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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  Sompo Holdings, Inc.    8630   JP3165000005

SOMPO HOLDINGS, INC.

(8630)
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End-of-day quote. End-of-day quote Tokyo Stock Exchange - 03/31
3343 JPY   -5.67%
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Fitch Ratings: Typhoon Hagibis an Earnings Event for Japan's Insurers

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10/30/2019 | 07:26am EDT

Typhoon Hagibis is likely to be an earnings event for Japan's three main non-life insurance groups, MS&AD, Sompo and Tokio Marine, with no material effects on capital and no rating implications, Fitch Ratings says.

We expect the companies' net losses after reinsurance and catastrophe reserve releases to be limited in relation to their overall earnings, based on our preliminary analysis following initial industry loss estimates. We do not expect catastrophe reserve releases to materially weaken the insurers' capital as measured by Fitch's Prism factor-based capital model.

Hagibis, which made landfall in central Japan on 12 October, was classified as 'violent', the highest category on Japan's typhoon scale. It caused widespread flooding, with tens of thousands of homes damaged or destroyed, and many businesses disrupted. Catastrophe risk modelling firm AIR Worldwide estimates that insured losses from Hagibis will be between JPY865 billion and JPY1.73 trillion (USD8 billion and USD16 billion). Insurers are likely to announce their initial loss estimates in mid-November.

We expect that well over half of the insured losses will be covered by the reinsurance sector or partly borne by cooperatives such as Zenkyoren, which provides insurance to Japan's agriculture sector. Primary insurers are therefore likely to bear less than half of the total insured losses. We expect them to cover these mostly by releases from their catastrophe reserves, limiting the implications for reported earnings. The depletion of catastrophe reserves will be negative for insurers' balance sheet strength but we do not expect a material effect on their Prism scores.

MS&AD, Sompo and Tokio Marine had catastrophe reserves totalling a combined JPY2.4 billion at end-June 2019, and the profitability of their non-catastrophe business gives an extra buffer to absorb catastrophe losses or replenish reserves. The three groups combined have reported annual recurring profits consistently around JPY800 billion in recent years from their domestic non-life business, despite record weather-related losses of JPY1.6 trillion in the underwriting year ending March 2019 (FYE19). MS&AD (Insurer Financial Strength (IFS) Rating: A+/Stable), Sompo (A+/Stable) and Tokio Marine (AA-/Stable) represent about 85% of Japan's non-life sector by premium income.

Japanese non-life insurers are expanding their reinsurance cover and facing higher reinsurance premium rates as a consequence of more frequent weather-related catastrophe losses. Weather-related events in FYE19 accounted for three of the ten largest windstorm and flood losses in Japan's history, and Hagibis follows Typhoon Faxai in September, for which AIR Worldwide estimates insured losses of between JPY340 billion and JPY740 billion. We expect insurers to increase their windstorm and flood loss reinsurance cover at the next round of reinsurance programme renewals in April 2020 given the recent high losses.

Contact:

Akane Nishizaki

Associate Director, Insurance

+885 2263 9942

Fitch (Hong Kong) Limited

19/F Man Yee Building

68 Des Voeux Road Central

Hong Kong

Teruki Morinaga

Director, Insurance

+81 3 3288 2781

David Prowse

Senior Director, Fitch Wire

+44 20 3530 1250

Media Relations: Athos Larkou, London, Tel: +44 20 3530 1549, Email: athos.larkou@thefitchgroup.com

Wai Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@thefitchgroup.com

The above article originally appeared as a post on the Fitch Wire credit market commentary page. The original article can be accessed at www.fitchratings.com. All opinions expressed are those of Fitch Ratings.

(C) 2019 Electronic News Publishing, source ENP Newswire

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Financials (JPY)
Sales 2020 3 604 B
EBIT 2020 174 B
Net income 2020 123 B
Debt 2020 510 B
Yield 2020 4,52%
P/E ratio 2020 9,64x
P/E ratio 2021 6,70x
EV / Sales2020 0,47x
EV / Sales2021 0,45x
Capitalization 1 202 B
Chart SOMPO HOLDINGS, INC.
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Technical analysis trends SOMPO HOLDINGS, INC.
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TrendsNeutralNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 13
Average target price 4 904,55  JPY
Last Close Price 3 300,00  JPY
Spread / Highest target 84,8%
Spread / Average Target 48,6%
Spread / Lowest Target -3,03%
EPS Revisions
Managers
NameTitle
Kengo Sakurada President, Group CEO & Representative Director
Shinji Tsuji Group COO, Representative Director & EVP
Masahiro Hamada Group Chief Financial Officer & Director
Shigeru Ehara Director & Senior Managing Executive Officer
Sawako Nohara Independent Outside Director
Sector and Competitors
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SAMPO OYJ-32.90%16 246
MS&AD INSURANCE GROUP HOLDINGS, INC.-2.70%15 998