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0:00:00.0 Tokio Marine Group Mid-Term Business Plan “To Be a Good Company 2017” FY2017 Business Plan May 2017 Tokio Marine Holdings, Inc. 0:01:49.7 Table of Contents Ⅰ Tokio Marine Group Business Strategy 1. Progress of the Mid-Term Business Plan 2. ERM & Shareholder Return Policy 3. Initiatives to Support Corporate Value Enhancement 4. Group Asset Management 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 1 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:01:59.9 Ⅰ Tokio Marine Group Business Strategy 2 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:02:06.1 Ⅰ Tokio Marine Group Business Strategy 1-1. Progress of the Mid-Term Business Plan Key financial indicators are projected to reach the outlook of the mid-term business plan FY2017 outlook of the mid-term business plan*1 Enhance capital efficiency FY2017 Projections*2 1 Adjusted ROE : Upper 9% range 9.8% \382B Applied FX rate (USD/JPY): JPY 112.19 (end of Mar. 2017) 2 Sustainable profit growth Adjusted Net Income : Approx. \400B Applied FX rate (USD/JPY): JPY 120.17 (end of Mar. 2015) 3 Enhance shareholder return Steady growth of dividends in line with profit growth Annual dividend per share FY2014 \95 \160 3 *1: Outlook was released in the first year of the mid-term business plan, based on market environment as of the end of Mar. 2015 *2: If FX rate as of end of Mar. 2015 (USD/JPY JPY120.17) is applied, adjusted net income is approx. \395B Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:02:59.8 Ⅰ Tokio Marine Group Business Strategy 1-2. Sustainable Profit Growth (Adjusted Net Income) and Enhance Shareholder Return CAGR Adjusted net income (billions of yen) Dividend per share (yen) +5.7% 406.7 FY2017 Projections Main factors of change YoY +65 382.0 160 (Projections) 351.9 140 (Plan) ? FX effects at overseas subsidiaries (when converting to yen and FX gains/losses at major overseas subsidiaries) : approx. - \13B ? Decrease in sales of business-related equities and dividends income in domestic non-life business: approx. - \15B 2016 Net incurred losses relating to natural catastrophes (before-tax basis) (billions of yen) Domestic Non-Life International Insurance Total 323.3 243.7 95 163.1 55 2012 2013 2014 110 70 2017 Projections 55.3 35.4 90.7 43.0 47.0 90.0 2015 2016 2017 Projections Previous mid-term period Net (Financial accounting) income*1 Current mid-term period 247.4 254.5 273.8 280.0 billion yen 129.5 184.1 *1: Since FY2015, net income attributable to owners of the parent Business Unit Profits Domestic Non-Life (TMNF) CAGR +8.4% (billions of yen) Domestic Life (TMNL) CAGR*3 +5.5% (billions of yen) International Insurance CAGR +10.3% (billions of yen) 1,217.0 153.0 113.7 approx. 120.0 CAGR plan : approx. +3% Plan 1,037.3 CAGR*3: approx. +8% FY17 increase : \100B 54.0 Increase in MCEV 145.5 approx. 114.0 CAGR plan: approx. +8% +TMHCC 153.0 2014 2017 Projections 2014 *4 2017 Projections *5 2014 2017 Projections Normalized basis*2 *2: FX effects are excluded and nat-cat losses are normalized to an average annual level Copyright (c) 2017 Tokio Marine Holdings, Inc. *3: CAGR of MCEV *4: Figures are after payment of shareholders’ dividends of the prior fiscal year *5: Figures are before payment of shareholders’ dividends of the prior fiscal year Normalized basis*6 *6: FX effects (when converting to yen and FX gains/losses at major overseas subsidiaries) are excluded and nat-cat losses are normalized to an average annual level 4 0:04:58.2 Ⅰ Tokio Marine Group Business Strategy 1-3. Enhance Capital Efficiency (Adjusted ROE) 11.0% 9.8% 9.1% 8.9% 8.2% 6.5% 2012 2013 Previous mid-term period 2014 2015 2016 Current mid-term period 2017 Projections ROE (Financial accounting) 6.2% 7.3% 7.9% 7.2% 7.8% 7.8% Sustainable profit growth Enhance capital efficiency ? Enhancing the integrated business model for life and non-life ? Initiatives to expand specialty insurance to innovate our business portfolio ? Promote “Life Insurance Revolution to Protect One’s Living” and shift to protection-type products in domestic life ? Strengthen growth strategies by leveraging the expertise of each group company in international business ? Acquisition of TMHCC, smooth progress of PMI, and expanding group synergies Enhance quality of capital Improving risk portfolio Flexible share repurchase ? Continuous sales of business-related equities ? Strengthen management of natural catastrophe risk ? Strengthen control of interest rate risk ? FY2016 2H \25B (completed) ? FY2017 1H Up to \25B (scheduled) 5 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:05:47.0 Ⅰ Tokio Marine Group Business Strategy 1-4. Stabilization of Business Platform by Risk Diversification Pursue to establish a risk diversified portfolio in terms of geography and business 1% Insurance Premiums (Net premiums written + life insurance premiums) International Insurance Domestic Non-Life 6% 12%18% 2002 81% 82% 34% 2017 Projections 53% 13% Domestic Life International Insurance 3% 17% Domestic Non-Life 41% 2002 53% 96% Business Unit Profits* 28% 2017 Projections 43% 14% Domestic Life * For Domestic Life, TEV is used in 2002, and MCEV is used in 2017 Projections Copyright (c) 2017 Tokio Marine Holdings, Inc. 6 0:07:00.8 Ⅰ Tokio Marine Group Business Strategy 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 Solvency II in Europe, etc. Target range of ESR is 100-130% in light of financial soundness and profitability 130% Utilize capital buffer ? Invest in businesses for growth and take additional risks ? Repurchase shares Target range 100% ? Prepare for regulation changes and significant changes in business environment Confirm the necessity of action Consider to recover capital level ESR 99.95%VaR Copyright (c) 2017 Tokio Marine Holdings, Inc. Consider the below with consideration of the outlook of future profit accumulation and restricted capital ? Refrain from investment in businesses and additional risk-taking ? Consider risk reduction measures * 130% is the capital level which can maintain AA credit ratings withstanding once-in-a-decade risks 7 0:07:49.7 Ⅰ Tokio Marine Group Business Strategy 2-2. Promoting Strong ERM (2) (ESR as of Mar. 31, 2017) ? ESR has increased to 139% due to a decrease in risk capital as well as an increase in net asset value - Factors of change in net asset value: Contribution of 2H FY2016 adjusted net income, an increase in unrealized gains of business-related equities, and a decrease in unrealized capital gains of bonds due to rise in interest rate, etc. - Factors of change in risk capital: Sales of business-related equities, and a decrease in interest rate risks due to rise in interest rate, etc. ? Business continuity is confirmed even in the event of stress scenario (reference) at 99.5%VaR, with UFR* ? Economic Solvency Ratio (ESR) 130% Factors of change in net asset value ? Contribution of 2H FY2016 adjusted net income ? Increase in unrealized gains of businessrelated equities ? Decrease in unrealized capital gains of bonds due to rise in interest rate ? Adjustment of capital level etc. 139% ? 