First-quarter progress is ahead of the full-year forecast, but sustainability through the first half is the focus

Ordinary revenue for the first quarter of the fiscal year ending March 2027 was ¥2,893.02 billion, up 25.3% year on year. Ordinary profit was ¥251.057 billion, up 195.6%, while net income attributable to owners of the parent was ¥160.065 billion, up 367.8%, indicating a substantial improvement from the same period of the previous year on the surface. First-quarter ordinary revenue represented 27.1% of the full-year forecast of ¥1,066.6 billion, ordinary profit represented 28.9% of the ¥869.0 billion forecast, and net income represented 31.2% of the ¥513.0 billion forecast.

On the simple assumption that one-quarter of the full-year forecast is the benchmark, both ordinary revenue and profit were progressing above 25%. Profit progress was particularly strong, exceeding the benchmark by 3.9 percentage points for ordinary profit and 6.2 percentage points for net income. However, life insurers’ earnings are affected by investment income, foreign exchange, the valuation and sale of equities and bonds, policy reserves and other factors, so the quarterly progress rate cannot be treated as a direct measure of the probability of achieving the full-year forecast. The first-half results will need to show whether the current earnings growth can be maintained into the second half or reflects a reversal of market-related factors.

The company has not revised its full-year forecasts of ¥1,066.6 billion for ordinary revenue, ¥869.0 billion for ordinary profit and ¥513.0 billion for net income. Accordingly, in FY2027-H1, investors will want to assess not only cumulative progress against the full-year forecasts, but also why the company has left its forecasts unchanged, the investment environment assumed for the second half, and its assumptions for insurance claims and other payments and policy reserves. A simple half-year benchmark would be ¥434.5 billion for ordinary profit and ¥256.5 billion for net income, but these are not half-year targets published by the company, merely mechanical comparison benchmarks set at 50% of the full-year forecasts.

The company did not disclose operating profit for the first quarter, so its performance needs to be assessed primarily through ordinary profit as a life insurer. In addition, because it did not prepare a quarterly consolidated statement of cash flows for the first quarter, it will be difficult to determine from the first-half disclosure how much of the increase in profit translated into cash generation. The earnings summary states that both the full-year earnings forecast and dividend forecast remain unchanged. The key issue this time is therefore not a change to the forecasts, but whether the strong first-quarter profit level is temporary or can be sustained through the first half.