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Ladies and gentlemen, thank you for waiting. Thank you for accessing to Tokio Marine Holdings Fiscal Year 2018 Q2 Results Conference Call. [Operator Instructions] This conference call will be taped.
Here is a disclaimer before we start the call. This presentation may include business projection and forecasts relating to expected financial and operating results. This is subject to a range of inherent risks and uncertainties. Please understand that the actual results may vary materially.
Now we would like to move on to the results presentation. Mr. Ishiguro, over to you.
Thank you for your participation, everyone. My name is Ishiguro from IR PR of Tokio Marine Holdings. I will be presenting the overview of 2Q of 2018 results and full year projections of Tokio Marine Holdings Group, which was announced today.
From this point around, our initial presentation will be about 10 minutes, and we'll allocate more time for Q&A afterwards. As for materials, we will be using the presentation materials which we have posted on our website today as well as the news release for shareholders.
And please turn to Page 3. First, I will explain about the top line or net premiums income of non-life insurance business. As of the end of Q2, in the domestic non-life insurance business, we have seen growth in all lines of business, except the compulsory auto liability. In the international insurance business, underwriting expanded mainly in North America and Asia. As a result, top line grew by 1.7% year-on-year.
With our full year projections, there is no change to the growth trend with top line. However, due to one-off increase in reinsurance cost, we are forecasting 0.7% year-on-year growth with top line. Compared to the projections we had at the onset of the year, we are making an upward revision by JPY 60 billion.
Next, I will explain about life insurance premium. There was decrease in surrender of variable annuity to former financial life and contribution from medical software business acquired by TMHCC last year leading to increase in life insurance premium by 6.5% year-on-year. Full year forecast of life insurance premium is still showing growth trends. In the first half, due to less surrender of variable annuities, life insurance premium grew by 3.9%. Compared to the projections we had at the onset of the year, we are making an upward revision by JPY 40 billion.
Next, I will talk about the bottom line by looking at the statutory accounting basis net profit of the first half. Although there was a reaction from the North American hurricanes last year, domestic natural catastrophes pushed down the profit by JPY 122 billion, which then was recouped by reversal of catastrophic loss reserve as well as risk performance of domestic life business and international business. Still, net profit declined by JPY 22.8 billion year-on-year to JPY 53.8 billion.
As I'm sure you know, the reversal of the catastrophic loss reserves kicks in when the written to paid basis loss ratio exceeds 50% for fire line of business. This time, because occurrence of the last natural catastrophes were concentrated in September, a lot of these losses have not been paid yet, and therefore, the amount of the reversal of catastrophe loss reserve as of the second quarter was limited. Please now turn to Page 4, where I will talk about full year projections of bottom line. We have not changed the original projection for consolidated net income in a financial accounting basis. As we expect, the negative impact of domestic natural catastrophes to be offset by the reversal of cat loss reserve and less natural catastrophes overseas and profit growth in North America and Brazil. Please also confirm the full year projections of net incurred losses of nat cap as well as cat loss reserves on the bottom right.
Full year adjusted net income projections have been revised down by JPY 98 billion to JPY 298 billion due to domestic nat cat and because the impact of cat loss reserve is excluded from financially accounted consolidated net income. Finally, I'd like to jump to Page 29, on which I will elaborate on ESR and shareholder returns. ESR at the end of September was 197%. Contribution from first half adjusted net income and sales of business-related equities were positive. But business investment in Safety in Thailand as well as Hollard in South Africa as well as shareholder return weighed on ESR.
