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Review of Operations

Annualized Premiums from Policies in Force

Reviewing our fiscal 2017 consolidated performance for the Sumitomo Life Group, annualized premiums from policies in force increased 1.6% from the end of the previous fiscal year to 2,783.2 billion ($26.1 billion).
Annualized premiums from policies in force for the third-sector insurances, which we focus on as a growth area, increased 3.6% year on year to 573.0 billion ($5.3 billion), on the basis of two domestic entities (Sumitomo Life and Medicare Life) excluding Symetra, growing steadily for fifteen consecutive years since we started to publish such figures.

The two main reasons for these consecutive increases in Japan are:

Annualized Premiums from New Business

In fiscal 2017, the Sumitomo Life Groupfs annualized premiums from new business decreased 32.0% from the previous fiscal year to 215.0 billion ($2.0 billion).
The decrease from the previous fiscal year was due to the effects of strong sales results of saving-type products in the previous year in the domestic business.
On the other hand, annualized premiums from the third-sector insurances, which we focus on as one of the growth areas, increased 9.5% to 52.4 billion ($0.4 billion) from the previous fiscal year.



* Symetrafs performance has been recorded since February 2016.

Annualized Premiums from Surrendered and Lapsed Policies

Sumitomo Lifefs annualized premiums from surrendered and lapsed policies increased 1.0% to 69.4 billion ($0.6 billion) over the previous year.
The annualized premiums from surrendered and lapsed policies sold through our sales representatives, our primary sales channel, decreased 0.9% to 60.4 billion ($0.5 billion), continuing a trend of improvement. This primarily reflects our sales representativesf effort to maintain regular contact with policyholders.

Core Business Profit

Core business profit is an indicator of the fundamental earnings strength of Japanfs life insurance companies.
In fiscal 2017, core business profit (Sumitomo Life Group), which represents profitability excluding the impact of the standard policy reserves concerning the minimum guarantees for variable annuities, etc., increased 9.2% from the previous fiscal year to 361.7 billion ($3.4 billion).
Meanwhile, the size of the negative spread has been constantly shrinking since fiscal 2001 when the Company started its disclosure, which turned positive for the first time in fiscal 2014 and the width of the positive spread has expanded for four consecutive years.


*1 Core business profit of the Group (see the solid line graph) is calculated by combining core business profit of Sumitomo Life and Medicare Life, and profit before tax of Symetra, Baoviet Holdings, BNI Life, and PICC Life attributable to Sumitomo Lifefs equity stake in each company, with adjustments made to some internal transactions. The dotted line graph indicates the sum of core business profit of Sumitomo Life and Medicare Life.
*2 Adjusted core business profit (see the bar graph): Core business profit excluding the impact of provision (reversal) of the standard policy reserves, etc. concerning variable annuities.



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