To our valued shareholders and investors
My name is Noriyuki Hara, President and CEO of MS&AD Insurance Group.
In May 2022, we announced our new four-year Medium-Term Management Plan started fiscal 2022, together with our financial results for fiscal 2021.
Under Vision 2021, the previous Medium-Term Management Plan started in 2018, we used the SDGs as our guidepost and implemented management based onCreating Shared Value (CSV). We declared achieving a world-leading insurance and financial services group and building a resilient and sustainable structure that can swiftly respond to environmental changes as our vision to be achieved during the plan, and worked on three key strategies: pursuing the Group's comprehensive strengths, promoting digitalization and reforming the business portfolio.
As a result, we managed to steadily enhance our earning power, and achieved each of our goals, posting Group adjusted profit of 347.1 billion yen, nearly 50 billion yen above the target of 300 billion yen, and net income of 262.7 billion yen, nearly 33 billion yen above the initial forecast. Both of these figures represent record highs. However, while the Group adjusted ROE was 9.5%, one point higher than forecast of 8.5%, we were still one step away from the target of 10%. We will continue to address the challenge of improving capital efficiency in the new Medium-Term Management Plan.
In the new Medium-Term Management Plan that started this year, we will accelerate efforts to realize our 2030 vision to form a company that supports a resilient and sustainable society centered around CSV × DX × Global.
The CSV × DX × Global strategy developed in fiscal 2020 is a strategy to leverage the power of data and digital technologies to roll out products and services that help solve social issues on a global scale.
Recently, the business environment surrounding us has undergone rapid changes, from the COVID-19 pandemic and geopolitical risks to the associated impact on supply chains, inflation, and fluctuating interest and exchange rates. In this business environment we are committed to achieve growth with society by helping to solve social issues as a platform provider of risk solutions.
Quantitatively, we aim to record net income of 470-500 billion yen on an IFRS basis and post a stable adjusted ROE of at least 10% by fiscal 2025. In doing so, we hope to achieve profits and capital efficiency on par with our global peers. We plan to apply the International Financial Reporting Standards (IFRS) from fiscal 2024 onwards. In the first two years of our Medium-Term Management Plan representing Stage 1, we will continue to apply Japan GAAP. In fiscal 2023, the final year of Stage 1, we will target Group adjusted profit of 400 billion yen and Group adjusted ROE of 10%.
The three basic strategies at play will be Value (value creation), Transformation (business reforms) and Synergy (demonstration of group synergy). As the foundations supporting these basic strategies, we will work to enhance sustainability, quality, human resources and ERM.
We see improving capital efficiency as one of the highest priority issues to address in the new Medium-Term Management Plan. To this end, we will pursue the optimization of capital allocation. Through sophisticated business management and the flexible movement of capital, we will allocate capital to more efficient businesses. These highly efficient investments will increase profits and capital and in turn will lead to businesses with higher capital efficiency, increasing returns to shareholders.
Lastly, on the topic of return to shareholders, our policy is to provide shareholder return based on dividends and the share buybacks by adopting a benchmark of 50% of Group adjusted profit in Stage 1 (fiscal 2022 to fiscal 2023) of the Medium-Term Management Plan and 50% of base profit for shareholder return in Stage 2 (fiscal 2024 to fiscal 2025). In addition to this, we will provide additional returns in an agile and flexible manner, in light of market trends, the business environment, capital status and other factors.
In fiscal 2021, we decided to issue dividends of 180 yen per share, a 25-yen increase from the previous year, and implement share buybacks worth 50 billion yen. With an additional 25 billion yen in share buybacks announced on November 19, total share buybacks came to 75 billion yen.
Regarding Group adjusted profit for fiscal 2022, although we expect a decrease compared with fiscal 2021, as the Group's earnings strength has steadily improved, excluding one-time factors, we expect to maintain the dividend increase from fiscal 2021 and increase it by 5 yen to 185 yen per share for fiscal 2022.
We will continue to make every effort to fulfill your expectations, and appreciate your continued support.
June 2022
Noriyuki Hara
President & CEO
