Tokio Marine : PDF (5.1MB)

Tokio Marine Group

Investor Day

November 26, 2020

Today's Schedule and Speakers

I	Group Strategy
	(13:30－14:30 JST)

II	Domestic Business Strategy
	(14:40－15:25 JST)

• International Business Strategy

(15:35－16:20 JST)

• Asset Management Strategy

(16:30－17:00 JST)

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Group CEO	Group CFO
Group CCO
Satoru Komiya	Takayuki Yuasa

President & CEO	President & CEO
Tokio Marine &	Tokio Marine &
Nichido	Nichido Life
Shinichi Hirose	Katsumi Nakazato

Co-Head of International Business

Akira Harashima

Group CIO

Yoshinari Endo

1

I

Group Strategy

Group CEO	Satoru Komiya
Group CFO	Takayuki Yuasa

Copyright (c) 2020 Tokio Marine Holdings, Inc.

2

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Our Goal and Strategy

Continue the existing management strategy and turn the growth cycle at a fast and planned pace heading towards our goal

Our Goal

A global insurance group delivering attractive value to all stakeholders

	Stable double-digit ROE				High-level shareholder return
					Capital adjustment
		Capital				Shareholder return
	Organic growth
	generation
			Business		Dividend increase
Sustain stable profit base in Japan
		Flexible capital level adjustment
	Enhance specialty in		investment

developed countries
Capture growth potential in	Disciplined and strategic M&A
emerging countries

Disciplined risk taking

+

IN

Portfolio review

Strategic capital release

Appropriate risk control

OUT

ESG for sustainable growth

Copyright (c) 2020 Tokio Marine Holdings, Inc.

3

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Strategic Portfolio Review

Constantly review portfolio to further improve capital efficiency

IN

(Pure, Caixa, etc.)

Forward-looking portfolio review

Disciplined and strategic M&A, risk taking

Actual Profit	Volatility
Growth Potential
	Strategic Significance
ROR
of Business

	Generate Capital / Fund
	OUT
	(TMR, Bail USA, Egyptian Life, etc.)
Copyright (c) 2020 Tokio Marine Holdings, Inc.	4

(Adjusted ROE)

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

For Further Growth

Enhance our actual capabilities with steady execution of business strategy towards our goal

[Adjusted Net Income/Adjusted ROE (normalized basis)*]

12.	M&A
(Billions of JPY)
500.0	Shorter time
frame
420	Organic
growth
400.0

300.0

200.0 4.8%

114.1

100.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

(Projection)

growth

Further

Our Goal

M&A

Allocating capital for

M&A will enable further growth and shorter time frame

Medium- to long-term

target (Milestones)

Over ¥500 bn (Adjusted net income)

Around 12％

Organic growth

Medium- to long-term target can be achieved with organic growth

• Hardening overseas market
• Growth potential of Pure and Caixa
• Profitability improvement of fire insurance and expansion of specialty insurance

Copyright (c) 2020 Tokio Marine Holdings, Inc.	*: Natural catastrophes are adjusted to 2020 original projection level, and the impact of reinstatement premiums is excluded for 2018 and 2019.	5
2020 figures exclude the impact of COVID-19.

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Portfolio Diversification

Appropriately control risk and realize sustainable growth

Risk diversification

FY2019 Diversification effects 48%

			Risk after diversification
	12%	24%			¥2.7 trillion
	Before
24% ¥5.2 trillion
			■ Domestic non-life
		24%
					(underwriting)
	16%
					Control of nat-cat risk
						■ Domestic non-life
						(investment)
						Reduction of business-related
FY2014 Diversification effects 44%
		equities risk
		■ Domestic life
						Control of interest rate risks
						Shift to protection-type products
	10%	21%
					■ International insurance
14%
	Before					Diversification improvements
	¥5.0 trillion				with business expansion
21%		33%

Risk after diversification ¥2.8 trillion

• Others: Financial and General businesses, FX risk derived from net capital investments, etc.

Trends of premiums and risks*

¥4.5 Sustainable trillion growth

¥3.3	Net premiums written + Life insurance premiums
trillion

Risk

¥2.8	Disciplined
control
trillion

¥2.7

trillion

2014

2015

2016

2017

2018

2019

Copyright (c) 2020 Tokio Marine Holdings, Inc.	*: ESR risk (99.95% VaR, after tax basis)	6

Limited the impact on income despite large natural catastrophes

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Stabilization of Business Platform with Global Risk Diversification

Control impact on income from natural catastrophes and COVID-19 with risk diversification

Impact of natural catastrophes

 Geographical and business diversification steadily controls impact of natural catastrophes on income

