- Interim net income/loss (total overseas insurance companies): Loss of ¥14.8 billion, net income sharply declined by ¥45.8 billion YoY
- However, a gain on reversal of ¥27.9 billion loss recognition relating to natural disasters in the FY2010 consolidated results, has been recorded separately in the 1H of FY2011
- Interim net income after adding back the said ¥27.9 billion: ¥13.1 billion, down ¥17.8 billion YoY
- Adjusted earnings*: ¥13.6 billion, down ¥18.2 billion YoY
- Calculated by adding back the gain on reversal of the adjustment for natural disasters during January-March 2011
- *Includes quarterly net income of "international insurance business (life and non-life)" for financial accounting purposes as well as profits and losses of overseas branches of Tokio Marine and Nichido and equity method investees; valuing earnings of life insurance business at embedded value (EV); adjusting the differences between non-consolidated accounting standards and consolidated accounting standards.
- Adjusted earnings by location/geographic area*:
- *Figures for each location are before the adjustment relating to the New Zealand Earthquake and the Great East Japan Earthquake during January-March 2011
- Philadelphia Insurance Companies: ¥3.4 billion, down ¥9.2 billion YoY
- While keeping disciplined underwriting, earnings declined due to a large natural catastrophe losses incurred from tornadoes during April-June and the record-setting cold weather in the eastern U.S. regions in the beginning of the year
- Kiln: Loss of ¥11.0 billion, earnings declined by ¥15.6 billion YoY
- While net premiums written increased, earnings declined mainly due to the effect of large natural disasters such as the New Zealand Earthquake, the Great East Japan Earthquake, flood in Australia, tornadoes in the U.S., etc.
- Adjusted earnings after eliminating the effect of the prior-period natural disasters (the New Zealand Earthquake and the Great East Japan Earthquake): loss of ¥0.6 billion
- Reinsurance (excluding Kiln): Loss of ¥12.1 billion, earnings declined by ¥20.7 billion YoY
- Mainly due to a significant increase in large natural disasters such as the New Zealand Earthquake, the Great East Japan Earthquake, flood in Australia, tornadoes in the U.S., etc., in addition to the appreciation of the yen
- Adjusted earnings after eliminating the effect of the prior-period natural disasters (the New Zealand Earthquake and the Great East Japan Earthquake): ¥2.3 billion
- North America: ¥1.0 billion, earnings declined by ¥1.5 billion YoY
- Mainly due to major accidents
- Central and South America: ¥1.2 billion, earnings increased by ¥2.0 billion YoY to return to profitability
- Due to the improvement of underwriting performance and successful expense cutting efforts in Brazil
- Non-life in Asia: ¥1.5 billion, earnings declined by ¥1.2 billion YoY
- ¥Mainly due to the effect of natural disasters since the beginning of the year such as the New Zealand Earthquake and flood in Australia
- ¥Adjusted earnings after eliminating the effect of the prior-period natural disasters (the New Zealand Earthquake): ¥4.5 billion
- International life: ¥1.1 billion, up ¥0.1 billion YoY
- Due, among others, to steady growth in new policies at major locations
＜ International Business: Review of 1H of FY2011 Results ＞
＜Impact of the Thai Flooding to Our Business Projections for Full-Term FY2011＞
The flooding in Thailand which began in early October of this year is still continuing. Although draining work has begun in some industrial parks, we are still not able to visit the affected factories for loss surveys and are thus unable to determine the extent of the damage to our individual clients.
Therefore, we have factored in the Thai flooding loss by applying certain damageability percentages to the insured values of the properties which exist in areas where inundation has been confirmed, to our updated Business Projection for Full-Term FY2011.
For the Thai flooding, we estimate the total gross loss (before reinsurance) to be about ¥200.0 billion, half of which to be our Group's net incurred loss.
The breakdown of net incurred losses amongst Tokio Marine & Nichido Fire and our overseas group companies is about ¥50.0 billion each.
We also expect to pay out approximately ¥25.0 billion of Tokio Marine & Nichido Fire's expected losses during FY2011, most of which will be covered by its (or, Tokio Marine & Nichido Fire's) catastrophe loss reserves.
We have identified flooding in Thailand as one of the significant risks and have carried out risk analyses such as assessing the PML of our portfolio, however, the magnitude of the current flooding both in terms of geographical scope and duration of time has exceeded our assumptions and that of many other experts.
Nevertheless, we view the expected loss from the Thai Flooding can be fully absorbed by the capital buffer Tokio Marine holds for this kind of extreme event and therefore the impact on our financial soundness will be limited.