Sompo raises 2018 profit target following agreed acquisition of Endurance

25-11-2016

Japanese insurer Sompo Holdings has raised its profit target for 2018, driven by expectations of its agreed acquisition of Endurance, as well as good performance of its domestic property/casualty business.

Sompo expects an adjusted consolidated profit of between ¥220 billion ($1.95 billion) and ¥230 billion for the 2018 full year (irregular fiscal year), according to a November 24 mid-term management plan update.

If closing procedures on the acquisition of Endurance are finalised as planned, Sompo expects to expand its top- and bottom-lines.

The Endurance acquisition is set to help Sompo’s overseas insurance’s adjusted profit to grow to over ¥60 billion compared to ¥18.7 billion in 2015. Premiums from overseas should jump to ¥650 billion from ¥294.3 billion in 2015.

Sompo Holdings entered into a definitive agreement in October to acquire 100 percent of the outstanding ordinary shares of Bermuda-based Endurance Specialty Holdings, in a deal that could be finalised by March 2017.

The Japanese insurer plans to grow the Endurance business in the existing Sompo business networks, leveraging the product development capabilities and underwriting expertise of Endurance. In this sense, Endurance products should be offered to Sompo customers globally including Japan.

Furthermore, due to a good performance of the Japanese P&C insurance business, Sompo has revised upwards the adjusted profit for the segment for the 2018 fiscal year. The combined ratio in the segment is expected to improve to 92.5 percent in 2018 from 95.3 percent in 2015, helped by lower expenses.
The company also plans to grow its domestic life business over the period. Premium and other income in the segment is set to expand to ¥450.0 billion in the 2018 full year from ¥396.4 in 2015. The company plans to evolve into a health support enterprise by going beyond boundaries of insurance.

Sompo, Endurance, M&A, Japan, Bermuda

Bermuda Re