Dai-ichi Life Insurance Stock

It is now time to begin Daiichi Life Group, CFO Dialogue. Thank you very much for taking time out of your busy schedule to join us today. Today's speakers are Mr. Taisuke Nishimura, our Managing Executive Officer and Group CFO; and Mr. Paul Wells, President and CFO of Protective Life Corporation. Today's event is being streamed online with simultaneous interpretation in Japanese and English. Regarding the agenda, Paul will first explain about Protective's strategy, followed by a panel discussion.

After the panel discussion, we will take questions. Then Nishimura will provide a brief update on briefly ESR, after which we will take questions for that update. The total duration is expected to be up to 1 hour and 30 minutes. Please also note that an archived recording of today's event will be posted on our website at a later date.

Now we'll ask Paul to explain about Protective's strategy. Paul, please go ahead.

Good afternoon, and thank you for the opportunity to spend time with you. We appreciate Daiichi's support and partnership, and we recognize the importance of Protective's role in Daiichi's long-term growth ambitions. My goal today is to give you a concise update on where Protective is today, progress we have made, and the path we see to continued growth toward 2030.

For clarity, I will not address all information included in my slides during this presentation as we will get into much more detail during the question-and-answer session. On this first slide, I'd like to characterize the last few years as a period of deliberate repositioning for Protective. We have been actively reshaping the company so that the earnings profile, capital position, and operating model are better aligned with where we need to go.

First, we have taken several strategic capital actions, including the sale of Concourse, the Resolution reinsurance transaction, and the expansion of Protective Life Re in Bermuda. The purpose of these actions was to improve capital efficiency and reduce risk in areas that were not core to our future growth. Second, we have added scale and diversification through the acquisitions of Portfolio and Obsidian. Third, we have continued to evolve our investment strategy.

Finally, cost efficiency remains a major focus. We have improved our expense efficiency, and that discipline gives us more capacity to invest in important areas of growth. All of these actions are part of our strategy to improve the quality of earnings, improve capital efficiency, build scale and position Protective to deliver sustained growth. Moving forward to the next slide. In the near term, our 2026 goals are very important because they show the progress that is already underway.

Our 2030 goals that are shown here are ambitious, but they are not dependent on a single lever. They are driven by a combination of retail growth, investment strategy, operational efficiency, and disciplined acquisition execution. Moving forward to the next slide, we describe our strategy broadly as achieving Competitive Fitness. Within this broad strategy, we have 4 key pillars: cost efficiency, investment returns, strong product management, and capital utilization.

We have 7 individual focus areas, and they are intentionally a mix of business initiatives and enterprise enablers. On the business side, as examples, we are focused on protection growth and growing our Asset Protection division profitably while integrating the Portfolio acquisition. In terms of enablers, we are optimizing our investment strategy and embedding operational excellence through data analytics and automation. We have a clear vision, a strong financial foundation, and scalable businesses to support our 2030 vision. We are now very focused on execution.

Moving forward to the next slide. This slide provides a high-level overview of our 4 retail businesses. In Protection, our focus is on accelerating earnings growth, improving profitability, and creating embedded value. In Retirement, we continue to pursue a multiyear organic growth plan with fixed and variable annuities along with bank and company-owned life insurance. In Employee Benefits, the opportunity is to accelerate and diversify growth, diversifying growth outside of the state of New York while also improving our expense ratio.

Finally, with Asset Protection, the priority is improving our loss ratios, improving cost efficiency, and integration execution. Moving forward to the retail earnings growth, this provides a more detailed view of our path forward to 2030. You can see in the chart to the left, our pretax adjusted operating income is growing significantly for each of these 3 categories of businesses between 2025 and 2030. Retirement is the largest earnings contributor with fixed annuities as the primary driver.

As I mentioned earlier, our investment strategy is critical in supporting the competitiveness of our spread-based products. In the Protection division, earnings are accelerating as the block continues to grow and earnings outpace the cost of issuing new business. Term Insurance is the primary earnings driver within the Protection division. As you can see, the biggest step change is in our capital-light businesses. Portfolio doubles the size of the Asset Protection division.

We are also expecting that ongoing rate increases will continue to improve loss ratios on our legacy business. Through ShelterPoint acquisition from 2024, our Employee Benefits division, we expect to see continued premium growth on paid leave products. And then finally, the recently announced acquisition of Obsidian, which we expect to close later this year or early next year, will expand our presence in the P&C market with opportunities for further growth.

The path to 2030 depends on disciplined execution across several growth drivers, as you can see detailed out on this slide. Moving forward to the next slide, as I mentioned previously, evolving our investment strategy continues to be a key area of focus. We have evolved the asset mix to improve risk-adjusted returns, including a prudent increase in private and less liquid assets.

Importantly, we are pairing the evolution of our investments with enhanced risk management. This includes stronger exposure limits, credit surveillance, look-through monitoring for private assets, expanded liquidity monitoring, stress testing, and tighter concentration risk oversight. We have also continued to add outside asset managers. As you can see, we call out here currently 13 firms managing approximately $6 billion of our investment portfolio.

We have also made a significant investment in an enterprise data platform called Aladdin Enterprise that will improve our portfolio management, and liquidity oversight, and broader ALM capabilities. It's important to note that while we are improving our investment competitiveness, we are doing it in a measured way to ensure ongoing risk management and business success.

Moving forward to the next slide. This slide covers our 2 most recent acquisitions, Portfolio and Obsidian. Portfolio closed on January 1, 2026. And the strategic rationale behind this acquisition was to create a scaled business, combining with our legacy Asset Protection division to create more modernized operations and a broader set of dealer wealth platforms.

Over time, we expect this acquisition will increase earnings, ROE and ESR. Obsidian was signed in April of 2026, and again, we expect it to close pending regulatory approval later this year or early next year. Obsidian is an opportunity for us to add another fee-based, and short-tailed P&C business specializing in the excess and surplus, or E&S market within the U.S. As with portfolio, we expect over time, Obsidian will increase earnings, ROE as well as our ESR. That concludes my prepared remarks for my presentation. And I think with that, we'll move into Q&A.

Thank you very much. So we'd like to move to the panel discussion. Panel discussion we like to start san Nishimura now would be the moderator for panel discussion. So please held via Zoom simultaneous interpretation in Japanese and English. Please go ahead.

And before moving on to Q&A with participants, I want to go through 8 questions from myself to you to deepen the understanding on Protective strategy. So let me go on to question number one. What is the greatest challenge to achieving $1 billion operating income target for 2030? And what actions are you taking to address it?

First, I would say we acknowledge that the $1 billion target is ambitious, but we certainly view the target as achievable. I would describe the primary challenges as 3 primary areas. First, the competitive dynamics within the fixed annuity and term insurance markets. These -- both of these markets are important to our growth and also very competitive.

We are addressing these risks by pursuing expansion of our distribution sources and actively enhancing the underlying customer experience. Second, achieving planned growth in our capital-light businesses. As I discussed earlier, that is critical to our long-term plans towards 2030. We are addressing the risk of growth in these businesses through active monitoring of each business, investments in technology to improve our efficiency and customer experience and then also ensuring each business has the appropriate resources they need to properly grow.

Third, challenge I would mention are external or macro factors. This would include financial market conditions as well as regulatory risks, and we are actively addressing these risks through monitoring as well as scenario planning for each of our business units.

Okay. So this is a follow-up on question number one. And the plan you showed today seems to be more favorable than prior year plan. So what are the principal drivers of this step-up to 2030? And how confident are you in achieving it?

Yes. I'm going to talk through really 3 primary drivers of our increase that we've showed towards 2030. But maybe first, I would say we have confidence in our plans. As I mentioned earlier, we have not just one, but multiple levers that are in place and being actively worked on to drive towards the performance that we've outlined. The first driver, I would talk about is our recent acquisitions, that being ShelterPoint, from late 2024 in the employee benefit space, portfolio, which I just discussed as well as Obsidian.

And ultimately, all of those businesses as they become more operational within the Protective platform, we expect to see significant growth and that growth really leveraging 4 key elements. One, we think there are a set of internal capabilities that Protective can bring as the owner of these businesses to help drive growth. One example of that is Obsidian, we expect will benefit from being part of a much larger, more diversified and highly rated company like Protective.

The second area of support for these businesses is synergies and synergies both on the revenue side and the expense side. For example, on the expense side, we see opportunities to replace legacy technology resources with a more modernized set of technology platforms. The portfolio acquisition we did earlier this year is a good example of that. On the revenue side, we also expect to see significant revenue synergies within the Asset Protection division from the recent acquisition of Portfolio as well. The third supporting capability for the capital-light business growth is improved loss ratios in our legacy asset protection business.

As we've commented previously, we have seen higher loss ratios over the last few years due to heightened inflation in the auto parts and labor, and we've progressively taken steps to increase those rates to improve loss ratios over time. The fourth supporting item, I would mention for the capital-light businesses is external factors. I would mention 2 examples there. One, with our Employee Benefits business, we are seeing continued momentum with more states adding the mandatory paid leaf products.

And then the second example would be with Obsidian in the broader market growth that we're seeing in the E&S space. So that's the capital-light businesses. I'll move now to the retirement division, which is another key area of growth, as I showed on the earlier slide. Our retirement division sales are continuing to grow, and that's, again, been supported by our enhanced investment strategy, as well as we have an ability to continue to increase and maintain our market share in those markets over the coming years.

And then finally, our Protection division earnings is a key driver of the growth towards 2030. That's primarily a function of our term insurance product and our sales levels there, and we expect earnings will continue to increase as that term block grows and the earnings outpace the cost needed to issue new policies.

Okay. So in your explanation, so annuity business is one of the key drivers to grow. And how does Protective plan to grow annuity business while remaining competitive in very crowded market?

The annuity market, as you noted, is very competitive. But I think it's important we start framing the opportunity here with our current market share and some of the recent initiatives that we've undertaken. So let me take a minute and kind of walk through what I mean by that. Currently, we have a fairly small market share, even though our sales have grown significantly over the last 3 years. When we look back to 2023 up to 2026, we have seen a significant growth in sales.

However, we started this path of growth at a relatively low level of account value. And so even at current sales levels with no growth, we do see earnings momentum continuing on for several years. Secondly, with respect to the broader fixed-annuity market, our market share is relatively small. It's approximately 1.1% for fixed annuities. It's approximately 2% for traditional variable annuities.

So as you can see, we have an opportunity to continue to increase our market share and potentially increase sales significantly over time as we take advantage of opportunities, including broader distribution, which is the last important point, I'll make on the fixed annuity business. Even though it's very competitive, there are some significant distribution channels that we do not participate in today that we think could be an opportunity for us to take advantage of over the next few years.

Thank you, Paul. So, I understand you don't necessarily have to grow in terms of new business. You can grow in terms of in-force even though you maintain the current level of new business. Okay. Next question #4 is how do you assess the risks arising from the market environment and the investment portfolio? And how are those risks being managed?

Maybe just to start as a reminder, our investment philosophy and strategy really has evolved over the last few years. More specifically, we have added several outside managers as was described on the slide earlier. That has allowed us to shift our asset mix, we have expanded our allocation to private credit. However, we have done so in a diversified and prudent manner. In addition, we have repositioned our portfolio with 6 separate portfolio trades since 2023.

Those trades have, on a cumulative basis, served to strengthen our overall capital, ALM and also enhancing overall investment income returns. With respect to risk management around investments, we have undertaken a variety of measures to ensure that the evolution of our portfolio strategy is appropriately supported to optimize our overall risk-adjusted returns. A few of the measures we've taken, I'll just mention -- I mentioned this earlier, but we are currently in the process of implementing what I would describe as a best-in-class centralized data platform with one of the largest platform providers in the U.S. to improve our overall portfolio management, liquidity oversight, and ALM capabilities.

We think that's a very important investment that we are putting in place that will give us a much stronger infrastructure as we grow the company and broaden the asset sources that we bring into the portfolio. The second measure I would mention is we are utilizing an enhanced investment risk framework. That framework includes stronger exposure limits, credit surveillance, look-through monitoring of our private assets. And then finally, we are strengthening our external manager due diligence and ongoing performance monitoring, including adding additional resources within that area.

Okay. Yes. I agree that enhancement in investment capabilities, frameworks, and also risk management, very key initiatives, not only Protective, but other groups, so let us work together more tight. And let me switch to the next topic about capital-light business. So capital-light business are expected to make significant earnings contribution. How much of that contribution should be viewed as recurring and resilient and which businesses are expected to be the largest contributors?

First, I would say we expect all of the capital-light businesses to grow over the coming years and each of them to contribute in a meaningful way to our earnings objectives. I will address each of the businesses separately because they each have some important supporting elements that I think are important to understand. So first, Asset Protection Division or APD, the earnings from APD will ultimately be the majority of our capital-light earnings over this time frame over the next 5 years just due to its relative size today. For legacy APD, so our Asset Protection Division before the portfolio acquisition, some of the key drivers there for growth again, continued rate increases.

We have done multiple rounds of rate increases on new business since 2023. And those are resulting in improved loss ratios as we see the premium become earned. That will take some time to work through the earnings as we earn those premiums over the next several years. In addition to the loss ratio improvement, we are expecting to see continued cost efficiencies. We've taken out a significant amount of cost in that business over the last few years, and we expect that to be an important driver as we move forward to continue to maintain our operating margins.

For the recent portfolio acquisition, as I alluded to earlier, we are anticipating some significant synergies, both in expense and revenue. I would just say we have a lot of integration efforts that are already underway with portfolio, and we are expecting some significant expense synergies from a variety of departments, including IT, sales and finance. And then finally, I would say on portfolio from a revenue perspective, we do think there's opportunity to capitalize on providing a broader range of products to the existing distribution within portfolio.

I'll now move to Obsidian. So as I mentioned earlier, this is really an entry point for Protective into the excess and surplus or E&S part of the P&C market. We are expecting revenue and earnings growth to be fairly significant over the next few years for a variety of reasons. First, the E&S market overall has been growing and showing strong trends over the last several years, and Obsidian's historical performance has been very consistent with that. So we expect, just based on the existing organic activity happening within Obsidian, there will be strong momentum in revenue growth.

Secondarily, or additive to that, we think that Protective and Daiichi's ownership of Obsidian with a larger balance sheet, higher ratings, long-term owner will provide additional opportunities for growth in larger programs and will improve the overall earnings performance over time. Finally, the last capital-light business I'll mention is our Employee Benefits business. As I discussed earlier, we are expecting to see continued premium growth there. More states are being added. We're adding new groups, and we also expect to see improved loss ratios in this business as well from what we saw in 2025 and so far in 2026.

