FY2017 Business Results - Sumitomo Life · Life, and profit before tax of Symetra, Baoviet...

FY2017 Business Results

Sumitomo Life at a Glance

Also sell other

insurers’ products.

Ownership: 100%

/ 95%/ 49.8%

/ 33%

Sells simple and

affordable

products through

banks and

outlets. 100%

subsidiary

PICC Life Insurance

Baoviet Holdings PT BNI Life Insurance

The largest financial /

insurance group in Vietnam.

Owns 18% of the shares

Life insurance JV with

PICC. Owns 10% of the

shares

JV with BNI, a national

bank. Owns 39.9% of the

shares

Do

me

stic

Ove

rse

as

Medicare Life

Insurance

Izumi Life Designers / INSURANCE

DESIGN / Agent / Mycommunication

China

Vietnam Indonesia

Life

Insurance

Insurance

Outlets

Sumitomo Mitsui

Asset Management

Operates asset

management

business.

Owns 20.0% of

the shares

Asset

Management

U.S.

Symetra Financial Corp

Life insurance group

operating businesses across

the U.S. 100% subsidiary

since February 2016

Company Overview Group Overview6

Established: May 1907

(111 years of history)

Key Figures1 – FY2017 (as of Mar. 2018)

Premium income: JPY 2.68tn

(JPY 3.45tn in FY2016)

Core business profit2: JPY 361.7bn

(JPY 331.2bn in FY2016)

Total assets: JPY 36.3tn

Annualized premiums from policies in force3: JPY 2.78tn

Solvency margin ratio: 881.7%

Embedded value4 (EEV): JPY 3.77tn

Number of sales representatives: 31,894

Insurer financial strength rating5: A1 [Moody’s], A [S&P],

A [Fitch], A+ [R&I], A+ [JCR]

1

Source: Company disclosure

1 Consolidated figures

2 Adjusted core business profit of the group (see page 6 for details)

3 Figures for individual life and individual annuity for domestic business (see page 4 for details)

4 Combined figures of Sumitomo Life’s EEV, Medicare Life’s EEV and Symetra’s EEV (see page 7 for details)

5 As of April 30, 2018. The rating from Fitch is based on public information

6 As of March 31, 2018 on ownership

Key Highlights

2

✓ Annualized premiums from policies in force has increased steadily.

Annualized premiums from new policies for the Third sector, our

focused area, increased by expanding sales of protection type products

✓ Core business profit increased due to incremental interest income as

a result of increased exposure to foreign bonds and incremental

dividend income from domestic stocks

✓ EEV increased due to income from insurance businesses

✓ Capital base was further strengthened through the accumulation of

internal reserves and surplus, as well as the issuance of subordinated

bonds

・・・ P.4

・・・ P.6

・・・ P.7

◇ FY2017 Results

・・・ P.13

Ⅰ. FY2017 Business Results

4

Operating Performance ①

516.7 523.4 535.4 552.9 573.0

1,680.2 1,658.7 1,679.61,799.3 1,790.4

368.4

387.0 419.7

2,196.9 2,182.2

2,583.5

2,739.4 2,783.2

0

500

1,000

1,500

2,000

2,500

3,000

Mar 14 Mar 15 Mar 16 Mar 17 Mar 18

Third sector Excl. third sector Overseas (Symetra)

Annualized Premiums from Policies in Force (Group)

JPY bn

Note: Figures for domestic business (Third sector + Excl. third sector) are individual life and individual annuity

Figures for Symetra is included since February 2016

40.4 39.7 43.6 47.8 52.4

90.6 100.5

129.9

211.4

86.6

57.2

75.9

131.0 140.2

173.5

316.4

215.0

0

50

100

150

200

250

300

350

FY13 FY14 FY15 FY16 FY17

Third sector Excl. third sector Overseas (Symetra)

JPY bn

Annualized Premiums from New Policies(Group)

Annualized premiums (AP) from policies in force has increased steadily. AP from new policies decreased as we

recorded high sales for saving type products last year, while the figures for the Third sector increased.

95.595.9 96.0

96.4 96.5

90.0

91.1 91.8 92.0

92.7

85

90

95

100


13th month

25th month

105.7

87.8 86.4

68.7 69.4 74.1

70.065.6

60.9 60.4

0

25

50

75

100


Surrendered / lapsed annualized premiums

Of which, sales representative channel

5

Operating Performance ②

Surrendered / Lapsed AP (Non-consolidated)

Surrender and Lapse trends for sales representative channel continued to improve.

