FY2017 Business Results
Sumitomo Life at a Glance Company Overview Group Overview 6 Established: May 1907 (111 years of history) Life Insurance Insurance Outlets Asset Management Key Figures 1 FY2017 (as of Mar. 2018) Premium income: JPY 2.68tn (JPY 3.45tn in FY2016) Core business profit 2 : JPY 361.7bn (JPY 331.2bn in FY2016) Total assets: JPY 36.3tn Annualized premiums from policies in force 3 : JPY 2.78tn Solvency margin ratio: 881.7% Embedded value 4 (EEV): JPY 3.77tn Number of sales representatives: 31,894 Insurer financial strength rating 5 : A1 [Moody s], A [S&P], A [Fitch], A+ [R&I], A+ [JCR] 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 Domestic Overseas Medicare Life Insurance Sells simple and affordable products through banks and outlets. 100% subsidiary U.S. Symetra Financial Corp Life insurance group operating businesses across the U.S. 100% subsidiary since February 2016 Vietnam Baoviet Holdings The largest financial / insurance group in Vietnam. Owns 18% of the shares Izumi Life Designers / INSURANCE DESIGN / Agent / Mycommunication Also sell other insurers products. Ownership: 100% / 95%/ 49.8% / 33% China PICC Life Insurance Life insurance JV with PICC. Owns 10% of the shares Indonesia Sumitomo Mitsui Asset Management Operates asset management business. Owns 20.0% of the shares PT BNI Life Insurance JV with BNI, a national bank. Owns 39.9% of the shares 1
Key Highlights FY2017 Results 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 P.4 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 P.6 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.7 P.13 2
Ⅰ. FY2017 Business Results
Operating Performance 1 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. Annualized Premiums from Policies in Force (Group) Annualized Premiums from New Policies (Group) 3,000 2,500 2,196.9 2,182.2 2,583.5 368.4 2,739.4 2,783.2 387.0 419.7 350 300 316.4 57.2 2,000 250 215.0 1,500 1,680.2 1,658.7 1,679.6 1,799.3 1,790.4 200 150 131.0 140.2 173.5 211.4 75.9 1,000 100 90.6 100.5 129.9 86.6 500 516.7 523.4 535.4 552.9 573.0 50 40.4 39.7 43.6 47.8 52.4 0 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 0 FY13 FY14 FY15 FY16 FY17 Third sector Excl. third sector Overseas (Symetra) Note: Figures for domestic business (Third sector + Excl. third sector) are individual life and individual annuity Figures for Symetra is included since February 2016 Third sector Excl. third sector Overseas (Symetra) 4
Operating Performance 2 Surrender and Lapse trends for sales representative channel continued to improve. Persistency rate has also shown an upward trend. Surrendered / Lapsed AP (Non-consolidated) Persistency Rate (Non-consolidated) 100 105.7 100 % 13th month 87.8 86.4 95.5 95.9 96.0 96.4 96.5 75 50 74.1 70.0 65.6 68.7 69.4 60.9 60.4 95 90 90.0 91.1 91.8 92.0 92.7 25 25th month 0 FY13 FY14 FY15 FY16 FY17 Surrendered / lapsed annualized premiums Of which, sales representative channel 85 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Note: Figures are based on annualized premiums for products sold by sales representatives 5
Profit Trend Core business profit increased due to incremental expense savings and interest gain. Core Business Profit (Group) Three Surplus Factors (Non-consolidated) 400 300 393.9 405.0 301.7 309.0 Group core business profit 1 333.0 363.6 325.2 331.2 361.7 450 350 250 150 82.0 49.3 38.4 34.7 63.7 334.4 330.5 314.4 312.8 304.5 Expense savings Mortality gain 200 100 0 351.2 359.5 317.9 Adjusted group core business profit 2 (15.7) FY13 FY14 FY15 FY16 FY17 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 3 50 (50) % 3.00 2.50 2.00 2.66 2.58 8.1 22.7 2.61 2.57 2.55 2.57 2.46 56.7 64.2 FY13 FY14 FY15 FY16 FY17 <Average Assumed Yield and Investment Yield 4 > (Non-consolidated) Average assumed yield Investment yield 4 2.30 2.44 FY13 FY14 FY15 FY16 FY17 Interest gain 2.17 6
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 4,000 3,000 2,000 3,146.6 3,651.7 2,936.6 3,523.8 3,778.9 3,500 Income from insurance businesses including acquiring new policies + 496.6 (241.6) Economic variances including decrease in domestic interest rates 3,523.8 3,778.9 (+ 255.0) 1,000 Mar 17 Mar 18 0 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 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 7
Progress of New Medium-Term Business Plan (2017-2019) 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 force JPY 2,363.5bn JPY 2,440.0bn Of which, third sector JPY 573.0bn JPY 610.0bn Note: Total of Sumitomo Life and Medicare Life Corporate value (EEV) Target AP from policies in force Target AP from policies in force for Third sector Target 3,766.0 4,025.7 JPY 4,560bn 2,352.3 2,363.5 JPY 2,440bn 552.9 573.0 JPY 610bn Mar 17 Mar 18 Mar 20 Mar 17 Mar 18 Mar 20 Mar 17 Mar 18 Mar 20 8
Ⅱ. Asset Management