Let me also touch upon the press release made today regarding the JPY 100 billion-sized capital level adjustment. Our policy for a capital level adjustment is to implement measures flexibly by accounting for the market environment and business investment opportunities in a comprehensive manner and to maintain discipline in our capital policy. We made this decision from a capital policy maintenance perspective. Moreover, we regarded that our earnings power is enhancing. In other words, although we were affected by domestic natural catastrophes this year, as we made progress in growing earnings contribution from the international insurance business, adjusted net profit is kept at a certain level at JPY 298 billion. And earning stability is improving due to regional and business diversification. We have also comprehensively accounted for changes in the market environment, capacity for business investments and continuous improvement of ROE. Ordinary dividend for fiscal 2018 will stay in line with the beginning of the year original projection at JPY 90 a share for the interim period and a JPY 20 increase for the full year at JPY 180 a share. We will present more details about shareholder return at the second half IR meeting next week. Finally, although there are major natural catastrophes occurring in Japan lately, we will continue to diversify risks on a global scale as well as thoroughly implement growth measures based on our trend so as to raise the earnings power of our group steadily. This is the end of my explanation. We would like to now take any questions that you may have.
[Operator Instructions] The first question will be from Mr. Muraki of Deutsche Securities.
I have 2 questions. The first is about the international insurance business. If you look at the income statement, you are showing that 14 bps in the forecast. I would like to get some update about the general insurance business. There are some fluctuations with the FX, but there was a downward revision related to the Europe and U.S. business. In the North American market, what is the situation? And also, in the first half, there was no profit being made in the European business, but that was revised upward. Is that just because of natural catastrophes and foreign exchange? Or is it because of the forecast for the rest of the year, where we do not need to worry about the European business? And the second question is about the domestic natural catastrophe. If you simply take the 10-year average for TMNF, at the beginning of the year, I believe the average value is going to go up next year. But can I just assume that the 10-year average is going to be taken? Or are you going to be excluding some things from this year's natural catastrophe level? And would you be adapting the number in regards to the natural catastrophes that we have experienced by the end of this year?
From Tokio Marine Holdings, my name is Komiya from the International Business Development Department. I'd like to answer your question about the international business. I believe your first question was about the North American and European businesses, especially the profit and loss situation for the North America market. For this point, top line expansion is taking place for its subsidiary, and underwriting earnings is making some progress in accordance with the business plan, so I do not see any problems with this. In Europe, the reason for adjusting the forecast, and so we have made an upward revision by JPY 2 billion. And so less natural catastrophes and FX gain are the 2 major reasons for this upward revision, and that is indeed are the reason for the upward revision. And so those are the 2 reasons for making the upward revision to the European business. That concludes my answer.
My name is [ Nagata ] from the corporate accounting of TMNF. I'd like to answer your second question. Looking at the trend of divisions in natural catastrophe, from this fiscal year, the natural catastrophe budgets have been expanded per year from JPY 40 billion to JPY 50 billion. And as for this level, it's based on the claims' payment from the past and also according to the risk model we have. From year-to-year, this -- it could fluctuate. This fiscal year, we did have a multiple of large natural catastrophes. And including those, at this point in time, we are taking -- we are not planning on reviewing and revising the normalized level of natural catastrophes. However, we would like to look at how the natural catastrophe occurrence trends in the future and would add any adjustment if needed.
On the first point about the European business, in the first quarter, there wasn't really any profit being made there, so I believe the underwriting profit was not so good. But the lack of the progress in the first quarter is not necessarily problematic to you. So about the level of the reserve, in the industry, some companies are lacking reserve. However, at Tokio Marine, should I not worry about the lack of the reserve within your international businesses?
This is Komiya again from the International Business Development Department. About the European business, excluding those factors I have already told you, that at the first quarter, profitability is improving. And also, as for the trend of the natural catastrophes going forward, we are still profit oriented, bottom line oriented, and we are making progress in accordance within the policy.
So overall, the reserve balance in having the international business, what do you think about the adequacy of the reserve?
We have no concerns over the adequacy of the reserves so far with your international business?
That is our understanding. Yes, you are correct.
Mitsubishi UFJ Morgan Stanley Securities, Ms. Tsujino, over to you.
