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0:00:00.0 Tokio Marine Group Mid-Term Business Plan “To Be a Good Company 2017” FY2016 Business Plan Update November 2016 Tokio Marine Holdings, Inc. 0:00:23.3 Table of Contents Ⅰ Tokio Marine Group Business Strategy 1. Progress of the Mid-Term Business Plan 2. ERM & Shareholder Returns Ⅱ Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance Reference ◆Abbreviations used in this material TMNF : Tokio Marine & Nichido Fire Insurance Co., Ltd. NF : Nisshin Fire & Marine Insurance Co., Ltd. TMNL : Tokio Marine & Nichido Life Insurance Co., Ltd. FL : Former Tokio Marine & Nichido Financial Life Insurance Co., Ltd. TMHCC : Tokio Marine HCC Copyright (c) 2016 Tokio Marine Holdings, Inc. 1 0:01:29.3 Ⅰ Tokio Marine Group Business Strategy Copyright (c) 2016 Tokio Marine Holdings, Inc. 2 0:01:31.0 Ⅰ. Tokio Marine Group Business Strategy 1. Progress of the Mid-Term Business Plan 2.ERM & Shareholder Return Copyright (c) 2016 Tokio Marine Holdings, Inc. 3 0:01:36.9 1-1. Objectives of the Mid-Term Business Plan Mid-Term Business Plan “To Be a Good Company 2017” ~Evolve business structure to realize sustainable profit growth and higher ROE~ Group Total FY2017 outlook Enhance capital efficiency Sustainable profit growth Enhance shareholder returns Adjusted ROE : Upper 9% range *1 Adjusted Net Income : Approx. \400B *1 Steady growth of dividends in line with profit growth *1: Released in Nov. 2015 Based on market environment as of the end of Mar. 2015 Business Unit Profits Domestic Non-Life (TMNF) (billions of yen) Domestic Life (TMNL) (billions of yen) International Insurance (billions of yen) +TMHCC approx. approx. CAGR approx. +3% CAGR*3 approx. +8% 120 120 approx. approx. CAGR approx. +8% 125 125 2014 Normalized basis *2 2017 Plan 2014 1,037.3 Year-end MCEV Increase in MCEV 2017 Plan Approx. 1,300 100 *3: CAGR of MCEV 2014 Normalized basis *4 2017 Plan *2: FX effects are excluded and natural catastrophe losses is normalized to an average annual level Copyright (c) 2016 Tokio Marine Holdings, Inc. *4: FX rate is as of the end of Mar. 2015, and natural catastrophe losses is normalized to an average annual level 4 0:02:13.8 1-2. 2Q FY2016 Results Adjusted Net Income (Group Total) +78.9 (billions of yen) Adjusted net income increased by \78.9B YoY mainly due to: ? ? ? Profit contribution of TMHCC Decrease in natural catastrophe losses in domestic non-life Decrease in provision for reserves for foreign currency denominated outstanding claims associated with the appreciation of the yen in domestic non-life Decrease in profit due to the appreciation of the yen at overseas subsidiaries Adjusted Net Income 219.2 140.3 ? Net Income* (financial accounting basis) Net incurred losses relating to natural catastrophes (before-tax basis) Domestic Non-Life International insurance Total 2015 1H 2016 1H 85.6 67.1 11.3 78.4 155.2 39.4 15.2 54.6 Net income on financial accounting basis increased by \69.6B YoY mainly due to the above factors and: ? ? Decrease in net provision for catastrophe loss reserves in domestic non-life (positive to profit) Amortization of goodwill associated with new consolidation of TMHCC (negative to profit) Business Unit Profits Domestic Non-Life (TMNF) +49.9 (billions of yen) * Net income attributable to owners of the parent Domestic Life (TMNL) +139.9 (billions of yen) International Insurance +15.9 (billions of yen) 96.1 46.1 200.3 60.3 63.7 79.6 2015 1H 2016 1H 2015 1H 2016 1H 2015 1H 2016 1H Increased due to decreases in natural catastrophe losses and provision for reserves for foreign currency denominated outstanding claims associated with the appreciation of the yen Copyright (c) 2016 Tokio Marine Holdings, Inc. Increase in MCEV increased YoY mainly due to the changes in definitions in measurement method Increased due to profit contribution of TMHCC and the progress of growth measures, etc., despite the appreciation of the yen 5 0:03:07.8 1-3. FY2016 Full-Year Projections Adjusted Net Income (Group Total) +1.0 (billions of yen) Adjusted Net Income 351.9 388.0 389.0 Adjusted net income revised upward by \1.0B, reflecting upward revision in profit growth in domestic non-life, despite the effect of the appreciation of the yen at overseas subsidiaries Net income on financial accounting basis revised upward by \15.0B due to a decrease in an amortization of goodwill associated with the appreciation of the yen, etc., in addition to the above factors 2015 Net Income* (financial accounting basis) Net incurred losses relating to natural catastrophes (before-tax basis) Domestic Non-Life International insurance Total 2016 Projections (Original) (Revised) 254.5 77.4 15.7 93.1 265.0 48.0 47.0 95.0 280.0 48.0 36.0 84.0 * Net income attributable to owners of the parent Business Unit Profits Domestic Non-Life (TMNF) 120.0 (billions of yen) +15.0 Domestic Life (TMNL) (billions of yen) +163.0 International Insurance 131.8 (billions of yen) -11.0 158.0 173.0 202.0 39.0 159.0 148.0 2015 2016 Projections (Original) (Revised) 2015 2016 Projections (Original) (Revised) 2015 2016 Projections (Original) (Revised) Upward revision due to a decrease in provision for reserves for foreign currency denominated outstanding claims associated with the appreciation of the yen Copyright (c) 2016 Tokio Marine Holdings, Inc. Increase in MCEV revised upward mainly due to the changes in definitions in measurement method Downward revision due to the appreciation of the yen 6 0:03:46.7 1-4. Key Financial Indicators (1) Projecting favorable progress of adjusted net income and adjusted ROE for FY2016, the second year of the mid-term plan, due to steady execution of growth strategies in each domain ? Adjusted net income: Projecting \389.0B, an increase by \37.1B YoY An increase of \65.7B from FY2014* ? Adjusted ROE: Projecting 10.7%, an increase by 1.6pt YoY Upward revision by 0.2pt from the original projections of 10.5% ? Shareholder returns: Projecting dividend increase for 5 consecutive years in line with profit growth Annual dividends is projected to be \135 per share, an increase by \25 YoY Share repurchases of up to \25.0B in 2H FY2016 has been resolved * FY2014 is the final year of the previous mid-term business plan Copyright (c) 2016 Tokio Marine Holdings, Inc. 7 0:04:45.4 1-4. Key Financial Indicators (2) Expanding Profit ? Adjusted net income +65.7 (billions of yen) + Enhancing Capital Efficiency ? Adjusted ROE +1.8pt + Expanding Shareholder Returns ? DPS (Dividends per share) +40 (yen) 10.7% 389.0 135 9.1% 8.9% 95 8.2% 70 110 351.9 323.3 243.7 163.1 6.5% 55 2012 2013 2014 2015 2016 Projection (Revised) 2012 2013 2014 2015 2016 Projection (Revised) 2012 2013 2014 2015 2016 Projection (Revised) Previous mid-term period Net income* (Financial accounting) Current mid-term period 254.5 280.0 (Financial accounting) Previous mid-term period ROE 6.2% 7.3% 7.9% Current mid-term period 7.2% 8.2% Previous mid-term period Current mid-term period 129.5 184.1 247.4 ? Share repurchases Share repurchases of up to \25.0B in 2H FY2016 has been resolved * Since FY2015, net income attributable to owners of the parent Copyright (c) 2016 Tokio Marine Holdings, Inc. 8 0:05:55.8 1-5. Progress of the Mid-Term Business Plan (1) Steadily execute strategies in the mid-term business plan to evolve business structure to realize sustainable profit growth and higher ROE FY2015 Enhancing the integrated business model for life and nonlife Strengthening claimsservice capabilities and further utilizing our risk consulting service Enhancing organic growth in international insurance FY2016 FY2017 Further promote the integrated business model for life and nonlife utilizing Super Insurance Establish new business model ? Supporting regional development in Japan ? Health & Productivity Management Further advance claims-service capabilities and utilizing our risk consulting service Further expansion of group synergies on a global basis Unlocking our potential 【 Enhancement】 ? Strengthen consulting skills of agents through utilization of “next-generation business model” (tablet PCs) ? Expand comprehensive discount for Super Insurance (October 2016) ? Strengthen claims-service capability of employees and agents ? Provide BCP planning services ? Product revisions of fire insurance to strengthen capability for wide-area disasters (January 2017) ? Strengthen growth strategies utilizing each group company’s strength ? Pursuing synergies leveraging the Group’s global footprint and high expertise of each group company Capitalizing on changes 【 Evolution】 Original Drive Recorder ? Product revisions of auto insurance responding to Effectively forecasting and proactively meeting the emerging and evolving needs Strengthening R&D the changing business environment ? Develop new insurance products for cancer, medical and household income coverage ? Provide Drive Agent and Automatic Accident Report Service ? Advance “next-generation business model” and expand it to overseas group companies ? Establishment of Digital Strategy Division (July 2016) Study advancing technologies and offer product and services proactively meeting the emerging and evolving needs Deploy digital strategy on a global group-wide base Copyright (c) 2016 Tokio Marine Holdings, Inc. 9 0:08:52.1 1-5. Progress of the Mid-Term Business Plan (2) FY2015 FY2016 FY2017 Pursuing growth opportunities 【 Expansion】 Promoting disciplined business investment ? Acquisition of TMHCC and smooth progress of PMI - Leading to a more stable group business foundation - Further enhance abilities to create group synergies Disciplined business investment z ? Continue to consider new business investments in both developed and emerging country markets Enhancing our diversified business portfolio ? Continuous bolt-on acquisitions in developed countries Advancing our business platform 【 Excellence】 Advancing ERM and improving risk portfolio ? Reduce the risks associated with businessrelated equities ? Strengthen control of natural catastrophe risks ? Achieve stable growth of dividends ? Aligned group management (April 2016) ? Establishment of Group Chief Officer positions Continuous improvements in risk portfolio based on enterprise risk management (ERM) ? Continuous reduction of risks associated with business-related equities ? Continuously improving and sophisticating risk measurement model Maximize the Group’s comprehensive capability ? Work to solve management issues on a global/group basis Strengthening our business platform ? Establishment of committees and strengthened their functions ? Involvement of overseas talent in the group management ? Strengthen global HR strategies ? Increasing productivity through innovation in work style Further strengthen global HR strategies ? Develop global leaders ? Develop human resources with high expertise by specialty ? Expand the base of the global talent pool Developing a diverse human workforce ? Utilization of “next-generation business model” (tablet PCs) ? Innovation