Lowering to Neutral; wait-and-see until next business investment action

Research evidence excerpt

Lowering to Neutral; wait-and-see until next business investment action

We also expect continued

Absolute and TOPIX-relative share price price hikes on automotive and fire insurance from FY3/27 to boost earnings.

For the overseas non-life insurance business, we factor in yen depreciation.

While the loss ratio is unlikely to improve much through expansion in the

casualty insurance category, we expect topline growth to continue through

geographic expansion. However, we lower our profit forecasts for the life

insurance business, as we believe it is appropriate to take a more cautious

view than the company on growth in the CSM balance.

WATCH: Direction of business investment

The company’s overseas strategy is to leverage Sompo International as a

platform to expand geographically and diversify its business. While we areSenior Analyst Naruhiko Sakamaki

+81 3 6202 8476 naruhiko.sakamaki@mizuho-sc.com upbeat on the company’s efforts to expand its business by flexibly shifting

its areas of focus, it also appears to be searching for business opportunities

Click here for ESG on across a somewhat wide range of areas. We look for the company to focus

our entire coverage not only on volume growth through M&A but also present a clear direction.

MEASURE: Based on dividend yield of 3.5%, adjusted PER of 10.5x

We lower our price objective to ¥6,200, based on cost of capital of 9.9%

(9.7% previously) for insurance companies, a perpetual growth rate of 6.4%

(6.7%), and a required yield of 3.5% (3%). We also factor in a fall in the

number of shares outstanding due to share buybacks. Our perpetual growth

rate assumption is based on the average forward ROE and dividend payout

for the period covered by our forecasts. Our price objective also equates to