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Shinichiro Hayashi: Ladies and gentlemen, esteemed investors and analysts, thank you very much for taking time out of your busy schedule to join today's earnings conference call for MS&AD Insurance Group Holdings, Inc. My name is Hayashi from the IR Department, and I will be moderating today's session. Also participating are Mr. Nakayama, General Manager of the Accounting Department, together with the colleagues from both the IR and accounting departments. The presentation materials are available on our company's website under the Investors section, specifically in the IR events area listed alongside the earnings release and other related disclosures for the fiscal 2026 first quarter results. Please have these materials ready as we proceed. As with our previous conference calls, we have included a summary of today's presentation in the materials. Therefore, at the outset, I will focus only on the key points, and we will dedicate most of the session to the Q&A. We aim to conclude the entire meeting in approximately 45 minutes, and we appreciate your understanding. Furthermore, please be aware that today's presentation may include forward-looking statements based on our current forecasts. Such statements are subject to risks and uncertainties, and actual results may differ materially from these projections. We kindly ask for your understanding in this regard. Now let me briefly outline the key points of our financial results. The key highlights for today are shown on Page 4 of the presentation materials. First, adjusted profit for the first quarter of fiscal 2026, excluding gains from the sales of strategic equity holdings, was JPY 251 billion, an increase of JPY 64.7 billion year-on-year. This represents solid progress at 47.2% of our full year forecast. In addition, group adjusted profit, which serves as the basis for shareholder returns, increased by JPY 71.1 billion year-on-year to JPY 310.6 billion. This also represents very strong progress at 38.8% of our full year forecast. Breaking down adjusted profit by business segment, the domestic non-life insurance business recorded 126 -- the domestic non-life insurance business recorded JPY 124 billion, an increase of JPY 4.2 billion year-on-year. This was mainly due to improved loss ratios in automobile insurance, reflecting the positive impact of rate revisions. In the international business, adjusted profit increased by JPY 52.9 billion year-on-year to JPY 108.8 billion. This strong growth was driven by continued low loss levels, higher revenues across all regions, particularly in Europe and the inclusion of equity earnings from W.R. Berkley Corporation, which began this quarter. In the domestic life insurance business, insurance service profit improved to JPY 16.5 billion, an increase of JPY 4.4 billion year-on-year. This was mainly due to a reduction in losses on onerous contracts following a review of key assumptions such as mortality rates. Next, I will explain insurance revenue in each business segment. Please turn to Page 8 of the presentation materials. Insurance revenue for the first quarter of fiscal 2026 was JPY 1.6158 trillion, an increase of JPY 208.8 billion year-on-year. Breaking this down, insurance revenue from the domestic non-life insurance business increased by JPY 31.4 billion year-on-year to JPY 819.3 billion. This growth was mainly driven by higher automobile insurance revenues, reflecting the positive impact of rate revisions. In the international business, insurance revenue increased by JPY 169.7 billion year-on-year to JPY 707.7 billion, driven by growth across all regions, particularly in Europe as well as the positive impact of foreign exchange rates. Next, I'll provide an update on natural catastrophe losses. Please turn to Page 9 of the presentation materials. In Japan, although natural catastrophe losses for the 2 domestic companies increased by JPY 5.8 billion year-on-year, mainly because there were no major events in the same period of the previous year, the figure remains within our full year forecast range. Overseas, natural catastrophe losses decreased by JPY 1.3 billion year-on-year as there were no significant events in the first quarter. This is also within the range of our full year forecast. With regard to natural catastrophes that have occurred since July, including the Kumamoto earthquake, detailed information is not yet available at this time. However, we currently expect these losses to remain within our full year forecast. Next, I'll explain the status of our sales of strategic equity holdings. Please turn to Page 13 of the presentation materials. Gains on the sale of strategic equity holdings in the first quarter increased by JPY 6.4 billion year-on-year to JPY 59.6 billion, showing steady progress toward our full year target of JPY 268 billion. Finally, I will provide an update on our ESR. Please refer to Page 11 of the presentation materials. ESR rose by 1 point from the end of March to 215%, reflecting the accumulation of retained earnings, including those earmarked for shareholder returns. We continue to maintain a sound financial position. As for the denominator, integrated risk volume, while we continue to sell strategic equity holdings, it increased due to factors such as our business investment in Barings, which was closed in May, and rising domestic stock prices. As for the numerator, net assets at market value, as mentioned earlier, these have increased due to the accumulation of retained earnings. As a result, the level remains roughly unchanged from the end of March. That concludes my remarks. We will now begin the Q&A session.
