[Reduce strategic equity holdings]
We are selling our strategic equity holdings ahead of schedule and reallocating the proceeds toward growth investments. In FY2024, we sold ¥708.5 billion and are on track to achieve a zero balance at the end of FY2029.
We have decided to allocate approximately ¥600 billion of the roughly ¥2 trillion in growth investments to a business investment in W.R. Berkley Corporation (hereinafter “WRB”) of the United States.
Regarding additional business investments, we will conduct disciplined reviews based on our accumulated experience, considering not only profitability relative to capital and risk but also multiple perspectives such as diversification effects and Group synergies.

[Build an optimal risk portfolio]
We see the sale of strategic equity holdings as an opportunity to reduce domestic equity risk—a longstanding challenge and the greatest risk for
our Group—and build an optimal asset management portfolio, while expanding our international business portfolio through strategic investments. We thus view this as an opportunity to increase profits and improve capital efficiency. We believe that by advancing these initiatives, we can maintain our current profit levels even after the sales are completed.
In asset management, in addition to liquid foreign bonds, we are accumulating higher return assets, mainly private assets that are expected to offer risk diversification, high yield, and low volatility, to secure a stable source of income while controlling market risk sensitivity and improving ROR.

Furthermore, we have decided to invest in WRB, a leading U.S. specialty insurance company, and are working toward completing the transaction. In addition to accelerating the growth of our international business, we believe this will contribute to both profit expansion and risk diversification by acquiring risks with low correlation to natural catastrophes and diversifying revenue sources.
In preparing for this business investment, we have steadily prepared by mobilizing our accumulated expertise. This includes underwriting U.S. risks and achieving profitability through the Lloyd’s and reinsurance business; initiating underwriting of specialty lines and securing profits at MSIG USA, which had primarily focused on underwriting for Japanese companies; and generating profits and gaining visibility into retained risks through investment in WRB’s captive reinsurance company.
Going forward, while expanding the quantity and quality of higher return assets, we will consider investing in overseas asset management businesses to meet the asset management needs arising from the expansion of our international business. In making business investments, we will comprehensively consider factors such as ROR, risk diversification effects, shared values, and Group synergies to execute disciplined business investments.

The Group is committed to achieving stable profit growth and improving capital efficiency. We have set a target to maintain stable Group adjusted ROE of 10% or higher, aiming for 16% in FY2025, the final year of our Medium-Term Management Plan. This target is expected to be achieved through the recovery of insurance underwriting profit in the domestic non-life insurance business, the reduction of strategic equity holdings, and the expansion of profits in the international business.

[Enhance the quality of assets and liabilities]
As We mentioned earlier, on the asset side we are reducing strategic equity holdings and focusing on business investments in WRB, a company with low correlation to natural catastrophes and high growth potential, as well as acquiring insurance risks in the U.S. specialty sector. On the liability side, we are working to shorten fire insurance policy terms, set appropriate rates for fire insurance and casualty insurance while tightening underwriting standards, and procure reinsurance with a focus on periodic earnings and financial soundness. Among other measures, we will consider options such as utilizing reinsurance and pursuing strategic alliances and reorganizations within our domestic life insurance business. Through such initiatives, we will enhance the quality of our assets and liabilities, and generate high-quality profits and cash, thereby improving capital efficiency.
 

The shareholder return policy stipulates that 50% of Group adjusted profit will be returned as dividends and share buybacks as basic returns. Additional returns will be implemented flexibly and proactively based on factors such as the business environment, ESR levels, liquidity, and stock price trends.
For FY2024, shareholder returns will include an annual dividend of ¥145 per share (an increase of ¥55 year on year) as the basic returns along with a decision to repurchase up to ¥145 billion of our own shares. We will strive to continue delivering attractive shareholder returns.