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0:00:00.0 Tokio Marine Group Mid-Term Business Plan “To Be a Good Company 2020” FY2018 Business Plan Update November 26, 2018 0:00:24.0 Table of Contents Ⅰ Tokio Marine Group Business Strategy 1. FY2018 Financial Results 2. Economic Solvency Ratio (ESR) & Shareholder Return Policy 3. Progress of the Mid-Term Business Plan Ⅱ Business Plan and Strategy by Domain 1. Domestic Non-Life Business 2. Domestic Life Business 3. International Insurance Business Reference 1 Copyright (c) 2018 Tokio Marine Holdings, Inc. 0:00:40.2 Ⅰ Tokio Marine Group Business Strategy Copyright (c) 2018 Tokio Marine Holdings, Inc. 2 0:00:50.2 Ⅰ Tokio Marine Group Business Strategy 1-1. 2Q FY2018 Results Adjusted Net Income (Group Total) (billions of yen) -53.6 Adjusted Net Income 143.5 89.9 Fell by \53.6B YoY mainly due to the impact of natural catastrophes in domestic non-life after 2017 1H 2018 1H Net Income* (financial accounting basis) Net incurred losses relating to natural catastrophes (before-tax, business unit profits basis) an increase at overseas subsidiaries 76.7 53.8 Domestic non-life International insurance Total 25.1 73.1 98.2 213.1 11.2 224.3 *: Net income attributable to owners of the parent Business Unit Profits Domestic Non-Life (TMNF) -123.4 (billions of yen) Domestic Life (TMNL) (Increase in MCEV) (billions of yen) International Insurance +57.2 (billions of yen) -15.4 86.5 93.2 71.1 36.0 64.3 -59.0 2017 1H 2018 1H 2017 1H 2018 1H 2017 1H 2018 1H Fell mainly due to the impact of natural catastrophes Copyright (c) 2018 Tokio Marine Holdings, Inc. Fell mainly due to the reversal effect of changes in economic environment (interest rate fluctuation, etc.) Grew due to the reversal effect of hurricanes in North America, etc. and the impact of U.S. 3 tax reform 0:01:38.9 Ⅰ Tokio Marine Group Business Strategy 1-2. FY2018 Full-Year Projections ? ? Adjusted net income and adjusted ROE are revised downward mainly due to an increase in natural catastrophe losses in Japan However, performance when normalizing nat-cats and FX rates is growing steadily, exceeding the plan Adjusted net income 2020 Plan Adjusted ROE 2020 Plan 3~7% CAGR (billions of yen) 10% or more ? +13% YoY on normalized basis: ahead of the plan +13% -98.0 ? 10.6% on normalized basis: on track -2.2pt 341.4 372.0 421.0 396.0 298.0 8.6% 9.4% 9.6% 10.6% 7.4% Normalized basis*1 Normalized basis*1 2017 Net Income*2 (financial accounting basis) 2018 Projections (Original) (Revised) 2017 2018 Projections (Original) (Revised) 284.1 Domestic non-life International insurance Total 320.0 52.5 50.0 102.5 320.0 237.0 38.0 275.0 ? Main factors of changes in adjusted net Income 【after-tax*3】 ? Increase in domestic natural catastrophe losses ? Decrease in overseas natural catastrophe losses ? Other factors relating to overseas subsidiaries (favorable growth in North America and Brazil, etc.) *3: Estimated figures after tax Net incurred losses relating to natural catastrophes (before-tax, business unit profits basis) 76.3 87.2 163.5 -\133B +\10B +\25B *1 : Adjusted net income:Nat-cat losses are normalized to an average annual level and FX effects are excluded (From 2017, one time impact of U.S. tax reform is also excluded) Adjusted net assets: Market condition (FX and stock price) is adjusted to the same level as the end of Mar. 2018 *2 : Net income attributable to owners of the parent Copyright (c) 2018 Tokio Marine Holdings, Inc. 4 0:02:35.2 Ⅰ Tokio Marine Group Business Strategy 1-3. Net Incurred Losses relating to Natural Catastrophes ? Natural catastrophe losses are projected to exceed the original projection due to the record largest wind and flood damages in Japan Wind and flood, etc. payouts in Japan (industry total) ? In FY2018, many large natural disasters such as the West Japan heavy rain in July and typhoons No.21/24 in September hit Japan ? Estimated industry-wide payouts of wind and flood, etc. damages is projected to be record largest Year-on-year payouts of major wind and flood, etc. *1 (billions of yen) Impact of nat-cat losses on financial results ? Our original projection for nat-cat losses in FY2018, \102.5B, is revised upward to \275B ? It pushes down the profit by 123B from the original projections Net incurred losses relating to natural catastrophes (billions of yen) Record largest 2018 Projections (Original) Domestic non-life International insurance 1,000 Once in10~15yrs. Beforetax (Revised) 237.0 38.0 275.0 Impacts +184.5 -12.0 +172.5 52.5 50.0 102.5 600 Total Domestic non-life International insurance 200 37.8 40.0 77.8 170.8 30.0 200.8 +133.0 -10.0 +123.0 Aftertax*2 1991 2004 2018 (image) Total *1: Source: 1991-2017 The General Insurance Association of Japan Copyright (c) 2018 Tokio Marine Holdings, Inc. *2 Estimated figures after-tax 5 0:03:46.3 Ⅰ Tokio Marine Group Business Strategy 1-4. Impact of Natural Catastrophe Losses on Profits ? ? The impact on profits is within our expectations and tolerance as a result of enhancing geographical/business diversification and advancing risk management, although damaged by the record largest domestic wind and flood Continue to enhance further risk model advancement and improve profitability (revising rate levels, etc. ) Adjusted net income ? Impact of nat-cat losses is limited as it is less than 30% ? Impact on the average adjusted net income as source of dividends is even more limited 421.0 (normalized basis) (billions of yen) Net income on financial accounting basis ? As a result that impact of domestic nat-cat losses is covered by catastrophe loss reserves and international business profits, hold the original projections 406.7 351.9 323.3 243.7 341.4 123.0 298.0 Impact of nat-cat losses hold (billions of yen) -29% 320.0 International insurance +32.0 Other*2 -4.7 Domestic non-life*1 -27.2 320.0 2013 2014 2015 2016 2017 2018 Projections 2018 Projections (Original) Source of dividend in FY2017 Source of dividend in FY2018 2018 Projections (Revised) \330.0B Copyright (c) 2018 Tokio Marine Holdings, Inc. \340.0B *1: Nat-cat losses: -133.0, catastrophe loss reserves: +108.5 *2: Consolidated adjustment, etc.: -4.7 6 0:05:02.5 Ⅰ Tokio Marine Group Business Strategy 2-1. Economic Solvency Ratio (ESR) ? ESR as of Sep. 30, 2018 slightly declined to 197% (within target range) due to business investment and shareholder return, offsetting the positive impact associated with the profit contribution and rise in stock price ESR ESR sensitivity Stock 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 Factors of change in net asset value 201% ? Contribution of 1H FY18 adjusted net income ? Increase in unrealized gains of businessrelated equities ? Shareholder return ? Goodwill associated with new business investment etc. 197%* Net asset value Risk Net asset value Risk Sep. 30, 2018 197% 200% 193% 201% 188% 196% 197% 2.5 Trillion yen 5.1 Trillion yen Factors of change in risk ? Sales of business-related equities ? Increase in equity risk due to rise in stock price Stock price +30% 2.6 etc. Trillion yen 5.1 Trillion yen ▲30% Interest rate +50bp ▲50bp FX rate 10% appreciation Mar. 31, 2018 Nikkei Stock Average Sep. 30, 2018 \21,454 \24,120 *: ESR of 197% as of Sep. 30, 2018 does not include the impact of divestment of reinsurance subsidiaries (TMR), which is expected to close by the end of Mar. 2019 10% depreciation (Ref.) ESR 210 % 150 % 100 % Implementation of business investment, additional risk-taking and/or 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 ESR is calculated using capital model based on 99.95%VaR (equivalent to AA credit rating) Copyright (c) 2018 Tokio Marine Holdings, Inc. 7 0:06:11.3 Ⅰ Tokio Marine Group Business Strategy 2-2. Shareholder Return Policy Stable growth of dividends ? Our primary means of shareholder return is dividends and we plan to sustainably increase total dividends along 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 ? Interim dividend is \90 per share as projected in the original plan ? Annual dividend is \180 per share as projected in the original plan Payout ratio will be 38% of the average adjusted net income (\340B) ? Decided capital level adjustment of \100B ? Share repurchases: \50B ? One-time dividend: \50B + Adjustment of capital level ? Adjustment of capital level will be executed with flexibility through share repurchase etc. based on relevant factors (market conditions, business opportunities etc.) Projecting dividend per share increase for 7 consecutive years 160 High level shareholder return 180 140 95 Dividend per share (yen) 110 50 55 70 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 117.6 150.0 2018 (Projections) 2020 Future Group Vision 38.3 - 128.9 100.0 *1: The payout ratio is the original projections basis *2: 2018 (projections) is before reflecting the share repurchases *3: Total amount approved by the announcement date of financial results of respective years. FY2018 (projections) includes one-time dividend of 50bn yen Capital adjustment *3 (Share repurchases, etc.) (billions of yen) Copyright (c) 2018 Tokio Marine Holdings, Inc. 8 0:10:14.0 Ⅰ Tokio Marine Group Business Strategy 2-3. Enhancing Shareholder Value Total Shareholder Return has outperformed TOPIX Transition of total shareholder return* *Total Shareholder Return(TSR): Capital return after reinvesting dividends Stock price indexed at 100 on April 1, 2002 300 As of Oct. 31, 2018 400 358 TOPIX(Insurance) 250 200 TOPIX 209 100 2002.4 Recent 5 years (2013.10-2018.10) 2018.10 Recent 3 years (2015.10-2018.10) Most recent year (2017.10-2018.10) Tokio Marine Group TOPIX (Insurance) 193 179 153 126 119 113 114 106 95 Source:Bloomberg TOPIX Copyright (c) 2018 Tokio Marine Holdings, Inc. 9 0:10:47.8 Ⅰ Tokio Marine Group Business Strategy 3-1. The Future Group Vision and the Mid-Term Business Plan Mid-Term Business Plan (2018~2020) The future Group visions ? Consistent double-digit ROE ? High level shareholder return 「To Be a Good Company 2020 」 Progress up to 2017 ? Profit growth through strengthening earnings base Higher shareholder return Adjusted ROE approx. Material improvement in profitability ? 