Core Viewpoint - Tokio Marine Holdings Inc. has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system is based on changes in earnings estimates, which have a strong correlation with near-term stock price movements [4][6]. - For Tokio Marine, the expected earnings per share for the fiscal year ending March 2025 is $3.51, reflecting a year-over-year increase of 39.8% [8]. Analyst Sentiment and Market Impact - Analysts have been consistently raising their earnings estimates for Tokio Marine, with a 4.5% increase in the Zacks Consensus Estimate over the past three months [8]. - The upgrade to Zacks Rank 2 places Tokio Marine in the top 20% of Zacks-covered stocks, suggesting potential for higher stock prices in the near term [10]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7][9].

Core Viewpoint - The analysis compares Tokio Marine Holdings Inc. (TKOMY) and Kinsale Capital Group, Inc. (KNSL) to determine which stock is more attractive to value investors [1] Valuation Metrics - TKOMY has a forward P/E ratio of 9.51, while KNSL has a forward P/E of 24.48 [5] - TKOMY's PEG ratio is 0.54, indicating a more favorable valuation compared to KNSL's PEG ratio of 1.63 [5] - TKOMY's P/B ratio is 1.84, significantly lower than KNSL's P/B of 7.21, suggesting TKOMY is undervalued relative to its book value [6] Earnings Estimates - TKOMY currently holds a Zacks Rank of 1 (Strong Buy), indicating positive earnings estimate revisions, while KNSL has a Zacks Rank of 3 (Hold) [3] - The stronger estimate revision activity for TKOMY suggests an improving earnings outlook compared to KNSL [7] Value Grades - TKOMY has a Value grade of B, while KNSL has a Value grade of D, reflecting the relative attractiveness of their valuation metrics [6]

Financial Data and Key Metrics Changes - The company projects an EPS growth of 8% for fiscal 2024, driven by a 6% increase in adjusted net income and a 2% contribution from share buybacks [14][40] - Current ROE stands at 19.1%, with a target to exceed 20% by fiscal 2026 [12][31] - Profit projections for fiscal 2024 have been revised upward by JPY 40 billion, leading to an increase in dividend per share (DPS) from JPY 159 to JPY 162 [30][59] Business Line Data and Key Metrics Changes - The Japan P&C business aims for a CAGR of over 10% in underwriting profit, offsetting increased natural catastrophe budgets with rate increases in auto and fire insurance [18][23] - The international business is targeting a CAGR of 7% or more, with strong underwriting performance in North America and Brazil [23][26] - Specialty P&C lines have achieved a CAGR of 23% in underwriting profits, indicating robust growth compared to peers [53] Market Data and Key Metrics Changes - The underwriting profit growth in Brazil is at a CAGR of 42%, making it the fastest-growing segment within the group [26] - The company anticipates a decline in total return to 4.8% per annum in fiscal 2024 due to conservative provisions on commercial real estate loans [27] Company Strategy and Development Direction - The company is undergoing a transformation to enhance governance and operational efficiency, aiming to eliminate non-insurance tactics and focus on intrinsic value [13][45] - The Re-New initiative is designed to improve loss ratios and expense ratios, with a projected impact of JPY 42 billion on profits [17][94] - A tender offer for ID&E Holdings is part of the strategy to enhance disaster resilience solutions, positioning the company uniquely in the market [19][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the need for structural reforms in response to past incidents, emphasizing a commitment to improving governance and operational practices [62] - The company is optimistic about achieving top-tier EPS growth and improving ROE, leveraging its unique position in the market [38][41] Other Important Information - The company plans to fully divest from business-related equities within six years, which is expected to significantly improve ROE [41][60] - The establishment of the Group Audit Committee aims to strengthen governance and oversight across subsidiaries [34][62] Q&A Session Summary Question: Impact of Re-New initiative on bottom line - The expected impact from the Re-New initiative is approximately JPY 42 billion, but the timeline for completion and realization of these benefits remains uncertain [94][97] Question: Progress on governance strengthening - The Group Audit Committee is actively discussing governance improvements, focusing on compliance and cultural changes within the organization [104][106]

