MS&AD Insurance Group Holdings,Inc. Q4 FY2026 earnings call

- Financial Results Records * Consolidated net income reached an all-time high for fiscal 2025, with group adjusted profit (the basis for shareholder returns) also hitting a new record * Strong premium growth across all three core segments, driven by rate revisions in domestic non-life auto and fire insurance, product revision-driven sales growth at Mitsui Sumitomo Primary Life Insurance, and broad-based regional growth in overseas operations * Lower natural catastrophe losses year-on-year across domestic and overseas businesses supported profit growth

- Shareholder Return Policy * Fiscal 2025 total annual dividend set at 160 yen per share, an increase of 15 yen year-on-year and 5 yen above the initial forecast, following a 77.5 yen per share interim dividend and 82.5 yen per share year-end dividend * Fiscal 2025 approved share repurchases of up to 265 billion yen, of which 75 billion yen had already been completed by the time of the call * Fiscal 2026 planned annual dividend of 170 yen per share, a 10 yen increase year-on-year; planned total share repurchases of 270 billion yen, consisting of 80 billion yen for the first half of the year plus 190 billion yen linked to fiscal 2025 results

- Strategic and Operational Updates * Voluntary adoption of IFRS for consolidated financial statements began with the fiscal 2025 securities report, so all 2026 forecasts are presented on an IFRS basis * Ongoing reduction of strategic equity holdings, with a planned decrease of over 200 billion yen in outstanding balance in fiscal 2026 * A planned merger of domestic non-life insurance entities will incur integration costs across fiscal 2025, 2026, and 2027, with the majority of expenses expected in fiscal 2026; the largest share of expenses is for system integration, followed by location consolidation * Full details on the updated midterm growth strategy and strategic equity holding reduction plans will be presented at a dedicated investor information meeting on May 26

For fiscal 2025 (Japanese GAAP): 1. Domestic Non-Life Insurance: Net premiums written = 3,269.6 billion yen, up 122.6 billion yen year-on-year. Consolidated net income increased 4.93 billion yen year-on-year, even after absorbing merger-related expenses. This segment contributed ~48.5% of total consolidated net premiums written across all segments. 2. Domestic Life Insurance: Net premiums written = 1,741 billion yen, up 100.6 billion yen year-on-year. This segment contributed ~25.8% of total consolidated net premiums written. Net income decreased 7.49 billion yen year-on-year, driven by a 519 million yen loss at Mitsui Sumitomo Aioi Life from the sale of yen-denominated loans to eliminate unrealized portfolio losses. 3. Overseas (International) Insurance: Net premiums written = 1,735.1 billion yen, up 207.8 billion yen year-on-year, with particularly strong growth in the Americas and Europe. This segment contributed ~25.7% of total consolidated net premiums written. Net income increased 7.74 billion yen year-on-year, driven by higher regional revenues and lower natural catastrophe losses.

Consolidated full fiscal 2025 results: Net income hit a record 78.73 billion yen, up 9.56 billion yen year-on-year. Group adjusted profit (Japanese GAAP) hit a record 100.09 billion yen, up 26.91 billion yen year-on-year. IFRS-based 2025 adjusted profit was 91.89 billion yen, with the difference driven by onerous contract loss recognition in domestic non-life and fiscal year-end alignment timing adjustments for overseas operations. As of end-March 2025, the group's ESR was 214%, down 12 points year-on-year.

