Tokio Marine plots higher profit targets after H1 surge; global P&C units will lead

Tokio Marine is feeling bullish after a surge in current year profits and now expects to ride growth in P&C to group profits "well past" its prior FY2023 target of ¥500 million ($4.4 million), a level the group can "stably exceed" thereafter, management said in a presentation for its investor day Friday, November 26.

The group's international operations will lead. International units will likely present 9 percent CAGR profit growth through 2023, well ahead of the broader group's goal for 3 to 7 percent CAGR growth.

Those gains will be driven by rate increases, profitability improvement and gains for the new US unit Pure, management said. Top line annual growth through 2023 is expected at 5 percent after a heady 9 percent now expected in fiscal year 2021 after North American assets outperformed and triggered the forecast upgrades.

Profit growth in Japanese domestic non-life will be in the upper range of the group's target at 6 percent, "driven by profitability improvement of fire and growth of specialty insurance" but with pressure from auto expected following 2022 rate decreases.

The drive into domestic specialty lines will see Tokio Marine build new departments, new products and new services in health, SME, renewables and cyber to deliver over ¥100 billion in new premium in 2023 (vs. 2020), the presentation indicated.

Domestic life lines fall out of the growth picture. Japanese life should rather offer "stably secure" annual net profits near JPY 50 billion, the presentation shows.

Growth to and after 2023 will include a further press on ROE past the 12 percent 2023 target, resulting both from the expected growth in P&C and business area expansion into prevention and recovery services, management claimed.

With greater profits come higher dividends, management vows. The payout target has been hiked to 50 percent from a prior floor of 40 percent.

Earnings strength in the company's fiscal first half already rendered a hike of Tokio Marine's full-year targets when the company reported H1 figures mid-November.