in office work process Continuously promote innovation in work style Copyright (c) 2016 Tokio Marine Holdings, Inc. 10 (Blank Page) Copyright (c) 2016 Tokio Marine Holdings, Inc. 11 0:11:21.9 Ⅰ. Tokio Marine Group Business Strategy 1. Progress of the Mid-Term Business Plan 2.ERM & Shareholder Return Copyright (c) 2016 Tokio Marine Holdings, Inc. 12 0:11:31.0 2-1. Promoting Strong ERM (1) (Controlling Risk and Capital) ? Control risk and capital Maintain financial soundness Balance capital and risk to maintain AA credit ratings ? ? Advance natural catastrophe risk management Ensure our financial base can withstand catastrophic risks × Enhance profitability Sustainable profit growth and enhance capital efficiency ? ? ? Invest in businesses which enhance capital efficiency Improve the profitability of existing businesses Continue to sell business-related equities Control risk and capital in accordance with risk appetite* * Insurance risk control : Pursue sustainable growth, risk diversification (stabilization), and improvement of capital efficiency through global business expansion Investment risk control : Secure liquid assets and stable profits mainly through ALM ? Economic Solvency Ratio(ESR) ? Utilize strict capital model which calculates risk capital based on 99.95%VaR (standard to maintain AA credit rating) and excludes restricted capital, while referring to the method in SolvencyⅡin Europe, etc. ? Target range of ESR is 100~130% in light of financial soundness and profitability as of the end of September 2016: 130% *1 (reference) at 99.5%VaR with UFR*2 130%*3 Utilize capital buffer ? Invest in businesses for growth and take additional risks ? Repurchase shares ? Prepare for regulation changes and significant changes in business environment 161% 100% Target range Confirm the necessity of action *1 Including subordinated term loan financed at TMNL *2 By reference to international capital regulation, Ultimate Forward Rate, UFR, is set at the level of 3.5% in year 60 and forward rates beyond the 30th year are extrapolated accordingly *3 Capital level which can maintain AA credit ratings withstanding once-in-a-decade risks Copyright (c) 2016 Tokio Marine Holdings, Inc. Consider to recover capital level Consider the below with consideration of the outlook of future profit accumulation and restricted capital ESR 99.95%VaR ? Refrain from investment in businesses and additional risk-taking ? Consider risk reduction measures 13 0:13:15.6 2-1. Promoting Strong ERM (2) (ESR as of Sep. 30, 2016) ? ESR has been improved to 130% due to a decrease in risk capital as well as an increase in net asset value Factors increasing net asset value: Contribution of 1H FY16 adjusted net income, changes in definition of measuring MCEV, etc. Factors decreasing risk capitals: Sales of business-related equities, changes in definition of measuring risk capital associated with MCEV, etc. Business continuity is confirmed even in the event of stress scenario ? ? Economic Solvency Ratio (ESR) 106% Factors of changes in net asset value ? Contribution of 1H FY16 adjusted net income ? Change in definition of measuring MCEV ? Subordinated term loan financed at TMNL ? Adjustment of capital level 130% ? Impact of market changes on ESR and our measures ? Share price: Continue to sell business-related equities as the impact on ESR associated with the market value fluctuation is large ? Interest rate: While preparing for the future rise in interest rate, control the impact of interest rate fluctuation through ALM ? FX rates: Limited impact on ESR Sep. 30, 2016 Risk capital Met asset value Risk capital Net asset value trillion yen 2.9 3.0 Factors of changes in risk capital trillion yen ? Sales of business-related equities trillion yen 2.6 3.3 trillion yen 130% 138% 121% 132% 127% ? Changes in definition of measuring risk capital associated with MCEV Mar. 31, 2016 Sep. 30, 2016 Share Price +30% - 30% Interest Rate +10bp - 10bp \16,758 Nikkei Stock Average \ 16,449 ? Net Asset Value Net Asset Value = Consolidated net asset on financial accounting basis + Liability of capital nature (catastrophe loss reserves, price fluctuation reserves, etc.) (after-tax basis) Goodwill, etc. Planned distribution to shareholders + Value of life insurance policies in-force Restricted capital, etc. Copyright (c) 2016 Tokio Marine Holdings, Inc. 14 0:13:51.6 2-2. Shareholder Returns ? Our primary means of shareholder returns is dividends, which we plan to increase in line with profit growth Steady growth of dividends ? We pursue steady growth of dividends, and payout ratio as a guide is above 35% of average adjusted net income - Interim dividends is \67.5 per share as planed in the initial projections - Annual dividends is projected to increase by \25 YoY to \135 per share (payout ratio* of 35%), representing five consecutive years of increase *payout ratio to average adjusted net income + Flexible share repurchases ? We intend to conduct share repurchases in a flexible manner based on a comprehensive assessment of market conditions, our capital levels, business investment opportunities, and other relevant factors Share repurchases of up to \25B in 2H FY2016 has been resolved ■ : Dividends per share \135 (Projections) \110 \95 \70 \48 \36 \48 \50 \50 \50 \55 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Copyright (c) 2016 Tokio Marine Holdings, Inc. 15 0:15:49.9 2-3. Group Asset Management Group Asset Management Concept ? With asset and liability management (ALM) at the core, we aim for steady profit growth while ensuring liquidity ? Further strengthen investment capability by enhancing coordination among group companies in Japan and overseas and promoting global investment diversification <Investment policy for each asset> ? Domestic bond: Hold for controlling interest rate risks of yen-dominated insurance liabilities while closely watching the market trend ? Foreign securities (mainly foreign bonds): Increase the balance through investment in bonds in the U.S. and Europe by domestic subsidiaries as well as asset expansion at overseas subsidiaries ? Domestic equities (business-related equities): Continue to sell more than \100B per year from the perspective of enhancing capital efficiency Asset composition of TMHD (Consolidated) * As of the end of Sep. 2016 5% 4% 3% Investment yield of the Group Domestic subsidiaries Overseas subsidiaries Group total ■ Others \2.9T Mainly tangible fixed asses and intangible fixed assets, etc. ■ Cash and deposits \0.7T 4.0% 4.3% 4.4% 3.6% 13.7% 3.3% 5.5% ■ Loans \1.1T ■ Monetary receivables bought \1.2T Mainly absolute return investment & lending by Domestic Non-Life (TMNF) and overseas subsidiaries 2.1% 2% 1% 0% 2.3% 1.6% 2.2% 1.5% 5.1% ■ Other securities \0.7T Mainly assets in separate accounts held by Domestic Life 1.6% 4.4% Impact on the Group’s investment yield from low interest rates in Japan is 2.1% limited due to investment portfolio centered on long-term bonds in Japan and global investment diversification on a 1.4% group basis 2016 1H Income return Total Assets 2013 2014 2015 ■ Foreign securities \4.3T Mainly local country bonds held by overseas subsidiaries mainly in the U.S. and Europe 19.9% \21.8T 10.1% 38.9% Continuous reduction of business-related equities Sold total amount of \1.4T*1 since FY2004 Book value*2 has declined approx. by half ■ Domestic bonds \8.4T Domestic government bonds (JGB): Approx. \7.6T Mainly bonds for the purpose of ALM by Domestic Life and Non-Life ■ Domestic equities \2.2T Mainly business-related equities held by Domestic Non-Life (TMNF) Copyright (c) 2016 Tokio Marine Holdings, Inc. 100 93 2008/3E 66 2012/3E 49 2016/9E 2004/3E *1: Market price at the time of sale *2: Figure at the end of FY2003 is set at index value of 100 16 0:17:05.9 Ⅱ Business Plan and Strategy by Domain Copyright (c) 2016 Tokio Marine Holdings, Inc. 17 0:17:10.3 Ⅱ. Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance Copyright (c) 2016 Tokio Marine Holdings, Inc. 18 0:17:20.6 1-1. TMNF FY2016 Projections ? ? Business unit profits is revised upward despite downward revision of net premiums written Steady progress of both top-line and bottom-line as planned in the mid-term plan ? Net Premiums Written (billions of yen) -25.0 Downward revision by ¥25.0B from the original projections mainly due to; ? Impact of the appreciation of the yen on foreign currency denominated contracts ? Not factoring last minute demand associated with the postponement of consumption tax hike which was factored in the original projections 2,128.3 2,036.7 2,135.0 2,110.0 2014 2015 2016 Projections (Original)(Revised) ? Business Unit Profits (billions of yen) +15.0 158.0 113.7 120.0 173.0 Upward revision by ¥15.0B from the original projections mainly due to; ? Decrease in provision for reserves for foreign currency denominated outstanding claims associated with the appreciation of the yen ? Improvement in loss ratio mainly in auto 2014 Copyright (c) 2016 Tokio Marine Holdings, Inc. 2015 2016 Projections (Original)(Revised) 19 0:18:35.9 1-2. TMNF Business Results Trend Stable combined ratio as a result of measures implemented to improve profitability ? Combined Ratio (Private insurance: E/I basis*1) *1 Loss ratio (private insurance E/I basis) + expense ratio (private insurance W/P basis) 99.6% 97.5% 97.2% 94.4% ■ After normalizing natural catastrophes to an average annual basis approx. 92~93%*2 90.6% 91.4% 92.7% 91.0% 90.0% 90.8% 2012 E/I loss ratio Excl. natural catastrophes Natural catastrophes normalized to an average annual basis 2013 65.0% 60.1% 62.2% 65.3% 32.2% 2014 58.5% 56.9% 59.2% 61.1% 32.2% 2015 60.1% 56.0% 58.2% 60.5% 32.6% 2016 Projections (Original) 58.3% 55.8% 60.9% 32.7% (Revised) 57.2% 54.7% 60.3% 32.8% 2017 Plan *2 Planned figure at the time of formulating the mid-term business plan factoring consumption tax hike in April 2017, which was announced to be delayed. 