Operator: To begin, I'd like to invite Takemura-san from Morgan Stanley.
Atsuro Takemura: I am Takemura from Morgan Stanley MUFG Securities. I have 2 questions. My first question is Slide #7. I'd like you to give us more detailed explanation. On year-on-year basis, profit is increasing and especially international business, it seems that the profit growth was big. So could you please give us more color? Last year, 20.7 plus, that was coming from W.R. Berkley. So the remaining portion, Europe, I think it's coming from lower loss ratio and Asia evaluation-related profit. That's my understanding. Is my understanding correct? That's my first question.
Shinichiro Hayashi: Takemura-san, thank you. Slide #7, adjusted profit breakdown, especially the international business. The explanation on the numbers, I think, is your question.
Shinichiro Nakayama: I am Nakayama from the Accounting division. Thank you very much for your participation. And talking about the international business adjusted profit, please refer to Page 21. There is a waterfall chart. And if you jump to Page 21, you will find regional breakdown. There's a chart below. And as your understanding, basically, your understanding is correct, JPY 20.7 billion increase in U.S. is the biggest contribution, but Berkley accounting for more than 50%. On the other hand, transfers in the U.S. business itself, profits were growing. All in all, we've been able to grow by JPY 20.7 billion. So it does not mean that the majority of JPY 20.7 billion is coming from Berkley. It's about half, a little bit more than JPY 10 billion. That was about the Americas. Moving on to Europe, increased by JPY 18.6 billion and MS Re was making the biggest contribution, JPY 9 billion; Amlin, JPY 5 billion; GU, JPY 5 billion for the breakdown. And the underwriting -- not only the underwriting profit, but also management -- investment management is doing well. So profits were increasing. Lastly, Asia, JPY 14.9 billion increase year-on-year, close to JPY 10 billion is coming from MSIG Mingtai, Taiwanese subsidiary. And following the Taiwanese share price increase, the valuation loss we were being able to recognize, that was a major contributing factor. In First Capital, because of FX, we've been able to increase the profit by JPY 2 billion. These 2 businesses were contributing mostly.
Atsuro Takemura: My second question, Slide #16, expense ratio. If we look at the expense ratio decreased by 0.3 percentage points year-on-year. And based on that, following the domestic subsidiaries consolidation, how you've been able to make improvement in your expense ratio or expense? This is my first question. And can we expect the decrease in expense ratio is going to be continuing even in the future with the same speed?
Shinichiro Hayashi: Thank you. The second question is domestic non-life insurance expense.
Shinichiro Nakayama: I am Nakayama. I will answer to your question. We have maintenance fee and new policies expense. You will find the breakdown below. And first of all, expense, basically following the recent inflationary situation, both personnel costs and other costs rising. But as you see, top line is growing. So the ratio -- expense ratio has been improving. And the new policy following the rate revision, the commission has been improving. That should be one of the major reasons. That's it.
Atsuro Takemura: That means out of -- to achieve the JPY 150 billion in annual target, you have been making a good progress at end of Q1, and you are being able to enjoy positive effect. Am I correct?
Shinichiro Nakayama: Well, JPY 150 billion, the target is by 2030. So JPY 150 billion will be reduced by 2030. And if we are already achieving certain results, after the consolidation, we're going to streamlining. So we should not expect that immediate impact is taking place. Approaching 2030 in a gradual manner, we believe that the visible impact -- well, positive impact should become more visible.
Operator: Next person is Sakamaki-san, Mizuho Securities.
Naruhiko Sakamaki: This is Sakamaki from Mizuho. I also would like to ask 2 questions. First, regarding natural catastrophes domestically, compared to your peers, it seems that the claims that have been incurred are relatively low. So how far have you reflected typhoon impact? And regarding growth incurrences, growth claims as well as the recovery through reinsurance, can you also sort that out for us?
Shinichiro Hayashi: Sakamaki-san, thank you very much. First is about natural catastrophes domestically.