Thank you, Paul. So you have several source of growth in capital-light business, and that contributes a lot to 2030. So in addition to 2030 outlook, also 2026 forecast is very strong. What gives you confidence in 2026 outlook? And what are the key assumptions supporting it?

So there are several items driving our expected growth in 2026. There's 4 key ones I'll mention. The Protection division, first, we expect to see continued earnings growth from recent sales levels, so sales levels we've already achieved. We are also seeing a positive impact in the Protection business from higher yields. So we are reinvesting our new money at higher interest rates than our portfolio yield. That is particularly helpful for the Protection business as well as some of our older acquired businesses that are longer duration.

In the Retirement division, as I mentioned earlier, we have good momentum in our fixed-annuity business in particular, but we also have nice momentum from the relatively high levels of sales we've had over the last several years in our BOLI and COLI market. We see continued growth in spread income, and we've certainly seen that in the first half of this year.

For our stable value division, our interest spreads have been a bit compressed over the last few years, but we anticipate spread improvement in 2026 versus 2025. And again, we are certainly seeing that through the first half of the year. The final point, I would make on this question is if you just look at the performance we've had over the first 6 months of 2026, we are running ahead of our plan. So to this point, we are seeing positive mortality along with favorable investment income. And so we feel very confident at this point in being able to achieve our 2026 forecast.

Thank you, Paul. That's encouraging. And switch the topic, how do you expect AI to reshape business models in the United States insurance industry and Protective?

So, I tend to think about AI affecting our business in 2 broad ways. It's probably a little bit more than this, but I think it fits pretty nicely in these 2 broad categories, one being enhancing cost efficiency and then the second, really around the customer experience. So on the cost-efficiency side, we're taking what I would call a combination approach, both from the top down as well as from the bottom up.

And what I mean by that, from the top down, we're really looking at what are the really significant processes we have where we think there could be a significant impact from AI -- and 2 areas of particular focus there are our life underwriting process as well as our APD claims process. Those are areas that we think we could see some significant benefits over time, but will likely take more time to show up in our numbers given the complexity of those processes.

On the bottoms-up side, that's really all about getting a broad set of our people using AI and improving efficiency at a personal level. And we have seen some nice benefits in terms of personal productivity. So the most significant benefit we've seen achieved so far is in our software development area within our technology group, and we are seeing tangible savings there based on the additional automation we're able to put in place with technology we have. So that's cost efficiency.

I'll move now to the customer experience. We're very focused here on providing improved experiences for both our customers and distributors. We do have several pilot programs in place to pursue improvement in experiences. I would say we are taking a bit of a cautious approach here just to ensure that we appropriately handle all interactions with our customers as the capabilities of the underlying technology continue to improve. We anticipate that benefits from AI around customer experience will likely materialize more in the intermediate and long term.

Okay. So this is my last question to you in this panel. So you are becoming CEO starting January 1, '27. Congratulations, by the way. And as you prepare to assume the role of CEO, could you share your aspiration for the company and key priorities you intend to pursue?

Yes. I'll keep this relatively simple. But I would just say my aspiration for Protective is to be a company that delivers sustainable growth and creates long-term value for Daiichi and remains a trusted partner for all of our customers and distributors. To achieve those objectives, we're going to focus on 3 key priorities: First, serving our customers and distributors across all of our different businesses very well. We're going to maintain strong financial discipline.

And then lastly, really intentionally investing in our people and capabilities to support the broader enterprise growth. The last thing, I would say is Protective has a strong foundation. We have a very strong foundation. We have a supportive owner in Daiichi. We have a very dedicated team, and my goal is to build on that foundation while also continuing to make very thoughtful decisions to prepare us and support the company's next phase of growth.

Next, Nishimura will explain about regulatory ESR. Nishimura-san, please go ahead.

So Paul, thank you very much. So I would like to add one point using this opportunity to update about this important topic. This is group regulatory ESR. So as shown in this slide, at the end of March, so we have the preliminary number that 198%, so we have already mentioned group regulatory ESR at the end of March 2026. This is slightly lower, but still with that, we ensure sufficient financial soundness. And we also have eligible capital and required capital here. So there are difference in how we measure these numbers and also there are requirements from regulators.

So for Protective, as Paul mentioned today, in Regulatory ESR, we apply Deduction and Aggregation method. So this is the base of our Regulatory ESR calculation. So there are such differences here. So that is one difference we can mention here. So for Protective, we have also internal ESR and also group Regulatory ESR, there's a difference here. And that is also reflected in both eligible capital as well as required capital. That's the gist of this chart. And also, there are some slight differences in how we measure the risks.

And we also have an internal ESR, we are looking at more adequate way to measure and reflect. So we are using internal models rather than the regulatory models. And based on the market credits, we look at the judgment of the internal rating, the discount rate, and equity risks. These factors differ. And also for marginal risks in internal ESR, we use some deductions in a portion of MOCE.

So these differences in measurement methods and regulatory treatment are reflected in both eligible and required capital, resulting in the gap between the levels. And while the regulatory ESR is an indicator used to verify compliance with labor requirements, the internal ESR is an indicator we use to inform capital policy decisions. And also with regard to the group's capital policy, we are going to use group's internal ESR as we've done in the past. So that's briefly from my side. Thank you very much.

Well, thank you very much for coming to our call. So today, we disclosed the first quarter results. So I'm going to give you some explanations on the results.

Please go to Page 3. So these are the main points for our results. Regarding the bottom line, Group adjusted profit is JPY 158.1 billion. It's about JPY 84 billion higher than the number the previous year. The last year, due to the bond rebalancing, profit level was quite low. So we had 113% increase this year. And our progress rate for full year outlook is about 28%.

For Domestic Business, higher positive spread in DL and higher gain from sale of domestic equities drove the better results. Particularly because of the yen portfolio rebalancing, the Group's fundamental earning power has been improving.

Now regarding the top line, Well, the Group's new business ANP was JPY 135 billion, 6.7% higher compared to the same period of last year. If you exclude FX impact, that's 3.9% increase. Sales in DL was steady and PLC's retirement business saw outperforming fixed annuity sales, and TAL benefited from Group business contract renewals. And sales momentum for the Group as a whole is quite steady.

On the other hand, if you look at the value of new business for 3 domestic companies, Daiichi Life, the new business margin has been lower because of the inflation. So it resulted in lower results from the -- or than the original estimate.

Now economic value. Group EV increased from the previous term. ESR-wise, because of the acquisition of the company portfolio and investment in M&G and also higher mass lapse risk due to higher domestic rate, that lowered the number. However, we still have sufficient level of capital.

So in terms of the profit, it's better than original estimate, and the sales momentum has been quite solid for the Group as a whole. I'm going to give you more details in the following pages.

This is progress about the Group adjusted profit. For Domestic Business, positive spread increased in Daiichi Life and there was increase in sale gain from the domestic stocks. And yen bond portfolio rebalancing and higher interest and dividend income from alternative assets contributed.

For International Business, each entity's profits and loss were mixed. But overall, it's within original estimate range. For noninsurance business, asset management entities contributed, an increase in membership fee and lower expense, so the employer business -- employee benefit business, the higher profit.

For HD and Others, SG&A and interest payment increased, resulting in lower profit. And for Group as a whole, higher profit, mainly Domestic Business, way offset the impact, showing 28% progress to the budget. This is by the impact of higher interest rate. At Daiichi Life, that we are working on that yen bond portfolio rebalancing, resulting in higher asset yield. Impact of the positive spread improvement amounts to about JPY 17 billion per annum. On the other hand, the higher rate can increase fixed income valuation loss and mass lapse risks.

In terms of risk management, matching ratio at the end of June is 91%. So we have enough buffer for higher interest rate in the future.

Daiichi Life and Daiichi Frontier Life surrender rate is stable at low level. We appropriately manage the risk due to higher rate. And through bond rebalancing, we would like to make sure positive spread and fundamental earning power will improve our mid to long-term results.

Now this is about the sale of domestic listed shares. For first quarter, we actually sold about JPY 300 billion worth domestic shares, making good progress towards planned JPY 800 billion sale for fiscal year 2026. But stock market value increase was higher than sale amount. So equity value at June-end increased to JPY 3.7 trillion. We keep monitoring the market situation and continue to sell the listed shares.

So please go to the next page. This is about our initiatives to expand positive spread at Daiichi Life. In response to higher stock sale gain and higher rate in Japan, in the first quarter, we rebalanced about JPY 500 billion of the fixed income portfolio. Loss from sale amounts to JPY 200 billion. But it translates to a positive spread of JPY 17 billion per annum.

If nothing changes in the market environment, for full year, rebalancing loss will be JPY 540 billion and positive spread impact should be JPY 34 billion per annum. And out of that, JPY 26 billion will contribute to the profit of this year. We continue to take a good balance between gain from stock sale and loss from portfolio rebalancing and making our portfolio more resilient.

Please go to Page 11. This is about value of new business and new business ANP. For 3 domestic entities, VNB is about JPY 20 billion, 26% lower than the previous year. The last year, in the fourth quarter, we conducted model change in Daiichi Life. On the other hand, for Group as a whole, new business ANP was JPY 135 billion, 6.7% higher compared to the same period of last year. Excluding FX impact, it's a 3.9% increase. While there was an impact of the model change, however, solid sales momentum continues.

Please go to the next page. This is about Group's economic value. At the end of June, Group EV is about JPY 9.8 trillion, because of the increase of the domestic shares. This is 2% higher than the end of last period. For Group ESR, it's 206%, 13 points lower than the end of last term.

For eligible capital, because of the acquisition of portfolio and the dividend payout, there was some downward pressure. However, that was offset by higher domestic equity price, so resulting in a flat number. For required capital, because of the increase of the risk of mass lapse and higher stock price and equity risk increased due to M&G investment, it increased about by JPY 400 billion.

ESR declined compared to the previous term, but we are still securing over 200% level. We will monitor rate, stock price, lapse trend and M&A impact on capital, and make sure sufficient level of ESR is maintained.

Go to the next page. This is our full year forecast for fiscal year 2026. Adjusted profit for the Group in first quarter, JPY 158.1 billion. The progress rate is 28%. This has been better than original estimate, so we appreciate these numbers positively. Particularly, fixed income portfolio rebalancing increased our fundamental earning power.

However, we just finished the first quarter. So depending on the future interest rate and market environment, our results might fluctuate. So we do not change our forecast for full year. We keep monitoring the progress of each entity and the economic environment so that we can actually achieve our full year goals.

Thank you very much. That concludes my presentation.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Thank you very much for coming despite of very hot weather. I'm Akifumi Kai, the Managing Executive Officer of Dai-ichi Life Group for International Life Business. I'm a Head of the International Life Insurance business. So today, I'd like to talk about our international business current status and aspirations. And also, I'd like to cover an overview of our business and each country's strategy. First, I'd like to introduce myself. I joined in Dai-ichi Life in 1997. Well, currently, it's called Mizuho-DL Financial Technology. It's actually the company working on -- focusing on the cons, and I've been actually working in that company for more than 10 years. And I studied overseas temporarily. And from 2013, I've been involved in the international business in Hong Kong and Singapore for 6 years.

And after that, I worked in investment planning and corporate planning departments and new field business. So starting from this fiscal year as the Head of the International Life business, I came to international business area. So we would like to grow our international life insurance business, which is the growth driver for the group. And leveraging my own experiences, I'd like to steadily progress each country's strategy. So that was a brief introduction of myself. So this is the current status of our International Life Insurance business. In 2007, we entered into Vietnam. And since then, we've been covering different stages of business in many countries. And by doing so, we try to improve our competitiveness globally.

Largest market is the United States. And in U.S., we have Protective, and Protective actually purchased many companies, which is actually bolt-on M&A. And through those initiatives, we are now 15 out of 329 companies in the United States. And also in Oceania, we have TAL in Australia and their share in protection market in Australia is 33.6%, which is a top insurer. And in New Zealand, we have a Partners Life, and they actually grow the existing business, and they are currently #2 in New Zealand. So we established our leading position in Oceania. In Asia, we strengthened distribution channels. So we developed new products so that we actually grow our existing business. In Vietnam, we are #2 player. Among foreign lifers, we are #1. And in Cambodia, Dai-ichi Life Cambodia, well, we have a #4 rank in the market. And in Myanmar, we are #3. So we are steadily increasing our presence in each country.

Most recently, as you know, we invested in M&G which is the entry into Europe. So we see a steady growth of the business in each country and the Protective performance is very good. And also, we work on the cost reduction measures as well. And as a result, adjusted profit for international business for last fiscal year is about 22% of group adjusted profit, which is JPY 119.2 billion, which is a record high. And for international business, 10-year average growth rate is about 10%, steadily growing in the last 10 years. Now these are the goals for our international business. By fiscal year 2030, we would like to be global top-tier life insurance group or company leading future of Japan's insurance industry. And our goal for market capitalization is JPY 10 trillion. For international life insurance, objective is to become the group -- the growth driver and contributing more than 50% to group profit.

As I said before, since our entry into Vietnam in 2007, we've been complementing our domestic business through profit growth and dividend payment. However, for fiscal year 2030, we are going to increase our presence steadily. So we would like to be the core of the group profit. On the other hand, there are some challenges and risks. Most recently, we are suffering from Middle East conflicts, financial market volatilities and there are some regulation changes in the market that we operate. And there are some other geopolitical risks and volatilities in the market. So we like to establish resilient business portfolio, which can overcome volatility and environmental changes. And in the past, we have been operating in a balanced manner, but we would like to keep this good diversification of our business.

As a core business for the group, we would like to generate profit on a steady basis. So like before, we focus on diversification through the North America, Europe, Oceania and Asia. And also in terms of business scope, we would like to, of course, cover life insurance business. But not only that, we would like to capture the growth opportunity of retirement area. And also, we'd like to expand our capital-light business so that we can improve our profit base and capital efficiency. And ultimately, we'd like to contribute to majority of the profit of the group. Now I'd like to talk about the strategy for international business. The adjusted profit for International Life business for fiscal year 2026 is expected to be JPY 160 billion.

