Japan’s Insurers Surge on Buybacks, Unwind of Cross-Holdings

(Bloomberg) -- Shares of Japanese insurers MS&AD Insurance Group Holdings Inc. and Tokio Marine Holdings Inc. surged after the companies announced stock buybacks, as well as plans to sell their holdings in client companies.

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MS&AD, which also reported full-year guidance that exceeded analysts’ expectations, soared by a record 18% at one point in Tokyo. Tokio Marine surged 8.7%, while a measure of insurance companies on the Topix index climbed as much as 6.1% to lead the broader gauge higher.

“Measures including sale of so-called strategic holdings are being received favorably by investors” as a form of shareholder return and improving capital efficiency, said Tetsuo Seshimo, a portfolio manager at Saison Asset Management Co.

• NOTE: MS&AD FY Net Income Forecast Beats Estimates

• NOTE: MS&AD Plans to Sell 1.4 Trillion Yen in Cross-Shareholdings

• Robust premium growth and strong investment are among key positives for MS&AD, while its additional buyback plan was ahead of consensus and underscores management’s commitment to boosting capital efficiency, Jefferies analysts including Sam Wong write in a note

  • Increase in domestic P&C target is driven by “more aggressive than expected” unwinding of cross shareholdings, as well as improvement in underwriting

• Tokio Marine’s upsized buyback and dividend can continue over the next few years on solid profit growth and capital position, Bloomberg Intelligence analyst Steven Lam writes in a note

  • NOTE: Tokio Marine plans to buy back ¥200b of its shares this fiscal year and cut cross-shareholdings to zero by the end of fiscal 2029

  • NOTE: Tokio Marine FY Net Income Forecast Beats Estimates

• On the flip-side, Sompo Holdings shares decline as much as 6%, the most since Nov. 2022, after its full-year net income forecast missed analyst estimates

  • NOTE: Sompo HD FY Net Income Forecast Misses Estimates

(Updates with shares of Sompo Holdings, analyst comments)

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