MS& Insurance : Handouts "Growth Strategy for Overseas Businesses - MS Amlin Initiatives -"

FY 2022 IR Day

Growth Strategy for Overseas Businesses - MS Amlin Initiatives -

MS & AD Holdings

Tamaki Kawate, Executive Officer

Tuesday, October 4, 2022

Impact of losses related to Russia-Ukraine

MS Amlin 1Q 2022 Results and Full Year Forecast

 Due to losses related to Russia-Ukraine and impairment loss of investment assets following rapid market fluctuations, net income for 1st quarter appears to be on a low progress, decreased by 44 million pounds from the previous quarter to -93 million pounds, but generally as planned.

 Losses related to Russia-Ukraine has been within our conservative estimate (124 million pounds) in early FY2022.

 Investment result should be watched carefully, but showed the better results than other Lloyd's syndicates due to risk control measures.

MS Amlin 1Q Financial Result Summary

			million ￡
	FY2022
	1Q	YoY change
Net premiums written	1,398	125
Underwriting profit/loss	-66	-25
Investment profit/loss	-21	-35
Net income after tax	-93		-44
EI combined ratio	110.3%		3.9pp
(exc. Russi-Ukraine related loss)	95.5%		-10.9pp

		1Q		full-year
			forecast
Incurred loss	60	IBNR for property	60
impact		insurance, etc., mainly
		covering war risks
Preparing for	35	Reserves to prepare for	64
Uncertainty		uncertainty

Current situation:

Even the situation has last long, the loss has been within our estimate planned in early FY2022

We review reserves for each class. But there is no sign of loss expansion

Asset management

Achieved a combined ratio level that	Real estates9%	Others
ensures stable profitexcluding the
1%	Cash and
impact of losses related to Russia-
Equities6%		Deposits,etc
Ukraine
	33%
	Total assets under
Bond funds※33% management
		6,359 million ￡
	(987.2 billion yen)
* Bond funds are funds whose basic strategy is to sell	(As of December 2021)
high-priced bonds and purchase low-priced bonds.
We will take credit risks while controlling losses		Bonds18%
caused by overall rises in interest rates

	(million ￡)
First Quarter
Interest & dividend	24
income
Capital gains and	-45
losses, etc.
Total	-21
Asset management	-0.3%
yield

• A preference for BZD and restrained bond duration resulted in a relatively minor loss from rising interest rates
• Stock hedging program partially mitigates the impact of falling stock prices

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1

Profit Expansion Plan during the Medium-Term Management Plan

Group Adjusted Profit Plan

Overall international businesses

MS Amlin profit plan

Expansion of profits

(billion yen)

About

through

business investments

18.0

125.0

(billion yen)

Capturing

growth in Asian

markets,

etc. 6.0

39.0

MS Amlin profit growth

31.0

44.0

Russia-Ukraine

Related Impact

Incidental Factors for FY2021

(Excess of overseas

4.0

natural disasters)

-5.0

26.0

Incidental Factors for FY2021

34.3

(Excess of overseas natural

disasters)

(Fiscal year)

2021

2022

2023

2025

Result

Forecast

Target

Target

2021

Increase factor

2025 (Fiscal year)

Result

Target

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Direction of MS Amlin's growth

Achievement of midium term management plan "Vision 2021"

AUL :Non-cat risk improvement largely completed

AAG ※ :Response to losses in previous years completed

AISE : Developed the structures which can steadly produce the profit

Going

Forward

Dissolved cross-organization management between MS Amlin companies

following the reorganization of international business in Jan 2020,

We will pursue autonomous growth by leveraging each company's strengths

AUL

AAG ※

AISE

Pursue growth by leveraging the MS Amlin brand's name recognition and contacts, as well as its expertise and know-how, and aim to become one of the top syndicate in both scale and profitability at Lloyd's.

Restructure the portfolio centering mid-term profitability judgement on each client, and secure a presence as a global reinsurer and a stable return of 10% ROE.

Pursue Topline growth and build steadly profit foundation through sales expansion in marine insurance, where AISE has strengths, and niche areas, where AISE has significant expertise.

※In Sep 2022, New brand "MS Reinsurance" has been introduced and used thereafter.

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AUL portfolio improvement

• AUL reduced its exposure to natural catastrophe risks and restructured its portfolio to improve profitability.
• The earnings structure has been steadily improving due to the withdrawal from unprofitable lines of business, initiatives such as rate increases, and cost reductions through operational efficiency.

Reduction in risk amount of natural catstrophe

• We continue to reduce the risk amount of natural catastrophe and improve the portfolio.
• Model losses (net) assuming a revisit of Hurricane Ida in 2021 is about 65% lower than 2018.

Portfolio improvement in non-cat lines

• The profitability of non-cat risks has improved significantly.
• Aim to expand and optimize the underwriting profit by building a portfolio that can absorb the volatility caused by natural catastrophe losses through selective underwriting.

Net losses in case of Hurricane Ida's revisit

(million US dollars)

Down 65% from 2018

Net loss ratio of non-cat lines

57

62% 62%

Down -12pp from 2018

47

37	Down 23%
	from 2021

25

24

19

2018Jan 2019Jan 2020Jan 2021Jan 2022Jan 2022Jun

(Year and month)

※Net estimated loss under the treaty for natural catastrophe in North America

58%

				53%
			50%
		Excluding Russia-Ukraine	46%
		related losses estimation
2018	2019	2020	2021	2022
(Fiscal year)	※excluding the impact of COVID19	(Forecast）

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