Sumitomo Life premium income jumps 10.4% as core profit falls 10.6%

CreditSights links the life profit decline to higher technical reserves.

Sumitomo Life Insurance is showing strong sales growth even as higher costs and technical reserves squeezed its recent profits, a CreditSights report said.

The insurer’s latest nine-month results show that total premium income jumped 10.4% to $17.5b (JPY2,732.6b).

This is a faster growth rate than the 4% seen earlier in the year, proving that the company is successfully bringing in new business.

However, core profit—a key measure of underlying performance—fell 10.6% to $1.7b (JPY258.9b).

This drop happened because the company had to set aside more money for reserves due to a surge in sales of life insurance policies.

Additionally, its Medicare Life unit saw profits plunge nearly 45% because of high costs related to winning new customers.

Despite the lower operating profit, the company’s overall financial health got a massive boost from the stock market. Sumitomo

Life recorded $5.8b (JPY901b) in gains from its investments, pushing its "comprehensive income" to $5.4b (JPY843b)—a huge jump from the $0.2b (JPY37b) it reported the year before.

Whilst the company’s capital levels are improving, they still trail behind its biggest competitors. 

($1.00 = JPY156.22)