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: Impact to ESR decreased according with rise in interest rate. Control the impact of interest rate fluctuation through ALM while preparing for future rise in interest rate ? FX rates: Limited impact on ESR 160% Risk Capital Net asset value Factors of change in risk capital ? Sales of business-related equities ? Decrease in interest rate risks due to 2.6 trillion yen rise in interest rate trillion yen ? Increase in risks of business-related equities due to rise in stock price Risk Capital Net asset value 3.3 3.5 trillion yen Mar. 31, 2017 139% 147% 130% 138% 139% trillion yen 2.5 Share Price + 30% - 30% etc. Sep. 30, 2016 Mar. 31, 2017 \16,449 Nikkei Stock Average \ 18,909 Interest Rate +10bp - 10bp (Ref.) Definition of Net Asset Value Net Asset Value = Consolidated net asset on financial accounting basis + * 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 Planned distribution to shareholders Value of life insurance policies in-force Restricted capital, etc. Liability of capital nature (catastrophe loss reserves, price fluctuation reserves, etc.) (after-tax basis) - Goodwill, etc. - + - 8 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:08:29.7 Ⅰ Tokio Marine Group Business Strategy 2-3. Shareholder Return Policy Increase of dividends through profit growth ? Our primary means of shareholder return is dividends, which we plan to increase in line with profit growth ? We aim to pursue steady growth of dividends, and payout ratio as a guide is above 35% of average adjusted net income ? FY2016 : Annual dividend is planned to increase by \30 YoY to \140 ? FY2017 : Annual dividend is projected to increase by \20 YoY to \160 per share (payout ratio* of 35%), an increase for six consecutive years * proportion of average adjusted net income + Adjustment of capital level ? Maintain current policy : Appropriateness and size will be determined and executed with flexibility based on a comprehensive assessment of relevant factors (market conditions, business opportunities etc.) ? Share repurchase: FY2016 2H \25B (completed) FY2017 1H Up to \25B (scheduled) ? Additional methods to share repurchase will also be considered for future capital adjustment \160 ■ Dividend per share \140 (Plan) (Projection) \110 \95 \70 \48 \36 \48 \50 \50 \50 \55 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 9 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:10:37.6 Ⅰ Tokio Marine Group Business Strategy 3-1. Further Integration and Alignment in Group Decision Making Strengthen both lateral functions by Group Chief Officers and committee function across the Group, and promote group HR strategies to maximize the Group’s comprehensive capability Maximize the Group’s Comprehensive Capability ~ Create group synergies Revenue Investment Capital Cost ~ Globalize and strengthen corporate functions Strengthen group governance system ? Established Group Chief Officer positions in Apr. 2016 ? COO of Delphi in North America appointed to Co-CIO in 2016 ? Established CISO in charge of cyber security management in Apr. 2017 ? Globally strengthen the Group’s corporate functions related to business strategies, synergies, risk management, asset management, etc. Strengthen group committee function ? Established committees across the Group ? Both domestic and overseas top management discuss group management issues and make effective decisions ERM Committee IEC (International Executive Committee) GISC (Global Investment Strategy Committee) GRSC (Global Retention Strategy Committee) GITC (Global Information Technology Committee) Promote group HR strategies ? Promote HR strategies to maximize the potential of our diverse people ? Leverage the expertise and talent of our employees globally -HR, actuary, internal audit -Digital strategy, IT ? Develop young and mid-career employees through strengthening group committee secretarial function 10 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:13:51.4 Ⅰ Tokio Marine Group Business Strategy 3-2. Initiatives to Support Corporate Value Enhancement Initiatives and external acknowledgments etc. Mangrove tree planting Initiatives to achieve “carbon neutral” through mangrove tree planting (total of planted area in hectares) CO2 emissions and fixation/reduction effects CO2 emissions CO2 fixation/reduction effects (thousand tons) “Carbon neutral” for three consecutive years 98 113 2014 8,994 2000.3E 2015.3E 10,103 87 100 2013 122 133 Environmental Communication Award 2017.3E 2015 Business continuity plan (BCP) workshops for SMEs ?More than 50 workshops held and more than 300 companies have participated Earthquake-risk awareness brochure and BCP planning sheet ?Distributed more than 40,000 brochures to companies, local governments and chambers of commerce Supporting the youth and the challenged ?1989- Japan Swimming Federation (official sponsor) ?2005- Special Olympics Nippon Foundation (friendship sponsor) ?2016- Japanese Para-Sports Association (official sponsor) Japan Inclusive Football Federation (partner) Disaster Prevention Lesson Teaching how to prepare for natural disasters lessons in elementary schools, etc. ?Approx. 23,000 people have attended Japan Resilience Award Diversity on a global scale Culture that facilitates the active participation and growth of female employees and other diverse human resources Implementing a PDCA cycle to enhance the health of employees Health & productivity management is the base for creating a Support our customers’ health & “Good Company” productivity management by leveraging the know-how accumulated in the Group Health and Productivity Award 11 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:14:50.6 Ⅰ Tokio Marine Group Business Strategy 4-1. Group Asset Management (1) Group Asset Management Concept ? With asset and liability management (ALM) at the core, aim to enhance profit and ensure liquidity based on a portfolio reflecting the characteristics of insurance liabilities ? 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 Mar. 2017 ■ Others \3.2T Mainly tangible fixed assets and intangible fixed assets, etc. ■ Cash and deposits \0.7T ■ Monetary receivables bought \1.2T Mainly absolute return investment & lending by Domestic Non-Life (TMNF) and overseas subsidiaries ■ Loans \1.2T 3.1% 5.6% 14.5% ■ Other securities \0.4T Mainly assets in separate accounts held by Domestic Life 5.5% 2.0% Total Assets \22.6T 20.8% 37.5% ■ Foreign securities \4.7T Mainly local country bonds held by overseas subsidiaries mainly in the U.S. and Europe 10.9% ■ Domestic bonds \8.4T Domestic government bonds (JGB): Approx. \7.5T Mainly bonds for the purpose of ALM by Domestic Life and Non-Life ■ Domestic equities \2.4T Mainly business-related equities held by Domestic Non-Life (TMNF) Copyright (c) 2017 Tokio Marine Holdings, Inc. 12 0:15:27.6 Ⅰ Tokio Marine Group Business Strategy 4-2. Group Asset Management (2) Investment yield of the Group Impact on the Group’s investment yield from low interest rates in Japan is limited due to investment portfolio centered on long-term bonds in Japan and global investment diversification on a group basis by leveraging the Group’s comprehensive capability Income return 4.0% 2.3% 2.1% 1.6% 1.6% 1.5% 1.4% 2016 4.3% 2.2% 4.4% 4.5% Overseas subsidiaries Group total *By entrusting the asset management of a portion of assets held by the group companies to Delphi, a company with profound investment expertise, we are able to enhance the Group’s investment capability and raise the investment yield Total of entrusted amount as of end of Mar. 2017 is approx. USD 4,900M Group company Start of entrustment Jul. 2014 Jul. 2015 Jan. 2016 Mar. 2016 Jan. 2017 - 2.3% Domestic subsidiaries 2013 2014 2015 Philadelphia Tokio Millennium Re TMNF TMHCC TMNL Continuous reduction of business-related equities Book value*2 declined to less than half ? Sold total amount of \1.5T*1 since FY2004 100 93 66 49 2017.3E *1: Market price at the time of sale *2: Figure at the end of FY2003 is set at index value of 100 2003.3E Copyright (c) 2017 Tokio Marine Holdings, Inc. 2007.3E 2011.3E 13 0:16:44.1 Ⅱ Business Plan and Strategy by Domain 14 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:16:56.8 Ⅱ Business Plan and Strategy by Domain 1-1. TMNF FY2017 Projections ? ? Net premiums written is projected to expand favorably due to growth strategies, etc. Business unit profits is projected to significantly exceed the mid-term plan target despite a YoY decrease ? Net Premiums Written (billions of yen) +23.8 2,140.0 2,116.1 ? Projected to increase by +1.1% YoY to \2,140.0B due to growth in auto and specialty insurance ? CAGR from FY2014 to FY2017 is +1.7%, increasing in line with the mid-term plan 2,036.7 2014 2016 2017 Projections ? Business Unit Profits (billions of yen) -7.3 160.3 113.7 153.0 ? Projected to decrease by \7.3B YoY due to a decrease in domestic income return in asset management, etc. ? CAGR from FY2014 normalized basis* is +8.4%, projected to largely exceed the mid-term plan target of +3% CAGR * Approx. \120B in which effect of FX rate is excluded and natural catastrophes losses is normalized to an average annual level 2014 Copyright (c) 2017 Tokio Marine Holdings, Inc. 2016 2017 Projections 15 0:17:55.4 Ⅱ Business Plan and Strategy by Domain 1-2. TMNF Combined