Persistency rate has also shown an upward trend.

JPY bn

Persistency Rate (Non-consolidated)

%

Note: Figures are based on annualized premiums for products sold by sales representatives

351.2 359.5 317.9

325.2 331.2 361.7

393.9 405.0

301.7

309.0333.0

363.6

0

100

200

300

400


6

Profit Trend

Core Business Profit (Group)

Core business profit increased due to incremental expense savings and interest gain.

JPY bn

Three Surplus Factors (Non-consolidated)

2.66

2.572.46

2.302.17

2.58

2.61 2.57 2.55 2.44

2.00

2.50

3.00


%

Adjusted group core business profit2 (15.7)

8.1 22.7 56.7 64.2

334.4 330.5 314.4 312.8 304.5

82.0 49.3 38.434.7 63.7

(50)

50

150

250

350

450


JPY bn

Average assumed yield Investment yield4

Group core business

profit1Expense savings

Mortality gain

Interest gain

3

<Average Assumed Yield and Investment Yield4> (Non-consolidated)

1 Group core business profit is calculated by combining core business profit of Sumitomo Life and Medicare

Life, and profit before tax of Symetra, Baoviet Holdings, BNI Life, and PICC Life attributable to Sumitomo

Life’s equity stake in each company, with adjustments made to some internal transactions

2 Adjusted group core business profit indicates group core business profit excluding provision / reversal of

standard policy reserve relating to variable annuities

3 Yellow graph before FY15 indicates the simple aggregation of Sumitomo Life’s and Medicare Life’s core

business profit

4 Related to core business profit

7

EEV Trend

EEV increased due to income from insurance businesses, which effectively covered the adverse impact

of decrease in domestic interest rates.

EEV (Group) EEV Growth Factors

3,146.6

3,651.7

2,936.6

3,523.8

3,778.9

0

1,000

2,000

3,000

4,000


JPY bn

3,523.8

3,778.9

+ 496.6

(241.6)

Mar 17 Mar 18

3,500

Economic

variances

including decrease

in domestic

interest rates

Income from

insurance

businesses

including acquiring

new policies

(+ 255.0)

JPY bn

Note: The ultimate forward rate (UFR) has been applied for EEV since March 2016

See “EEV (summary) as of Mar 31, 2018” on the website for details

3,766.04,025.7

Mar 17 Mar 18 Mar 20

JPY bn

8

Progress of New Medium-Term Business Plan (2017-2019)

Note: Total of Sumitomo Life and Medicare Life

Corporate value

(EEV)

AP from policies in force

for Third sector

JPY 4,560bn

552.9573.0


JPY bn

Items Results as of March 2018 Targets for March 2020

Corporate value (EEV) JPY 4,025.7bn JPY 4,560.0bn

Annualized premiums

from policies in forceJPY 2,363.5bn JPY 2,440.0bn

Of which, third sector JPY 573.0bn JPY 610.0bn

Target

2,352.3 2,363.5


JPY bnJPY 2,440bn

Target

AP from policies in force

JPY 610bn

Target

Ⅱ. Asset Management

12.5 12.7 12.8 12.6 12.5

2.4 2.3 2.1 2.9 2.7

1.4 1.7 1.7 1.6 1.60.2 0.2 0.20.2 0.2

3.7 4.3 5.0

6.5 7.6 1.2

1.61.4

1.71.9

0.5

0.5 0.9

0.9 1.0

0.7

0.60.6

0.50.5

0.8

0.80.9

1.5

2.0

23.7 25.0

25.9

28.8 30.5

0.0

10.0

20.0

30.0


10

Asset Management ①

Prudent investment policy, focusing mainly on yen-denominated interest-bearing assets.

Figurers on B/S

JPY tn

16.7 16.9 16.9 17.4 17.2

Breakdown of GA Assets(Non-consolidated)

Trend of General Account (GA) Assets(Non-consolidated)

＜As of March 2018＞

Yen-denominated

interest-bearing assets

Foreign-currency denominated foreign bonds

Domestic stocks

Foreign stocks, etc.

