These points were covered also by Mr. Komiya, our CEO, in the IR event we held on May 27. Our intention is to show the market our attitude of the disciplined return policy by clarifying our stance of doing after a certain period rather than giving ambiguity to the market, whether we do it or not. We hope this first execution helped your understanding about our policy, and we appreciate your continued support for us. This completes my explanation. Thank you. [Statements in English on this transcript were spoken by an interpreter present on the live call.]