Ratio Stable combined ratio as a result of measures implemented to improve profitability ? Combined Ratio (Private insurance: E/I basis*) * Loss ratio (private insurance E/I basis) + expense ratio (private insurance W/P basis) 99.6% 97.5% ■ After normalizing natural catastrophes to an average annual basis 97.2% 94.4% 92.7% 90.6% 91.4% 90.8% 90.4% 89.7% 90.4% 2012 E/I loss ratio Excl. natural catastrophes Natural catastrophes normalized to an average annual basis Auto Expense ratio Copyright (c) 2017 Tokio Marine Holdings, Inc. 2013 65.0% 60.1% 2014 58.5% 56.9% 2015 60.1% 56.0% 2016 57.7% 54.8% 2017 Projections 57.8% 55.6% 66.8% 62.8% 64.7% 69.4% 32.8% 62.2% 65.3% 32.2% 59.2% 61.1% 32.2% 58.2% 60.5% 32.6% 57.0% 60.2% 32.7% 60.2% 32.6% 16 0:18:57.1 Ⅱ Business Plan and Strategy by Domain 1-3. TMNF Measures to achieve sustainable growth (1) 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, and innovating work style Unlocking the integrated business model for life and non-life Comprehensive discount for Super Insurance Increase ratio of the number of policies and unit premiums Strengthen consulting sales ability Renewal ratio* Enhance customer satisfaction Top-line growth Net premiums written (Private insurance total) (billions of yen) Ratio of the number of policies of Super Insurance with either life or third sector coverage Unit premiums of Super Insurance Total 18.4% of non-life and life (thousands of yen) * Figures are for the past 1 year period until the end of Mar. 2017 CAGR +2.1% 1,831.9 1,758.9 16.0% 16.3% 118.8 114.6 97.0% 95.9% 112.9 2014 2015 2016 Auto insurance Super Insurance auto 2014 Generate more time allocated to sales promotion ? Utilize generated time and work in sales promotion 2016 Utilize IT and business process reform Promote innovation in role of employees ? Shift office work employees to agents-supporting employees Number of agents-supporting employees in the Area Course 1,739 employees Increase in the number of customers Growth rate of number of autos (2011.3E is set at index value of 100) TMNF number of auto insurance policies 111.4 (managerial accounting basis, past 1 year period) Innovation in work style ? Reduce office work through utilization of “next-generation business model” and innovation in office work process Work related to sales promotion increased by approx. 110 Office work reduced by approx. 11%* 105 17% 120 employees Number of automobiles owned nationwide (source: Automobile inspection & Registration Information Association) 103.9 2008 2014 2016 * Change in time allocated to office work (including inquiries) and sales promotion in FY2016 compared to FY2014 (based on company data) Copyright (c) 2017 Tokio Marine Holdings, Inc. 100 2011.3E 2014.3E 2017.2E 17 0:21:00.8 Ⅱ Business Plan and Strategy by Domain 1-4. TMNF Measures to achieve sustainable growth (2) Further expanding specialty insurance for innovative changes in business portfolio, while utilizing new technologies in various categories through strengthening R&D ? Establish new business model focusing on regional revitalization in Japan Promoting sales expansion of specialty insurance for the corporate sector -Promote sales of Super Business Insurance (packaged product covering risks of business activities comprehensively) and overseas products liability insurance through group insurance such as the one provided by Chamber of Commerce -BCP planning services for SMEs, inbound business and support of overseas expansion ? Establish new business model focusing on health & productivity management Medical / nursing care / health -Promote sales of Super T Protection (employment injury coverage) -Support “Data Health Planning” ? Provide new products and services for business interruption and nursing care ? Net premiums written Total of specialty insurance*1 and P.A. (billions of yen) Initiatives to change our business portfolio 464.5 450.8 445.2 Response to social changes ? Offer Comprehensive Support Plan for Farmers reflecting the trend in diversification of agriculture into processing and distribution (6th Industrialization of Agriculture) ? Provide products and services for sharing economy 432.6 ? Leverage overseas group company’s expertise and know-how Pursuing group synergies -Know-how for D&O and cyber risk insurance -Develop and provide products for professional sport teams 2014 2015 2016 2017 Projections *1: “Other” category excluding fire, marine, P.A, auto and CALI Utilization of technology Technological innovation ? AI ? Big data ? Medical technology ? IoT, etc. Applicable fields Enhance customer satisfaction ? Provide “Drive Agent”, a service for individual and corporate clients which uses telematics technology ? Introduce CTI*2 technology at all claims-service offices ? Sales/Marketing × ? Pricing/Underwriting ? Internal business process, etc. Increase productivity ? Introduce system using AI to respond to inquiries at over 400 sales offices nationwide *2: Computer Telephony Integration = Functionally integrated system that enables computers to interact with telephones Copyright (c) 2017 Tokio Marine Holdings, Inc. 18 0:23:44.3 Ⅱ Business Plan and Strategy by Domain 2-1. TMNL FY2017 Projections Aiming for growth maintaining financial soundness and profitability by promoting 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”) -24% 120.7 113.5 -19% 91.5 91.5 ? New policies ANP ? Projected to decrease by 24% YoY in total reflecting sales increase in profitable living protection products*1 despite the following factors of decrease ? Sales suspension of long-term saving type products (individual annuity and whole life with long-term discount), etc. ? Reversal effect of last minute demand in FY2016 before lowering of the standard interest rate ? Decrease in policies due to product revision in Apr. (premiums hike) associated with the lowering of the standard interest rate *1: Medical and cancer insurance, household income term insurance, 114.1 84.9 2014 Ratio of new policies ANP excluding long-term saving-type products 2016 94% 2017 Projections 100% 74% ? Individual Insurance, Number of New Policies (ten thousands of policies) -5% and long-life support whole time insurance 53 55 52 2014 2016 2017 Projections ? Number of new policies for individual insurance ? Projected to decrease by 5% YoY due to the above sales suspension and the effect of product revisions, etc. despite projecting effect of sales promotion of living protection products ? Business unit profits ? Business Unit Profits (increase in MCEV) (billions of yen) +54.0 1,217.0 1,163.2 ? ? Increase in MCEV is projected to be \54B Projecting profit growth due to promoting sales of profitable living protection products even under the low interest rate environment 2016 *2 2017 Projections*3 Copyright (c) 2017 Tokio Marine Holdings, Inc. *2: Figures are after payment of shareholders’ dividends of the prior fiscal year *3: Figures are before payment of shareholders’ dividends of the prior fiscal year 19 0:25:17.2 Ⅱ Business Plan and Strategy by Domain 2-2. TMNL Product Strategies and Channel Strategies ? Promoting and advancing “Life Insurance Revolution to Protect One’s Living” “Life Insurance Revolution to Protect One’s Living” Presymptomatic/ Prevention Hospitalization/ Surgery <Medical insurance> Outpatient treatment (After discharge) Inability to work (Home care) Nursing care requirement (Permanent disability) Death <Conventional life insurance> ? Response to new customer needs Emerging needs of asset accumulation and coverage due to the aging society Advancement Coverage for conventionally untapped area <Release in Aug. 2017> “Aruku Hoken” (New comprehensive medical insurance with rider to enhance health) Decreasing savings capability of financial products due to the historical low interest rate Product <Released in Jul. 2015> Cancer Treatment Support Insurance NEO Cancer Insurance R <Release in Aug. 2017> “Market Link” ((Terminable) Variable insurance with installment plans) ? Mitigate risk and secure stable investment performance by diversifying investments in several assets with installment plans over the long-term Long-term investment Time dispersion Asset diversification <Released and revised in Nov. 2015> Medical Kit NEO Medical Kit R (Revised) Entering a new phase First in the industry ? ? Uses sensing technology (wearable device) <Released in Nov. 2016> Household Income Term Insurance NEO (Disability Plan) First in the industry ? ? Refund a portion of insurance premiums according to health enhancement activities ? Promoting multi-channel strategies focusing on the integrated business model for life and non-life Sales channel Life Partners approx. 