Others

Real estate

Yen-denominated foreign bonds

Domestic bonds

Loans

Monetary claims bought

２

1

41.1%

9.1%5.3%

0.9%

25.1%

6.3%

3.5%1.9%

6.8%

Domestic bondsLoansYen-denominated foreign bondsMonetary claims boughtForeign-currency denominated foreign bondsDomestic stocksForeign stocks, etc.Real estate

Yen-denominated

interest-bearing assets

56.4%

1 Foreign-currency denominated foreign bonds (including those issued by residents) include currency-hedged foreign bonds2 Yen-denominated foreign bonds include foreign-currency denominated foreign bonds with a fixed amount in Japanese yen

77.0 79.0 79.4 77.0 74.3

7.99.8 11.3 15.5 17.5

15.1 11.2 9.3 7.6 8.1

0%

20%

40%

60%

80%

100%


5 years or less

Between 5 to 10 years

More than 10 years or no fixed maturity

11

Asset Management ②

Domestic Bonds by Maturity(GA・non-consolidated)

Disciplined interest rate risk management based on ALM strategy.

Domestic Bonds by Category(GA・non-consolidated)

83.8%

3.0%

13.1%

Policy-reserve matching bonds

Held-to-maturity debt securities

Available-for-sale securities

Domestic Bonds Outstanding Balance：

JPY 13.04tn

＜As of March 2018＞

Ⅲ. Capital Base

508.6 555.6 588.6 616.0 631.6

165.0 165.0 165.0 165.0 165.0231.4

252.2352.1

502.3656.9

301.3315.1

322.6

333.7

349.4

270.0270.0

200.0

170.0

100.0

221.9 149.4149.4

354.4

499.9

1,698.3 1,707.41,777.8

2,141.5

2,402.8

0

500

1,000

1,500

2,000

2,500


13

Capital Base

JPY bn

Trend of Capital (Non-consolidated) US$ Subordinated Bond issued in 2017

TypeUS$ subordinated notes due 2077 with interest

deferral options

Principal

amountUS$1.34bn

Offer price 100% of the principal amount

Coupon4.00% per annum before September 14, 2027

and a floating rate with step-up thereafter

MaturitySeptember 14, 2077 (callable on and after

September 14, 2027)

OfferingOutside Japan, primarily in the US and Asia

(144A/RegS format)

Rating A3(Moody’s) / A-(Fitch)

Capital base was further strengthened through the accumulation of internal reserves and surplus, and the issuance

of capital securities. US$ subordinated bond issued in 2017 achieved the lowest coupon of Japanese life insurers.

JPY145.4bn

Issuance of

US$1.34bn

Subordinated

bond

JPY70bn

Redemption of

Foundation

funds

①Reserve for fund redemption＋Reserve

for redemption of foundation funds

②Fund for price

fluctuation allowance

③Reserve for price

fluctuation

④Contingency reserve ⑤Foundation funds ⑥Subordinated loan

/ bonds

①

②

③

④

⑤

⑥

Note: Figures are after Appropriation of Surplus

Internal

reserves

and surplus

Ⅳ. Financial Statements, etc.

Note: Group EEV is calculated as Sumitomo Life’s EEV + Medicare Life’s EEV + Symetra’s EEV - book value of Medicare Life’s equity and Symetra’s equity owned by Sumitomo Life

Figures of Symetra is included since February 2016. The fiscal year-end of Symetra is December 31 (Exchange rate as of December 31, 2017 is JPY113.0 to US$1.00)15

Key Performance Indicators

Key Performance Indicators (Group)

(JPY bn)

Group Sumitomo Life Medicare Life SymetraIncrease(decrease) as

% of Mar 31, 2017

Increase(decrease) as

% of Mar 31, 2017


% of Mar 31, 2017


% of Dec 31, 2016Mar 2018 Mar 2018 Mar 2018 Dec 2017

Annualized premiums

from policies in force2,783.2 1.6% 2,329.9 0.2% 33.5 24.0% 419.7 8.4%

Group Sumitomo Life Medicare Life SymetraIncrease(decrease) as

% of Mar 31, 2017


% of Mar 31, 2017


% of Mar 31, 2017


% of Dec 31, 2016FY2017 FY2017 FY2017 FY2017

Annualized premiums

from new policies215.0 (32.0%) 131.3 (48.1%) 7.7 23.7% 75.9 32.8%

Group Sumitomo Life Medicare Life SymetraIncrease(decrease)

compared to Mar 31,

2017

Increase(decrease)

compared to Mar 31,

2017

Increase(decrease)

compared to Mar 31,

2017

Increase(decrease)

compared to Dec 31,

2016Mar 2018 Mar 2018 Mar 2018 Dec 2017

Solvency margin ratio 881.7% 68.5pt 873.6% 46.7pt 3,191.1% (796.6pt) - -

EEV 3,778.9 255.0 3,968.1 247.8 137.5 11.8 227.1 (17.3)