12% Adjusted ROE 9.4% 8.9% Adjusted ROE 10% or more Adjusted net income : over \500.0B 3 ~ 7% CAGR Adjusted net income \372.0B ? Optimum portfolio ? Strong Group synergies ? Lean management structure ? Global business platform The priorities ? Continued diversification of portfolio ? Enhancement of business structure ? Strengthening aligned Group management 323.3 1.3% 30.7 FY2011 FY2014 FY2017 Normalized basis FY2020 Target Copyright (c) 2018 Tokio Marine Holdings, Inc. 10 0:11:19.6 Ⅰ Tokio Marine Group Business Strategy 3-2. The Priorities (1) Continued Diversification of Portfolio ? Achieve stable profit through the optimal diversification across geography, business, product, and investment while realizing growth in key growth markets Mid-term plan priories & targets Growth of international insurance business Organic growth M&A Progress & results in mid-term plan ? ? Expand group synergies Bolt-on M&A in developed countries (Qdos, WNC) M&A/investment in non-life insurance business in emerging countries (Safety, Hollard) Future Group vision International Domestic Copyright (c) 2018 Tokio Marine Holdings, Inc. Geographical/ business diversification Appropriate risk control Refinement of product portfolio 2018-2020 Business unit profits CAGR (international insurance) 2018 Projections Business unit profits YoY (international insurance) ? Business unit profits approx. Strategic optimization of portfolio +11% +35% ? Divestment of reinsurance subsidiaries(TMR) Increase the emerging countries proportion in international business Enhance risk diversification Before After diversification diversification Control of natural catastrophe risks Reduction of business-related equities ? Strengthen risk management framework (ERM Committee/GRSC ) ? Continue risk model advancement and profit improvement (rate level revision, etc.) 2018-2020 Reduction (market value) 2018 1H Reduction (market value) more than ? \100B /year \81B 2018 Projections protection-type products number of in-force policies YoY (TMNL) Reduce book value to 39% (compared to 2002.3E) effect ? Expansion of protection-type products Expansion of specialty insurance Provide products/services that meet environmental changes +6.3% 2018 Projections Specialty/P.A. insurance net premiums written YoY (TMNF) Decrease interest rate risks by shifting to protection-type products ? Launch industry first protections ? Leverage technology to improve UX on procedure Keep focusing on 84% 43% 2014 2017 protection-type products ? +3.3% Develop market through regional revitalization/ health & productivity management Net premiums written (All lines) Specialty /P.A. 11 0:13:13.1 Ⅰ Tokio Marine Group Business Strategy 3-3. The Priorities (2) Business Structure Enhancement Utilizing Technology ? We will realize a lean management structure that can withstand any tough business environment as well as create “new values” such as innovative products/services, etc. by actively utilizing technology group-wide Examples of our initiatives Concept of utilizing technology 【Strengthen our capability to cope with natural disasters】 Business tie-up with Orbital Insight in the U.S. Mission Driven ? ? Strengthen our capability against large natural catastrophes to meet higher social attention Realize prompt claims payment to customers by utilizing AI and satellites to specify the flooded area Fusion of people’s power and technologies 【Utilize technology】 Invest in MetroMile, a U.S. insurtech company ? Establish a maximum automated claims service process by utilizing cutting-edge digital technologies 83 # of R&D/PoC phase 【Enhance our people’s ability】 Business tie-up with ExaWizards in Japan ? Analyze the ideal accident response with high customer satisfaction by utilizing AI and raise the value of human services to an inspirational level 22 # of Go-Live phase Global Digital Synergies 【Launch 3 labs over the world】 Invest in Healthians, a provider of medical checkup services in India ? ? Consider to develop a new products/services for diabetic patients that accounts for 10% of the population in India Aim to roll out developed products/services to other regions as of the end of Sep. 2018 Group Chief Digital Officer Makoto Okada Tokio Marine Innovation Lab Set 3 labs (Tokyo, Silicon Valley, and Singapore) that capture promising Tech information and share them to the Group Digital Roundtable Share global-based knowhow among group companies in Japan and overseas Digital Roundtable 12 Copyright (c) 2018 Tokio Marine Holdings, Inc. 0:16:21.9 Ⅰ Tokio Marine Group Business Strategy 3-4. The Priorities (3) Strengthen Aligned Group Management ? While strengthening aligned Group management and maximizing Group synergies, create a strong global management platform that is able to strengthen and support our competitive businesses around the world by leveraging our diverse talent under our core identity Strong Group Synergies Increase investment income with Delphi’s capabilities, etc. Expand revenue synergies by leveraging our global network Revenue Expanding Group Synergies Annual results: USD Investment 270Mil Cost Capital Contribution on a post-tax basis in the past one year from June.30, 2018 Optimize retention/ reinsurance on a Group basis Contain costs by both efficiently using Group resources and taking advantage of the Group’s scale Global Management Platform Co-Head of International business Satoru Komiya Americas, Asian life, Synergy, Digital, IR, etc. Spreading Group Culture, ”To Be a Good Company” 18,000 people ・ Continuous town hall meetings by Group CCO ・ Dialogues with a total of 18,000 people, roughly half of our employees, in 17 countries, 76 branches in 5 years Christopher Williams Satoru Komiya Christopher Williams 4.1points out of Europe, Reinsurance, Asian P&C, M&A, Retention strategy, HR, etc. 5 ・ A PDCA cycle based on the culture & value survey ・ 75% of approx. 40,000 employees responded ・ Passion toward the Group is 4.1 points out of 5 Copyright (c) 2018 Tokio Marine Holdings, Inc. 13 0:19:04.0 Ⅰ Tokio Marine Group Business Strategy 3-5. Group Asset Management ? Secure long term and stable investment income under the policy based on the characteristics of insurance liabilities with ALM at the core as well as strengthen investment structure across the Group Steady accumulation of overseas assets based on the policy reflecting the characteristics of insurance liabilities Investment synergy with Delphi AUM in Delphi (excluding Delphi’s own AUM) (USD Bil) Maintain stable yield Group income yield 4.3 % 4.4 % 4.5 % 4.6 % 4.7 % Asset composition of TMHD (Consolidated) Others 19% Domestic bonds 38% 15.0 9.6 4.4 5.2 2018.9E 4.0 % Loans 4% Total Assets 10.5 4.5 2.1% 2.3% 2.2% 2.3% 2.3% 2.4% 5.0 1.6% 1.6% 1.5% 1.4% \23.3T Balance of foreign securities, etc.* (trillions yen) (2018.9E) 7.7 4.0 3.7 1.5% 1.5% 10.0 6.0 2013 2014 Domestic 10.0 6.04 5.0 6.38 Foreign securities, etc.* 27% Domestic equities 12% 2015 2016 Overseas 2017 2018 .9 2018.3E 2019.3E (Plan) 2021.3E (Plan) Domestic & overseas total Domestic *: Including international backed securities and beneficiary securities, etc. which are recorded except for foreign securities on financial accounting basis Overseas (Ref.) Open market rate 0.0 2018.3E 2018.9E ■ Domestic subsidiaries: TMNF, TMNL, NF ■ Overseas subsidiaries: Philadelphia, Tokio Millennium Re, TMHCC, TMAIC 4.0 3.0 2.0 Decision-making across the Group and strengthening of corporate functions Aligned Group operating structure under the Group Co-CIOs ? Prompt and effective decision making on issues across the Group and domestic/overseas challenges ? Discussion on asset management strategy and market analysis, etc. at the global investment strategy committee Copyright (c) 2018 Tokio Marine Holdings, Inc. 1.0 0.0 ▲1.0 Hirokazu Fujita Donald Sherman 2013 2014 2015 2016 10y US Treasury 10y JGB 2017 2018 14 0:20:03.0 Ⅱ Business Plan and Strategy by Domain Copyright (c) 2018 Tokio Marine Holdings, Inc. 15 0:20:17.6 Ⅱ Business Plan and Strategy by Domain 1-1. TMNF Projections ? ? Hold projections of net premiums written Business Unit Profits is revised downward mainly due to the impact of natural catastrophes Net premiums written 2020 Plan CAGR+1% or more Business unit profits 2020 Plan CAGR+1% or more*1 Combined ratio approx. 92~93%*1 ? The progress of FY2018 projections (revised) is +0.1% YoY (+0.7% YoY on private insurance basis, as planned) (billions of yen) ? +7.3% YoY on normalized basis*2, exceeding the plan Normalized basis*2 (billions of yen) +0.1% 2,146.0 2,144.7 137.1 150.0 2,146.0 +7.3% -128.0 155.0 27.0 161.0 2017 2018 Projections (Original) (Revised) C/R (Private Insurance E/I basis) 2017 2018 Projections (Original) (Revised) 93.9% 91.3% 101.3% *1:After-tax profit decreases by approx. 28B and C/R worsens by approx. 