10% Bancassurance approx. 10% Life Professionals approx. 25% Sales promotion of living protection products Non-life Agents approx. 55% Create synergies with channel mix ? Tie-up between full-time non-life agents and life partners ? Tie-up between non-life agents (credit card, mail order companies, etc.) and life professionals ? Promote cross-selling by utilizing Super Insurance at non-life agents ? Strengthening sales of a series of products with R (return & reserve) function* at financial institutions (bancassurance) *Medical Kit R and Cancer Insurance R (life insurance premiums on managerial accounting basis as of the end of Mar. 2017) Channel Composition 20 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:29:25.2 Ⅱ Business Plan and Strategy by Domain 3-1. International Insurance FY2017 Projections Pursue stable and sustainable profit growth despite slowdown in global market growth due to continuing soft market and low interest rate environment ? Net premiums written (billions of yen) -1% +2% ? Business unit profits (billions of yen) -16.5 +6.0 1,654.4 1,642.0 1,607.0 1,302.6 1,141.0 169.5 145.5 114.0 147.0 153.0 Normalized basis* 2014 Applied FX rate (USD/JPY) 2016 2017 Projections Mar. 31, 2017 JPY 112.1 Normalized basis* 2014 Applied FX rate (USD/JPY) 2016 2017 Projections Mar. 31, 2017 JPY 112.1 *Excluding FX effects when converting to yen *Excluding FX effects (when converting to yen and FX gains/losses at major overseas subsidiaries). Nat-cat losses are normalized to an average annual level Dec. 31, 2016 JPY 116.4 Mar. 31, 2017 JPY 112.1 Results basis Applied FX rate (USD/JPY) Dec. 31, 2014 JPY 120.5 Results basis Applied FX rate (USD/JPY) Dec. 31, 2014 JPY 120.5 Dec. 31, 2016 JPY 116.4 Mar. 31, 2017 JPY 112.1 On normalized basis, projected to increase by 2% YoY due to growth in North America, Europe, and Asia (projected to increase by 4% YoY in non-life primary basis) On results basis, projected to decrease by 1% YoY due to the appreciation of the yen On normalized basis, projected to increase by \6.0B (+4%) YoY due to profit growth mainly in Asia, Europe, and Reinsurance On results basis, projected to decrease by \16.5B YoY due to assuming an average level of natural catastrophe losses, reversal effect of foreign exchange gains in FY2016, and the appreciation of the yen 21 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:31:55.9 Ⅱ Business Plan and Strategy by Domain 3-2. Promoting Growth and Risk Diversification Build a well-balanced business portfolio that delivers growth potential and stable profit growth Capturing market growth in emerging countries Vast network in Asia, Middle East, and South & Central America Life Reinsurance 9% Philadelphia 21% Specialty insurance franchise in developed countries Pursue sustainable profit growth with highly competitive advantages in products and services Major products Human Services Delphi 15% Growth of non-life and life in emerging countries*1 (2012-2016, net premiums written CAGR) 160 140 120 100 2012 2013 2014 2015 2016 5% Asia, Middle East 7% South & Central America 8% CAGR +11% FY2016 Net premiums written composition North 5% America other Europe 8% TMHCC 21% Premium composition by products line Real Estate Disability Excess W/C Medical Stop-loss Agriculture D&O US Liability Property & Liability Marine *1: Trend of net premiums written on local currency basis. 2012 is set at index value of 100 Establish a diversified portfolio by a wide range of specialty insurance products Trend of Combined Ratio (2012-2016) 100% Including M&A*2 20% 10% 5% Growth of net premiums written(2012-2016, CAGR) Peer average *4 95% Tokio Marine international business Excluding M&A*2 QBE AIG Zurich Generali Chubb Allianz AXA Tokio Marine international business*3 -5% -10% Copyright (c) 2017 Tokio Marine Holdings, Inc. 90% 2012 2013 2014 2015 2016 *4: Peer companies: AIG, Allianz, AXA, Chubb, Generali, QBE, Zurich *2: M&A after 2012(Delphi and TMHCC) *3: Excluding FX effects when converting to yen 22 0:33:52.0 Ⅱ Business Plan and Strategy by Domain 3-3. International Insurance - North America (1) Results basis ■ Normalized basis ■ (Comments are normalized basis) Net Premiums Written Business Unit Profits Market Comparison North Aim for sustainable profit growth while pursuing synergy between group companies America (billions of yen) (billions of yen) US Commercial P&C Market Share 1st Chubb Ltd. 1,031.6 993.0 1,023.0 140.2 129.0 128.0 2nd Travelers Companies Inc. 3rd Liberty Mutual 8th Hartford Financial Services 9th Berkshire Hathaway Inc. 10th Tokio Marine Group 11th AmTrust Financial Services 49th 50th 2.1% ・ ・ ・ ・ ・ 2016 2017 Projections 2016 2017 Projections Source: SNL Financial Maintain growth and profitability outperforming the market through underwriting discipline and action (billions of yen) (billions of yen) 110% Combined Ratio 米国損保マーケット平均 US P&C market average フィラデルフィア Philadelphia 352.2 339.0 348.0 45.7 42.0 39.0 100% 90% 2016 2017 Projections 2016 2017 Projections 80% 2012 2013 2014 2015 2016 ? Projected to increase by 3% YoY mainly due to rate increases in renewal book and an increase in new business book Copyright (c) 2017 Tokio Marine Holdings, Inc. ? Projected to decrease due to the reversal effect of reserve takedown in FY2016. Excluding this, profit is in an upward trend 23 0:34:48.4 Ⅱ Business Plan and Strategy by Domain 3-3. International Insurance - North America (2) Results basis ■ Normalized basis ■ (Comments are normalized basis) Net Premiums Written Business Unit Profits Combined Ratio Maintain profit growth through profound investment expertise as well as strength in employee benefit products and services (billions (億円) of yen) (billions of ) yen) (億円 110% 米国損保マーケット平均 US P&C market average 247.9 238.0 246.0 44.0 440 38.0 380 Delphi デルファイ 100% 39.6 396 90% 2016 2017 Projections 2016 2017 Projections 80% 2012 2013 2014 2015 2016 ? Projected to increase by 3% YoY due to rate increases in both non-life and life business and increase in new business book ? Projected to increase due to an increase in investment income associated with an increase in AUM and improvement in underwriting profit Maintain stable high profitability and pursue synergy on a global basis 347.9 335.0 49.6 496 43.0 430 41.0 410 100% (billions (億円) of yen) (億円 ) (billions of yen) 346.0 110% 米国損保マーケット平均 US P&C market average TMHCC 90% 2016 2017 Projections 2016 2017 Projections 80% 2012 2013 2014 2015 2016 ? Projected to increase by 3% YoY due to expansion of underwriting in specialty products, etc. Copyright (c) 2017 Tokio Marine Holdings, Inc. ? Projected to decrease due to the reversal effect of reserve takedown in FY2016, etc. Excluding this, profit is in an upward trend 24 0:35:18.0 Ⅱ Business Plan and Strategy by Domain 3-4. International Insurance - Europe / Reinsurance Results basis ■ Normalized basis ■ (Comments are normalized basis) Net Premiums Written Business Unit Profits Combined Ratio Europe Even under the softening market, promote common growth strategies under the business platform of Lloyd’s market and Corporate market at Tokio Marine Kiln (billions of yen) (billions of yen) 100% 148.0 134.4 131.0 8.9 6.0 2016 2017 Projections 2016 ロイズマーケット平均 Lloyd’s market average Tokio (Lloyd’s Marine Kiln TMK business) (ロイズ事業) 7.0 2017 Projections 90% ? Projected to increase by 13% YoY mainly due to business expansion in US, Europe, and Asia, etc. ? Projected to increase mainly due to business expansion 80% 2012 2013 2014 2015 2016 Reinsurance Under the softening market, continue to maintain stable profit by promoting geographical and product line diversification mainly at Tokio Millennium Re (billions of yen) (billions of yen) 110% 153.8 148.0 128.0 12.4 6.0 2016 2017 Projections 2017 Projections 