For the international business, for incurred losses, from JPY 50 billion, it's now revised down to JPY 38 billion. And for the first half, it was JPY 11.2 billion. There were impacts from wildfires, and it seems that your assumptions are conservative. That's why it's reached these numbers. So it seems that those numbers seem to be worse? So is that the right way to look at it? That's my first question. For asset management gain from Delphi, and it seems that you are doing well on that front, that's my second question. Therefore, some JPY 49 billion, you have revised up your expectation to JPY 68 billion. So since that last year was too good or very good, and the first half of this fiscal year has continued to perform well, and maybe that has led to the upward revision. So with regards to this, I guess we shouldn't be that optimistic. Or can we be optimistic? That's my second question. For the third question, I'm sorry, I have a third question. This time around, for reinsurance, it seems that there is an impact on the domestic business. On a full year basis, it seems that you have covered 4 events -- for each event, and you also have comprehensive cover on a full year basis. And that's why in accounting for reinsurance, you have resulted in these numbers. So is that the right way to look at it? Or should I look at it otherwise? Can you give me some details around that?
Komiya will take your question. I am from the International Business Development Department at Tokio Marine Holdings. First of all, for nat cat expectations in the international business, let me provide you with an answer. Earlier, I talked about this -- the wildfires in California, first of all, is -- with regards to this, the fires have not yet settled down. It has not been extinguished yet. Therefore, we are still researching into how much of an impact that business is going to have. With regards to damages, we would like to continue to have a close watch on it to see and scrutinize how much of an impact we will be incurred by. Secondly, regarding Delphi and the first business that it's been seeing, first of all, for fiscal year 2017, which meaning in the previous fiscal year, the impact of this is profit. Due to the tax revision, which is on one-off basis, this boosted profit in fiscal 2017. This time around, in fiscal year 2018, you were asking that probably the performance is good, especially in the area of asset management, which is one of the strengths that Delphi has. We continue to see good performance. And that has led to -- that is expected to support future growth. That concludes my remarks.
All right. How about on the last question? Can you comment on that or no?
I am [ Nagata ] from the corporate accounting department of Tokio's TMNF. With regards to reinsurance, we will get risk and cost and compare the balance with capital efficiencies, stability, solvency, margin, ratio at all the regions' market. And we'll look at things in a comprehensive manner to make decisions. For natural catastrophe risks, even if it happens once in 500 years, we will look at the capital soundness. And we will ensure that we keep the reinsurance costs within a certain level. With regards to coverage per event as well as coverage for the full year and the schemes we employ, I would like to refrain from answering your question in detail. I apologize.
The next question will be from Daiwa Securities, Mr. Watanabe.
My name is Watanabe. I have 2 questions. So first is about the capital policy. You are spending the JPY 130 additional of shareholder return. What is the justification or rationale? Then also, one-off dividends and also share buyback, how do you decide on that switch? And I believe the details will come out next week in the IR meeting, but as much as you can speak today, I expect to be answered. And as for the forecast of all the net incurred loss for the domestic business, if I go to Page 20 of the material, it talks about the net incurred loss. And other than the above, you have changed the amount by JPY 12.9 billion, and you are expecting about JPY 220 billion for domestic natural catastrophes. What is the primary underwriting amount? And also, how much loss do you expect from your corporate accounts? Those are the 2 major questions I have for you.