Financial Data and Key Metrics - Net premiums written increased by 5.7% year-on-year, driven by rate increases in Japan and International businesses [15] - Life Insurance Premiums decreased by 32.9% due to block reinsurance ceded by Tokio Marine and Nichido Life Insurance Company [15] - Adjusted net income for Q2 was JPY771.2 billion, with a progress rate of 77% against the original projection [17] - Full-year adjusted net income projection revised to JPY1,040 billion, up JPY40 billion from the original projection [23] - Excluding gains from business-related equities, adjusted net income revised down by JPY82 billion to JPY528 billion [23] Business Line Performance - Japan P&C business had a benign Nat Cat for the first half of the year, with a high progress rate due to yen appreciation and foreign currency claim reversals [19][20] - International Business showed strong underwriting performance in North America and Brazil, with a progress rate of 53% in local currency terms [21] - Life Insurance business saw a significant decline in premiums due to reinsurance ceding [15] Market Performance - North America and Brazil were key drivers of strong underwriting performance in the International Business [18][21] - CRE loans in the US faced challenges due to high interest rates and inflation, leading to conservative CECL provisions [8][24] Strategic Direction and Industry Competition - The company is focusing on globally diversified, bottom-focused underwriting and leveraging robust capital gains to achieve top-tier EPS growth [28] - M&A activities, including the acquisition of ID&E Holdings for JPY97.8 billion, are aimed at enhancing corporate value and expanding disaster prevention and mitigation services [13][33] - The company plans to increase the share buyback budget from JPY200 billion to JPY220 billion [36] Management Commentary on Operating Environment and Future Outlook - Management highlighted the strong underlying performance of the underwriting business, particularly in North America and Brazil [6] - The company expects flat growth in normalized adjusted income for FY2024, with a focus on disciplined capital policy and ROE enhancement [27][28] - CRE loan provisions are being managed conservatively due to the challenging environment, with potential impacts carrying over to FY2025 [8][24] Other Important Information - The company announced a TOB on ID&E Holdings, a domestic top-class engineering consultancy firm, for JPY97.8 billion [13] - The ESR (Economic Solvency Ratio) stands at 147%, indicating a solid capital position [12] - The company revised the DPS (Dividend Per Share) upward from JPY159 to JPY162 [12] Q&A Session Summary Question: CRE Loan Provisions and LTV Classes - The company does not disclose detailed LTV class balances but mentioned a provision rate of 16.5% for office properties [42] - CRE loan losses are expected to be JPY1.2 billion, with potential carryover to FY2025 [47][72] Question: International Business and Tax Rate Impact - The effective tax rate for international group companies has increased due to US GAAP and provisions related to CECL loans [50][52] Question: ID&E Acquisition Synergies and Impact on ESR - The acquisition of ID&E is expected to enhance disaster prevention and mitigation capabilities, with limited impact on ESR due to its capital-light nature [58][59] Question: CRE Loan Provisioning and Market Misinterpretation - The company acknowledged a misinterpretation of the CRE loan market, with higher interest rates and inflation impacting sponsor cash flows [65] Question: International Business Risk Assessment - The company expects additional losses related to CRE loans, with potential carryover to FY2025, but no significant concerns in other asset classes [68][72] Question: US Business Outlook and Reserving - The US business outlook remains stable, with rate increases in some lines of business and flat growth expected in reinsurance rates [77][78] Question: ID&E Acquisition Details and Market Expansion - The acquisition of ID&E is aimed at expanding disaster prevention and mitigation services, leveraging ID&E's expertise in urban and spatial development [83][84] Question: Business-Related Equities Sales Progress - The company revised its sales target for business-related equities to JPY750 billion, with plans to complete the reduction by 2029 [92] Question: ID&E Earnings Volatility - ID&E's earnings are expected to remain stable over the long term, with limited impact on Tokio Marine's earnings volatility [96] Question: Auto Loss Ratio Assumptions - The company made a minor downward revision to the normalized loss ratio, with no significant changes in auto loss ratio projections [101]