2016 90% 70% 9.0 50% Peer average* 競合グループ平均 Tokio Millenium Re Tokio Millennium Re 2017 Projections 2017 Projections 30% 2012 2013 2014 2015 2016 ? Projected to decrease by 14% YoY mainly due to the reversal effect of an increase in multi-year policies in FY2016 ? Projected to increase mainly due to the reversal effect of temporary decrease factors in FY2016 *Peer companies: Renaissance Re, Validus, Ace (R/I only), Axis (R/I only), Markel, AWAC, Arch, Endurance, Aspen, Everest Re, Partner Re 25 Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:36:09.4 Ⅱ Business Plan and Strategy by Domain 3-5. International Insurance - 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) 129.6 130.0 131.0 4.4 2017 Projections 4.0 4.0 ? Promote measures to improve profitability even under the economic slowdown in Brazil 2016 2016 2017 Projections Asia & Middle East Non-life Achieve growth in the retail market by expanding distribution channels and creating a business model with group synergy at the core (billions of yen) (billions of yen) 116.8 116.0 123.0 7.5 9.0 6.0 2017 Projections ? Net premiums written is projected to increase by 6% YoY due to auto insurance, etc. sales growth mainly in India, Malaysia, and Thailand ? Business unit profits is projected to increase due to the reversal effect of large losses in FY2016 and business expansion, etc. 2016 2017 Projections 2016 Life 88.0 87.0 89.0 (billions of yen) (billions of yen) ? Net premiums written is projected to increase by 2% YoY mainly due to sales growth mainly in Thailand, India and Indonesia ? Business unit profits is projected to increase mainly due to the reversal effect of interest rate fluctuation in FY2016 2.0 0.1 2016 2017 Projections 0 2017 Projections 2016 26 Copyright (c) 2017 Tokio Marine Holdings, Inc. Ⅱ Business Plan and Strategy by Domain 3-6. International Insurance FY2017 Projection by regions Excluding effects*3 Net Premiums Written (billions of yen) FY2016 FY2017 Projections YoY Change -8.6 -4.2 -1.9 -1.9 13.5 1.3 6.1 12.3 -25.8 -13.4 0.9 % -1% -1% -1% -1% 10% 1% 5% 1% -17% -1% 1% YoY Change 30.0 9.0 8.0 11.0 17.0 1.0 7.0 54.0 -20.0 33.0 2.0 % 3% (USD / JPY) 3% (GBP / JPY) 3% (Brazilian Real / JPY) 3% (Malaysian Ringgit / JPY) 12% 1% 6% 4% -14% 2% 2% FY2016 Applied FX rate As of endDec. 2016 FY2017 Projections As of endMar. 2017 YoY Change -4% -2% 0% -2% North America   Philadelphia   Delphi   TMHCC Europe South & Central America Asia & Middle East Total Primary Non-Life*1 Reinsurnace Total Non-Life*1 Life 1,031.6 352.2 247.9 347.9 134.4 129.6 116.8 1,412.6 153.8 1,566.4 88.0 1,023.0 348.0 246.0 346.0 148.0 131.0 123.0 1,425.0 128.0 1,553.0 89.0 \116.4 \143.0 \35.7 \25.9 \112.1 \140.0 \35.9 \25.3 Total 1,654.4 1,642.0 -12.4 -1% 35.0 2% Excluding effects*3 Business Units Profits (billions of yen) FY2016 FY2017 Projections YoY Change -12.2 -6.7 4.3 -8.6 -1.9 -0.4 1.4 -12.7 -3.4 -16.2 1.8 % -9% -15% 11% -17% -22% -11% 20% -8% -28% -9% 1720% YoY Change -1.0 -3.0 6.0 -2.0 1.0 3.0 3.0 3.0 6.0 2.0 % -1% -7% 16% -5% 17% 50% 2% 50% 4% North America   Philadelphia   Delphi   TMHCC Europe South & Central America Asia & Middle East Total Primary Non-Life*1 Reinsurnace Total Non-Life* Life 1 C/R FY2016 FY2017 Projections North America   Philadelphia   Delphi   TMHCC Europe South & Central America Asia & Middle East Total Primary Non-Life*1 Reinsurnace Total Non-Life*1 Life 140.2 45.7 39.6 49.6 8.9 4.4 7.5 160.7 12.4 173.2 0.1 128.0 39.0 44.0 41.0 7.0 4.0 9.0 148.0 9.0 157.0 2.0 93% 92% 100% 88% 99% 102% 99% 95% 96% 95% - 94% 95% 98% 89% 96% 102% 95% 95% 97% 96% - *1: Total Primary Non-Life and Total Non-Life figures include some life insurance figures of composite overseas subsidiaries *2: After adjustment of head office expenses *3: In Net Premiums Written, excluding FX effects due to yen conversion and in Business Units Profits, excluding FX effects (when converting to yen and FX gains/losses at major overseas subsidiaries). Nat-cat losses are normalized to an average annual level Total *2 169.5 153.0 -16.5 -10% 6.0 4% Total 95% 96% 27 Copyright (c) 2017 Tokio Marine Holdings, Inc. (Blank Page) 28 Copyright (c) 2017 Tokio Marine Holdings, Inc. Reference ? Summary of FY2016 Results ? Tokio Marine Holdings Key Statistics a ? Return to Shareholders ? FY2016 Results Overview ? FY2017 Projections Overview ? Adjusted Net Income and Business Unit Profits ? Definition of Adjusted Net Income, Adjusted Net Assets, Adjusted ROE, and Business Unit Profits ? Reconciliation of Adjusted Net Income and Adjusted Net Assets ? Reconciliation of Business Unit Profits ? Long-term Vision and Mid-Term Business Plan “To Be a Good Company 2017” ? Initiatives for “Sustainable Profit Growth” ? Framework of the Mid-Term Business Plan and Group Management ? Further Integration and Alignment in Group Decision Making ? Basic Information (Domestic Non-Life) ? Basic Information (Domestic Life) ? Basic Information (International Insurance) ? Asset Portfolio ? Impact of FX rate change on the Group’s Financial Results 29 b c d Copyright (c) 2017 Tokio Marine Holdings, Inc. Summary of FY2016 Results Adjusted Net Income (Group Total) (billions of yen) +54.8 Adjusted Net Income 351.9 406.7 Adjusted net income increased by \54.8B YoY mainly due to: ? Profit contribution of TMHCC ? Increase in net premiums earned and decrease in natural catastrophe losses in domestic non-life ? Decrease in domestic life 2015 (financial accounting) Domestic non-life International insurance Total 2016 Net Income* 254.5 273.8 Net income (on financial accounting basis) increased by \19.3B YoY mainly due to the above factors and: ? Decrease in net provision for catastrophe loss reserves in domestic non-life ? Amortization of goodwill associated with TMHCC which started from FY2016 Net incurred losses relating to natural catastrophes (before-tax basis) 77.4 15.7 93.1 55.3 35.4 90.7 * Net income attributable to owners of the parent Business Unit Profits Domestic Non-Life (TMNF) +40.3 Domestic Life (billions of yen) (TMNL) +560.9 (billions of yen) International Insurance +37.6 (billions of yen) 160.3 120.0 2015 373.5 131.8 169.5 2016 2015 2016 -187.4 Increase in MCEV increased YoY mainly due to the impact of changes in economic environment (rise in interest rates) and the changes in definitions in MCEV measurement method 2015 2016 Increased due to a decrease in natural catastrophe losses, etc. Copyright (c) 2017 Tokio Marine Holdings, Inc. Increased due to profit contribution of TMHCC and the progress of growth measures, etc. 30 Tokio Marine Holdings Key Statistics FY2007 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) 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 7.3 122 FY2016 273.8 3,542.1 363 4,722 7.8% 0.99 406.7 3,812.4 539 5,082 11.0% 0.92 167.6 373.5 169.5 6.6 117 *1 108.7 2,563.5 133 3,195 3.6% 1.15 99.4 15.1 29.7 -1.0 60 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) 2008/3E Adjusted number of issued and outstanding shares (thousands of shares) Market capitalization (billions of yen) Share price (yen) Percentage change (Reference) TOPIX Percentage change 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% 2016/3E 754,685 2,878.6 3,800 - 16.3% 1,347.20 - 12.7% 2017/3E 750,112 3,536.2 4,696 23.6% 1,512.60 12.3% *3 802,231 2,960.6 3,680 - 15.6% 1,212.96 - 29.2% *1: From FY2015: The figure is "Net income attributable to owners of the parent" *2: Until FY2014: The figures are "Adjusted earnings" (Former KPI), domestic life insurance business is presented on an TEV (Traditional Embedded Value) basis *3: All figures exclude the number of treasury shares held from the total number of the shares issued 31 Copyright (c) 2017 Tokio Marine Holdings, Inc. Return to Shareholders FY2007 Dividends per share Dividends total 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 FY2016 FY2017 Projections 160yen 119.1bn yen 110yen 140yen(plan) 83.0bn yen 105.3bn yen Share repurchases *1 90.0bn yen 128.7bn 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 83.0bn yen 25.0bn yen 130.3bn yen TBD*2 TBD Total distributions to shareholders 53.7bn yen 122.2bn yen Adjusted net income Average adjusted net income Payout ratio *3 30.7bn yen 163.1bn yen 243.7bn yen 