66.8% 62.8% 64.7% 69.4% 32.8% Auto insurance Expense ratio Auto insurance market share is expanding due to steady execution of growth strategies ? Growth of the number of auto policies substantially exceeds that of automobiles owned nationwide ? Growth rate of number of autos (2011/3E is set at index value of 100) ? Each month attains YoY growth in new premiums ? Premiums written including renewal contracts stably grows in the range of 101-102% ? TMNF’s premiums written*3 (monthly YoY changes) 104% ●TMNF Number of auto insurance policies (managerial accounting basis, changes over the past one-year) ●Number of automobiles owned nationwide 110 New contracts Total of new and renewal contracts (source: Automobile Inspection & Registration Information Association) 110.8 102% 105 103.4 100% 100 2011/3E 2012/3E 2013/3E 2014/3E 2015/3E 2016/3E 2016/8E April May June July August September *3 Results in FY2016. Non-fleet auto Insurance premiums on managerial accounting basis Copyright (c) 2016 Tokio Marine Holdings, Inc. 20 0:19:44.0 1-3. TMNF Unlocking the Potential (Integrated Business Model for Life and Non-life) Becoming “the best choice” for customers through unlocking the potential of the integrated business model for life and non-life with Super Insurance at the core ?Revision of Comprehensive Discount for Super Insurance*1 Improve product appeal ? Expand Comprehensive Discount for Super Insurance to promote sales of multiline non-life policies, and introduce discount for long-term fire insurance ? Introduce discount for life insurance product aiming for increasing ratio of the number of Super Insurance with either life or third sector coverage as well as strengthening customer contact ? Unit premiums of Super Insurance Total of non-life and life (thousands of yen) 【Higher discount rates】 In case of attaching 3 or more non-life lines of products 【Before revision】 【After revision】 【Expand product lines applied】 Life insurance Long-term fire insurance 112.9 115.8 2% discount (only first year) 2% discount 3% discount 93.5 1% discount 2011 3/E Ratio of the number of policies with either life or third sector coverage *1 A certain condition including premium is required to employ the discount rate X After revision 2015 3/E 2016 9/E 15.9% 16.7% ?Refine “next-generation business model” Enhance sales ability ? Enrich movies and presentation tools for providing information and stimulating needs ? Support consulting services at agents by enabling to directly start up presentation tools on the list of coverage status Target ratio of the number of policies with either life or third sector coverage in 2020 20% ?Advancing consulting services ? Enrich training programs for agentssupporting employees to strengthen consulting skill of the agents An accumulated attendance rate of the advanced life insurance course is approx. 37% since started in FY2015 【List of coverage status】 Enriched Link “Super Insurance” Number of in-force policies (millions of policies) (reference) Data of Super Insurance Renewal ratio*2(%) 95.8 97.0 1.95 0.85 2011 3/E 2016 9/E Auto insurance 【Presentation tools】 Super Insurance auto *2 Figures are for the past one-year period until the end of Sep. 2016. Copyright (c) 2016 Tokio Marine Holdings, Inc. 21 0:21:10.4 1-4. TMNF Unlocking Our Potential (Establishment of New Business Model) Develop new markets focusing on regional revitalization and health & productivity management leveraging insurance & services, in response to changing business environments of depopulation of rural areas, aging society with low birthrate and decline in the labor force population ? Initiatives Our main solution New initiatives ? Municipalities ? Financial institutions ? Chamber of Commerce and Industry, etc. ? Launch Super Business Protect, comprehensive business insurance for members of the Chamber of Commerce and industry in July, 2016, in addition to existing nationwide group insurance for employment injury insurance and overseas products liability Insurance, etc. ? Attach support services for capturing inbound demand in light of needs from the SME members ? Acquire over 10thousand policies for approx. two months since launch Supporting regional development in Japan TMNF ? Providing ? BCP insurance Regions and societies (SME, etc.) planning services ? Tourism (inbound) ? Support overseas expansion, etc. <reference> Penetration rate of specialty insurance among SME (searched by a research company) Developed market Approx. Insurance product + ? Comprehensive coverage of business risks ? Multi-language interpretation service ? Provide inbound information service, etc. ? Provide shop information for Chinese inbound tourists ? Offer TMNF special price 65% New markets to develop ? Estimate market size of specialty insurance on premium basis using data and sampling survey about 3.2 million small and medium-sized companies with 99 employees or less, excluding sole proprietors Service Health & Productivity Management <Business Environment> ? Growing interest in health and productivity management by companies ? Government supports for companies’ initiatives X Conventional product and services Initiatives to support companies and health insurance associations which promote health & productivity management ?Group insurance to support ?Support service for health & productivity companies’ employee benefit programs management ? Medical and cancer insurance, and GLTD, etc. ? New consulting service that support health enhancement measures for employees through ?“Data Health” support service analysis* focusing on productivity as well as ? Consulting service that supports health medical expense insurance associations to formulate data *Utilizing co-study with health & productivity health plan based on analyses of health management unit in Policy Alternatives Research insurance claims and medical checkup results Institute, University of Tokyo <Strengths of the Group > ? Know-how accumulated in the Group ? Recognized 2016 Health & Productivity Stock Copyright (c) 2016 Tokio Marine Holdings, Inc. 22 0:24:02.2 1-5. TMNF Capitalizing on Changes (Products & Services Strategy, and Strengthen R&D) Improve products & services in auto and fire insurance in response to environmental changes such as autonomous cars and frequent natural catastrophes, while enhance specialty insurance meeting customers’ new needs Product revision proactively responding to changes Auto Insurance (revised in April 2017) Initiatives to expand specialty insurance ? Cyber Risk Insurance (revised in January 2017) Provide new coverage and various services for cyber risks in response to progress of IoT society and smart city, etc. ? Develop coverage riders for expenses for saving victims ? Provide this rider as a safety net given the progress in autonomous driving system ? Contribute to realize safe and secure car societies ? Insurance for agriculture ? Support for diversification of agriculture into processing and distribution (sixth sector industrialization) and exporting industrialization, and provide coverage responding to new risks for agricultural corporations ? Offer Comprehensive Support Plan for Farmers to managers of agriculture and livestock farming ? Drive Agent Personal Develop high-value-added service* using telematics technology and provide it as a rider to individual policy holders * Lend a drive recorder with our original communication function ? Development of Bicycle Package Following recently emerging coverage needs to bicycle accidents, newly add a rider to auto insurance which covers liability and injury risk associated with riding bicycles 【reference】Ratio of household with bicycles 【reference】 Enrollment rate of cycle cover ? Insurance for sharing economy In the sharing economy area that is expected to grow, develop products and services for sharing providers (skill sharing in homemaker service & child day-care, renting private homes and rooms, pleasure boat, etc.) 70.4% Fire Insurance source: Juridical Foundation, Japan Bicycle Promotion Institute 44% source: A survey on web by TMNF Without cycle cover (revised in January 2017) ? AI ? Big data ? Medical technology ? IoT, etc. Strengthen R&D ? Product revisions to strengthen capability for wide-area disasters ? Include expense claims which are often listed on the repair estimation into total amount of general claims. (Previously it was necessary to classify each item on the repair estimation into expense claims and general claims.) ? Implement “prompt” claims-services, “more easy to understand” products and “expansion of expense coverage” Copyright (c) 2016 Tokio Marine Holdings, Inc. Technological innovation ? Sales/Marketing ? Pricing/Underwriting ? Claims service, etc. 23 0:26:23.6 Ⅱ. Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance Copyright (c) 2016 Tokio Marine Holdings, Inc. 24 0:26:30.8 2-1. TMNL FY2016 Projections (1) Aiming for growth maintaining financial soundness and profitability by accelerating sales shift from saving-type products to protection-type products ? New Policies Annualized Premiums (ANP) (billions of yen) Total of new policies ANP Excluding long-term saving-type products (individual annuities and “whole life with long-term discount”) ? New Policies ANP ? Excluding long-term saving type products, revised downward to \103.1B due to the reversal effect of favorable sales of cancer insurance in FY2015, etc. although projecting to increase YoY Excluding long-term saving type products, CAGR from FY2014 to the revised projections of FY2016 is projected to be +10% New policies ANP is projected to be \110.2B Ratio of new policies ANP excluding long-term saving type products is projected to increase by 20pts to 94% from the end of FY2014 ? ? ? 114.1 84.9 119.7 100.4 112.7 107.1 110.2 103.1 2014 Ratio of new policies ANP excluding longterm saving type products 2015 2016 Projections (Original) (Revised) (Reference) Product revisions in response to the low interest rates Prior to FY2014 ■Suspension of sales ・Single payment endowment (new policy) ・Single payment individual annuity FY2015 ●Product revision ・Whole life with long-term discount ・Individual annuity ・Single payment whole-life ・Single payment increasing whole-life FY2016 ■Suspension of sales ・Whole life with long-term discount ・Individual annuity ・Single payment whole-life ・Single payment increasing whole-life ・Single payment endowment (renewal) ■Partial suspension of sales ・Whole-life 74% 84% 94% ? Individual Insurance・Number of New Policies (ten thousands of policies) 53 58 60 58 * Meanwhile, release new protection-type products every year (please refer to page 27). ? Number of New Policies for Individual Insurance 2014 2015 2016 Projections (Original) (Revised) ? Projected to be 580,000 due to the above factors 25 Copyright (c) 2016 Tokio Marine Holdings, Inc. 0:27:53.0 2-1. TMNL FY2016 Projections (2) ? Business Unit Profits (increase in MCEV) (billions of yen) +163.0 +202.0 Changes in definitions in measurement method : +223.0 Changes in economic environment : -32.0 ? Business Unit Profits (Increase in MCEV) ? Upward revision by \163.0B from the original projections to \202.0B mainly due to changes in definitions in measurement method shown below Value of new business is projected to be positive by promoting sales shift to protection-type products ? +190.0 +1,902 +39.0 +12.0 - Changes in definitions in measurement method ? Review and updated some factors which can be considered too conservative today, based on the objective data, etc. on the occasion of one year after the introduction of MCEV in Apr. 2015 【 Major changes 】 ? Surrender risk: 2015 *1 2016 projections *2 (Original) (Revised) Updated surrender rate fluctuation risks considering the definitions in the measurement method of the international capital regulations and TMNL’s actual data ? Cancer payment risk (the third sector risk): Updated considering analyses based on estimation models for cancer morbidity by third-party and TMNL’s actual data, etc. since previously assuming too high increase in cancer diagnosis rate associated with