Sompo Holdings,Inc. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥362.01B
• EPS: ¥389.96

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

SOMPO Holdings (TSE: 8630) reported strong IFRS-based consolidated FY2026 Q2 results, highlighted by a sharp rebound in profitability and capital gains. Net income reached 3,604.28億円, up 97.4% YoY, supported by a very low effective tax rate of 8.3% and a favorable financial market backdrop. Profit before tax was 4,653.72億円, suggesting robust pre-tax earnings momentum. Total comprehensive income was significantly higher at 7,639.93億円, indicating large other comprehensive income (OCI) gains, likely from valuation gains on investment securities as interest-rate and equity market movements turned supportive. The balance sheet remains sizable with total assets of 1,635,654億円 and total equity of 479,764.6億円, resulting in an equity ratio of 29.2%, which is typical for an insurance group with large policy liabilities. Financial leverage (assets/equity) stands at 3.41x, and liabilities/equity at 2.43x, underscoring a balance sheet structure dominated by insurance liabilities rather than traditional bank debt. Cash and equivalents totaled 10,276.28億円, providing ample liquidity buffer in addition to liquid securities held for investment. EPS (basic and diluted) came in at 389.96円 on an average share count of 9.242億株, and calculated book value per share is 5,256.8円. With a calculated payout ratio of 34.2%, dividends appear well-covered by earnings for the half-year period, although free cash flow data are unreported. Key profitability diagnostics such as revenue, operating income, and underwriting metrics were not disclosed in the provided data, limiting margin and DuPont decomposition analysis beyond leverage. Even so, the step-up in net profit and comprehensive income points to both improved core performance and material market-related gains. Equity method income was slightly negative at -1.56億円 and thus not a meaningful driver. The reported tax charge of 385.40億円 confirms the low effective rate and possibly the mix of tax-exempt investment income or the use of loss carryforwards. Given the heavy reliance on investment results in H1, earnings sustainability into H2 will depend on underwriting discipline through the catastrophe season and the stability of financial markets. Overall financial health appears sound, but the absence of operating cash flow, revenue, and segment details necessitates caution in interpreting the durability of the earnings surge. We therefore emphasize monitoring underwriting indicators (e.g., combined ratio) and realized/unrealized gains to assess the repeatability of results.

Profitability Analysis

ROE_decomposition: Full DuPont is not calculable due to missing revenue and equity-attributable detail. Financial leverage is 3.41x (assets 1,635,654.4億円 / equity 479,764.6億円). Net margin and asset turnover are not available; consequently, calculated ROE is not determinable from the provided dataset. margin_quality: Net income rose 97.4% YoY to 3,604.28億円 with a very low 8.3% effective tax rate, implying that a notable portion of profits likely stems from favorable investment income or items with low tax incidence. Total comprehensive income (7,639.93億円) far exceeds net income, pointing to sizeable OCI gains (e.g., FVOCI bond/equity valuation gains). Without revenue and operating income, we cannot assess core underwriting margins or expense ratios. operating_leverage: Not directly observable due to lack of revenue and SG&A/operating income. The magnitude of net profit growth relative to unreported top line suggests a material contribution from non-underwriting drivers (investment and OCI) rather than operating leverage alone.

Growth Assessment

revenue_sustainability: Revenue is unreported. The near-doubling of net income indicates strong growth, but sustainability is uncertain without visibility into underwriting volumes, pricing, and loss trends. profit_quality: Profit before tax of 4,653.72億円 and low taxes lifted net income; comprehensive income outpaced net income by 4,035.65億円, signaling market-related gains that may be volatile. Equity-method contribution was a small loss (-1.56億円) and not impactful. outlook: Into H2, earnings durability hinges on catastrophe loss experience, renewals pricing, and financial markets (rates, credit spreads, and equities). If markets stabilize and underwriting discipline holds, earnings could remain robust, but normalized tax rates and potential mean-reversion in OCI gains would temper growth.

