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0:00:00.0 Tokio Marine Group New Mid-Term Business Plan “To Be a Good Company 2020” May 25, 2018 Tokio Marine Holdings, Inc. 0:00:21.0 Table of Contents Ⅰ Tokio Marine Group Business Strategy 1. Review the Previous Mid-Term Business Plan 2. Outline of the New Mid-Term Business Plan 3. Priorities of the New Mid-Term Business Plan 4. ERM & Shareholder Return Policy 5. Group Asset Management Ⅱ Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance ◆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 TMK : Tokio Marine Kiln TMR : Tokio Millennium Re Reference 1 Copyright (c) 2018 Tokio Marine Holdings, Inc. 0:01:03.4 Ⅰ Tokio Marine Group Business Strategy 2 Copyright (c) 2018 Tokio Marine Holdings, Inc. 0:01:12.8 Ⅰ Tokio Marine Group Business Strategy 1-1. Review the Previous Mid-Term Business Plan (1) We achieved our target KPIs despite the impact of the large natural catastrophe losses in the final year of the previous mid-term business plan Sustainable profit growth Adjusted net income: Mid-Term Business Plan approx. \400B (billions of yen) + Enhance capital efficiency Mid-Term Business Plan + Enhance shareholder return Steady growth of dividends Mid-Term Business Plan in line with profit growth ? Annual dividend per share Adjusted ROE: upper 9% range +98.9 +2.4pt (Yen) +65 397.0 10.0% 341.4 323.3 298.1 8.9% 8.6% 95 7.6% 160 2014 2014 : Actual basis 2017 Plans 2017 :Normalized basis*1 2014 2017 ? Share repurchases*2 FY2016: FY2017: *1: Adjusted net income: Net incurred losses relating to natural catastrophe losses are normalized to an average annual level. In addition, as for 2017, excluding the FX effects and one time impact of U.S. Tax Reform Adjusted net assets: Adjusted to the market condition of Mar. 31, 2015 (USD/JPY exchange rate :\120.17, Nikkei stock average : \19,206) Copyright (c) 2018 Tokio Marine Holdings, Inc. \50.0B \150.0B (Maximum) 3 *2: Total amount approved by the announcement date of 4Q results of respective years 0:02:15.2 Ⅰ Tokio Marine Group Business Strategy 1-2. Review the Previous Mid-Term Business Plan (2) ■ Measures to enhance capital efficiency ? Enhancing life and non-life cross-selling business model ? Initiatives to expand and diversify our business portfolio domestically with specialty insurance products ? “Life Insurance Revolution to Protect One’s Living”, promoting sales 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 and smooth PMI, the expansion of group synergies Sustainable profit growth Enhance capital efficiency 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 ? FY2017 \50B* \150B* (Maximum) * : Total amount approved by announcement date of 4Q results of the end of respective years ■ Business Unit Profits Domestic Non-Life Business (TMNF) (billions of yen) Domestic Life Business (TMNL) MCEV Growth Rate CAGR*2 +8.4% (billions of yen) International Insurance Business (billions of yen) CAGR +9.6% 113.7 120.0 CAGR plan: approx.+3% 137.1 CAGR +9.5% 1,322.5*3 145.5 CAGR plan: approx. +8% 125.0 +TMHCC 157.8 1,037.3 Plan ・CAGR*2 : approx. +8% ・FY17 increase: \100.0B 99.0 Increase in MCEV 144.1 164.0 2014 Normalized basis*1 2017 2014 2017 2014 Normalized basis *4 2017 *1: FX effects are excluded and nat-cat losses are normalized to an average annual level *2: MCEV balance basis *3: Figures are before payment of shareholders’ dividends for FY2015~2017. The figure of after payment of shareholder’s dividends is \1,248.7B *4: FX effects are excluded and nat-cat losses are normalized to an average annual level. As for FY 2017, excluding one time impact of U.S. Tax Reform Copyright (c) 2018 Tokio Marine Holdings, Inc. 4 0:03:42.1 Ⅰ Tokio Marine Group Business Strategy 2-1. Targets of the New Mid-Term Business Plan FY2020 Targets*1 Sustainable profit growth FY2018 Projections*1 FY2017 Results 1 Adjusted net income : 3 ~ 7% CAGR*2 \396.0B \372.0B (normalized basis*3) 2 Enhance capital efficiency Adjusted ROE : 10% or more 9.6% 9.4% (normalized basis*3) 3 Enhance shareholder return ? Continuous dividend total increase in accordance with profit growth ? Gradually raise the dividend payout ratio towards the future Group visions Dividend per share Dividend per share \160 (Plans) \180 (Projections) *1: The market environment basis at the end of March 2018 (USD/JPY exchange rate:\106.24, Nikkei Stock Average: \21,454) *2: CAGR based on the FY2017 Results (Normalized basis*3)\372.0B *3: Adjusted net income: Nat-cat losses are normalized to an average annual level and excluding one time impact of U.S. Tax Reform Adjusted net assets :Adjusted the market condition (FX and stock price) to the same level as at the end of March 2018 Copyright (c) 2018 Tokio Marine Holdings, Inc. 5 0:05:13.8 Ⅰ Tokio Marine Group Business Strategy 2-2. Vision for the New Mid-Term Business Plan New Mid-Term Business Plan (2018~2020) 「To Be a Good Company 2020」 The future Group visions Consistent double-digit ROE High level shareholder return Progress up to 2017 ? Profit growth through the establishment of earnings base Increase in shareholder return level Significant improvement in profitability Adjusted ROE 9.4% 8.9% ? Adjusted ROE approx. 12% Adjusted ROE 10% or more Adjusted net income : over \500.0B 3 ~ 7% CAGR Adjusted net income \372.0B 1.3% 323.3 ? Optimum portfolio ? Strong Group synergies ? Lean management system ? Global business platform The priorities ? Further diversification of portfolio ? Enhancement of business structure ? Strengthening aligned group management 30.7 FY2011 FY2014 FY2017 Normalized basis FY2020 Target Copyright (c) 2018 Tokio Marine Holdings, Inc. 6 0:06:44.6 Ⅰ Tokio Marine Group Business Strategy 2-3. Plan for Each Business Segment ? Business unit profits Domestic non-life insurance business (TMNF) (billions of yen) Domestic life insurance business (TMNL) (billions of yen) International insurance business (billions of yen) CAGR +1% or more*1 MCEV Growth Rate CAGR +4% or more CAGR + approx. 11%*4 150.0 137.1 155.0 Increase in MCEV 35.0 165.0 145.0 144.1 FY2017 FY2018 Projections FY2020 Plans Year-end MCEV*2 Business unit profits*3 FY2017 FY2018 Projections 1,248.7 99.0 1,284.0 35.0 FY2020 Plans 1,417.0 FY2017 FY2018 Projections FY2020 Plans Normalized basis: FX effects are excluded and nat-cat losses are normalized to an average annual revel *1: Including the impact of the consumption tax rise and the revision of law of obligation, approx. ? \28.0B (after tax) Copyright (c) 2018 Tokio Marine Holdings, Inc. Normalized basis 83.0 FX effects are excluded and nat- cat losses are normalized to an average annual level. Also, excluding one time impact of U.S. Tax Reform *4 : CAGR excluding impact of U.S. Tax Reform from the figures of FY2020 plans is approx.8% *2 : Figures of FY2017 are after payment of shareholder’s dividends. Figures of FY2018 Projections and FY2020 Plans are before payment of shareholder’s dividends *3 : Figures before payment of shareholder’s dividends 7 0:07:11.6 Ⅰ Tokio Marine Group Business Strategy 3-1. Priorities of the New Mid-Term Business Plan Geographical / Business diversification ? Achieve growth organically as well as through targeted M&A (emerging markets, primarily Asia, as well as advanced markets) ? Appropriately control interest rate risk and natural catastrophe risk along with continuing sales of business-related equities ? Expand specialty insurance 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. ? Use new technology and selected integration to realize more efficient business processes ? Leverage the best practices among our group companies to generate synergies on a global basis ? 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 group 8 Further diversification of portfolio Appropriate risk control Continue refinement of product portfolio Innovative products and services Enhancement of business structure Enhance and strengthen sales channels Increase productivity Global synergies Strengthening aligned group management 8 Leverage and develop global talent Spread group culture “To Be a Good Company” Copyright (c) 2018 Tokio Marine Holdings, Inc. 0:07:37.0 Ⅰ Tokio Marine Group Business Strategy 3-2. Further Diversification of Portfolio ? Net premiums written+Life insurance premiums *1 ■ Domestic non-life ■ Domestic life ■ International business 2015.10 2012.5 2008.3 2008.12 ? Trends of premiums and risk capital *3 (The previous mid-term business plan period) \4.5Trillion \4.5Trillion Sustainable growth \2.3Trillion \3.3Trillion Net premiums written+Life insurance premiums 2002 2005 2008 2011 2014 2017 *1: Excluding life insurance premiums of variable annuities at FL ? Business unit profits *2 Future Group Vision (image) \2.8Trillion Risk capital \2.5Trillion Disciplined control 3% 45% International insurance 2002 2018 Projections 44% Future Group Vision (Image) Domestic non-life 96% 10% *2 : Domestic life insurance business; - FY2002 : TEV basis - After FY2018 Projections : MCEV basis Copyright (c) 2018 Tokio Marine Holdings, Inc. Domestic life*2 2015.3 2016.3 2017.3 2018.3 *3 : ESR risk capital 9 0:09:12.9 Ⅰ Tokio Marine Group Business Strategy 3-2. Further Diversification of Portfolio Implementing measures of change in product portfolio and geographical and business diversification while controlling risks properly Geographical / Business diversification Change in product portfolio ■ Promote life and non-life cross-selling business model with Super Insurance at the core Super Insurance, ratio of the number of Super Insurance with either life or third sector coverage 2020 Markets Market Color Growth rate *2 Group strategies Developed countries *1 Emerging countries High profitability +2% High-growth +6% 2017 21% Sustainable growth Organic growth through competitive products / services Growth rate *3 M&A 25% ■ Expansion of protection - type products 84% 43% Continuously focus on the protection?type products 2014 2017 Capture high market growth ■ Expansion of specialty insurance 22% +4% Business diversification +6% Geographical diversification Composition of specialty insurance and P.A. insurance Expanding TMNF net premiums written (FY2017) *1: Excluding Japan *2: 2018 forecast of direct premiums written in non-life insurance (Source: Swiss Re) *3: CAGR projections of direct premiums written in the Group’s non-life insurance business during new mid-term business plan (excluding FX effects) TMNL protection-type products rate (New policies ANP. Excluding business insurance) Appropriate risk control ■ Continued reduction of ■ Control of interest rate risks business-related equity holdings ? Reducing interest-rate risk by ? Reduce 100 billion yen or more every year promoting sales shift to protection - type products Copyright (c) 2018 Tokio Marine Holdings, Inc. ■ Control of nat-cat risks ? Advanced risk management against nat-cat risks 10 0:10:28.1 Ⅰ Tokio Marine Group Business Strategy 3-3. Enhancement of Business Structure Initiatives to date Direction of the future initiatives ■ Launching innovative products and services to proactively meet the emerging and evolving needs of customers ? Drive Agent Personal ? Aruku Hoken (Medical insurance for walkers) Changing Environment ? ? ? ? Population decline Increase in natural catastrophes Expansion of sharing economy Increase in foreign tourists, etc. ? ? ? ? Technology IoT, AI, big data Sensing technology Block chain technology Robotics, etc. Innovative products and services ? " Rider for expenses for saving victims “ (corresponding to Autonomous driving) ? Cyber Liability Insurance ? Insurance for sharing businesses ? Utilizing drone and satellite images in claim services Products/Services Underwriting Advance Claim services Strengthen distribution channels ■ Expand a business platform for strengthening of sales capabilities such as creating new customer contacts through advanced technologies, etc. ? Strengthen customer contacts by utilizing Mobile-Agent ? Enhancement of tablet tools for customer interface ? Strengthen customer contacts and create a contract process in a convenient and comfortable manner by utilizing technology ? Collaboration with market holders ■ Realize lean business process by utilizing new technology and integrating common tasks, etc. Enhance productivity ? Operational streamlining by using block chain technology ? Utilizing AI inquiry response system ? Voice mining for accident reports etc. ? Unmanned and automated processes by utilizing RPA (Robotic Process Automation) and AI ? Accident assessment by AI ? Advancing data utilization etc. 11 Copyright (c) 2018 Tokio Marine Holdings, Inc. 0:12:01.9 Ⅰ Tokio Marine Group Business Strategy 3-3. Enhancement of Business Structure Improve the competitiveness of the group enhancing digital strategies globally USA Silicon Valley ・Capture cutting-edge technology through investment in venture capital ・Business tie-up with Cyber risk analysis provider, Cyence Inc. ・Tie up with start-up companies Singapore ・Establish a special department to plan create direct & digital business strategies. Indonesia ・Started proof-of-concept for fraud prevention by utilizing AI. Houston / New York ・Started proof ?of-concept for advancing underwriting with an AI start-up company ・Started proof-of-concept to improve efficiency of accident assessment service by utilizing drone India ・Realize quick and efficient insurance payment by utilizing image recognition technology on mobile application UK ・Started to sell the system risk coverage insurance for unmanned aircraft system, such as drone ・Tie up with Evari, an insure-tech company in Australia Brazil ・Realize operational streamlining through introduction of an automated inquiry response system (Chatbot) by utilizing AI on the intranet Strengthen cross function CSSO (Chief Strategy & Synergy Officer) CDO (Chief Digital Officer) Strategy and Synergy Dept., Digital Strategy Div. Copyright (c) 2018 Tokio Marine Holdings, Inc. Measures across the Group ? Know-how sharing at digital round table ? Hiring the outside experts ? Promote PoC or tie-up by introducing scouted startup companies to each Group company etc. 12 0:13:08.0 Ⅰ Tokio Marine Group Business Strategy 3-4. Further Alignment of Group Management Demonstrate group wide capabilities ? Create synergies and share best practices across the Group ? Address challenges the group is facing by leveraging the Group collective insights and expertise Domestic non-life business Domestic life business International insurance business Financial and General businesses Further globalize and strengthen the Group Chief Officer positions, the Group committees, Globalization of the Group management system and corporate functions ? Involvement of top management at overseas subsidiaries for the Group chief officers and the Group committees ? Promote the global medium and long term strategies including synergies and digital strategies ? Create the globalized organization arrangements of legal compliance / internal audit functions Further promotion of talent development across the Group and leveraging the global talent Leverage and develop global talent ? Prepare global human resource development system for future group chief officer ? Deploy global talents at corporate function of head office ? Develop mid /young level employees under strengthened secretariat function of the Group committees Enhancing a sense of Group unity by penetrating core identity throughout the company Spreading Group culture (To Be a Good Company) ? Group CEO, as the Group chief culture officer, holds the town hall meeting globally ? The top management of each group company promote the measures to share core identity Copyright (c) 2018 Tokio Marine Holdings, Inc. 13 0:14:46.9 Ⅰ Tokio Marine Group Business Strategy 3-4. Further Alignment of Group Management Pursuing synergies by leveraging the Group’s global footprint, expertise of each group company, and financial strengths, etc. Expand revenue synergies by leveraging our global network ? Mutually provide specialty insurance among group companies in developed countries and expand specialty insurance market in Japan ? Development of specialty insurance underwriting capability and creating a market through product offering in emerging countries Increase investment income making the most of Delphi’s asset management capabilities, etc. ? The Group companies entrust part of the assets to Delphi ? The total of entrusted amount to Delphi from the Group companies at the end of FY2017 was USD 7.7 Billion Revenue Expanding Group Synergies Annual results: USD210Mil Contribution on after tax basis at the end of Dec. 2017 Investment Capital Optimization of retention/reinsurance on a group basis Cost Cost reduction by both efficient use of the Group resources and taking advantage of its scale. ? Cost savings through joint purchasing etc. ? Streamlining resources by reducting interest rates on loans ? Strengthening retention capability of each group company by leveraging the group's financial base ? Increasing Group retention through utilizing intragroup reinsurance Copyright (c) 2018 Tokio Marine Holdings, Inc. 14 0:16:11.0 Ⅰ Tokio Marine Group Business Strategy 4-1. Promoting Strong ERM ? Control risk and capital Maintain financial soundness Capital and risk balance that maintain AA credit ratings Enhance profitability × Sustainable profit growth and enhance capital efficiency 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 risk-taking Investment risk control : With ALM as the first principle, secure liquidity and aim for stable profit growth ? Economic Solvency Ratio (ESR) ? Modify ESR model by including restricted capital as part of net asset value for simplicity and ease of comparability, etc. ? Continue to use capital model which calculates risk capital based on 99.95%VaR (equivalent to maintain AA credit rating) ? Set the new target range of ESR model from 150 to 210% 100 % 150 % 210 % Implementation of business investment, additional risk-taking and shareholder return Target Range Strategic consideration of business investment, additional risk-taking and shareholder return Aiming to recover the capital level through accumulation of profits Control of risk level by reducing risk taking activities De-risking Consideration of capital increase Review of shareholder return policy Copyright (c) 2018 Tokio Marine Holdings, Inc. 15 0:17:20.2 Ⅰ Tokio Marine Group Business Strategy 4-2. ESR (as of Mar. 31, 2018) ESR is 201% due to an increase in risk capital associated with both a decrease in the tax effect owing to U.S. tax reform and an increase in credit risk, offsetting an increase in net asset value by the profit contribution. ESR ESR sensitivity Share price: Continue to sell business-related equities given its large impact of market value fluctuation on ESR Interest rate: Control the impact of interest rate fluctuation through ALM while preparing for future interest rate hike FX rate: Limited impact on ESR 206% Factors of change in net asset value ? Contribution of 2H FY17 adjusted net income ? Increase in unrealized gains of business-related equities etc. ? Shareholder return 201% Net asset value Risk capital Factors of change in risk capital ? Sales of business-related equities ? Increase in risks of equities due to rise in stock price ? Increase in credit risk ? Decrease in tax effects owing to U.S. tax reform etc. Net asset value Risk capital Mar. 31, 2018 201% 204% 196% 206% 190% 201% 201% 5.0 Trillion yen 5.1 Trillion yen Share price+30% ▲30% Interest rate+50bp ▲50bp 2.4 Trillion yen 2.5 Trillion yen Sep. 30, 2017 Mar. 31, 2018 \20,356 Nikkei Stock Average \21,454 FX rate +10% (Ref.) Definition of Net Asset Value Net Asset Value Copyright (c) 2018 Tokio Marine Holdings, Inc. Consolidated ▲10% Planned distribution to shareholders Value of life insurance policies in-force = net asset on financial accounting basis + Liability of capital nature (catastrophe loss reserves, price fluctuation reserves, etc.) (after-tax basis) - Goodwill, etc. - + + Others 16 0:18:05.4 Ⅰ Tokio Marine Group Business Strategy 4-3. Shareholder Return Policy Stable growth of dividends ? Our primary means of shareholder return is dividends and we plan to sustainably increase dividends total in line with profit growth. ? The payout ratio is above 35% of the average adjusted net income and will be raised gradually toward the future Group vision*1. ? Adjustment of capital level will be executed with flexibility through share repurchase etc. based on relevant factors (market conditions, business opportunities etc.) High level shareholder return + Adjustment of capital level Projecting dividend per share increase for 7 consecutive years 180 140 Dividend per share (yen) 160 95 55 70 110 50 2011 Dividends total *2 (billions of yen) 2012 42.2 - 2013 53.7 - 2014 72.2 50.0 2015 83.0 - 2016 105.3 50.0 2017 (Plans) 2018 (Projections) 2020 Future Group Vision 38.3 - 117.6 130.5 *1: The payout ratio is the original projections basis *2: 2018 (projections) is before reflecting the share repurchases basis *3: Total amount approved by the announcement date of 4Q results of respective years Share repurchases*3 (billions of yen) 150.0(maximum) Copyright (c) 2018 Tokio Marine Holdings, Inc. 17 0:19:45.6 Ⅰ Tokio Marine Group Business Strategy 4-4. Enhancing Shareholder Value ‘Total Shareholder Return’ has outperformed TOPIX as of Apr. 30, 2018 Transition of total shareholder return * *Total Shareholder Return(TSR): Capital return after reinvesting dividends Stock price indexed at 100 on April 1, 2002 341 TOPIX 223 Source:Bloomberg 2002/4 Copyright (c) 2018 Tokio Marine Holdings, Inc. 2006/4 2010/4 2014/4 2018/4 18 0:20:16.5 Ⅰ Tokio Marine Group Business Strategy 5-1. Group Asset Management (1) Group Asset Management Concept ? With asset and liability management (ALM) at the core, aim to secure long - term and stable investment income and efficient liquidity management under the appropriate risk control based on the characteristics of insurance liabilities. ? Further strengthen investment capability by enhancing collaboration among group companies in Japan and overseas and promoting global investment diversification Measures to Mid-Term Business Plan The medium and long term profit growth ? Based on the management policy reflecting the characteristics of insurance liabilities, steady accumulation of overseas assets and utilization of alternative investment ? Strengthen decision-making and corporate functions across the Group including overseas Aligned group management ? Promote the integration of the investment functions in domestic insurance companies ? Aggregate U.S. dollar-denominated asset management in domestic insurance companies to Delphi Investments managed at Delphi Group companies Philadelphia Tokio Millennium Re TMNF TMHCC TMNL NF (Plan) Start of entrustment July 2014~ July 2015~ Jan. 2016~ Mar. 2016~ Jan. 2017~ June 2018~ ? As of the end of Mar. 2018 total investments : approx. USD 7.7B Copyright (c) 2018 Tokio Marine Holdings, Inc. 19 0:21:02.8 Ⅰ Tokio Marine Group Business Strategy 5-2. Group Asset Management (2) Asset composition of TMHD (Consolidated) ※As of the end of Mar. 2018 Group income return ? Continue to implement the measures to investment centered on long-term bonds in Japan and diversified investment measures by leveraging the Group’s comprehensive investment ■ Cash and deposits \0.7T ■ Others \3.3T Mainly tangible fixed assets and intangible fixed assets etc. ■ Loans \1.0T ■ Other securities \0.2T Mainly assets in separate accounts held by Domestic Life 14.4% 4.4% 0.9% 3.2% 5.5% ■ Monetary receivables bought \1.2T capability Investment by Domestic Non-Life (TMNF) and overseas subsidiaries Overseas 4.3% 4.4% 4.5% 4.6% subsidiaries Total Assets 21.8% 4.0% 38.0% 2.1% 1.6% 1.6% 1.5% 1.4% 1.5% 2.3% 2.2% 2.3% 2.3% Group total ■ Foreign securities \5.0T Mainly local country bonds held by overseas subsidiaries mainly in the U.S. and Europe \22.9T 11.7% Domestic subsidiaries ■ Domestic bonds \8.7T Domestic government bonds (JGB): \7.7T Mainly bonds for the purpose of ALM by Domestic Life and Non-Life ■ Domestic equities \2.6T 2013 2014 2015 2016 2017 Mainly business-related equities held by Domestic Non-Life (TMNF) Copyright (c) 2018 Tokio Marine Holdings, Inc. 20 0:21:33.0 Ⅰ Tokio Marine Group Business Strategy 5-3. Group Asset Management (3) Continuous reduction of business-related equities for capital efficiency ? Book value of business-related equities declined to 40% from Mar. 31, 2002 through steady actions ? Sold total amount of approx. \2.0T*1 since FY2002 ? The new mid-term business plan, we will also plan to sell \100 billion or more a year *1: Market price at the time of sale Book value of business-related equities*2 Sales amount ? The previous mid-term business plan (2015-2017) Plan : Sell \100.0B or more every year Result: Sold \100.0B or more every year 100 82 FY 2015 Sales amount \122.0B \117.0B \108.0B \347.0B 57 40 2016 2017 3 years total ? The new mid-term business plan (2018-2020) 2002.3E 2007.3E 2012.3E 2018.3E Plan : Continue to sell \100.0B or more every year *2 : Figure at the end of FY2002 is set at index value of 100 Copyright (c) 2018 Tokio Marine Holdings, Inc. 21 0:22:04.1 Ⅱ Business Plan and Strategy by Domain 22 Copyright (c) 2018 Tokio Marine Holdings, Inc. 0:22:18.4 Ⅱ Business Plan and Strategy by Domain 1-1. TMNF Main KPIs ? Despite the impact of rate reduction in auto insurance, etc., achieve sustainable growth due to steady implementation of growth measures ? We will maintain the Combined Ratio at below 95%, though the impact of consumption tax increase and the revision of law of obligation, etc. are foreseen Net Premiums Written (billions of yen) Normalized basis*1 *1 : Excluding FX effects, and net incurred losses relating to natural catastrophe losses are normalized to an average annual level Business Unit Profits (billions of yen) Combined Ratio (Private insurance :E/I basis) Natural catastrophes normalized to an average annual basis CAGR +1% or more CAGR +1% or more *2 approx. 92~93% *3 2,146.0 2,144.7 150.0 155.0 92.2% 91.3% 1,610 2017 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans *2: Including the impact of both consumption tax increase and the revision of law of obligation (approx. -\28B after-tax) Copyright (c) 2018 Tokio Marine Holdings, Inc. *3: Including the impact of both consumption tax increase and the revision of law of obligation (approx. 2pt ) 23 0:23:13.1 Ⅱ Business Plan and Strategy by Domain 1-2. TMNF Concepts of the New Mid-Term Business Plan (challenge to the best quality) Through relentless pursuit of quality, promote three measures to enhance business structure and achieve “sustainable growth” and “stable profits generation“ Three measures to enhance business structure 1 The best quality products / services (Develop attractive products & services) 2 The best quality sales channel (Enhance quality and expand volume of sales channel) 3 The best quality business process (Enhance productivity through business process improvement) ? Change product portfolio ? Change product portfolio through the integrated through life and non-life crossbusiness model for life and selling business model and non-life and regional regional revitalization and revitalization and health & health & productivity productivity management, etc. management, etc. ? Advance products and services ? Advance products and services centering on strengthening centering on strengthening R&D and utilizing new R&D and utilizing technology technology ? Increase sales ? Increase sales productivity productivity through through enhancement enhancement of of expertise and consulting expertise and consulting ability ability of agents of agents ? channel by ? Expand Expand new new sales market by creating business tie-up with market new customer contacts through holders and promoting channel channel mix mix, etc. ? 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. The best quality human resources (enhance expertise / develop global talents) Maximize the Group’s comprehensive capability Spreading Group culture “To Be a Good Company” throughout the organization Copyright (c) 2018 Tokio Marine Holdings, Inc. 24 0:23:38.2 Ⅱ Business Plan and Strategy by Domain 1-3. TMNF The Best Quality Products / Services ? We will undertake initiatives to change product portfolio through providing the products/services to prepare for changing environments and enhancing life and non-life cross-selling business model Furthermore, pursue advancing products / services by utilizing new technology Perspectives Life and nonlife crossselling business model Related information Super insurance, ratio of the number of Super Insurance with either life or third sector coverage 25% Strengthen sectors / measures ? Further enhancing product attractiveness ? Enhance promotion of multiline sale ? Develop new products for SMEs (income coverage products, etc.) ? Measures of Regional revitalization ? Measures of Health & productivity management Specialty insurance*4+P.A. net premiums written (billions of yen) *4 : “Others” : Excluding fire, marine, P.A., auto, and CALI 16% 2014 21% Copyright (c) 2018 Tokio Marine Holdings, Inc. Change our product portfolio 2017 2020 Target Penetration rate of SME’s specialty insurance (based on research company SME data*1) Developed markets approx. 65% potential markets Expanding senior generation*2 38.4% Medical / nursing care 28.9% 4.9% 1950 9.1% 1980 2020 2065 ? Develop nursing care products/services ? Expand income coverage products ? Expand scope of customers eligible The response to : ? ? ? ? Cyber risks lot, AI, Big data Sharing economy Agricultural risks 463.5 432.6 Cyber insurance market size*3 (2016) Advancing products services Social change ? U.S. (\250.0B) Worldwide ? Europe(\15.0B) ? Japan(\13.0B) ? Others(\12.0B) \290.0B 2014 2017 2020 Plans Future vision Utilizing technology ? The diversification of customer needs ? Expand customer contact by various devices / means ? Provide optimum coverages tailored to each customer segmentation ? Creating a simple and comfortable insurance procedure ? Expansion of services / functions provided to our customers ? Advance U/W, pricing, etc. *1 : Estimated the market size of specialty insurance on an insurance premiums basis based on data and sample questionnaire to 3.2 million SMEs (excluding individual business owners) with 99 employees or less *2 : Aging rate (proportion of people of 65 years old or more) (Source: An excerpt from “White Pater on Aging society”) *3 : Source OECD, "Japan" is from “Japan Network Security Association”. The figures for "Japan" include insurance lines other than single cyber insurance (personal information leak insurance, etc.) 25 0:25:47.4 Ⅱ Business Plan and Strategy by Domain 1-4. TMNF The Best Quality Products / Services ? Raise capability of being chosen by customers through efforts to improve quality and efficiency of agents and initiatives of best channel mix ? Increase productivity through new technologies and business process improvement ■ Provide support to become scaled agents to enhance quality and productivity <Agents handling premiums ¥0.1B or more> ■ Premium composition among full-time agents 60.4% 2011.3E 2018.3E Growth outperforms the market <Trends of direct net premiums written> CAGR +3.8% CAGR +3.1% 8,611.2 (billions of yen) 83.2% Copyright (c) 2018 Tokio Marine Holdings, Inc. Sales channel Business process Agents 1,593 1,894(+19%) ■ Expansion of new markets by creating new customer contacts through channel mix Collaboration of channels of different strengths and uniqueness 7,174.9 1,851.4 25.8% 2,322.1 27.0% ■ TMNF ■ Market *1 Future direction ? Collaboration among corporate agents / ? Enhance the cooperation Market share financial agents and full-time agents with market holders ? Sales expansion of non-life insurance by Life Professionals and tied-up life insurance 2010 *1: Source: The website of The General Insurance Association of Japan companies 2012 2014 2016 ■ Increase productivity by utilizing new technology Operational streamlining by utilizing technology ? Execution of business process reform project ? Promoting easy & comfortable procedures ? Inquiry responses by AI ? Voice mining for accident reports Reduce office work of 20-30% in the long-term ? Utilizing RPA ? Advance easy & comfortable procedures ? Further utilizing AI, etc. Competitive business efficiency 35.0% 33.5% 32.6% 30.8% 30.7% 2010 TMNF (Private 35.1% insurance) <Expense ratio (all lines)> TMNF Market*2 2016 32.7% 2017 32.5% *2 : Total of the members of The General Insurance Association of Japan (excluding TMNF) (Source: The website of The General Insurance Association ) 26 0:27:07.3 Ⅱ Business Plan and Strategy by Domain 2-1. TMNL Main KPIs Promote steady growth with soundness and profitability centering on protection - type products ? New policies ANP (billions of yen) ? Business unit profits (billions of yen) CAGR +1% or more MCEV Growth Rate CAGR +4% or more 104.2 102.1 Increase in MCEV 2017 2018 Projections 2020 Plans Year end MCEV*1 Business unit profits*2 2017 1,248.7 99.0 2018 Projections 1,284.0 35.0 2020 Plans 1,417.0 83.0 *1 : Figures of FY2017 are after payment of shareholder's dividends. Figures of FY2018 Projections and FY2020 Plans are before payment of shareholder’s dividends Copyright (c) 2018 Tokio Marine Holdings, Inc. *2 : Figures before payment of shareholder’s dividends 27 0:28:09.1 Ⅱ Business Plan and Strategy by Domain 2-2. TMNL Concepts of the New Mid-Term Business Plan Achieve sustainable growth by pursuing quality to become “Insurer of choice” for customers Realize sustainable profit growth Develop innovative products by proactively capitalizing on changes in environment ? Advance living protection products to meet emerging 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 deliver safety for 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 Enhancement of business process that generates growth ? Generate strategic growth fund for future growth by implementing business process enhancement Risk control that supports sound growth Group’s comprehensive capability R&D Develop human resources 28 Spreading Group culture “To Be a Good Company” throughout the organization Copyright (c) 2018 Tokio Marine Holdings, Inc. 0:28:23.6 Ⅱ Business Plan and Strategy by Domain 2-3. TMNL Products and Services Strategies Develop innovative products by proactively capitalizing on changes in environment, and thoroughly pursuing quality to be “Insurer of choice" for customers Demographic change Business (Aging society/ environment a single-person household) Advance in medical technology Technology advancement (AI・Robot・IT) Becoming health-conscious Increasing competition of protection - type products Unique product lineup 2012 2013 ~2015 2015 2016 2017 ~ Launched life insurance revolution to protect one's living ~ ? R series (medical/cancer insurance) ? Cancer Treatment Support Insurance NEO ? Medical Kit NEO ? Household Income Term Insurance NEO ? Market link (Variable insurance with installment plans) ? Aruku Hoken (medical insurance) Advance living protection products ? Continue to launch highly unique protection type products, expecting advancing medical technology Respond to asset accumulation needs and longevity risks ? Considering products, a different type from existing products, to respond to asset accumulation needs of based on expanding “longevity risk" Receive a high external evaluation Medical and cancer insurance R series Aruku Hoken Utilizing technology ? Product development to support presymptomatic disease / prevention / enhancing health Further utilization of sensing technology and living pattern data such as the number of steps and sleeping Insurance Comparison Site "Insurance Market", " The most selected insurance last year” in 2018 Copyright (c) 2018 Tokio Marine Holdings, Inc. Exceeded 1 Million ? Expecting expansion of senior citizen, advance underwriting so that we can provide coverages to as many our customers as possible 29 0:29:55.1 Ⅱ Business Plan and Strategy by Domain 2-4. TMNL Sales and Business Structure Process Achieve further growth by promoting business process enhancement and enhancing the ability to provide safety to customers worldwide ? Utilizing the Group's customer base, cultivate the market with the integrated business model for life and non-life Channel Composition (life insurance premiums on managerial accounting basis as of the end of Mar. 2018) Non-life Agents The Growth rate of * protection - type product (in-force policies basis) (ten thousands of policies) Copyright (c) 2018 Tokio Marine Holdings, Inc. Advanced capabilities for delivery Enhancing business process Deep cultivation of the potential life insurance customer market Life Partners (direct) approx. 10% Bancassurance approx. 5% Non-life Agents approx. 60% ? Generate further synergy effect by amalgamating the distribution channels Non-life Agents (Market holders such as corporates, card, and mail order company, etc.) CAGR + approx. 8% 320 240 × Life Professionals Life Partners High level of expertise Vast customer base Life Professionals approx. 25% ? Supporting management of agents who will become the core of growth ・ Develop know-how (Training for sales agents /Internal control) gained through business support to the direct capital agents*, expand them to other agencies and strengthen relationship * : TMNL 100% owned agents (Tokio Marine Anshin Agency) Improve efficiency and quality of business processes (Measures implemented) Providing personnel in the growth field FY2014 FY2017 FY2020 Projections *:Medical/Cancer/Household Income Term/Longlife Support Whole Life ? Spreading use of easy & comprehensive ? Automate part of the office work procedure ? Transition of business processes of the sales such as office administrative work and inquiry responses to back office by utilizing the latest technology ? Shift the provided staff into growing fields to strengthen a competitive edge 30 0:31:46.5 Ⅱ Business Plan and Strategy by Domain 3-1. International Insurance: Main KPI’s Pursue global opportunities to enhance growth and continue building a diversified business portfolio as the Group’s growth driver ? Net premiums written (billions of yen) ? Business unit profits (billions of yen) (Normalized basis) 98% C/R 96% 95% level CAGR +approx. 11% *3 CAGR +approx. 5% 165.0 1,713.0 1,648.0 145.0 2017 2017 2018 Projections 2020 Plans 2018 Projections 2020 Plans Normalized basis *1 *1 Applied FX rate (USD/JPY) Mar.31, 2018 \106.2 Normalized basis*2 *2 Applied FX rate (USD/JPY) Mar.31, 2018 \106.2 : FX when converting to yen is adjusted to FX of Mar. 31, 2018. Excluding the impact of FX gains/losses at major overseas subsidiaries. Nat-cat losses are normalized to an average annual level. Excluding one time impact of U.S. Tax Reform. (Regarding International Insurance, the same applies hereinafter) : FX when converting to yen is adjusted to FX of Mar. 31, 2018. (Regarding International Insurance, the same applies hereinafter) *3 : CAGR excluding the impact of the US tax reform from 2020 plans is approx. +8% Copyright (c) 2018 Tokio Marine Holdings, Inc. 31 0:32:24.9 Ⅱ Business Plan and Strategy by Domain 3-2. International Insurance: Concepts of the New 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 synergies ・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) 2018 Tokio Marine Holdings, Inc. 32 0:32:53.4 Ⅱ Business Plan and Strategy by Domain 3-3. International Insurance: Acceleration of Strategic M&As(1) (Executed Major M&As) Significant contribution to the Group’s profit growth through disciplined acquisition principles and smooth PMI ? Acquisition Principles ? A good management team sharing our values (Management soundness) ? A Good Company with high profitability ? A robust business model overcoming changing environment ? Smooth PMI (Post Merger Integration) ? Establishing strong relationship with local management ? Implementing effective governance structure while respecting local management ? Expanding group synergies through sharing and transferring competitive advantages of each company Steadily growing after joining Tokio Marine Group Net premiums written (Normalized basis*1) of western acquired companies Significant contribution to the Group’s profit growth while maximizing Group synergy ? Adjusted net income of Tokio Marine Group (Normalized basis*2) ? Business unit profits (Normalized basis*2) of western acquired companies 2008 2017 × 3.2 400.0 350.0 \372.0B \48.0B Mar. 2008 \158.0B 2017 2009 \199.0B Dec. 2008 \338.0B 2017 300.0 250.0 200.0 150.0 100.0 \114.5B \96.0B \30.0B 2011 FX (USD/JPY) Dec. 31, 2011 \77.7 \298.1B × 4.2 \125.0B 2013 May, 2012 \199.0B 2016 \238.0B 2017 Oct. 2015 \317.0B \334.0B 50.0 2014 Dec.31, 2014 \120.5 2017 Mar. 31, 2018 \106.2 *1: Adjusted to the FX of Mar. 31, 2018 *2: Natural catastrophe losses are normalized to an average annual level As for 2017, FX when converting to yen is adjusted to Mar. 31, 2018, excluding the impact of FX gains / losses at major overseas subsidiaries, and Copyright (c) 2018 Tokio Marine Holdings, Inc. excluding one time impact of U.S. tax reform 33 0:34:37.5 Ⅱ Business Plan and Strategy by Domain 3-3. International Insurance: Acceleration of Strategic M&As(2) (our focus) Promote strategic M&A targeting emerging countries (primarily Asia, etc.) and developed countries with the aim to establish a well-balanced business portfolio that delivers stable and profitable growth ? Emerging Countries ? Emerging countries’ business unit profits constitutes just under 10 percent of the international business ? Further promote geographical Asia & Middle Life 1% diversification through South & East Reinsurance Central 5% America 5% implementing M&A in emerging North America 3% Philadelphia other 2% markets where high growth is 24% Europe expected in the mid to long term 6% Emerging countries’ markets growth*1 FY2018 Business Unit Profits*2 composition (Projections) ? Developed Countries ? In developed countries market where North America accounts for approx. 80% of business unit profits, risks are well-diversified thanks to a wide range of specialty insurance product ? Aim to further expand specialty franchise through M&A including bolt-on TMHCC 25% Delphi 28% CAGR +6.2% 160 140 120 100 2012 2016 2017E 2018F 2019F FY2017 Premium composition by line Lloyd’s business major products *1: Trend of non-life direct premiums written, FY2012 is set at index value of 100 (Source)Swiss Re Institute: Global insurance review 2017 and outlook 2018/19 *2: Denominator: Total of Business Unit Profits of international insurance business on a before adjustment of head office expenses basis Copyright (c) 2018 Tokio Marine Holdings, Inc. Human Services Real Estate Disability Excess W/C Medical Stop-loss Agriculture D&O US Liability Property & Liability Marine 34 0:35:47.0 Ⅱ Business Plan and Strategy by Domain 3-4. International Insurance: North America (1) North America Aim for sustainable profit growth while pursuing synergies between group companies Net Premiums Written (billions of yen) Business Unit Profits (billions of yen) C/R 95% 95% 94% level CAGR +approx. 4% CAGR +approx. 7% 1,027.0 985.0 132.0 132.0 137.0 2017 Normalized basis 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans 1st Chubb Ltd. 2nd Travelers Companies Inc. 3rd Liberty Mutual 4th Zurich Insurance Group 5th American International Group 6th CNA Financial Corp. 7th Berkshire Hathaway Inc. 8th Nationwide Mutual Group 9th Hartford Financial Services 10th Tokio Marine Group 11th American Financial Group Inc. ・ ・ ・ Copyright (c) 2018 Tokio Marine Holdings, Inc. US Commercial P&C Market Share (2017) (Source) SNL Financial 2.1%* *: Market share in all lines of US P&C is 1.1% (17th place) 35 0:36:06.1 Ⅱ Business Plan and Strategy by Domain 3-4. International Insurance: North America (2) (Philadelphia) Maintain growth and profitability outperforming the market through underwriting discipline and action Net Premiums Written (billions of yen) Business Unit Profits C/R 94% 96% (billions of yen) 95% level Combined Ratio CAGR +approx. 3% CAGR +approx. 5% 110% US P&C market average Philadelphia*1 338.0 347.0 42.0 40.0 100% 90% 2017 Normalized basis 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans 80% *1: Local management accounting basis Strengths of Philadelphia ? Create a competitive business model focused on niche markets and a robust franchise network Product compositions (FY2017) Other 19.2% Sports & Rec. 10.2% Human Services 32.8% Mgmt & Prof. 11.9% Future initiatives ? Maintain and enhance high renewal ratio and rate increases through improving productivity of franchise network and products focused on niche markets Renewal ratio 88.7% 88.7% 89.0% Wholesalers 2.5% Channel compositions (FY2017) Preferred Agent 35.4% National/ Global Broker Other 0.3% Direct Sales 3.3% Open Brokerage 25.7% Rate increases Philadelphia Market average*3 2015 3.6% Approx. 2016 1.8% Approx. 2017 1.5% Approx. Real Estate 18.5% Public Service 7.4% Copyright (c) 2018 Tokio Marine Holdings, Inc. PHLY Select*2 12.3% 20.4% *2: Candidates for the future preferred agents 1% 0% 1% *3: (Source) Willis Towers Watson 36 0:36:42.2 Ⅱ Business Plan and Strategy by Domain 3-3. International Insurance: North America (3) (Delphi) Maintain profit growth by leveraging its investment expertise as well as strength in employee benefit products/services and retirement services Net Premiums Written (billions of yen) Business Unit Profits C/R 103% (billions of yen) Combined Ratio 100% 99% level 110% US P&C market average Delphi * 100% CAGR +approx. 4% CAGR +approx. 11% 238.0 244.0 43.0 49.0 90% 80% 2017 Normalized basis 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans * Local management accounting basis Strength of Delphi ? Market leading franchise in employee benefits ? Ability to achieve investment returns which far exceed peers on a risk adjusted basis with high investment expertise and an increase in AUM by entrustment from the Group companies Average Investment Returns 7.51% 7.28% 4.74% 2.45% 2001~2017 Recent 5 years Future Strategy ? Maintain leadership position in employee benefits business ? Continue to grow retirement services business ? Apply core investment management expertise across other Tokio Marine investment portfolios Copyright (c) 2018 Tokio Marine Holdings, Inc. ? Delphi ? Benchmark (Barclays Aggregate Index) 37 0:37:17.0 Ⅱ Business Plan and Strategy by Domain 3-4. International Insurance: North America (4) (TMHCC) Pursue organic growth in all businesses while maintaining high profitability and enhance existing franchise businesses through bolt-on M&A Net Premiums Written Business Unit Profits Combined Ratio (billions of yen) C/R 89% 89% (billions of yen) 88% level CAGR +approx. 7% 363.0 CAGR +approx. 7% 110% US P&C market average TMHCC * 100% 334.0 42.0 43.0 90% 2017 Normalized basis 2018 Projections 2020 Plans 80% 2017 2018 Projections 2020 Plans *: Local management accounting basis Strength of TMHCC ? Pursue stable profitability through a wide range of specialty insurance products lineup and strict underwriting Stable profits Highest Lowest ProAssurance Alleghany PartnerRe C/R decade? average AXIS XL Everest?Re Aspen Highest Global?Indemnity Argo?Group Travelers C/R?changes RLI Arch Chubb? Ltd Lowest Future Strategy ? Organic growth in all businesses while maintaining the best in class combined ratio ? Bolt-on M&A that enhances existing franchise businesses History of bolt-on M&A Company Main products/businesses Premium size (at the time of announcement) Approx. Approx. TMHCC American? Financial W.R.?Berkley Navigators CNA Hartford 2017 2016 2015 2014 ・AIG (business acquisition) ・Medical stop-loss, etc. ・Agriculture MGA ・Surety MGA ・Assistance services $350M $67M Baldwin?&?Lyons Markel Source: Tokio Marine created from Company Reports, Dowling & Partners Analysis; data through 12/31/17. Copyright (c) 2018 Tokio Marine Holdings, Inc. ・International Ag ・Bail USA ・On Call International ・ProAg Approx. ・Agriculture $633M 38 0:38:04.7 Ⅱ Business Plan and Strategy by Domain 3-5. International Insurance: Europe Promote unified growth strategies under the business platforms of Lloyd’s market and Corporate market under the continued softening market Net Premiums Written Business Unit Profits C/R 109% 95% (billions of yen) (billions of yen) Combined Ratio 94% level CAGR +approx. 4% approx CAGR + . 8%* 120% Lloyd's market average TMK (Lloyd's business) * 110% 158.0 158.0 10.0 100% 90% 0 2017 Normalized basis 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans 80% *: CAGR is calculated based on FY2018 projections since FY2017 is 0. *: Local management accounting basis Strength of Tokio Marine Kiln ? One of the best insurance groups with its name recognition and power of brand in the Lloyd’s of London market, and the 4th underwriting scale ? High level of products and know-how in specialty insurance ? Prompt response to market cycle and our earnings potential by disciplined underwriting Lloyd’s premium composition(FY2017) Others 8.6% Aviation 4.0% A&H 10.8% Future Strategy ? Promote growth strategies by expanding cyber/intellectual property, etc. (distinctive specialty insurance products) and growing U.S. businesses through strengthen ties with cover holders. Reinsurance 7.5% Marine 16.0% Property & Liability 53.1% Copyright (c) 2018 Tokio Marine Holdings, Inc. 39 0:38:31.1 Ⅱ Business Plan and Strategy by Domain 3-6. International Insurance: Reinsurance / South & Central America Net Premiums Written (billions of yen) Business Unit Profit (billions of yen) Future Strategy Reinsurance Maintain stable profit by promoting geographical and product line diversification under the continued softening market C/R 114% 99% 98% level ? Promote globalization for geographical diversification ? Promote diversifying product lines (business expansion of the non nat-cat risks) HIM net incurred losses in net premiums written Average of competing groups*2 CAGR +approx. 1% approx. CAGR + 8%*1 9.0 145.0 138.0 - 3.0 2017 Normalized basis 5.9% 2020 Plans < 13.6% 2018 Projections 2020 Plans 2018 2017 Projections *1: Calculate CAGR from FY 2018 projections because FY 2017 is negative. *2: Arch, Aspen, Axis, Everest Re, Markel, Ren Re, Validus South & Central America Continue profit growth by providing products and services which meet the needs of customers 100% through high quality operation C/R 99% 99% level CAGR +approx. 4% CAGR +approx. 8% ? Execution of growth strategies focusing on strengthening sales of new products in auto and life insurance fields 145.0 139.0 5.0 5.0 2017 Normalized basis 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans Copyright (c) 2018 Tokio Marine Holdings, Inc. 40 0:39:26.0 Ⅱ Business Plan and Strategy by Domain 3-7. International Insurance: Asia & Middle East Net Premiums Written (billions of yen) Business Unit Profit (billions of yen) Future Strategy Asia & Middle East Achieve growth mainly in the retail market by expanding distribution channels and generating group synergies 99% C/R 95% 97% level Non-life CAGR +approx. 7% CAGR +approx. 3% ? Build unique business model that is unrivaled in the industry by rolling out the best practices across the Group, personnel exchanges, and utilizing technology. ? Establish a profit-generating model for Japanese businesses. 145.0 139.0 12.0* 9.0 Normalized basis 2017 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans *: Excluding the temporary impact of reserve takedown in FY2017, we projected CAGR +11% toward FY2020 plans Life CAGR +approx. 10% CAGR - approx. 8% ? Expansion of agency network and enhance productivity ? Shift to the products with low burden of capital 93.0 89.0 6.0* 2.0 2017 Normalized basis ? Further progress of life and non-life cross-selling business model in Asia 2018 Projections 2020 Plans 2017 2018 Projections 2020 Plans *: Excluding the impact of interest rate fluctuation in FY2017, we projected CAGR +21% toward FY2020 plans Copyright (c) 2018 Tokio Marine Holdings, Inc. 41 Reference ? Tokio Marine Holdings Key Statistics ? Return to Shareholders ? FY2017 Results Overview (Consolidated) ? FY2018 Projections Overview (Consolidated) ? Reconciliation of Business Unit Profits and Adjusted Net Income ? Adjusted Net Income and Business Unit Profit ? 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 ? Modified ESR Model ? Risk Capital as of Mar. 31, 2018 ? Basic Information (Domestic Non-Life) ? Basic Information (Domestic Life) ? Basic Information (International Insurance) ? Group Management Framework ? Globalize and Strengthen Group Management Structure ? Our Initiatives to Support Enhancing Corporate Value ? Impact of FX Rate Change on the Group’s Financial Results ? Asset Portfolio Copyright (c) 2018 Tokio Marine Holdings, Inc. 42 Tokio Marine Holdings Key Statistics FY2007 Net income (billions of yen) Shareholders' equity after tax (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 FY2017 284.1 3,805.1 382 5,245 8.6% 0.90 341.4 4,086.4 459 5,633 8.6% 0.84 144.3 98.4 144.1 7.2 108 *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 EPS (yen) BPS (yen) ROE PBR Adjusted net income (billions of yen) Adjusted net assets (billions of yen) KPI Adjusted EPS (yen) Adjusted BPS (yen) Adjusted ROE Adjusted PBR Domestic non-life insurance business Business Unit Domestic life insurance business *2 Profits (billions of yen) 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 3,800.0 - 16.3% 1,347.20 - 12.7% 2017/3E 750,112 3,536.2 4,696.0 23.6% 1,512.60 12.3% 2018/3E 725,433 3,541.9 4,735.0 0.8% 1,716.30 13.5% *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) 2018 Tokio Marine Holdings, Inc. 43 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 160yen (plan) FY2018 Projections 180yen 117.6bn yen 130.5bn yen*4 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 50.0bn yen 155.3bn yen 150.0bn yen (Maximun) 267.6bn yen TBD TBD Total distributions to shareholders 53.7bn yen 122.2bn yen Adjusted net income Average adjusted net income Payout ratio*2 30.7bn yen 163.1bn yen 243.7bn yen 323.3bn yen 351.9bn yen 220.0bn yen 38% 406.7bn yen 295.0bn yen 36% 341.4bn yen 330.0bn yen 36% 396.0bn yen 360.0bn yen 36%*4 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. <Reference1 : Financial accounting basis > Net income (Consolidated) Payout ratio <Reference2 : Former KPI> Adjusted earnings Adjusted earnings (excluding EV) Average adjusted earnings *3 (excluding EV) Payout ratio*2 143.2bn 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% 284.1bn yen 42% 320.0bn yen 41% *1: Total amount approved by the announcement date of 4Q results of respective years *2: Until FY2014: payout ratio to average adjusted earnings (excluding EV) From FY2015: payout ratio to average adjusted net income *3: Excludes effects from the Great East Japan Earthquake and Thai Flood *4: Before reflecting the share repurchses basis Copyright (c) 2018 Tokio Marine Holdings, Inc. 44 FY2017 Results Overview (Consolidated) (billions of yen, except for %) YoY FY2016 ■ Ordinary income (TMHD Consolidated) Net premiums written (TMHD Consolidated) Life insurance premiums (TMHD Consolidated) FY2017 5,399.1 3,564.7 953.0 344.9 325.8 7.5 23.5 126.2 7.4 - 92.6 - 3.1 - 43.8 - 6.0 284.1 253.8 5.3 15.5 145.3 57.8 5.0 - 92.6 - 2.4 - 43.8 - 2.1 Change % 5,232.6 3,480.4 904.4 387.6 312.4 9.0 13.2 174.1 6.2 - 64.4 - 3.8 - 51.1 - 7.9 273.8 248.6 6.5 8.7 135.6 4.0 - 64.4 - 4.4 - 51.1 - 9.7 166.5 84.2 48.5 - 42.7 13.4 - 1.4 10.2 - 47.9 1.2 - 28.2 0.6 7.3 1.9 10.3 5.2 - 1.2 6.7 9.7 57.8 1.0 - 28.2 2.0 7.3 7.5 + 3.2% + 2.4% + 5.4% - 11.0% + 4.3% - 16.0% + 77.6% - 27.5% + 19.4% ■ Ordinary profit (TMHD Consolidated) Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Financial and general Elimination of dividends received by Tokio Marine & Nichido from subsidiaries etc. Purchase method adjustments Amortization of goodwill and negative goodwill Others (Consolidation adjustments, etc.) ■ Net income attributable to owners of the parent Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Impact of U.S. Tax Reform Financial and general Elimination of dividends received by Tokio Marine & Nichido from subsidiaries etc. Purchase method adjustments Amortization of goodwill and negative goodwill Others (Consolidation adjustments, etc.) 【 KPI for the Group Total】 + 3.8% + 2.1% - 18.7% + 77.1% + 7.2% + 24.8% ■ Adjusted net income Copyright (c) 2018 Tokio Marine Holdings, Inc. 406.7 341.4 -65.3 - 16.1% 45 FY2018 Projections Overview (Consolidated) (billions of yen, except for %) FY2017 Results ■ Ordinary income (TMHD Consolidated) Net premiums written (TMHD Consolidated) Life insurance premiums (TMHD Consolidated) FY2018 Projections YoY Change % 5,399.1 3,564.7 953.0 344.9 325.8 7.5 23.5 126.2 7.4 - 92.6 - 3.1 - 43.8 - 6.0 284.1 253.8 5.3 15.5 145.3 87.5 57.8 5.0 - 92.6 - 2.4 - 43.8 - 2.1 3,530.0 950.0 450.0 328.0 7.6 31.3 168.0 5.8 - 44.9 - 3.0 - 33.2 - 9.6 320.0 242.0 5.6 21.0 138.0 126.0 12.0 3.9 - 44.9 - 2.1 - 33.2 - 10.3 - 34.7 - 3.0 105.0 2.1 0.0 7.7 41.7 - 1.6 47.7 0.1 10.6 - 3.5 35.8 - 11.8 0.2 5.4 - 7.3 38.4 - 45.8 - 1.1 47.7 0.3 10.6 - 8.1 + 12.6% - 4.7% + 4.7% + 34.8% - 5.1% + 43.9% - 79.3% - 23.4% - 1.0% - 0.3% + 30.5% + 0.7% + 0.3% + 33.0% + 33.1% - 22.4% ■ Ordinary profit (TMHD Consolidated) Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Financial and general Elimination of dividends received by Tokio Marine & Nichido from subsidiaries etc. Purchase method adjustments Amortization of goodwill and negative goodwill Others (Consolidation adjustments, etc.) ■ Net income attributable to owners of the parent Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Overseas subsidiaries Excluding Impact of U.S. Tax Reform Impact of U.S. Tax Reform Financial and general Elimination of dividends received by Tokio Marine & Nichido from subsidiaries etc. Purchase method adjustments Amortization of goodwill and negative goodwill Others (Consolidation adjustments, etc.) 【 KPI for the Group Total】 Copyright (c) 2018 Tokio Marine Holdings, Inc. ■ Adjusted net income 341.4 396.0 54.6 + 16.0% 46 Business Unit Profits (billions of yen) Business Domain FY2016 Results FY2017 Results (before normalization) FY2018 Projections YoY Change Domestic Non-Life TMNF NF Other Domestic Life *1 TMNL 167.6 160.3 10.6 -3.3 144.3 137.1 8.3 -1.0 161.0 155.0 8.0 -2.0 16.7 17.9 -0.3 -1.0 373.5 373.5 98.4 99.0 35.0 35.0 -63.4 -64.0 International Insurance North America Europe South & Central America Asia & Middle East Reinsurance International Non-Life*2 International Life 169.5 140.2 8.9 4.4 7.5 12.4 173.2 0.1 144.1 159.8 -17.9 5.0 14.3 -16.1 144.8 6.3 165.0 137.0 10.0 5.0 9.0 9.0 170.0 2.0 20.9 -22.8 27.9 -0.0 -5.3 25.1 25.1 -4.3 Financial & General *1: Excluding capital transactions 6.6 7.2 5.0 -2.2 *2: International Non-Life figures include some life insurance figures of composite overseas subsidiaries Copyright (c) 2018 Tokio Marine Holdings, Inc. 47 Reconciliation of Business Unit Profits / Adjusted Net Income Gains relating to sales of businessrelated equities (billions of yen) International insurance business 165.0 Domestic non-life 161.0 (44%) International insurance Financial / general +56.4 - 14.0 Domestic Life Difference between financial accounting and MCEV 396.0 - 12.4 Other adjustments, etc. 165.0 5.0 (45%) Domestic life Business unit profits FY2018 Projections Total \366.0B* Domestic non-life 35.0 161.0 Domestic life 35.0 (10%) Business unit profits Adjusted net income * :Total of Business unit profits of domestic non-life, domestic life, international insurance business, and financial/general businesses Copyright (c) 2018 Tokio Marine Holdings, Inc. 48 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 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 ? Profit indicator for the Group total as the base for calculating capital efficiency (adjusted ROE) and source of dividends ? <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 Copyright (c) 2018 Tokio Marine Holdings, Inc. 49 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) 2018 Tokio Marine Holdings, Inc. 50 Reconciliation of Adjusted Net Income / Adjusted Net Assets (billions of yen) ? Adjusted Net Income*1 FY2017 Results FY2018 Projections YoY Change ? Adjusted Net Assets*1 FY2017 Results FY2018 Projections YoY Change ? Adjusted ROE FY2017 Results FY2018 Projections YoY Change Net income attributable to owners of the parent (consolidated) Provision for catastrophe loss reserves *2 284.1 +25.6 +3.3 +4.9 -5.5 320.0 +4.0 +1.0 +5.0 +0.0 35.8 -21.6 -2.3 0.1 5.5 Net assets(consolidated) Catastrophe loss reserves 3,805.1 3,896.9 91.8 Net income(consolidated) 284.1 320.0 35.8 +836.5 +842.2 5.7 Provision for contingency reserves *2 Net assets(consolidated)* Financial acccounting basis ROE * average balance basis 3,673.6 3,851.0 177.4 Provision for price fluctuation reserves *2 Gains or losses on sales or valuation of ALM*3 bonds and interest rate swaps Gains or losses on sales or valuation of fixed assets and business investment equities Amortization of goodwill and other intangible fixed assets Other extraordinary gains/losses, valuation allowances, etc. Contingency reserves +39.6 +40.6 1.0 7.7% 8.3% 0.6pt Price fluctuation reserves Goodwill and other intangible fixed assets +72.2 +77.3 5.1 +1.5 +0.0 -1.5 -667.2 -691.9 -24.7 FY2017 Results FY2018 Projections YoY Change +73.7 -46.4 341.4 +67.0 -1.0 396.0 -6.7 45.4 54.6 Adjusted Net Assets 4,086.4 4,165.2 78.8 Adjusted Net Income 341.4 396.0 54.6 Adjusted Net Income Adjusted Net Assets* 3,949.4 4,120.0 170.6 Adjusted ROE *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 * average balance basis 8.6% 9.6% 1.0pt Copyright (c) 2018 Tokio Marine Holdings, Inc. 51 Reconciliation of Business Unit Profits (billions of yen) ? Domestic Non-Life*1 (TMNF) ? International Insurance*1 FY2017 Results FY2018 Projections YoY Net income for accounting purposes 253.8 242.0 -11.8 FY2017 Results FY2018 Projections Provision for catastrophe loss reserves *2 +23.0 +1.3 -21.7 Overseas subsidiaries Net income for accounting purposes Difference with EV (Life) Adjustment of non-controlling interests 145.3 138.0 Provision for price fluctuation reserves *2 +3.8 +3.8 0.0 +0.5 -2.7 +1.3 -0.3 144.1 165.0 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 Intra-group dividends -4.3 +0.1 4.4 Difference of subsidiaries covered -58.8 -55.8 3.0 Other adjustments -92.9 -45.7 47.2 *4 Business Unit Profits Other extraordinary gains/losses, valuation allowances, etc +12.4 +9.3 -3.1 Business Unit Profits *1: Each adjustment is on an after-tax basis *2: In case of reversal, it is subtracted from the equation 137.1 155.0 17.9 *3: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities *4: Others: Other intangible fixed assets, head office expenses, etc. Copyright (c) 2018 Tokio Marine Holdings, Inc. 52 Modified ESR Model ? Modify ESR model by including restricted capital as part of net asset value for simplicity and ease of comparability, etc. ? ESR with 99.95%VaR (equivalent to maintain AA credit rating) is 201% as of Mar. 31, 2018 Sep. 30, 2017 Old Model Modified Model Factors of change in net asset value ? Contribution of 2H FY17 adjusted net income ? Increase in unrealized gains of business-related equities ? Shareholder return Mar. 31, 2018 Modified Model 141% Impact to Net asset value ? Include restricted capital 206% 201% etc. Risk capital Net asset value Net asset value Risk capital Factors of change in risk capital ? Sales of business-related equities ? Increase in risks of equities due to rise in stock price ? Increase in credit risk ? Decrease in tax effects owing to U.S. tax reform etc. Net asset value Risk capital 5.0 Trillion yen 5.1 Trillion yen 2.4 Trillion yen 3.4 Trillion yen 2.4 Trillion yen 2.5 Trillion yen Sep. 30, 2017 Sep. 30, 2017 Mar. 31, 2018 \20,356 Nikkei Stock Average \21,454 (Ref.) Definition of Net Asset Value (Modified Model) Net Asset Value = Consolidated net asset on financial accounting basis + Liability of capital nature (catastrophe loss reserves, price fluctuation reserves, etc.) (after-tax basis) - Goodwill, etc. - Planned distribution to shareholders + Value of life insurance policies in-force + Others Copyright (c) 2018 Tokio Marine Holdings, Inc. 53 Risk capital as of Mar. 31, 2018 Risk diversification enhanced mainly through the ongoing expansion of business diversification and progress in business-related equities sales over the period of previous mid-term business plan 5.0 Trillion yen Others 10% International insurance Effect of diversification 4.8 Trillion yen Measures for Risk Diversification ■ International Insurance Further diversification associated with business expansion ■ Domestic Life Control of interest rate risk Shift to protection-type products Risk capital ■ Domestic Non-Life(Investment) Reduction of business-related equities risk ■ Domestic Non-Life(Underwriting) Control of natural catastrophes risk Others 11% International insurance Effect of diversification 14% Domestic life 44% 20% Domestic life 47% 21% Domestic non-life (investment) 15% Domestic non-life (investment) 33% Domestic non-life (underwriting) 56% 31% Domestic non-life (underwriting) Risk capital 53% 2.8 Trillion yen After diversification 2.5 Trillion yen After diversification 21% Before diversification 24% Before diversification Mar. 31, 2015 Previous Mid-term business plan period ? 99.95%VaR, after tax basis Mar. 31, 2018 ? “Others” includes Financial and General businesses, and FX risk derived from net capital investment, etc. Copyright (c) 2018 Tokio Marine Holdings, Inc. 54 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 (FY2017 net premiums written basis) Marine 2.8% 103.3% 99.4% 93.1% 97.9% 97.2% 97.4% 91.2% 92.0% 89.8% 89.2% 89.6% 90.8% Fire 12.8% CALI 13.2% Specialty *2 + P.A. 21.6% Auto 49.6% *2 : Categorized as “Others” in Summary of Financial Statements 1,912.1 1,813.4 1,736.0 1,742.7 1,783.0 1,869.6 1,966.3 2,036.7 2,128.3 2,116.1 2,144.7 2,146.0 ? Premium composition by sales channel (FY2017 managerial accounting basis) Financial institutions 3.3% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (Projections) Others ? 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 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Projections Auto repair shop 8.9% Full-time 14.3% agents 27.4% Corporate 25.7% Auto dealership 20.3% ? Market share 103.8% 69.8% 61.3% 34.0% 99.6% 66.8% 62.8% 32.8% 97.2% 65.0% 60.1% 32.2% 90.6% 58.5% 56.9% 32.2% 92.7% 60.1% 56.0% 32.6% 90.4% 57.7% 54.8% 32.7% 93.9% 61.4% 57.0% 32.5% 91.3% 58.7% 56.0% 32.7% Direct insurer*3 4.3% (excluding reinsurance companies) (FY2016 net premiums written basis) TMNF 26.1% 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, E. design, SBI, Sonpo 24 Source Insurance Statistics (Sonpo Toukeigo) Copyright (c) 2018 Tokio Marine Holdings, Inc. 55 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% 103.8% <Measures to improve profitability> ? ? ? ? ? 102.6% 98.5% 94.0% 91.5% 90.1% 89.4% 2016 90.3% 93.3% Efforts to decrease business expenses such as operational streamlining Product and rate revisions Introduction of age-bracket rate plans Revisions of the Grade Rating System Other measures to improve underwriting result ? 102.9% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2017 Projections 2018 ? Trend of auto insurance policy renewal ratio, E/I basis combined ratio and loss ratio FY2011 Policy renewal ratio 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 95.8% 91.8% 60.8% FY2018 Projections - 94.0% 62.8% 95.1% 102.9% 70.7% Net E/I C/R* E/I L/R Copyright (c) 2018 Tokio Marine Holdings, Inc. *: Net E/I C/R =E/I loss ratio + W/P expense ratio 56 Basic Information (Domestic Life 1) - TMNL ? Market stats: 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) 570 470 500 530 555 438 ・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 2017 ? 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 5.70 million in-force policies in FY2017, significantly exceeding the market growth Copyright (c) 2018 Tokio Marine Holdings, Inc. 57 Basic Information (Domestic Life 2) - TMNL Major Products (Products lineup as of May 2018) (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) 2018 Tokio Marine Holdings, Inc. 58 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) 2018 Tokio Marine Holdings, Inc. 59 Basic Information (International Insurance 2) : Net Premiums Written ? Net premiums written in international insurance business (billions of yen) 1,800.0 1,654.4 1,600.0 1,741.0 1,713.0 Life Reinsurance 1,400.0 1,302.6 1,074.5 1,304.0 1,200.0 1,000.0 North America 800.0 734.3 544.0 413.9 362.6 526.5 600.0 499.7 Europe*2 South & Central America 400.0 319.5 240.2 118.7 200.0 Asia & Middle East *2 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 (Projections) 106.2 0 2004 FX*1 USD/JPY 104.2 118.1 119.1 114.1 91.0 92.1 81.4 77.7 86.5 105.3 120.5 120.6 116.4 113.0 *1: FX rates are as of Dec. 31 of each year (FX rate for FY2018 Projections is as of Mar. 31, 2018) *2: Up to FY2015, Middle East is included in Europe. From FY2016, Middle East is included in Asia Copyright (c) 2018 Tokio Marine Holdings, Inc. 60 Basic Information (International Insurance 3) FY2018 Projections by regions Excluding effects Net Premiums Written (billions of yen) FY2017 FY2018 Projections *5 YoY Change % -2% -4% -3% 2% -2% -2% -1% -2% -1% -2% 1% YoY Change 42.0 9.0 6.0 29.0 6.0 6.0 54.0 7.0 61.0 4.0 % 4% 3% 3% 9% -0% 4% 4% 4% 5% 4% 5% FY2017 Applied FX rate FY2018 Projections As of end- As of endDec. 2017 Mar. 2018 YoY Change -6% -2% -6% -1% North America*1   Philadelphia   Delphi   TMHCC Europe*2 South & Central America Asia & Middle East Total Primary Non-Life*3 Reinsurnace Total Non-Life*3 Life *4 1047.0 359.7 252.6 354.7 161.9 148.0 145.9 1503.0 146.2 1649.2 91.7 1027.0 347.0 244.0 363.0 158.0 145.0 145.0 1475.0 145.0 1620.0 93.0 -20.0 -12.7 -8.6 8.2 -3.9 -3.0 -0.9 -28.0 -1.2 -29.2 1.2 (USD / JPY) (GBP / JPY) (Brazilian Real / JPY) (Malaysian Ringgit / JPY) \113.0 \151.9 \34.1 \27.8 \106.2 \148.8 \32.1 \27.5 Total Business Units Profits (billions of yen) 1741.0 1713.0 FY2018 Projections -28.0 -2% 65.0 4% *5 Excluding effects FY2017 YoY Change 159.8 39.2 73.0 45.1 -17.9 5.0 14.3 161.0 *4 YoY % -14% 7% -33% -5% -1% -37% -0% 17% -68% Change 5.0 2.0 6.0 1.0 10.0 -3.0 12.0 12.0 24.0 -4.0 % 4% 5% 14% 2% 0% -25% 8% 16% -67% C/R FY2017 FY2018 Projections North America*1   Philadelphia   Delphi   TMHCC Europe*2 South & Central America Asia & Middle East Total Primary Non-Life*3 Reinsurnace Total Non-Life*3 Life 137.0 42.0 49.0 43.0 10.0 5.0 9.0 161.0 9.0 170.0 2.0 -22.8 2.7 -24.0 -2.1 27.9 -0.0 -5.3 -0.0 25.1 25.1 -4.3 North America*1   Philadelphia   Delphi   TMHCC Europe *2 95% 94% 103% 89% 117% 99% 94% 98% 95% 96% 100% 89% 95% 100% 99% 96% 99% 96% - South & Central America Asia & Middle East Total Primary Non-Life*3 Reinsurnace Total Non-Life*3 Life *4 -16.1 144.8 6.3 121% 100% - Total *6 144.1 165.0 20.8 14% 20.0 14% Total 100% 96% Copyright (c) 2018 Tokio Marine Holdings, Inc. *1: North American figures include European and Reinsurance businesses of TMHCC, but not include North American business of TMK *2: European figures include North American business of TMK, but not include European and Reinsurance businesses of TMHCC *3: Total Primary Non-Life and Total Non-Life figures include some life insurance figures of composite overseas subsidiaries *4: Reinsurance figures are those of TMR and other Reinsurance companies *5: In Net Premiums Written, FX when converting to yen is adjusted to FX of Mar. 31, 2018 and in Business Units Profits, FX when converting to yen is adjusted to FX of Mar. 31, 2018, Excluding the impact of FX gains / losses on major overseas subsidiaries, Nat-cat losses are normalized to an average annual level, Excluding one time impact of U.S. tax reform *6: After adjustment of head office expenses 61 Group Management Framework Based?on?ERM?(Enterprise?Risk?Management),?realize?profit?growth?while?maintaining?financial? soundness?and?strategically?allocating?capital Generate profits Sustainable profit growth Domestic non-life insurance business ? Sustainable growth as the Group core business ? Change our portfolio by sales expansion of specialty insurance. Domestic life insurance business ? Expand corporate value based on the economic value as a growth driver contributing to the long-term profit for the Group. ? Increase in protection - type products International insurance business ? Realize high organic growth and implement new business investment as a growth driver of the Group. The Group total ? Generate further synergy effect ? Appropriate control of business expenses Efficient deployment of capital Invest for growth ? Invest in new business with diversification effects ? Prior investment to establish future profit base(new products/new technology) Enterprise Risk Management (ERM) Risk reduction/control ? Continuing sales of business - related equities, control of the risk of nat-cat losses and interest rates Shareholder return ? Raise level of shareholder dividend ? Adjustment to the appropriate level of capital via flexible share repurchase, etc. Strategic capital allocation Profit growth Copyright (c) 2018 Tokio Marine Holdings, Inc. Enhancement of shareholder return Maintain financial soundness 62 Globalize and Strengthen Group Management Structure ? ? ? In April 2016, globalized and strengthened Group management system by establishing Group Chief Officer positions and committees as well as strengthening those functions Involvement of top management at overseas subsidiaries in solving Group management issues with their expertise More focus by the Group CEO on Group management and promote initiatives for spreading Group culture Globalize and Strengthen Maximize the Group’s comprehensive capabilities Group CEO / CCO Chief Culture Office ?Focus on group management ?Initiatives to spread Group culture Committees Top management both in Japan and overseas discuss various Group management issues Domestic Non-life Domestic Life International Insurance Financial and General Group chief officers (by order of organization) Dept. in charge CSSO Strategy and Synergy Strategy and Synergy Strategy and Synergy Financial Planning Corporate Planning Global Retention Strategy Human Resources IT Planning IT Planning Risk Management CDO Digital CIO Investment ? Create synergies across the group and roll out best practice ? Converge knowledge of the Group to solve issues across the Group ? Involvement in the Group management by overseas talent CFO Financial ERM Committee International Executive Committee (IEC) Global Investment Strategy Committee (GISC) Global Retention Strategy Committee (GRSC) Global Information Technology Committee (GITC) CRSO Retention Strategy CHRO Human Resources CITO Information Technology CISO Information Security CRO Risk Copyright (c) 2018 Tokio Marine Holdings, Inc. 63 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 10,400 87 100 2013 98 113 2014 122 133 163 119 Environmental Communication Award 2018.3E 2015 2016 Business continuity plan (BCP) workshops for SMEs ?80 or more workshops held and 800 or more companies have participated Earthquake-risk awareness brochure BCP planning sheet (FY2017 results) (Think again about possible earthquake and its countermeasures) Disaster Prevention Lesson Teaching how to prepare for natural disasters in elementary schools, etc. ?Approx. 30,000 people have attended (As of the end of FY2017) ?Distributed 73,000 or more brochures to companies, local governments and chambers of commerce (Total of FY2016 / FY2017) 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 (Easy, Understandable BCP Planning Sheet) 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) 2018 Tokio Marine Holdings, Inc. Health and Productivity 64 Award Impact of FX Rate Change on the Group’s Financial Results ? Impact 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. - \ 1.0B 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) approx. - \1.5B ? Decrease in amortization of intangible fixed assets and goodwill ? 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. + \0.1B outstanding claims reserves and derivatives at TMNF: Total: approx. - \0.4B *1 : Assuming that the FX rate for each currency changes by the same ratio as USD *2 : Impact on the FY2018 projections, after tax basis ? Reference: applied FX rate (USD/JPY) Mar. 31, 2018 Dec. 31, 2018 Mar. 31, 2019 JPY 106.24 Overseas subsidiaries FY2018 Projections Change from the original projections FY2018 Results TMNF Copyright (c) 2018 Tokio Marine Holdings, Inc. FY2018 Projections Change from the original projections FY2018 Results 65 Asset Portfolio ? Domestic Non-Life (TMNF) ? With regard to assets backing insurance liabilities, we aim to enhance capital / cash efficiency, and increase long-term and stable investment income under the ALM management ? With regard to assets in deposit-type insurance account, we aim a stable increase in the value of surplus by appropriately controlling the interest rate risk based on strict ALM investments TMNF Total ? 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 Assets \9.6T (as of end of Mar. 2018) TMNL Total Assets \7.2T (as of end of Mar. 2018) Assets backing insurance liabilities 22% Under the ALM management, enhance capital and cash efficiency and increase long-term and stable investment income Appropriately control yen-denominated interest rate risks of long-term insurance liabilities with yendenominated fixed income assets under strict ALM investments Assets in deposittype insurance 17% accounts Business-related equities Assets backing insurance liabilities Appropriately control interest rate risks of life insurance liability Continue to reduce holdings 27% Investments in subsidiaries and affiliates, etc. 22% Others Real estate for own use, 12% non-investment assets, etc. Copyright (c) 2018 Tokio Marine Holdings, Inc. 90% Assets in separate 3% accounts Others Short-term investments, etc. 7% 66 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 20180525 0:40:07.8 0:40:44.9 0:53:25.6 1:00:05.7 1:09:48.0 1:19:03.7 1:29:11.2 1:35:29.6 Tsuyoshi Nagano President and Group CEO