2pts due to consumption tax increase and the revision of law of obligation Copyright (c) 2018 Tokio Marine Holdings, Inc. *2: Nat-cat losses are normalized to an average level and FX rates are excluded 16 0:21:23.3 Ⅱ Business Plan and Strategy by Domain 1-2. TMNF Growth Strategy ? Continue to beat the market growth and stay competitive in business efficiency by promoting initiatives toward further growth and productivity enhancement Growth outperforming the market CAGR + Initiatives toward further growth <Direct net premiums written> (billions of yen) 3.5% ■ TMNF ■ Market*1 Regional revitalization/health & productivity management Products/services for chambers of commerce organizations Expansion of new sales channels Products/services for post offices ? Super Business Insurance ? Added P.A./nursing care products ? Selling mainly to JP Bank account holders*3 (number of bank accounts : approx. ? TMNF’s share : CAGR +2.7% + 31.5 % premiums increase*2 ? Added new coverage for Super T Protection 2,357.0 1,851.4 Added coverage for cancer/nursing care leave*3 120 million ? Launched a new income protection scheme 100% 26.4% 25.0% 2010 2011 2012 2013 2014 2015 2016 2017 Easy to purchase based on sales/industry types*3 Market share Life and non-life cross-selling Super insurance with either life or third sector coverage 25.0% ? Strengthening multiline sales ? Enhancing further product attractiveness 21.0% 2018.3 21.7% 2018.9 2021.3 Advantage in business efficiency 35.0% Market *5 <Expense ratio (All lines)> ※ ( ) : Private insurance basis Initiatives toward further productivity enhancement ? Keep advantage in business efficiency by accelerating our operational streamlining, utilizing technology ? Streamlining claims process utilizing digital technology ? Advancing easy & comprehensive procedure (Introduce procedure completion model via smartphone) ? Further utilizing RPA/ block chain technology ? Further utilizing AI (Automated Inquiry response system, etc.) ,etc. *1 *2 *3 *4 *5 Source:Insurance Statistics 2018 1H Results (for chambers of commerce organizations), YoY Since FY2018 2H 2018.3E Source: Website of JP Bank Total of the members of The General Insurance Association of Japan (excluding TMNF), Source: Website of The General Insurance Association of Japan TMNF 33.3% 33.5% (35.1%) Reduce workloads in the long-term -20-30% 30.7% (32.5%) 2010 Copyright (c) 2018 Tokio Marine Holdings, Inc. 2017 17 0:24:20.0 Ⅱ Business Plan and Strategy by Domain 1-3. TMNF Provide New Value Through Utilizing Technology ? Continue to provide new values to our customers through collaboration with our diverse partners with cutting-edge technology ? Jointly exploring full digitization of insurance process and AI based insurance proposals ? Aim for a new style of insurance (the only one insurance) in the age of AI by combining the customer base and technologies of Docomo with our diverse insurance products Oct. ? Aim to provide a convenient, quick, and high CX insurance purchase system from EC websites, etc., utilizing the technology of Simplesurance, a German company, which has extensive track records of providing insurance sales modules in Europe ? Aim to develop next generation products in view of autonomous driving age and enhance claims services utilizing ALBERT’s data analysis and AI technologies ? Developed technology that predicts employee's leaving risks with NTT DATA, which has extensive health-related data and solid analytical abilities, and MICIN, which has strengths in AI development/analysis technique in the medical area ? Aim to expand services to support company’s health & productivity management ? Aim to make quick judges of claims payment and automatize claims response by utilizing data analysis and AI technology, etc. of MetroMile, an U.S. insurtech auto insurance company ? Promote joint researches on cyber security area in connected cars/autonomous cars, etc. with WHITE MOTION, which has advanced technology/know-how of auto’s cyber security Aug. Jul. Apr. 2018 Copyright (c) 2018 Tokio Marine Holdings, Inc. 18 0:25:10.5 Ⅱ Business Plan and Strategy by Domain 2-1. TMNL Projections ? Business unit profits is revised upward due to further shift to protection-type products New policies ANP 2020 Plan CAGR Business unit profits 2020 Plan MCEV growth rate CAGR +4% or more +1% or more ? Revised FY2018 projections downward, reflecting sales decrease of products for corporations and the favorable sales of protection-type products ? Toward FY2020, aim to accomplish the plan by further expanding protection-type products (billions of yen) ? Increase in MCEV is revised upward due to sales shift to protection-type products and the impact of rising interest rates ? MCEV growth rate is +6.8% YoY, along with the plan -8.6% + 6.8% +50.0 1,XXX (billions of yen) -10.9 102.1 104.2 93.3 350 35.0 85.0* *Increase in economic environment changes: 34.0 2017 2018 Projections (Original) (Revised) 104.2 878.9 93.3 874.8 Year-end MCEV*1 Increase in MCEV*2 2017 2018 Projections (Revised) (Original) New policies ANP In-force policies ANP 102.1 852.7 1,248.7 99.0 1,284.0 35.0 1,334.0 85.0 Copyright (c) 2018 Tokio Marine Holdings, Inc. *1: Figures of FY2017 are after payment of shareholder's dividends. FY2018 projections are before payment of shareholder’s dividends. *2: Before payment of shareholder’s dividends. 19 0:26:09.6 Ⅱ Business Plan and Strategy by Domain 2-2. TMNL Growth Strategies ? Contribute as the growth driver for the Group through innovative products and enhancing life and non-life cross-selling business model Continually launch unique protection-type products by proactively capitalizing on environmental changes <examples of unique products, launched up to the previous mid-term plan> Medical/cancer R series Aruku Hoken Growth outlook of protectiontype products*1 (number of in-force policies) Promotion of multichannel strategies through non-life agents at the core Life Partners (direct) approx. 10% Bancassurance approx. 5% Non-life Agents approx. 55% CAGR approx. (ten thousands) +8% (2014-2020(plan)) 320 Exceeded 1 million "The most selected insurance last year ver.2018“ from “Insurance Market", a website comparing insurance products 340 Life Professionals approx. 30% Channel Composition Product Strategies Channel strategies 240 (life insurance premiums on managerial accounting basis as of the end of Sep. 2018) <Launched in Aug. 2018> Medical Kit R living protection priority plan ? Medical insurance which returns unused premiums Original R series ? Enhancing life and non-life cross-selling business model ? Promote cross-selling against the extensive customer base of the Group ? Promoting channel mix ? Generate further synergy effect by combining market holders (non-life agents) and Life Partners /Life Professionals + The industry’s first, new protection In the case of being in a specific condition by a specific diseases ? Exempt future premium payments ? Receive the refund benefits for health ahead of schedule 14 17 18 Projections 20 Plan *1:Medical/Cancer, Household Income Term, Long life Support Whole Life Utilize technology in all areas (products, channels and business processes) ■ Promote R&D in health and medical field as a Group ? Develop new products/services to support disease prevention/ presymptomatic disease/health enhancement by utilizing sensing technologies ? Enhance underwriting ability by using big data and develop products/services that respond to advanced medical technology Copyright (c) 2018 Tokio Marine Holdings, Inc. ■ Operational streamlining and quality advancement ? Realize quick, easy and convenient paperless procedures for contract change, etc. utilizing QR code*2 (the first in the industry*3) ? Automate a part of business processes of sales department, such as office administrative work and inquiry response work, by utilizing RPA, etc. *2 QR code is a registered trademark of Denso Wave *3 based on Company data 20 0:27:54.3 Ⅱ Business Plan and Strategy by Domain 3-1. International Insurance Projections ? FY2018 Projections is revised upward, reflecting the recent favorable results Net Premiums Written 2020 Plan CAGR+ approx. Business Unit Profits 5% 2020 Plan CAGR+ approx. 