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0:00:00.0 IR Meeting Presentation Progress of Mid-term Management Plan May 24, 2018 0:00:05.7 Table of Contents 1. Group management Progress of Group management Progress of mid-term management plan (1) ? Group Progress of mid-term management plan (2) ? Businesses Progress of mid-term management plan (3) ? Shareholder return (Reference) Progress of mid-term management plan (4) ? Stock price (Reference) Mid and long term strategy of SOMPO Holdings (As previously shown) 2. Businesses 4 5 6 7 8 9 10 11 12 13 14 15 16 17 2-1. Domestic P&C insurance Progress of domestic P&C insurance Key points for domestic P&C insurance 2-2. Domestic life insurance Progress of domestic life insurance Key points for domestic life insurance 2-3. Nursing care & healthcare, etc. Progress of nursing care & healthcare, etc. Key points for nursing care business 2-4. Overseas insurance Progress of overseas insurance Key points for overseas development (Reference) Global M&A strategy (As previously shown) 25 26 27 23 24 21 22 19 20 (Reference) Business portfolio transformation Drive Group’s qualitative evolution looking ahead to the period after mid-term management plan Dramatic growth with SI’s evolution into a global plat form Progress of digital strategy (Reference) Enhance corporate value through initiatives for ESG (Reference) Group asset management (Reference) Robust financial base and ERM for growth strategy (Reference) Numerical management targets, etc. * SI stands for Sompo International(Endurance). 2 0:00:19.3 1. Group management 2. Businesses 2-1. Domestic P&C insurance 2-2. Domestic life insurance 2-3. Nursing care & healthcare, etc. 2-4. Overseas insurance 3 0:00:25.2 1. Group management Progress of Group management ? Executed management strategies steadily, and evolve into a global enterprise “SOMPO ” while establishing business foundations in Japan. ? Moved to next phase of realizing Group qualitative evolution (transformation). Aim at long-term sustainable growth. Progress of mid-term management plan Current mid-term management plan period Transformation of overall group and each business Evolving to global top 10 level insurance group As early as possible after FY2020 Adjusted \300.0 billion consolidated profit level Adjusted consolidated ROE Phase of establishing base FY2016 to FY2017 (Achievement) Domestic P&C Generated stable cash flow Domestic life Expanded policy in force and profit level stably Nursing care & healthcare Phase of realizing FY2018 ・Expected to achieve both Adjusted consolidated profit and ROE ・Accelerate group transformation FY2019 to FY2020 Catching change in environment as a chance, enhance profit and ROE further Plan after FY2019 Over 10% Realized turning nursing care business into profit Overseas insurance 【FY2018 (forecast)】 Adjusted \220.0 billion consolidated profit Adjusted consolidated ROE Developed PMI with SI steadily and progressively Digital 8.3% Scheduled to announce direction of the strategy, etc. around November 2018 and detail such as numerical management target around May 2019. Established and evolved structure of digital strategy ERM & Capital policy Reduced strategic holding stocks in a planned way Maintained solid financial base Implemented thorough ERM management 4 0:02:10.2 1. Group management Progress of Mid-term Management Plan (1) ? Group ? While the impact of hurricanes in North America and other large losses, etc., executed strategies aiming at global top 10 steadily. ? In FY2018 expect adjusted consolidated profit to increase drastically and adjusted consolidated ROE to achieve over 8%. Adjusted consolidated profit*1 (Billions of yen) Adjusted EPS*2 Adjusted consolidated ROE*1 \300.0 level +57.2*4 220.0 Vision Expected to achieve plan (over 8%) Vision -20.5*3 Over 10% 8.3% 164.3 183.2 162.7 \578 6.9% 7.6% 6.4% \326 \461 \420 (Reference) ROE(J-GAAP) 9.2% 9.7% 7.6% about 11% FY2015 FY2016 FY2017 FY2018 (Forecast) After FY2020 (Image) FY2015 FY2016 FY2017 FY2018 After FY2020 (Image) (Forecast) *1 See page 17 for definitions of adjusted consolidated profit and adjusted consolidated ROE. (Reference) Adjusted consolidated net assets (average balance of beginning and end of FY) FY2015: 2,378.3, FY2016:2,403.3, FY2017:2,553.9, FY2018(forecast):2,650.1 (billions of yen) *2 Adjusted EPS = adjusted consolidated profit / the number of issued stocks (excluding portion of share buy-back, etc.) *3 Decreased mainly due to one time factors such as hurricanes in North America, etc. and other large losses. *4 Increased mainly due to the rebound of one time factors in FY2017 and overseas profit expansion. Expected to achieve FY2018 plan (\220.0 to \230.0 billion). 