My name is [ Gojo ] from corporate planning of Tokio Marine Holdings. First, about the capital policy, on the first question why we have decided to return JPY 100 billion -- or adjust the capital by JPY 100 billion this time, why did we make that decision? So as it was mentioned by Mr. Ishiguro, as for the adjustment of the capital level, we look at the market environment, business investment opportunities and other factors comprehensively, and we do the adjustment in a flexible manner, and that is how we keep the discipline over capital management. And so that policy still remains unchanged. As for this year, we have been quite proactive with the business investment. But as of September and 2018, the level of ESR prior to the adjustment, it was 201%. And so this is on the higher end within the target range. And also, as for this fiscal year, domestically, we have seen a series of natural catastrophes, and the impact is quite large, and the net incurred loss is more so than what we had anticipated. However, we had less natural catastrophes in the overseas market, and therefore, adjusted net income for 2018 is still -- are expected to be JPY 398 billion. And so we were confident in creating some level of profit for this year as well. And this is thanks to the global diversification that we had proceeded up until now. As a result, the capital level as of today, unless -- or even if there is a drastic change of the market, we still have adequate capital to cover rate exchanges. And also, as for the business investment opportunities, we have considered the possibility comprehensively and have decided to adjust the capital level by JPY 100 billion. ESR is going to go down by 4%, and it will become 197% as a result. As for our capital management policy, we need to be raising ROE. That is our aim. And we want to also be proactive in business investment together with profit growth. And so together with fulfillment of shareholder return and also keeping the capital management discipline are all important to us. Oh, and one more point, the JPY 100 billion that we have adjusted, JPY 50 billion is for the one-off dividend for the adjustment of the capital purpose. And why did we decide on doing this? Up until now, in order to adjust the capital level, we have done that mainly by spending the money on share buyback. And since last year, while we have the shareholder return policy and as means of adjusting the capital, we had this onetime dividend in mind in pursuit of the means other than share buyback. As a result, as we spoke with many investors on the topic of how we should be adjusting your capital levels and to rid of the questions, people -- some people preferred share buyback; but on the other hand, there were some investors who prefer the dividend payments, and so there were 2 comments. And as for dividend payment, adjusting the capital level through dividend payment is also a way to diversely return capital to the shareholders who already own our shares. And so people could really feel that they were being remunerated with this capital that was to be returned to the shareholders. And so based on those comments, and we just wanted to meet the request of as many investors as possible, so this time, we have decided to spend a total amount of JPY 100 billion, and half of that we thought should be onetime dividend, and the remainder should be share buyback. And so that's the 2 means they are well balanced. Going forward, in order to adjust the capital level, we will be doing that by keeping the capital management discipline and also looking at the market environment, the business investment opportunities, and those multiple factors will be in consideration concurrently. And that remains unchanged. However, as for the means of shareholder return, we will continue to speak with our shareholders, and we want to be flexible in order to meet the needs and requirements of the investors. So that conclude my answer to you regarding the capital holding.
From the accounting department of TMNF, I'd like to answer your question. My name is [ Nagata ]. So your questions was about the net incurred loss related to natural -- other than natural catastrophes and FX. It was negative 12.9. And details are on the next page, on Page 21. So mainly in fire insurance, that there was increase in large losses, and so we made some upward revision of the large losses. And your question pertaining to natural catastrophes, in the first half of the year, on primary underwriting basis, it was -- there were JPY 299 billion. And on net basis, it was JPY 199.8 billion. And for the full year forecast, the reason I calculate the primary underwriting number, as you can see on the slide, it was JPY 220 billion on net basis. And lastly, for the commercial underwriting business, we do not calculate that with the percentage or ratio, but we look at the large losses for the commercial account, and we pushed up into this year's financial reporting.
Let's move on to the next question from Mizuho Securities. Mr. Sato, over to you.
This is Sato from Mizuho Securities. I have 2 questions. I'm sorry, but I have a question about nat cat as well. On Page 4, you show your expectations for the fiscal year on a business profit basis. By company, I think they are [ tested ] per company, so it's hard to see. But one of my question is with regards to -- for -- other than earned, what is your buffer in your budget? Like the wildfires in California, when you look at the P&C business in Japan as well as abroad, apart from the -- how much buffer do you still have in your budget is my question. That's my first question. My second question overlaps with my previous question. This is with regards to one-off dividend. This time around, the base dates where you are able to gain the rights, you are going to be offering additional dividends to ordinary dividends. So I was wondering why you decided on this scheme. So that concludes my presentation -- that concludes my question.
This is [ Towell ] from the corporate accounting department of Tokio Marine Holdings. Let me take your first question. With regards to expectations for nat cat, on Page 4, we show our full year projections. And you basically want to know how much of a buffer we have for the first half. So Tokio Marine & Nichido Fire, JPY 213 billion was the level we were able to achieve, and our expectation is JPY 237 billion, so the difference is what we're expecting for the second half. So for overseas, JPY 38 billion, but the result in the first half was JPY 11.2 billion, so the difference is what we're expecting for the second half. That concludes my remarks.