As I said before, by 2030, we would like to contribute more than 50% of the group profit. And for that purpose, we like to focus on organic growth and inorganic initiatives to achieve the goal. Regarding the organic growth for existing business, most of the growth will come from expansion of the business in North America. And in Europe, Australia and Asia, we will accumulate profit steadily, but about half of the growth will come from North America. For North America, we would like to tap individual life and annuity market, which are still growing. And on top of that, we would like to work on group insurance and asset protection business, which are capital-light business. We'd like to increase the share of this type of business so that we can actually improve the capital efficiency as well. For Europe, through our investment in M&G, we would like to receive the benefit of the retirement market growth. And also, we'd like to accumulate our know-how and knowledge in life and annuity area.

In Oceania, we already have a leading position. In protection market, as I said before, we have more than 30% market share. But in addition to that, particularly in Australia, retirement market, which is expected to grow more will be our focus so that we can actually receive the benefit of the growth of the individual annuity and group pension market. For Asia, for the future phase of profit contribution, our priority is to increase the scale of business in each country. In addition to those organic initiatives, in order to fill the gap for fiscal year 2030 profit goal, probably bolt-on M&A or group direct M&A transactions will be considered.

Particularly, we'd like to focus on the inorganic deals where we can expect early profit contribution and cash recovery. By doing so, we can actually fill the gap between the current status and the goal. Now I'd like to talk about more specific strategy for each region. Now on North America. For our group, as I said before, North America is a core market for our international business for the growth and capital efficiency. For fiscal year 2025, adjusted profit of Protected is about JPY 80 billion. By 2030, we expect growth in individual life and annuity and capital-light businesses.

And if we add recently announced Obsidian transaction, I think that profit will be increased to USD 1 billion. Well, for individual annuity, Peak 65 is very important factor. These are the baby boomer generation, and they're actually entering into the phase of retirement and 65 and above population is increasing by 4 million a year. So the aging is proceeding quite fast in the United States as well. And also due to insufficient access to public and corporate pension plan, increasing -- we are seeing increasing need for self-advised investment. That means that the demand for annuity products will be high. For individual life, we see population and economic growth and mortality improvement, and that will lead to higher profit.

Now for capital-light business, in existing business like asset protection, we see repricing due to inflation and also efficiency improvement are expected. And also in the new business, we expect the other profit, the contribution from portfolio that we purchased. And Obsidian's purchase and integration, we are making efforts to complete this transaction as soon as possible. For group insurance, and also we will actually improve the quality of protection in New York State. And also, we can actually expand the business to other states as well so that we can distribution channel more connected. So through those initiatives, we are aiming at the profit of $1 billion by 2030.

In addition to those organic initiatives, we continue to look for inorganic opportunities proactively to achieve higher growth for the future in the United States. Now moving to Europe. Well, the biggest market in Europe is U.K. and M&G has a strategic asset in the United States -- United Kingdom. And we actually acquired 15.7% voting right of this company through strategic partnership. We're actually trying to send directors and try to make M&G our affiliate for this fiscal year so that we can actually create new opportunities. For international business department, the first, we focus on the life insurance and annuity. We would like to capture the needs from retirement market so that we can actually increase our group profit through M&G.

In addition, in the life and annuity area, we would like to collaborate like by sending directors. so that we can create synergy across the organization. Most recently, we actually the considering to mutually develop the products in the asset management area. But in life and annuity area as well, we consider joint investment and the accumulation of the know-how of the bulk purchase annuity BPA business, and we try to share knowledge in the group as well.

Regarding the collaboration in asset management area, or example, we consider jointly investment strategy, and we might actually invest in M&G's fund or our group's investment outsourcing and product development, leveraging group's asset management capabilities, that would be a good idea as well so that we can actually create new business opportunities. So together with asset management unit, we'd like to collaborate in those areas as well. The operating profit on the license insurance side is actually manage M&G's total number this is not the consensus disclosed in April by M&G nor our interest in company. But we assume M&G will generate about 8% level of profit growth. So as a best partner for M&G, we would like to further work on the collaboration with them in life insurance and asset management area.

And also through an interest and the dividend, we will receive the benefit of European market growth. We would like to grow this U.K., European business further. Now moving to Oceania. In this region, we have a high market share in the protection market. So we'd like to take advantage of our competitiveness in this area so that we can actually contribute steadily to the group profit. And also in Australia, we'd like to leverage the growth potential of retirement business. For protection, negative impact of last year's claim increase subsided for this year. So after this year, stable profit growth phase will be expected. Well, TAL actually acquired about 30% of the market share, 20% in retail and 40% in group insurance market.

And in total, their market share is about a little bit more than 30%, which is a top share. And for New Zealand, the P&G is a relatively young company. However, they are #2 in the industry and 20% or so market share. Towards 2030, these 2 companies maintain leading position. And because of the improvement of the profitability that we are working on, we believe that the profit from protection business will steadily grow. For retirement business, in Australia, retired population is increasing. Therefore, retirement business is an expanding business. So we'd like to receive the benefit of that. And last year, through TAL, we actually invested in Challenger, which is a company who has a 90% share in annuity. So we can actually get the benefit of the growth of the annuity market through Challenger. But also TAL's relationship with superannuation can be leveraged. So for example, we can actually develop the products, which can cater to the needs of each group.

So for this year's adjusted profit will be JPY 64 billion for Oceania as a whole. By diversifying profit sources through above-mentioned initiatives, we would like to further grow our profit towards 2030. Now Asia. Asian business, the only profit-making company -- the country is actually Vietnam, and we'd like to actually recover the profit level of Vietnam. And for other countries, we'd like to improve the market share so that we can actually have more the markets which can give us more profit. In 2007, as I said, our first international transaction was achieved, that is actually Dai-ichi Life Vietnam. As for first year it will be, they are actually #2 and among foreign company, they are #1. For last year's adjusted profit, the bancassurance new business underperformed.

And because of the onetime factors such as impairment of upfront fee, the profit declined to JPY 2 billion. Currently, in Vietnam, they are working on repricing and improvement and enhancement of the major distribution channel so that they can improve persistency rate. So top line will be improved and the quality of the product will be enhanced as well. By 2030, our goal is actually to go back to the profit level of the last several years, which will be JPY 13 billion to JPY 15 billion or more.

Other focus areas include India, which is a very big market. And we expect that this market will grow towards 2030. We like to benefit from high growth of this market and Star Union, the profit will be improving. And in other Mekong area, excluding Vietnam, we focus on partnership with banks and also through organic growth of the existing business. In Cambodia, for example, the market share improved from 6th to 4th in the last 3 years. And Myanmar improve their ranking from 8th to 3rd. So we are actually having leading positions in each market. But by 2030, Cambodia and Myanmar business will turn to be profitable. So for Asian business, in Vietnam, we are going to go back to the profitable growth. And for other countries, we'd like to benefit from the growth potential and work on the initiatives so that the profit will be returned earlier.

Now lastly, I'd like to talk about our initiatives for inorganic growth. In May, our CEO, Kikuta, explained on this. So from 2026 through 2030, we expect to spend JPY 1.5 trillion for strategic investment. For insurance and asset management areas in developed nations, we focus on the investment where we can actually expect early contribution to the profit and cash recovery. And through that, we can enhance our profit base.

And in addition, for emerging markets and the new businesses, mainly in Asia, we'd like to focus on mid- to long-term growth opportunity so that we can actually diversify our profit source for the future. This strategic investment budget, about 70% of that will be allocated to overseas developed nations. And the remaining 30% will be allocated to emerging markets like Asia and domestic non-life business area. Well, depending on the opportunities and the transactions available, we may actually change plans, but that's the current goal. For international life insurance business, we'd like to maintain financial discipline in finding inorganic opportunities using this investment budget together with organic growth opportunities.

So that's briefing for International Life Insurance business. This year is the last year of the current midterm plan. So we'd like to achieve our goal for this fiscal year, which is JPY 160 billion. And towards 2030 through existing business expansion and inorganic transactions, we'd like to contribute to enhancement of our group enterprise value. Thank you very much.

I'm Ogata, Business Head of New Fields of Business at Dai-ichi Life Group. I was here last year, and I think that was about 2 weeks after I joined the company. And then I've been thinking about the new strategy for 1 year. So I would like to share with you the strategy we have worked out. Well, now let me introduce myself. I joined Dai-ichi Life Group in July last year. And currently, I am the Managing Executive Officer. And also, I am the Senior Managing Executive Officer of Benefit One. And I am responsible for new fields of business. And this is today's agenda.

I will look at the review of the current medium-term management plan, and then I would like to talk about the new strategy for the new businesses at Dai-ichi Life Group. The first the review of the current medium-term plan. So currently, one big theme is to lay the foundation for the transformation into insurance and related services provider. We have set the goal of generating 10% of the group adjusted profit from noninsurance businesses by fiscal 2030. This is the asset management and other businesses combined. And one important factor is Benefit One. So we have to do the PMI and enhance the value, and then we have to build new businesses.

So we have less than 1 year for the current medium-term plan. So we work out the strategy and lay the foundation. And after next year, in the next medium-term plan, we will use the newly acquired assets, and we would like to realize cash generation. And based on that, in 2030, fiscal 2030, we would like to contribute more than 10% of the group adjusted profit. So this is about the transformation of business portfolio. And we are now thinking about transforming ourselves into the insurance and related services provider. In addition to the insurance business, we will focus on asset-light businesses, which will be a new source of revenue. So one of them is the asset management business and the other one is the new businesses.

By combining the businesses, which has very different way of stream of the revenue, we would like to enhance our businesses. Now I would like to talk about the positioning of the new businesses at Dai-ichi Life Group. So this shows how we view the world we are facing. From now on, AI will prosper. And the role of the human beings will change significantly and many of the tasks involving knowledge processing and efficient execution are shared with technology.

And especially in Japan, we will see the decline in population. And resource constraints such as those related to energy and public finances will intensify. So the meaning of work and meaning of life will be questioned. So we have to start thinking about what Dai-ichi Life can do in such a world. And as a new field of business, we do not think that Japan is shrinking or Japan is declining. Rather, we think that Japan is condensing. So even with fewer people, each of us can enhance our individual capabilities and become richer, freer, and maintain the level of GDP. or else, Japan will not be invigorated, and we are betting on the potential. On the other hand, a condensing society has challenges. While we have achieved material affluence, A significant gap remains regarding whether people are truly living fulfilling lives.

A long working hours and the burdens of house work and childcare have little time -- leave little time for people to expand their potential and opportunities to redesign one's life through reskilling are limited and social connections are weakening. So we aim to create a society where every individual can lead a more fulfilling life. So we have to redefine prosperity. When prosperity means that one's life is not confined to a single story.

So traditionally, prosperity was defined as being safer, live longer and owning a lot. However, in contrast, prosperity in the future lies in the possibility of redesigning one's life again and again regardless of the change in age, roles and/or location. And Dai-ichi Life Group aspires to be an entity that transforms this change into new possibilities. So we have a 124-year history. And we continue to challenge and -- our theme is that the Dai-ichi Life Group opens up the opportunities and possibilities for everyone. And I think this is a very important point. And we are trying to build an ecosystem that extends life and driven by 2 cycles. And the first one creates a room in the B2B and B2E areas, we enrich working environment, foster growth opportunities, create time and increase the meaning of work.

The second one enriches that room in the toC area, we diversify choices and deepen connections to enhance the meaning of life. Enriched working environment creates a room, which leads to a more enriched life, which in turn reinforces the meaning of work. These cycles drive service adoption while continues to serve as a foundation for both LTV and the recurring revenue. Now I would like to look at the values new fields of business can deliver. So for a long time, we wanted to be an entity that protect the lives of customers, but now we want to be a company that expands them. So we deliver value to companies such as improved productivity and benefits to employees. And for individuals, we offer better quality of life and wider range of choices.

So a company grows and the workers get richer, new consumption and challenges emerge, fueling further growth of companies. We create this virtuous cycle. And 70% of the workforce belong to the small and medium-sized companies, and they have a lot of management issues. So we would like to respond broadly to such issues. And we combine solutions such as transaction digitalization by Infomart, employee benefit by Benefit One and recruitment and retention support through group insurance and pension plans. And in doing so, we generate multiple revenue streams derived from transactions, membership fees and insurance from a single customer base.

Now let's look at the toC, the consumer sector. So here, we focus on experiences such as eating, traveling and training areas that still offer significant room for growth in Japan. Through platform centered on Benefit One, we will expand Dai-ichi Life Group's rich consumer content across categories such as dining, traveling and entertainment.

And we would like -- we are hoping that, that would lead to the transactional revenue through fees and customer referrals. The mission of the new field of business is to lead the expansion of the noninsurance businesses and contribute to increasing corporate value over the medium to long term. Our goal is to generate 10% of group adjusted profit of JPY 700 billion from noninsurance businesses. That is a new business plus asset management business. by combining various methods, we would like to earn strong recognition from the market and customers and build sustainable organizational capabilities. There are 3 approaches. The left-hand side, buy. This is acquisition. We can strengthen the platform by M&A. And also we enhance value after the acquisition. So we can, of course, buy everything.

So we have to borrow and this focuses on alliance and develop new business. And the last one is build. We will have a business contest in-house. So we would like to improve the ability to develop the businesses. We will focus on the areas where we can quickly expand earnings. And then -- we would take an approach of capital allocation, which enables us a disciplined management of invested capital and time. First, approach of buy. This shows the growth of Benefit One.

The revenue was JPY 45.3 billion, 114% of the previous year. Compared to the time of acquisition, the number of client companies increased by 28% and number of members increased by 12.5% to 13.5 million. The sales synergies derived from the Dai-ichi Life sales channel significantly boosted Benefit One sales performance. And the synergy extends beyond Benefit One sales, contributing to Dai-ichi Life's corporate insurance sales as well. Approximately 800 new corporate clients have been acquired by Dai-ichi Life channels with some of them -- some of these clients also purchasing business owner insurance. There are 4 levers for enhancement of Benefit One's values.

The first is the membership expansion. Second is the strengthening profitability improvement. The third is the productivity improvement. Fourth is the usage rate improvement. As for the usage rate improvement, -- the MAU of Benefit One -- we are aiming to increase that to 10 million. And also, we will have multiple streams for monetization. So MAU is not just a headline figure, but we would like to monitor that as the leading indicator for the future performance. And in February 2026, we entered into capital alliance with Infomart. Infomart is a leading provider of DX services for businesses, serving approximately 1.27 million corporate users. By leveraging their capabilities in the digitalization transactions, we will enhance operational efficiency for small- and medium-sized companies and establish a revenue base driven by recurring transactions.

