Sompo International builds growth plan against casualty headwinds

Sompo International, covering the global insurance business of Sompo Holdings outside the Japanese home market, is suffering a palpable slowdown in premium growth in key commercial casualty lines, but can likely beat its modest target for premium growth in the fiscal year just started, a company official has argued.

“This budget of 4-5% is reasonably conservative,” Sompo Holdings IR chief Yukinori Kuroda said of Sompo International (SI) broad premium growth targets. “SI may be able to outperform against this guidance.”

Comments followed signals of alarm from analysts that premium growth in the unit, Sompo’s traditional growth driver against domestic market stagnation, had seen a slowdown in premium growth rates over the course of Sompo’s 2022 fiscal year that ended March 31.

“The pace of increase has slowed down,” Kuroda acknowledged. In commercial, the slowdown tilted towards SI’s core casualty lines while being lightly offset by higher gains in property and nat cat. Overall growth rates are, of course, skewed by the sale of Brazilian retail operations.

The latest measures of premium growth across lines “is enough to achieve the plan,” he Kuroda said of momentum.

Property and catastrophe has “successfully increased rates more than they expected,” he said. “In the area we focus on, the casualty area, rate increase was more moderate.” Professional lines including D&LO managed to squeeze out rate increases, but competition held the gain to a lower magnitude.

Some softness in commercial top line growth will follow select cases of de-risking.

“We are beginning to decrease cat exposure,” Kuroda said. “As to casualty risks that we took a lot of last year, [they] include some poorly performing contracts as well; we need to cut that off and that factor is being factored in the top line.”

Sompo International has a GWP target pencilled in at ¥1446 billion in fiscal 2023, a mere 4% gain on the prior year period.

That growth should include 11.8% growth in commercial, offsetting a major contraction in retail stemming from the sale of the Brazilian unit.

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