Giant life insurer, Dai-ichi Life, demonstrated a mixed financial performance in the first quarter of the current fiscal year which started on 1 April 2024 (FY24). The company faced a decline in premium income but saw improvements in other areas, including investment income and core profit, says CreditSights, a FitchSolutions company.
The company's premium and other income experienced a slight contraction, falling by 8% YoY to JPY568.7bn ($3.85bn) from JPY615.3bn in 1QFY23, driven by a reduction in premium income due to a decreased number of policies in force.
However, in terms of new business, Dai-ichi Life's sales volume increased, boosted by the launch of new products; the domestic value of new business rose to approximately JPY30bn as compared to JPY11bn last year.
On the expenses side, Dai-ichi Life managed to reduce total expenses, which decreased from JPY945.9bn in 1QFY23 to JPY909.3bn in 1QFY24, partly due to a decrease in benefits and claims.
Investment income showed a modest uptick, increasing from JPY373.4bn in 1QFY23 to JPY376.1bn in 1QFY24; this improvement was driven by a rise in interest and dividend income as well as reduced hedging costs.
Overall, Dai-ichi Life’s profitability showed notable improvements, with core profit rising by 18% to JPY72.2 bn from JPY61.1bn YoY, driven by higher interest and dividend income.
There was also a considerable increase in net income, which rose by 41% to JPY82.6bn from JPY58.5bn in the previous year, driven by improved core profit and capital gains.
In terms of capital adequacy, the group's economic solvency ratio (ESR) stood at 214% as of June 2024, down 12 percentage points from the end of FY23, influenced by increased mass lapse risk, which may come about particularly on savings products due to higher interest rates.
Looking ahead
Taking into account the economic environment up to 5 August, the full-year adjusted profit forecast of JPY340.0bn for the holding group remains unchanged, largely due to the substantial profit increase in the first quarter.
Going forward, Dai-ichi Life’s strategies include selling domestic equities ahead of schedule, reducing the balance of currency-hedged foreign bonds, and increasing credit assets; these actions have significantly contributed to the positive spread and overall financial performance.
Despite a potential decline in core profit due to lower gains from core insurance activities, increases in gains on sales of securities and improvements in derivative transactions are expected to offset this; this will lead to an overall profit increase.