Japanese Insurers Raise Guidance After Interim Results; FVEs Up 4%-7% for Tokio, Sompo, Dai-Ichi

Following Japanese insurers’ interim results for the year ending March 2022, we raise our fair value estimate for Tokio Marine by 7% to JPY 6,000; raise Sompo's and Dai-Ichi Life's by 4% each to JPY 5,200 and JPY 2,400 respectively; and retain MS&AD's at JPY 4,000. Our new fair value estimates value Tokio Marine at 0.79 times, Sompo at 0.56 times and MS&AD at 0.44 times their book values adjusted for catastrophe, contingency, and price fluctuation reserves, unrealized gains on bonds not marked to market, and the value of in-force life insurance business; and Dai-Ichi Life at 0.34 times embedded value. Relative to Bloomberg consensus earnings, our fair value estimates value Tokio Marine at 12.4 times, Sompo at 12.6 times, MS&AD at 9.3 times and Dai-Ichi at 8.4 times. Tokio Marine and Dai-Ichi Life are near our fair value estimates, while MS&AD and Sompo have modest upside.