11% ? On normalized basis, +5.7% YoY, steadily growing in line with our plan +5.7% ? On normalized basis, +20.0% YoY, growing above our plan (billions of yen) (billions of yen) +20.0% +95.0 +30.0 Normalized basis*1 1,808.0 1,713.0 1,648.0 1,742.0 Normalized basis*2 195.0 174.0 165.0 145.0 2017 2018 Projections (Original) (Revised) 2018.3E JPY 106.2 2018.9E JPY 113.5 2017 FX rate (USD/JPY) 2018 Projections (Revised) (Original) 2018.3E JPY 106.2 2018.9E JPY 113.5 FX rate (USD/JPY) 2018.3E JPY 106.2 2018.3E JPY 106.2 *1: FX when converting to yen is adjusted to Mar. 31, 2018 *2: FX when converting to yen is adjusted to Mar. 31, 2018, excluding the impact of foreign exchange gains / losses at major overseas subsidiaries, nat-cat losses are normalized to an average annual level, and excluding one time impact of U.S. Tax Reform Copyright (c) 2018 Tokio Marine Holdings, Inc. 21 0:28:23.6 Ⅱ Business Plan and Strategy by Domain 3-2. International Insurance Projections by Regions North America Net Premiums Written YoY ■ Business Unit Profits (billions of yen) Europe +7% Net Premiums Written YoY ■Business Unit Profits (billions of yen) Reinsurance +4% → +31.0 -0% → +2.0 +0% Net Premiums Written YoY +5% → -1.0 -5% ■ Business Unit Profits (billions of yen) 168.0 132.0 137.0 10.0 0 2017 FX rate (USD/JPY) 2018.3E JPY 106.2 12.0 -3.0 9.0 8.0 2018 Projections (Original) 2018.3E JPY 106.2 2017 FX rate (GBP/JPY) 2018.3E JPY 148.8 2018 Projections (Original) 2018.3E JPY 148.8 (Revised) 2018.9E JPY 113.5 (Revised) 2018.9E JPY 148.5 FX rate (USD/JPY) 2017 2018.3E JPY 106.2 2018 Projections (Original) 2018.3E JPY 106.2 (Revised) 2018.9E JPY 113.5 South & Central America Net Premiums Written YoY ■ Business Unit Profits (billions of yen) Asia & Middle East Net Premiums Written YoY ■ Business Unit Profits (billions of yen) Life Insurance +11% Net Premiums Written YoY ■ Business Unit Profits (billions of yen) +4% → +4.0 +6% +4% → -1.0 +5% → +8% -3.0 9.0 5.0 2017 FX rate (BRL/JPY) 2018.3E JPY 32.1 12.0 90 9.0 80 8.0 6.0 2017 5.0 2018 Projections (Original) 2018.3E JPY 32.1 2.0 -1.0 (Revised) 2017 *1: *2: *3: *4: *5: 2018 Projections (Original) (Revised) 2018 Projections (Original) (Revised) 2018.9E JPY 28.0 The figures in "North America" include TMHCC in Europe and reinsurance businesses. Excluding TMK in North America. The figures in “Europe” include TMK in North America. Excluding TMHCC in Europe and reinsurance businesses. The figures in “Reinsurance” are TMR and other reinsurance businesses The figures in “Net Premiums Written YoY” are excluding the FX effects The figures in “Business Unit Profit in 2017” are adjusted to FX of Mar. 31, 2018, excluding the impact of foreign exchan ge gains / losses at major overseas subsidiaries, nat-cat losses are normalized to an average annual level, and excluding one time impact of U.S. Tax Refor m Copyright (c) 2018 Tokio Marine Holdings, Inc. 22 0:30:22.6 Ⅱ Business Plan and Strategy by Domain 3-3. International Insurance Major Strategies at Developed Markets ? 4 companies in Europe and the U.S. outperform the market growth after joining Tokio Marine Group ? In addition to organic growth, aim to achieve further growth through expanding Group synergies and promoting bolt -on M&A Top line*1 (USD Bil ) Bottom line*2 Philadelphia U.S. P&C Market Stimulate further growth ? Expand Group synergies 3.2 Philadelphia 1.7 7.3% + Since 2008.12 1.0 2.9% 2017 2008-2017 CAGR 6.2% 2008 2008-2018 (Projections) CAGR USD 520 9.6 Mil Annual net premiums written created as revenue synergies ( As of the end of June 2018) (USD Bil ) 2.2 Delphi U.S. P&C Market 1.5 Delphi + 6.4% 1.0 4.3% 18.9% USD Bil Delphi’s AUM from the Group companies for investment synergies ( As of the end of Sep. 2018) Since 2012.5 2011 (USD Bil ) 2017 2011-2017 CAGR 2011-2018 (Projections) CAGR 3.1 TMHCC TMHCC U.S. P&C Market ? Promote Bolt-on M&A TMK ( Acquired in Jan. 2018 ) 2.8 5.4% Since 2015.10 2.5 + 9.9% A U.S. based cover holder, providing property insurance relating to home loan, etc. 3.8% 2015 (GBP Bil ) 2017 2015-2017 CAGR 2015-2018 (Projections) CAGR TMHCC A UK-based insurance agency and its holding company, providing Professional Indemnity and Employers and Public Liability insurance via an online platform 0.8 TMK*3 11.1% 0.3 0 Lloyd’s Market TMK*3 + 6.5% 2017 2007-2017 CAGR 0.8% ( Acquired in Oct. 2018 ) Since 2008.3 2007 2007-2018 (Projections) CAGR Copyright (c) 2018 Tokio Marine Holdings, Inc. *1:Net premiums written on local accounting basis *2:Profits after tax on local accounting basis *3:TMK (Lloyd’s business) 23 0:32:04.4 Ⅱ Business Plan and Strategy by Domain 3-4. International Insurance Major Strategies at Emerging Markets ? Promote further geographical diversification through capturing growth potential in emerging markets and a strategic M&A Growth exceeding the market India Organic growth capturing the market growth Grow mainly through auto, medical and agricultural insurance by utilizing our partner IFFCO’s network Brazil Expand market share of auto insurance through quality improvement of products and broker systems ? Growth rate*2 of P&C premiums in FY2018 (projections) +10% Safety acquisition effects +7% Organic growth, etc. +6% Thailand South Africa Our Group in emerging market*3 Emerging market*4 *2: Growth rate of emerging market (excluding advanced Asia and Oceania) *3: Net premium written(excluding FX effect) *4: Direct premium(Source: Swiss Re) Pursue strategic M&As Acquired safety insurance with a network throughout Thailand and strength in retail car insurance (released in Jun. 2018) 22.5% investment in Hollard Group, networked in SubSaharan Africa (released in Sep. 2018) Further geographical diversification ? Emerging countries composition among total profits of international insurance business (our Group) approx. 8% No. No. Copyright (c) 2018 Tokio Marine Holdings, Inc. 1 3 Market share of foreign non-life insurance companies in Thailand *1 No. Market share of non-life insurance in Thailand *1 2 Gained a strategic partner whose market share of non-life insurance in South Africa is at No.2 Business Unit Profits FY2018 Projection to approx. 20% 24 *1:After the integration of existing Thai subsidiaries Ⅱ Business Plan and Strategy by Domain 3-5. International Insurance Strategies of Major Subsidiaries ? Both net premiums written and business unit profits are revised upward due to the rate increases and renewal ratio exceeding the plan ? Maintain growth potential and profitability outperforming the market through underwriting discipline and the execution skills Business unit profits 2020 Plan Net premiums written YoY Strategies ? Focus on niche markets Oters13% Results ? High renewal ratio and rate increases Renewal ratio Human services 33% CAGR + approx. 5% +3% → +5% (billions of yen) 88.7% 88.7% 89.0% Auto 6% Public services 7% Sports & Rec. 10% Market composition (FY 2017) +3.0 Rate increases Real estate 19% Philadelphia Market average*2 2015 3.6% approx.1% 2016 1.8% approx.0% 2017 1.5% approx.1% 45.0 42.0 40.0 Non profit organization D&O E&O 12% *2: (Source) Willis Towers Watson ? Strong customer loyalty Net Promoter Score*1 2017 2018 Projections (Original) FX rate (USD/JPY) 2018.3E JPY 106.2 2018.3E JPY 106.2 ? Combined ratio U.S. P&C market average (Revised) 2018.9E JPY 113.5 55 50 61 68 36 Philadelphia*3 ※Net premiums written YoY : Excluding the FX effects Business unit profits FY2017 : FX when converting to yen is adjusted to FX of Mar. 31, 2018, nat-cat losses are normalized to an average annual level, and excluding one time impact of U.S. Tax Reform 2014 2015 2016 2017 2017 Average of insurance industry *3: Local management accounting basis Philadelphia Also translated as “customer satisfaction” *1 Customer Loyalty: Indicator for knowing customer's intention of continuous use. Copyright (c) 2018 Tokio Marine Holdings, Inc. 25 Ⅱ Business Plan and Strategy by Domain 3-5. International Insurance Strategies of Major Subsidiaries ? Continue to grow mainly in employee benefits and retirement services market by leveraging the Tokio Marine brand and its strong financial foundation ? Maintain profit growth by leveraging investment expertise while focusing on underwriting profitability Business unit profits 2020 Plan CAGR + approx. 11% + 3% → +6% (billions of yen) Strategies ? Strength in employee benefits and retirement products/services Life insurance 58% Other life insurance 6.7% Group life insurance 19.5% Results ? High Investment Returns Average Investment Return Net premiums written YoY Non-life insurance 42% Excess workers compensation 21.9% Other non-life 20.4% 7.51% 7.28% 6.63% 4.74% 2.27% 2001 - 2017 The recent 5 years ( July. 2013 ? Jun. 2018 ) +19.0 Product composition (FY 2017) 68.0 43.0 49.0 Disability 31.5% ? Delphi ? Benchmark (Barclays Aggregate Index) ? Diversified investment portfolio Others 7% Corporate Bonds 16% Securitized bonds 23% Municipal bonds 30% ? Combined ratio U.S. P&C market average 2017 2018 Projections (Original) (Revised) 2018.9E JPY 113.5 Investment composition 2.1 trillion yen (FY2017) FX rate (USD/JPY) 2018.3E JPY 106.2 2018.3E JPY 106.2 Loans 23% Delphi* ※Net premiums written YoY : Excluding the FX effects Business unit profits FY2017 : FX when converting to yen is adjusted to FX of Mar. 31, 2018, nat-cat losses are normalized to an average annual level, and excluding one time impact of U.S. Tax Reform ? Abilities of gathering and analyzing information, leveraging its extensive networks such as external investment managers ? Cautiously balance the investment portfolio, reflecting changes in financial environments *: Local management accounting basis Copyright (c) 2018 Tokio Marine Holdings, Inc. 26 Ⅱ Business Plan and Strategy by Domain 3-5. International Insurance Strategies of Major Subsidiaries ? Revised upward due to rate increases in property lines and medical stop-loss as well as bolton M&A ? Pursue organic growth in all businesses while maintaining high profitability and enhance existing franchise businesses through bolt-on M&A Business unit profits 2020 Plan CAGR + approx. 