- Fiscal 2026 (ending March 2027, IFRS basis) consolidated adjusted profit guidance is 800 billion yen - Domestic non-life insurance adjusted profit (excluding strategic equity holding gains/losses) is projected at 170 billion yen, roughly flat year-on-year. Revenue growth from ongoing rate revisions is expected to be offset by higher projected natural catastrophe losses that return to historical averages - Domestic life insurance adjusted profit is projected at 52 billion yen, roughly flat year-on-year. The absence of 2025's bond sale loss at Mitsui Sumitomo Aioi Life is expected to be offset by lower investment margins at Mitsui Sumitomo Primary Life - International business adjusted profit is projected at 300 billion yen, a 4 billion year-on-year modest increase. European natural catastrophe losses are expected to hit historical averages, and the 2025 Challenger Limited share sale gain will not repeat; overall growth is driven by solid profit growth from the Americas region, including earnings from W.R. Berkley Corporation - Consolidated adjusted profit excluding strategic equity holding gains/losses is projected at 532 billion yen, flat year-on-year. The guidance assumes natural catastrophe losses in both Japan and overseas align with historical averages - The 2030 IFRS adjusted profit target was revised upward to 800 billion yen from the prior 764 billion yen target, driven by stronger-than-expected performance from the international business segment that makes the new target more achievable; no other major changes were made to midterm strategic initiatives - Domestic natural catastrophe loss budget for fiscal 2026 is 150 billion yen, up from 124.7 billion yen in fiscal 2025, reflecting a return to average levels after a lower-loss 2025. Overseas natural catastrophe loss budget is 64 billion yen, up from 54.2 billion in 2025, also aligned with historical averages; the loss calculation definition remains unchanged from Japanese GAAP after the IFRS transition

- Forward-looking statements (including guidance and targets) are subject to risks and uncertainties, and actual results may differ materially from projections - Global reinsurance and specialty insurance markets are experiencing pricing softening, which has already been incorporated into guidance for MS Amlin and MS Re - The Middle East geopolitical situation remains unstable, with potential for unexpected additional losses beyond the 30 billion yen in total loss reserves already set aside across fiscal 2025 and 2026 - Higher-than-expected natural catastrophe losses in Japan or overseas would negatively impact profits relative to guidance, which assumes losses align with historical averages - Uncertainty around foreign exchange rate movements could impact reported top-line and profit results for the international segment - Planned merger of domestic non-life entities will incur significant integration expenses through 2027, pressuring near-term segment profits

Q: What is the impact of market softening on MS Amlin and MS Re, and what revisions were made to the midterm management plan? / A: Excluding natural catastrophe losses, MS Amlin saw a 1% loss ratio improvement on an April-March IFRS basis, while MS Re's loss ratio increased 3.7%, with part of the increase driven by IFRS discount timing differences rather than market changes. Market softening impacts were already fully incorporated into guidance. For the midterm plan, the 2030 IFRS adjusted profit target was raised from 764 billion yen to 800 billion yen on stronger-than-expected international business performance, with no other major strategic revisions.

Q: How should we interpret the projected 15% top-line growth for MS Re despite broad reinsurance market softening, and what drives Americas top-line growth? / A: MS Re is still in a growth phase, unlike mature large peers such as Munich Re, allowing it to grow by selectively underwriting lines that are not experiencing pricing softening while maintaining strong customer relationships. For the Americas, most of the projected top-line growth comes from positive foreign exchange translation impacts, with around 160 billion yen of the 400 billion yen projected increase tied to currency movements rather than underlying underwriting growth.

Q: Is the pace of strategic equity holdings unwind likely to exceed the current guidance, leading to larger sales than projected? / A: The group expects a more than 200 billion yen decrease in outstanding strategic equity holdings in fiscal 2026, bringing the balance down to 476.3 billion yen from 701 billion yen. This plan accounts for existing market trends and weak yen conditions, so the 476.3 billion yen target is highly probable. However, management acknowledges that actual sales could end up higher or lower than projected depending on market conditions during the year.

Q: What impact does the Middle East geopolitical situation have on fiscal 2026 results, and will dividend growth accelerate? / A: Limited impact is expected for the domestic business. For overseas operations (MS Amlin and MS Re), exposures related to early-2025 Iran-related events were already recorded in fiscal 2025 results. The group has set aside a total of 30 billion yen in reserves to cover potential Middle East-related impacts split between fiscal 2025 and 2026. Dividend policy remains aligned with the existing progressive dividend framework targeting a 50% payout ratio, with no change to the policy to accelerate increases.