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Review of Operations

Annualized Premiums from Policies in Force

Reviewing our fiscal 2019 consolidated performance for the Sumitomo Life Group, annualized premiums from policies in force increased 0.9% from the end of the previous fiscal year to ¥2,806.5 billion ($25.7 billion).
Annualized premiums from policies in force for the third-sector insurances, which we focus on as a growth area, increased 1.1% year on year to ¥590.0 billion ($5.4 billion), on the basis of two domestic entities (Sumitomo Life and Medicare Life) excluding Symetra, growing steadily for seventeen consecutive years since we started to publish such figures.
The main reason for this is that we have achieved steady results through “multi-channel, multi-product strategy” in the nursing care (including work disability) and medical insurance markets, which are expanding along with the advent of a long lived society.

Annualized Premiums from New Policies

In fiscal 2019, the Sumitomo Life Group’s annualized premiums from new policies decreased 3.4% from the previous fiscal year to ¥202.7 billion ($1.8 billion).
The decrease from the previous fiscal year was mainly due to a drop in sales volume of single-premium whole life insurance in the domestic business.

* Symetra’s performance has been recorded since February 2016.

Core Business Profit

Core business profit is an indicator of the fundamental earnings strength of Japan’s life insurance companies.
In fiscal 2019, adjusted group core business profit, which represents profitability excluding the impact of the standard policy reserves concerning the minimum guarantees for variable annuities, etc., decreased 1.2% from the previous fiscal year to ¥393.3 billion ($3.6 billion).
Meanwhile, the size of the negative spread has been constantly shrinking since fiscal 2001 when the Company started its disclosure, which turned positive for the first time in fiscal 2014 and the width of the positive spread has expanded for six consecutive years.

*1 Group core business profit (see the solid line graph) is calculated by combining core business profit of Sumitomo Life and Medicare Life, and profit before tax of Symetra, Baoviet Holdings, BNI Life, Singlife and PICC Life attributable to Sumitomo Life’s equity stake in each company, with adjustments made to some internal transactions.
*2 Adjusted group core business profit (see the bar graph): Group core business profit excluding the impact of provision (reversal) of the standard policy reserves, etc. concerning variable annuities.

Accumulated Retained Surplus

Accumulated retained surplus (Sumitomo Life)* increased ¥95.9 billion in fiscal 2019, to ¥2,008.6 billion ($18.4 billion).
We will continue to reinforce our long-term financial strength by accumulating surplus while maintaining a good balance with the distribution of dividends to policyholders.

*Contingency reserves + Reserve for price fluctuation + Fund for price fluctuation allowance + Reserve for redemption of foundation funds + Reserve for fund redemption

Solvency Margin Ratio

The solvency margin ratio is the ratio of total solvency margin to total risk amount, which quantifies various risks. Our solvency margin ratio was 870.0% (consolidated) at the end of fiscal 2019. The ratio far exceeds 200%, the level which would require administrative-intervention in Japan.
In anticipation of the introduction of an economic value based solvency regulation, we are making efforts to control risk and accumulate retained surplus based on the discussions of the ICS.

European Embedded Value (EEV)

The Sumitomo Life Group’s EEV at the end of fiscal 2019 decreased ¥114.8 billion year on year to ¥3,584.1 billion primarily due to negative impacts from the lower domestic super-long-term interest rate and fall in stock prices, despite the positive results of the insurance business such as acquiring new policies and securing earnings from policies in force.

*The EEV of the Group is calculated as follows: Sumitomo Life’s EEV plus Medicare Life’s EEV and Symetra’s EEV, less Sumitomo Life’s carrying amount of equity of Medicare Life and Symetra.
*The ultimate forward rate has been applied for the super-long-term interest rate since fiscal 2016. Hence, the EEV figure as of March 31, 2016 is restated based on the same method.