5 0:02:54.8 1. Group management Progress of Mid-term Management Plan (2) ? Businesses ? Adjusted profit in FY2018 of each business is expected to increase (Key factors are improving as well). Adjusted profit by segment and typical key factors (億円) Adjusted profit (Billions of yen) Expected to increase drastically mainly due to the absence of large losses in FY2017 Combined ratio*1 Plan to implement measures to improve the loss ratio and boost efficiency, aiming at the target level (92% to 94%) Adjusted profit (Billions of yen) Projected to increase steadily mainly based on expansion of policies In force Policies in force Target a doubling over the midand long term mainly through the timely launch of new products +32.6 -0.9pt +2.7 85.3 Over 118.0 95.9% 95.0% 29.2 Over 32.0 +0.15 mn. 4.04 mn. 4.20 mn. FY2017 FY2018 (Forecast) FY2017 FY2018 (Forecast) *1 excl. CALI, household earthquake Domestic P&C Nursing care & healthcare, etc. Domestic Life Overseas FY2017 FY2018 (Forecast) FY2017 FY2018 (Forecast) Adjusted profit (Billions of yen) Expected to increase in light of occupancy rate improvement Occupancy rate*2 Projected to achieve target (90% level) of occupancy rate Adjusted profit (Billions of yen) Expected to increase mainly due to the absence of hurricanes in North America , etc. and SI profit expansion Premium written Plan to increase the weight of business centered on specialty insurance, such as U.S. on the ground +1.8 Over 6.0 +2.9pt 91.0% 88.1% +18.9 +\76.1 bn. \515.4 bn.*3 \591.6 bn. 4.1 Over 63.0 44.0 FY2017 FY2018 (Forecast) FY2017 FY2018 (Forecast) FY2017 FY2018 (Forecast) FY2017 FY2018 (Forecast) *2 Sum of SMPO Care and SOMPO Care Next 6 *3 excl. Sompo Canopius portion 0:03:35.7 1. Group management Progress of mid-term management plan (3) ? Shareholder return ? Unchanged shareholder return policy, total payout ratio maintained 50% for 4th consecutive years since FY2014. ? Projected to raise DPS in FY2018 for 5th consecutive years, mainly due to record-high profit forecast (DPS: \110 to \130). History of shareholder returns (Billions of yen) Total shareholder return yield*1 5.7% 5.1% 3.0% 3.2% 4.9% (Reference) DPS (yen) Dividend yield*2 48% 91.6 56.2 81.3 39.1 65.8 33.5 32.3 FY2015 132.0 50% \3,188 Raise DPS for 5th consecutive years 34.7 Share buyback Cash dividend 45.6 17.0 28.6 FY2014 90.8 50% \3,735 +\20 +\10 +\10 +\20 10.0 24.7 FY2013 \130 \90 \110 35.4 FY2016 183.2 50% \4,079 42.2 FY2017 162.7 50% \4,282 52% 49.6 +\10 \60 FY2018 (Forecast) 220.0 - - FY2013 \70 1.9% \80 2.5% 2.3% 2.2% 2.6% Adjusted consolidated profit Total payout ratio (Reference) Share price (End of fiscal year) 15.8 220% \2,652 FY2014 FY2015 FY2016 FY2017 FY2018 (Forecast) Shareholder return policy Aim at attractive shareholder return through stable dividend and flexible share buyback, taking into account relative level of dividend yield or DPS growth. (Target level of total payout ratio: around 50%*3 over medium term.) * Determine balance of dividends and share buybacks based on stock price and dividend yield, etc. *1 Total shareholder return yield = (Cash dividend + Share buyback) / Market cap. as of end of FY *2 Dividend yield = Cash dividend / Market cap. as of end of FY *3 Total payout ratio = (Cash dividend + Share buyback) / Adjusted consolidated profit Could be adjusted based on capital level, ROE, etc. 7 1. Group management (Reference) Progress of mid-term management plan (4) ? Stock price ? Since announced mid-term management plan on 26 May 2016, our stock price has progressed steadily. Progress of stock price(from 26 May 2016 to 30 April 2018) Our price TOPIX TOPIX Sector Index (Insurance) *Indexed with the stock price on 26 May 2016 set as 100 (left axis). 