Sompo lifts earnings target to $3.1b amidst improved auto and fire business

Profitability is expected to improve further in the domestic non-life insurance segment.

Morningstar expects stronger profitability for Sompo Holdings in the coming years, supported by higher insurance premiums and improving margins.

The Japanese insurer reported adjusted profit of $2.2b (JPY347b) for the December quarter, which accounts for about 79% of its full-year guidance.

Following the result, the company lifted its full-year earnings target by $0.3b (JPY40b) to $3.1b (JPY480b). This follows an earlier upward revision of $0.5b (JPY77b) announced in November.

Morningstar said the stronger outlook reflects improving profitability in Sompo’s domestic auto and fire insurance businesses after recent premium rate increases.

Lower catastrophe losses and continued growth in overseas operations also supported earnings. Catastrophe losses are expected to return to normal levels after fiscal 2026.

Looking ahead, profitability is expected to improve further in the domestic non-life insurance segment.

Morningstar expects operating efficiency gains from digitalisation and tighter market discipline to reduce costs, leading to a 50-basis-point improvement in the expense ratio in fiscal 2027 and 2028.

($1.00 = JPY157.39)