Sompo : Integrated Annual Report 2021

2021 port R l e egrauInAnet d a

26-1,Nishi-Shinjuku1-chome,Shinjuku-ku,

Tokyo 160-8338, Japan

URL: https://www.sompo-hd.com/en/

21.10 501494 -0800

SOMPO Holdings

Integrated Annual Report

2021

Group Management Philosophy

We will at all times carefully consider the interests of our customers when making decisions that shape our business. We will strive to contribute to the security, health, and wellbeing of our customers and society as a whole by providing insurance and related services of the highest quality possible.

Brand Slogan

A Theme Park for Security,

Health & Wellbeing

Sompo Group intends to give visible form to the abstract concepts of safety, security, and health, and to realize a vision of the Group that solves social problems through its businesses and contributes to society as a presence that continuously supports the lives and happiness of its customers by appropriate use of advanced technologies, including digital technologies, while remaining close to the lives of "people," who are the heart of society. We therefore adopted this Brand Slogan so that the Sompo Group can be united in our efforts to further accelerate our transformation into

"A Theme Park for Security, Health & Wellbeing."

SOMPO's Purpose

With "A Theme Park for Security, Health and Wellbeing," create a society in which every person can live a healthy, prosperous and happy life in one's own way.

Social value delivered by SOMPO

• Protect people from future risks facing the society
• Create a future society for healthy and happy lives
• Foster the ability to change the future society with diverse talents and connections

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Integrated Annual Report 2021

This report presents the Sompo Group's past and present to clearly demonstrate our track record and strengths, which we use to inform all stakeholders about the Sompo Group's future vision in an easy-to-understand manner.

130-year-long track record of solving social challenges

We have hitherto expanded and continuously grown our business operations over our 130-year-long history by providing solutions to various challenges in society. By continuing to assume a social infrastructure role with, for example, our insurance and nursing care businesses, the trust we have built and the responsibility we have shouldered as a public institution of society now form the cornerstone of the Sompo Group.

Embracing the challenge of transformation to realize "A Theme Park for Security, Health & Wellbeing"

Under our previous Mid-Term Management Plan (FY2016-2020), we went about establishing and strengthening our competitive advantage in each of our busi- nesses, addressed key challenges, such as executing M&As, rolling out a digital strategy, and promoting diversity in our workforce, and made changes to our business portfolio. With social challenges as a starting point, we are accelerating our transformation toward the realization of "A Theme Park for Security, Health & Wellbeing" that provides various values beyond the framework of insurance by leveraging the strengths of the Sompo Group.

Contributing to the SDGs and boosting

earnings power through partnerships centering

on our Real Data Platform (RDP)

In the Mid-Term Management Plan that kicked off this fiscal year, we have set our sights on bringing to bear our Group Management Philosophy and purpose as an organization. We therefore intend to hone our problem-solving capabilities by merging our long-standing track record of solving social challenges, as well as the strengths of the Sompo Group, with a new Real Data Platform (RDP).

Armed with these capabilities, the Sompo Group will continue to deliver solutions for creating new value as a platform provider for partnerships with numerous stakeholders and seek to solve the social challenges outlined in the SDGs and boost earnings power.

Disclaimer

The information presented in this report includes future forecasts based mainly on the Sompo Group's management policies and plans. They are based on information available at the time of publishing. Accordingly, actual earnings and activity plans may be affected by the future operating environment.