150 140 130 120 110 100 90 80 26 May 2016 3 +5.5% +7.3 + 13.5% % 2.5 (Trillion yen) 2 1.5 1 End of August End of November End of February 2017 End of May End of August End of November End of February 2018 8 兆 160 Our market capitalization (right axis) 1. Group management (Reference) Mid and long term strategy of SOMPO Holdings 【As previously shown】 ? Never change our vision evolving to global top 10 insurance group. ? With proactive shareholder returns, maintain capital buffer sufficient to execute our strategies. ? Build a sustainable growth cycle by capturing opportunities to execute growth investments, with organic growth as our fundamental premise. Our vision of growth strategy To be global top 10 level after FY2020 Adjusted consolidated profit Adjusted consolidated ROE Shareholder return \300.0 billion level Over 10% Enhance shareholder return in accordance with growth in profit * Aim at total payout ratio of 50% over medium term Investment In growth fields Adapt to environmental changes Digital transformation, etc. 安定的 収益性 Generate stable profit Maintain and enhance profitability in existing businesses ? Achieve steady organic growth in each business ? Realize business collaboration model led by nursing care business, etc. ? Harness a solid capital base ? Select high ROE fields (Overseas M&A, etc.) + Robust capital base 9 ? Reduce strategic holding stocks steadily ? Maintain proper capital policy ? Implemented thorough ERM management 0:05:06.3 1. Group management (Reference) Business portfolio transformation ? Since holdings company was established, entire group risk diversification has progressed while expanding the weight of overseas insurance business. Progress of business portfolio Domestic P&C Domestic Life Nursing care & healthcare, etc. Overseas Insurance FY2010*1 FY2017 When achieve vision (Image) Overseas weight: around 40% Overseas weight: 27% Around Adjusted 40% consolidated profit Overseas weight: 7% 0% 7% 3% 27% Adjusted consolidated profit \162.7 bn. Adjusted consolidated ROE 6.4% 52% \300.0 bn. level Adjusted consolidated ROE over 10% Around 4% Around 15% Around 40% Adjusted 27% consolidated profit \29.6 bn.*2 66% 18% Domestic weight: around 60% Domestic weight: 73% Domestic weight: 93% *1 FY of SOMPO holdings establishment *2 Estimation based on current definition of adjusted profit 10 0:08:15.0 1. Group management Drive Group’s qualitative evolution looking ahead to the period after mid-term management plan ? Achieve sustainable growth by pursuing transformation of entire group and each business. Domestic P&C Business Largest growth engine Maintain and expand profit scale ? Pursue efficiency by optimizing sales channels ? Improve productivity and develop new service and insurance product, utilizing digital technologies Interactive Collaboration between businesses Domestic Life Accelerate development of Insurhealth Steady profit growth ・ Challenge for integrating healthcare support and insurance ・Evolve into a Health Support Enterprise Utilize; Digital technologies, Group resource such as capital strength, Knowledge from external partners (Building Eco-System), etc. Nursing care & healthcare Expand with development of dementia prevention and senior market as key factors Deepen collaboration among group, in addition to profit expansion of nursing care on a stand alone basis ? Develop products and services originating from dementia ? Strengthen links with insurance, targeting the senior market as a key sector Overseas Insurance Build an advanced global platform Lead profit growth of group ? Build a global platform including retail field ? Grow based on integration of SI’s know-how and SOMPO’s resources ? Expand region and line further mainly in specialty insurance segment 11 0:09:23.3 1. Group management Dramatic growth with SI’s evolution into a global platform ? PMI has progressed steadily and build SI in as an advanced global platform. Quantitative synergies have materialized as well. ? Aim to expand further while realizing steady organic growth. Progress of PMI (Post-Merger Integration) with SI FY2017 PMI has progressed steadily. Both qualitative and quantitative benefits have materialized. Quantitative synergies Qualitative aspects (typical examples) FY2018 to FY2020 SI growth target(Net written premium)CAGR:+10% ~ 15%(for around next 3 years) 【Build a truly integrated global platform】 + \72.4 billion A decrease in tax expenses in connection with the reorganization of SI, etc. Organization ? Set up SIH, integrated