Core Insights - The Zacks rating system is primarily driven by a company's changing earnings picture, with the Zacks Consensus Estimate tracking EPS estimates from sell-side analysts [1] - Tokio Marine has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook for the stock due to rising earnings estimates [5][6] - The recent upgrade reflects a 20.8% increase in the Zacks Consensus Estimate for Tokio Marine over the past three months [10] Earnings Estimates and Stock Performance - The upgrade of Tokio Marine suggests an improvement in its underlying business, which is expected to positively influence its stock price [7][8] - The Zacks Rank system has a strong track record, with Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [9] - For the fiscal year ending March 2025, Tokio Marine is projected to earn $3.28 per share, representing a 30.7% increase from the previous year [14] Market Dynamics - The correlation between earnings estimate revisions and near-term stock price movements is well-established, with institutional investors playing a significant role in this relationship [12][13] - The Zacks rating system maintains a balanced approach, ensuring an equal proportion of 'buy' and 'sell' ratings across its universe of over 4000 stocks, with only the top 5% receiving a 'Strong Buy' rating [15]

Core Viewpoint - Tokio Marine is positioned to improve its return on equity (ROE) from 15% in FY 2023 to 20% by FY 2026, which could justify a higher price-to-book (P/B) multiple, leading to a bullish investment outlook [3][5][12]. Company Overview - Tokio Marine is Japan's largest general insurance group, holding a 90% market share in the non-life insurance segment alongside peers MS&AD Insurance and Sompo Group [2]. - The company ranks as the ninth largest non-life insurance company globally in terms of earnings contribution [10]. Market Position and Valuation - Tokio Marine's shares are currently trading at a P/B ratio of 2.4 times, which is lower than peers such as Zurich Insurance Group at 3.1 times and The Progressive Corporation at 5.5 times [11]. - The valuation discount is attributed to Tokio Marine's relatively lower ROE compared to its peers, which have set ROE targets in the high-teens to high-twenties percentage range [11]. ROE Improvement Strategies - Key drivers for ROE expansion include the reduction of cross-shareholdings and an increase in shareholder capital return through dividends and buybacks [13]. - Tokio Marine aims to sell half of its business-related equities by FY 2026 and eliminate cross-shareholdings by the end of FY 2029, potentially lowering its business-related equities-to-net assets ratio from above 0.6 times to around 0.2 times [13]. - The company plans to increase its dividend per share by 29% to JPY 159 in FY 2024 and allocate JPY 200 billion for share repurchases, resulting in forward dividend and buyback yields of 2.6% and 1.7%, respectively [13]. Future Valuation Potential - If Tokio Marine achieves its target ROE of 20%, the fair P/B valuation could rise to 3.4 times, representing a 42% increase from the current level [12][13]. - The market currently values Tokio Marine reasonably based on its ROE metric, with a fair P/B valuation derived from the Gordon Growth Model [11].

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Investors interested in Insurance - Property and Casualty stocks are likely familiar with W.R. Berkley (WRB) and Tokio Marine Holdings Inc. (TKOMY) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look. There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasi ...

Tokio Marine Holdings, Inc. (OTCPK:TKOMY) Q2 2023 Earnings Conference Call November 17, 2023 1:30 AM ET Company Participants Satoru Komiya - CEO Kenji Okada - CFO Conference Call Participants Satoru Komiya Hello and good evening everyone this is Komiya speaking. I thank you for sparing your time with us this evening despite your busy schedule. I also like to appreciate your continuous understanding and support you extend towards Tokio Marine. First of all I would like to explain about the earnings highlight ...

Tokio Marine Holdings, Inc. (OTCPK:TKOMY) Q1 2023 Earnings Call Transcript August 7, 2023 4:00 AM ET Company Participants Taizou Ishiguro - GM of Global Communications Department Kenji Okada - Group CFO Toshihiro Yahata - Global Communications Dept Kazuhiro Honjo - Head of Alternative Investment Division Hiroshi Sakiyama - MD and GM of Corporate Planning Department, TMNF Conference Call Participants Masao Muraki - SMBC Nikko Securities Nastsumu Tsujino - Morgan Stanley Kazuki Watanabe - Daiwa Securities Kok ...