Shinichiro Nakayama: This is Nakayama speaking. I'm on Page 9, where there is a page on natural catastrophes. As you can see here, main ones would be Typhoon No. 6 which we have accounted for by JPY 6 billion, comparing ourselves against 2 peers, saying that we are relatively low or high. But with regards to how much we account for for nat cat, as you can see under the star, this is on an internal basis, and that's how we have derived these numbers. So for other companies, they may account for smaller claims as well. So this is not an apple-to-apple comparison. That's all from me.
Naruhiko Sakamaki: And how about Typhoon No. 7 and 8, you haven't really accounted for them?
Shinichiro Nakayama: No, we have not included 7 or 8.
Naruhiko Sakamaki: I see. My second question is about MS Re. I'm on Page 24. Regarding -- it seems that the discounting has been impacted, your performance and loss ratios haven't really gone up for MS Re. So are there any portfolio changes or excluding discount impact, can you give us some flavor on what has happened?
Shinichiro Nakayama: Thank you very much, Sakamaki-san. For MS Re loss ratios, that was your question. I'm on Page 24. And as you rightly said, regarding the discounting and natural catastrophe impact, when you add it back, it's 83% for fiscal '26 and 79.2% for fiscal '25. So it has went up by 3.8%. The loss ratios were too good last fiscal year. That's the trend we saw. And you may remember, Baltimore, a bridge in the U.S. collapsed, and that was a large loss. And on a market-wide basis, that boosted losses, and that has been accounted for by MS Re too. So compared to last year, it looks like it has been going up. But we are still in the first quarter. So we will continue to monitor the trends against our full year plan.
Naruhiko Sakamaki: I think this is associated with MS Amlin as well. Were there any impact from the Middle Eastern circumstances regarding Amlin or MS Re?
Shinichiro Nakayama: For this quarter, no. For MS Re, no, but for MS Amlin, there were some loss notices that have come in, and we have been accumulating reserves in accordance. So for Amlin, there has been some reserve impact in light of the Middle Eastern conflict.
Operator: Next, Mr. Muraki from SMBC Nikko Securities.
Masao Muraki: I am Muraki from SMBC. Europe and U.S., I have questions. First is about Europe. Amlin, the Middle East situation has been happening, but still loss ratio much lower than your plan, I believe. What is the reason? And what about the sustainability? That's my first question.
Shinichiro Hayashi: Thank you. So that was about Amlin loss ratio after incorporating the Middle East impact.
Shinichiro Nakayama: I am Nakayama. Page 23, please. As you mentioned right now, yes, loss ratio has been trending well. On a year-on-year basis, you will find what -- how we've been able to make improvement. And there's no special reason why the situation number is improving, but we are still only at the end of Q1. So at this moment, yes, the progress is good. That's what we're incorporating, but we'd like to pay close attention to the situation. That's it.
Masao Muraki: My second question is on Page 21, the Americas. And I think domestic non-life, I think, is included in the others. But in United States, the liability loss, you were recognizing the company was incorporating. But how are you viewing the situation is my question. And other than W.R. Berkley, U.S. business, softening situation, how are you being impacted or not is my second question.
Shinichiro Hayashi: The second question is about the Americas, mostly liability insurance loss, especially for Japanese companies, the recent trend and excluding W.R. Berkley, softening situation in the U.S. was your latter part of your question. Thank you.
Shinichiro Nakayama: Nakayama speaking. First of all, Japanese companies' liability insurance for their overseas businesses, that's not included in the others out of the international business. But because they are Japanese companies, our accounting, we are incorporating in our domestic insurance business. And answering your question, yes, we are underwriting liability insurance from the Japanese customers, but the overseas business is related. Underwriting, we are not recognizing large-sized loss. That's our current understanding. That's the current status. And other than W.R. Berkley softening situation in the United States, talking about MSIG U.S., relatively immune to softening because we're focusing on specialty. And MS Transverse fronting is the main business -- front line is the main business. So at this moment, not affected by the softening situation.
Masao Muraki: And talking about Japanese companies, I heard that you are recognizing as non-life in domestic, but I think that the other business lines loss ratio deteriorating. Is this domestic, domestic liability or domestic overseas?