advancement of medical technology ? Business expense risk: Updated based on the most recent data considering the current situation where business expenses fluctuate less associated with the expansion of business Year-end MCEV *1,*2 Increase in MCEV *2 811.6 850.6 1,013.6 +39.0 +202.0 (※) ※ Increase in MCEV of the revised projections in FY2016 excluding the effect of changes in definitions in measurement method and changes in economic environment is projected to be +12.0B *1: Figures for FY 2015 are after payment of shareholders’ dividends of the prior fiscal year *2: Excluding the effects of payment of shareholders’ dividends Copyright (c) 2016 Tokio Marine Holdings, Inc. 26 0:28:56.1 2-2. TMNL Promotion of “Life Insurance Revolution to Protect One’s Living” ・ Focus on new field which are not fully covered by conventional life insurance ・ Aiming for securing stable profit as well as growth by expanding our unique product line-up which meets the diverse customer needs and shifting to protection-type products <Image> Life Insurance Revolution to Protect One’s Living Hospitalization / Surgery <Medical insurance> Outpatient treatment (After discharge) Inability to work (Home care) Nursing care requirement (Permanent disability) Death <Conventional life insurance> Coverage for conventionally untapped area July 2015 Cancer insurance Cancer Treatment Support Insurance NEO ・Respond to the latest cancer treatment including chemotherapy Cancer Insurance R ・Introduced unique R (return) function in addition to the above November 2015 Medical insurance Medical Kit NEO ・Higher competitive pricing and flexibility in coverage to meet diverse customer needs Medical Kit R (Revised) ・Extended coverage in response to the latest medical treatment November 2016 Household Income Term Insurance Household Income Term Insurance NEO Disability Plan ・Introduce new product in response to risk of “inability days to work” after discharge, which needs is growing ・Deliver industry-leading coverage including lump-sum benefit payment covering inability to work ?Income Before and After an Incidence of Cancer Less than 50% : 33% 50%-70% 62% patients decreased income to 70% or less of that before the incidence 27 : 29% Copyright (c) 2016 Tokio Marine Holdings, Inc. *source: Ministry of Health, Labour and Welfare “2012 Material for the Conference Discussing about Supporting Treatment and Work at the Same Time” 0:31:20.3 2-3. TMNL Strengthening Growth Potential Promote multi-channel strategies utilizing each channel’s strengths Measures to enhance growth of each channel (life insurance premiums on managerial accounting at the end of Sep. 2016) Bancassurance approx. 10% Life Partner approx. 10% Non-life Agents approx. 55% Life Professionals approx. 25% Non-life Agents Channel Composition Initiatives in FY2016 ? Enhance sales ability by deploying dedicated salesperson for life ? Promote integrated business for life and non-life ? Differentiate from competitors leveraging the highly unique products (Medical Kit NEO, etc.) ? Support for establishment of sales system in response to the revision of Insurance Business Act ? Strengthen business tie-up with non-life agents ? Recruiting sales agents with higher consulting abilities ? Strengthen business tie-up with non-life agents ? Build closer ties with financial institutes which focus on selling protection-type insurance products to broaden customer base Life Professionals Life Partner Bancassurance Sustainable growth by promoting cross-sell ? Product revision of Super Insurance ? Introduce comprehensive discount for life insurance in Super Insurance (first year 2% discount) (October 2016) First in the industry ? Strengthen business tie-up utilizing strengths of channels Further development of market by promoting sales channel mix ? Tie-up between non-life agents and life partner: increased by 8% YoY* ? Tie-up between non-life agents and life professionals: increased by 35% YoY* * Life insurance premiums on managerial accounting basis at the end of Sep. 2016 ? Enhance website marketing Business expansion through new initiative ? Strengthen customer contact by using web advertisement and renewal of corporate website ? Introduce the internet-completion application system which enable the purchase of life insurance through the web (October 2016) Copyright (c) 2016 Tokio Marine Holdings, Inc. 28 (Blank Page) Copyright (c) 2016 Tokio Marine Holdings, Inc. 29 0:32:58.7 Ⅱ. Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance Copyright (c) 2016 Tokio Marine Holdings, Inc. 30 0:33:11.0 3-1. FY2016 Projections ? Promote initiatives to achieve further profit growth by maintaining underwriting discipline even under continuing soft market and low interest rate environment ? With contribution from TMHCC, promote further diversification of risks and expand profit growth as well as accelerate initiatives to create group synergies Net Premiums Written (billions of yen) +11 -160 Business Unit Profits (billions of yen) 1,610 1,302.6 1,304.0 1,032 1,097 1,439 1,450 -11 +3 145.5 102 131.8 90 159 140 148 143 2014 2015 Normalized basis* Results basis 2016 Projections (Original) (Revised) Sep. 30, 2016 JPY 101.1 2014 2015 Applied FX rate (USD/JPY) *Excluding FX effects in converting to yen Applied FX rate (USD/JPY) Dec. 31, 2014 JPY 120.5 Dec. 31, 2015 JPY 120.6 Mar. 31, 2016 JPY 112.6 Sep. 30, 2016 JPY 101.1 *Excluding FX effects in converting to yen. Nat-cat losses are normalized to an average annual level Normalized basis* Results basis 2016 Projections (Original) (Revised) Sep. 30, 2016 JPY 101.1 Applied FX rate (USD/JPY) Applied FX rate (USD/JPY) Dec. 31, 2014 JPY 120.5 Dec. 31, 2015 JPY 120.6 Mar. 31, 2016 JPY 112.6 Sep. 30, 2016 JPY 101.1 ? On normalized basis, upward revision by \11B from the original projections due to expansion of business mainly in reinsurance and Europe ? On results basis, downward revision by \160B from the original projections to \1,450B due to the appreciation of the yen Composition of net premiums written Asia, Middle East (FY2016 Revised Projections) 7% South & Central America Reinsurance 8% 9% Europe 9% 5% Copyright (c) 2016 Tokio Marine Holdings, Inc. ? On normalized basis, upward revision by \3B from the original projections due to foreign exchange gains, etc. ? On results basis, downward revision by \11B from the original projections to \148B due to the appreciation of the yen Life 5% TMHCC 21% Phila delphia Delphi Delphi 15% 21% ? Pursue balanced growth by seizing size and profitability in developed countries and growth in emerging countries North America through “organic growth” and “strategic M&A” 62% Others 31 0:35:42.3 3-2. Expanding Group Synergies Global Footprint (Strong Customer Base) Expertise of each group company (Products / Underwriting Expertise) ? Providing specialty insurance products through each company’s sales network for cross selling ? Developed countries Emerging countries - D&O, environmental liability, cyber liability, medical stop-loss, etc. Cultivating the market in emerging countries by setting up underwriting system for specialty insurance and offering products - D&O, cyber liability, etc. Revenue Creating Synergies Japan ? Reaching out to and expanding the specialty insurance market in Japan - D&O, event cancellation, representations and warranties (M&A), etc. Investment Enhancing investment return through Delphi’s superior investment expertise ? ? Entrust the asset management of a portion of assets held by the group companies* to Delphi with high investment expertise * Philadelphia, Tokio Millennium Re, TMNF, TMHCC, TMNL (plan 2017~) Capital Optimizing retention strategy and outward reinsurance on a group basis ? ? ? Expand underwriting capacity of each group company leveraging the Group’s risk diversification effect Reduce cost of outward reinsurance through intra-group reinsurance, etc. leveraging the Group’s financial strengths Cost reduction by joint purchase of IT systems, etc. Optimize resources due to delisting of company purchased and utilizing shared services Cost Cost reduction through effective use of the group resources and scale merit Copyright (c) 2016 Tokio Marine Holdings, Inc. 32 0:37:03.5 3-3. North America (1) Results basis ■ Normalized basis ■ (Comments are normalized basis) Net Premiums Written Business Unit Profits North America With TMHCC, establish a further solid premier specialty insurance franchise. Aim for sustainable profit growth while pursuing synergy between group companies US Commercial P&C Market Share (billions of yen) (billions of yen) 994 94% 93% 93% 893 1st American International Group 891 2nd Chubb Ltd. 665.8 558 129 95.6 73 115 122 3rd Travelers Companies Inc. ・ ・ 121 8th Hartford Financial Services 9th Berkshire Hathaway Inc. 10th Tokio Marine Group 11th AmTrust Financial Services 49th 50th 2.0% ・ ・ ・ 2015 2015 2016 2016 2016予想 予想 Projections (Original) (Revised) (年初) (今回) 2015 2015 20162016 2016予想 予想 Projections (Original) (Revised) (年初) (今回) Source: Insurance Statutory Market Share Report 2015 Maintaining profitability outperforming the market through underwriting discipline and action (billions of yen) (billions of yen) Combined Ratio 110% US P&C market average Philadelphia 342.3 332 297 +6 91% 94% 92% 303 46.4 34 286 +3 100% 40 36 39 39 90% 2015 2015 2016 2016 2016予想 予想 Projections (Original) (Revised) (年初) (今回) 2015 2015 2016 2016 2016予想 予想 Projections (Original) (Revised) (年初) (今回) 80% 2010 2011 2012 2013 2014 2015 2016.2Q ? Upward revision mainly due to rate increases in renewal book and an increase in new business Copyright (c) 2016 Tokio Marine Holdings, Inc. book ? Upward revision due to favorable loss ratio and an increase in investment income 33 0:37:26.3 3-3. North America (2) Results basis ■ Normalized basis ■ (Comments are normalized basis) Net Premiums Written Business Unit Profits Combined Ratio Maintaining profit growth through profound investment expertise as well as further developing specific products and specific markets (billions of yen) (billions of yen) 110% US P&C market average Delphi 100% 241.3 232 202 208 +5 96% 98% 98% 213 44.4 36 ±0 42 37 37 90% 37 2015 2015 2016 Projections 2016 2016予想 予想 (Original) (Revised) (年初) (今回) 80% 2015 2015 2016 2016 2016予想 予想 Projections (Original) (Revised) (年初) (今回) 2010 2011 2012 2013 2014 2015 2016.2Q ? Upward revision mainly due to rate increases in ? No change due to an increase in investment renewal book and an increase in new business book income associated with an increase in AUM Aiming for further profit growth through synergy creation on a global basis while maintaining high profitability (billions of yen) (billions of yen) 88% -9 87% +3 110% US P&C market average TMHCC 100% 349 313 304 44 39 43 42 90% 2016予想 (Original) (年初) 2016 Projections 2016予想 (Revised) (今回) 2016 Projections 2016予想 2016予想 (Original) (Revised) (年初) (今回) 80% 2010 2011 2012 2013 2014 2015 2016.2Q ? Downward revision factoring in the softening of the market Copyright (c) 2016 Tokio