So we would like to enhance the value by acquiring new assets. So we will acquire a suite of services primarily in the B2B sectors and leverage our sales networks and customer base to drive cross-selling, increasing revenue per customer and retention rates. And this is approach of borrow. The first initiative is collaboration with Resona Holdings. We have signed a basic agreement to launch a consumer service Resona Plus. We plan to offer benefit preferential content via Resona Plus by late September 2026. This allows us to create unique service by leveraging the strength of the 3 companies, including JCB.

We can borrow access to financial service touch points with minimal capital investment. The second initiative is a business alliance with start-up miive. In response to the tax revision in April that expanded the tax-exempt allowance for meal subsidies, we aim to agilely capture market demand. We launched Bene-One Smart meal subsidy powered by Miive on May 18. Starting with meal subsidies, we will roll out coupons, cafeteria plans and other programs based on usage data. And we will realize new services by borrowing the strength of other companies through alliances rather than relying solely on M&A. We expand our customer base through collaboration with large enterprises and financial institutions and enhance our capabilities through partnership with start-ups in order to fill in missing pieces quickly.

Through these efforts, we will build highly distinctive ecosystem of Dai-ichi Life Group. And last one is our approach to build. In August 2025, we established an internal venture program. In order to adapt to the ever-changing social environment, we foster a corporate culture that encourages taking on challenges, improve our business development capabilities and diversify our development -- deployment methods. This may not contribute to profit immediately, but we can acquire ability to cope with changes. Next, I will show you overall picture of our platform and business model.

This is an illustration of the new business platform with Benefit One at its core. It is the core not simply because it is an employee benefit company. Rather, it is because it has membership of approximately 13.5 million individuals and 21,000 companies, enabling us to connect with those businesses and individuals. Using this platform as a starting point, we will expand the services into the areas of health, learning, work styles and consumption. We will deliver value to B2B clients, employees and individuals, building ecosystem unique to Dai-ichi Life Group.

The business model for the new field of business features the 2-tiered structure, a solid B2B foundation serving as the primary revenue pillar with B2E revenue streams layered on top. In the first tier, we will leverage Dai-ichi Life's sales resources to expand our corporate client base, strengthen recurring revenue from employee benefits and increase the number of employee users. Furthermore, we will expand B2B services on the platform to generate transactional fee revenue linked to transaction volume. By expanding our B2B foundation, we aim to reach 10 million employee monthly active users and use this as a springboard to generate transactional revenue from B2E customer referral and advertising. So we'll be able to obtain the data of the users. And then we'll be able to provide a service that is competitive in the era of AI.

By establishing through the 2-tiered business structure, we established a stable and growth-oriented revenue base. Our future in 2026, we focus on sales promotion and value enhancement to expand the Benefit One membership base while continuing to strengthen and scale the platform. We aim to boost the value of the entire group by fostering synergies among group companies and investees, including Benefit One and inform. Through these measures, we will lead our business portfolio transformation to achieve 10% of gross adjusted profit in fiscal 2030, we will swiftly implement the buy, borrow, build strategy. In addition, we will continuously monitor how leading KPIs such as MAU and LTV as well as the metrics like the number of members, number of client companies and the unit price and profit margins, how these translate into revenue.

While maintaining the stability of the insurance business, we will also build up growth by noninsurance businesses. So our new direction is not move away from insurance, but rather leverage the trust and corporate relations established through insurance. Thank you very much for listening.

Thank you very much for the introduction. I'm Hanyu, and I assumed the post on June 1, 2026. So since this is the first time, I would like to introduce myself. Here's a slide that shows my background. Half of my career was B2C marketing. I used to work in the food, restaurant and retail and also health care listed companies, IPOs. So I've known Ogata for 15 years. So we've been working together as consultants. It so happened that we work together for Dai-ichi Life Group, and that is quite impressive for me. So it's been only 1 month since I assumed this post, and I'm trying to understand the company and the company's businesses. So I'm having conversations with employees, customers and my colleagues. And there are 3 missions.

First is the creation of the value based on customer perspective and strengthen the collaboration with Dai-ichi Life and enhance sales and utilizing AI and digital and realize strength. And as a center of the new business of Dai-ichi Life, we would like to establish the Benefit One. Maybe we'll have more opportunity to see you, and I hope that we will have built a good relationship. Thank you very much.

[Portions of this transcript that are marked

[Interpreted] were spoken by an interpreter present on the live call.]

So thank you very much for your time to join us for today's Dai-ichi Life Group Financial Analyst Conference Call for the fiscal year ended March 2026. So please turn to Page 2. I'd like to review the fiscal '25 summary. Group adjusted profit was driven by factors such as for domestic businesses and expansion of positive spread and higher-than-expected gain on sales of securities at Dai-ichi Life and also we had a strong progress at PLC. Group-wise, group adjusted profit totaled JPY 551.5 billion, exceeding the full year forecast of JPY 500 billion. So group PMD was driven by TAL's performance exceeding the previous year, partly due to the effect of repricing and reached JPY 173.8 billion. Revenues from subsidiaries with the increase in group adjusted profit is projected at JPY 580 billion for the current fiscal year.

Additionally, for shareholder returns by raising the dividend payout ratio of 50%, starting with interim dividend for fiscal 2026, we expect the figure to be at JPY 260.6 billion. The final figure for ESR as of end of March rose by 10 points from the end of the previous fiscal year to 220% despite increased mass risk due to the rising interest rates, thanks to rising stock prices and increase in eligible capital driven by VNB and expected returns. The relative TSR, which indicates market valuation ranked fourth among 14 peers as of May 15, maintaining the target of being in the middle of or higher. Please turn to the next page. So I'll also explain the changes in group ESR during the period. As of the end of March 2026, the group ESR stood at 220%, an improvement of approximately 10 percentage points.

So there were increased mass lapse risks, but to reduce equity risk, our ongoing efforts on the reducing of equity risk have partially offset this impact. And for increase of eligible capital had a contribution to improved ESR and with the external environment such as rising domestic stock prices and rising interest rates. So we had the increase in ESR with the contribution on to the eligible capital. And we see the overall improvement with these factors. Please turn to the next slide. [Indiscernible] Group, we define group ESR as an indicator of financial soundness. Previously, we had a target range of group ESR of 170% to 200%. Moving forward, we'll maintain the lower limit of current definition while no longer setting the upper limit for the target level. And instead, we will aim for 170% or higher. Our current ESR stands at approximately 220%, which is well above the target.

This level indicates sufficient financial flexibility from the perspective of financial soundness, while at the same time, we recognize that there's a room for further capital utilization from the perspective of improving capital efficiency. Based on this understanding, our basic approach to capital policy remains unchanged. So to maintain the ESR above a certain level based on that premise, we prioritize the allocation of capital to areas that lead to profit growth and improved ROE. In practice, when the ESR exceeds a target level, we'll first continue to pay stable dividends along with our profit as a basic principle while combining this with growth investments and flexible additional shareholder returns as appropriately. So if the ESR is below 170%, we'll look at the accelerated ESR or other measures to have the increased capital strength.

So going forward, by balancing disciplined capital allocation with flexible management, we will ensure financial soundness while achieving improved capital efficiency and sustainable growth. Please turn to the next page. Next, I'll explain about the group risk profile. So this fiscal year, including the sale of approximately JPY 800 billion in domestic equities, we've continued our efforts to reduce market risks. However, this was offset by increase in market cap due to the rising stock prices. And the proportion of equity risk relative to total required capital remains largely unchanged. On the other hand, due to impact of rising interest rates, mass lapse risk continue to increase. In order to keep the market cap of domestic equities below JPY 2.8 trillion by the end of this fiscal year, we expect to sell approximately JPY 800 billion worth of domestic equities this fiscal year.

So we'll continue to closely monitor market conditions while working to improve capital efficiency through risk reduction. Now please turn to Page 7. This concerns new business results and its forecast. The fiscal '25 results presented here are the same as they are disclosed during the conference call on May 15. So this section outlines this fiscal year's forecast for value of new businesses. We anticipate that fiscal '26 forecast for VNB will be approximately JPY 188 billion with the factors, including TA's contribution as well. And this fiscal year, the overseas business was a driver to maintain this level. Regarding Dai-ichi Life, acquisition of new business remains on a recovery trend. And we had seen a slight increase from the previous fiscal year.

For Dai-ichi Frontier Life, we have the yen-denominated products that is selling and there are some value that is not reflected to VNB, but with the increase in the excess profit, this could be a negative factor for VNB numbers, but it doesn't mean that the profitability of this business has been decreased rather that is not true. So please turn to Page 9. This illustrates the holding company's cash position. Due to increase in group adjusted profit, remittance for the fiscal '25 is expected to exceed initial projections at around JPY 600 billion. In light of transition to economic value regulation, Dai-ichi Frontier Life or DFL for short, which has reduced its capital and TAL, which adjusted its capital levels in accordance with local regulations. paid dividends exceeding adjusted profit, respectively.

And we've conducted disciplined capital circulation management. As a result, group-wide dividend payout ratio for fiscal '25 exceeded 100% to reach 109%. Furthermore, our group aims to revise group adjusted profit to JPY 700 billion by fiscal '30. Free cash through fiscal '30 is expected to exceed JPY 2 trillion. So taking into account outflows associated with dividend payouts, the strategic investment for available for allocation to M&A and share buybacks is currently projected to exceed around JPY 1 trillion.

Furthermore, in executing our future growth strategy, particularly strategic investments, including M&A, in addition to internal funding, we're considering the use of external funding, specifically, as illustrated in this material, including debt finance such as corporate bonds and loans, hybrid instruments such as preferred stock and other needs, our policy is to flexibly utilize a diverse range of funding methods.

In doing so, we'll proceed on the premise of maintaining financial soundness and will primarily consider measures that do not result in share dilution. Through this balanced balance sheet management, including our funding capabilities, we intend to ensure flexibility in growth investment while achieving the maximized shareholder value. The holding company's cash position has been expanding and the cash position has been improving as well. So will have a solid foundation to support both future shareholder returns and growth investments. We'll continue to enhance corporate value through disciplined capital allocation and flexible funding.

Please turn to the next page. On relative TSR, starting from fiscal '23 as the base year, we ranked fourth among 14 peer companies, including global top 2 firms. So with the increased share prices, we had achieved return exceeding TOPIX. So we would like to strengthen the expected returns in VNB and would like to contribute to the group's performance. Please turn to the next page. So finally, under EV, in addition to the realization of VNB and expected returns due to rising in interest rates and changes in yield curve pricing that's steepening our group EV rose significantly.

For EV disclosures in light of fiscal year's introduction of economic value regulation, we're currently considering disclosure aligned with ESR and for useful information disclosure, we would like to ensure that investors does not fall short of current standards. Thank you very much. Now we'll ask Kikuta-san to give his presentation.

This is Group CEO, Kikuta. Thank you very much for your time despite your busy schedule today. So I will now explain our vision for fiscal 2030, centering on our growth story. So first, I would like to report on the progress of the midterm management plan. Please turn to Page 16. As our Group CFO, Nishimura, explained earlier, we assess that group adjusted profit and adjusted ROE for fiscal '25 are progressing smoothly supported by a favorable economic environment and are expected to significantly exceed targets set in the midterm management plan and to be achieved ahead of schedule. Taking this steady progress on the midterm management plan into account and in preparing for fiscal '26, the final year of the midterm plan, we have raised the dividend payout ratio to 50%. So first, regarding domestic business, against the backdrop of rising domestic interest rate, Dai-ichi Life's positive spreads expanded significantly.

By using proceeds from the sale of domestic equities for funding and accelerating bond rebalancing during the rising interest rate environment, we're able to achieve a higher-than-expected yield improvement. The rising yen interest rate is also having a positive impact in Dai-ichi Frontier Life's distribution. Thanks to a strong accumulation of new contracts, Dai-ichi Frontier Life's AUM is steadily increasing while its profitability is also improving. So in our domestic business, initiatives to improve profitability are making steady progress. Furthermore, Dai-ichi Life's new business is continuously on a steady recovery trend. Going forward, by leveraging AI, digital technologies and other tools to further improve productivity, we aim to enhance Dai-ichi Life's profit-generating capability.

I will provide a more detailed explanation for this later. In overseas business, Protective is driving profit growth and is making progress in capital-light acquisitions, reinsuring unprofitable blocks and business operations focused on capital efficiency, resulting in an improving trend in Protective's capital efficiency. In the APAC region, due to increased payment of insurance claims, TAL experienced temporary decline in performance last fiscal year.

But with its revision in insurance assumptions and repricing last year, TAL for this fiscal year now sees a significant recovery in profit forecast. In noninsurance business, Capula in which we invested during the current midterm plan period and Dai-ichi Life Marubeni Real Estate, where the joint venture has been launched, have begun contributing to profits and leading to a significant expansion in the profit scale of like quadrupled asset management profit in this segment.

At Benefit One, the distribution share of Dai-ichi Life's channel and employee benefits business is growing steadily and through both on M&A and business alliance, its customer base is expanding. While we anticipate launching new midterm plan starting next fiscal year, as explained, our group's profit base is being steadily bolstered. We are confident in achieving profit growth exceeding our plans and improved cash generation capabilities. Now please turn to the next page.

As you heard from Nishimura, in fiscal year 2025, we achieved a record high group adjusted profit of JPY 551.5 billion as we did in fiscal year 2023 and fiscal year 2024. The adjusted ROE reached 12.7%, and we consider it quite an achievement to attain the target set in the MTP ahead of schedule for both profit levels and capital efficiency. This is due to stable profit generation in domestic business, growth in overseas and asset management businesses and steady progress in capital recycling management focused on capital efficiency.

Regarding the forecast for this fiscal year, which is the final year of the MTP, we aim for adjusted profit of JPY 560 billion, marking the highest profit for the fourth consecutive term. Since the initial profit target at the start of the MTP was JPY 400 billion, this means about 40% upside in profits. Of course, there are tailwinds of the financial market. But in addition to Dai-ichi Life Insurance's ability to steadily generate profit generation, our organic and inorganic initiatives in recent years have surely expanded our profit generation capacity. Against the backdrop of profit growth, our cash generation capacity has expanded significantly and reliably compared to the start of the MTP.

In light of these circumstances, we have raised the adjusted ROE target in FY 2030 to 15% or more to further improve capital efficiency. While this target is even higher than the previous level, we believe it is achievable. And by ensuring a state where we consistently exceed the cost of capital, we will continue to achieve sustainable enhancement of corporate value. To achieve a group adjusted profit of JPY 700 billion or more in FY 2030, we will transition into a growth acceleration phase. Now that we have laid the foundation, our profit and cash generation capabilities have increased. So going forward, we plan to actively execute strategic investments while maintaining financial discipline. Specifically, we are planning strategic investments of about JPY 1.5 trillion from FY 2026 to FY 2030.

