Net Premiums Written Increase Materially for First Time in 10 Years
Net Income Advances 6.6% Year-on-Year to JPY 8.0 Billion
TOKYO, May 22 /Xinhua-PRNewswire/ -- The Fuji Fire & Marine Co., Ltd., ("Fuji Fire and Marine" or "the Company")(TES: 8763), one of Japan's oldest and most trusted names in insurance, reported financial results for the fiscal year ending March 31, 2007.
HIGHLIGHTS
-- Net Premiums Written increased to JPY 296.1 billion, up 0.2% from
JPY 295.4 billion in FY2005
-- Income from underwriting decreased to -JPY 4.6 billion, reflecting
the impact of Typhoon No. 13 (approx. JPY 5.2 billion), excluding
payments for additional claims
-- Investment income increased by 61% to JPY 15.8 billion due to
securities sales gains and a year-on-year increase in interest &
dividend income yield rates
-- Risk-monitored loan ratio decreased to 1.6%, from 2.3% in FY2005
-- Ordinary income decreased slightly as robust earnings from
investments offset an increased claims payment for natural disasters
and a decrease in underwriting earnings stemming from additional
claims payments and an increase in IBNR reserves
-- Extraordinary income expanded considerably since there had been small
extraordinary losses stemming from front-loading statistical IBNR in
FY2005 and also due to a non-recurrent profit on the disposal of real
estate assets in FY2006
-- Current net profit increased by 6.6% to JPY 8.0 billion
-- EPS increased 6.5% to JPY 18.1, compared to JPY 17 per share in FY2005
-- ROE slightly declined to 4.5%, down from 4.8% in FY2005 due to
valuation differences on securities
Excluding the effect of the CALI scheme change, Fuji Fire and Marine achieved material growth in net premiums written ("NPW") for the first time in 10 fiscal years in FY2006. NPW of JPY 296.1 billion were reported, up 0.2% from JPY 295.4 billion for FY2005, as a result of the successful execution of the strategic initiative to develop innovative, value-added products as well as new sales channels over the last two years. The industry-leading loss-ratio and an improvement in investment yield from 2.47% to 2.66% advanced the bottom line by 6.6%, to JPY 8.0 billion up from JPY 7.5 billion. On a consolidated basis Fuji Fire & Marine delivered a 10.8% growth in net earnings, with the difference attributable to high growth of assurance premiums written by Fuji Life.
Fuji Fire and Marine CEO Bijan Khosrowshahi commented, "I am extremely pleased with our results for the past fiscal year. We have worked hard over the last two years to build an infrastructure that promotes growth. Our efforts are now yielding promising results."
Mr. Khosrowshahi continued, "We have created new products to address the changing needs of our clients, and have developed a strong dedicated sales force, professional agencies and alternative channels to market these products. The results have been dramatic and we are poised to further capitalize on our strengths in underwriting, distribution and asset management to continue our growth in the coming years. We intend to pay a dividend of JPY 7.5 per share to our common shareholders and initiate a share buy back program to repurchase 12.5 million shares."
NET PREMIUMS WRITTEN
NPW increased to JPY 296.1 billion in FY2006, up 0.2% from JPY 295.4 billion in FY 2005 and the Company enjoyed substantial year-on-year growth in four of its five business lines. Marine NPW were JPY 1.8 billion, up 15.8% from JPY 1.6 billion, based on a nationwide marketing push into this high-margin, high growth area. Casualty was up 5.9%, from JPY 13.4 billion to JPY 14.2 billion, due to the Company's highly-focused efforts to market its services to construction companies. Accident and Health was up 4.1%, from JPY 27.4 billion to JPY 28.5 billion, as premiums for medical insurance grew. Fire was up 4.0%, from JPY 43.1 billion to JPY 44.9 billion, as the successful "Mirai Smile" policy reached households nationwide, resulting in increased sales.
Only Auto was marginally down 1.1% from JPY 165.1 billion to JPY 163.3 billion. However, the overall direction of Auto has been positive and with new products such as the high-service/high-value Veriest(TM) policy, the Company expects to make advances in the coming year.
5% of the NPW for Fire and 8% for Auto NPW were transferred to strengthen the Catastrophe Loss Reserves. These amounts are based on the reserve plan which was formulated when the natural-disaster underwriting reserve system was introduced the last fiscal year.
