Sompo International eyes Canada, Europe & more in diversification drive

Sompo International, covering the global insurance business of Sompo Holdings outside the Japanese home market, will push into Canadian, European, SE Asian and American markets as it focuses its attempts to diversify its global commercial business through expanded geographies, top officials have indicated.

Sompo International is “aiming for further top line growth and the stabilisation of earnings through geographical diversification,” group chief operating officer Mikio Okumura told market analysts during an update of the group’s mid-term strategic plan.

“For fiscal 2023 and onwards, we will continue to diversify our business lines and expand our underwriting regions to Canada, continental Europe and south east Asia and also in the American continent,” Okumura said.

Conditions for achieving earnings stability are anything but certain. “For the external environment we cannot be over-optimistic,” Okumura said, citing increasing nat cat and continuing inflation. “So the environment is still severe.”

But the portfolio has been rejigged for reduced earnings volatility, officials noted. Property catastrophe is down to 4% of the portfolio from 13% in 2017. Casualty and crop insurance rose as a portion of the whole.

Reunderwriting will continue at the North American crop unit Agri-Sompo “to maximise margins,” management admitted.

Sompo International continues to be the earnings lever for the Sompo group. The global division is expected to nearly double their net income in the group's coming fiscal year to ¥151.4 billion on a mix of improved underwriting and higher investment income, the group has recently declared. Sompo International enjoyed a 13.5% or ¥73.1 billion increase in net income to ¥73.1 billion in the fiscal year ended March 31, 2023.

Gross written premium for Sompo International’s commercial lines grew nearly 10% year on year, including 25% growth from the US crop insurer AgriSompo, 7.6% growth from reinsurance and 4.2% growth in non-crop commercial.

Sompo is pencilling in the Sompo International combined ratio for the coming fiscal year at 91.6%, down nearly 2 percentage points from the prior 12M period on big hopes for a lower loss ratio. Management is counting on improvement in crop insurance loss ratios and “controlled catastrophe risk-taking.”

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