Group Sumitomo Life Medicare Life SymetraIncrease(decrease)

compared to Mar 31,

2017

Increase(decrease)

compared to Mar 31,

2017

Increase(decrease)

compared to Mar 31,

2017

Increase(decrease)

compared to Dec 31,

2016FY2017 FY2017 FY2017 FY2017

Value of new business 153.3 144.4 155.4 141.1 9.5 3.6 (11.6) (0.3)

FY2017 FY2017

Consolidated Sumitomo Life Medicare Life SymetraIncrease(decrease) as

% of Mar 31, 2017


% of Mar 31, 2017


% of Mar 31, 2017


% of Dec 31, 2016(JPY bn) (JPY bn) (JPY bn) (USD mm)

Ordinary income 3,747.1 (15.5%) 3,400.8 (18.1%) 31.3 21.0% 2,481 -

Ordinary expenses 3,529.2 (16.8%) 3,170.9 (19.2%) 43.1 23.6% 2,384 -

Ordinary profit 217.8 14.8% 229.9 0.5% (11.8) - 97 -

Net surplus 69.8 24.6% 65.4 (24.2%) (9.6) - 228 -

Mar 2018 Dec 2017

Consolidated Sumitomo Life Medicare Life SymetraIncrease(decrease) as

% of Mar 31, 2017


% of Mar 31, 2017


% of Mar 31, 2017


% of Dec 31, 2016(JPY bn) (JPY bn) (JPY bn) (USD mm)

Total assets 36,036.4 4.9% 31,536.9 5.0% 199.7 3.6% 42,865 6.3%

Total liabilities 34,379.6 5.0% 29,873.1 5.3% 160.3 11.2% 38,649 6.0%

Total net assets 1,656.8 2.7% 1,663.7 0.4% 39.3 (19.1%) 4,216 9.9%

16

Financial Statements (Key Items)

Financial Statements (Consolidated)

Consolidated Income Statement

Consolidated Balance Sheet

Note: USGAAP for Symetra

Net surplus in consolidated is net surplus attributable to the parent company

Figures of Symetra is included since February 2016. The fiscal year-end of Symetra is December 31

For further information…

Capital Planning Section, Corporate Planning Department

Sumitomo Life Insurance Company

E-mail： [email protected]

These materials are for your information and may not be reproduced, redistributed or passed on to any other person or

published, in whole or in part, for any purpose, without the prior written consent of Sumitomo Life Insurance Company

(the “Company”). All information included in this presentation speaks as of the date of this presentation (or earlier, if so

indicated in this presentation) and is subject to change without notice.

The Company does not warrant or ensure the accuracy or completeness of any of the contents set forth in these

materials. Accordingly, the Company does not accept any liability for any error, omission or misstatement, negligent or

otherwise, in these materials, and any liability in respect of these materials or any inaccuracy therein or omission

therefrom that might otherwise arise is hereby expressly disclaimed.

These materials contain forward-looking statements such as forecasts, outlooks, targets and plans in connection with the

Company and its group companies (collectively, the “Group Companies”). Such statements are based on certain

subjective assumptions in light of the information available as of the date of preparation of these materials. There is no

guarantee that such forecasts or targets will be realized, and actual results may materially differ. In addition, forward-

looking statements such as business strategies and business performance merely reflect the expectations of the

Company’s management as of the date of preparation of these materials (or of the date separately specified herein), and

are subject to risks and uncertainties, many of which are beyond management’s control. The Company does not

undertake any obligation to update the information contained in such forward-looking statements.

These materials do not constitute or form a part of any offer to sell or solicitation of an offer to purchase or subscribe for

securities in the United States or elsewhere in which such offer, solicitation or sale would be unlawful prior to registration

or qualification under the securities laws of any such jurisdiction.

FY2017 Business Results - Sumitomo Life · Life, and profit before tax of Symetra, Baoviet...

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