Asset Management 1 Prudent investment policy, focusing mainly on yen-denominated interest-bearing assets. Figurers on B/S JPY tn 30.0 20.0 10.0 Trend of General Account (GA) Assets (Non-consolidated) 23.7 0.8 0.7 0.5 1.2 3.7 0.2 1.4 25.0 0.8 0.6 0.5 1.6 25.9 0.9 0.6 0.9 1.4 4.3 5.0 0.2 0.2 1.7 1.7 28.8 1.5 0.5 0.9 1.7 30.5 2.0 0.5 1.0 1.9 6.5 7.6 0.2 0.2 1.6 1.6 2.4 2.3 2.1 2.9 2.7 Others Real estate Foreign stocks, etc. Domestic stocks Foreign-currency denominated 1 foreign bonds Monetary claims bought Yen-denominated foreign bonds 2 Loans <As of March 2018> Breakdown of GA Assets (Non-consolidated) 6.3% 25.1% 1.9% 6.8% 3.5% 0.9% 5.3% Yendenominated interestbearing assets 56.4% 9.1% 41.1% 0.0 12.5 12.7 12.8 12.6 12.5 16.7 16.9 16.9 17.4 17.2 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Domestic bonds Yendenominated interestbearing assets Domestic bonds Loans Yen-denominated foreign bonds Monetary claims bought Foreign-currency denominated foreign bonds Domestic stocks Foreign stocks, etc. Real estate 1 Foreign-currency denominated foreign bonds (including those issued by residents) include currency-hedged foreign bonds 2 Yen-denominated foreign bonds include foreign-currency denominated foreign bonds with a fixed amount in Japanese yen 10
Asset Management 2 Disciplined interest rate risk management based on ALM strategy. Domestic Bonds by Maturity (GA non-consolidated) Domestic Bonds by Category (GA non-consolidated) 100% 80% 15.1 7.9 5 years or less Between 5 to 10 years More than 10 years or no fixed maturity 11.2 9.3 7.6 8.1 9.8 11.3 15.5 17.5 <As of March 2018> Domestic Bonds Outstanding Balance: JPY 13.04tn 3.0% 13.1% 60% 40% 77.0 79.0 79.4 77.0 74.3 83.8% 20% Policy-reserve matching bonds Held-to-maturity debt securities 0% Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 Available-for-sale securities 11
Ⅲ. Capital Base
Capital Base 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. Trend of Capital (Non-consolidated) US$ Subordinated Bond issued in 2017 2,500 2,000 1,500 1,000 500 0 1,698.3 1,707.4 221.9 270.0 301.3 231.4 165.0 149.4 270.0 315.1 252.2 1,777.8 149.4 200.0 322.6 352.1 2,141.5 354.4 170.0 333.7 502.3 JPY145.4bn Issuance of US$1.34bn Subordinated bond JPY70bn Redemption of Foundation funds 2,402.8 499.9 100.0 349.4 656.9 165.0 165.0 165.0 165.0 508.6 555.6 588.6 616.0 631.6 Mar 14 Mar 15 Mar 16 Mar 17 Mar 18 6 5 4 3 2 1 Internal reserves and surplus Type Principal amount US$ subordinated notes due 2077 with interest deferral options US$1.34bn Offer price 100% of the principal amount Coupon Maturity Offering Rating 4.00% per annum before September 14, 2027 and a floating rate with step-up thereafter September 14, 2077 (callable on and after September 14, 2027) Outside Japan, primarily in the US and Asia (144A/RegS format) A3(Moody s) / A-(Fitch) 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 Note: Figures are after Appropriation of Surplus 13
Ⅳ. Financial Statements, etc.
Key Performance Indicators Key Performance Indicators (Group) () Annualized premiums from policies in force Group Sumitomo Life Medicare Life Symetra Mar 2018 Mar 2018 Mar 2018 Dec 2017 % of Dec 31, 2016 2,783.2 1.6% 2,329.9 0.2% 33.5 24.0% 419.7 8.4% Annualized premiums from new policies Group Sumitomo Life Medicare Life Symetra FY2017 FY2017 FY2017 FY2017 % of Dec 31, 2016 215.0 (32.0%) 131.3 (48.1%) 7.7 23.7% 75.9 32.8% Group Sumitomo Life Medicare Life Symetra Increase(decrease) compared to Mar 31, 2017 Increase(decrease) compared to Mar 31, 2017 Increase(decrease) compared to Mar 31, 2017 Mar 2018 Mar 2018 Mar 2018 Dec 2017 Increase(decrease) compared to Dec 31, 2016 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 Symetra Increase(decrease) compared to Mar 31, 2017 Increase(decrease) compared to Mar 31, 2017 Increase(decrease) compared to Mar 31, 2017 FY2017 FY2017 FY2017 FY2017 Increase(decrease) compared to Dec 31, 2016 Value of new business 153.3 144.4 155.4 141.1 9.5 3.6 (11.6) (0.3) 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
Financial Statements (Key Items) Financial Statements (Consolidated) Consolidated Income Statement FY2017 FY2017 Consolidated Sumitomo Life Medicare Life Symetra () () () (USD mm) % of Dec 31, 2016 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 - Consolidated Balance Sheet Mar 2018 Dec 2017 Consolidated Sumitomo Life Medicare Life Symetra () () () (USD mm) % of Dec 31, 2016 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% 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 16
For further information Capital Planning Section, Corporate Planning Department Sumitomo Life Insurance Company E-mail: sumisei_ir@am.sumitomolife.co.jp 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, forwardlooking 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.