Among these, for the insurance and asset management business in the developed markets, we will focus on investments expected to contribute early to profits and strengthen our revenue base. On the other hand, for developing the markets and new businesses, mainly in Asia, we will expand future revenue sources with the aim of capturing medium- to long-term growth. To give you an idea, about 70% of the strategic investment will be allocated to developed markets overseas. remaining 30% will be allocated to growth markets and domestic noninsurance areas. Furthermore, considering these investment opportunities and market conditions, we will respond nimbly and flexibly to shareholder returns.

We plan to optimize capital allocation while balancing growth investments by comprehensively taking into account stock price levels and the status of investment projects. As described earlier, based on the results of profit growth and capital efficiency improvements to date, our group will accelerate profit growth through strategic investments in the next growth stage and aim to achieve ambitious targets for FY 2030. Please turn to the next page. Next, I will go over our approach towards enhancing sustainable profit-generating capacities. To date, our group has used group adjusted profit as a key indicator. Going forward, we plan to introduce group core profit as well and position it as a primary management metric from the next MTP onwards.

Group core profit is an indicator that expresses more aptly our group's sustainable profit generating capacity by excluding one-off factors such as capital gains and losses from group adjusted profit. The traditional group adjusted profit was subject to market conditions such as gains from sales of equities. By disclosing group core profit as well, we will clearly show trends in more fundamental earnings power. As shown in the chart on the right, there will be a certain short-term difference between group adjusted profit and core profit. Towards the end of FY 2030, where a large-scale sell-down of equities will end, we believe it is important to steadily narrow this gap and raise the level of core profit.

As a growth driver for this, the deepening of organic growth in existing business is our first key measure. In the domestic business, we aim to enhance revenue generation capacity through expansion of positive spread and improvement in business efficiency. In overseas business, we will drive group-wide profit growth by expanding the insurance business and enhancing profitability. We intend to enhance capital recycling management going forward. By utilizing proceeds from planned sales of equities, we aim to accelerate the growth of the core profit through further expansion of the positive spread in the domestic business and investment in highly profitable space.

We will also enhance the capital-light business so that we can switch to more optimal business portfolio. To reiterate, as a result of these initiatives, we aim to grow our group core profit approaching and eventually almost matching group adjusted profit toward FY 2030. Through these measures, our group aims to achieve sustainable profit growth without relying on temporary factors, aiming to enhance corporate value with higher quality.

Please turn to the next page. Next, as a topic of interest, I will talk about our initiatives to improve business efficiency at Dai-ichi Life. First, what we recognize as the current challenges is that in addition to ongoing inflationary pressures, increased costs are expected due to expanded investment in human capital and IT DX areas.

In particular, we recognize that it is highly likely that AI and cybersecurity-related investments to be expanded going forward. On the other hand, on the income side, we are facing structural challenges such as the shrinking domestic life insurance market and the trend of declining in-force policies, especially in the protection segment, making it difficult to maintain and improve profitability by simply continuing with traditional approaches. In this environment, the company aims not only to reduce costs but to transform our revenue structure itself through fundamental productivity improvements.

Specifically, by maximizing the use of AI and digital technologies to advance and streamline business processes, we aim to realize operational excellence that simultaneously enhances customer convenience and internal efficiency. Through this, we will drive the transformation of administrative and operational processes around underwriting a new business and claims and benefits payments and promote automation and labor saving in areas that previously relied on manual processes. In terms of organizational structures and operational model, we are promoting simplification. Through a highly selective and focused approach to businesses and initiatives, we will turn limited management resources into greater value-added creation.

Through these initiatives, we aim to maximize productivity while expanding recurring revenue and reducing fixed costs. To realize these transformations, we plan to make about JPY 100 billion of additional investments in AI and IT-related investments over the next 5 years. These mainly involve system renewal, data infrastructure development and advanced AI utilization, which in the short term will lead to higher business expenses, that is temporary cost increases. And that will have a negative impact on the value of new business.

However, these are upfront investments aimed at establishing future competitive advantages and are expected to lead to significant cost reductions and improved profitability in the mid- to long term. In fact, by FY 2030, we expect a cost reduction effect of about JPY 50 billion per year, which is equivalent to about 20% of the existing cost base. Furthermore, we plan to continuously monitor the progress of productivity improvement metrics in each business process rather than the amount of cost reduction. For example, we will make it visible as a unit cost, the efficiency at each process level, such as per transaction cost of new business, premium collection and policy maintenance and claims payments to drive continuous improvement.

What is meant by unit cost is a concept of managing the entire operation of the company with per transaction cost. Thus, through this approach, we intend to improve productivity by raising per transaction efficiency rather than focusing on the total cost. By setting a unit cost target for FY 2030 and transitioning to management based on that, we will establish a cost structure that can flexibly respond to changes in the external environment. The company aims to achieve sustainable profitability improvement and to establish competitive advantages in the mid- to long term accompanied by short-term cost increases through business transformation leveraged by AI and digital initiatives, investments as well as the sophistication of organizational management.

Please turn to the next page. Finally, I will touch upon our group's current position in our journey to enhance corporate value and our aspirations for the future. Thanks to everyone's support, the company's market capitalization has exceeded JPY 6 trillion. It was about JPY 2.4 trillion as of April 2023. So in just over 2 years, it has grown by more than 2.5x, allowing us to achieve our initial target about 1 year ahead of schedule. By appropriately reflecting the external environment of rising domestic interest rates, we have delivered steady profit growth, improved capital efficiency and enhanced shareholder returns. As a result, we outperformed the TOPIX.

However, we are not satisfied with our current position. Rather, -- we see ourselves as finally getting to the starting line. Our goal is not to gain relative recognition domestically, but to realize corporate value that rivals the global top tier. A milestone for this is to attain a market capitalization of JPY 10 trillion in FY 2030. To achieve this ambitious goal, we will be more growth-oriented than ever and will accelerate transformation. First, we will achieve sustainable and high-quality profit growth by strengthening growth drivers anchored on overseas and asset management businesses while relying on stable cash flows generated by domestic business.

Regarding shareholder returns, while maintaining stable dividends, we will further strengthen total returns and further enhance market valuation by more flexibly utilizing share buybacks. Through these initiatives, we aim to simultaneously enhance profit growth and capital efficiency, and we will incessantly accelerate the enhancement of corporate value, and we will work closely together as one company to achieve a market capitalization of JPY 10 trillion in FY 2030. That concludes my presentation. Thank you for your attention.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

I'm Kohei Kai, and thank you for joining us today. Here is my background. I have always worked in the financial industry, including insurance, banking and securities. I have long experience in business strategy, organizational reform and M&A. I joined Dai-ichi Life Holdings in October 2024. At present, I am the Head of Protection Business in Japan.

Together with the President and the management of the group companies and the CxOs of the holding company, I am responsible for developing and implementing business strategies and realizing synergies across the group. My main role is to objectively view the business and steadily implement strategies. Also, as we often say at our company, I try to create a healthy conflict.

Now let me begin the presentation. First, let us look at the domestic insurance market and how we position ourselves in the market. In the past few years, the domestic life insurance market has remained flat. However, with the size of almost JPY 30 trillion, it remains one of the most important markets for us. In terms of new business, savings type products have nearly doubled, compared to fiscal 2019, while the protection-type products dropped to 90%.

While savings-type products have surpassed protection-type products, the ANP from protection-type products continues to exceed JPY 1 trillion annually, even though we see little room for significant growth in the future. At Dai-ichi Life Group, the contribution from overseas and noninsurance business is increasing, but we continue to position domestic protection business as our core business, which contribute to stable cash generation.

We believe the integrated value proposition of protection and asset formation succession is becoming increasingly important for the domestic insurance business. We are experiencing a transition to a world with interest rates, a decline in birth rate and aging society, longer healthy life expectancy and the increase in dual income households, structural changes are progressing, affecting lifestyle and asset formation. Against this backdrop, sales of savings type products have increased significantly, and the demand for asset formation and succession is expected to grow further.

Within this context, we believe protection and asset formation succession are closely linked and inseparable. That is to say people need to build assets towards their financial goal while ensuring protection as a safeguard against rainy days. We have the strength to enable both and meeting the diverse needs of customers with our products and services. To ensure cash generation capacity, we will continue to diversify our revenue base by maximizing revenues from both asset management and insurance.

This slide shows the profile of each domestic company and recent highlights. I will also touch upon their performance in the first half of fiscal 2025. Dai-ichi Life is a domestic core company, though its sales reps -- through its sales reps, it provides comprehensive lineup of insurance products to the core generation in need of protection. Adjusted profit is JPY 158.6 billion, increased steadily from the previous year. As we have already disclosed, we plan to revise the full year forecast upward. Value of new business was JPY 53.1 billion. It also increased from the previous year, thanks to growth in contracts with SMEs, even though the effect of new products faded. We would like to push up the value of new business even further.

Dai-ichi Frontier Life offers single premium products to savings and succession-oriented customers, mainly through bancassurance channel. Both asset under management and the number of policies in force were the highest since the company's founding. Mr. Iida will explain the business later, so I will not go into the detail here.

Neo First Life offers medical and health promoting products to comparison-oriented customers through walk-in shops and digital channels. The value of new business was JPY 3.1 billion, and the number of customers was 1.04 million. Both of them increased from the same period the previous year. The number of policies in force exceeded 1 million in the previous fiscal year.

Ipet offers pet insurance through pet shops, website and sales rep channels. The new business ANP was JPY 3.7 billion. The number of customers was 0.73 million. Both of them increased from the same period the previous year. By the end of August, the number of policies in force exceeded 1 million, keeping the second largest share in the industry. We are accelerating the sale through Dai-ichi Life sales reps and the sales more than doubled from the previous year.

And now I will explain the positioning of the Dai-ichi Life sales rep channel in our group. We have a large sales team of approximately 35,000 -- sorry, 35,100 sales reps based in 69 branches and 1,031 sales offices across Japan. They comprise a core channel supporting the group's domestic insurance business, supporting customers by saying, "By your side, for life." The sales rep channel sells Dai-ichi Life products and other group company products as well.

For example, in new premiums for Dai-ichi Frontier Life single premium products, the sales rep channel contributed 20% in FY 2024, playing an important role in supporting Dai-ichi Frontier business. In addition, in selling Benefit Station, which is an employee benefit service, the sales rep channel contributed to getting 40% of approximately 1,000 companies out of 2,400 companies who have joined the membership between May 2025 to December 2025. The sales rep channel has enabled access to small and medium-sized companies that Benefit One had not been able to fully approach in the past. So in this way, the sales reps form a core part of the group's domestic insurance business, staying by the customer, catering to their various needs and providing a wide range of values.

I will now cover EL initiatives for sustainable growth from 4 perspectives: customer, product, channel and sales infrastructure. First of all, from a customer perspective, in addition to the existing individual insurance customer base, we are targeting owners and employees of SMEs and their families. The contribution of executive insurance to total new business was 29% as of the first half of this fiscal year, an increase of 6 points and showing steady growth. We will continue to deliver solutions as a group, including Benefit One in order to cater to corporate customers' needs.

Next, from a product perspective. Last December, we launched wide type and basic type Waiver Premium riders, which was well received by many customers. Going forward, we will continue to deliver new products strategically from both protection and retirement savings and asset management. We will also strengthen product governance and develop products based on deeper insight into customer needs.

Thirdly, from our channel perspective, we are starting to see results from changes made such as new standards and quarterly hiring system and efforts to strengthen development of employees. In terms of hiring, in the most recent results, we have been able to hire 1,200 people in the past 3 quarters, and we believe our pace of hiring has gone up one level. And in terms of enhancing the development and retention of employees, the second year retention rate of new hires is 86% and in the third year, 71%, which is a significant improvement.

In addition, based on the total life design plan, we are continuing to enhance the consulting capabilities and corporate sales skills. And based on these factors, we believe we are starting to see signs of getting out of the turnover issue and moving towards steady regrowth in our organization.

And lastly, on the sales infrastructure. Leveraging digital and AI, we have worked on improving the sales reps productivity and transforming the business process. Specifically, we are using new platforms such as integrated CRM, digital studies and AI customer analysis. We're working on preparations for full operations from FY 2026 onwards. We want the 4 pillars to work together for sustainable growth.

Now I'd like to turn to Dai-ichi Life initiatives to improve operational efficiency and productivity. As people have been saying for some time now, the domestic insurance market overall is a mature industry, which we recognize will shrink in the long term. Also, with recent dramatic advancements in technology, using generative AI has become the norm, and we view this as an opportunity. Based on these environmental changes and potential increase in operating expenses or business costs in the future with inflation, we are working to reduce operating expenses and improve productivity, leveraging AI and digital technology, making our business leaner, a move that we see as a natural course.

The right-hand side of the material shows part of our initiative. First, in reducing business costs, Dai-ichi Life has worked on reorganization of headquarters and branch offices in order to reduce fixed operating expenses in FY 2026 by approximately JPY 35 billion compared to FY 2020, and we expect to generally achieve this plan. In addition, towards FY '30, we will further reduce our operating expenses and improve productivity by revisiting our business processes centering around our back office and administrative functions. This will be made possible through our investment into AI and digital technology. We are assuming a review of existing business processes, referencing global case studies and are working on fundamental transformation of our operations.

Lastly, on the organization. The headquarters organization is becoming more complex, and we're going to make it simple, fast and lean. This will enable speedier decision-making. On the other hand, we will be strengthening our front office sales capabilities that contribute to top line. The expected investment into AI and digital, and our targets for decreasing operating expenses will be disclosed together with the progress of our planning going forward.

Lastly, I'd like to talk about the concept of our business strategy, leveraging the group strength. This is something that we are going to work as a group-wide initiative. First of all, the Dai-ichi Life Group has an abundant management resources available by leveraging them, combining them, we believe we'll be able to evolve our business into a more differentiated one.

In addition to our existing 2C strength, we will be brushing up our value creation capabilities in 2B so that we can create a B2B2C model that is unique to our group. Specifically, we're going to look at developing more corporate customers through Benefit One, provide more value to the employees of members, also provide protection as well as asset formation and business [indiscernible] And work in an integrated manner in the group. And we will be leveraging the strength of the face-to-face interactions that our 35,000 sales reps have so that we will be able to enhance value of our domestic insurance business even in a market that is shrinking. And we will be creating that kind of model.

