Sompo forecast miss hits market confidence

Morningstar still expects underlying growth after stripping out volatile disaster impacts.

Sompo Holdings Inc. exceeded its previous fiscal year targets with a profit of $3.4b (JPY535.2b), but Morningstar noted that the company’s forward guidance of $3.2b (JPY500b) disappointed the market.

This lower projection stems from expectations that natural disaster claims will return to normal baseline levels.

Morningstar has maintained its JPY6,000 fair value estimate for Sompo Holdings Inc, following a review of the insurer's outlook by Senior Equity analyst Iris Tan.

Despite the softer profit forecast, Morningstar expects Sompo’s underlying business to grow when stripping out volatile disaster impacts.

This growth will be heavily driven by expanding international insurance margins and the first full year of results from newly acquired specialty insurer Aspen. Operating with a profitable combined ratio below 90%,

Aspen is expected by Morningstar to serve as a crucial buffer, shielding overseas profitability from rising claims elsewhere.

($1.00 = JPY158.92)