For the North American hurricane, that is included for net incurred losses, so can you also give me your estimate on that?
The hurricane in North America, we had Michael and Florence. I think that's what you're thinking about. We are still gathering information on it. And we believe it's going to be several billions of yen each.
So what -- please take my second question then.
From Holdings, I am [ Gojo ] from the corporate planning department. With regards to adjusting the capital level and one-off dividends, and the base date for this was in September. When -- well, the base date, that determines whether you can receive the rights to our interim result dividends. With regards to our capital policy itself, this is a basic policy that we have, and we've put in, for instance, transparency as we rule out this policy. For this was a one-off dividend in order to adjust our capital level and as we decide to use dividends as a way to adjust the capital level. From before, we did share buybacks. But this time around, we were pursuing alternate means in offering shareholder return. And our understanding is that shareholders have been showing a certain level of understanding towards this, and that is why we decided to go ahead with the JPY 50 billion one-off dividend plan. And for the details, we are working off a base, that our shareholders have given us a certain level of understanding, and that is why we use the base date in September to offer the one-off dividends. That concludes my remarks. Thank you.
Next question from JPMorgan, Mr. Otsuka.
This is Otsuka from JPMorgan. I have 2 questions, and they both have to do with natural catastrophes. The first question is, so this time, especially for the domestic natural catastrophes, the large ones that have occurred in terms of the risk amount and also in terms of the net incurred loss that you'll be paying as claims, in terms of your enterprise risk management, was this within your expectation? And if it was within your expectation, from next year and after, for the natural catastrophe risk, for your underwriting, in other words, how much cession would you arrange with reinsurance? How much catastrophic loss reserve provisioning would you do? If it was within your expectations, I would assume that they would not have much impact to your underwriting policy. Or if they're not so simple, so year-by-year, you need to settle your account; and in a flexible manner, you'll be reviewing how you need the provision for nat cat reserve, et cetera? My second question has to do also with natural catastrophe. What would be the impact of natural catastrophes over the medium-term target? For example, by 2020, you want to grow the adjusted net income by 3% to 7%. You want to achieve ROE of about 10%, et cetera. You have those medium-term targets. Can I assume that the natural catastrophes wouldn't impact those medium-term targets? And from the outside, with my view, I thought that you don't think those would impact your medium-term target, and therefore, you are making additional remuneration to the shareholders. Is that the right way to understand your actions on this side?
From the accounting department, my name is [ Nagata ]. In the first half, we had the Western Japan torrential rain. We had 2 major typhoons, TWENTYONE and TWENTYFOUR. And the revisions that we have made to the forecast, we are expecting a natural catastrophe-related loss by JPY 220 billion for the full year. However, looking at the loss payment in the past and also the risk model, the net incurred loss with the natural catastrophes this year is once in 30 years of an event, and it's not beyond our expectation. And so this was within our expectation. And including natural catastrophe reserve, et cetera, we have provided the measures against those natural catastrophes, and so we have very little impact that these would bring to our financial targets, and therefore, we have not made any changes to the targets we had prior to the occurrence of those events.
From risk management of Tokio Marine Holdings, my name is [ Matsuda ]. From the ERM point of view, I'd like to add some information. The natural catastrophes that we have seen this year, the specific numbers, I cannot disclose the numbers. But in terms of the domestic natural catastrophes, wind and fire, we have reached the amount that we can take in, and although the natural catastrophes we saw this year are still seeping within these risk elements we have for Japanese wind and fire -- sorry, wind and flood.
My name is [ Gojo ] from corporate planning. To your second question, the -- how will these natural catastrophes impact our medium-term targets, as [ Nagata-san ] has explained, the natural catastrophes have been some of the biggest so far in history. However, those are -- those will not be impacting the medium-term targets, for example, the growth of the profit by 3% to 7% per year, et cetera. And so we are not pressed with the need to be changing our medium-term targets because of those natural catastrophes. Because the earnings capability that we have seen still remains to be there, and we are so confident about that, and so it was that -- based on such confidence that we have decided to make additional remuneration to shareholders.
