Dai-ichi Life Holdings

Financial Results & Earnings Forecast: 1Q

Financial Results Overview

The gradual recovery of economic activity in services industry was observed globally during the first quarter of FY2021, impacted by progress of Covid-19 vaccination mainly in the United States and Europe. In the financial markets, as large-scale fiscal and monetary policies in each country continued, expectations for economic normalization increased, and stock prices remained firm.
On the other hand, the Japanese economy continued to be sluggish, partly due to the impact of the third state of emergency issued in April. In Japan, vaccination progress was behind compared to other developed countries, and the pace of recovery in economic activity also reflected that difference.
In such business environment, our business results for the first quarter were as follows.

Ordinary revenues increased to ¥1,945.5 billion (8.6% increase), consisting of (1) ¥1,253.7 billion (22.6% increase) of premium and other income, (2) ¥606.5 billion (14.6% decrease) of investment income, and (3) ¥85.1 billion (46.2% increase) of other ordinary revenues, compared to 1Q of the prior fiscal year.
Increase in business results reflect recovery from sales restraints amid spread of Covid-19 that impacted Dai-ichi Frontier Life at financial institution agencies and Dai-ichi Life in the life plan designer channel in the previous fiscal year.
Meanwhile, ordinary expenses increased by 1.4%, to ¥1,739.3 billion, consisting of (1) ¥1,232.4 billion (24.2% increase) of benefits and claims, (2) ¥134.8 billion (544.2% increase) of provision for policy reserves and others, (3) ¥111.7 billion (69.0% decrease) of investment expenses, (4) ¥181.4 billion (13.7% increase) of operating expenses, and (5) ¥78.9 billion (56.3% decrease) of other ordinary expenses, compared to the prior fiscal year.
The main reason for the decrease in investment expenses was the fact that Dai-ichi Life recovered from the significant deterioration in derivatives transaction gains (losses) due to fluctuations in the financial markets in the 1Q of the previous fiscal year. As a result, ordinary profit increased to ¥206.2 billion (168.6% increase), YoY. Net income attributable to shareholders of parent company, which is ordinary profit after extraordinary gains and losses, provision for reserve for policyholder dividends, and total of corporate income taxes, increased to ¥138.4 billion (238.9% increase).

Financial Position Overview

Total assets as of June 30, 2021, compared to March 31, 2021, increased by 2.3%, to ¥65,033.6 billion, mainly consisting of ¥51,806.4 billion (1.8% increase) of securities, ¥3,829.9 billion (1.8% increase) of loans, ¥1,118.0 billion (0.4% increase) of tangible fixed assets and ¥2,216.1 billion (9.9% increase) of other assets.
Total liabilities as of June 30, 2021 increased by 2.4% to ¥60,173.7 billion, mainly consisting of ¥51,908.8 billion (1.7% increase) of policy reserves and others, ¥5,225.6 (11.9% increase) of other liabilities compared to March 31, 2021.
Total net assets as of March 31, 2021 increased by 1.1% to ¥4,859.9 billion.
Group solvency margin ratio (SMR), which indicates the ability to pay insurance claims, decreased by 10.1% points from the end of previous fiscal year to 948.4%.

Earnings Forecast

Although the progress rate is relatively high against forecast, there is no change in the full-year forecast (released May 14) considering expected cost of reinsurance ceding at DL after the 1Q, and recent rebound of Covid-19 infection as well as the increase in financial markets volatility.