U.S. existing company Underwriting ? Unified further insurance underwriting standards ? Progressed Agri Sompo ? Unified methods ? Optimized global CAT management Further dramatic growth Commercial Platform Retail Platform ? Accelerate to expand globally mainly focused on U.S. on the ground business ? Develop and Execute on new strategies such as Agri Sompo ? Continue bolt-on M&A, etc. ERM + \0.3 billion Specialty insurance to Japanese clients Progress of bolt-on M&A ? Merged Lexon and A&A ? Initiated personnel exchange programs aimed at integration With SI’s expertise, etc., develop mainly of personnel systems. specialty commercial business across the world. HR Entities of developed countries Entities of emerging countries Leveraging with group resources and know-how, etc., expected to integrate accordingly. (complete by around the end of FY2020) + \2.0 billion reduced cost for reinsurance guarantee, etc. 12 0:12:11.7 1. Group management Progress of digital strategy ? While continuing researches and trials (PoC), qualitative effect can be expected after FY2018 by accelerating practical implementation use of digital technologies. Pioneering approach for utilizing digital technologies FY2016~FY2017 Structured framework and researches and trials (PoC) led to practical implementation 【Build digital strategy trilateral structure】 ● CDO(Chief Digital Officer) 【From PoC* to practical implementation】 Productivity enhancement 56% After FY2018~ Actual effect of digital strategy ●Example of effect (Rough Image) By utilizing RPA, etc. in HQ, 400 thousand hours of clerical works are assumed to be cut down. ⇒Including the above, targeting several tens of billions yen level of cost reduction in the future. Typical Examples ? ? Automation of clerical works by implementation of RPA Introduction of urination prediction sensor in nursing care business Utilization of AI in call centers Silicon Valley ? Practical implementation Enhancement customer contact phase (16 Cases) 38% 6% <Automobile insurance with safe driving support service> Israel -Advanced Cyber Security Nation Tokyo New Business Model Alliance with LINE aiming at building new insurance distribution model <Designated insurance service for Smartphone> <Cyber Security Service> * Research and trial phase: 50 cases (as of the end of FY2017) 13 0:14:47.6 1. Group management (Reference) Enhance Corporate value through initiatives for ESG ? Tackle the challenge of solving social issues through businesses in conjunction with working to increase sustainable corporate value on the ESG front. ESG incorporated in the businesses E *1 Identify and mark the main United Nations’ Sustainable Development Goals (SDGs) that correspond to SOMPO’s initiatives *1 S ? ? ? ? Wide variety of insurance products match with customer’s demand Improve and develop loss prevention services Provide high quality nursing care service Set up eco-funds (Sompo Japan Nipponkoa Asset Management) *1 Human resource and Management supporting ESG E S G Continuous promotion of diversity Human resource development/ productivity enhancement ? ? Governance system supporting ESG G Compensation for officers linked to corporate business performance 7 individuals among the 17 Directors and Audit & Supervisory Board members are outside officers The Nomination and Compensation Committee is chaired by an outside director. *1 ? ? ? (continuously selected in Certified Health & Productivity Management Outstanding Organizations Recognition Program by METI) Obtained international standard that specifies requirements for ? an effective environment system (ISO14001) Inclusion in Socially Responsible Investment (SRI) indexes and other indexes ? ? Selected for inclusion in the Dow Jones Sustainability Index for 18 consecutive years (longest-running record for a Japanese company). Adopted by all ESG indexes selected by the Government Pension Investment Fund (GPIF) Selected for inclusion in the highest rank of the CDP*2 for two consecutive years. 