That concludes my presentation. Thank you.

I'm Takashi Iida. I am the business owner of -- Business Head of Retirement, Savings and Asset Management business. My background is written here. Unlike Kohei Kai, I joined the Dai-ichi from the beginning, and I used to be [indiscernible] and then I started to work on investment and then annuities. And now I am an Executive -- Managing Executive Officer.

First, I would like to give you an overview of retirement savings and asset management business. The desirable state of the business is written on the upper part of the slide. It says that asset management capability is the foundation of the business, and we will develop investment products as well as savings type insurance and annuity products. And the business will be global through overseas group companies. So in the middle, we show the structure of the business by entity. The first domain is the asset formation and succession business, which consists of Dai-ichi Life's Savings Investment Trust and group annuities businesses and Dai-ichi Frontier Life.

And the second one is asset management business in and outside Japan. That's another pillar. That includes Asset Management one, Vertex and overseas companies we have invested in. And the last one is real estate asset management. The largest one is the Dai-ichi Life Marubeni Real Estate, which is a joint venture started operation last year.

Each asset management company has its own profit target. However, at the same time, by providing asset management functions to Dai-ichi Life, Dai-ichi Frontier Life and Dai-ichi Life Reinsurance Bermuda, the group's reinsurance company, they contribute to the development of savings type products by group life insurance companies. That is the characteristic of this business. In the future, they will be able to provide asset management functions to overseas group life insurance companies and help enhance competitiveness, especially in growing retirement markets in advanced economies.

This shows profit target. It shows where we stand in the profit target. And the group's adjusted profit target for 2030 is JPY 700 billion. And you can see in the pie chart on the right, domestic insurance accounts for 40% and overseas insurance 50% and noninsurance business 10%.

Dai-ichi Life Savings Investment Trust and the Dai-ichi Frontier Life businesses are called spread business because the source of profit is the difference between investment yield and cost of debt or assumed interest rates. We believe that spread business will become a major pillar in the domestic business. In the overseas market, because of the aging population and advanced economies, retirement business is expected to grow.

Asset management business, which is included in the noninsurance businesses, will play a central role in noninsurance businesses. The asset management companies aim to increase their profits. They will provide asset management functions to group life insurance companies in creating synergy within the group and contributing to group's profit target.

So before explaining future strategies for each business, I would like to look at the current state of personal assets in the developed countries. From left to right, the United States, Japan, the U.K. and Australia. The vertical scales are roughly aligned, except for the U.S. U.S. is outstandingly large. So this chart shows the growth and the share of each asset over the 5 years period from 2019 to 2024.

One thing in common is that the gray nonfinancial assets are driving the growth in personal assets. So in the U.K., stocks and investment trust declined. But in the other countries, equities, investment trust and other assets are also driving total asset growth. The growth rate is 9.6%, 9.2%, 0.5% and 7.6%, respectively. And with the exception of the U.K., you can also see a solid growth for insurance annuities, the light blue part. The Australian superannuation, in particular, shows a high growth of 5.0%. And the hidden part, it's showing a very high growth.

And Japan has an outstanding high level of cash and deposits shown in dark blue. So we assume that the Japan's personal finance assets could reach JPY 4,000 trillion by 2040 as the government's policy to promote Japan as a leading asset management center accelerates the shift from savings to investment, and we are getting ready for that.

This shows the distribution of wealth. The inverted pyramid on the left shows the world's adult population divided into 3 tiers by the amount of assets held. The pyramid in the middle, on the other hand, shows the number of households in Japan divided into 3 tiers by the amount of net financial assets held. The sources are listed below. You can see that the world's wealth concentrates among the so-called the wealthy people. So that's an inverted pyramid.

For example, the adult population holding more than $1 million is limited to 60 million, yet the value of their holdings is $226.5 trillion. And the global mass population with assets less than $100,000 is 3.12 billion. And the value of their holdings is $69.5 trillion. We can see that it's not evenly distributed.

And let's look at Japan. There are 1.65 million wealthy households with a net financial asset of JPY 469 trillion. That's JPY 284 million per household. While there are 44.25 million mass households with a net financial asset of JPY 711 trillion, that's JPY 16 billion per household. So I believe that if the government's policy will succeed, then the pyramid will be like the global one -- close to the global one, but the mass accounts for a large part in Japan.

So particularly in Japan, Dai-ichi Life has provided protection type insurance to the mass segment and DFL has provided savings type insurance in yen and foreign currencies to the senior affluent segment, and will also provide asset management products and services in Japan and abroad using the investment capabilities acquired through its asset management strategy. So that is the integrated value proposition.

So I would like to talk about the synergies between the insurance pension business and the asset management business. On the left-hand side, there's a spread business. The spread business on left-hand side, in particular, requires insurance and pension products backed by strong investment management capabilities. Conversely, if you have an asset management company of choice for insurance company, the group can keep the investment management fees within the group. We have to entrust the fund from our clients to outside company. So we can keep that investment management fees within the group. So combination with the asset management business to help us have the synergy.

Suppose, for example, the group entrusted JPY 10 trillion of investment funds to an external manager. Even if fee is 20 basis points or 0.2%, this would mean that the JPY 20 billion of fees would flow out of the company every year. The target profit for the noninsurance business is 10% of the total, that's JPY 70 billion in 2030. The more you invest, the value of the strong asset management companies will increase. So global insurance groups already have strong asset management companies within their group. We believe that the group needs to build such an asset management platform as soon as possible.

Please go to next page, and this is about DFL. We have two slides for DFL. By enhancing investment capabilities and utilizing reinsurance, DFL has steadily increased asset under management. Our aim is to increase the AUM to JPY 18 trillion by 2030. And in the near future, we expect it will become a major pillar of the domestic business. However, the issue of secondary employees made news and caused significant trouble for the agencies. We need to rebuild the foundation of our business and reform our governance from scratch, starting with corporate culture.

So we have another slide for Frontier Life. And -- so I would like to explain the investment portfolio of DFL, which is the source of its competitiveness. And the slide compares the investment portfolio in 2021 and 2025. By shifting from corporate bonds to so-called alternative credit investments such as CLOs, credit-linked bonds and direct lending, we are strengthening our products, and you can see that in these graphs.

The life insurance industry is set to transition to economic value-based capital regulations from the end of this fiscal year. Toward the end of the fiscal year, we plan to reduce or reverse the accumulated capital and various reserves and distribute them as dividends to the holding company. And that is our plan. Dai-ichi Frontier Life will improve capital efficiency even further by releasing the capital and to contribute to the group's capital circulation management.

Next slide, please. We have not talked much about Dai-ichi Life Group Pension business to the external community in the past. But here, I want to give an introduction of this business. Because it contributes stable and significant profit to the group since general accounts products guaranteed interest rates have been lower, which is a topic that I will touch upon later. The Dai-ichi Life Group Pension business provides services for pension schemes like DBO defined benefits and DC defined contributions that are set up by corporations. And in addition to providing support for setting up and administrating the corporate pension scheme, we are also entrusted with managing assets for corporate pensions.

Now for DB, we offer general accounts or GA products and special accounts or SA products. GA is a spread business. So during the time when interest rates were low, we decided to lower guaranteed rates, which were higher than market interest rates. Since then, interest rates have started rising. But instead of returning to GA with a high capital burden, we have developed and launched a new guaranteed interest rate product called [indiscernible]

Recently, we have been securing good margins so that we're able to provide interest rates that are more attractive compared to other industry peers, asset managers and trust banks. And this has been very well received by our customers. For the SA, we've been leveraging the investment capabilities of asset managers inside and outside the group, and the AUM is #1 in the life insurance industry.

So DC is a fee business. And it's growing significantly in both the corporate and individual lines of business. We're enhancing our corporate DC administration services, of course. And for individual DC [IDCO], we're educating the Dai-ichi Life sales reps so that they can make proposals to individual customers. And through these efforts, we will be promoting integrated proposals combining protection and asset formation, which is also something that is required from a fiduciary duty perspective. And last but not least, in the corporate lump sum retirement payment and corporate surplus asset management, which we believe is one big market. We will maximize the use of our group asset management capabilities in order to monetize market growth.

Next slide, please. So this is about our profit expansion in the asset management business. In our capital-light asset management business, our contribution to group profit at the end of year ending March 2021 was small at JPY 3.5 billion. But after establishing Vertex, we have acquired alternative investment capabilities inside and outside of Japan and through our real estate business joint venture with Marubeni Corporation, profits have grown so that we can expect JPY 18.5 billion and contributing to profit growth.

Going forward, in addition to organic growth from our existing group asset managers, we will execute new M&A deals to build profit to around JPY 70 billion by the end of FY '30, the year ending March 2031.

So now I will introduce two case studies of synergies with group asset managers. The first is our collaboration with Canyon Partners, which is an alternative credit company in the United States. At the moment, the Dai-ichi Life Group holds a 19.9% stake in Canyon, but has the right to acquire a majority interest from FY 2027 onwards.

At the time of the first investment, the group made a USD 1.3 billion investment commitment. And Canyon used that to set up a new fund. And net funds raised outside of assets entrusted by our company also strongly turned positive. And they are also in the alternative credit area, they are significantly increasing hiring of new talent into Canyon. And recently, the AUM has reached a record high even excluding the adjustment that we have been making.

The other case study is Vertex case study, and it's about the development of Dai-ichi Life's savings type of product development with Vertex. So as Kai-san mentioned earlier, there's a Step Jump savings product. And I'd like to talk about how that was developed. The Dai-ichi Life Group has around 60 to 70 financial engineering talent mainly in the investment-related divisions in the group. And when Vertex was established, some of them have been transferred to Vertex so that they can work on product development and investment. So I want to introduce a part of what they do.

So AUM of Vertex, as you can see in the bar chart, is currently JPY 2.7 trillion. Currently, on Dai-ichi Life Investment divisions and QIS service quant-based investment solutions as well as the Dai-ichi Frontier Life and Dai-ichi Life Reinsurance Bermuda asset and entrustments are contributing to the AUM JPY 2.7 trillion, currently. Also, we have the Step Jump indexed annuities product developed mainly in collaboration with Vertex.

Now Step Jump is a product that has taken -- a product that is popular in the U.S. single premium annuity market. We call this an FIA type of product. And you have a right of product where you can be quite flexible. So combining quant with insurance, they are developing a lot of products like that.

Now Vertex has taken reference from those types of products and converting the popular product in the U.S. market into a regular premium product to launch here in Japan. And in that 1 year after launch, we have sold 100,000 policies, and it's quite well received.

Let me also touch upon the investment divisions of group insurance companies. The Dai-ichi Life Group, as of last October, consolidated a portion of the Dai-ichi Life and Dai-ichi Frontier Life investment functions to Dai-ichi Life Holdings, and this is aimed to efficiently leverage group investment functions, reallocating talent and resources to growth areas such as private investment in order to improve investment returns and improve the competitiveness of our products.

And going forward, we will partner and integrate with other life insurance investment divisions and collaborate with asset managers in the group in order to develop this into an asset management platform. That say, on our domestic real estate asset management business. As you can see on the left-hand side of Japan, the market continues to grow, meaning the market for real estate asset management. And when we look at the portfolio and look at the pension fund asset structure in Japan and the United States, we expect real estate allocations as a share of total assets to continue growing in Japan going forward.

And we believe that this is one of the growth areas that help us transform our business portfolio. So this is an asset management business. So it's a capital-light fee business. And in order to expand this, we plan to secure high-quality properties on a continuous and stable basis to meet institutional investor needs and increase our AUM.

So this is the last slide I have to present. In order to expand the domestic real estate business, this fiscal year, we have worked on strategic initiatives such as integrating our real estate business with Marubeni Corporation and making strategic investments into [indiscernible] Holdings Company Limited and also Wealth Management Inc.

By investing into Wealth Management Inc., which has extensive expertise and capabilities in hotel development and operations, including overseas luxury hotels, we hope to be capturing the continued growth opportunities in the hotel market driven by increasing inbound tourist demand, thereby accelerating the growth of the domestic real estate asset management business. And through the business growth of our group companies, we aim to expand real estate AUM to around JPY 3 trillion, reaching a top-tier level in the domestic real estate industry. So that's one reason for investing in the company. And so the last slide is a summary of what I have said so far, and I will be welcoming any comments and questions. Thank you.

[Statements in English on this transcript were spoken by an interpreter present on the live call]

Good morning. I'm Nishimura, and thank you very much for attending our conference call today. So from my side, I'd like to first review the overall results for the first half of fiscal year 2025.

So please turn to Page 2. The group adjusted profit reached JPY 231.1 billion, progressing steady at 56% of initial forecast, driven by higher-than-expected gains from security sales at Dai-ichi Life and reduced operating expense and the impact of agency sales at PLC. We announced on November 14 that we are raising this fiscal year's adjusted profit outlook to JPY 470 billion. Group VNB increased to JPY 106.3 billion, primarily driven by Dai-ichi Life reflecting the impact of rising interest rates.

Remittance from subsidiaries projected to total JPY 830 billion with increase of about JPY 600 billion for the current and next fiscal year. And we have raised JPY 3 for share payout is expected to reach JPY 280 billion. And for the ESR as of end of September plus lapse risk was there but despite that, we had rising interest rates. And with that, we have the 8 percentage point increase from the fiscal -- previous fiscal year.

And relative to ESR, we have been seventh place compared with to 14 peer companies, and we are in our range. And next to this page, this is about ESR. While lapse risk increased due to rising interest rates, eligible capital rose significantly, driven by higher domestic stock prices, higher interest rates and an increase in the value of new business and expected earnings. So this has been an increase since then.

And compared with our initial plan, the environment itself has become more favorable. So we're above the range. But to the year-end, some cash outs for ESR, it could go up -- to go down by 10 percentage points. And with the volatile financial environment, this could be a factor that we have to be careful. And on the right-hand side, regarding sensitivity, the trend remains unchanged from the levels indicated in June 2025. Please refer to the next page.

Next, we'll explain the group risk profile. As part of efforts to reduce market risk, we proceeded with the sales of domestic equities. However, this was offset by rising stock prices and proportion of equity risk within total required capital remained largely unchanged.

On the other hand, due to the impact of rising interest rates, lapse rates have increased. So the target for this fiscal year, we are considering to increase this fiscal year's target amount for stock sales from JPY 380 billion to approximately JPY 700 billion. We'll continue to closely monitor the market conditions and enhance capital efficiency through risk reduction.