Marine Holdings, Inc. ? Upward revision due to favorable combined ratio 34 0:38:08.6 3-4. Europe / Reinsurance Results basis ■ Normalized basis ■ (Comments are normalized basis) Net Premiums Written Business Unit Profits Combined Ratio Europe Maintaining underwriting discipline as continuous softening of the European market is expected (billions of yen) (billions of yen) 96% +10 94% 95% 110% Lloyd's market average TMK (Lloyd's business) 148.4 108 147 118 128 8 1 +2 100% 9 7 10 9 90% 2015 2015 2016 Projections 2016予想 2016予想 (Original) (Revised) (年初) (今回) 2015 2015 2016 2016 2016予想 予想Projections (Original) (Revised) (年初) (今回) 80% 2010 2011 2012 2013 2014 2015 2016.2Q ? Upward revision due to business expansion at Tokio Marine Kiln, etc. Reinsurance ? Upward revision mainly due to foreign exchange gains Under the softening market, continue maintaining stable profit by promoting geographical and product line diversification (billions of yen) (billions of yen) 130% 110% 93% 97% -1 99% 188.3 155 +16 134 120 136 10.6 90% 9 1 8 9 7 70% 50% Peer average* Tokio Millenium Re 2015 2015 2016 Projections 2016 2016予想 予想 (Original) (Revised) (年初) (今回) 2015 2015 2016 2016 2016予想 予想Projections (Original) (Revised) (年初) (今回) 30% 2010 2011 2012 2013 2014 2015 2016.2Q ? Upward revision mainly due to favorable growth in non-catastrophe business ? Downward revision due to an increase in loss ratio of non-catastrophe business non-natcat non-natcat approx. Change in portfolio (Earned premiums basis) Copyright (c) 2016 Tokio Marine Holdings, Inc. natcat natcat approx. * Average of the following 12 peer companies as below: (Renaissance Re, Validus, Ace (R/I only), Axis (R/I only), Montpelier Re, Markel, AWAC, Arch, Endurance, Aspen, Everest Re, Partner Re) 40% natcat 80% 2007 2011 2016.2Q 35 0:39:13.7 3-5. Emerging Countries Results basis ■ Normalized basis ■ (Comments are normalized basis) Net Premiums Written Business Unit Profits South & Central America Continue profit growth by providing products and services which meet the needs of customers through high quality operation (billions of yen) (billions of yen) 100% -6 100% 102% 102.7 103 117 115 109 ±0 5.3 5 4 4 4 4 ? Net premiums written revised downward mainly due to economic slowdown of Brazil 2015 2015 2016 Projections 2016 2016予想 予想 (Original) (Revised) 2015 2015 (年初) (今回) 20162016 2016予想 予想 Projections (Original) (Revised) (年初) (今回) Asia, Middle East Achieve growth in the retail market by expanding distribution channels and rolling-out the best-practice within the Group (billions of yen) (billions of yen) Non-life 115.7 124 99 110 -5 91% 95% -3 98% 105 14.8 11 ? Net premiums written revised downward due to slowdown in auto sales in Thailand and Malaysia, etc. ? Business unit profits revised downward due to large losses, etc. 10 8 6 5 2015 2015 Projections 20162016 2016 予想 予想 (Original) (Revised) (年初) (今回) (billions of yen) 2015 2015 20162016 2016予想 予想 Projections (Original) (Revised) (年初) (今回) (billions of yen) Life 82.9 71 -4 94 83 79 2 0.6 0.4 1 ±0 1 1 ? Net premiums written revised downward due to sales circumstances under the low interest rate environment, etc. 2015 2015 Copyright (c) 2016 Tokio Marine Holdings, Inc. 2016 Projections 2016予想 2016 予想 (Original) (Revised) (年初) (今回) 2015 2015 2016 Projections 2016予想 2016予想 (Original) (Revised) (年初) (今回) 36 (Blank Page) Copyright (c) 2016 Tokio Marine Holdings, Inc. 37 Reference a ・Tokio Marine Holdings Key Statistics ・Return to Shareholders ・2Q FY2016 Results Overview ・FY2016 Projections Overview ・Definition and Reconciliation of Adjusted Net Income, Adjusted Net Assets and Adjusted ROE ・Definition and Reconciliation of Business Unit Profits ・Impact of FX rate change on the Group’s Financial Results ・Long-term Vision and Mid-Term Business Plan "To Be a Good Company 2017" b c ・Initiatives for “Sustainable Profit Growth” ・Framework of the Mid-Term Business Plan and Group Management ・Basic Information (Domestic Non-Life) - TMNF ・Basic Information (Domestic Life) ? TMNL ・Subordinated Term Loan by TMNL ・Asset Portfolio ・International Insurance - FY2016 Projections by Region ・Basic Information (International Insurance) d Copyright (c) 2016 Tokio Marine Holdings, Inc. 38 Tokio Marine Holdings Key Statistics FY2006 Net income (billions of yen) Shareholders' equity after tax (billions of yen) EPS (yen) BPS (yen) ROE PBR Adjusted net income (billions of yen) Adjusted net assets (billions of yen) FY2007 108.7 2,563.5 133 3,195 3.6% 1.15 99.4 15.1 29.7 -1.0 60 FY2008 23.1 1,627.8 29 2,067 1.1% 1.16 5.1 -57.2 20.8 -21.1 50 FY2009 128.4 2,169.0 163 2,754 6.8% 0.96 46.2 52.0 76.5 -9.4 95 FY2010 71.9 1,886.5 92 2,460 3.5% 0.90 20.4 27.5 24.8 -0.7 187 FY2011 6.0 1,839.6 7 2,399 0.3% 0.95 30.7 2,301.6 40 3,001 1.3% 0.76 -26.1 15.9 -11.9 2.6 206 FY2012 129.5 2,340.7 168 3,052 6.2% 0.87 163.1 2,746.5 212 3,580 6.5% 0.74 48.3 110.3 69.2 -18.7 115 FY2013 184.1 2,712.7 239 3,536 7.3% 0.88 243.7 3,172.5 317 4,135 8.2% 0.75 34.0 104.5 136.9 2.5 109 FY2014 247.4 3,578.7 323 4,742 7.9% 0.96 323.3 4,103.4 423 5,437 8.9% 0.83 122.5 139.8 145.5 4.0 112 FY2015 254.5 3,484.7 337 4,617 7.2% 0.82 351.9 3,599.3 466 4,769 9.1% 0.80 126.0 -188.1 131.8 7.3 FY2016 Projections 280.0 3,318.9 370 4,396 8.2% 0.87 389.0 3,654.0 515 4,839 10.7% 0.79 178.0 202.0 148.0 5.0 *1 93.0 3,398.4 112 4,128 2.8% 1.06 89.0 48.2 28.6 3.8 45 Financial accounting basis KPI Adjusted EPS (yen) Adjusted BPS (yen) Adjusted ROE Adjusted PBR Domestic non-life insurance business Business Unit Profits*2 (billions of yen) Domestic life insurance business International insurance business Financial and general businesses Sales of business-related equity holdings (billons of yen) 122 more than 100 2007/3E Adjusted number of issued and outstanding shares (thousands of shares) Market capitalization (billions of yen) Share price (yen) Percentage change (Reference) TOPIX Percentage change 2008/3E 802,231 2,960.6 3,680 - 15.6% 1,212.96 - 29.2% 2009/3E 787,562 1,926.8 2,395 - 34.9% 773.66 - 36.2% 2010/3E 787,605 2,118.3 2,633 9.9% 978.81 26.5% 2011/3E 766,820 1,789.3 2,224 - 15.5% 869.38 - 11.2% 2012/3E 766,928 1,827.1 2,271 2.1% 854.35 - 1.7% 2013/3E 767,034 2,039.2 2,650 16.7% 1,034.71 21.1% 2014/3E 767,218 2,383.9 3,098 16.9% 1,202.89 16.3% 2015/3E 754,599 3,438.0 4,538.5 46.5% 1,543.11 28.3% 2015/9E 754,685 2,878.6 3,800 - 16.3% 1,347.20 - 12.7% 2016/9E 754,959 2,904.3 3,834 0.9% 1,322.78 - 1.8% *3 823,337 3,594.9 *4 4,360 - 6.4% 1,713.61 - 0.8% *1 *2 *3 *4 From FY2015: The figure is "Net income attributable to owners of the parent". FY2006-2014 figures are "Adjusted earnings" (Former KPI), domestic life insurance business are presented on an TEV (Traditional Embedded Value) basis All figures exclude the number of treasury shares held from the total number of the shares issued and are shown on a basis after a share-split 1-500 in Sep. 2006 All figures are shown on a basis after a share-split 1-500 in Sep. 2006 Copyright (c) 2016 Tokio Marine Holdings, Inc. 39 Return to Shareholders FY2006 Dividends per share Dividends total 36yen 29.8bn yen FY2007 48yen 38.7bn yen FY2008 48yen 38.0bn yen FY2009 50yen 39.4bn yen FY2010 50yen 38.6bn yen FY2011 50yen 38.3bn yen FY2012 55yen 42.2bn yen FY2013 70yen 53.7bn yen FY2014 95yen 72.2bn yen FY2015 110yen 83.0bn yen FY2016 Projections 135yen 101.9bn yen Share repurchases*1 Total distributions to shareholders 85.0bn yen 90.0bn yen 50.0bn yen 88.0bn yen 39.4bn yen 50.0bn yen 88.6bn yen 38.3bn yen 42.2bn yen - 50.0bn yen 114.8bn yen 128.7bn yen 53.7bn yen 122.2bn yen 25.0bn yen (Plan) 126.9bn yen 83.0bn yen (Plan) - Adjusted net income Average adjusted net income Payout ratio *2 30.7bn yen 163.1bn yen 243.7bn yen 323.3bn yen 351.9bn yen 220.0bn yen 38% 389.0bn yen 290.0bn yen 35% 2015年度から修正純利益を使用(2011~14年度の修正純利益はその際に過去分として算出したもの) Adjusted net income was adopted as a new KPI in FY2015. (Figures from FY2011 to FY2014 are adjusted net income.) 2006年度から2014年度の指標は<参考2>のとおり Key Statistics from FY2006 to FY2014 are shown in Reference 2 table. <Refernece1 : Financial accounting basis> Net income (Consolidated) Payout ratio <Refernece2 : Former KPI> Adjusted earnings Adjusted earnings (excluding EV) Average adjusted earnings *3 (excluding EV) Payout ratio *2 93.0bn yen 108.7bn yen 32% 36% 23.1bn yen 128.4bn yen 165% 31% 71.9bn yen 54% 6.0bn yen 129.5bn yen 184.1bn yen 247.4bn yen 639% 33% 29% 29% 254.5bn yen 33% 280.0bn yen 36% 169.7bn yen 143.2bn yen - 52.5bn yen 165.4bn yen 121.5bn yen 128.1bn yen 90.0bn yen 100.0bn yen 33% 39% 4.7bn yen 113.4bn yen 80.0bn yen 48% 85.0bn yen 46% 72.0bn yen - 19.5bn yen 209.1bn yen 278.1bn yen 412.0bn yen 44.5bn yen - 35.4bn yen 80.0bn yen 48% 80.0bn yen 48% 98.8bn yen 173.6bn yen 272.2bn yen 85.0bn yen 110.0bn yen 155.0bn yen 50% 49% 47% *1: On a repurchase year basis. FY2006 figure excludes JPY57.8B of stock exchange between Nisshin Fire *2: Until FY2014: payout ratio to average adjusted earnings (exluding EV) From FY2015: payout ratio to average adjusted net income *3: Excludes effects from the Great East Japan Earthquake and Thai Flood Copyright (c) 2016 Tokio Marine Holdings, Inc. 40 2Q FY2016 Results Overview (Consolidated) ? Net Premiums Written (billions of yen, except for %) FY2015 2Q ■Ordinary income (TMHD Consolidated) Net premiums written (TMHD Consolidated) Life insurance premiums (TMHD Consolidated) FY2016 2Q 2,587.0 1,700.8 434.4 213.4 159.3 2.8 15.3 74.7 2.7 - 41.6 155.2 124.0 2.1 10.6 58.7 1.7 - 41.9 YoY Change % ? Decreased due to the appreciation of the yen, etc., despite TMHCC consolidation 2,241.4 1,735.1 116.9 116.1 70.4 1.3 15.6 72.6 2.7 - 46.7 85.6 65.7 0.9 10.8 54.5 1.7 - 48.2 345.6 - 34.2 317.4 97.2 88.9 1.5 - 0.3 2.0 0.0 5.0 69.6 58.3 1.2 - 0.2 4.2 - 0.0 6.2 + 15.4% - 2.0% + 271.4% + 83.7% + 126.2% + 110.7% - 2.1% + 2.8% + 0.1% ? Life Insurance Premiums ? Increased significantly due to an increase in in-force policies and a decrease in surrender of variable annuities in domestic life business as well as TMHCC consolidation in international insurance business, etc. ■Ordinary profit (TMHD Consolidated) Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Financial and general Others (Consolidation adjustments, etc.) ? Ordinary Profit ? Domestic Non-Life Increased mainly due to i. Decrease in net incurred losses relating to natural catastrophes ii. Decrease in net provision for catastrophe loss reserves at TMNF iii. Decrease in provision for reserves for foreign currency denominated outstanding claims due to the appreciation of the yen at TMNF, etc. ■Net income attributable to owners of the parent Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Financial and general Others (Consolidation adjustments, etc.) + 81.4% + 88.7% + 137.6% - 2.2% + 7.8% - 5.1% ? Domestic Life Decreased mainly due to (i) a decrease in gains on sales of securities and (ii) a decrease in reversal of contingency reserves, despite a decrease in provision for underwriting reserves by limiting the sales of individual annuities 【KPI for the Group Total】 ■Adjusted net income 140.3 219.2 78.9 + 56.2% ? Overseas Subsidiaries Increased mainly due to TMHCC consolidation and foreign exchange gains on a local accounting basis, etc. despite the appreciation of the yen ? Net Income attributable to owners of the parent ? Increased according to the above ? Adjusted Net Income ? Excluding the effect of the decrease in net provision for catastrophe loss reserves and amortization of goodwill associated with TMHCC, etc., increased Copyright (c) 2016 Tokio Marine Holdings, Inc. 41 2Q FY2016 Results Overview (Business Unit Profits) (billions of yen) Business Domain FY2015 2Q Results 47.9 46.1 3.0 -1.2 59.7 60.3 63.7 46.6 -0.9 3.1 7.6 6.6 *3 FY2016 2Q Results 98.8 96.1 4.2 -1.5 199.6 200.3 79.6 55.7 9.0 1.7 2.8 7.4 76.5 3.7 YoY Change 50.8 49.9 1.1 -0.3 ? Domestic Non-Life Increased by \50.8B YoY to \98.8B mainly due to: ? ? Decrease in net incurred losses relating to natural catastrophes Decrease in provision for reserves for foreign currency denominated outstanding claims due to the appreciation of the yen at TMNF Reversal effect of an increase in net incurred losses in FY2015 due to large losses and an increase in net incurred losses in auto relating to accidents occurred in past fiscal years at TMNF Domestic Non-Life TMNF NF Other Domestic Life*1・2 TMNL International Insurance North America Europe South & Central America Asia (incl. Middle East) Reinsurance International Non-Life International Life Financial & General ? 