Downgrade to Neutral on valuation; niche strengths but industry competition tough

Research evidence excerpt

Downgrade to Neutral on valuation; niche strengths but industry competition tough

iQprofile SM T&D Holdings (8795)

Key Income Statement Data 3/25A 3/26A 3/27E 3/28E 3/29E Company Sector

(¥ Billions) Insurance - Life

Net Premiums Income - Life 2,580 2,636 2,658 2,671 2,684

S,G&A (including commissions) (265) (274) (272) (277) (282)

Interest & Dividend Income 356 398 363 377 389 Company Description

Basic Earnings 162 240 182 200 215

Major subsidiaries include Daido, Taiyo and T&D Financial Sales Profit/Loss of Securities 18 13 47 33 28

Ordinary Profit 199 257 236 239 252 Life. T&D HD has a 26% stake in Bermuda-based reinsurer

Extraordinary Profit/Loss (30) (66) (47) (33) (33) Fortitude Re (an equity-method affiliate). Daido is the

Provision for policy holder dividend (26) (25) (27) (27) (27) number one insurer in the SME market. Taiyo has carved

Net Profit Before Taxes 169 191 188 206 219 out a position as mid-tier life insurer by focusing on the

Net Profit 142 159 172 175 185

home-visit salesperson channel, but is expanding the direct Diluted Shares (mn) 512 480 480 472 450

sales channel with infomercials, a strategy that differs from

Key Balance Sheet Data

major life insurers. Fortitude Re underwrites life insurance

Cash and Deposit 779 423 423 423 423

Securities 12,306 12,870 13,253 13,399 13,631 blocks for mainly US insurers.

Loans 1,654 1,508 1,453 1,432 1,410

Fixed Asset 374 370 585 804 1,025

Total Asset 16,713 17,318 17,765 18,131 18,584 Investment Rationale

Reserves for Outstanding Claims 84 87 87 87 87 Our Neutral rating is premised on (1) limited upside

Liability Reserves 13,569 13,825 14,235 14,650 15,068 compared with our PO, (2) risks of whether Taiyo Life can

Total Shareholder's Equity 1,409 1,618 1,637 1,582 1,611