7% +9% → +12% (billions of yen) Strategies ? Bolt-on M&A to reinforce our strengths ? A UK-based insurance agency holdings company ? Provide Professional Indemnity and Employers and Public Liability insurance via online platform Results ? Stable profitability Highest Lowest C/R Volatility ProAssurance RLI Alleghany PartnerRe AXIS Travelers XL Markel Navigators Lowest TMHCC Net premiums written YoY Arch Chubb C/R decade average American Financial W.R. Berkley +6.0 (Oct. 2018) Everest Re Baldwin & Lyons Aspen Global Indemnity 49.0 42.0 43.0 AIG Business acquisition (Oct. 2017) ? AIG's medical stop-loss business ? Gained No.3 position in the medical stop-loss business and strengthened our earnings base CNA Hartford Argo Group Highest Source: Created by Tokio Marine from Company Reports, Dowling & Partners Analysis ( based on data through Dec. 31, 2017 ) ? Specialty insurance that are less dependent on the P&C market cycles 2017 ? Combined ratio U.S. P&C market average 2018 Projections (Original) (Revised) 2018.9E JPY 113.5 approx. Product composition (FY2017) 64% TMHCC* *: Local management accounting basis FX rate (USD/JPY) 2018.3E JPY 106.2 2018.3E JPY 106.2 ■Medical stop-loss ■Agriculture ■Surety insurance, etc. ※Net premiums written YoY : Excluding the FX effects Business unit profits FY2017 : FX when converting to yen is adjusted to FX of Mar. 31, 2018, nat-cat losses are normalized to an average annual level, and excluding the impact of foreign exchange gains / losses and one time impact of U.S. Tax Reform Copyright (c) 2018 Tokio Marine Holdings, Inc. 27 Ⅱ Business Plan and Strategy by Domain 3-5. International Insurance Strategies of Major Subsidiaries ? FY2018 Projection is revised upward, reflecting the recent favorable results ? Strengthen profitable U.S. cover holder business while maintaining disciplined underwriting for profit stabilization Business unit profits 2020 Plan Net premiums written YoY Strategies ? Product portfolio to enhance stable profitability Growth field ? Profitable U.S. cover holder business ? Our distinctive specialty insurance products such as cyber and intellectual property coverages Results ? Improving Loss ratio -1pt CAGR + approx. 8% -0 % → +0% 72.2% 55.5% 54.5% (billions of yen) +2.0 Shrinkage field 10.0 12.0 ? Review and reduce underwriting of product lines/regions which are difficult to ensure profit in the mid-to-long term 2017 2018 Projections (Original) (Revised) 0 2017 2018 Projections (Original) FX rate (GBP/JPY) 2018.3E JPY 148.8 2018.3E JPY 148.8 ? Combined ratio ? Underwriting products in Lloyd's Others 9% Aviation 4% 2018.9E JPY 148.5 Lloyd's market average (Revised) Property 41% Reinsurance 8% A&H 11% Products composition (FY 2017) TMK* ※Net premiums written YoY : excluding the FX effects Business unit profits FY2017 : FX when converting to yen is adjusted to FX of Mar. 31, 2018, nat-cat losses are normalized to an average annual level, and excluding the impact of foreign exchange gains / losses and one time impact of U.S. Tax Reform 2020 Plan CAGR is calculated based on FY2018 Original Projections ※Some figures above include Russia’s and Turkey’s results Copyright (c) 2018 Tokio Marine Holdings, Inc. *: Local management accounting basis Marine 16% liability 12% 28 Ⅱ Business Plan and Strategy by Domain 3-5. International Insurance Strategies of Major Subsidiaries ? Maintain top-line growth exceeding the market by providing high-quality operations and products/services that meet customers’ needs ? Realized efficient business operations through systematized and automated business processes Business unit profits 2020 Plan CAGR + approx. 8% +4 % → +6% Approx. (billions of yen) Strategies ? Expanding the number of brokers Results ? Growth exceeding the market Growth rate of Gross Premium ( 2013 is set at index value of 100 ) Net premiums written YoY Approx. 22 thou 200 TMSR* 150 CAGR +16.2% 13 thou +4.0 9.0 5.0 5.0 2013 2017 Brazil market average CAGR +5.6% ? Provide systems and contact centers to support sales activities of brokers 100 2013 2015 2017 ? Product & Service strategies 2017 2018 Projections (Original) FX rate (BRL/JPY) 2018.3E JPY 32.1 2018.3E JPY 32.1 ? Stable performance of Auto Loss Ratio Brazil market average (Revised) 2018.9E JPY 28.0 ? Realize growth with profitability by flexibly adjusting premium rates ? Utilize wireless technology to reduce theft risk and develop specialized products TMSR* *: Local management accounting basis ※Net premiums written YoY : excluding the FX effects Business unit profits FY2017 : FX when converting to yen is adjusted to FX of Mar. 31, 2018, nat-cat losses are normalized to an average annual level ※Some figure above include Mexico’s results ? Enhance service quality by providing in-house contact center of road assistance service Copyright (c) 2018 Tokio Marine Holdings, Inc. 29 Reference ? Tokio Marine Holdings Key Statistics ? Return to Shareholders ? Business Unit Profit ? Reconciliation of Business Unit Profits and Adjusted Net Income ? Adjusted Net Income and Business Unit Profit ? Definition of Terms ? Reconciliation of Adjusted Net Income and Adjusted Net Assets ? Reconciliation of Business Unit Profits ? Mid-Term Business Plan Group Management Framework ? Risk Amount ? Basic Information (Domestic Non-Life) ? Basic Information (Domestic Life) ? Basic Information (International Insurance) ? Group Asset Management ? Asset Portfolio ? ESG (Sustainably Enhancing Corporate Value) ? Impact of FX rate change on the Group’s Financial Results ◆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. TMHCC : Tokio Marine HCC TMK : Tokio Marine Kiln TMR : Tokio Millennium Re Copyright (c) 2018 Tokio Marine Holdings, Inc. 30 Tokio Marine Holdings Key Statistics FY2008 Net income (billions of yen) *1 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 7.7% 0.90 341.4 4,086.4 459 5,633 8.6% 0.84 144.3 98.4 144.1 7.2 108 FY2018 Projections 320.0 3758.9 445 5,247 8.5% 1.07 298.0 3,980.0 414 5,556 7.4% 1.01 26.0 85.0 195.0 5.0 more than 100 23.1 1,627.8 29 2,067 1.1% 1.16 5.1 -57.2 20.8 -21.1 50 Shareholders' equity after tax (billions of yen) Financial accounting basis EPS (yen) BPS (yen) ROE PBR Adjusted net income (billions of yen) Adjusted net assets (billions of yen) Adjusted EPS (yen) KPI Adjusted BPS (yen) Adjusted ROE Adjusted PBR Domestic non-life insurance business Business Unit Profits *2 Domestic life insurance business International insurance business Financial and general businesses (billions of yen) Sales of business-related equity holdings (billons of yen) 2009/3E Adjusted number of issued and outstanding shares (thousands of shares) Market capitalization (billions of yen) Share price (yen) Percentage change (Reference) TOPIX Percentage change *3 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% 2018/9E 716,262 4,056.9 5,637.0 19.0% 1,817.25 5.9% 787,562 1,926.8 2,395 - 34.9% 773.66 - 36.2% *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 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. 31 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 140円 105.3bn yen FY2017 160円 117.6bn yen FY2018 Projections 180yen 128.9bn yen *4 Adjustment of capital level (share repurchases, etc.) *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 53.7bn yen 50.0bn yen 122.2bn yen 83.0bn yen 50.0bn yen 155.3bn yen 150.0bn yen 267.6bn yen 100.0bn yen (Plan) 228.9bn yen (Plan) Total distributions to shareholders 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% 298.0bn yen 340.0bn yen 38% 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 (excluding EV)*3 Payout ratio *2 108.7bn yen 36% 23.1bn yen 165% 128.4bn yen 31% 71.9bn yen 54% 6.0bn yen 639% 129.5bn yen 33% 184.1bn yen 29% 247.4bn yen 29% 254.5bn yen 33% 273.8bn yen 39% 284.1bn yen 42% 320.0bn yen 40% 143.2bn yen - 52.5bn yen 128.1bn yen 100.0bn yen 39% 4.7bn yen 80.0bn yen 48% 165.4bn yen 113.4bn yen 85.0bn yen 46% 72.0bn yen - 19.5bn yen 44.5bn yen - 35.4bn yen 80.0bn yen 48% 80.0bn yen 48% 209.1bn yen 98.8bn yen 85.0bn yen 50% 278.1bn yen 173.6bn yen 110.0bn yen 49% 412.0bn yen 272.2bn yen 155.0bn yen 47% *1: Total amount approved by the announcement date of financial results of respective years. FY2018(Projections) includes one-time dividend of 50bn yen *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. 32 Business Unit Profits (billions of yen) FY2017 Results FY2018 Projections Original (a) Revised (b) (b)-(a) Business Domain Domestic Non-Life TMNF NF Other *1 144.3 137.1 8.3 -1.0 161.0 155.0 8.0 -2.0 26.0 27.0 0.0 -2.0 -135.0 -128.0 -8.0 - Domestic Life TMNL 98.4 99.0 35.0 35.0 85.0 85.0 50.0 50.0 International Insurance North America Europe South & Central America Asia & Middle East Reinsurance International Non-Life*2 International Life 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 2.0 195.0 168.0 12.0 9.0 8.0 8.0 206.0 -1.0 30.0 31.0 2.0 4.0 -1.0 -1.0 36.0 -3.0 Financial & General 7.2 5.0 5.0 - *1: Excluding capital transactions *2: International Non-Life figures include some life insurance figures of composite overseas subsidiaries Copyright (c) 2018 Tokio Marine Holdings, Inc. 33 Reconciliation of Business Unit Profits and Adjusted Net Income -64.0 Domestic life Gains on sales difference of business- between MCEV related equities and financial +56.6 accounting (billions of yen) Domestic non-life 26.0 (8%) Domestic life 85.0 (27%) Business unit profits (FY2018 projections) International insurance 195.0 Financial /general -5.6 Others adjustment, etc. 5.0 298.0 Total \311.0B* Domestic life 85.0 International insurance 195.0 Domestic non-life 26.0 (63%) Business unit profits Adjusted net income *: Total of business profits of domestic non-life, domestic life, international insurance, financial/general businesses Copyright (c) 2018 Tokio Marine Holdings, Inc. 34 Adjusted Net Income and Business Unit Profit Adjusted Net Income (Group total) Enhancing transparency and comparability / Linking with shareholder returns ? Business Unit Profits Creating long-term corporate value ? For the Group total, “Adjusted Net Income” based on financial accounting is used from the perspective of enhancing transparency and comparability as well as linking with shareholder returns Profit indicator for the Group total as the base for calculating