Shinichiro Nakayama: Nakayama speaking. Well, first of all, this is kind of complicated. But as long as the underwriting is taking place in Japan, regardless of whether -- where the accident is taking place, the loss is going to be recorded here in Japan. So it's going to be impacting the domestic loss ratio.
Operator: Next person is Watanabe-san from Daiwa Securities.
Kazuki Watanabe: This is Watanabe from Daiwa. I have 2 questions. First is about strategic equities and the reduction. Compared to JPY 476.3 billion, which is your full year plan, how much progress have you made? And you talked about the overhang in Q4. Has this already been resolved with regards to your cross share holdings?
Shinichiro Hayashi: Thank you for the 2 questions. First is the progress rate about our strategic equity holdings. That's your first question.
Shinichiro Nakayama: This is Nakayama speaking. Please refer to Page 6 in the presentation at the top in the box. It says JPY 102.5 billion in the box. And it's a little bit over 20% when you compare it against our full year plan of JPY 476.3 billion. So it's about 1/5 on a mark-to-market basis. Regarding the overhang concern about the sales of our shares, corporates that own large portions of our stock, the overhang issue has pretty much been resolved already. You can look at it that way.
Kazuki Watanabe: My second question is about auto insurance. And the average payout size as well as claims frequency, has it exceeded your full year expectations or your company expectations?
Shinichiro Nakayama: So claims frequency as well as the average payout as well as the progress was the gist of your question. This is Nakayama. It's on Page 17 in the presentation, as we always do. Regarding frequency as well as average payout, we are expecting accidents to go down by approximately 1% in our assumptions. However, result-wise, it didn't go down that far. On the other hand, for average payout, we were assuming that it was going to go up by 7% to 8%. But actually, it went below our expectations as a result. That's all from me.
Kazuki Watanabe: How about claims frequency? Has it been going up or down?
Shinichiro Nakayama: Well, our assumption was that it was going to go down. And result-wise, the number of accidents have went down as well, but it hasn't went down as much as we have initially planned.
Kazuki Watanabe: So if you net both out, were you performing in line with your expectations?
Shinichiro Nakayama: Yes, we were broadly in line.
Operator: Next, Tsujino-san, BofA Securities, please.
Natsumu Tsujino: First is domestic loss ratio. Auto, according to Slide #17, it seems that the loss ratio has been improving. And I think the reversal of losses related to onerous contracts causing positive impact here. Am I correct? And if yes, what is the size of the impact? And if we exclude this factor, what could be the actual magnitude of the improvement? That's my first question. And another question is about fire insurance. Serious losses, large-scale losses this year, what has been the situation compared to last year? That's it.
Shinichiro Hayashi: Thank you. Your first question is the loss ratio. First of all, voluntary auto loss ratio is improving. But if we exclude the contribution coming from reversal of losses related to onerous contracts, what could be the situation? And also you also -- you're also interested in fire.
Shinichiro Nakayama: Nakayama speaking. If you could please take a look at Slide #16, you will find domestic voluntary auto. And within the bracket, excluding nat cat, 2026, the ratio was JPY 59.4 billion (sic) [ 59.4% ], so improved by 1.5%. And yes, reversal of the onerous contract losses included here. And if we exclude this factor, actually, the ratio increased slightly on a year-on-year basis. And the reason is because, first of all, the average repair cost rising. And yes, because of this reason, mostly the ratio has been deteriorating. And your other question is fire large-scale losses. That's because fire loss ratio also improving.
Natsumu Tsujino: So I am interested in to know the situation of the large-scale losses. And by the way, onerous contracts, you also have with fire insurance rights. What is the impact here?
Shinichiro Nakayama: Fire insurance, first of all, large-scale losses, combining MS&AD on a total basis, almost flattish year-on-year. And if we exclude onerous contract impact, excluding the factor, 2.7% improvement. But if we exclude this factor, the improvement could be 4%. And I think that fire insurance because we've been able to revise the rate and also taking the development into consideration, we've been able to make improvement.
Natsumu Tsujino: I see. That means even as of today, you still have additional onerous contracts. Am I correct?
Shinichiro Nakayama: No, no, no, no. Because onerous contract reversal, if you exclude improvement, could be 4% or more.
