Thank you for your continuous support of The Dai-ichi Life Insurance Company, Limited. On August 10, 2012, we announced our financial results for the three months ended June 30, 2012 and a strategic business and capital alliance with Janus Capital Group ("Janus").
Financial Results for the Three Months ended June 30, 2012
Throughout the three months ended June 30, 2012, due to the European sovereign debt problem and the growing concern over a potential global recession, we faced a tough financial environment. The following two points summarize our financial results:
First, we maintained a high level of sales in each of our group companies. Dai-ichi Life, on a stand-alone basis, increased sales of "Junpu Life", its core product, and Dai-ichi Frontier Life maintained favorable sales of fixed annuity products. Also, TAL in Australia continued favorable sales of risk products. As a result, due mainly to the increase in premium income, we increased our ordinary revenue year-on-year.
The second point relates to the deteriorated investment environment. A decrease in interest and dividend income and an increase in losses on valuation of securities of stand-alone Dai-ichi Life, in addition to an increase in provision for policy reserve associated with guaranteed minimum maturity benefit of variable annuities of Dai-ichi Frontier Life, resulted in a decrease in the Group's net income. However, thanks to an increase in gains on sale of securities, the decrease in net investment income of Dai-ichi Life was limited. While uncertainty of the financial markets still remains, we will appropriately control risks and adjust our investment strategies.
In addition, we calculated Dai-ichi Life Group's embedded value as of June 30, 2012 to be approximately 2,550 billion yen, slightly below the figure as of March 31, 2012. Despite the harsh market conditions, we will strive to focus on our core businesses and growth areas to increase our embedded value.
Under the medium-term management plan, Dai-ichi Life has considered entering into the overseas asset management business, which is synergistic with a life insurance business, with high growth potential against a backdrop of increasing population and retirement savings.
Today, Dai-ichi Life has entered into an investment and strategic cooperation agreement with Janus, known for its competitive edge in equity investment in the U.S., the world's largest asset management market, and a strong asset management brand. Dai-ichi Life will acquire no less than 15% but no more than 20% of Janus common shares, subject to notification or approval requirements to relevant authorities. Dai-ichi Life will be able to designate one member for appointment to the Janus board of directors once it has acquired at least 15% of Janus common shares. After the appointment of the board member, we plan to account for this investment using the equity method.
With the alliance, we will strive to grow consolidated revenues and enhance management of Dai-ichi Life's assets and Dai-ichi Life and Janus will strive to mutually expand sales of financial products through DIAM Co., Ltd., an affiliate of Dai-ichi Life, and strengthen our knowledge of the asset management business by seconding employees to Janus. We believe this business and capital alliance will be a new driver for the Group's future growth, accelerate Dai-ichi's global expansion, and improve the corporate value of both companies, through accumulating Janus' assets under management and diversifying and expanding its areas of distribution.
As the fiscal year ending March, 2013 represents the final year of the current medium-term management plan and a milestone of the 110th anniversary of Dai-ichi Life's foundation, the Group will make a leap to the next growth stage, while striving for recovery from the earthquake and overcoming harsh financial environment. We appreciate your continued support.
*DIAM Co., Ltd.: an asset management company jointly owned by Mizuho Financial Group and Dai-ichi Life
Koichiro Watanabe
President and Representative Director
The Dai-ichi Life Insurance Company, Limited