14 *2 International project on climate change strategy, etc. (Carbon Disclosure Project) 1. Group management (Reference) Group Asset Management ? No change in plans to undertake stable asset management, taking liquidity, safety and so on into consideration. ? While continuously reducing strategic-holding stocks in a planned way, aim at maintaining and enhancing yield based on asset management diversification, etc. <Balance of group investment assets*1 (Trillions of yen)> Domestic stocks 1.6 Others 0.4 Reduction of strategicholding stocks Plan to reduce \100 billion per annum on fair value basis. (In FY2017, reduced \109.6 billion on fair value basis) Measures against low interest rate Government bonds 2.6 Domestic bonds 3.6 Balance of strategic-holding stocks on book value (Plan and actual) (Billions of yen) → -61% 1,241.2 846.0 ・・・ FY2000 FY2010 About -25% Deposits, etc. 0.9 Total \10.2 tn. → Loans 0.6 Corporate and municipal bonds 1.0 ? Diversify investments, such as foreign currency assets ? Sophisticate asset management, such as growth investment, monitoring credit risk Progress of income yield*2 (Sompo Japan Nipponkoa and Himawari Life) 2.13% 2.18% 2.09% 478.0 ・・・ FY2017 ・・・ FY2020 (Plan) Foreign securities 2.9 Arrow is image of direction of asset allocation. FY2015 FY2016 FY2017 15 *1 End of FY2017, group-wide basis *2 Excluding group companies’ stocks, etc. 1. Group management (Reference) Robust financial base and ERM for growth strategy ? Achieve the stable growth of the Group based on the fundamental premise of maintaining and enhancing a robust financial base by implementing ERM thoroughly. ESR(99.5%VaR)progress forecast Organic increases in ESR in the range of +5% to nearly 10% are expected every year mainly through the steady reduction of strategic-holding stocks, in addition to retained earnings, while proactively implementing shareholder returns. (In terms of the cash management policy, Group companies that have adequate capital for the medium term will pay dividends 50% of adjusted profit in principle to parent company.) 250% 229% Target level (Reference)Comparison in ESR with European insurance companies*2 229% 229% 205% 208% 180% FY2017 FY2018 (Forecast) FY2019 (Image) FY2020 (Image) Our ESR Euro A Euro B Euro C Implement ERM thoroughly (Our main initiatives in FY2018) - Build a global ERM framework including SI*1 - Optimize global CAT risk structure (including reinsurance cover) - Support appropriate management decision-making on all fronts, including product development and M&A activity - Accelerate Group-wide penetration of an ERM culture further *1 SOMPO group ERM evaluation by S&P global: Raised to “Strong” (April 2018) *2 SOMPO uses ESR (99.5%VaR) as of end of FY2017. Other companies use solvency ratio based on Solvency II as of end of December 2017. 16 1. Group management (Reference) Numerical Management Targets, etc. Numerical management targets FY2016 FY2017 (Forecast) FY2018 (Reference: Plan) Announced on November 2016 Definition of adjusted profit Domestic P&C insurance (Billions of yen) Domestic P&C insurance*1 Domestic life insurance Nursing care & healthcare, etc. Overseas insurance Total (Adjusted consolidated profit) Adjusted consolidated ROE*2 134.9 29.1 -0.7 19.9 85.3 29.2 4.1 44.0 Over 118.0 Over 32.0 Over 6.0 Over 63.0 Over 120.0 Over 32.0 Over 8.0 Over 60.0 Net income + Provisions for catastrophic loss reserve (after tax) + Provisions for reserve for price fluctuation (after tax) ? Gains/losses on sales of securities and impairment losses on securities (after tax) ? Special factors (e.g. dividend from subsidiaries) Domestic life insurance Net income + Provision of contingency reserve (after tax) + Provision of reserve for price fluctuation (after tax) + Adjustment of underwriting reserve (after tax) + Deferral of acquisition cost (after tax) ? Depreciation of acquisition cost (after tax) 183.2 162.7 220.0 220.0 ? 230.0 Nursing care & healthcare, etc. Net income 7.6% 6.4% 8.3% Over 8% Overseas insurance (Reference) ROE (J-GAAP) 9.7% 8.2% About 11% Around 10% level Net income (including major non-consolidated subsidiaries) Adjusted profit of SI is operating income*3 *1 Total of Sompo Japan Nipponkoa, Saison Automobile & Fire, Sonpo 24, Sompo Japan Nipponkoa Insurance Services, DC Securities and Sompo Risk Management & Healthcare (from FY2017) *2 Adjusted consolidated ROE = Adjusted consolidated profit / Adjusted consolidated net assets (The denominator is the average balance at the end/start of each fiscal year.) Adjusted consolidated net assets = Consolidated net assets (excluding life insurance subsidiary’s net assets) + Catastrophic