Natsumu Tsujino: Right. So onerous contract is causing negative impact on year-on-year basis, right?
Shinichiro Nakayama: Because onerous contract, is it -- you still have additional new onerous contracts. Otherwise, the -- excluding onerous contract, the situation could not be worse. Fire insurance reversal of onerous contract continuously happening, the reversal on a -- by the way, total basis, not only fire, total basis, reversal has been increasing.
Natsumu Tsujino: Understand. But if we only look at fire, loss ratio improved by 2.7%. But if there was no onerous contract impact, the improvement could be 4%. That's what you're saying.
Shinichiro Nakayama: Right.
Natsumu Tsujino: So reversal of the onerous contract losses, if that was causing positive impact?
Shinichiro Nakayama: No, the reversal amount has been less this year compared to last year.
Natsumu Tsujino: I got it. Yes. So meaning the positive impact coming from onerous contract has been smaller this year compared to last year. Last year, the reversal amount was much more. That's why.
Shinichiro Nakayama: Yes. By the way, fire insurance, the reversal of losses of onerous contract is going to be smaller year after year. So the positive impact may become smaller. But still, because the contract period is long for fire insurance, the positive impact is going to continue approaching 2030.
Natsumu Tsujino: Understood. My second question is, if I look at your balance sheet, there's JPY 324.9 billion noncurrent -- intangible assets. And I think the number was like JPY 500 billion at the end of the last fiscal year and it decreased, but Q1, the number did not increase, although there was -- should be Barings impact. So were there any factors also incorporated here?
Shinichiro Nakayama: Intangible asset, yes, the balance is now JPY 324.9 billion. These are -- the biggest intangible assets should be soft there, amortization or M&A-related, the intangible assets included. Thinking about goodwill, approximately JPY 40 billion. Other intangible assets, we have like JPY 70 billion, which are incorporated within this number. But Berkley or Barings, they are not our subsidiary. So they are just equity method affiliate. So they are not included here. It's not -- they are not part of our intangible assets. Their contribution is coming under the profit or loss coming from our equity method affiliates. Of course, investment in Berkley and Barings we are making, but that has nothing to do with our intangible assets.
Operator: Next is Tokai Tokyo Intelligence Laboratory, Mr. Mashima.
Ryusei Mashima: This is Mashima. I might be going into detail about Page 29, where you talk about MSP Life and the CSM balance. Because you were talking about the CSM balance increasing mainly due to CSM non-variable products as a result of rising stock prices, but how are we supposed to look at it? What is the logic behind this?
Shinichiro Hayashi: We're on Page 29, which was a question on CSM balance.
Shinichiro Nakayama: This is Nakayama speaking. We are on Page 29. And the third comment that we have. So the balance increased by JPY 10.6 billion for this bullet point regarding assumption change. For variable products, because of IFRS 17, there are 3 ways of measuring it. And there is this variable commission approach. That's the way we do the calculations. For variable products, it is a customer account. So as a company, we receive fees. So it's a fee type business. So when stock prices appreciate for the special accounts or the customer account increases against the AUM, the fees will be incurred. So future cash flow inflow will increase. And that is why future profit or CSM, the balance increases. So that's the logic. So it's a little technical, but that's the logic under which this has been increasing.
Ryusei Mashima: My other question is also a technical question as well. Apologies. But for other non-life insurance companies, for Q1 seasonal factors associated with IFRS, there were some peers that have been commenting on that. I think it's your first IFRS results announcement. So have you been impacted by IFRS factors in Q1?
Shinichiro Hayashi: So that was a question on seasonality impact from IFRS. That was the second question.
Shinichiro Nakayama: This is Nakayama speaking. Regarding the premium distribution approach, when you distribute the premiums as a rule, you are able to account for seasonality. But in the case of our group, when we implemented IFRS and did the analysis, we have deemed that there is no seasonality. Therefore, in accordance with that period, it will pass. So the earned premiums will be incurred basically in accordance with that period of time. Depending on the company, sometimes they do have seasonal differences because of certain parts of the year where there are more natural catastrophes. But in the case of our company, we do not account for that seasonality.
Operator: Next, Mr. Sasaki from Nomura Securities.