Now on to the next page. This is about the supplementary information on Dai-ichi Life's asset liability duration matching ratio. During the November 14 conference call, we disclosed that the matching ratio for the individual insurance block is 104%. Dai-ichi Life holds the majority of its assets as policy reserve matching bonds. These are assets that unlike those held to maturity can be rebalanced as needed. So that's the asset classification.

And in the liability block of Dai-ichi Life, the duration fluctuates due to new insurance contracts, policy cancellation, et cetera. However, since assets are held in policy reserve matching bonds, the asset can be adjusted through rebalancing and we proactively and flexibly rebalance the asset side to avoid overhedging. Furthermore, in the sensitivity perspective, we are calculating using effective duration that reflects the impact of derivative asset interest rates and the matching rate could be approximately 97%. And this page is about holding cash position.

Following the upward revision of group adjusted profit, remittance for fiscal 2026 is expected to increase by approximately JPY 60 billion compared to the initial forecast. And also, in light of the planned changes to capital regulation at the fiscal year-end, certain domestic subsidiaries are considering the release of surplus capital. It is not reflected in this diagram, but we would like to provide further details on this matter as soon as updated information becomes available.

Also, as announced in October, regarding the subordinated loan of Dai-ichi Life Insurance Company that reached its call date, Dai-ichi Life will repay its position. And also the Dai-ichi Holdings raised approximately JPY 210 billion in subordinated loans. Consequently, Dai-ichi Holdings cash position increased to JPY 440 billion. If there are no specific uses for this cash, such as strategic investments, deleveraging is a potential option, and we're also considering allocating this cash towards repaying some borrowings scheduled for the next fiscal year. Combined with the last fiscal year's increased profit, free cash flow is approximately increasing, as you can see in this diagram.

Please turn to the next page. Under our current medium-term plan, we are actively pursuing strategic investments. We are allocating this capital surplus generated by reducing Dai-ichi Life's risks to growth businesses, particularly overseas operations and asset management. And since the launch of the plan, we have executed approximately 10 strategic investments of varying sizes, including bolt-on deals.

Concurrently, we actively manage capital circulation through measures such as existing our Thai operations and selling unprofitable blocks via PLC. When executing investment projects, we set appropriate hurdle rate variables based on risk and make disciplined decisions.

Going forward, we'll enhance capital efficiency through capital-light projects, pursue projects that contribute to asset formation and leverage bolt-on acquisitions overseas to realize synergies thereby driving early corporate value growth.

Please turn to the next page. So this is reviewing profit contribution from overseas businesses. Since entering Vietnam in 2007, our group has expanded into a total of 10 countries. Considering each country's market environment, we have steadily grown the scale and profit of contribution of these companies.

In developing overseas operations, we partner with local management teams who are deeply familiar with each country's regulations for the insurance sector, an area where we possess deep and affluent expertise. And to leverage our extensive experience in insurance, we also actively invest in human capital to achieve midterm value enhancement. While ROI figures are presented, not all projects have achieved such numbers from the outset day 1.

In the regulated insurance sector, heavy day 1 cost during the initial acquisition phase often result in lower initial ROI calculation at the beginning. However, by taking time to refine these operations, we enable them to generate stable and long-term profits. Our overseas operations now generate profits exceeding JPY 100 billion, accounting for approximately 1/4 of the total group profit, we'll continue to thoroughly refine our each country's operations to drive value enhancement.

Now next page. This is about the future outlook for profits at Protective in the U.S., one of the pillars of our overseas operations. Following the acquisition in 2016, PLC expanded its business scale through large-scale block acquisitions in 2018 and 2019, supported by capital assistance from our company. However, due to impacts, including the novel influenza outbreak, COVID-19 and the failure and the default of U.S. regional banks, the PLC experienced several years of persistently low profit levels.

However, these were all temporary negative events. We received tough criticism from market participants regarding PLC. Amidst all this, since 2023, factors such as temporary downward pressure dissipated. And in recent years, we have actively pursued initiatives, including reducing operating expenses to improve business efficiency and driving unprofitable blocks.

We focused on enhancing the profitability of existing businesses and through measures like improving investment yields through portfolio restructuring and expanding the balance of retirement products, we were able to enhance PLC's capital efficiency and also improve the contribution to Grupo RE. And we also recently announced the acquisition of portfolio, portfolio operates warranty business in the U.S. And the company is a capital-light business model, generating the majority of its revenue from fee income, including ShelterPoint acquired last year and our existing APD businesses, we aim to actively expand the capital-light businesses across in areas going forward and we'll target the generation of approximately USD 200 million in profit from these areas by fiscal 2030.

To achieve its [indiscernible] profit target for fiscal 2026 and 2030 and to realize the vision envisioned at the time of PLC's acquisition, PLC will accelerate initiatives to expand earnings and shifting away from the [indiscernible]. So I would like to talk about Group EV.

In addition to realization of value of new business and expected earnings, the rising interest rates and changes in the yield curve that was steepening pushed up group EV significantly. Regarding EV disclosure, we are currently considering disclosing information based on ESR. In light of the introduction of economic value regulation in the end of the fiscal year -- this fiscal year. Please note that we are considering disclosing useful information to investors so that the disclosure level will not drop. That's all from me.

Thank you, Mr. Nishimura. Next, Group CEO, Kikuta, will give a presentation.

I'm Kikuta, and thank you very much for giving us time today and participating in this meeting. So I will explain to you our growth story for 2030. Let me start by talking about the progress of the midterm management plan. As Mr. Nishimura explained, group adjusted profit and adjusted ROE significantly exceeded targets, thanks to the favorable economic environment and revised upwards.

As it has already been announced, we have revised our full year forecast upwards, and we continue our efforts to enhance corporate value. We see steady progress in M&A activities in overseas and noninsurance businesses and we are taking steps to improve capital efficiency and drive growth.

In Domestic businesses, the recovery trend in Dai-ichi Life's sales performance continues. At Dai-ichi Frontier Life, the sales of yen-denominated products expanded, thanks to the higher interest rates. Its AUM is growing steadily, and we can expect stable profit going forward. Dai-ichi Life is working on initiatives to improve operational efficiency.

In the beginning of the next year, we will have business strategy presentation by group heads. Mr. Kai, the Head of Domestic Protection business, I will give you an overview of the initiatives there. As you have just heard, in overseas businesses, PLC Protective is driving profit growth through capital-light M&A and reinsurance of nonprofitable blocks, it is moving toward operations with focus on capital efficiency.

On the other hand, the Asia Pacific region, TAL and Dai-ichi Life Vietnam are struggling. And in case of TAL, there is a bad claim environment. And in Vietnam, there is regulatory changes. And these companies are struggling to perform. TAL is repricing products with high claim payments. So we can expect some improvement with respect to claims.

And in Vietnam, stagnant sales of bancassurance have hit the bottom, and we are now seeing a sign of recovery. In noninsurance business, Kepler, an investment made during the period of this medium-term plan, and DMRE for which the JV started to operate start to contribute to group profit. And the revenue of Asset Management segment is expanding. It's coming closer to JPY 20 billion.

In Benefits One's, employee benefit business, the share of Dai-ichi Life channel is growing, especially the sale to the large corporations. The major sales will come next year, but we are making steady progress. As you may know, we have revised upward the fiscal '25 full year forecast of adjusted profit from JPY 410 billion to JPY 470 billion. Favorable economic environment is indeed a tailwind, but Dai-ichi Life has been generating profit steadily and both organic and inorganic initiatives have heightened our profit generation capacities, capabilities.

As for group adjusted ROE, assuming the achievement of this fiscal year's full year forecast, it will be 11.8%, bringing us closer to the midterm plan target of 12% Dai-ichi Life's plan to sell domestic listed stocks is progressing according to the plan. Its ROE forecast for the next fiscal year is around 13%. So there is a high probability of achieving group adjusted ROE of 12%, and we will move forward with greater speed and steady progress toward our target of 14% or more by fiscal 2030.

Considering current performance and future forecast, we have revised our fiscal 2030 profit target to JPY 700 billion from JPY 600 billion. Domestic businesses are expected to generate scalable profit. And we also take into account profit growth of overseas businesses driven by Protective profit expansion and increase of profit contribution from noninsurance businesses as the profit of Asset Management segment grows in the mid-to-long term.

So in profit levels have risen under the current medium-term plan, enabling us to generate more cash than when plan first began. We will think about inorganic investment using this capital. We cannot aim to achieve JPY 700 billion only by organic growth. So we would like to allocate more capital to inorganic growth in order to achieve this target. So we will put more focus on cash flow and cash remittance. And at the same time, we'll be reviewing our KPIs. This shows the outlook for 2030.

In our current medium-term management plan, we have made improvement of capital efficiency a top priority and have steadily strengthened our founding of growth by expanding profit, reducing risks and accelerating growth in our overseas business and entering adjacent noninsurance market. So the target of ROE larger than 10% and adjusted profit of JPY 400 billion have been adjusted upward to JPY 450 billion and ROE of 12%.

In light of these circumstances, the most important goal of the medium-term plan, achieving capital efficiency that consistently exceeds capital cost as we approach the third year of the plan. So we have previously stated that when that is achieved that we would raise our dividend payout ratio to 50% and allocate more capital to growth investments to accelerate growth towards 2030.

We believe that the time has come for that. First, we will focus on achieving our full year forecast for this fiscal year and hope to raise our dividend payout ratio to 50% as early as possible. Furthermore, we will increase capital allocation to growth investment and accelerate profit growth. However, these changes do not mean a weakening of our shareholder return policy. We expect shareholder returns to expand in line with profit growth, especially the dividends.

Our basic we intend to manage share buybacks flexibly. Before that the plan has been disclosed shortly before the General Meeting of Shareholders. So as a means to improve our capital efficiency, share buyback is one of the measures -- possible measures. However, we would like to decide the timing very flexibly, taking into consideration such factors as capital and cash positions, a pipeline of strategic investments and the share price.

So that is how we would like to change the announcement of share buyback. We backed by stable profit and cash generation, we have been able to steadily increase dividends for over the past 10 years. We are proud of our dividend per share growth rate of 18%. It is a very good number. And as for EPS, the growth rate is 11%, and it demonstrates a stable profit growth. So by steadily implementing our growth strategy, focusing on profit growth and accelerating our growth, we aim to further expand shareholder returns.

Now I would like to conclude my explanation here. Thank you very much for listening.

[Statements in English on this transcript were spoken by an interpreter present on the live call]

Thank you very much. I'm Kai Executive Officer. Prior to the panel discussion, I'm going to give you update on the mid-to-long-term strategy to realize our group goals.

Next page. As you know, our goal is -- actually, our goal for fiscal year 2030 is to become global top-tier insurance company and leader shaping the future of Japanese insurance industry. To achieve these goals, we set the goals for fiscal year 2026 as follows: Capital efficiency steadily above cost of capital, building of the base for transforming ourselves into insurance service provider, achieving upward revised group adjusted profit of JPY 450 billion and doubling of our market capitalization from fiscal year 2023 level of JPY 3 trillion.

For financial year 2024, on the back of the favorable economic environment, we could make more than expected progress with capital efficiency exceeding cost of capital for the first time. In addition, we actually had achieved the goals in group adjusted profit and adjusted ROE for the end of management plan period on the first year of the period. So in June, in our earnings call, we actually explained that we are going to raise the target for adjusted ROE and group adjusted profit.

For further profit and capital efficiency, we would like to be more aggressive on strategic investments. For this fiscal year, for example, our Australian subsidiary, TAL, made investment in Challenger, and we increased our stake in Capula in U.K. And also, we announced our investment in M&G in the U.K.

We continue to diversify in geography and risk types. And through the investment in the asset management companies with high cash generation, we would like to make at a highly capital-efficient portfolio. So that was the overview of our group mid- to long-term strategy.

So I'd like to move to the panel discussion. And I'll be the moderator for this panel discussion. For this panel, we are going to focus on mid- to long-term strategy of our group and initiatives to improve capital efficiency. First, I'd like to ask the outside directors to introduce themselves. First, Ishii-san, please go ahead.

Thank you very much. I'm Ishii, I'm Outside Director. Well, this is my resume, as you can see on the screen. I joined the company as an Outside Director in June last year. So it's been 1 year since I joined as Outside Director. And prior to that, I've been actually focusing on the work of Tokio Marine Group. Most of my time and career were actually spent for International business. And we -- actually, I was head for the responsible person for International Business at the end and actually covered the acquisition and PMI of North American companies.

So I think that my experience and the background, I hope will contribute to the improvement of enterprise value of Dai-ichi Group. Thank you very much.

Now Nagase-san, please. Together with Ishii san, I became a Outside Director last year. My background is shown on the screen. I actually was in many different segments. I was in financial department in Suntory and I was a CFO for Dexerials. So my career is basically focusing on the treasury department and market and financials.

When I was at the Dexerials, there are many investment ideas. And as a CFO, when I consider those opportunities, I had a lot of thoughts process. And I was actually told by other people that the new CEO, which is me, doesn't like M&A. But actually, I -- it's not the case that I don't like investment. But I don't like the situation that we could actually get return on investment. That's what I don't like. So that the thought is still staying with me. Thank you very much.

So please go to next page. For Ishii san, he has rich experiences and insights as a manager in the global companies plus he was International Insurance Business head. So he has expertise for M&A, International M&A, particularly. Nagase san, he has a rich experience as a manager in financial institutions, and he served as a CFO. So he has expertise for capital strategy and financing.

Here, I'd like to touch upon our company's -- our group's corporate governance structure. In our company, we have Audit and the Supervisory Committee. And in order to heighten the management transparency, we actually set up discretionary committees such as Nominations and Advisory Committee and Remuneration Advisory Committee. In order to build a high-level corporate governance structure, in addition to the Chair of Audit and Supervisory Committee, the Chair of the Remuneration and Nomination Committees were actually served by outside directors.

And in audit and other committees, a majority of the members are outside directors in our Board of Directors as well, more than 1/3 of members are outside people. So we are actually working on the governance issue on a consistent basis.

So I'd like to move to the panel discussion now. So we have some questions, and I'd like to ask both of you to answer those questions.

This is the first question. It's about mid- to long-term strategy of the group. Currently, we are at the midpoint of our Mid-Term Management Plan period. So what is your impression or vision on the progress of the strategy so far?

First, Nagase-san, please. Thank you very much. Regarding the progress of the strategy, what is my view? Basically, as Kai-san said, in the initial year, you had a very good performance and the profit in the initial year actually exceeded the target for the final year of the period and ROE actually exceeded the cost of capital.