Contents
	A Message from the Group CEO...............................................................	04
	SOMPO's Purpose....................................................................................	14
PURPOSE	SOMPO's Strength 1 Trust and responsibility with 130 years of history......	16
What kind of value do we provide	SOMPO's Strength 2 Diversity of business, talent and network.................	18
and what kind of society are we
	SOMPO's Strength 3 Strong problem-solving abilities...............................	20
aiming for?
	Social Challenges Facing SOMPO.............................................................	22
	Social Value Delivered by SOMPO.............................................................	23
	Value Creation Process.............................................................................	26
	Financial and Pre-Financial Highlights........................................................	28
	History of Strategy....................................................................................	32
STRATEGY	Initiatives of each business under the previous Mid-Term
How should we create value?	Management Plan.....................................................................................	34
	New Mid-Term Management Plan.............................................................	36
	A tripartite discussion: SDGs in Business Management for
	fulfilling the SOMPO's Purpose..................................................................	52
	Financial capital: CFO Message.................................................................	58
CAPITALS	Social and relationship capital...................................................................	62
SOMPO's various capital	Human capital...........................................................................................	68
as a source of competitiveness
	Intellectual capital......................................................................................	73
	Natural capital...........................................................................................	76
	Corporate Governance..............................................................................	82
GOVERNANCE	Supervisory Framework.............................................................................	84
Systems underpinning value	Business Execution Framework.................................................................	90
creation
	Succession Planning.................................................................................	94
	Policies for Appointment of Directors and Executive Officers.....................	95
	Executive compensation structure.............................................................	96
	Enterprise Risk Management (ERM)........................................................	101
	Group Internal Controls...........................................................................	104
	Directors.................................................................................................	106
	Directors and Executive Officers..............................................................	108
	Sustainability Promotion Structure...........................................................	112
	Information Disclosure.............................................................................	113
	Industry Data...........................................................................................	116
BUSINESS	At a Glance.............................................................................................	122
SOMPO's businesses that realize	Domestic P&C Insurance Business.........................................................	124
value creation
	Overseas Insurance and Reinsurance Business.......................................	130
	Domestic Life Insurance Business...........................................................	134
	Nursing Care & Seniors Business............................................................	138
	Digital Business.......................................................................................	142
	Healthcare Business................................................................................	144
	Strategic Operating Companies..............................................................	146
	Financial Section.....................................................................................	147
DATA	Corporate Overview................................................................................	240
Financial Section, Corporate Data	Share and Shareholder Information.........................................................	241
	The Company, Subsidiaries, and Affiliates................................................	243
	External Recognition...............................................................................	246
	Governance member endorsement of the Integrated
	Annual Report.........................................................................................	247

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A Message from the Group CEO

Delivering SOMPO's Purpose:

Start of a new Mid-Term Management Plan (FY2021-2023)

Introduction

Following last year, the novel coronavirus (COVID-19) disease continues to have an overwhelming influence on people's lives around the world. I would like to express my deepest sympathy to everyone who has been infect- ed, and my sincere respect and gratitude to all medical, healthcare and other frontline workers who are making strenuous efforts every day despite the risk of infection. Also in the Sompo group, many employees are working in various frontlines every day. Especially in frontline nursing care where challenging conditions continue, positive minded employees with strong sense of mission literally use their bodies to protect the happiness and meet expectations of people needing support. I feel proud of such colleagues and renewed my determination to be responsible for contributing to society as a Group even in the current difficult environment.

Huge paradigm shifts are occurring in the mind and behavior of conventional society and people. The increasing frequency and severity of natural disasters due to climate change and the prolonged low interest rate environment, which have substantial effects on the Group's insurance business, are already the new normal.

Kengo Sakurada

Group CEO, Director,

President and Representative Executive Officer

Sompo Holdings, Inc.

In addition, the serious problem of low birthrate and population aging in Japan facing the nursing care and other businesses, is indeed a reality from which we cannot turn our eyes away. Our daily lives have also changed. The wide use of remote work and digital transformation (DX), which were expected to occur sometime in the near future, have advanced rapidly, and new work and life styles are becoming rooted in the Group as well. I believe that these trends are essentially irreversible. The Group will continue to take on the challenge of realizing "A Theme Park for Security, Health & Wellbeing" which has been our goal, while proactively making change happen and adopting ourselves to change rather than being reactive to it. A new fiscal year has started and we announced "SOMPO's Purpose" and a new 3-year Mid- Term Management Plan. We will work to steadily grow existing businesses and expand new businesses in the digital domain, etc. and surely implement measures to create further value and enhance corporate value.