Futoshi Sasaki: I am Sasaki from Nomura Securities. I have 2 questions. If I look at Slide #16, combined ratio. And if I look at Tanshin, there's a detailed material attached. And if I look at #11, the combined ratio there, the number is different. Is it because the definition of combined ratios are different?
Shinichiro Hayashi: Thank you, Sasaki-san. So combined ratio, the number we have on this presentation material and the number we have on Tanshin are different. That's what you're saying.
Shinichiro Nakayama: Nakayama speaking. Yes, as your understanding, the definition or the scope of the combined ratios are different. The presentation material, if you look at Slide #3, you will find how we are disclosing. If you look at MS, we are categorizing into 3 categories: domestic non-life, and international, and domestic life insurance. And we have business domains, as you see in our material. So this is not about the entire company. We are -- we have 3 business domains. And based on the domains, we are calculating. But financial accounting, we have numbers for MSI. It's on a company basis, not on a domain basis. That's why depending on financial accounting and managerial accounting, the numbers are being different.
Futoshi Sasaki: Okay. If that's the case, on your slide, you say combined ratio for the domestic non-life. I think that means you're not including international. And this international portion, where can I find the number?
Shinichiro Nakayama: It's part of the international. The number is not big. But if you look at Page 21, we have Thai in Asia. That's part of Asia on Slide #21. But generally speaking, subsidiaries numbers are big.
Futoshi Sasaki: I see. My second question is the progress to achieve your full year guidances. And from now on, nat cat impact likely to be bigger. That's why you are currently maintaining your forecast. But I think your progress ratio is performing well. And compared to your annual expectations, how should we see because especially over international, the profit growth was big in Q1. And could we believe that Q2 onwards, this growth momentums are going to be maintained? And if possible, strategic equity holding, no plan to change -- no change are you expecting is another question?
Shinichiro Hayashi: Well, the progress to achieve our full year guidances, and related to the question, strategic equity unwinding was the latter half of your question.
Shinichiro Nakayama: Nakayama speaking. As your understanding, as we are showing on Slide #10, the progress ratio, yes, we have been able to make a good progress at the end of Q1. And even compared to our internal Q1 expectation, we've been able to outperform, especially international, the progress ratio has been higher for sure. But international, the market, for example, share prices are trending well. That is one of the reasons for the outperformance. So Q2 onward, we need to continuously pay close attention. And expense ratio as well, it's just at the end of Q1, so we should not be able to tell whether we can maintain the same momentum. So on as-needed basis, we may want to revisit the numbers, but maybe not. And unwinding the strategic shareholding at the beginning of the fiscal year, well, at this moment, we are saying that we do not have a plan to revisit our annual guidance.
Futoshi Sasaki: But market momentum has been better than expected, and it is likely that unwinding your cross shareholding is going to be accelerating. But are you just keeping the initial guidance? Or is there any reason why you still do not revise your guidance?
Shinichiro Nakayama: Well, as of now, we do not think we are currently in a situation to revisit the target. But we will continuously consider whether we can further accelerate or not. But as of now, we do not think we need to revisit the annual target.
Operator: Next person is Mr. Sato from JPMorgan Securities.
Koki Sato: This is Sato from JPMorgan. You were saying international was stronger than your company plan earlier, but how about your domestic business? It's your first quarterly results announcement after the implementation of IFRS. For natural catastrophes, your budget is quite big. I would like to hear what your view was on the progress you've been making during Q1.
Shinichiro Nakayama: Sato-san, thank you very much for your question. First is about the domestic business and our comparison against our plan as well as the progress made. This is Nakayama speaking. Natural catastrophes was actually better than planned. For natural catastrophes, it was less than expected. And for other parts, like investments, when you look at investment management, we have been able to exceed plan, at least so far. So we are seeing things steadily progress. That's all for me.
Koki Sato: Second question is about the impact from softening of the market. You were talking about the Americas earlier. But centered around Amlin, what about the European business? In the material, regarding the impact from softening, you spoke about it somewhat. And I think you accounted for it in your plan as well. So compared to your assumptions, how do you view the current trends?