loss reserve in domestic P&C insurance (after tax) + Reserve for price fluctuation in domestic P&C insurance (after tax) + Domestic life insurance adjusted net assets Domestic life insurance adjusted net assets = Net assets (J-GAAP) + Contingency reserve (after tax) + Reserve for price fluctuation (after tax) + Adjustment of underwriting reserve (after tax) + Non-depreciated acquisition cost (after tax) *3 Adjusted profit of SI is defined as operating income, which excludes one-time factors (operating income = net income - net foreign exchange gains/losses - net realized and unrealized gains/losses - net impairment losses recognized in earnings, etc.). Forecasts for the overseas insurance business in FY2017 include a decrease in tax expenses in connection with the reorganization of SI. 17 1. Group management 2. Businesses 2-1. Domestic P&C insurance 2-2. Domestic life insurance 2-3. Nursing care & healthcare, etc. 2-4. Overseas insurance 18 0:15:43.9 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas Progress of Domestic P&C Insurance ? Adjusted profit for FY2018 is expected to improve drastically by over \32.0 billion mainly due to the materialization of cost saving benefits and the absence of the impact of one-time factors in FY2017. Plan for adjusted profit (Billions of yen) Assume CAGR of about +4% Assume conservatively gradual materialization of cost saving Mainly due to the one-time factors benefits and the absence of the such as hurricanes in North America, impact of large losses, etc. etc. and increase of large losses Net premiums written (Sompo Japan Nipponkoa)* (Billions of yen) Assume CAGR of about +1% 134.9 111.9 85.3 +38% 2,162.5 2,121.7 2,132.8 2,146.0 Over 118.0 Over 120.0 FY2015 FY2016 FY2017 FY2018 (Forecast) (Plan) FY2020 (Image) FY2015 FY2016 FY2017 FY2018 (Forecast) FY2020 (Image) * Presented by adjusting reinsurance policies scheduled for successive transfer to overseas subsidiaries: Deducting the portion of the total transfer amount (approx. \60.0 billion) that has yet to be transferred in each fiscal year. 19 0:16:10.3 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas Key Points for Domestic P&C Insurance ? Aim to maintain and enhance profitability by taking the initiatives such as implementation of digital technology and collaboration with innovative players. Key point (1) Key point (2) Key point (3) Combined ratio*1 Keep on upfront investment*2 in IT and digital tech. Aim at combined ratio of 92 to 94% level by optimizing sales network and applying AI and RPA early. Growth strategy Create a new business model for growth by collaborating with innovative players. Direct business (Saison Automobile & Fire) Expand steadily toward becoming profitable. Direct group companies will merge into one*3, which will improve our efficiency and profitability further. <Policies in force of direct auto insurance> No.1 growth rate in the industry*4 (10 thousands) <Examples of recent alliances> 95.9% 94.5% 93.5% 95.0% Smartphone-optimized insurance service +16% To about 1.2 million FY2015 FY2016 FY2017 FY2018 (Forecast) After FY2020 Products and services that contribute to private lodging business 50 62 72 85 *1 Sompo Japan Nipponkoa (excl. CALI, household earthquake) *2 FY2016:\14.7 billion, FY2017:\9.4 billion, FY2018(Forecast): around \10.0 billion Next-generation services for selfdependence to a casualty etc. FY2015 FY2016 FY2017 FY2018 (Forecast) FY2020 (Image) R&D of insurance products that contribute to disease prevention *3 Merger of Saison Automobile & Fire and Sonpo 24 insurance (expected date: FY2019) *4 As of the end of 3Q FY2017 20 0:17:01.7 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas Progress of Domestic life insurance ? Expanded policies in force steadily and adjusted profit for FY2018 is expected to achieve over \32.0 billion as planned. Plan for adjusted profit (Billions of yen) Assume CAGR of about +6% Premium and other income (Billions of yen) Assume CAGR of about +5% Expected to achieve plan mainly due to steady expansion of policies in force by timely launch of new product Over 500 396.4 419.5 438.4 452.0 +10% 30.4 29.1 29.2 Over 32.0 Over 32.0 1H actual 14.7 FY2015 FY2016 FY2017 FY2018 (Forecast) (plan) FY2020 (image) FY2015 FY2016 FY2017 FY2018 (Forecast) FY2020 (image) 21 0:17:20.1 