capital efficiency (adjusted ROE) and source of dividends For each business domain, “Business Unit Profits” is used from the perspective of accurately assessing corporate value including economic value, etc. for the purpose of longterm expansion Use MCEV (market-consistent embedded value) for domestic life, which reflects the economic value of the business more accurately ? ? <Main differences> Adjusted Net Income Domestic non-life Gains or losses on sales of business-related equities Provision for reserves of capital nature, etc. Domestic life Other than the above Amortization of goodwill and other intangible fixed assets Included Excluded Adjust the financial accounting basis net income Business Unit Profits Excluded Excluded Increase in MCEV during the current fiscal year Excluded Excluded Copyright (c) 2018 Tokio Marine Holdings, Inc. 35 Definition of Terms Definition of Adjusted Net Income / Adjusted Net Assets / Adjusted ROE Adjusted Net Income*1 = 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 Amortization of goodwill and other intangible fixed assets Gains or losses on sales or valuation of fixed assets and business investment equities Other extraordinary gains/losses, valuation allowances, etc. - Adjusted Net Assets *1 = Net assets (consolidated) + Catastrophe loss reserves + Contingency reserves + Price fluctuation reserves - Goodwill and other intangible fixed assets Adjusted ROE = Adjusted Adjusted Net Income ÷ Net Assets (average balance basis) Definition of Business Unit Profits ? Non-life insurance business Business Unit Profits*1 = Net income Provision for + catastrophe loss 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, business-related equities and business investment equities *1: Each adjustment is on an after-tax basis *2: Net income attributable to owners of the parent in the consolidated financial statements *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: 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) ? Life insurance business*5 Business Unit Profits*1 Increase in = EV*6 Capital transactions such as capital increase during the current fiscal year Other extraordinary gains/losses, valuation allowances, etc. ? Other businesses Net income determined in accordance with financial accounting principles Definition of Net Asset Value Net Asset Value *1 = *6: 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 Net assets (consolidated) + Catastrophe loss reserves + Contingency reserves + Price fluctuation reserves Goodwill and other intangible fixed assets - Planned Value of life distribution to shareholders + insurance policies in-force + Others Copyright (c) 2018 Tokio Marine Holdings, Inc. 36 Reconciliation of Adjusted Net Income / Adjusted Net Assets (billions of yen) ? Adjusted Net Income*1 FY2017 Results FY2018 Projections Original (a) FY2018 Projections Revised (b) (b)-(a) ? Adjusted Net Assets*1 FY2017 Results FY2018 Projections Original (a) FY2018 Projections Revised (b) (b)-(a) ? Adjusted ROE FY2017 Results FY2018 Projections Original (a) FY2018 Projections Revised (b) (b)-(a) Net income attributable to owners of the parent (consolidated) Provision for catastrophe loss reserves*2 284.1 320.0 320.0 - Net assets(consolidated) 3,805.1 3,896.9 3,758.9 -138.0 Net income(consolidated) 284.1 320.0 320.0 - +25.6 +4.0 -105.0 -109.0 Catastrophe loss reserves +836.5 +842.2 +733.6 -108.6 Net assets(consolidated)* Financial acccounting basis ROE * average balance basis 3,673.6 3,851.0 3,782.0 -69.0 Provision for contingency reserves*2 +3.3 +1.0 +1.0 Contingency reserves +39.6 +40.6 +41.1 +0.5 7.7% 8.3% 8.5% 0.2pt 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. +4.9 +5.0 +6.0 1.0 Price fluctuation reserves +72.2 +77.3 +78.3 +1.0 -5.5 +0.0 +2.0 2.0 Goodwill and other intangible fixed assets FY2017 Results FY2018 Projections Original (a) FY2018 Projections Revised (b) (b)-(a) -667.2 -691.9 -632.0 +59.9 Adjusted Net Income 341.4 396.0 298.0 -98.0 +1.5 +0.0 +2.0 2.0 Adjusted Net Assets +73.7 +67.0 +73.0 6.0 4,086.4 4,165.2 3,980.0 -185.2 Adjusted Net Assets* 3,949.4 4,120.0 4,030.0 -90.0 Adjusted ROE -46.4 -1.0 -1.0 * average balance basis 8.6% 9.6% 7.4% -2.2pt Adjusted Net Income 341.4 396.0 298.0 -98.0 *1: Each adjustment is on an after-tax basis *2: In case of reversal, it is subtracted from the equation *3: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities Copyright (c) 2018 Tokio Marine Holdings, Inc. 37 Reconciliation of Business Unit Profits ? Domestic Non-Life*1 (TMNF) FY2017 2Q Results FY2018 2Q Results YoY (billions of yen) FY2017 Results FY2018 Projections Original (a) FY2018 Projections Revised (b) (b)-(a) Net income for accounting purposes 112.4 -10.3 -122.7 Net income for accounting purposes 253.8 242.0 218.0 -24.0 Provision for catastrophe loss reserves *2 +24.7 -2.6 -27.4 Provision for catastrophe loss reserves *2 +23.0 +1.3 -100.3 -101.6 Provision for price fluctuation reserves *2 +1.8 +1.9 0.0 Provision for price fluctuation reserves *2 +3.8 +3.8 +3.9 0.1 Gains or losses on sales or valuation of ALM*3 bonds and interest rate swaps -2.6 +1.2 3.8 Gains or losses on sales or valuation of ALM*3 bonds and interest rate swaps -4.3 +0.1 +2.0 1.9 Gains or losses on sales or valuation of fixed assets, business-related equities and business investment equities -34.3 -44.2 -9.8 Gains or losses on sales or valuation of fixed assets, business-related equities and business investment equities -58.8 -55.8 -55.3 0.5 Intra-group dividends -52.4 -7.5 44.8 Intra-group dividends -92.9 -45.7 -48.0 -2.3 Other extraordinary gains/losses, valuation allowances, etc +14.7 +2.5 -12.2 Other extraordinary gains/losses, valuation allowances, etc +12.4 +9.3 +6.7 -2.6 Business Unit Profits 64.3 -59.0 -123.4 Business Unit Profits 137.1 155.0 27.0 -128.0 ? International Insurance*1 FY2017 2Q Results FY2018 2Q Results YoY FY2017 Results FY2018 Projections Original(a) FY2018 Projections Revised(b) (b)-(a) Overseas subsidiaries Net income for accounting purposes Difference with EV (Life) Adjustment of non-controlling interests Difference of subsidiaries covered Other adjustments*4 Business Unit Profits *5 63.9 82.3 18.4 Overseas subsidiaries Net income for accounting purposes Difference with EV (Life) Adjustment of non-controlling interests Difference of subsidiaries covered Other adjustments*4 Business Unit Profits 145.3 138.0 170.0 32.0 +1.6 -1.4 +6.0 +14.7 84.8 -2.6 -0.9 +0.3 +14.2 93.2 -4.2 +0.4 -5.6 -0.5 8.3 +0.5 -2.7 +1.3 -0.3 144.1 165.0 195.0 30.0 *1: Each adjustment is on an after-tax basis *2: In case of reversal, it is subtracted from the equation *3: ALM: Asset Liability Management. Excluded since it is counter balance of ALM related liabilities *4: Amortization of other intangible fixed assets, head office expenses, etc. *5: 2Q Results in FY2017: Before adjustment of losses related to hurricanes in North America, etc. Copyright (c) 2018 Tokio Marine Holdings, Inc. 38 Mid-Term Business Plan 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 39 Risk Amount (as of Sep. 30, 2018) ? ? Risk amount after diversification as of Sep. 30, 2018 is 2.6 trillion yen Risk diversification has been enhanced mainly through the ongoing expansion of business diversification and continuous sales of business-related equities ? Risk Before diversification After diversification ? Trends of premiums and risk \4.5Trillion Sustainable growth 4.9 Trillion yen Others 11% Measures for Risk Diversification Diversification Effect Net premiums written +Life insurance premiums International Insurance 21% Domestic Life 47% ■ International Insurance Further diversification associated with business expansion \3.3Trillion 14% Domestic Non-Life (Investment) ■ Domestic Life Control of interest rate risk Shift to protection-type products Risk 31% Domestic Non-Life (Underwriting) 53% 2.6 Trillion yen ■ Domestic Non-Life (Investment) Reduction of business-related equity risk \2.8Trillion Risk Disciplined control \2.5Trillion ■ Domestic Non-Life (Underwriting) Control of natural catastrophe risk 22% Sep. 30, 2018 ? 99.95%VaR, after tax basis ? “Others” includes Financial and General businesses, FX risk derived from net capital investment, etc. Copyright (c) 2018 Tokio Marine Holdings, Inc. 2015.3 2016.3 2017.3 2018.3 40 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% 99.5% 92.0% 89.8% 89.2% 2,128.3 103.3% 99.4% 93.1% 91.2% 89.6% 2,116.1 2,144.7 2,146.0 Fire 12.8% CALI 13.2% Specialty *2 + P.A. 21.6% Auto 49.6% 97.9% 97.2% 97.4% *2 : Categorized as “Others” in Summary of Financial Statements 1,912.1 1,813.4 1,736.0 1,966.3 1,869.6 2,036.7 1,742.7 1,783.0 ? 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 14.3% Auto repair shop 8.9% Full-time agents 27.4% Corporate 25.7% ? Statistics of combined ratio and loss ratio (private insurance E/I Basis) FY2011 Net E/I C/R*1 E/I loss ratio (Excluding natural catastrophes) Expense ratio 103.8% 69.8% 61.3% 34.0% FY2012 99.6% 66.8% 62.8% 32.8% FY2013 97.2% 65.0% 60.1% 32.2% FY2014 90.6% 58.5% 56.9% 32.2% FY2015 92.7% 60.1% 56.0% 32.6% FY2016 90.4% 57.7% 54.8% 32.7% FY2017 93.9% 61.4% 57.0% 32.5% FY2018 Projections Auto dealership 20.3% ? Market share Direct insurer*3 4.3% (excluding reinsurance companies) 101.3% 68.8% 57.0% 32.5% (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 Copyright (c) 2018 Tokio Marine Holdings, Inc. *3 : Sony, American home, AXA, Mitsui Direct, Saison, SBI, E.design, Sonpo 24 Source Insurance Statistics (Sonpo Toukeigo) *4: Market share of auto insurance: 6.5% 41 Basic Information (Domestic Non-Life 2) - TMNF ? Trend of underwriting results in auto *東京海上日動の基本情報 insurance (W/P basis combined ratio) 基本情報(国内損保②) <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% 102.9% 103.8% 102.6% <Measures to improve profitability> ? 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 ? 98.5% 98.5% 94.0% 91.5% 90.1% 89.4% 2016 90.3% 94.6% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2017 2018 Projections ? 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 - 94.8% 63.6% 95.1% 102.9% 70.7% Net E/I C/R* E/I L/R * : Net E/I C/R =E/I loss ratio + W/P expense ratio Copyright (c) 2018 Tokio Marine Holdings, Inc. 42 Basic Information (Domestic Life 1) - TMNL ? ? Achieve profit growth greatly exceeding the markets by developing product strategies focusing on “life insurance to protect one's living” in response to customer needs Control the interest rate risks, etc. appropriately by transforming product portfolio TMNL CAGR (market : +3.1%) (unit: ten thousands of policy) ? Growth potential of Tokio Marine & Nichido Life Proportion of third-sector products increased in the market 【The percentages of medical/cancer insurance in individual insurance/number of in-force policies】 +11.6% 438 470 500 530 555 570 FY2000 20.2% FY2017 35.4% 256 219 160 187 378 317 283 349 405 87 106 134 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ・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 ? Appropriately control interest rate risks The end of FY2016 Underwriting risk approx. 30% Investment (interest rate, etc.) risk approx. 70% Copyright (c) 2018 Tokio Marine Holdings, Inc. The end of FY2017 Underwriting risk approx. 40% Future Vision Underwriting risk approx. 60% Investment (interest rate, etc.) risk approx. 60% Investment (interest rate, etc.) risk approx. 40% 43 Basic Information (Domestic Life 2) - TMNL Major Products (Products lineup as of Nov. 2018) (whole life insurance/ term insurance/ variable insurance) Whole life insurance for longevity in case of death and nursing care (Premium Series) 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 Death insurance ?Long-life Support Whole Life ?Household Income Term Insurance 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 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 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) cancer insurance (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 ?Cancer Treatment Support ・Aruku Hoken Refund a portion of insurance premiums in response to health enhancement activities using sensing technology (wearable device) 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. 44 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 2018 Capture emerging market growth and further geographical diversification Acquired on 2018.8 Announced on 2018.9 Further Growth, Diversification and Capital Efficiency Strategic optimization of our global portfolio Divestment of Reinsurance Subsidiaries Established Material Presence in Lloyd's (UK) and the US Developed Footholds in Non-Japanese Business (~2000) Reinsurance business P&C Emerging Markets Acquired on 2008.3 Acquired on 2008.12 Acquired on 2012.5 Acquired on 2015.10 business development focused on Japanese clients Life Emerging Markets 45 Pursue balanced growth in both developed and emerging markets through “organic growth” and “strategic M&A” Copyright (c) 2018 Tokio Marine Holdings, Inc. 45 Basic Information (International Insurance 2) - Net Premiums Written ? Net premiums written in international insurance business 2,000 (billions of yen) 1,808.0 1,800 1,654.4 1,741.0 Life Reinsurance 1,600 1,400 1,302.6 1,304.0 1,200 1,074.5 North America 1,000 800 734.3 544.0 413.9 362.6 526.5 600 499.7 Europe*2 South & Central America 400 319.5 240.2 118.7 0 2004 2005 118.1 2006 119.1 2007 114.1 200 Asia & Middle East *2 2008 91.0 2009 92.1 2010 81.4 2011 77.7 2012 86.5 2013 105.3 2014 120.5 2015 120.6 2016 116.4 2017 113.0 FX*1 USD/JPY 104.2 2018 (Projections) 113.5 *1: FX rates are as of Dec. 31 of each year (FX rate for FY2018 Projections is as of end- Sep, 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. 46 Basic Information (International Insurance 3) - FY2018 Projections by regions FY2017 Net Premiums Written (billions of yen) FY2018 Projections FY2018 Projections vs FY2017 Actual Actual ① Normalized basis*5 ② 985.0 338.0 238.0 334.0 158.0 139.0 139.0 138.0 1,559.0 89.0 Original ③ Revised ④ Normalized basis*5 ⑤ 1,054.0 356.0 252.0 372.0 159.0 148.0 155.0 131.0 1,647.0 95.0 YoY Changes ④-① 79.9 20.2 16.3 43.2 ▲ 2.9 ▲ 18.0 10.0 ▲ 7.2 61.7 5.2 YoY % ④÷① 8% 6% 6% 12% ▲2% ▲12% 7% ▲5% 4% 6% Normalized basis Group Asset Management Ongoing efforts to reduce business-related equities ? Book value of business-related equities declined to 39% from Mar. 31, 2002 through steady action ? Sold total amount of approx. \2.1T*1 since FY2002 ? In this 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 ? Previous mid-term business plan (2015-2017) 100 82 82 57 42 39 Plan : Sell more than \100.0B every year Results: Sold more than \100.0B every year FY 2015 2016 2017 3 years total Sales amount \122.0B \117.0B \108.0B \347.0B 2002.3 2007.3 2012.3 2017.3 2018.9 ? Mid-term business plan (2018-2020) Plan : Continue to sell more than \100.0B every year *2: Figure at the end of FY2002 is set at index value of 100 Copyright (c) 2018 Tokio Marine Holdings, Inc. 48 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 ? 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 TMNF Total Assets \9.8T (as of end of Sep. 2018) TMNL Total Assets \7.2T (as of end of Sep. 2018) Assets backing insurance liabilities 23% 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 yen-denominated fixed income assets under strict ALM investments Assets in deposittype insurance 16% accounts Business-related equities Assets backing insurance liabilities Mainly yen-denominated fixed income assets Appropriately control interest rate risks of life insurance liability Continue to reduce holdings 28% 92% Investments in subsidiaries and affiliates, etc. Others 22% Assets in separate accounts 2% 6% Others Short-term investments, etc. Real estate for own use, 12% non-investment assets, etc. Copyright (c) 2018 Tokio Marine Holdings, Inc. 49 ESG (Sustainably Enhancing Corporate Value) ~ External Evaluation~ ? Tokio Marine Group has promoted ESG (Environment, Social, and Governance) through business activities, etc. and acquired high recognitions and got commendations in Japan and overseas SRI/ESG indices including Tokio Marine Group Japan ? Overseas Overseas Group companies were awarded : - “Best Places to Work in Insurance” in the U.S. - “Best Workplaces for Women” in Brazil ? Five Group companies received recognition ? Selected as a "Nadeshiko under the 2018 Certified Health and Brand" in FY2017, following Productivity Management Outstanding FY2013 and FY2015 Organizations Recognition Program in the large enterprise category (white 500)“, and also we are selected as a “2018 Health & Productivity Stock” Disclosure ? Received “Best Resilience Award” and “Excellent Resilience Award” at the Japan Resilience Award 2018 ? Copyright (c) 2018 Tokio Marine Holdings, Inc. Received Ministerial ? “Sustainability Report 2017” won ? “Integrated Annual Report 2017” Commendation as Model Example “Excellent Reliability Report Awards of received an Award for Excellence of Financial Institution Initiatives the 21st Environmental at the 20th Nikkei Annual Report for Revitalizing Regional Communication awards” as a excellent Awards 50 Economies environmental report ESG (Sustainably Enhancing Corporate Value) ~Promoting ESG~ ? ? Participate in international initiatives and conduct surveys, researches, and proposal making activities in order to contribute to a safe, secure and sustainable future Also, actively work on SDGs and contribute to the resolution of social issues by taking advantage of the expertise of insurance and risk consulting Our Group’s Initiatives UN Global Compact ? ? Signed and expressed support for the UNGC in 2005 Participated in "Training for Tomorrow’s Management", "SDGs Working Group", and "Disaster Risk Reduction Working Group“ in FY2017 United Nations Environment Programme(UNEP)/ Finance Initiative ? ? Participated in the insurance committee as a representative director of Asia region In Dec. 2017, UNEP FI Asia Pacific Roundtable was held in Tokyo. Participated in the conference focusing on task force on Climaterelated Financial Disclosures (TCFD) and insurance Principle for Responsible Investment ? Our Group companies, Tokio Marine & Nichido, Tokio Marine Asset Management and Tokio Marine Capital agreed with PRI and signed the principles UNISDR Private Sector Alliance for Disaster Resilient Societies Principles for Sustainable Insurance ? ? Signed in 2012 as a drafting committee member Joined in PSI TCFD Insurer Pilot Working Group from FY2018 Principles For Financial Action for the 21 st century ClimateWise CDP IDF Eco First Japan Sustainable Investment Forum The Geneva Association Asia-Pacific Financial Forum Task Force on Climaterelated Financial Disclosure Forum for Integrated Corporate Disclosure and ESG Dialogue COOL CHOICE Copyright (c) 2018 Tokio Marine Holdings, Inc. 51 ESG (Sustainably Enhancing Corporate Value) ~ Environment~ ? Actively contribute to environmental protection, biodiversity preservation, and creation of environmental values through our business ■ Creating a green society through insurance