323.3bn yen 351.9bn yen 220.0bn yen 38% 406.7bn yen 295.0bn yen 36% 382.0bn yen 340.0bn yen 35% Adjusted net income was adopted as a new KPI in FY2015. (Figures from FY2011 to FY2014 were calculated as a reference) Key Statistics from FY2007 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 (excluding EV)*4 Payout ratio*3 143.2bn yen - 52.5bn yen 165.4bn yen 128.1bn yen 100.0bn yen 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% 108.7bn yen 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% 273.8bn yen 39% 280.0bn yen 43% *1: On a repurchase year basis *2: FY2017 1H Up to \25B (scheduled) *3: Until FY2014: payout ratio to average adjusted earnings (exluding EV) From FY2015: payout ratio to average adjusted net income *4: Excludes effects from the Great East Japan Earthquake and Thai Flood 32 Copyright (c) 2017 Tokio Marine Holdings, Inc. FY2016 Results Overview (Consolidated) ? Net Premiums Written (billions of yen, except for %) ? FY2015 ■ Ordinary income (TMHD Consolidated) Net premiums written (TMHD Consolidated) Life insurance premiums (TMHD Consolidated) FY2016 5,232.6 3,480.4 904.4 387.6 312.4 9.0 13.2 174.1 6.2 - 127.4 273.8 248.6 6.5 8.7 135.6 4.0 - 129.8 YoY Change % Increased due to TMHCC consolidation, etc. despite a decrease in fire at TMNF Increased 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, etc. 4,579.0 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 - 183.0 653.5 214.8 432.7 1.8 - 64.8 - 0.6 - 15.7 28.4 0.5 54.1 19.3 - 52.9 0.4 - 5.9 24.0 0.5 53.1 + 14.3% + 6.6% + 91.7% + 0.5% - 17.2% - 7.2% - 54.3% + 19.5% + 9.4% ? Life Insurance Premiums ? ■ 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 Decreased mainly due to the following factors at TMNF: ? Increase in underwriting profit mainly due to (i) increase in net premiums earned, (ii) decrease in net incurred losses relating to natural catastrophes and (iii) decrease in net provision for catastrophe loss reserves ? Decrease in net investment income and other due to the reversal effect of an increase in dividends income from overseas and domestic subsidiaries in FY2015 ■ 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.) + 7.6% - 17.6% + 7.0% - 40.4% + 21.6% + 16.7% ? Domestic Life Decreased due to (i) an increase in business expenses and (ii) the reversal effect of take down of contingency reserves in FY2015 relating to variable annuities ? Overseas Subsidiaries 【KPI for the Group Total 】 ■ Adjusted net income 351.9 406.7 54.8 + 15.6% Increased mainly due to profit contribution from TMHCC consolidation ? Net Income attributable to owners of the parent ? Increased due to an increase in underwriting profit in domestic non-life business, etc. ? Adjusted Net Income ? Adjusted net income, which excludes the effect of provision for catastrophe loss reserves and amortization of goodwill, etc., increased by \54.8B YoY to \406.7B 33 Copyright (c) 2017 Tokio Marine Holdings, Inc. FY2016 Results Overview (Business Unit Profits) (billions of yen) Business Domain FY2015 Results FY2016 Results YoY Change 41.6 40.3 1.8 -0.6 561.6 560.9 37.6 44.6 0.9 -0.8 -7.3 1.8 38.9 -0.4 ? Domestic Non-Life Increased by \41.6B YoY to \167.6B mainly due to the factors below at TMNF: ? ? ? ? Increase in net premiums earned Decrease in net incurred losses relating to natural catastrophes Reversal effect of an increase in net incurred losses due to large losses in FY2015 Increase in provision for foreign currency denominated outstanding claims reserves Domestic Non-Life TMNF NF Other Domestic Life*1 TMNL International Insurance North America Europe South & Central America Asia & 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 0.6 167.6 160.3 10.6 -3.3 373.5 373.5 169.5 140.2 8.9 4.4 7.5 12.4 173.2 0.1 ? Domestic Life Increased by \561.6B YoY to \373.5B mainly due to the factors below at TMNL: ? ? Impact of changes in economic environment (rise in interest rates) Changes in definitions in the measurement method of MCEV ? 7.3 6.6 -0.7 *1: Excluding capital transactions *2: International Non-Life figures include some life insurance figures of composite overseas subsidiaries International Insurance Increased by \37.6B YoY to \169.5B due to contribution from TMHCC and the progress of growth measures in each business segment, etc. 34 Copyright (c) 2017 Tokio Marine Holdings, Inc. FY2017 Projections Overview (Consolidated) (billions of yen, except for %) ■Ordinary income (TMHD Consolidated) Net premiums written (TMHD Consolidated) Life insurance premiums (TMHD Consolidated) FY2016 Results 5,232.6 3,480.4 904.4 387.6 312.4 9.0 13.2 174.1 6.2 - 127.4 273.8 248.6 6.5 8.7 135.6 4.0 - 129.8 FY2017 Projections 3,490.0 890.0 405.0 339.0 6.5 34.5 170.0 5.7 - 150.7 280.0 270.0 4.5 23.9 127.0 3.8 - 149.2 YoY Change % 9.5 - 14.4 17.3 26.5 - 2.5 21.2 - 4.1 - 0.5 - 23.2 6.1 21.3 - 2.0 15.1 - 8.6 - 0.2 - 19.3 + 0.3% - 1.6% + 4.5% + 8.5% - 27.9% + 160.4% - 2.4% - 8.9% ■Ordinary profit (TMHD Consolidated) Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Financial and general Others (Consolidation adjustments, etc.) ? Net Premiums Written ? Increase in domestic non-life business due to business expansion despite the impact of the appreciation of the yen at overseas subsidiaries ? Life Insurance Premiums ? Decrease due to the appreciation of the yen at overseas subsidiaries, etc. despite an increase in in-force policies in domestic life business ? Ordinary Profit ? Domestic Non-Life Increase mainly due to the following factors at TMNF: ? Increase in underwriting profit due to (i) a decrease in net incurred losses relating to natural catastrophes and (ii) an increase in amount taken down from catastrophe loss reserves associated with an increase in W/P loss ratio in auto ? Increase in net investment income and other due to an increase in dividends from subsidiaries ■ 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】 + 2.2% + 8.6% - 31.6% + 171.7% - 6.4% - 6.8% ? Domestic Life Increase due to (i) the product revisions owing to the standard interest rate revision and (ii) a decrease in provision for underwriting reserves owing to suspension of sales of long-term saving-type products in FY2016 ? Overseas Subsidiaries Although projected to decrease due to the appreciation of the yen, assuming an average level of net incurred losses relating to natural catastrophes, and the reversal effect of foreign exchange gains in FY2016, etc., excluding these factors, profit is projected to increase ■ Adjusted net income 406.7 382.0 -24.7 - 6.1% ? Net Income attributable to owners of the parent ? Increase due to a decrease in net provision for underwriting reserves in domestic life business and a decrease in amortization of goodwill, etc. despite the impact of FX effects at overseas subsidiaries Decrease due to (i) a decrease in gains on sales of businessrelated equities and dividends income in domestic non-life business and (ii) the impact of FX effects at overseas subsidiaries, etc. ? Adjusted Net Income ? 35 Copyright (c) 2017 Tokio Marine Holdings, Inc. FY2017 Projections Overview (Business Unit Profits) (billions of yen) Business Domain FY2016 Results FY2017 Projections YoY Change -7.6 -7.3 -2.6 2.3 -320.5 -319.5 -16.5 -12.2 -1.9 -0.4 1.4 -3.4 -16.2 1.8 Domestic Non-Life TMNF NF Other Domestic Life*1 TMNL International Insurance North America Europe South & Central America Asia & Middle East Reinsurance International Non-Life International Life Financial & General *2 167.6 160.3 10.6 -3.3 373.5 373.5 169.5 140.2 8.9 4.4 7.5 12.4 173.2 0.1 160.0 153.0 8.0 -1.0 53.0 54.0 153.0 128.0 7.0 4.0 9.0 9.0 157.0 2.0 ? Domestic Non-Life Projected to decrease by \7.6B YoY to \160.0B mainly due to the factors below at TMNF: ? Decrease in net incurred losses relating to natural catastrophes ? Decrease in interests and dividends other than dividends from subsidiaries ? Reversal effect of large losses which were relatively low in FY2016 ? Domestic Life Projected to decrease by \320.5B YoY to \53.0B mainly due to the factors below at TMNL: ? Reversal effect of changes in definitions in the measurement method of MCEV in FY2016 ? Reversal effect of changes in economic environment (rise in interest rates) in FY2016 ? 6.6 5.0 -1.6 *1: Excluding capital transactions *2: International Non-Life figures include some life insurance figures of composite overseas subsidiaries International Insurance Projected to decrease by \16.5B YoY to \153.0B as shown on p.21 36 Copyright (c) 2017 Tokio Marine Holdings, Inc. Adjusted Net Income and Business Unit Profit Adjusted Net Income (Group total) Enhancing transparency and comparability / Linking with shareholder returns ? Business Unit Profits Creating long-term corporate value ? For the Group total, “Adjusted Net Income” based on financial accounting is used from the perspective of enhancing transparency and comparability as well as linking with shareholder returns Profit indicator for the Group total as the base for calculating capital efficiency (adjusted ROE) and source of dividends For each business domain, “Business Unit Profits” is used from the perspective of accurately assessing corporate value including economic value, etc. for the purpose of long-term expansion Use MCEV (market-consistent embedded value) for domestic life, which reflects the economic value of the business more accurately ? ? <Main differences> Adjusted Net Income Domestic non-life Gains or losses on sales of business-related equities Provision for reserves of capital nature, etc. Domestic life Other than the above Amortization of goodwill and other intangible fixed assets Included Excluded Adjust the financial accounting basis net income Business Unit Profits Excluded Excluded Increase in MCEV during the current fiscal year Excluded Excluded (Note) Please refer to P.38 for details regarding the definition 37 Copyright (c) 2017 Tokio Marine Holdings, Inc. Definition of Adjusted Net Income / Adjusted Net Assets / Adjusted ROE / Business Unit Profits 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 attributable to owners of the parent *3: In case of reversal, it is subtracted from the equation *4: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities *5: Average balance basis 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: In case of reversal, it is subtracted from the equation *3: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities *4: For some of the life insurance companies, 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 sum of the net present value of profits to be gained from policies in-force and the net asset value ? Other businesses Net income determined in accordance with financial accounting principles 38 Copyright (c) 2017 Tokio Marine Holdings, Inc. Reconciliation of Adjusted Net Income / Adjusted Net Assets (billions of yen) ? Adjusted Net Income*1 FY2016 Results FY2017 Projections YoY Change ? Adjusted Net Assets*1 FY2016 Results FY2017 Projections YoY Change ? Adjusted ROE FY2016 Results FY2017 Projections YoY Change Net income attributable to owners of the parent (consolidated) Provision for catastrophe loss reserves *2 *2 273.8 +35.1 +1.7 280.0 +27.0 +1.0 +4.0 +0.0 6.1 -8.1 -0.7 0.1 -0.6 Net assets(consolidated) Catastrophe loss reserves Contingency reserves 3,542.1 +810.9 +36.2 +67.3 +644.2 3,812.4 3,625.5 +838.4 +37.2 +71.6 +565.9 4,006.8 83.4 27.5 1.0 4.3 -78.3 194.4 Net income(consolidated) Net assets(consolidated)* FInancial acccounting basis ROE * average balance basis 273.8 3,513.4 7.8% 280.0 3,583.8 7.8% 6.1 70.4 -0.0pt Provision for contingency reserves Provision for price fluctuation reserves *2 +3.9 *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 Amortization of goodwill and other intangible fixed assets Other extraordinary gains/losses, valuation allowances, etc. +0.6 FY2016 Results FY2017 Projections YoY Change -3.5 +0.0 3.5 Adjusted Net Assets Adjusted Net Income Adjusted Net Assets* Adjusted ROE * average balance basis 406.7 3,705.9 11.0% 382.0 3,900.0 9.8% -24.7 194.1 -1.2pt +96.9 -1.9 406.7 +70.0 +0.0 382.0 -26.9 1.9 -24.7 Adjusted Net Income *1: Each adjustment is on an after-tax basis *2: In case of reversal, it is subtracted from the equation *3: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities (Note) Please refer to P.38 for details regarding the definition 39 Copyright (c) 2017 Tokio Marine Holdings, Inc. Reconciliation of Business Unit Profits (billions of yen) ? Domestic Non-Life*1 (TMNF) FY2016 Results FY2017 Projections YoY Change ? International Insurance*1 FY2016 Results FY2017 Projections Net income for accounting purposes 248.6 270.0 21.3 Overseas subsidiaries Net income for accounting purposes Difference with EV (Life) Adjustment of non-controlling interests 135.6 -1.2 -2.5 -1.5 +39.1 169.5 127.0 Provision for catastrophe loss reserves *2 +31.0 +24.6 -6.4 Provision for price fluctuation reserves *2 +3.6 +3.6 0.0 Difference of subsidiaries covered Gains or losses on sales or valuation of *3 ALM bonds and interest rate swaps Gains or losses on sales or valuation of fixed assets, business related equities and business investment equities +0.3 -0.4 -0.7 Other adjustments*4 Business Unit Profits -58.2 -54.6 3.6 153.0 Intra-group dividends -63.6 -97.7 -34.1 Other extraordinary gains/losses, valuation allowances, etc -1.4 +7.5 8.9 Business Unit Profits 160.3 153.0 -7.3 *1: Each adjustment is on an after-tax basis *2: In case of reversal, it is subtracted from the equation *3: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities *4: Amortization of other intangible fixed assets, head office expenses, etc. (Note) Please refer to P.38 for details regarding the definition 40 Copyright (c) 2017 Tokio Marine Holdings, Inc. 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) 2017 Tokio Marine Holdings, Inc. Sustainable profit growth stage 41 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 ? ? 42 Copyright (c) 2017 Tokio Marine Holdings, Inc. 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) 2017 Tokio Marine Holdings, Inc. + Enhance ROE + Sustainable profit growth 43 Further integration and Alignment in Group Decision Making ? ? ? In April 2016, established Group Chief Officer positions and committees as well as strengthened its functions to globalize and strengthen Group management system Involvement of top management at overseas subsidiaries in solving Group management issues with their expertise More focus by the Group CEO on Group management to maximize the Group’s comprehensive capability Globalization and Strengthening Maximize the Group’s comprehensive capabilities Group CEO Group chief officer (by order of organization) More focus on Group management by the Group CEO Committees Top management both in Japan and overseas discuss various Group management issues Domestic Non-life Domestic Life International Insurance Financial and General Dept. in charge CSSO Strategy and Synergy Strategy and Synergy Financial Planning Corporate Planning Global Retention Strategy Human Resources IT Planning IT Planning Risk Management CIO Investment CFO Financial ? Enhancing group governance ? Utilization of the Group management resources ? Involvement in the Group management by overseas talent CRSO Retention Strategy ERM Committee International Executive Committee (IEC) Global Investment Strategy Committee (GISC) Global Retention Strategy Committee (GRSC) Global Information Technology Committee (GITC) CHRO Human Resources CITO Information Technology CISO Information Security CRO Risk 44 Copyright (c) 2017 Tokio Marine Holdings, Inc. 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 (FY2016 net premiums written basis) CALI 13.4% 103.3% Marine 2.8% Others 13.2% Auto 49.7% P.A. 8.1% Fire 12.9% 99.4% 93.1% 97.9% 97.2% 97.4% 91.2% 92.0% 89.8% 89.2% 2,128.3 89.6% 2,116.1 88.9% 2,140.0 ? Premium composition by sales channel (FY2016 managerial accounting basis) 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 Financial institutions Others 3.4% Auto repair shop 9.0% Full-time 14.1% agents 27.6% Corporate 25.3% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Projections ? 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% FY2016 90.4% 57.7% 54.8% 32.7% Auto dealership 20.6% FY2017 Projections 90.4% 57.8% 55.6% 32.6% ? Market share* (FY2015 net premiums written basis) TMNF 25.9% NF 1.7% *: Net E/I C/R=E/I loss ratio + W/P expense ratio Copyright (c) 2017 Tokio Marine Holdings, Inc. *Japanese non-life market (excluding reinsurance companies) 45 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 103.6% 98.5% 96.0% 94.0% 91.5% 90.1% 89.4% 90.1% 102.9% 103.8% 102.6% 98.5% ? ? ? ? ? <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 ? 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Projections ? Trend of auto insurance policy renewal ratio, combined ratio and loss ratio FY2011 Policy renewal ratio Net E/I C/R* E/I L/R 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 95.9% 91.0% 60.2% FY2017 Projections - 91.1% 60.2% 95.1% 102.9% 70.7% Copyright (c) 2017 Tokio Marine Holdings, Inc. *: Net E/I C/R =E/I loss ratio + W/P expense ratio 46 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) 150 555 438 349 378 405 470 500 530 Source: The Life Insurance Association of Japan 256 160 187 219 283 317 87 8 23 41 57 106 134 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Number of in-force policies*4 at TMNL (total of individual insurance and individual annuities) *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 5.5 million in-force policies in FY2016, significantly exceeding the market growth Copyright (c) 2017 Tokio Marine Holdings, Inc. 47 Basic Information (Domestic Life) - TMNL Major Products (Products lineup as of May 2017) (whole life insurance/ term insurance) Whole life insurance for longevity in case of death and nursing care (Premium Series) Death insurance Receive benefits as if receiving monthly salary in times of needs Enhance coverage for inability to work (Premium Series) Coverage for business (Coverage for business, fund for condolence money and retirement benefits, etc. for stable business activities) ?Long-life Support Whole Life Insurance In addition to severe disability and death, this product benefits in case the policyholder becomes second degree nursing care or above, etc. under the public nursing care insurance system ?Household Income Term Insurance NEO (Disability Plan) In addition to severe disability and death, this product offers monthly benefits in the event of the inability to work or the need for nursing care due to certain illness ?Term insurance ?Increasing term insurance with lower surrender benefits This product offers coverage of severe disability and death for a certain period. Increasing term insurance with lower surrender benefits increases insured amount for death and severe disability for the future Medical insurance with lifelong coverage for disease and injury Insurance to secure coverage in case of cancer cancer insurance (Premium Series) Medical and (Premium Series) ?Medical Kit NEO ?Medical Kit R Product series with “R” function ? Cancer Treatment Support Insurance NEO ? Cancer Insurance R Product series with “R” function A medical insurance product, which covers hospitalization due to illness or injury, surgery and radiation therapy This product offers diagnosis benefit, etc. to a policyholder *Features of product series with “R” function: R (return) function = We return the balance of premiums paid excluding benefits, etc. (refund benefits to health) R (reserve) function= We continue to provide lifelong coverage with same premiums at the time of enrollment after paying refund benefits for health *Premium series are living protection products that are unique and include extensive coverage Copyright (c) 2017 Tokio Marine Holdings, Inc. 48 Basic Information (International Insurance 1) - Strategic Expansion Pursue growth opportunities globally as the profit growth driver of the Group Pursue to establish a diversified business portfolio 2000 2007 2011 2015 Further Growth, Diversification and Capital Efficiency Established Material Presence in Lloyd's (UK) and the US Developed Footholds in Non-Japanese Business Further Expansion in High Growth Markets Indian Life Business (~2000) business development focused on Japanese clients P&C Emerging Markets Life Emerging Markets Pursue balanced growth in both developed and emerging markets through “organic growth” and “strategic M&A” 49 Copyright (c) 2017 Tokio Marine Holdings, Inc. Basic Information (International Insurance 2) - Net Premiums Written ? Net premiums written in international insurance business 1,800 (billions of yen) 1,654.4 1,600 1,642.0 Life Reinsurance 1,400 1,302.6 1,074.5 1,304.0 1,200 1,000 North America 800 734.3 544.0 413.9 319.5 240.2 118.7 362.6 526.5 600 499.7 Europe*2 South & Central America Asia & Middle East*2 400 200 2004 USD/JPY*1 104.2 2005 118.1 2006 119.1 2007 114.1 2008 91.0 2009 92.1 2010 81.4 2011 77.7 2012 86.5 2013 105.3 2014 120.5 2015 120.6 2016 116.4 2017 Projections 112.1 *1: FX rates are as of Dec. 31 of each year (FX rate for FY2017 Projections is as of Mar. 31, 2017) *2: Up to FY2015, Middle East is included in Europe. From FY2016, Middle East is included in Asia 50 Copyright (c) 2017 Tokio Marine Holdings, Inc. Asset Portfolio ? Domestic Non-Life (TMNF) ? With regard to assets backing deposit-type insurance of long-term insurance liabilities, we aim a stable increase in the value of surplus by controlling the interest rate risk based on strict ALM investments ? Of long-term insurance liabilities, by integrating assets (excluding deposit-type insurance) and absolute return investment / lending, we aim to enhance capital / cash efficiency, and increase long-term and stable investment income under ALM management TMNF ? Domestic Life (TMNL) ? Excluding assets in separate accounts, most assets are assets for backing long-term insurance liabilities. We aim a stable increase in the value of surplus by controlling the interest rate risk based on ALM investments Total Assets \9.5T (as of end of Mar. 2017) TMNL Total Assets \7.3T (as of end of Mar. 2017) Assets backing long-term insurance liabilities 18% Mainly yen-denominated fixed income assets Appropriately control yendenominated interest rate risks of longterm insurance liabilities with yendenominated fixed income assets Excluding deposit- 9% type insurance (Including short-term investments) Absolute return investment and lending 14% Under ALM management, enhance capital and cash efficiency and increase long-term and stable investment income Assets backing long-term insurance liabilities Mainly yen-denominated fixed income assets Business-related equities 25% Appropriately control interest rate risks of life insurance liability Continue to reduce holdings Investments in subsidiaries and affiliates, etc. 21% Others Former FL 86% Assets in separate 6% accounts 12% Short-term investments, etc. Real estate for own use, non-investment assets, etc. Copyright (c) 2017 Tokio Marine Holdings, Inc. Others 8% 51 Impact of FX rate change on the Group’s Financial Results ? Main impact in the event of 1 yen appreciation*1 (compared with the original projections) Impact on net income on financial accounting basis*2 ? Decrease in profit from overseas Impact on adjusted net income*2 ? Decrease in profit from overseas subsidiaries: ? Decrease in profit from local subsidiaries approx. - \ 0.8B approx. - \1.3B subsidiaries: (Of factors stated in the left column, amortization of intangible fixed assets and goodwill has no impact because it is added back to adjusted net income) ? Decrease in amortization of intangible fixed assets and goodwill ? Change in foreign currency approx. + \1.2B ? Change in foreign currency denominated approx. + \1.2B denominated outstanding claims reserves and derivatives at TMNF: Total: approx. + \0.4B outstanding claims reserves and derivatives at TMNF: Total: approx. - \0.1B *1 Assuming that the FX rate for each currency changes by the same ratio as USD *2 Impact on the FY2017projections. After tax basis ? Reference: applied FX rate (USD/JPY) Mar. 31, 2017 Dec. 31, 2017 Mar. 31, 2018 JPY 112.19 Overseas subsidiaries FY2017 Projections Change from the original projections FY2017 Results TMNF FY2017 Projections Change from the original projections FY2017 Results 52 Copyright (c) 2017 Tokio Marine Holdings, Inc. MEMO 53 Copyright (c) 2017 Tokio Marine Holdings, Inc. MEMO 54 Copyright (c) 2017 Tokio Marine Holdings, Inc. 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 201705261150 0:37:13.2 0:37:49.5 0:48:07.9 0:55:00.1 1:01:02.7 1:06:11.8 1:13:03.4 1:21:34.5 Tsuyoshi Nagano President