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A Message from the Group CEO

"A Theme Park for Security, Health & Wellbeing" and "SOMPO's Purpose"

SOMPO's strengths

I have many opportunities to discuss with diverse people in Japan and abroad, including political and business leaders, executives of startups, and students, at the World Economic Forum annual meetings (Davos) and through activities as Executive Director of the Japan Association of Corporate Executives (Keizai Doyukai). And I strongly feel that the tide of multi-stakeholder capitalism, sustainability, and digitalization, which are big waves engulfing society, lose no time. The society became unworkable with conventional capitalism, and companies have to rethink the pursuit of short-term profits and management biased toward shareholder supremacy. I also think that the management approach represented by the SDGs, which is long-term oriented, attentive to all stake- holders, and enhances diversity and sustainability, is now a prerequisite. The Group has also decided to make further advances in living together with society and collaboration with stakeholders, which we have been working on over many years through the insurance and nursing care business-

es, incorporate priority issues (materiality) in management framework, and strategically implement these as the Group's business foundation. And the potential of digital technologies that the Group has been focusing on is clearly accelerating changes in the world, and traditional financial businesses are no exception of being affected. The current situation is

on such common values which challenges they address and how they solve them to contribute to society. However, this is not a new realization for the Group, but rather a path that we have been following. I am convinced again that our management strategy aimed at realizing "A Theme Park for Security, Health & Wellbeing" based on the management philosophy of making all value judgments from the customer's perspective and providing the highest quality services that contribute

to the security, health, and wellbeing of customers was not wrong. Even in the current difficult environment, the Group aims to maintain a robust business foundation and continue to grow with solid strategies.

In light of the external environment, "SOMPO's Purpose" was newly established to communicate both internally and externally in an easy to understand manner the approach to what the Group aspires to accomplish in the long term, such as in the next 20 and 50 years, which challenges we will address, and what kind of value we should aim to deliver by returning to the core of business management. SOMPO's Purpose is to create a society in which every person can live a healthy, prosperous and happy life in one's own way with "A Theme Park for Security, Health & Well-being." Specifically, we will protect people from future risks facing the society, create a future the society for healthy and happy

In conducting business, I am strongly aware of "fluidity and immutability," that is, there are essential things that should not be changed, and things that should be changed many times. As an insurance group with a history of 130 years, we will fulfill our role of supporting customers in "unforeseen circumstances." As a nursing care provider, we will fulfill our role of "always" supporting all users of facilities. Thus, continuously protecting everyday lives which matter to people through business activity as a social infrastructure, while addressing various challenges with diverse services and talent delivering these is an important DNA and strength of SOMPO. I believe that this attitude will not change in the future and should not be changed. The roles and responsibilities of Sompo are large in the "new normal" world where changes in the natural environment threaten people's daily lives and require adaptation to new risks, such as cyber risks, and in the "low birthrate and aging society" that all countries in the world will experience starting with Japan. In formulating the new Mid-Term Management Plan announced recently, management discussions were held many times being acutely aware of this.

And what will change is the future of SOMPO. We will thoroughly think through a growth story, such as how to deliver "SOMPO's Purpose" by making the most of our strengths, and how to engage with society with what kind of partners, determine what choices we need to make and take actions.

entirely different from a few years ago. As I have been saying, I believe that the unpredictable era of VUCA will continue and that the business environment surrounding the Group will

lives, and foster the ability to change the future society with diverse talents and connections. We decided to place "SOMPO's Purpose" at the core of business management

SOMPO's value creation using Real Data Platform

continue to change and transform at a tremendous speed. Amid the COVID-19 pandemic, a 100-year historic disas-

ter, people's desire for "security," "health," and "wellbeing" that everyone in the world has as a basic desire, and hope for the realization of a society that ensures these have become even stronger. Companies in the future will be asked based

and aim for sustainable growth as a Group.

The Group is able to obtain various data from the frontline on a daily basis through the insurance and nursing care busi- nesses. The most important feature of the data is that it is an accumulation of real information related to the behavior and daily life of customers, residents and users, in other words, "real data." This real data with clear sources obtained from the actual society and people's daily lives is necessary for

addressing social challenges, and the real data is a "vast repository" for realizing the extremely unique and new business potential of Sompo. The Real Data Platform (hereinafter "RDP") is a unique system of Sompo to create new solutions that contribute to security, health, and wellbeing by integrating and analyzing the extensive and vast amount of real data as the following examples demonstrate. I think that RDP is

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