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas Key Points for Domestic Life Insurance ? While timely launch of innovative products and services, aim at evolving into a health support enterprise for customers. Key point (1) Key point (2) Key point (3) Evolve into a health support enterprise Aim at doubling number of customers in conjunction with providing new added values integrating health support function for customers and insurance 【Develop “Insurhealth”】 Function of Insurance Annualized premium in force By providing new product at proper timing, etc. expand policies in force centered on protective product 【annualized premium in force after FY2010 】 Product mix (policies in force) Maintain product mix mainly with highly profitable products Saving-type products 26% + Function of Healthcare (Billions of yen) CAGR +5% Increasing Term life term life, (Income etc. compensation Whole life 5% , etc.) 21% 15% 332.8 357.6 370.4 Others 9% March 2018 Comprehensive breast cancer-related services for women Total 4.04 million at the 1Q end of 実績 March 3,611 2018 Medical 50% 275.8 April 2018 Health management App for employees Industry’s first*1 income compensation insurance designed to support the health of policyholders FY2010 ・・・・ Protection-type products*2 74% Going forward FY2015 FY2016 FY2017 Launch new products and services timely *2 Protection-type products: Medical, cancer, income compensation, and term life insurance (excluding long term life and increasing term life insurance), etc. *1 If a policyholder improves health condition by meeting certain conditions after policy enrollment, premiums are reduced and the difference between the former and reduced premiums are reimbursed retroactively, going back to the policy enrollment date. 22 0:18:57.5 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas Progress of Nursing Care & Healthcare, etc. ? Achieved to become profitable in line with occupancy rate improvement of nursing care business as planned. ? In FY2018, expand profit further and enhance collaboration with group business, while improving occupancy rate and starting initiatives for cost saving. Plan for adjusted profit Nursing care & healthcare Asset management, etc. Occupancy rate* SOMPO Care SOMPO Care Next End of FY2017 End of FY2018 (Forecast) (Billions of yen) 95% Assume CAGR of about +50% Expect continuous occupancy rate improvement and cost saving initiatives of nursing care business 90.9% 90% 85.3% 85% 92.3% 88.8% +46% Become profitable mainly due to improving occupancy rate Over 6.0 Over 8.0 4.3 4.1 1.5 1.5 -1 80% -0.7 -0.7 3.6* 3.0 75% With increasing residents, occupancy rate kept improving 70% -2.3 Apr. 2015 Apr. 2016 Apr. 2017 Apr. 2018 FY2015 FY2016 FY2017 FY2018 (Forecast) (Plan) FY2020 (Image) * Occupancy rate = the number of residents / capacity of facilities 23 0:19:49.2 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas Key Points for Nursing Care Business ? Pursuing the increase of added value of the group, through initiatives such as service development focused on dementia as a start point, in addition to securing stand-alone basis profitability. Key Point (1) Key Point (2) Key Point (3) Enhance profitability further Enhance the profitability through the initiatives such as maintaining and improving occupancy rate and cost reduction from merger* of SOMPO care 【 FY2018 Business Plan image 】 Improve capital efficiency further on nursing care business stand-alone basis Occupancy Rate Operating Expense Expected to improve further Strengthen the collaboration with the group businesses ? Utilize external expertise in addition to industry academia - government partnership ? Strengthen inter-group collaboration by developing service and launching insurance product related to dementia Future vision Expand into senior market area, Maximize expertise in the nursing care business and Voice of the Customer (VOC) and Voice of the Genba (VOG) (direct feedback from over 100,000 users and staff members) 【Main initiatives 】 Services related to dementia 【Future direction (image)】 Expand into surrounding area including insurance, from nursing care basis In light of the merger, drive business efficiency with action such as optimization of human resource allocation Utilizing know-how and customer base of the group Solid Internal Control + Human Resource Development Insurance Products Launching insurance products and services deeply linked with nursing care going forward, subsequent to the option to cover long-term care launched by Himawari Life. Industry ? Academia ? Government partnership Senior Market Nursing care Business Examples. Meal service, lifestyle support service, etc. * Merger of SOMPO Care and SOMPO Care Next is scheduled in July, 2018. 