Shinichiro Nakayama: Sato-san, thank you for your second question. Second question is about the softening of the market cycle, especially in Europe. Well, first, regarding Amlin, as assumed center around property, we have been seeing the market softening. And we have accounted for this in our plan, broadly speaking, but for some energy lines of business, we have been seeing a decline in revenue. So that's where we are right now. For the softening of property, in order to secure profitability, we have been able to secure profitability from a technical standpoint. So at this point in time, we have no major concerns. However, regarding future softening impact, we would like to consider various countermeasures when it comes to underwriting. For property, we do recognize that softening is happening, but in our portfolio, the nat cat risk is limited in its impact. Therefore, once again, we would like to ensure that we do underwriting that is being mindful of profitability.
Koki Sato: So if that's the case, the total impact, apart from that, so compared to your plan, I guess Amlin and the energy line of business is deteriorating. So it's very specific, I guess.
Shinichiro Nakayama: Well, even for energy, the impact has not exceeded our plan substantially when it comes to negative impact. So I would say, broadly speaking, things are progressing in line with our assumptions.
Operator: Next, Mr. Niwa, UBS Securities.
Koichi Niwa: I am Niwa. I have 2 questions related to natural catastrophe. The first question is Page 10, excluding nat cat, you're being able to make good progress in unwinding your strategic shareholding. But next year onward, can we expect that the momentum is going to continue? How should I understand that number being big?
Shinichiro Hayashi: Thank you, Niwa-san. Progress ratio, we should understand was the first part of your question.
Shinichiro Nakayama: Nakayama speaking. It's difficult to evaluate because this is our first year adopting IFRS. And even within our expectation, we were not expecting the number to be that high. But underwriting because of the less number of disasters, and also share prices have been trending well. So dividend as well, we've been able to receive more than expected. We should not say this should be considered as the normal situation. So we will keep observing the situation. And we will figure out what -- which level we should consider as the norm. But again, we should not consider this Q1 result is going to be the standard or average for the coming Q1s in the future.
Koichi Niwa: Another relevant question is possibly the group total exposure. Natural catastrophe-related risk, are you taking so much? Or are you being very conservative? Is there any color you can share with us?
Shinichiro Nakayama: Natural catastrophe fund, yes, we have JPY 150 billion equivalent in Japan and modeling, we are taking into consideration. We are calculating appropriately. So we do not think we're being too conservative. We believe that we are judging appropriately.
Koichi Niwa: And the next question is about Kumamoto earthquake. Any comment you can make related to the expected impact?
Shinichiro Hayashi: Thank you. Kumamoto earthquake potential impact on our earnings.
Shinichiro Nakayama: Nakayama speaking. The earthquake in Kumamoto, the loss situation, we have not been able to have full visibility at this moment. Of course, OEMs, automobile OEMs or shopping malls or semiconductor-related companies are operating in the region. So certain loss should be expected. But at this moment, it is difficult to discuss the specific numbers. On the other hand, talking about the earthquake, we are arranging for reinsurance. And as you have pointed out, we do have JPY 150 billion equivalent fund focusing on natural catastrophes. So we believe that all in all, the situation should be controllable, within our control.
Koichi Niwa: Compared to 10 years ago, because Kyushu economy has been developing, and your underwriting situation may be different now compared to 10 years ago. So any color if you compare the recent Kumamoto earthquake impact versus the earthquake happened 10 years ago?
Shinichiro Nakayama: I could not fully listen to your question, but you're asking to compare the current exposure in Kumamoto compared to 10 years ago. Was that your question?
Koichi Niwa: Yes. If there's any color you can share with us.
Shinichiro Nakayama: As of now, there are not enough information or data to compare the current situation versus 10 years ago because, first of all, the place where the earthquake happened not exactly the same compared to 10 years ago. So even if the exposure may be the same, is not going to be the same. But even if we assume it's going to be the same, the size of impact should be different. So it should be difficult to make specific comments at this moment.
Shinichiro Hayashi: Thank you, Mr. Niwa. As we are approaching the end of our allotted time, we will now conclude the Q&A session. If there are any questions we were unable to address today, please feel free to contact our Investor Relations department. We will be happy to respond to your inquiries individually. This concludes today's conference call. We kindly ask for your continued understanding and support for the business activities of our group. Thank you very much for joining our earnings conference call today. [Statements in English on this transcript were spoken by an interpreter present on the live call.]