LOSS RATIO
For fiscal year 2006, Fuji Fire and Marine's loss ratio increased from 60.6% to 63.2% on an earned/incurred basis. The increase represents JPY 5.8 billion of claim payments related to natural disasters, such as Typhoon No. 13. Moreover, there was JPY 2.5 billion in reserve for additional claims for non-payment and a JPY 3.1 billion increase in our IBNR reserve.
INVESTMENTS
Investment income increased to JPY 15.8 billion, or 61%, due to gains from securities sales and a year-on-year increase in interest & dividend income yield rates from 2.47% to 2.66%. This increase represents ongoing efforts to make the portfolio as efficient as possible. The Company has taken substantial steps to diversify out of domestic bonds by increasing exposure to assets such as non-Japanese bonds, REITs, and investment trusts resulting in a portfolio with better risk management and higher returns.
TOTAL ASSETS AND SHAREHOLDERS' EQUITY
Total assets amounted to JPY 1.081 billion, marginally up from JPY 1.077 billion in FY2005, while shareholders' equity increased from JPY 175.5 billion in FY2005 to JPY 178.0 billion in FY2006. These gains reflect an increase in retained earnings.
DIVIDEND
Fuji Fire and Marine plans to pay a cash dividend of 7.5 yen per share to its common shareholders and initiate a share buy back program, whereby the Company will repurchase 12.5 million shares.
OPERATIONAL HIGHLIGHTS AND RECENT DEVELOPMENTS
-- 3-Year Business Plan (2005 - 2007): The Company has made substantial
progress in advancing its 3-Year business plan and towards achieving
its goals for FY2007: NPW growth of 5% or higher in comparison to
FY2004, a combined ratio of 91% or lower, a ROE of 6% or higher, and
solvency ratio of 800% or higher. To date, the Company has achieved
a solvency ratio of 884% for FY2006, up from 833% in FY2005. NPW
still has room for improvement, but has turned the corner and is
growing due to new products and an ability to more effectively
penetrate the market. The Company's combined ratio of 96.5% due to
Typhoon No. 13, has retreated from 94.6% in FY2005, but made steady
progress (excluding typhoons) since FY2001 when it was 99.7%. ROE,
which was -5.1% as recently as FY2002, is stable and consistently
above 4.5%. As the Company moves forward in creating a more efficient
and profitable company, it expects to see continued advances in ROE.
-- Credit Ratings: Our credit ratings were raised by Standard & Poor's
from BBB+ to A-; by A.M. Best from B++ to A- during FY2006 and by R&I
from BBB+ to A- in May 2007 while JCR's A rating remained unchanged.
The improved ratings demonstrate that Fuji Fire and Marine has
financially strengthened during FY2006 and that the business model is
being executed successfully.
-- Statistical IBNR Reserving: Statistical Incurred But Not Reported
("IBNR") claim reserving was officially introduced in FY2006. The
company front-loaded reserves in FY2005 for Auto insurance due to the
anticipated impact of the adoption of statistical IBNR.
FINANCIAL RESULTS GLOBAL CONFERENCE CALL
Fuji Fire and Marine will hold a global conference call to discuss its results on Tuesday May 22, 2007. The call will begin at 10:00 PM in Tokyo, 9:00 AM in New York and 2:00 PM in London. For conference call dial-in information, please call our IR agent Taylor Rafferty in Tokyo at
81-3-5444-2730 (attn: Mr. James Hawrylak), in New York at 212-889-4350 (attn: Ms. Jessica McCormick), or in London at 44-20-7614-2900 (attn: Mr. Faisal Kanth).
Founded in 1918, Fuji Fire & Marine is one of Japan's oldest and most trusted names in insurance. Through its 200 offices nationwide, the Company is building on its tradition of excellence with a diverse family of products including the highly profitable and growing "Accident and Health" line of coverage and many other non-life insurance policies such as fire, automobile and marine.
News and other information about The Fuji Fire & Marine Co., Ltd. is available at http://www.fujikasai.co.jp/english/index.shtml .
CONTACT:
Taijirou Sawa, Manager, Investor Relations
The Fuji Fire & Marine Co., Ltd.
2-12-18, Ginza, Chuo-ku, Tokyo 104-8122
Tel: +81-3-5550-4920
Email: taijirou_sawa@fujikasai.co.jp