139.8 139.9 15.9 9.0 10.0 -1.3 -4.7 0.7 13.5 2.4 ? Domestic Life Increased by \139.8B YoY to \199.6B mainly due to the below factors at TMNL: ? ? Changes in definitions in the measurement method of MCEV Changes in economic environment including interest rates, etc. 62.9 1.3 5.5 3.5 -2.0 ? International Insurance Increased by \15.9B YoY to \79.6B mainly due to: ? ? ? Contribution from TMHCC Foreign exchange gains on a local accounting basis Appreciation of the yen *1: Excluding capital transactions *2: Simplified calculation method is applied for EV. The calculation is an unaudited basis *3: International Non-Life figures include some life insurance figures of composite overseas subsidiaries Copyright (c) 2016 Tokio Marine Holdings, Inc. 42 FY2016 Projections Overview (Consolidated) ? Net Premiums Written (billions of yen, except for %) FY2015 Results ■Ordinary income (TMHD Consolidated) Net premiums written (TMHD Consolidated) Life insurance premiums (TMHD Consolidated) FY2016 FY2016 Projections Projections Original (a) Revised (b) Difference (b) - (a) Change ? Downward revision due to a decrease in premiums at overseas subsidiaries associated with the appreciation of the yen, etc. ? Life Insurance Premiums - 4.0% + 1.3% + 3.9% + 3.9% - 15.6% + 7.0% - 5.5% - 3,265.5 471.6 385.8 377.2 9.7 29.0 145.7 5.7 - 181.5 254.5 301.6 6.1 14.7 111.5 3.4 - 183.0 3,460.0 800.0 380.0 309.0 6.4 22.9 164.1 4.3 - 126.7 265.0 245.0 4.3 15.6 120.7 3.0 - 123.6 3,320.0 810.0 395.0 321.0 5.4 24.5 155.0 4.3 - 115.2 280.0 252.0 3.9 16.9 117.0 2.9 - 112.7 - 140.0 10.0 15.0 12.0 - 1.0 1.6 - 9.1 11.5 15.0 7.0 - 0.4 1.3 - 3.7 - 0.1 10.9 ? Upward revision from the original projections ■Ordinary profit (TMHD Consolidated) Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Financial and general Others (Consolidation adjustments, etc.) ? Ordinary Profit ? Domestic Non-Life Upward revision due to (i) a decrease in provision for reserves for foreign currency denominated outstanding claims associated with the appreciation of the yen and (ii) an improvement of loss ratio mainly in auto at TMNF, etc. ■Net income attributable to owners of the parent Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Financial and general Others (Consolidation adjustments, etc.) 【KPI for the Group Total】 + 5.7% + 2.9% - 9.3% + 8.3% - 3.1% - 3.3% ? Domestic Life Upward revision due to an increase in gains on sales of securities, etc. ? Overseas Subsidiaries Downward revision due to the appreciation of the yen, etc. despite a decrease in natural catastrophes ■Adjusted net income 351.9 388.0 389.0 1.0 + 0.3% ? Net Income attributable to owners of the parent ? Upward revision according to the above ? Adjusted Net Income ? Projected to remain almost flat from the original projections Copyright (c) 2016 Tokio Marine Holdings, Inc. 43 FY2016 Projections Overview (Business Unit Profits) (billions of yen) FY2015 Results FY2016 Projections ? Domestic Non-Life Upward revision by \13B from the original projections to \178B mainly due to the below factors at TMNF: ? Decrease in provision for reserves for foreign currency denominated outstanding claims due to the appreciation of the yen ? Improvement of loss ratio mainly in auto Business Domain Original (a) 165.0 158.0 7.0 -1.0 39.0 39.0 159.0 129.0 9.0 4.0 10.0 9.0 161.0 2.0 Revised (b) 178.0 173.0 7.0 -2.0 202.0 202.0 148.0 122.0 10.0 4.0 6.0 9.0 151.0 1.0 (b)-(a) Domestic Non-Life TMNF NF Other Domestic Life*1 TMNL International Insurance North America Europe South & Central America Asia (incl. Middle East) Reinsurance International Non-Life International Life Financial & General *2 126.0 120.0 8.8 -2.7 -188.1 -187.4 131.8 95.6 8.0 5.3 14.8 10.6 134.3 0.6 13.0 15.0 -1.0 163.0 163.0 -11.0 -7.0 1.0 -4.0 -10.0 -1.0 ? Domestic Life Upward revision by \163B from the original projections to \202B mainly due to the below factors at TMNL: ? Changes in definitions in the measurement method of MCEV ? Changes in economic environment including interest rates, etc. ? International Insurance Downward revision by \11B from the original projections to \148B mainly due to: ? Decrease in natural catastrophes ? Foreign exchange gains on a local accounting basis ? Appreciation of the yen 7.3 4.0 5.0 1.0 *1: Excluding capital transactions *2: International Non-Life figures include some life insurance figures of composite overseas subsidiaries Copyright (c) 2016 Tokio Marine Holdings, Inc. 44 Definition of Adjusted Net Income (New from FY2016) / Adjusted Net Assets / Adjusted ROE Definition of Adjusted Net Income / Adjusted Net Assets / Adjusted ROE ? Adjusted Net Income*1 Adjusted Net Income = Net income (consolidated)*2 Provision for + catastrophe loss reserves*3 + Provision for contingency reserves*3 + Provision for price fluctuation reserves*3 Gains or losses on sales or valuation of ALM*4 bonds and interest rate swaps Gains or losses on sales or valuation of fixed assets and business investment equities + Amortization of goodwill and other intangible fixed assets Other extraordinary gains/losses, valuation allowances, etc ? Adjusted Net Assets*1 Adjusted Net Assets = Net assets (consolidated) + Catastrophe loss reserves + Contingency reserves + Price fluctuation reserves Goodwill and other intangible fixed assets ? Adjusted ROE Adjusted ROE = Adjusted Net Income ÷ Adjusted Net Assets*5 *1: Each adjustment is on an after-tax basis *2: Net income is attributable to owners of the parent *3: Reversals are subtracted *4: ALM: Asset Liability Management. Excluded as counter balance items against market value fluctuations of liabilities under ALM *5: Average balance basis Difference Between New Definition and Former Definition “Gains or losses on sales or valuation of business investment equities” is added to the adjusting items for Adjusted Net Income (See bold underline text portion). <Treatment of gains or losses on sales or valuation for the types of equities> Adjusted Net Income (new) Adjusted Net Income (former) (note1) Equities held for the purpose of gains derived from the increase in the market Absolute return investments (note1) Included Included value and/or the dividend income (note2) Domestic equities and other securities held by domestic subsidiaries for the main purpose of strengthening business relationships (note3) Equities and other securities other than Absolute return investments, Business-related equities and Investments in subsidiaries and affiliates (such as equities and other securities substantially equivalent to Investments in subsidiaries and affiliates, but not treated as Investments in subsidiaries and affiliates under the applicable accounting principles) Business-related equities (note2) Included Excluded (excluded as “other extraordinary gains/ losses) Excluded Included Excluded (excluded as “other extraordinary gains/ losses) Included Investments in subsidiaries and affiliates Business investment equities (note3) Copyright (c) 2016 Tokio Marine Holdings, Inc. 45 Reconciliation of Adjusted Net Income / Adjusted Net Assets (billions of yen) ? Adjusted Net Income*1 FY2015 Results FY2016 FY2016 Projections Projections Original (a) Revised (b) (b)-(a) ? Adjusted Net Assets*1 FY2015 Results FY2016 FY2016 Projections Projections Original (a) Revised (b) ? Adjusted ROE FY2015 Results FY2016 FY2016 Projections Projections Original (a) Revised (b) Net income attributable to owners of the parent (consolidated) Provision for catastrophe loss reserves *2 254.5 +68.9 -0.2 265.0 +31.0 +3.0 - 280.0 +29.0 +3.0 -4.0 15.0 -2.0 -4.0 Net assets(consolidated) Catastrophe loss reserves Contingency reserves 3,484.7 +769.1 +34.2 +62.8 -751.5 3,599.3 3,605.0 +806.0 +34.0 +67.0 -752.0 3,761.0 3,356.0 +804.0 +34.0 +67.0 -608.0 3,654.0 Net income(consolidated) Net assets(consolidated)* FInancial acccounting basis ROE * average balance basis 254.5 3,531.7 7.2% 265.0 3,545.0 7.5% 280.0 3,420.0 8.2% Provision for contingency reserves *2 Provision for price fluctuation reserves *2 +3.7 *3 Price fluctuation reserves Goodwill and other intangible fixed assets Gains or losses on sales or valuation of ALM bonds and interest rate swaps Gains or losses on sales or valuation of fixed assets and business investment equities (FY2015 Results : Gains or losses on sales or valuation of fixed assets) -22.6 FY2015 Results FY2016 FY2016 Projections Projections Original (a) Revised (b) +1.8 -4.0 -3.0 1.0 Adjusted Net Assets Adjusted Net Income Adjusted Net Assets* Adjusted ROE * average balance basis 351.9 3,851.4 9.1% 388.0 3,680.0 10.5% 389.0 3,620.0 10.7% Amortization of goodwill and other intangible fixed assets Other extraordinary gains/losses, valuation allowances, etc. +34.3 +11.3 351.9 +93.0 388.0 +83.0 +1.0 389.0 -10.0 1.0 1.0 Adjusted Net Income *1 Each adjustment is on an after-tax basis *2 Reversals are subtracted *3 ALM: Asset Liability management Excluded as counter balance items against market value fluctuations of liabilities under ALM Copyright (c) 2016 Tokio Marine Holdings, Inc. 46 Definition of Business Unit Profits (New from FY2016) Definition of Business Unit Profits ? Non-life insurance business Business Unit Profits*1 = Net income Provision for + catastrophe loss reserves*2 + Provision for price fluctuation reserves*2 Gains or losses on sales or valuation of ALM*3 bonds and interest rate swaps Gains or losses on sales or valuation of fixed assets, business related equities and business investment equities *1: Each adjustment is on an after-tax basis Other extraordinary gains/losses, valuation