business ? Provide drone insurance to encourage broad use of drone that are environmental friendly ? Provide special insurance and services for solar power / geothermal power generation companies to contribute to the broader adoption of clean energy Copyright (c) 2018 Tokio Marine Holdings, Inc. Examples of our approaches to environment Contribution to sustainable environment ? Contribute to the protection of natural environment by offering Environmental liability Insurance ? Promote web-based insurance contracts (clauses) and omission of issuing insurance policies ■ Creating a green society through financial business Performance of the renewable energy fund * (as of the end of Sep. 2018) ? Provide funds* that invest in renewable energy generation facilities to facilitate the introduction of clean energy The amount of commitment: approx. ? Offer “Low-carbon Japanese Equity Fund” comprising shares of corporations, actively reducing CO2 emissions Constructions: 44 billion yen 30 Plants *: TM Japan solar energy fund 2012, 2013, 2014, TM Japan renewable energy fund 2017 ■ Initiatives to reduce environmental footprint “Carbon neutral” for 5 consecutive years” (Thousand tons) ? Achieve “carbon neutral” through planting mangroves and utilizing natural energy as well as working proactively to reduce CO2 emissions 2013 2014 2015 2016 CO2 emissions 163 115 2017 CO2 fixation/reduction effects 52 ESG (Sustainably Enhancing Corporate Value) ~ Social~ ? Contribute to solve social issues by providing safety and security to customers and society through our business ■ Response to large natural disasters ? Stay close to our customers in times of need and support the reconstruction of disaster areas and livelihoods Contribute to solve social issues through business ? Build a structure to concentrate on responding to victims in order to provide the earliest possible claims payment as “safety” <Claims service structure set up after large natural disasters > Nationwide claims service offices Claims service system foundation Head office of disaster management task force Real time, paper less information provision Copyright (c) 2018 Tokio Marine Holdings, Inc. Examples of our approaches to society Accident assessment Head office of disaster management task force Backup office Local response headquarters Establishment and operation of satellite offices Loading relief supplies onto a truck Check on the damage situation of customers ■ Providing insurance products for tackling social issues ? Developed the industry's first cover that responds to the improvement of autonomous driving system ? Offer services utilizing our original drive recorder device aiming for a safe and secure car life ? Contribute to the development of agriculture and resolution of poverty problems by providing a low-cost product for farmers in India 53 ESG (Sustainably Enhancing Corporate Value) ~ Social~ ■ Promoting health & productivity management ? Implement PDCA steadily in the aim of employees’ health promotion, revitalizing organization, and enhancing corporate value. Health & productivity management supporting companies Contribute to solve social issues through business FY2018 approx. * Based on our survey 1,000 companies ? Support our customers’ health & productivity management Copyright (c) 2018 Tokio Marine Holdings, Inc. Examples of our approaches to society by leveraging the know-how accumulated in the Group ■ Support regional revitalization ? Support to stabilize SME businesses through local governments, chambers of commerce, commerce and industry association, etc. Companies TMNF assisted the formulation of BCPs A cumulative total of approx. ? Active support to both inbound business and overseas expansion of local companies 1,500 companies * FY2016~FY2017 (Based on our survey) ■ Promotion of active and equal participation Trend of female managers (TMNF) ? Develop various systems that will promote active and equal participation and provide chances for female employees ? Appoint female managers and develop management candidates ■ Realization of an inclusive society / Development of future generations For 2018, as of April 1 ? Conduct Disaster Prevention Lessons and seminars to enhance ? disaster mitigation awareness Hold Dementia Supporters Training Programs and provide covers that support people with dementia Support the Japanese Para-Sports Association, the Japan Inclusive Football Federation, and the Special Olympics Nippon TMNF Support Tokyo 2020 as a Gold Partner (non-life insurance) of Olympic and Paralympic Games Tokyo 2020 ? 54 ESG (Sustainably Enhancing Corporate Value) ~ Governance~ ? ? ? 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 Officer Group chief officers Dept. in charge ? Focus on the Group management ? Initiatives for spreading our Group culture Domestic Non-life Domestic Life International Insurance Financial and General Committees Top management both in Japan and overseas discuss various Group management issues ? Create synergies across the group and roll out best practice ERM Committee International Executive Committee(IEC) Global Retention Strategy Committee(GRSC) Global Investment Strategy Committee(GISC) Global Information Technology Committee(GITC) CFO Financial Corporate Planning Risk Management Strategy and Synergy Strategy and Synergy Global Retention Strategy Financial Planning Human Resources IT Planning CRO Risk CSSO Strategy and Synergy CDO Digital CRSO Retention Strategy ? Converge knowledge of the Group to solve issues across the Group ? Involvement in the Group management by overseas talent CIO Investment CHRO Human Resources CITO Information Technology CISO Information Security Copyright (c) 2018 Tokio Marine Holdings, Inc. IT Planning 55 ESG (Sustainably Enhancing Corporate Value) ~ Governance~ ? Strengthen global governance through promoting diversity and spreading core identity ■ Globalized and strengthened Group Chief Officer positions ? ■ Enhancement of committees International top management has taken the posts of Group Co-CRSO and Group Co-CIO since April 2016 Established Group CCO, CSSO, CDO, and CISO ? ? Realize optimal decision-making while considering from multiple perspectives by utilizing experts in Tokio Marine Group Copyright (c) 2018 Tokio Marine Holdings, Inc. Diversity Core identity Establish a strong governance CRSO and Co-CRSO lead underwriting/retention strategy CIO and Co-CIO lead asset management ■ Spreading “To Be a Good Company” ? ? Group CEO conducted townhall meetings with approx.18,000 Group employees. Further strengthen the Group governance by promoting the penetration of our Group culture through the meetings The culture & value survey (75% of approx. 40,000 employees answered) Passion toward the Group 4.1 points out of 5 (Being proud of working for Tokio Marine Group) Townhall meeting in Malaysia 56 Impact of FX rate change on the Group’s Financial Results ? Main impact in the event of 1 yen appreciation *1 (compared with the revised projections) Iimpact 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: approx. -\1.7B (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) subsidiaries: ? Decrease in profit from local subsidiaries approx. -\1.2B ? Decrease in amortization of intangible fixed assets and goodwill ? Change in foreign currency denominated approx. +\1.2B ? Change in foreign currency denominated approx. +\1.2B outstanding claims reserves and derivatives at TMNF: Total: almost no impact outstanding claims reserves and derivatives at TMNF: Total: approx. -\0.5B *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) Sep. 30, 2018 Dec. 31, 2018 Mar. 31, 2019 JPY 113.57 Overseas subsidiaries FY2018 Revised Projections Change from the revised projections FY2018 Results TMNF FY2018 Revised Projections Change from the revised projections FY2018 Results Copyright (c) 2018 Tokio Marine Holdings, Inc. 57 MEMO Copyright (c) 2018 Tokio Marine Holdings, Inc. Disclaimer These presentation materials include business projections and forecasts relating to expected financial and operating results of Tokio Marine Holdings and certain of its affiliates in current and future periods. All such forward looking information is based on information and assumptions available to Tokio Marine Holdings when the materials were prepared and is subject to a range of inherent risks and uncertainties. Actual results may vary materially from those estimated, anticipated, expected or projected in the accompanying materials and no assurances can be given that any such forward looking information will prove to have been accurate. Investors are cautioned not to place undue reliance on forward looking statements in these materials. Tokio Marine Holdings undertakes no obligation to update or revise any of this forward looking information, whether as a result of new information, recent or future developments, or otherwise. These presentation materials do not constitute an offering of securities in any jurisdiction. To the extent distribution of these presentation materials or the information included herein is restricted by law, persons receiving these materials must inform themselves of and observe any such restrictions. For further information... Investor Relations Group, Corporate Planning Dept. Tokio Marine Holdings, Inc. URL : http://www.tokiomarinehd.com/en/inquiry/ TEL : +81-3-3285-0350 20181126 0:34:38.9 0:35:16.9 0:46:32.1 False 0:55:30.9 False 1:01:52.8 1:08:43.1 1:14:56.9 1:22:15.6 Tsuyoshi Nagano President and Group CEO