Financial Health

liquidity: Cash and equivalents are 10,276.28億円, complemented by large investment portfolios (not itemized here). Traditional liquidity ratios are unreported, but insurers typically rely on liquid securities beyond cash for claims-paying capacity. solvency: Equity ratio is 29.2%; liabilities/equity is 2.43x, reflecting policy reserves rather than heavy financial debt. Financial leverage is 3.41x. These levels are consistent with a diversified insurer’s balance sheet under IFRS. capital_structure: Total equity is 479,764.6億円, including retained earnings of 35,210.76億円 and capital surplus of 327.33億円. Book value per share is 5,256.8円. No granular breakdown of interest-bearing debt or regulatory capital metrics was provided.

Cash Flow Quality

earnings_quality: Operating cash flow, investing cash flow, and free cash flow were not reported. The large gap between comprehensive income and net income suggests market valuation effects; recurring cash conversion cannot be assessed from the data provided. FCF_analysis: Free cash flow is unreported; therefore, we cannot evaluate FCF generation versus dividends or buybacks for the period. working_capital: Working capital metrics are unreported. For insurers, the key is the liquidity of investment assets versus claim obligations; however, the dataset lacks claim reserve movements and premium receivables.

Dividend Sustainability

payout_ratio_assessment: The calculated payout ratio of 34.2% indicates dividends are well-covered by earnings for the period. EPS is 389.96円; implied dividends would be comfortably below EPS, though DPS itself is unreported. FCF_coverage: Not assessable due to unreported operating and free cash flow. As such, cash coverage of dividends cannot be concluded. policy_outlook: Japanese insurers often target progressive dividends and opportunistic buybacks; however, buyback or DPS data are not provided. Given earnings strength and substantial retained earnings (35,210.76億円), capacity appears sufficient, but sustainability depends on underwriting results and market-driven income normalization.

Risk Assessment

Business Risks:

• Catastrophe losses and weather volatility affecting property and casualty underwriting
• Market volatility impacting investment income, OCI, and capital (rates, credit spreads, equities, FX)
• Pricing adequacy and claims inflation influencing loss ratios and reserving
• Regulatory changes in insurance capital requirements and IFRS measurement (insurance contract liabilities, OCI recognition)
• Competition in domestic non-life, life, and international markets affecting growth and margins
• Execution risk at overseas operations (e.g., Sompo International) including integration and risk selection

Financial Risks:

• Interest rate risk on bond portfolios and duration mismatch (ALM risk)
• Credit risk on corporate and structured investments during spread widening
• Equity market risk driving OCI volatility and book value swings
• Currency risk from foreign subsidiaries and investments
• Potential normalization of effective tax rate from the current low 8.3% level reducing net income

Key Concerns:

• Earnings reliance on market-related gains evidenced by high comprehensive income versus net income
• Limited visibility into core underwriting profitability due to unreported revenue and operating income
• Unreported cash flow data constraining assessment of earnings-to-cash conversion and dividend FCF coverage

Investment Implications

Key Takeaways:

• Net income surged 97.4% YoY to 3,604.28億円 with an 8.3% effective tax rate, boosting EPS to 389.96円.
• Total comprehensive income of 7,639.93億円 signals substantial OCI gains and strengthens book value.
• Balance sheet leverage (assets/equity 3.41x) and equity ratio (29.2%) are consistent with a large insurer’s profile.
• Cash and equivalents stand at 10,276.28億円, supporting liquidity alongside liquid securities.
• Dividend payout ratio of 34.2% suggests earnings coverage is comfortable, though FCF coverage is unassessed.
• Absent revenue and operating income, the quality and sustainability of profit growth require caution.
• H2 performance will hinge on catastrophe activity, underwriting discipline, and market conditions (rates/spreads/equities).

Metrics to Watch:

• Combined ratio and loss ratio trends in domestic and international P&C operations
• Net investment income, realized/unrealized gains, and OCI sensitivity to rates and equities
• Policy reserve movements and ALM duration gap indicators
• Capital adequacy metrics (e.g., ESR/SCR, RBC-equivalents if disclosed) and book value per share trajectory
• Tax rate normalization relative to the current 8.3%
• Shareholder returns policy updates (DPS, buybacks) and payout versus earnings/FCF

Relative Positioning: Within Japanese insurers, SOMPO’s H1 shows strong earnings and book value uplift driven by market tailwinds; capital and leverage appear typical for peers, but visibility into underlying underwriting performance is more limited here due to unreported operating metrics.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis