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0:00:00.0 Tokio Marine Group Mid-Term Business Plan “To Be a Good Company 2017” 2017 Business Plan Update November 24, 2017 Tokio Marine Holdings, Inc. 0:00:24.1 Table of Contents Ⅰ 1. Progress 2. Enterprise Risk Management (ERM)& Shareholder Return Policy 3. Group Asset Management 4. Business Plan and Strategy by Domain (1) Domestic non-life business (2) Domestic life business (3) International insurance business Current Mid-Term Business Plan Ⅱ Direction of the Next Mid-Term Business Plan 1. Group Business Plan 2. Business Plan by Domain (1) Domestic non-life business (2) Domestic life business (3) International insurance business Reference Copyright (c) 2017 Tokio Marine Holdings, Inc. 1 0:01:03.3 Ⅰ Current Mid-Term Business Plan Copyright (c) 2017 Tokio Marine Holdings, Inc. 2 0:01:14.3 Ⅰ Current Mid-Term Business Plan 1-1. 2Q FY2017 Results Adjusted Net Income (Group Total) - 75.7 (billions of yen) ? Natural catastrophe net incurred losses (Business unit profits basis, billions of yen) 2016.1H Domestic non-life Before tax International insurance Total 39.4 15.2 54.6 2017.1H 25.1 73.1 98.2 Adjusted Net Income 219.2 143.5 Net Income*1 2016 1H 2017 1H (financial accounting basis) 155.2 76.7 After tax*2 Domestic non-life International insurance Total *2 28.3 11.0 39.3 18.0 55.1 73.2 Decreased mainly due to the impact of large natural catastrophes such as hurricanes in North America, etc. and large losses at domestic non-life, etc. *1 Net income attributable to owners of the parent Estimated figures after tax Business Unit Profits Domestic Non-Life (TMNF) - 31.7 96.1 64.3 200.3 - 113.7 86.5 2,003 79.6 (billions of yen) Domestic Life (TMNL) (billions of yen) International Insurance - 43.6 (billions of yen) 36.0 2016 1H 2017 1H 2016 1H 2017 1H 2016 1H 2017 1H Copyright (c) 2017 Tokio Marine Holdings, Inc. Decreased due to the impact of large losses, etc. and the reversal effect of a decrease in provision for foreign currency dominated outstanding claims reserves due to the appreciation of the yen in FY2016, etc. Increase in MCEV decreased mainly due to the reversal effect of changes in definitions in measurement method in FY2016 Decreased due to an increase in net incurred losses relating to natural catastrophes, etc. 3 0:02:08.1 Ⅰ Current Mid-Term Business Plan 1-2. FY2017 Full-Year Projections Adjusted net income and Adjusted ROE revised downward mainly due to an increase in natural catastrophe losses and the impact of large losses in domestic non-life, etc. ? Adjusted Net Income 406.7 382 315 ? Impact of large losses, etc. in domestic non-life ? Foreign exchange losses at foreign subsidiaries ? Increase in provision for underwriting reserves associated with an increase in new policies at domestic life (billions of yen) - 67 ? Main downward revision factors of Adjusted Net Income ? Increase in natural catastrophes losses in domestic and overseas (after-tax*3) approx. \50B approx. \10B approx. \5B approx. \5B 2016 (Original) 2017 Projections (Revised) Net Income*1 (financial accounting basis) 273.8 280 230 ? Natural catastrophe net incurred losses (Business unit profits basis, billions of yen) *1 Net income attributable to owners of the parent 2016 2017 Projections (Original) 43.0 47.0 90.0 (Revised) 64.0 93.0 157.0 ? Adjusted ROE 11.0% 9.8% - 1.7pt Before tax Domestic non-life 8.1% International insurance Total 55.3 35.4 90.7 2016 (Original) 2017 Projections 7.8% 3,900 (Revised) ROE (financial accounting basis) Adjusted Net Asset*2 (billions of yen) 7.8% 3,705.9 6.4% After tax*3 3,890 Domestic non-life International insurance Total 39.8 26.4 66.2 31.0 34.0 65.0 46.0 69.0 115.0 *3 Estimated figures after tax *2 Average balance basis Copyright (c) 2017 Tokio Marine Holdings, Inc. *3 Estimated figures after tax 4 0:02:46.7 Ⅰ Current Mid-Term Business Plan 1-3. Progress of the Mid-Term Business Plan ? For FY2017, the final year of the mid-term business plan, main KPIs are projected to be lower than the original outlook due to the impact of large natural catastrophes, etc. ? Normalized basis performance excluding external environment such as market environment and natural catastrophe losses, etc. is expected to reach the original outlook Mid-Term Business Plan FY2017 outlook*1 FY2017 Projections Revised Normalized basis*2 FY2014 Results 1 Enhance capital efficiency Sustainable profit growth Enhance shareholder return Adjusted ROE : Upper 9% range 8.1% 9.6% 7.6% (Normalized basis*2) 2 Adjusted Net Income: Approx. \400B \315B approx. \ 380B \298.1B (Normalized basis*2) 3 Steady growth of dividends in line with profit growth Dividend per share Dividend per share \160 \95 *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: Adjusted net income: Nat-cat losses are normalized to an average annual level. Applied FX rates are also normalized so that it does not fluctuate from the end of Mar. 2015 Adjusted net assets: Market environment (stock price and FX) normalized to the level as of the end of Mar. 2015 Copyright (c) 2017 Tokio Marine Holdings, Inc. 5 0:03:49.0 Ⅰ Current Mid-Term Business Plan 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 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 6 0:04:45.7 Ⅰ Current Mid-Term Business Plan 2-2. Promoting Strong ERM (2) (ESR as of Sep.30, 2017) ? ? Although net asset value decreased due to shareholder return, etc., risk capital also decreased. As a result, ESR as of Sep. 30, 2017 is 141% Business continuity is confirmed even in the event of stress scenario ? Economic Solvency Ratio (ESR) 139% Factors of change in net asset value ? Contribution of 1H FY17 adjusted net income ? Increase in unrealized gains of businessrelated equities ? Shareholder return ? Increase in restricted capital relating to value of life insurance policies in-force etc. 141% (reference) at 99.5%VaR, with UFR* 169% ? 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 Risk Capital Net asset value Factors of change in risk capital Sales of business-related equities 3.5 ? ? Decrease in interest rate risks due to 2.5 trillion yen a decrease in interest rate volatility trillion yen ? Increase in risks of equities due to rise in stock price etc. Mar. 31, 2017 Risk Capital Net asset value 3.4 trillion yen Sep. 30, 2017 141% 149% 131% 140% 142% trillion yen 2.4 Share Price +30% - 30% Sep. 30, 2017 \18,909 Nikkei Stock Average \ 20,356 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. - + - Copyright (c) 2017 Tokio Marine Holdings, Inc. 7 0:05:41.9 Ⅰ Current Mid-Term Business Plan 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 ? Interim dividends is \80 per share as projected in the original projections ? Annual dividends is projected to increase by \20 YoY to \160 per share (payout ratio* of 37%), an increase for six consecutive years * proportion of average adjusted net income, before reflecting the share repurchases scheduled in 2H FY2017 + Adjustment of capital level ? Adjustment will be executed with flexibility through share repurchases, etc. based on comprehensive assessment of relevant factors (market conditions, business opportunities etc.) ? Share repurchase of up to \100B is scheduled in 2H FY2017 \160 ■ Dividend per share (Projection) \140 \110 \95 \70 \48 \36 \48 \50 \50 \50 \55 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Copyright (c) 2017 Tokio Marine Holdings, Inc. 8 0:08:07.8 Ⅰ Current Mid-Term Business Plan 3-1. Group Asset Management (1) ? 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 Group Asset Management Policy ? Further strengthen investment capability by enhancing coordination among group companies of both domestic and overseas and promoting global investment diversification ? 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. 2017) Investment yield of the Group ? Continue to implement investment centered on long-term bonds in Japan and diversified investment measures by leveraging the group's comprehensive capabilities 4.4% 4.5% 4.6% Overseas Domestic & overseas total Domestic ■ Other \3.1T Mainly tangible fixed asses and intangible fixed assets, etc. ■ Cash and deposits \0.7T 3.3% 5.2% 14.0% ■ Monetary receivables bought \1.1T Mainly absolute return investment & lending by Domestic Non-Life (TMNF) and overseas subsidiaries 4.3% 4.0% 2.3% 2.1% 1.6% 1.6% 2.2% ■ Loans \1.1T 5.1% 1.3% 2.3% 2.3% 1.5% 2017.1H ■Other securities \0.3T Mainly assets in separate accounts held by Domestic Life Total Assets \22.7T 1.5% 37.9% 2013 2014 2015 1.4% 2016 21.6% ■ Foreign securities \4.9T Mainly local country bonds held by overseas subsidiaries mainly in the U.S. and Europe 11.6% ■ Domestic bonds \8.6T Domestic government bonds (JGB): \7.6T Mainly bonds for the purpose of ALM by Domestic Life and NonLife ? Total of entrusted amount to Delphi as of end of Sep. 2017: approx. USD 5,600M Group companies Philadelphia Tokio Millennium Re TMNF TMHCC TMNL Start of entrustment July 2014~ July 2015~ Jan. 2016~ Mar. 2016~ Jan. 2017~ ■ Domestic equities \2.6T Mainly business-related equities held by Domestic Non-Life (TMNF) Copyright (c) 2017 Tokio Marine Holdings, Inc. 9 0:09:15.5 Ⅰ Current Mid-Term Business Plan 3-2. Group Asset Management (2) Continue to reduce business-related equities from the perspective of enhancing capital efficiency ? Book value of business-related equities has decreased to less than half compared with the end of Mar. 2002 through steady measures ? Since FY2002, sold a total of approx. \1.9T(cumulative) *1 *1: Market price at the time of sale Book value of business-related equities *2 Reduction results ? Previous mid-term business plan Plan: Sell \300B in 3 years total 100 100 82 86 57 59 41 41 FY 2012 2013 2014 3 year total Sales amount \115.0B \109.0B \112.0B \336.0B ? Current mid-term business plan: Plan: Sell over \100B every year 2002.3E 2007.3E 2012.3E 2017.9E FY 2015 Sales amount \122.0B \117.0B Over \100B *2: Figure at the end of Mar. 2002 is set at index value of 100 2016 2017 (Plan) Copyright (c) 2017 Tokio Marine Holdings, Inc. 10 0:10:04.3 Ⅰ Current Mid-Term Business Plan 4(1)-1. TMNF FY2017 Projections Net premiums written is revised upward due to steady implementation of growth measures, etc. ? Business unit profits is projected to exceed the mid-term business plan despite downward revision due to an increase in natural catastrophes, etc. ? Net Premiums Written (billions of yen) +5 2,140 2,145 ? Upward revision by \5B from the original projections mainly due to an increase in fire and CALI 2,116.1 2,036.7 ? CAGR from FY2014 to FY2017 is + 1.7%, increasing in line with the mid-term business plan 2014 2016 2017 Projections (Original) (Revised) Business Unit Profits (billions of yen) Normalized basis* Actual basis - 12 ? Revised downward by - \12B from the original projections mainly 160.3 153 approx. 160 141 due to an increase in natural catastrophes ? CAGR from FY2014 to FY2017 on a normalized basis* is +10.1%, projected to exceed the mid-term plan target of +3% CAGR 113.7 approx.120 2014 Copyright (c) 2017 Tokio Marine Holdings, Inc. 2016 2017 Projections (Original) (Revised) ? Effect of FX rate is excluded and natural catastrophes losses are normalized to an average annual level 11 0:10:58.2 Ⅰ Current Mid-Term Business Plan 4(1)-2. TMNF Combined Ratio Stable combined ratio despite an increase in loss ratio due to the impact of natural catastrophes, etc. ? Combined Ratio (Private insurance: E/I basis) *1 *1: Financial accounting basis, loss ratio (private insurance E/I basis) + expense ratio (private insurance W/P basis) 99.6% 97.5% ■ Natural catastrophes normalized to an average annual basis 97.2% 94.4% 92.7% 90.6% 91.4% 90.8% 93.6%*2 91.5% 90.4% 89.7% 90.4% 2012 E/I loss ratio Excluding natural catastrophes Natural catastrophes normalized to an average annual basis Auto insurance 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 (Original) 57.8% 55.6% (Revised) 60.9% 56.5% 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% 57.8% 60.2% 32.6% 58.7% 60.6% 32.8%*3 *2: Including the impact of reinsurance from overseas subsidiaries relating to large natural catastrophes such as hurricanes in North America, etc. *3: Expense ratio (all lines) is 30.9% 12 0:12:09.2 Ⅰ Current Mid-Term Business Plan 4(1)-3. TMNF Measures to Achieve Sustainable Growth Becoming "the best choice" for customers by enhancing product attractiveness and promoting channel strategies ? Unlocking the integrated business model for life and non-life ? Enhance customer satisfaction by extensive coverage and easy-to-understand selling materials High renewal ratio* ? 5 specific illness income coverage is newly added (Oct. 2017~) to Super Insurance to correspond to the inability-to-work market which is expected to expand in the future Super Insurance Promotion of multiline sales Ratio of the number of Super Insurance with either life or third sector coverage 19.5% 18.4% Unit premiums of Super Insurance, total of non-life and life (thousands of yen) 97.0% 95.6% Auto insurance (excluding Super Insurance) 17% Copyright (c) 2017 Tokio Marine Holdings, Inc. Product Strategy Channel strategy Prepared with inability-to-work insurance* Super Insurance auto market expected to expand Anxious about inability-to-work 79% 16.3% 16.0% 121.8 118.8 *Past 1 year period until the end of Sep. 2017 * Inability-to-work insurance of life insurance companies Source: Japan Institute of Life Insurance ? Auto insurance: Strengthen measures to enhance coverage Revised in Apr. 2017 ? New features: - Drive agent personal - Bicycle package Revised in Jan. 2018 ? Riders for expenses for rental car in response to customer needs 112.9 2014 114.6 2015 2016 2017.9E Sustainable increase in the number of customers Growth rate of number of autos (2011.3E is set at index value of 100) 115 TMNF number of auto insurance policies (managerial accounting basis, past 1 year period) ? Enhance agent productivity ? Through support to become organized agents, enhance quality and productivity <Agents handling premiums over \0.1B> ■ Composition among full-time agents ? Strengthen channel mix ? Strengthen cooperation leveraging characteristics and strengths of channels Full-time agents TNP* Corporate agents, financial institution agents 112.2 110 82.0% 60.4% 2011.3E Number of agents * Tokio Marine & Nichido 100% held agent 105 Number of automobiles owned nationwide* 103.9 2017.3E ? Promoting sales expansion of non-life insurance through life insurance channels Life professionals Tie up with life insurance companies 2011.3E 2013.3E 2015.3E 2017.8E 1,593 1,876(+18%) * Source: Automobile Inspection & Registration Information Association 13 0:15:33.0 Ⅰ Current Mid-Term Business Plan 4(1)-4. TMNF Measures to Achieve Sustainable Growth Aim to change product portfolio by expanding specialty insurance in various fields and aim to accelerate growth ? Promote new business model ? Through measures for regional revitalization and health & productivity management, promote a new business model in cooperation with local governments, financial institutions and chambers of commerce, etc. Insurance for chambers of commerce organizations Commercial package insurance approx. 25,000 policies ? Pursue group synergies Specialty insurance*+ P.A. insurance net premiums written (billions of yen) Leverage expertise and know-how of overseas group companies for product development and business expansion, etc. ? Cyber risk insurance Group companies in domestic and overseas tie up with Science Inc. (US), which has advanced knowhow, to strengthen risk management capability and start providing risk diagnostic services for customers. Employment injury insurance approx. 57,000 polices (as of the end of Sep. 2017) Shifting the gear towards further growth through various growth measures +11.4 ? D&O ? Insurance for professional sport teams ? Representations and warranties insurance (M&A insurance) ? Develop new products in the medical and inability-to-work areas and promote new approach to the large group market etc. ? Initiatives for large companies As a business strategic partner, contribute to the business expansion of our corporate clients while expanding value providing areas Before Provide solutions for risks 462.2 450.8 445.2 432.6 ? Response to social changes Develop and provide insurance that responds to new needs arising from technological advancement and social change ? Fertility treatment support insurance ? 5 specific illness income coverage (Super Insurance) ? On-demand insurance ? Crowd-funding insurance + Support new business creation (Joint R&D) Support enhancement of added-value of our Business corporate clients strategic ・Adding insurance products to BtoC partner business ・Coordination with startups etc. etc. 2014 2015 2016 2017 Projections * Categorized as “Others” in Summary of Financial Statements Copyright (c) 2017 Tokio Marine Holdings, Inc. 14 0:17:01.7 Ⅰ Current Mid-Term Business Plan 4(2)-1. TMNL FY2017 Projections Aiming for growth along with financial soundness and profitability by promoting sales shift from saving-type products to protection-type products ? New Policies Annualized Premiums (ANP) Total of new policies ANP Excluding long-term saving-type products (individual annuities and “whole life with long-term discount”) (billions of yen) ? New policies ANP ? Upward revision by \22.7B from the original projections to \114.3B reflecting the impact of a new product for corporations, etc. ? Excluding long-term saving-type products, CAGR for 3 years is 10.4%, which is expected to reach the target level (10%) of the mid-term business plan 120.7 114.1 84.9 113.5 91.5 +22.7 114.3 2014 Ratio of new policies ANP excluding long-term saving-type products 2016 94% 2017 Projections (Original) (Revised) 100% 100% 74% ? Individual insurance (number of new policies) 2014 53 2016 55 (ten thousands of policies) ? Number of new policies for individual insurance ? Project 500,000 policies due to medical insurance falling below the original projections despite favorable sales of Household Income Term Insurance 2017 Projections (Original) (Revised) 52 50 ? Business Unit Profits (increase in MCEV) +63 (billions of yen) +117 +54 +60 Change in economic environment ? Business unit profits (increase in MCEV) ? Upward revision by \63B from the original projections to \117B due to the impact of changes in economic environment such as rise in yen interest rates, etc. 2014 Year end MCEV *1,*2 Increase in MCEV *2 Copyright (c) 2017 Tokio Marine Holdings, Inc. 2016 1,163.2 2017 Projections (Original) (Revised) 1,217 +54 1,280 +117 1,037.3 *1: Figures of FY2014 and FY2016 are after payment of shareholders’ dividends of the prior fiscal year *2: Figures of FY2017 Projections are before payment of shareholders’ dividends of the prior fiscal year 15 0:18:24.7 Ⅰ Current Mid-Term Business Plan 4(2)-2. TMNL Growth Strategy Enhancing our highly unique product lineup to meet diverse needs 2017 Life Insurance Revolution to Protect One’s Living Long life support whole life 《Nov. 2010》 Cancer Treatment Support Insurance NEO Cancer Insurance R 《July. 2015》 Household Income Term Insurance NEO (Inability-to-work plan) 《Nov. 2016》 Medical Kit NEO Medical Kit R (Revised) 《Nov. 2015》 Life Insurance Revolution to Protect One’s Living Nextage Aruku Hoken ? Utilize sensing technology ? Refund a portion of insurance premiums according to health enhancement activities Achieving high growth Growth rate of the number of in-force policies for living protection products (medical, cancer, household income term, and long life support whole life) Response to new needs Market Link ((Terminable) Variable insurance with installment plans) ? Respond to asset accumulation needs and aim for stable investment performance (ten thousand policies) 350 CAGR +11.8% 300 250 Promoting multi-channel strategies focusing on the integrated business model for life and non-life Promote cross-sell by utilizing nonlife customer base & integrated product for life and non-life Ratio of the number of Super Insurance with either life or third sector coverage Create synergies with channel mix 200 Well-balanced growth in main four channels Life Partners approx.10% Bancassurance approx.10% Non-life Agents approx.55% Life Professionals approx. 25% (life insurance premiums on a managerial accounting basis as of the end of Sep. 2017) 150 100 19.5% Tie-up between non-life agents and life partner/life professionals (sales staff) 50 2012 2016 Strengthen channel support Promote HR development to enhance expertise of sales agents Channel Composition Copyright (c) 2017 Tokio Marine Holdings, Inc. 16 0:22:04.9 Ⅰ Current Mid-Term Business Plan 4(3)-1. International Insurance FY2017 Projections ? Net premiums written is revised upwards from the original projections due to progress of growth measures even under the soft market environment ? Although business unit profits is revised downwards mainly due to the impact of hurricanes in North America, etc. (approx. \49B, after-tax basis), still project \104B with the positive effect of business risk diversification Net premium written (billions of yen) +69 1,711 1,664 +47 Business unit profits (billions of yen) 169.5 145.5 116 149 -49 -9 1,654.4 1,302.6 1,161 1,628 1,642 153 155 146 104 2014 2016 Normalized basis* Actual basis 2017 Projections (Original) (Revised) Sep. 30, 2017 JPY 112.7 2014 2016 Applied FX rate (USD/JPY) Normalized basis* Actual basis 2017 Projections (Original) (Revised) Sep. 30, 2017 JPY 112.7 Applied FX rate (USD/JPY) *Excluding FX effects when converting to yen Applied FX rate (USD/JPY) Dec. 31, 2014 JPY 120.5 Dec. 31, 2016 JPY 116.4 Mar. 31, 2017 JPY 112.1 Sep. 30, 2017 JPY 112.7 *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 Applied FX rate (USD/JPY) Dec. 31, 2014 JPY 120.5 Dec. 31, 2016 JPY 116.4 Mar. 31, 2017 JPY 112.1 Sep. 30, 2017 JPY 112.7 On a normalized basis, upward revision by \47B from the original projections due to the progress of organic growth mainly in North America, South & Central America and Reinsurance as well as business expansion of Asia non-life On an actual basis, upward revision by \69B from the original projections to \1,711B due to the factors above as well as the depreciation of the yen On a normalized basis, downward revision by \9B from the original projections due to an increase in loss ratio mainly from large losses On an actual basis, downward revision by \49B from the original projections to \104B due to the impact of nat-cat such as hurricanes in North America, etc. and foreign exchange losses Composition of net premiums written (FY2017 Revised Projections) Asia, Middle East 8% 8% 9% Life 5% Phila delphia 21% North America TMHCC 61% Reinsurance South & Central America Europe 9% 5% Copyright (c) 2017 Tokio Marine Holdings, Inc. ? Pursue balanced growth by seizing size and profitability in developed countries and growth in emerging countries through “organic growth” and “strategic M&A” 17 21% Delphi 15% Others 0:23:45.9 Ⅰ Current Mid-Term Business Plan 4(3)-2. International Insurance Impact of hurricanes in North America, etc. ? The industry is expected to face one of the largest market losses in history due to frequent natural catastrophes worldwide including hurricanes in North America ? Although natural catastrophe losses of Tokio Marine Group are projected to increase from the original projections, the impact is within our expectations and tolerances, thanks to risk diversification due to a wide range of specialty insurance products, and risk control under strict ERM Impact of hurricanes in North America, etc. to Tokio Marine Group Net Incurred Losses approx. \21B approx. \33B approx. \8B approx. \2B approx. \64B (approx. \63B) Global Nat Cat Losses Global Nat Cat Losses*3 Event Hurricane Harvey Hurricane Irma Hurricane Maria Mexico Earthquakes Total (Incl. international business) $150B Hurricane Katrina Hurricane Sandy Incurred Loss Share on this event*1 US P&C Market 1.1% Share*2 $100B Mexico EQ Maria 0.6% < $50B Irma Harvey *1: Calculated by estimated market losses ($100B) as a denominator *2: From SNL Financial ref) US Commercial P&C Market Share: 2.1% 2005 2011 2012 2013 2014 2015 2016 2017YTD Tokio Marine Franchises in U.S. *3: From Dowling & Partners, IBNR #42. 2017YTD shows estimated losses to 3Q FY2017 Well-diversified business portfolio that delivers stable profit growth Disability Excess W/C Medical Stop-loss Major products Human Services Real Estate Agriculture D&O US Liability Property & Liability Marine Copyright (c) 2017 Tokio Marine Holdings, Inc. 18 0:24:48.4 Ⅰ Current Mid-Term Business Plan 4(3)-3. International Insurance North America ① Actual basis ■ Normalized basis ■ (Incl. Comments) Net Premiums Written Business Unit Profits Market Comparison North America 1,031.6 Aim for sustainable profit growth while pursuing synergy between group companies +9 US Commercial P&C Market Share (2016) 1,023 1,036 1,027 (billions of yen) (billions of yen) 1st Chubb Ltd. +4 998.0 140.2 130.0 2nd Travelers Companies Inc. 133 3rd Liberty Mutual ・ ・ 128 129 123 8th Hartford Financial Services 9th Berkshire Hathaway Inc. 10th Tokio Marine Group 11th AmTrust Financial Services 49th 2.1% 2016 2017 Projections (Original) (Revised) 2016 2017 Projections (Original) (Revised) 50th Source:SNL Financial Maintain growth and profitability outperforming the market through underwriting discipline and action Combined Ratio (billions of yen) (billions of yen) +6 ・ ・ ・ 352.2 341.0 356 348 350 110% US P&C market average Philadelphia +0 100% 45.7 42.0 39 39 37 39 90% ? 2017 Projections (Original) (Revised) Upward revision mainly due to rate increases in renewal book and an increase in new business book 2016 2016 ? 2017 Projections (Original) (Revised) 80% Copyright (c) 2017 Tokio Marine Holdings, Inc. Despite the impact of large losses, no change in projections due to business expansion and favorable investment income, etc. 19 0:26:01.4 Ⅰ Current Mid-Term Business Plan 4(3)-3. International Insurance North America ② Actual basis ■ Normalized basis ■ (Incl. Comments) 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 +2 (billions of yen) (billions of yen) 247.9 240.0 249 246 247 +1 110% US P&C market average Delphi 39.6 38.0 44 44 45 45 100% 90% 2016 ? 2017 Projections (Original) (Revised) ? 2016 2017 Projections (Original) (Revised) 80% Upward revision mainly due to rate increases in renewal book and an increase in new business book in non-life Upward revision mainly due to an increase in investment income associated with an increase in AUM, etc. Maintain stable high profitability and pursue synergy on a global basis +6 (billions of yen) (billions of yen) 110% 347.9 337.0 353 346 347 US P&C market average TMHCC 49.6 44.0 +2 100% 43 41 41 38 90% 2016 ? 2017 Projections (Original) (Revised) ? 2016 2017 Projections (Original) (Revised) 80% Upward revision mainly due to expansion of medical stop-loss business through organic growth and strategic M&A Upward revision mainly due to business expansion and an increase in investment income, etc. Copyright (c) 2017 Tokio Marine Holdings, Inc. 20 0:26:35.8 Ⅰ Current Mid-Term Business Plan 4(3)-4. International Insurance Europe / Reinsurance Actual basis ■ Normalized basis ■ (Incl. Comments) Net Premiums Written Business Unit Profits Combined Ratio Europe Promote common growth strategies under the business platform of Lloyd’s market and Corporate market -7 160 (billions of yen) (billions of yen) 110% 153 -3 Lloyd's market average TMK (Lloyd's business) 148 134.4 142.0 8.9 6.0 7 8 5 100% 90% 2016 2017 Projections (Original) (Revised) ? ? 2016 2017 Projections (Original) -22 2017 Projections (Revised) 80% ? Downward revision due to underwriting control under the soft market environment, etc. On a normalized basis, downward revision reflecting an increase in loss ratio mainly from large losses, etc. On an actual basis, downward revision due to the impact of hurricanes in North American, etc. and foreign exchange losses Reinsurance Maintain stable profit by promoting geographical and product line diversification (billions of yen) (billions of yen) 130% 110% 153.8 149.0 +15 -9 128 129 144 12.4 6.0 90% 9 9 70% Peer average* Tokio Millennium Re 0 2016 2017 Projections (Original) (Revised) ? ? 2016 2017 Projections (Original) 2017 Projections (Revised) 50% 30% -6 ? Upward revision due to underwriting expansion at Tokio Millennium Re On a normalized basis, downward revision reflecting an increase in loss ratio in the non-nat-cat book On an actual basis, downward revision due to the impact of hurricanes in North American and foreign exchange losses ?Peer companies (the figures are the average of the following 12 companies): (Renaissance Re, Validus, Chubb (R/I only), Axis (R/I only), Montpelier Re (2011-2014 only), Markel (R/I only), AWAC, Arch, Sompo International (R/I only), Aspen, Everest Re, Partner Re) Copyright (c) 2017 Tokio Marine Holdings, Inc. 21 0:27:17.0 Ⅰ Current Mid-Term Business Plan 4(3)-5. International Insurance Emerging Countries Actual basis ■ Normalized basis ■ (Incl. Comments) 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) +16 ? Net premiums written: Upward revision due to expansion of auto insurance business in Brazil 146 129.6 131 129.0 130 +0 4.4 4.0 4 4 4 4 ? Business units profits: Despite projecting a decrease in investment income, no change in projections due to business expansion 2016 2017 Projections (Original) (Revised) 2016 2017 Projections (Original) (Revised) Asia & Middle East Non-life Achieve growth in the retail market by expanding distribution channels and generating group synergies +16 (billions of yen) (billions of yen) 142 123 116.8 119.0 126 ? -2 Net premiums written: Upward revision due to the effect of raising shareholdings in India and the progress of growth measures in each country, etc. 7.5 9 7.0 9 8 7 ? Business units profits: Downward revision due to the impact of large losses, etc. 2016 2017 Projections (Original) (Revised) 2016 2017 Projections (Original) (Revised) Life 91.0 92 -2 (billions of yen) (billions of yen) 88.0 89 90 2 0.1 0 2016 2 +1 ? 3 Business units profits: Upward revision due to the impact of interest rate fluctuation in Singapore, etc. 3 2016 Copyright (c) 2017 Tokio Marine Holdings, Inc. 2017 Projections (Original) (Revised) 2017 Projections (Original) (Revised) 22 Ⅰ Current Mid-Term Business Plan 4(3)-6. International Insurance FY2017 Projection by regions FY2017 Projections Net Premiums Written (billions of yen) FY2016(a) Original (b) 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 Original ? Revised Revised (c) 1,036.0 356.0 249.0 353.0 153.0 146.0 142.0 1,477.0 144.0 1,621.0 90.0 Difference (c - b) 13.0 8.0 3.0 7.0 5.0 15.0 19.0 52.0 16.0 68.0 1.0 Normalized basis*3 9.0 6.0 2.0 6.0 -7.0 16.0 16.0 34.0 15.0 49.0 -2.0 YoY Change (c - a) 4.3 3.7 1.0 5.0 18.5 16.3 25.1 64.3 -9.8 54.5 1.9 from FY2016 Normalized basis*3 38.0 15.0 9.0 16.0 11.0 17.0 23.0 89.0 -5.0 84.0 -1.0 YoY Change % (c ÷ a) 0% 1% 0% 1% 14% 13% 21% 5% -6% 3% 2% FY2017 Projections FY2016(a) Applied FX rate Normalized basis*3 4% 4% 4% 5% 8% 13% 19% 6% -3% 5% -1% As of endDec. 2016 Original (b) As of endMar. 2017 Revised (c) As of endSept. 2017 Change % (b)?(c) 0% 8% -1% 5% YoY Change % (a)?(c) -3% 6% -0% 3% (USD / JPY) (GBP / JPY) (Brazilian Real / JPY) (Malaysian Ringgit / JPY) \116.4 \143.0 \35.7 \25.9 \112.1 \140.0 \35.9 \25.3 \112.7 \151.3 \35.6 \26.6 Total 1,654.4 1,642.0 1,711.0 69.0 47.0 56.5 83.0 3% 5% FY2017 Projections FY2017 Projections Business Units Profits FY2016(a) (billions of yen) Original (b) North America   Philadelphia   Delphi   TMHCC Europe South & Central America Asia & Middle East Total Primary Non-Life*1 Reinsurnace Total Non-Life* Life 1 Original ? Revised Revised (c) 123.0 37.0 45.0 38.0 -22.0 4.0 8.0 113.0 -6.0 107.0 3.0 Difference (c - b) -5.0 -2.0 1.0 -3.0 -29.0 -1.0 -35.0 -15.0 -50.0 1.0 Normalized basis*3 4.0 1.0 2.0 -3.0 -2.0 -9.0 -9.0 1.0 YoY Change (c - a) -17.2 -8.7 5.3 -11.6 -30.9 -0.4 0.4 -47.7 -18.4 -66.2 2.8 from FY2016 Normalized basis*3 3.0 -3.0 7.0 -1.0 -1.0 2.0 -6.0 -4.0 3.0 YoY Change % (c ÷ a) -12% -19% 14% -23% -345% -11% 7% -30% -148% -38% 2630% Normalized basis*3 2% -7% 18% -2% -17% 1% -100% -3% - C/R FY2016 Original Revised 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 North America   Philadelphia   Delphi   TMHCC Europe South & Central America Asia & Middle East Total Primary Non-Life*1 Reinsurnace Total Non-Life* Life 1 93% 92% 100% 88% 99% 102% 99% 95% 96% 95% - 94% 95% 98% 89% 96% 102% 95% 95% 97% 96% - 96% 96% 101% 90% 119% 101% 99% 99% 108% 100% - Total *2 169.5 153.0 104.0 -49.0 -9.0 -65.5 -3.0 -39% -2% Total 95% 96% 100% Copyright (c) 2017 Tokio Marine Holdings, Inc. *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. In Business Units Profits, excluding FX effects (due to yen conversion and FX gains/losses on major overseas subsidiaries) and normalizing natural catastrophe losses to an average annual level 23 0:28:04.1 Ⅱ Direction of the Next Mid-Term Business Plan Copyright (c) 2017 Tokio Marine Holdings, Inc. 24 0:28:21.7 Ⅱ Direction of the Next Mid-Term Business Plan 1-1. Long-Term Vision and Value Providing Cycle 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 - Value providing cycle leading to sustainable growth Customer ? Society ? Becoming "the best choice" for customers through providing high value added products Customer and services and delivering safety & security to customers Society Resolving issues of society from the perspective of “safety and security”, and increasing social appraisal and presence Employee Shareholder Employee ? Shareholder ? Increasing employee engagement worldwide by providing work environment which maximizes creativity Realizing growth of every employee through HR development and delivering high level added value to customers ? Generating stable double-digit ROE and high level of shareholder return as a result of value creation for each stakeholder Aim to maximize long-term shareholder value through the value providing cycle for each stakeholder Copyright (c) 2017 Tokio Marine Holdings, Inc. 25 0:29:33.7 Ⅱ Direction of the Next Mid-Term Business Plan 1-2. Future Group Vision Aim for further growth by capitalizing on expected changes in the business environment Expected business environment ? Change of social structure (change in demography) ? Technology advancement (autonomous driving, AI, etc.) ? Climate change (global warming) ? Economic environment (economy/interest rate environment, insurance market environment) Strengths of the Group ? Aligned Group management (maximize the Group’s comprehensive capability) ? Ability to execute (proven track record of business performance) ? Ability to capitalize on changes (proactively meeting the emerging and evolving needs of customers) ? Corporate culture (core identity of “Good Company”) Future Group Vision Optimal portfolio Achieve growth in markets expected to expand (emerging countries, speciality insurance, medical insurance, etc.), and constantly realize stable profits through optimal diversification of geography, business, and products Strong group synergy Realize further higher growth by promoting aligned group management to maximize group synergies and strengthen local management Lean management system Realize high productivity by promoting structural reform and establishing a lean management system that can withstand any business environment Global business platform Under the core identity of “Good Company”, leverage the diverse talent of employees globally and realize solid global management that supports strong local business Generate stable double-digit ROE and high level of shareholder return Copyright (c) 2017 Tokio Marine Holdings, Inc. 26 0:32:47.6 Ⅱ Direction of the Next Mid-Term Business Plan 1-3. Stage of the Next Mid-Term Business Plan ? Next Mid-Term Business Plan is an important stage to realize our future Group vision ? Although headwinds in business environment such as continuation of soft market and low interest rate, rate reduction in auto insurance are expected, aim to achieve profit growth and raise the level of shareholder return Next Mid-Term Business Plan (2018-2020) ? Future Group Vision Stable double-digit ROE High level of shareholder return Progress up to 2017 Significant improvement in profitability ? Profit growth through establishment of profit base Raise shareholder return level Adjusted net income: \500B and above Adjusted ROE: approx. 12% Adjusted ROE (normalized basis) 9.6% 8.9% Priority issues ? Further diversification of portfolio ? Optimal portfolio ? Strong group synergy ? Lean Management system ? Global business platform 1.3% ? Progress of global business diversification ? Profitability improvement in domestic non-life ? Risk reduction such as sales of business-related equities 2014 2017 (Projections) ? Business structural reforms ? Strengthening aligned Group management 2011 2018 2019 2020 Copyright (c) 2017 Tokio Marine Holdings, Inc. 27 0:34:27.4 Ⅱ Direction of the Next Mid-Term Business Plan 1-4. Priority Issues of the Next Mid-Term Business Plan Geography / Business diversification ? Achieve growth through organic growth as well as M&A (targeting emerging countries such as Asia, etc. and developed countries) Further diversification of portfolio Appropriate risk control Change in product portfolio Innovative products and services ? Appropriately control interest rate risk and natural catastrophe risk along with continuing the sales of business-related equities ? Expand specialty insurance, etc. in non-life insurance business and protection type products in life insurance business ? Launching innovative products and services which proactively meet the emerging and evolving needs of customers ? Strengthen business platform to enhance sales capabilities through creating new customer contacts by using new technology, etc. ? Realize an efficient business process by using new technology, integrating common tasks, etc. ? Generate further synergy on a global basis and further strengthen local management by sharing best practices ? Promote further talent development across the group and further leverage human resources globally ? Enhancing a sense of group unity by spreading core identity throughout the company 28 Business structural reforms Change and strengthen sales channels Enhance productivity Generate further synergy Strengthening aligned group management Leverage and develop global talent Spread group culture “To Be a Good Company” Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:36:12.8 Ⅱ Direction of the Next Mid-Term Business Plan 1-5. Group Management Framework Enhancing Enterprise Risk Management (ERM) to realize sustainable profit growth by strategically allocating capital while maintaining financial soundness Generate Profit Sustainable Profit Growth Domestic Non-Life Insurance Business ? As the core business of the Group, achieve sustainable profit growth ? Change portfolio through sales expansion of specialty insurance Domestic Life Insurance Business ? As a growth driver contributing to long-term profit of the Group, enhance the economic value based corporate value ? Expand sales of protection-type products International Insurance Business ? As a growth driver of the Group, achieve high organic growth and invest in new businesses Group Overall ? Generate further synergy ? Appropriate control of business expenses Efficient Deployment of Capital Invest for Growth ? Invest in new businesses with diversification effects ? Upfront investment to establish future profit base (New products, new technology) Enterprise Risk Management (ERM) Risk Reduction and Control ? Continue the sales of business-related equities, control natural catastrophe risks and interest-rate risks Shareholder Return ? Raise level of shareholder dividend ? Adjust to the appropriate level of capital via share repurchase executed with flexibility, etc. Strategic Capital Allocation Profit growth Copyright (c) 2017 Tokio Marine Holdings, Inc. Enhance shareholder return Maintain financial soundness 29 0:37:43.1 Ⅱ Direction of the Next Mid-Term Business Plan 2(1). TMNF Direction of the Next Mid-Term Business Plan Achieve “sustainable growth” and “generate stable profits“ by implementing three measures to reform business structure and establishing a thorough lean management system Measures to reform business structure (Thoroughly pursuing quality) 1 2 Develop attractive products & services ? Change product portfolio through the integrated business model for life and non-life and regional revitalization and health & productivity management, etc. ? Advance products and services centering on strengthening R&D and utilizing new technology Enhance quality and expand volume of sales channel 3 Enhance productivity through business process improvement ? ? Increase Increase sales sales productivity productivity through enhancement through enhancement of of expertise and consulting expertise and consulting ability ability of agents of agents ? ? Expand Expand new new market market by by creating creating new customer contacts new customer contacts through through channel mix channel mix ? By utilizing the new ? By utilizing new technologies technologies and ceaseless and ceaseless operational operational streamlining, streamlining, enhance enhance productivity through a productivity through a simple simple and speedy business and speedy business process. process. Enhance human resources and organizational capability Maximize the Group’s comprehensive capability Spreading Group culture “To Be a Good Company” throughout the organization Copyright (c) 2017 Tokio Marine Holdings, Inc. 30 Ⅱ Direction of the Next Mid-Term Business Plan 2(2). TMNL Direction of the Next Mid-Term Business Plan Achieve sustainable growth by pursuing quality to become “the best choice” for customers Realize sustainable profit growth Develop innovative products by proactively capitalizing on changes in environment ? Advance living protection products to meet new needs ? Provide new value by using new technology ? Develop products that meet diverse asset accumulation needs and longevity risk ? Cultivate potential life insurance customer market with the integrated business Advance ability to provide safety to customers model for life and non-life by leveraging the Group’s customer base ? Further strengthen sales platform by supporting management of agents who will become the core of growth ? Enhance efficiency and quality of business process by using new technology Business process reform that generates growth ? Generate strategic growth fund for future growth by implementing business process reform Risk control that supports sound growth Group’s comprehensive capability R&D Develop human resources 31 Spreading Group culture “To Be a Good Company” throughout the organization Copyright (c) 2017 Tokio Marine Holdings, Inc. 0:38:49.7 Ⅱ Direction of the Next Mid-Term Business Plan 2(3). International Insurance Direction of the Next Mid-Term Business Plan ?Be the driver of diversification and sustainable profit growth of the Group ?Pursue balanced, sustainable growth in both developed and emerging markets organically and through strategic M&A ?Strengthen “Integrated Group Management" through globalization and enhancement of business support functions Sustainable Organic Growth ? Strategic M&A Seek new business opportunities in both developed and emerging markets for sustainable, profitable growth and diversification of the group, while maintaining discipline Capture sustainable profit growth of Group Companies ・Pursue global synergy ・Strengthen support for Japanese clients through collaboration between domestic and international businesses ? Promote innovation through new technology ・Operational efficiency improvement and sophistication ・Business model innovation Enhance “Integrated Group Management” Globalize and enhance Corporate Functions / Promote Enterprise Risk Management (ERM) Global HR development and talent utilization IT platform development Spreading Group culture “To Be a Good Company” throughout the organization Copyright (c) 2017 Tokio Marine Holdings, Inc. 32 (Blank Page) Copyright (c) 2017 Tokio Marine Holdings, Inc. 33 Reference ? Tokio Marine Holdings Key Statistics ? Return to Shareholders ? 2Q FY2017 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 of Group Management ? Expansion of Group Synergies ? Initiatives to Support Corporate Value Enhancement ? Basic Information (Domestic Non-Life) ? Basic Information (Domestic Life) ? Basic Information (International Insurance) ? Impact of FX rate change on the Group’s Financial Results ? Asset Portfolio Copyright (c) 2017 Tokio Marine Holdings, Inc. ◆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. 34 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 FY2017 Projections 230.0 3,634.3 308 4,878 6.4% 0.90 315.0 3,973.7 422 5,334 8.1% 0.83 147.0 117.0 104.0 5.0 *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) 117 more than 100 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% 2017/9E 744,982 3,292.8 4,402 - 6.3% 1,674.75 10.7% *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 Copyright (c) 2017 Tokio Marine Holdings, Inc. 35 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 110yen 83.0bn yen FY2016 140yen 105.3bn yen FY2017 Projections 160yen 119.1bn 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 125.0bn yen (plan) *2 Total distributions to shareholders 53.7bn yen 122.2bn yen 244.1bn yen (plan) 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% 315.0bn yen 325.0bn yen 37% 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 *4 (excluding EV) Payout ratio *3 108.7bn 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% 230.0bn yen 52% 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% *1: On a repurchase year basis *2: FY2017 1H \25B completed, FY2017 2H up to \100B scheduled *3: Until FY2014: payout ratio to average adjusted earnings (excluding EV) From FY2015: payout ratio to average adjusted net income *4: Excludes effects from the Great East Japan Earthquake and Thai Flood Copyright (c) 2017 Tokio Marine Holdings, Inc. 36 2Q FY2017 Results Overview (Consolidated) ? Net Premiums Written ? (billions of yen, except for %) Increased due to business expansion at domestic non-life and overseas subsidiaries and the depreciation of the yen at overseas Increased due to an increase in in-force policies at TMNL and the depreciation of the yen at overseas ■Ordinary income (TMHD Consolidated) Net premiums written (TMHD Consolidated) Life insurance premiums (TMHD Consolidated) FY2016 2Q Results 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 FY2017 2Q Results 2,732.3 1,806.4 455.9 119.8 144.3 3.8 9.6 85.2 - 45.7 3.2 - 80.8 76.7 112.4 2.6 6.1 63.9 - 35.9 2.2 - 74.7 YoY Change % ? Life Insurance Premiums ? + 5.6% + 6.2% + 4.9% - 43.9% - 9.4% + 32.2% - 37.1% + 14.1% + 20.8% 145.2 105.6 21.4 - 93.6 - 14.9 0.9 - 5.7 10.5 - 45.7 0.5 - 39.2 - 78.5 - 11.6 0.5 - 4.4 5.1 - 35.9 0.5 - 32.7 ? Ordinary Profit ? Domestic Non-Life Decreased mainly due to the following factors at TMNF: ? Decrease in underwriting profit mainly due to (i) impact of large natural catastrophes, (ii) reversal effect of a decrease in provision for foreign currency dominated outstanding claims reserves in FY2016 and (iii) impact of large losses, etc. ? Increase in net investment income and other due an to increase in dividends income from overseas subsidiaries despite a decrease in (i) gains/losses on derivatives and (ii) gains on sales of securities ■Ordinary profit (TMHD Consolidated) Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Adjustment relating to large natural catastrophes Financial and general Others (Consolidation adjustments, etc.) ? Domestic Life - 50.6% - 9.4% + 25.5% - 42.0% + 8.8% + 33.6% ■Net income attributable to owners of the parent Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Adjustment relating to large natural catastrophes Financial and general Others (Consolidation adjustments, etc.) 【KPI for the Group Total】 Decreased due to an increase in provision for contingency reserves and a decrease in gains on sales of securities, etc. ? Overseas Subsidiaries Increased due to the depreciation of the yen and profit expansion in North America, etc. despite deterioration of foreign exchange gains/losses, etc. ? Adjustment relating to large natural catastrophes Increased in net incurred losses due to adjustment for losses relating to hurricanes in North America, etc. at overseas subsidiaries ■ Adjusted net income 219.2 143.5 -75.7 - 34.5% ? Net Income attributable to owners of the parent ? Decreased mainly due to impact of large natural catastrophes and large losses at TMNF, etc. Adjusted net income, which excludes the effect of provision for catastrophe loss reserves and amortization of goodwill and other intangible fixed assets, etc., decreased as well due to the factors above 37 ? Adjusted Net Income ? Copyright (c) 2017 Tokio Marine Holdings, Inc. 2Q FY2017 Results Overview (Business Unit Profits) (billions of yen) Business Domain FY2016 2Q Results 98.8 96.1 4.2 -1.5 *1・ *2 FY2017 2Q Results 69.1 64.3 4.8 -0.0 86.0 86.5 36.0 66.6 3.5 2.1 8.5 3.5 84.3 3.4 84.8 -48.8 YoY Change -29.6 -31.7 0.6 1.5 ? Domestic Non-Life Decreased by \29.6B YoY to \69.1B mainly due to the below at TMNF: ? Reversal effect of decrease in provision for foreign currency denominated outstanding claims reserves due to the appreciation of the yen in FY2016 Impact of large losses, etc. Domestic Non-Life TMNF NF Other Domestic Life TMNL International Insurance North America Europe South & Central America Asia & Middle East Reinsurance International Non-Life International Life Total (before adjustment) Adjustment relating to large nat cat losses Financial & General *3 ? 199.6 200.3 79.6 55.7 9.0 1.7 2.8 7.4 76.5 3.7 79.6 -113.6 -113.7 -43.6 10.8 -5.4 0.4 5.7 -3.8 7.8 -0.3 5.2 ? Domestic Life Decreased by \113.6B YoY to \86.0B mainly due to the below at TMNL: ? ? Reversal effect of changes in definitions in the measurement method of MCEV in FY2016 Impact of changes in economic environment such as rise in yen interest rates ? International Insurance Decreased by \43.6B YoY to \36.0B mainly due to the below 3.5 3.5 0.0 ? ? ? Progress of growth measures in each business segment and the impact of depreciation of the yen Deterioration of foreign exchange gains/losses, etc. Adjustment of large natural catastrophe losses *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) 2017 Tokio Marine Holdings, Inc. 38 FY2017 Projections Overview (Consolidated) ? Net Premiums Written (billions of yen, except for %) ? FY2016 Results ■Ordinary income (TMHD Consolidated) Net premiums written (TMHD Consolidated) Life insurance premiums (TMHD Consolidated) FY2017 Projections Original (a) FY2017 Projections Revised (b) Upward revision due to business expansion and depreciation of the yen at overseas subsidiaries Difference (b) - (a) Change ? Life Insurance Premiums + 1.4% + 2.2% - 16.0% - 5.0% + 4.6% - 27.2% - 26.5% + 1.8% 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 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 3,540.0 910.0 340.0 322.0 6.8 25.1 125.0 5.8 - 144.7 230.0 250.0 4.9 16.3 90.0 3.8 - 135.0 50.0 20.0 - 65.0 - 17.0 0.3 - 9.4 - 45.0 0.1 6.0 - 50.0 - 20.0 0.4 - 7.6 - 37.0 14.2 ? Upward revision due to an increase in in-force policies at TMNL and business expansion at overseas subsidiaries ■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 Downward revision mainly due to the following factors at TMNF: ? Downward revision in underwriting profit due to (i) an increase in net incurred losses relating to natural catastrophes and (ii) impact of large losses, etc. despite an increase in amount taken down from catastrophe loss reserves ? Upward revision in net investment income and other due to an increase in (i) dividends from domestic stocks and (ii) gains/losses on sales of securities ■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】 - 17.9% - 7.4% + 8.9% - 31.8% - 29.1% - ? Domestic Life Downward revision due to an increase in provision of underwriting reserves for a new product for corporations, etc. ? Overseas Subsidiaries ■ Adjusted net income 406.7 382.0 315.0 - 67.0 - 17.5% Downward revision due to large natural catastrophes and foreign exchanges losses, etc. ? Net Income attributable to owners of the parent ? Downward revision due to impact of large natural catastrophes and an increase in provision for underwriting reserves for a new product for corporations at TMNL, etc. ? Adjusted Net Income ? Copyright (c) 2017 Tokio Marine Holdings, Inc. Downward revision by - \67.0B from the original projections to \315.0B 39 FY2017 Projections Overview (Business Unit Profits) (billions of yen) Business Domain FY2016 Results FY2017 Projections Original (a) 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 Revised (b) 147.0 141.0 7.0 -1.0 117.0 117.0 104.0 123.0 -22.0 4.0 8.0 -6.0 107.0 3.0 (b)-(a) -13.0 -12.0 -1.0 0.0 64.0 63.0 ? Domestic Non-Life Downward revision by \13B from the original projections to \147B mainly due to the below at TMNF: ? Increase in net incurred losses relating to natural catastrophes ? Impact of large losses, etc. ? Increase in dividends from domestic stocks 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 ? -49.0 -5.0 -29.0 0.0 -1.0 -15.0 -50.0 1.0 Domestic Life Upward revision by \64B from the original projections to \117B mainly due to the below at TMNL: ? Impact of changes in economic environment such as rise in yen interest rates ? International Insurance Downward revision by \49B from the original projections to \104B as shown on P.17 6.6 5.0 5.0 0.0 *1: Excluding capital transactions *2: International Non-Life figures include some life insurance figures of composite overseas subsidiaries Copyright (c) 2017 Tokio Marine Holdings, Inc. 40 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.42 for details regarding the definition Copyright (c) 2017 Tokio Marine Holdings, Inc. 41 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 Copyright (c) 2017 Tokio Marine Holdings, Inc. 42 Reconciliation of Adjusted Net Income / Adjusted Net Assets (billions of yen) ? Adjusted Net Income*1 FY2016 Results FY2017 FY2017 Projections Projections Original(a) Revised(b) (b)-(a) ? Adjusted Net Assets*1 FY2016 Results FY2017 FY2017 Projections Projections Original(a) Revised(b) (b)-(a) ? Adjusted ROE FY2016 Results FY2017 FY2017 Projections Projections Original(a) Revised(b) 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 +0.0 230.0 +8.0 +3.0 +5.0 -4.0 -50.0 -19.0 2.0 1.0 -4.0 Net assets(consolidated) 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 3,634.3 +819.0 +37.0 +71.9 -588.5 3,973.7 8.8 -19.4 -0.2 +0.3 -22.6 -33.1 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% 230.0 3,588.2 6.4% Catastrophe loss reserves Provision for contingency reserves 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 FY2017 Projections Projections Original(a) Revised(b) -3.5 +0.0 +1.0 1.0 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% 315.0 3,890.0 8.1% +96.9 -1.9 406.7 +70.0 +0.0 382.0 +73.0 -1.0 315.0 3.0 -1.0 -67.0 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.42 for details regarding the definition Copyright (c) 2017 Tokio Marine Holdings, Inc. 43 Reconciliation of Business Unit Profits ? Domestic Non-Life*1 (TMNF) FY2016 2Q Results FY2017 2Q Results YoY (billions of yen) FY2016 Results FY2017 Projections Original(a) FY2017 Projections Revised(b) (b)-(a) Net income for accounting purposes 124.0 112.4 -11.6 Net income for accounting purposes 248.6 270.0 250.0 -20.0 Provision for catastrophe loss reserves *2 +25.4 +24.7 -0.7 Provision for catastrophe loss reserves *2 +31.0 +24.6 +6.3 -18.3 Provision for price fluctuation reserves *2 +1.7 +1.8 0.1 Provision for price fluctuation reserves *2 +3.6 +3.6 +3.6 0.0 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 -2.0 -2.6 -0.6 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 +0.3 -0.4 -4.5 -4.1 -40.9 -34.3 6.6 -58.2 -54.6 -53.4 1.2 Intra-group dividends -11.2 -52.4 -41.2 Intra-group dividends -63.6 -97.7 -87.2 10.5 Other extraordinary gains/losses, valuation allowances, etc -0.9 +14.7 15.6 Other extraordinary gains/losses, valuation allowances, etc -1.4 +7.5 +26.2 18.7 Business Unit Profits 96.1 64.3 -31.7 Business Unit Profits 160.3 153.0 141.0 -12.0 ? International Insurance*1 FY2016 2Q Results FY2017 2Q Results YoY FY2016 Results FY2017 Projections Original(a) FY2017 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*5 58.7 +2.3 -0.7 +3.5 +15.7 79.6 63.9 +1.6 -1.4 +6.0 +14.7 84.8 5.1 -0.7 -0.6 +2.4 -1.0 5.2 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 135.6 -1.2 -2.5 -1.5 +39.1 169.5 127.0 90.0 -37.0 153.0 104.0 -49.0 *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 Copyright (c) 2017 Tokio Marine Holdings, Inc. *4: Amortization of other intangible fixed assets, head office expenses, etc. *5: FY2017 2Q Results are before adjustment relating to large natural catastrophe losses (Note) Please refer to P.42 for details regarding the definition 44 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 45 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) 2017 Tokio Marine Holdings, Inc. 46 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 47 Further Integration and Alignment of Group Management ? ? ? 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 / CCO Chief Culture Officer 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 ? Create synergy and share best practices across the group ? Address challenges the group is facing by leveraging the group collective insights and expertise ? Achieve greater involvement of best global talents in the group management 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 Copyright (c) 2017 Tokio Marine Holdings, Inc. 48 Expansion of Group Synergies Pursuing synergies by leveraging the Group's global footprint, high expertise of each group company, and financial strengths, etc. ? Providing specialty insurance products through each company’s sales network for cross selling in developed countries ? Cultivating the market in emerging countries by setting up underwriting system for specialty insurance and offering products ? Reaching out to and expanding the specialty insurance market in Japan Revenue Aim to expand revenue synergy by leveraging our global network Capital ? Optimizing retention and outward reinsurance on a group basis Creating Group Synergies Investment ? Enhancing investment return through Delphi’s superior investment expertise, etc. Cost Copyright (c) 2017 Tokio Marine Holdings, Inc. ? Cost reduction through effective use of the group resources and scale merit 49 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 “Carbon neutral” for four consecutive years (thousand tons) CO2 fixation/reduction effects 8,994 2000.3E 2015.3E 10,103 87 100 2013 98 113 2014 122 133 163 119 Environmental Communication Award 2017.3E 2015 2016 Business continuity plan (BCP) workshops for SMEs ?More than 80 workshops held and more than 700 companies have participated Earthquake-risk awareness brochure and BCP planning sheet ?Distributed more than 70,000 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) ?2017- Career Development Program for Junior High and High School Students “Group Work on Managing Risks and Opportunities” expanded throughout Japan Disaster Prevention Lesson Teaching how to prepare for natural disasters 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 Copyright (c) 2017 Tokio Marine Holdings, Inc. Health and Productivity 50 Award 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 (All lines, billions of yen) ? Premium composition by line (FY2016 net premiums written basis) Marine 2.8% 103.3% Fire 12.9% CALI 13.4% Auto 49.7% 99.4% 93.1% 97.9% 97.2% 97.4% 91.2% 93.2% 89.8% 89.2% 2,128.3 92.0% 89.6% 2,116.1 2,145.0 *2 Categorized as “Others” in Summary of Financial Statements Specialty *2 + P.A. 21.3% 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 ? Premium composition by sales channel (FY2016 managerial accounting basis) Financial institutions 3.4% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (Projections ) Others Auto repair shop 9.0% Full-time 14.1% agents 27.6% Corporate 25.3% ? Statistics of combined ratio and loss ratio (private insurance E/I Basis) FY2011 Net E/I C/R*1 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% FY2017 Projections 93.6% 60.9% 56.5% 32.8% Auto dealership 20.6% ? Market share Direct insurer*3 4.1% (excluding reinsurance companies) (FY2015 net premiums written basis) TMNF 25.9% NF 1.7% *1: Net E/I C/R=E/I loss ratio + W/P expense ratio *3: Sony, American home, AXA, Mitsui Direct, Saison, SBI, E. design, Sonpo 24 Source Insurance Statistics (Sonpo Toukeigo) Copyright (c) 2017 Tokio Marine Holdings, Inc. 51 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 ? Projections ? Trend of auto insurance policy renewal ratio, E/I basis 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 - 91.6% 60.6% 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 52 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 FY2016】 (Total of individual insurance and individual annuities) FY2000 20.2% TMNL Average of Japanese life insurance market +12.2% +2.9% FY2016 35.3% 0 Others 50 100 Medical & Cancer 150 200 (unit: millions of policy) (unit: ten thousands of policy) 555 438 470 500 530 ・The source of figures regarding Japanese life insurance market is “The Life Insurance Association of Japan” ・The figures of TMNL are after merger basis between TMNL and former FL 349 256 160 187 219 283 317 378 405 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 at TMNL (total of individual insurance and individual annuities) 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. 53 Basic Information (Domestic Life) - TMNL Major Products (Products lineup as of November 2017) (whole life insurance/ term insurance/ variable 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) Variable annuities for future asset accumulation while securing coverage in time of needs ?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 ?Market Link Death, severe disability, and maturity insurance amount fluctuate based on the performance results. Ensure security of minimum coverage for death and severe disability insurance amount Medical insurance with lifelong coverage for disease and injury cancer insurance Medical insurance that supports health enhancement which refunds a portion of insurance premiums by walking (Premium Series) Insurance to secure coverage in case of cancer (Premium Series) (Premium Series) Medical and ?Medical Kit NEO ?Medical Kit R A medical insurance product, which covers hospitalization, surgery and radiation therapy due to illness or injury ・Aruku Hoken Refund a portion of insurance premiums in response to health enhancement activities using sensing technology (wearable device) ?Cancer Treatment Support Insurance NEO ?Cancer Insurance R This product offers diagnosis benefit, etc. to the policyholder Product series with “R” function Product series with “R” function *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. 54 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 Further Expansion in High Growth Markets Indian Life Business Developed Footholds in Non-Japanese 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” Copyright (c) 2017 Tokio Marine Holdings, Inc. 55 Basic Information (International Insurance 2) - Net Premiums Written ? Net premiums written in international insurance business 1,800 (billions of yen) 1,711.0 Life Reinsurance 1,654.4 1,600 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 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Projections 112.7 USD/JPY*1 104.2 118.1 119.1 114.1 91.0 92.1 81.4 77.7 86.5 105.3 120.5 120.6 116.4 *1: FX rates are as of Dec. 31 of each year (FX rate for FY2017 Projections is as of Sept. 30, 2017) *2: Up to FY2015, Middle East is included in Europe. From FY2016, Middle East is included in Asia Copyright (c) 2017 Tokio Marine Holdings, Inc. 56 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. - \ 0.4B subsidiaries: approx. - \1.0B ? Decrease in amortization of intangible fixed assets and goodwill (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) ? Change in foreign currency approx. + \1.1B ? Change in foreign currency denominated approx. + \1.1B denominated outstanding claims reserves and derivatives at TMNF: Total: approx. + \0.7B 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 FY2017 projections, after tax basis ? Reference: applied FX rate (USD/JPY) Sep. 30, 2017 Dec. 31, 2017 Mar. 31, 2018 JPY 112.73 Overseas subsidiaries FY2017 Revised Projections Change from the revised projections FY2017 Results TMNF Copyright (c) 2017 Tokio Marine Holdings, Inc. FY2017 Revised Projections Change from the revised projections FY2017 Results 57 Asset Portfolio ? Domestic Non-Life (TMNF) ? With regard to assets in deposit-type insurance accounts, we aim a stable increase in the value of surplus by appropriately controlling the interest rate risk based on strict ALM investments ? With regard to assets backing insurance liabilities, 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 \9.7T (as of end of Sep. 2017) TMNL Total Assets \7.2T (as of end of Sep. 2017) Assets in deposittype insurance 17% accounts Appropriately control yendenominated interest rate risks of longterm insurance liabilities with yendenominated fixed income assets under strict ALM investments Under ALM management, enhance capital and cash efficiency and increase long-term and stable investment income Assets backing insurance liabilities 24% Assets backing insurance liabilities Mainly yen-denominated fixed income assets Business-related equities 26% Continue to reduce holdings Appropriately control interest rate risks of life insurance liability 89% Investments in subsidiaries and affiliates, etc. Others 22% Real estate for own use, 11% non-investment assets, etc. Copyright (c) 2017 Tokio Marine Holdings, Inc. Assets in separate 4% accounts Others Short-term investments, etc. 7% 58 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 201711221630 0:39:28.2 0:40:03.7 0:50:21.9 0:54:43.2 1:00:16.6 1:04:24.9 1:11:31.8 1:18:08.1 1:23:27.5 1:27:17.1 Tsuyoshi Nagano President and Group CEO