So in terms of numbers, I think that because of the efforts of the current management and employees, good performance has been achieved. And for fiscal year 2030, the group has been working on many initiatives. For example, Benefit One PMI is underway and made investments in many companies. Those initiatives are actually going very well.

On the other hand, with huge profit increase, even they have a good profit and initiatives that the share price is still left unappreciated in the market, and that could be a kind of criticism from the market. Even though the company is striving for progress, but from the investors' point of view, the potential or the growth potential of the profit is not really convincing. That's all I have now.

Now Ishii-san, please.

Thank you very much. On this theme, Nagase-san actually covered the most important points. From '24 to '26 at the timing of the building or the creation of this midterm plan, I was not -- I'm not the outside director at that point. However, since I joined in 2024, the performance was very good. And for the first time, the capital efficiency exceeded cost of capital. And based on that, as Kai-san said, the goal for fiscal year 2026, the adjusted profit and adjusted ROE has been actually upward revised.

Beyond that, towards 2030, I think they actually set a very challenging goals. So as early as possible towards 2030, they like to actually make a steady progress. So for 2024, it was very good. And for this fiscal year, I think they are on track. Towards 2030, what kind of steps they are going to make as early as possible because it takes some time for the result come up. So I think that the early action will be very important. So from that perspective, the BOD has been actually be watchful and make advice. Thank you.

Thank you very much. Now let's go to the next theme. So as we mentioned earlier by fiscal 2030, we would like to ask for the long-term vision for 2030. So for achieving the vision for 2030 set by Group CEO, Kikuta, some in the market suggests that based on the current progress, market capitalization of JPY 10 trillion may not be achievable. So could you please share with us what discussions have taken place in the Board of Directors and other relevant forms? And as an Outside Director, what is your assessment of the current situation and challenges? So Nagase-san, please go ahead.

Now on this theme, I think this is very significant in the Board of Directors as well, we have been studying this, spending a long time to take various discussions. So on the executive side, we have been very much deep diving into this important theme with materials that are covering all the details. And based on those things, we have set a broad direction, and we have reached a broad agreement on this theme.

And more specifically, so International Insurance Business have to be expanded. And so we're not going to use that much capital, meaning that we're going to further go into and expand into capital-light business format. And similarly, asset management business have to be expanded. So those kind of broad directions we have been reaching consensus already inside the Board of Directors. But with those broad directions, what are the proportions of all these points and in each domain and area, what kind of investments have to be made into which exact and specific deals we need further discussion on those details as well.

So the direction is already set and there. So the point is which mountain we're going to climb up and what would be the detail for reaching all the peaks that are the things we're going to further explore. And by fiscal 2030, we have set the vision. And looking at the Japanese insurance industry, we would like to become the leadership in the future of Japanese insurance company and industry. So we have to be broad, including new business domains and international businesses compared with those discussions. Inside Japanese insurance company and market industries, I think there needs more detailed discussion.

So we are a share holding company, meaning that we may have to have a different style in competing in this kind of insurance company. So with equity at stake, we would like to identify what would be most appropriate for us to compete to become the ideal company in the industry. Thank you very much.

Now Ishii-san, please go ahead.

So for fiscal 2030, we have the challenging target of market capitalization of JPY 10 trillion. We are well aware of the market and how are we going to fill the gap to achieve this target is what we are now being asked for under scrutiny. So I'm from Tokio Marine, as I said. So what I have been doing, including M&A and other deals, it has actually impacted the business results, and we had increased market capitalization. Well, I already left Tokio Marine, but I have those experiences in my career path, meaning that what you have done and as a result, you get returns and that would ultimately be reflected to share prices, and there could be some time lag. I'm well aware of that.

So I may be repeating myself, but we should be as fast and quick as possible to show that we can do what we had promised to market participants and shareholders. So Dai-ichi Life portfolio, if you look at it closely, by fiscal 2030 in order to achieve the target set, what kind of business portfolio is required. And with that, ultimately, how can we reflect that to our share prices. So we need to have the future ideal of our business portfolio. So that design could be crucial for what we are doing as a business. So looking at domestic as well as international and protection, savings and investment and asset management, insurance.

So how are we going to align all this together and also annuity as well as noninsurance, new businesses. So these are all important pillars, all the domains we are covering. We are looking at the broad horizon. So in each domain, what would be the ideal business that we can construct. And then as a total, like we can maximize our return, looking at the risk allocation as well. So those are the perspective we are applying. But inside the Board and the company, whether our discussion is full-fledged, well, maybe we can do more. That's my opinion.

So in each deal, of course, we are discussing it in the Board of Directors. But on these each points, looking at the entire business portfolio, what is the ultimate goal, what we have to focus right now. And then we are always emphasizing on those points. And looking at the mid- to long-term plan, we are looking at each list items and having detailed discussions and going to have a good result looking at the overall portfolio.

Thank you very much. Okay. So let's go into the second theme. So here, in fiscal 2024, as we may be repeating, but capital efficiency exceeded the cost of capital for the first time. To further enhance capital efficiency in 2025, we have implemented and announced multiple M&A deals. Regarding these initiatives, please share with us what discussions have taken place at the Board of Directors' meetings and what governance aspects are prioritized in decision-making processes for M&A transaction, along with areas requiring improvement perhaps.

Additionally, so currently, we have Challenger, Capula, M&G in 2025, we have been investing. But how do you perceive the recent series of minority investment deals with regards to each deals? So first, Ishii-san, please go ahead.

Yes. Thank you very much. So as I mentioned earlier in this session, so the total business portfolio by fiscal 2030, how are going to compile that? And in each items, how should we have it aligned? So Challenger, Capula, and M&G, all these deals are under discussion.

Challenger, as you may know, in Australia, we have TAL, the top player, our subsidiary. And so the Australian market and we have the presence as a top player. We're going to expand that to have more synergy, and we want to expand our business more and more. So as a piece of our small steps with Challenger, we have been holding strategic discussions already. And at Capula as well, how are we going to expand globally for asset management businesses? What are promising, for example? And what could contribute to our group revenue as a total portfolio? And how can we maximize our skills and capabilities? And what are the lacking points we have to fill the gap, for example, we're also discussing on that.

And for M&G, U.K. and Europe, where we haven't had that much presence back then, we're going to focus on insurance products and also M&G itself is a very impactful asset management company in that market. So we can combine both the insurance and asset and what are the potentials that we can expand and further go into this important market. So inside Japan, we have synergy yet to come from fledged bases. But the U.K. market compared with Japanese market, maybe they are more advanced, so to speak. So what's happening in the U.K. market can also be taken for Japanese market as a good example. So those are the perspectives we are looking at.

Regarding the minority investments, Well, it's not actually the decision from the beginning. But in principle, whatever the suitable transaction for us, we'd like to take majority. But it's not necessarily the case that we are going to take a majority from the beginning because it could be risky. So we can start with minority and build a relationship and to confirm the chemistry of -- with the company and at the appropriate timing, we can actually take a minority. That's the process. So from that perspective, we do the minority investment.

Regarding M&A deals, well, in Board of Directors' meeting, we had a lot of discussions. Last year and this year, if you read the minutes, I think there are many discussions about M&As. So for each deal, we have a good discussion with this deal, what's the impact on ESR and what will be the relationship with the company and also what kind of risks relating to the deal. And of course, legal investigation has been done as well. So very high caliber CXOs actually monitoring all the information relating to deals and everything is actually checked and investigated before we make final decisions on M&A. Sorry for long answer.

Thank you very much. So, Nagase san.

Thank you. Well M&A deals, you read on the screen, of course, we can actually improve the capital efficiency. But in addition to that, for example, we can use reinsurance arrangement to improve the capital situation. So we are working on many initiatives, and this should continue.

For Insurance business, for example, we still have room for growth. For example, we can expand our asset management capability like our alternative asset capabilities such as private debt, then we can improve the spread, then the capital efficiency will be raised.

And for Dai-ichi Life, which are working on the domestic business might be able to see productivity increase through those deals. And for Noninsurance business, for example, Capula is an asset management company. So we can increase investment in asset management business and also Benefit One that we are already working on the PMI, we can actually improve the profitability of the kind of business, and that's quite useful to improve capital efficiency.

Regarding the minority investments, in principle, well, it depends on the sector that we invest. When something happens in that company that we invest in, well, that company has to have -- I mean, we have to have knowledge to save the company in that segment. If that's the case, we can actually take a majority. However, in other segments that we don't have enough experience and expertise, probably through minority investments, we can actually learn the business model and deepen our understanding about the segment and confirm the chemistry with the management of the investee. And in that way, it's sometimes useful to start with minority investment. Thank you.

Thank you very much. So this will be the last question for the panel. This is about the monitoring of our existing business. In Board of Directors meeting, how do you actually understand and supervise the status of the existing business? And in the current business environment, do you see any particular risks that we should pay attention to? Ishii san.

Thank you. Regarding the monitoring of our existing businesses, every quarter in Board of Directors meeting, Nishimura san, CFO, report us the performance and also the status of the ESR and other financial ratio. And Ohashi san, CRO explains about the risk management from various perspectives. So we have a full report.

For a group as a whole, we can actually monitor the situation. And the major group entities status can be confirmed every quarter through those reports. So we have a clear view about the status. CXO function has been strengthened those CXOs come from the Dai-ichi Life, but the other CXO actually came from outside. So we have a horizontal access.

The CXO system is functioning very well. And for individual entity under the group, with the other companies with the status of the monitoring needed, we actually check whether the action plans are being progressed for those entities that is being confirmed and followed up by Board of Directors. There are several risks to be monitored. But as a framework, risk reporting system is there by CRO, ERM, integrated risks, various risks are explained. And what kind of risks they are actually prioritizing every year, including emerging risks that is actually explained to us.

So by this system, we can actually have a good view of the total status. And interest risk or interest rate-related indices might actually change depending on the environment and sensitivity analysis is actually being shared with us with what kind of interest rate change, what kind of impact on the ESR well, by forecasting the change in the future, they make analysis and that is reported to us at BOD so that we can actually confirm the current status.

Regarding the most recent risks that we should pay attention to is the information security and compliance-related risks and also IT, DX and AI responses, if there are some delays in those responses, that would be quite risky. So DX and IT risks for those areas, the high expertise CXO and some of them are not Japanese, but by having those high-caliber CXOs, I guess that we can actually cover important areas in timely manner.

But of course, this is quite complicated and difficult challenging themes. So I cannot safely say that perfect system is established, but actually, they are making good progress as a work in progress. Thank you very much.

So Nagase san, what's your view on this?

As I said in the beginning, monitoring of the existing businesses is important to recover investment. As Ishii-san said, in BOD and mid- to long-term strategic sessions, we actually check the capital adequacy and the capital efficiencies for each business. We actually set the KPI. And on those numbers, we reported on a regular basis.

Before I came here, I was the outside Director of Frontier Life. And at that time, sometimes I felt that too much intervention from the parent company. However, now I'm serving as an outside director of the parent company. And now I understand that as a group, it's important to improve the enterprise value and the capital efficiency of each company and the governance is very important. And for that purpose, monitoring function has to be at a high level very well.

And there are some good areas. So as you may know, in Thailand, there was this Life Insurance business that we have withdrawn already. We have exited there. And Protective in the U.S. we had a thorough dialogue with them. And through reinsurance, we have been adding more capital. So these are backed by a good monitoring system already within our company and group. So the risks in the current environment. Well, within our group, it's not an immediate risk, but those are the risks that I have personally focused and is aware. But as Ishii-san mentioned, cybersecurity, so Asahi Group is now closed.

Looking at those situations, I think these kind of risks cannot be underestimated. And also geopolitical thinking, the uncertainty from the Trump administration, we have to also look carefully about what kind of impact that could give to our business and I have been also looking at market. So the yen interest rate is also point of my concern.

Thank you very much. So Ishii san,Nagase san, thank you very much for sharing your insights today. So we hope that this session provided everyone with an opportunity to directly confirm how highly effective our group's directors are functioning. So I hope this could be a good experience for investors and analysts as well.

We will now begin the CFO update by the group CFO, Nishimura san. Nishimura san, please proceed.

Okay. So maybe only 10 minutes left. So I have one slide. So we have been discussing about domestic interest rates that's rising, and it may continue to rise. So given those situations, it could be a positive factor for insurance providers, but there could be a surrender risk potentially damaging our profit. So with those one on one and also the frequently asked question from investors, I have summarized this point.

So starting from today with breakdown, especially for in-force policies, what are we going to control the recovery risk? I would like to give some additions. So looking at the left-hand side, there is the line graph. And you can see I have been repeating that the surrender risk is limited. And focusing on fiscal 2019 and afterwards, we have been looking at more detail, and we have been showing the transition. You can see the spike here.

And looking at the entire in-force policies in the past, there is this -- we didn't see that much significant jump. But if you look closely, so latter half of fiscal 2023, we have seen the U.S. interest rate roads. And with that, there was people that switched to foreign currency-denominated products, and it went up less than 1%. So that was about JPY 70 billion impact.

On the other hand, we have the other line that for single premium single type insurance surrender rate, and it's fairly stable. So the reason behind this, we believe that the background factors preventing a significant increase in surrender rates are for products purchased through Dai-ichi Life sales rep channel, customers choose us after receiving consulting tailored to their family structure and lifestyle and the products incorporate insurance protection functions.

So based on these actual performance and also the characteristics, we recognize that even if domestic interest rates rise further and likelihood of a significant increase in the surrender rate for our in-force policies, it could be low. Furthermore, as shown on the right, we have portion of saving type products, which are relatively more susceptible to increased cancellations and surrenders during rising interest rate environment.

Within Dai-ichi Life in-force policies is limited. So volume-wise, it's about JPY 7 trillion. And looking at those entire volumes, you can see that the saving type products account for only about 20% to 30% of the total volume of individual insurance and individual annuity policies as well. Particularly for single premium saving type products, which are prone to increased surrenders and cancellations, the duration of bonds held is shorter compared to other segments. And this keeps the product at a relatively mild level against unrealized loss ratio on JGBs, et cetera, which has expanded due to rising domestic interest rates.

And furthermore, we have established measures such as constructing hedging positions using interest rate swaps for a portion of these holdings. So we have those initiatives in place. So based on these factors, we believe the surrender risk for saving products is being managed at a controllable level, and we'll continue to closely monitor market development and take timely and appropriate actions as necessary. So that's briefly from my side. Thank you very much.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]