allowances, etc. - ? Life insurance business*4 Business Unit Profits*1 Increase in EV*5 = during the current fiscal year + Capital transactions such as capital increase *2: Reversals are subtracted *3: ALM: Asset Liability Management. Excluded as counter balance items against market value fluctuations of liabilities under ALM *4: For life insurance companies in certain regions, Business Unit Profits is calculated by using the definition in Other businesses (head office expenses, etc. are deducted from profits) *5: EV: Embedded Value. An index that shows the net present value of profits to be gained from policies in-force is added to the net asset value ? Other businesses Net income determined in accordance with financial accounting principles Difference Between New Definition and Former Definition <Change in the definition of Business Unit Profits for non-life insurance business> Among the adjusting items for Business Unit Profits, “Gains or losses on sales or valuation of equity holdings” is replaced by “Gains or losses on sales or valuation of business-related equities and business investment equities.” (See bold underline text portion). <Treatment of gains or losses on sales or valuation for the types of equities> Business Unit Profits (new) Business Unit Profits (former) Absolute return investments (note1) Included Excluded (note1) Equities held for the purpose of gains derived from the increase in the market value and/or the dividend income (note2) Domestic equities and other securities held by domestic subsidiaries for the Business-related equities (note2) Excluded Excluded (excluded as “other extraordinary gains/ losses) Excluded Excluded Excluded (excluded as “other extraordinary gains/ losses) Excluded main purpose of strengthening business relationships (note3) Equities and other securities other than Absolute return investments, Business-related equities and Investments in subsidiaries and affiliates (such as equities and other securities substantially equivalent to Investments in subsidiaries and affiliates, but not treated as Investments in subsidiaries and affiliates under the applicable accounting principles) Investments in subsidiaries and affiliates Business investment equities (note3) Copyright (c) 2016 Tokio Marine Holdings, Inc. 47 Reconciliation of Business Unit Profits ? Domestic Non-Life*1 (TMNF) FY2015 2Q Results FY2016 2Q Results YoY (billions of yen) FY2015 Results FY2016 Projections Original(a) FY2016 Projections Revised(b) (b)-(a) Net income for accounting purposes 65.7 124.0 58.3 Net income for accounting purposes 301.6 245.0 252.0 7.0 Provision for catastrophe loss reserves *2 +45.4 +25.4 -20.0 Provision for catastrophe loss reserves*2 +68.3 +27.0 +25.1 -1.9 Provision for price fluctuation reserves *2 +1.2 +1.7 0.5 Provision for price fluctuation reserves*2 Gains or losses on sales or valuation of ALM*3 bonds and interest rate swaps Gains or losses on sales or valuation of fixed assets and business investment equities (FY2015 Results : Gains or losses on sales or valuation of fixed assets) +3.5 +3.4 +3.5 0.1 Gains or losses on sales or valuation of ALM*3 bonds and interest rate swaps Gains or losses on sales or valuation of fixed assets and business investment equities (FY2015 Results : Gains or losses on sales or valuation of fixed assets) -2.7 -2.0 0.7 -21.1 +0.0 -3.4 -3.4 -22.6 -40.9 -18.3 -76.4 -55.0 -51.7 3.3 Intra-group dividends -33.8 -11.2 22.6 Intra-group dividends -155.7 -62.8 -57.1 5.7 Other extraordinary gains/losses, valuation allowances, etc -7.1 -0.9 6.2 Other extraordinary gains/losses, valuation allowances, etc -0.2 +0.4 +4.6 4.2 Business Unit Profits 46.1 96.1 49.9 Business Unit Profits 120.0 158.0 173.0 15.0 ? International Insurance*1 FY2015 2Q Results FY2016 2Q Results YoY FY2015 Results FY2016 Projections Original(a) FY2016 Projections Revised(b) (b)-(a) Overseas subsidiaries Net income for accounting purposes Difference with EV (Life) Adjustment of non-controlling interests Difference of subsidiaries covered Other adjustments*4 Business Unit Profits 54.5 -0.8 -1.4 +3.8 +7.7 63.7 58.7 2.3 -0.7 +3.5 +15.7 79.6 4.2 3.2 0.6 -0.2 7.9 15.9 Overseas subsidiaries Net income for accounting purposes Difference with EV (Life) Adjustment of non-controlling interests Difference of subsidiaries covered Other adjustments Business Unit Profits *4 111.5 -2.0 -2.3 +9.5 +15.2 131.8 120.7 117.0 -3.7 159.0 148.0 -11.0 *1: Each adjustment is on an after-tax basis *2: Reversals are subtracted *3: ALM: Asset Liability Management. Excluded as counter balance items against market value fluctuations of liabilities under ALM *4: Amortization of other intangible fixed assets, head office expenses, etc. Copyright (c) 2016 Tokio Marine Holdings, Inc. 48 Impact of FX rate change on the Group’s Financial Results ? Main impact in the event of 1 yen appreciation*1 Impact on P/L 1. Decrease in profit from overseas subsidiaries converted into yen: 2. Change in reserves for foreign currency denominated outstanding claims and derivatives at TMNF: approx. \ - 1.0B*2 approx. \ + 1.0B*2 *1 Assuming that the FX rate for each currency changes by the same ratio as USD *2 After tax basis ? Reference (applied FX rate) Applied FX rate (USD/JPY) FY2015 Results JPY 120.61 (end-Dec.2015) FY2016 Projections (Original) FY2016.2Q Results JPY 102.91 (end-Jun.2016) FY2016 Projections (Revised) Overseas subsidiaries JPY 112.68 (end-Mar.2016) JPY 101.12 (end-Sep.2016) TMNF JPY 112.68 (end-Mar.2016) JPY 101.12 (end-Sep.2016) Copyright (c) 2016 Tokio Marine Holdings, Inc. 49 Long-term Vision and the Mid-Term Business Plan "To Be a Good Company 2017" Long-term vision A global insurance group that delivers sustainable growth by providing safety and security to customers worldwide - Our timeless endeavor to be a Good Company Aiming for globally competitive-level earnings growth and capital efficiency ~Drive ROE towards double-digit sphere~ Mid-Term Business Plan “To Be a Good Company 2017” ~Evolve business structure to realize sustainable profit growth and higher ROE~ "Innovation and Execution 2014" ~Achieve an ROE exceeding our cost of capital~ ? ? Unlocking our potential Capitalizing on changes Pursuing growth opportunities Advancing our business platform Structural reform to profitable business Innovative changes for wellbalanced business portfolio ? ? ? ? Profit recovery stage Copyright (c) 2016 Tokio Marine Holdings, Inc. Sustainable profit growth stage 50 Initiatives for “Sustainable Profit Growth” ? Enhancement Unlocking our potential ? Domestic insurance: Enhancing the integrated business model for life and non-life, strengthening claims-service capabilities, and further utilizing our risk consulting service International insurance: Enhancing organic growth Evolution Capitalizing on changes ? Effectively forecasting and proactively meeting the emerging and evolving needs of the market and our customers Strengthening R&D to convert new risks into our business opportunities ? Expansion Pursuing growth opportunities ? Promoting disciplined business investment to capture growth opportunities globally Enhancing our diversified business portfolio based on risk appetite Advancing ERM and improving risk portfolio to sustainably and comprehensively enhance profit growth, capital efficiency, and financial soundness Strengthening our business platform to further reinforce our globalized business Developing a diverse workforce with a strong customer orientation to drive sustainable growth ? ? Excellence Advancing our business platform ? ? Copyright (c) 2016 Tokio Marine Holdings, Inc. 51 Framework of the Mid-Term Business Plan and Group Management Enhancing Enterprise Risk Management (ERM) to realize sustainable profit growth and higher capital efficiency even in a changing environment, while maintaining financial soundness Generate capital and cash Achieve sustainable profit growth and improve the risk portfolio in each business domain Achieve sustainable profit growth in each business domain ? Domestic non-life : Profit growth as the core business of the Group ? Domestic life : Profit growth while maintaining financial soundness as a growth driver of the Group ? International insurance: Profit growth while globally diversifying risks as a growth driver of the Group Improve the risk portfolio ? Reduce the risks associated with business-related equities ? Strengthen control of natural catastrophe risks Efficient deployment of capital and cash Invest for growth ? Invest in new businesses with high capital efficiency ? Invest today to build foundations for our growth tomorrow Enterprise Risk Management (ERM) Return to shareholders ? Increase dividends through profit growth ? Achieve an appropriate level of capital via flexible repurchases of shares Improve capital efficiency by diversifying our business portfolio Maintain financial soundness Copyright (c) 2016 Tokio Marine Holdings, Inc. + Enhance ROE + Sustainable profit growth 52 Basic Information (Domestic Non-Life 1) - TMNF ? Trend of net premiums written and combined ratio C/R(Private Insurance W/P Basis) Net Premiums Written (billions of yen) ? Premium composition by Line (FY2015 net premiums written basis) 103.3% 99.4% 97.9% 97.2% 97.4% Marine 91.2% 3.1% 89.8% 89.2% 2,128.3 Others 12.7% CALI 13.3% P.A. 8.2% Fire 14.3% Auto 48.4% 90.9% 92.0% 93.1% 89.9% 1,892.7 1,928.0 1,912.1 1,813.4 1,736.0 1,742.7 1,783.0 1,869.6 1,966.3 2,036.7 2,110.0 ? Premium composition by sales channel (FY2015 managerial accounting basis) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 ? Statistics of combined ratio and loss ratio (private insurance E/I Basis) FY2011 Net E/I C/R* E/I loss ratio Excluding natural catastrophes Expense ratio 103.8% 69.8% 61.3% 34.0% FY2012 99.6% 66.8% 62.8% 32.8% FY2013 97.2% 65.0% 60.1% 32.2% FY2014 90.6% 58.5% 56.9% 32.2% FY2015 92.7% 60.1% 56.0% 32.6% Financial institutions Others 3.5% 14.3% Auto repair shop 2016 8.8% Projections Auto (Revised) dealership 20.0% Full-time agents 28.3% Corporate 25.1% FY2016 Projections (Revised) 90.0% 57.2% 54.7% 32.8% ? Market share* (FY2014 net premiums written basis) TMNF 25.6% NF 1.7% *: Net E/I C/R=E/I loss ratio + W/P expense ratio Copyright (c) 2016 Tokio Marine Holdings, Inc. *Japanese non-life market (excluding reinsurance companies) 53 Basic Information (Domestic Non-Life 2) - TMNF ? Trend of underwriting results in auto insurance (W/P basis combined ratio) <Factors of profitability deterioration> ? Increase in senior drivers with high accident frequency ? Decrease in per-policy premiums owing to the progress of the average discount rate under the Grade Rating System Increasing trend in unit repair cost <Measures to improve profitability> ? Efforts to decrease business expenses such as operational streamlining ? Product and rate revisions Introduction of age-bracket rate plans Revision of the Grade Rating System Other measures to improve underwriting result ? 103.6% 102.9% 103.8% 102.6% 98.5% 94.0% ? ? ? 