Let's move on to the next question, Tokai Tokyo Research Center, Mr. Majima, please.
This is Majima. I'm sorry, I have a similar question. Three questions ago, on a primary basis, nat cat losses were talked about. On a primary basis as well as on a net basis, the difference, I believe, is the collection you've been making from reinsurance. So for reinsurance gains, it seems that it's relatively lower than other companies. Your policy on reinsurance, is it because compared to other companies, you're not spending that much cost? Is that the case? Is that your policy? That's my first question. My second question is, changing the subject, I'm going to Slide 24, to your life insurance business and MCEV that's shown here. And you were able to make upward revision of JPY 50 billion. At the beginning of the year, you talked about IT systems, and you were saying that your outlook was downwards looking with the same. But due to rate increases, is that the reason why you are revising up your expectations? Those are my 2 questions.
This is [ Nagata ] from the corporate accounting department of TMNF. With regards to reinsurance policies of other companies, we're not in a position to talk on their behalf. However, generally speaking, for major catastrophes, we do pay reinsurance cost. And sometimes, we capture it internally with our cat loss reserves. And we believe that the balance between the 2 is important for our company because there are a lot of natural catastrophes. However, cat loss reserves are in the scale of JPY 1 trillion. That is our expectation. With regards to having good cover from a reinsurance basis, we are able to reduce net losses. However, that obviously requires more costs. So with regards to our strategies around reinsurance, we need to look at how much cover we want, how much cost it's going to take. And we need to also look at our cat loss reserves, and we make a comprehensive decision. And we would like to continue to look at risk hedging as well as the costs that will entail and make decisions in a balanced manner. Whatever the case may be, stable profitability as well as financial soundness and risk control, we believe, is being supported in a good way.
So can you take my second question?
My name is [ Itsuno ] from corporate accounting and financial planning department from TMNL. With regards to the JPY 50 billion of business unit profit upward revision, the majority of that is due to the rate increase, as you rightly pointed out.
So in the beginning of the year, are you still wanting to make that IT spending that you were planning for?
Yes, the IT system investments that we are planning at the beginning of the year is still accounted for in our expectations.
Next question from Merrill Lynch, from Mr. Sasaki.
This is Sasaki from Merrill Lynch. I have 2 simple questions. My first question is about the interim dividend, and you will be adjusting your capital level. But why is the reference date the end of September? Why didn't you do it at the end of March? I couldn't really understand your previous answer to that, and so can you reiterate on this? And so why did you set the reference date to be the end of September and not March end? My second question is about the premium for the fire line of insurance. According to the model, you said that this was within your expectation. However, the profitability is not so good. It's loss-making for fire. And so per the risks, you have a forecast in charging adequate premium so that we will cover the risk profile.
From Tokio Marine Holdings, from corporate planning, my name is [ Gojo ]. To answer your first question about the onetime dividend and the base date or the reference date, the date of the right allotment being the end of September, as I have answered already, this time around, we are doing this in a onetime manner in order to adjust the capital. I believe we have already gained the understanding by the market participants in assuming this. And also, maybe your question was that we shouldn't be at the end of September, that it should be the end of March. Your point is well taken, and we would like to consider that as we continue to discuss about our capital management policy.
And so I thought that the end of March would impact your share price more? But you didn't really think about that aspect when you made this decision. Or if you have the Tokio Marine shares, is it a message that something like this will continue to happen more in the future? And is that the message that you're trying to get across? Or is it not the case?
This is [ Gojo ] again from Corporate Planning. Thank you for your comments. You said that our share price might go up more if it -- if the date, it's set at a future date? However, as for the adjustment of capital, we didn't really have the needs to rig up the share price, but we looked at the market environment, the business investment possibility, and we wanted to adjust the capital level in a way that we could. And that was the purpose of doing this, and therefore, we have decided on the shareholder return method based on that purpose. And if there is this kind of a dividend to be paid, then the shareholders might expect this to happen more, and they might -- more people might become more shareholders. And if that is the case, that is welcoming to us. And so that is also something that we expect to happen. And if that happens, it's good for us.