24 0:22:53.4 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas Progress of Overseas Insurance ? Adjusted profit for FY2018 is expected to achieve over \63.0 billion as planned mainly due to SI profit expansion. Plan for adjusted profit (Billions of yen) Assume CAGR of about +30% Expected to achieve plan mainly due to SI profit expansion Premiums* (Billions of yen) Assume CAGR of about +30% +43% Offset the impact of hurricanes in North America, etc. with a decrease in tax expenses in connection with the reorganization of SI, etc. Over 63.0 591.6 Over 60.0 44.0 515.4 218.5 18.7 19.9 167.1 FY2015 FY2016 FY2017 FY2018 (Forecast) (Plan) FY2020 (Image) FY2015 FY2016 FY2017 FY2018 (Forecast) FY2020 (Image) * Deduct the portion of Sompo Canopius due to sales completion. premiums reflect holding shares. This treatment does not coincide with financial statements. 25 0:23:13.6 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas Key points of overseas development ? Aim to enhance share of overseas insurance business further, while placing SI as an advanced global platform. Key point (1) Key Point (2) Key point (3) Build a global platform Commercial Integrate existing companies in the U.S. and Europe Accelerate to harmonize SI’s expertize and SOMPO resources SI’s organic growth Accelerate the growth by acquiring underwriters in specialty lines * SI growth target(Net written premium) CAGR:+10%~15% Bolt-on M&As by SI Execute selective bolt-on M&As that contribute to enhance profitability and risk diversification in geographic and line of business Retail Aim at further growth, while sharing group’s know-how, etc. 【Major activities】 Further enhancement of underwriters Acquired Novae’s underwriters (May 2017) 【Bolt-on M&As in FY2017】 Accomplished A&A merger in March 2018 (Italy: broker of crop insurance) 【Retail sector (Image) 】 Aim to finish building a global platform by the end of FY2020 →Share of know-how, R&D and talent, etc. (Reference) Number of SI’s underwriters FY2017 FY2012 Around 100 headcounts Development of Agri Sompo Alliance (South Africa) Expand to approximately over triple Expand crop insurance internationally Alliance with Sanlam and Saham - Aim to provide specialty lines on African market in future Accomplish Lexon merger in June 2018 (U.S.: surety insurance company) 26 0:25:52.1 Domestic P&C Domestic life Nursing care & healthcare, etc. Overseas (Reference) Global M&A strategy 【As previously shown】 ? Consider selectively M&As that will enhance Group profit and ROE in a disciplined manner. Typical criteria of M&A Our policy is to selectively consider M&As that will enhance Group capital efficiency based on a robust financial base, according to the following perspectives Developed countries Mainly Commercial business, that contribute sizable profit, risk diversification, and higher capital efficiency. Emerging countries Insurance company expand market footprint in retail business across the world. Also fit to our investment criteria. ‘Unique and uncommon’ is the key Direct P&C (Specialty) Large market scale Stable market growth e.g. U.S. on the ground Asia and opportunities with stable Middle East profit in large population with Latin America high growth potential market Cautiously consider Others Cautiously consider every matter that contribute group profit and ROE 27 Note Regarding Forward-looking Statements The forecasts included in this document are based on the currently available information and certain assumptions that we believe reasonable. Accordingly, the actual results may differ materially from those projected herein depending on various factors. Contacts Investor Relations Team, Office of Group CEO Telephone Fax E-Mail URL : : : : +81-3-3349-3913 +81-3-3349-6545 ir@sompo-hd.com https://www.sompo-hd.com/en/ 0:26:18.7 0:26:43.5 0:37:56.2 0:48:00.7 0:53:02.8 1:03:11.7 1:06:27.7 Kengo Sakurada President(Group CEO)