98.5% 94.9% 96.0% 91.5% 90.1% 90.2% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Projections (Revised) ? Trend of auto insurance policy renewal ratio, combined ratio and loss ratio FY2011 Policy renewal ratio Net E/I E/I L/R C/R* ? Rate revisions and profitability improvements per FY (excluding revisions of the Grade Rating System in non-fleet auto insurance) (billions of yen) FY2012 95.3% 100.2% 69.4% FY2013 95.6% 95.7% 65.3% FY2014 95.6% 91.6% 61.1% FY2015 95.7% 91.4% 60.5% FY2016 Projections (Revised) Revision Jan. 2012 Oct. 2012 Oct. 2013 Oct. 2014 Total FY13 7.0 8.0 4.0 19.0 FY14 FY15 FY16 Projections 95.1% 102.9% 70.7% - 91.2% 60.3% 1.0 26.0 3.0 30.0 4.0 15.0 19.0 3.0 3.0 *: Net E/I C/R =E/I loss ratio + W/P expense ratio Copyright (c) 2016 Tokio Marine Holdings, Inc. 54 Basic Information (Domestic Life) - TMNL ? Growing "Medical & Cancer" market 【Composition of number of in-force policies】 (Individual insurance basis, total of Japanese life insurance market) ? Growth rate of number of in-force policies at TMNL 【CAGR of in-force policies from FY2000 to FY2015】*1 *1: Total of individual insurance and individual annuities FY2000 20.2% TMNL*2 Average of Japanese life insurance market*3 +12.7% *2: After merger basis FY2015 35.5% 0 Others 50 Medical & Cancer 100 (unit: millions of policy) +3.0% *3 :Source Insurance Statistics (Seiho Toukeigo) (unit: ten thousands of policy) 150 530 500 470 438 349 283 256 317 378 405 Source: The Life Insurance Association of Japan 219 160 134 87 8 1996 187 106 23 1997 41 57 1998 1999 2000 Number of in-force 2015 2014 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 *4 policies at TMNL (total of individual insurance and individual annuities) 2001 *4:Total of TMNL and former FL Through development of product strategies focusing on “life insurance to protect one's living” in response to customer needs, TMNL achieved 5.3 million in-force policies in FY2015, significantly exceeding the market growth Copyright (c) 2016 Tokio Marine Holdings, Inc. 55 Subordinated Term Loan by TMNL Background of the funding Significant changes in life insurance business environment brought by unprecedented easy money policy ? Improving investment return is an immediate issue in the historically low interest rate environment. As liquidity of Japanese Government Bonds (“JGB”) has fallen, it has become more difficult to conduct flexible ALM depending on JGB ? Diversification of investment portfolio is required to improve stability of the means of controlling interest rate risk of insurance liabilities as well as to improve investment return ? In considering capital strategies, taking into account uncertainty in financial markets, such as future interest-rate spike has become more important Purpose of the funding TMNL plans to fund through a subordinated term loan to maintain stable financial base in the event of a future drastic environmental shift, specifically aiming two points below <Summary of the Loan> Amount : Approx. 100 billion yen Financing method : Syndicated loan Drawdown date : November 2016 (To be scheduled) Maturity : 27 years* ? Further enhance its capital preparing for investment portfolio diversification in consideration of the current *As premises for certain criteria, it is possible to be repaid voluntarily in a lump after November 2023 low interest rate environment Arranger : The Bank of Tokyo-Mitsubishi UFJ, Ltd. ? Prepare for uncertainty such as interest-rate spike in the future, which could lead to a decrease in unrealized Pricing : Fixed interest rate (Floating interest rate after November 2023) capital gains of its bonds and reduce its net assets on financial accounting basis Note : Credit rating will be assigned to the funding Copyright (c) 2016 Tokio Marine Holdings, Inc. 56 Asset Portfolio ? Domestic Non-Life (TMNF) ? With regard to "long-term insurance liabilities," we aim to maximize the value of surplus by controlling the interest rate risk based on ALM investments ? With regard to "Absolute return investment and lending," we work toward diversification of investments with appropriate risk control, in order to maximize net asset value and increase investment income TMNF ? Domestic Life (TMNL) ? Excluding assets in separate accounts, most assets are assets for backing long-term insurance liabilities. We aim to maximize the value of surplus by controlling the interest rate risk based on ALM investments TMNL Total Total Assets \9.2T (as of Sep. 30, 2016) Assets \7.6T (as of Sep. 30, 2016) Assets backing long-term insurance liabilities Mainly yen-denominated fixed income assets Appropriately control the yendenominated interest rate risks of longterm insurance liabilities including deposit-type insurance, with yendenominated fixed income assets 28% Absolute return investment and lending 15% (Including short-term investments) Carefully select investment targets from domestic and foreign bonds, etc. and aim for profit contribution Assets backing long-term insurance liabilities Mainly yen-denominated fixed income assets Business-related equities 23% Appropriately control interest rate risks of life insurance liability Continue to reduce holdings Investments in subsidiaries and affiliates 22% 83% Others Real estate for own use and non-investment assets Assets in separate accounts 9% Former FL 12% Others Short-term investments, etc. 8% Copyright (c) 2016 Tokio Marine Holdings, Inc. 57 International Insurance - FY2016 Projections by Region FY2016 Projections Net Premiums Written (billions of yen) FY2014 FY2015 Original → Revised Original (a) 994.0 332.0 232.0 349.0 147.0 117.0 124.0 134.0 1,516.0 94.0 Revised (b) 893.0 303.0 213.0 304.0 128.0 109.0 105.0 136.0 1,371.0 79.0 Difference (b - a) -101.0 -29.0 -19.0 -45.0 -19.0 -8.0 -19.0 2.0 -145.0 -15.0 from FY2015 YoY 227.1 -39.3 -28.3 304.0 -20.4 6.2 -10.7 -52.3 149.8 -3.9 34% -11% -12% -14% 6% -9% -28% 12% -5% (Ref.) (Excluding *3 FX effects) FY2016 Projections FY2014 As of endDec. 2014 FY2015 As of endDec. 2015 Original (a) As of endMar. 2016 Revised (b) As of endSept. 2016 Applied FX rate (USD / JPY) (GBP / JPY) (Brazilian Real / JPY) (Malaysian Ringgit / JPY) (a)→(b) Change -10% -19% -1% -15% YoY Change -16% -27% 2% -13% North America   Philadelphia   Delphi   TMHCC Europe*4 South & Central Asia & Middle East*4 Reinsurnace Total Non-Life* Life 1 631.2 323.9 236.6 152.4 132.1 118.7 149.5 1,184.7 117.9 665.8 342.3 241.3 148.4 102.7 115.7 188.3 1,221.1 82.9 60% 6% 5% 18% 5% 6% -12% 34% 10% \120.5 \187.0 \45.3 \34.4 \120.6 \178.7 \30.4 \28.0 \112.6 \161.9 \31.3 \28.8 \101.1 \131.0 \30.9 \24.4 Total *2 1,302.6 1,304.0 1,610.0 1,450.0 -160.0 145.9 11% from FY2015 32% FY2016 Projections (Ref.) (Excluding *3 FX effects) FY2016 Projections Business Units Profits (billions of yen) FY2014 FY2015 Original → Revised Original (a) 129.0 40.0 42.0 44.0 9.0 4.0 10.0 9.0 161.0 2.0 Revised (b) 122.0 39.0 37.0 43.0 10.0 4.0 6.0 9.0 151.0 1.0 Difference (b - a) -7.0 -1.0 -5.0 -1.0 1.0 -4.0 -10.0 -1.0 C/R FY2014 FY2015 YoY 26.3 -7.4 -7.4 43.0 1.9 -1.3 -8.8 -1.6 16.6 0.3 28% -16% -17% 24% -25% -60% -16% 12% 66% Original North America   Philadelphia   Delphi   TMHCC Europe *4 Revised 93% 92% 98% 87% 95% 102% 98% 99% 95% - North America   Philadelphia   Delphi   TMHCC Europe*4 South & Central Asia & Middle East*4 Reinsurnace Total Non-Life*1 Life 87.2 42.3 40.2 19.7 5.8 17.1 9.6 138.6 9.4 95.6 46.4 44.4 8.0 5.3 14.8 10.6 134.3 0.6 52% 0% -1% 73% -25% -52% 0% 34% 104% 94% 91% 96% 94% 100% 91% 93% 94% - 94% 91% 96% 96% 100% 91% 93% 95% - 93% 94% 98% 88% 94% 100% 95% 97% 94% - South & Central Asia & Middle East*4 Reinsurnace Total Non-Life* Life 1 Total *2 145.5 131.8 159.0 148.0 -11.0 16.1 12% 35% Total *2 94% 95% 94% 95% Copyright (c) 2016 Tokio Marine Holdings, Inc. *1: Total Non-Life figures include some life insurance figures of composite overseas subsidiaries *2: After adjustment of head office expenses *3: Excluding FX effects due to yen conversion *4: Before, Middle East was included in Europe, but from FY2016, Middle East is included in Asia (same for FY2014 and FY2015 in the above chart) 58 Basic Information (International Insurance 1) - Net Premiums Written ? Net premiums written in international insurance business (billions of yen) 1,600 1,450.0 1,302.6 1,304.0 Life Reinsurance 1,400 1,200 1,074.5 1,000 North America 800 734.3 544.0 319.5 240.2 118.7 413.9 362.6 600 526.5 499.7 400 Europe*2 South & Central America Asia & Middle East*2 200 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Projections (Revised) USD/JPY*1 104.2 118.1 119.1 114.1 91.0 92.1 81.4 77.7 86.5 105.3 120.5 120.6 101.1 *1: FX rates are as of Dec. 31 of each year (FX rate for FY2016 Projections is as of Sept. 30, 2016) *2: Up to FY2015, Middle East is included in Europe. From FY2016, Middle East is included in Asia Copyright (c) 2016 Tokio Marine Holdings, Inc. 59 Basic Information (International Insurance 2) - Strategic Expansion 2000 2007 2011 2015 Further Growth, Diversification and Capital Efficiency Further Expansion in High Growth Markets Indian Life Business Established Material Presence in Lloyd's (UK) and the US Developed Footholds in Non-Japanese Business (~2000) business development focused on Japanese clients P&C Emerging Markets Life Emerging Markets ? Step by step expansion since 2000 ? International business grew substantially after 2007 due to transformational acquisitions of Kiln, Philadelphia, Delphi, and HCC Copyright (c) 2016 Tokio Marine Holdings, Inc. 60 MEMO MEMO Disclaimer These presentation materials include business projections and forecasts relating to expected financial and operating results of Tokio Marine Holdings and certain of its affiliates in current and future periods. All such forward looking information is based on information and assumptions available to Tokio Marine Holdings when the materials were prepared and is subject to a range of inherent risks and uncertainties. Actual results may vary materially from those estimated, anticipated, expected or projected in the accompanying materials and no assurances can be given that any such forward looking information will prove to have been accurate. Investors are cautioned not to place undue reliance on forward looking statements in these materials. Tokio Marine Holdings undertakes no obligation to update or revise any of this forward looking information, whether as a result of new information, recent or future developments, or otherwise. These presentation materials do not constitute an offering of securities in any jurisdiction. To the extent distribution of these presentation materials or the information included herein is restricted by law, persons receiving these materials must inform themselves of and observe any such restrictions. For further information... Investor Relations Group, Corporate Planning Dept. Tokio Marine Holdings, Inc. E-mail: URL : www.tokiomarinehd.com Tel : +81-3-3285-0350 20161124 0:40:41.8 0:41:15.6 0:48:55.5 1:05:43.6 1:12:05.6 1:22:28.6 Tsuyoshi Nagano President