My name is [ Nagata ] from the corporate accounting of Tokio Marine & Nichido Fire. I'd like to answer your second question about the fire line of insurance. The natural catastrophe risk is -- a large natural catastrophe risk is underwritten with fire line of insurance. And we looked up to the risk. I believe the premium is such at a low level, and therefore, we need to be responding with the -- setting the right premium rate. However, at the same time, we will be cutting costs, to work in the business expenses, and we would like to monitor the situation of the profitability and decide on setting the right premium rate for the fire line of insurance going forward.
Here to next present from Citigroup, Mr. Niwa, please?
I have 2 questions around investment. What about the business-related equities? I'm looking Page 20 right now. For marketable securities and the P&L gains and losses, it has been revised downwards compared to the beginning of the year expectations. And when you look at first half results, you're making good progress. But it seems after the second half, it's going to be JPY 13.6 billion. You could do the reverse calculation, it's pretty low. So with regards to expectations around equities, for asset management, you have been revising up your expectation, so how should we look at this balance? For the second question, this is a general question. But for overseas credit investments in the market, there are some trends where people are becoming concerned about risk. When looking at this data, when you look at Page 32, ABS is about JPY 300 billion higher compared to end of March, but ratings are higher in content. And relative to that, the unrealized gains of equity seem to be coming down. So my question is, with regards to international credit risk, are you in the direction of pursuing more? Or are you going to flexibly make decisions accordingly when looking at the asset management environment internationally? Those are my 2 questions.
I am [ Nambu ] from the financial planning department of holdings. For business equity gains, compared to last year, you are saying that it appears to be low. With regards to the results, with regards to the sales that we've been making last year, although stocks are up, the gains had been less, and that is why it's flat year-over-year. And with regards to our full year expectations, as a result, it's coming down. But for the sales itself, the value, we sold there JPY 140.7 billion last year. But for this year, the target is more than JPY 100 billion. So the minimum is JPY 100 billion. And that's what we are considering. So as a result, compared to last year, we are seeing less of a sales gain. Secondly, when you look at the current trend centered around the U.S., there is a concern around credit risk. For our asset management policy, as we raised in our midterm plan, over the medium to long term, when we consider our portfolio, we would like to take credit risk mainly through investing into fixed income overseas as its policy is unchanged. And we would like to continue to look at the environment to determine how much credit risk we should take. So we'll look at the overall framework, whether it be from an ESR point of view. And within the framework, we are looking at these assets in operating our program. And in our midterm plan, as mentioned earlier, for Delphi, the dollar-denominated assets are being converged at Delphi for the domestic companies even. So that is one of our targets. So for Delphi Group and its credit risk, this is an area where they have strength. Due to the changes in environment, we will continue to scrutinize each of the respective mainstay investments. And in Delphi, their expertise in investing into the U.S. market is great, and they do have a network in place. They have the ability to look at business names before they make an investment. And they are also looking at ratings. And we also do carve out ABS. But in the case of the U.S., for insurance companies in the U.S., there are investment ratings that are attached. So it might be no ratings from external ratings. However, they are investing its names that are prime. And their investment style for the Delphi Group is not about short term, it's about holding until maturity. So over the short term, there might be some ups and downs, however, they ensure that steady earnings are generated over the long term. That is their investment style.
There seems to be no questions on the line right now. [Operator Instructions] There seems to be no more questions, so I will give the microphone back to Mr. Ishiguro.
Thank you very much for attending the telephone conference announcing the second quarter earnings of Tokio Marine Holdings. If you have any more questions or points that are unclear to you, do not hesitate to contact us. Thank you very much for your participation today.
That concludes the fiscal 2018 second quarter financial announcement telephone conference. Thank you, everyone, for your attendance. You can now hang up your phone. Thank you for your participation.