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

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.

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