400.0

Adjusted			FY14-16				FY17-19
300.0		Small natural
		catastrophes, large
		adjusted net income
200.0
net
				FY11-13
income
100.0				Large natural catastrophes,
				large impact on income
(*1)
0	40.0	80.0	120.0	160.0 (billions of JPY)

Net Incurred losses related to natural catastrophes (*1)

*1: 3 year average. Net incurred losses related to natural catastrophes based on a financial accounting basis (TMNF figures for domestic)

Impact of the COVID-19 on underwriting profit

• Impact of COVID-19 in FY2020 expected to be controlled compared to peers with risk

diversification

COVID-19*2>

Peers*3

Average Maximum Minimum

4.7%

3.6%

2.7%			2.9%

*2: Ratio of net incurred losses for COVID-19 in FY2020 to net premiums earned in FY2019.

Our figure is based on private insurance and net incurred losses excludes domestic non-life which benefited from great improvement in loss ratio for auto

*3: Allianz, AXA, Chubb, Zurich

Source: D&P research

Impacts of Natural Catastrophes and COVID-19

• The impact of more than annual average natural catastrophes and COVID-19 is controlled to approx. 20% of income through global diversification

Copyright (c) 2020 Tokio Marine Holdings, Inc.

				(Billions of JPY)
		420.0 (normalized basis*4)
2020
			91.5*5
Revised
projections
	Impact of natural catastrophes and COVID-19*5	-22%
*4: Normalizing natural catastrophes to an average annual level and excluding the impact of COVID-19
*5: Natural catastrophes over annual average	7

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Stable Business Platform

We have increased ROE by enhancing profitability and risk diversification through large-scale Mergers & Acquisitions in the U.S. and Europe

We will continue to further increase ROE towards our goal

Low	Capital efficiency

Low

TMHD

(2014-2019)

Japanese P&C 1

Volatility

Japanese P&C 2

High

0.0%

	Peer 1
	ROE standard
Peer 2	deviation
	1.5%

TMHD

(2009-2013)

High

Peer 4

Peer 3

3.0%

3%5%7% (Cost of capital)

Average ROE

9%

11%

ROE: Financial accounting basis.

Figures for other companies are 2014-2019 averages. (2017 of AXA is excluded). Peers: Allianz, AXA, Chubb, Zurich Source: Bloomberg

Copyright (c) 2020 Tokio Marine Holdings, Inc.

8

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Promoting Integrated Group Management

Optimal allocation of diverse talents to globally leverage on expertise and knowledge

Appointment as

Co-Head

Generate Group's collective strength

Domestic Non-life	Domestic Life Insurance	International Insurance	Financial and general
Insurance

Donald Sherman	Christopher Williams
Co-CIO (Group Co-Chief Investment Officer)	Co-Head of International Business
Delphi Financial Group CEO	Co-CRSO
	(Group Co-Chief Retention Strategy Officer)

Expertise

across the Group

Internal Audit

Desmond Yeo

TM Asia Regional Head of Internal Audit (additional post: TMHD)

Reinsurance

Barry Cook

CEO of International Group at TMHCC

(TMHD Global Reinsurance Advisor)

Reserving		Specialty
Daniel Thomas		Philippe Vezio
Chairperson of International		TM Asia Deputy CEO ＆
P&C Reserving Actuary		Chief U/W Officer
Committee		(Transferred form TMHCC Barcelona)

Cyber Insurance		HR/Legal
Daljitt Barn		Caryn Angelson
Cyber Centre of Excellence		TMNAS CHRO & CLO
Global Head of Cyber Risk		(additional post: TMHD)

Global Committee, etc.

ERM		ERM Committee		Digital		Digital Round Table		Investment		Global Investment
					Strategy Committee
				Retention		Global Retention
International		International Executive				IT		Global Information
Insurance		Committee		Strategy		Strategy Committee			Technology Committee

Copyright (c) 2020 Tokio Marine Holdings, Inc.

9

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Post-COVID-19 Medium- to Long-term Business Environment and Opportunities

Established global task force and identified post-COVID-19 business environment, etc.

Maintaining disciplined risk management while capturing business opportunities with Integrated Group Management

Our view on COVID-19

 COVID-19 will remain as
	permanent risk due to the
	nature of disease
	Balance between risk
	avoidance and restarting
	economic activity will differ
	by country
 COVID-19 will accelerate DX
	and business model reform
	Positive outcome
	recognized by businesses
	and individuals will increase
	(online sales, etc.)

Impact on insurance business

Based on our view, identify medium- to long-term impact and core requirements for post- COVID-19

Core business		Expected impacts
requirements
Digital capability/		Omni-channel sales with face-to-face and virtual communication

data analytics

 Accelerate creation of new values with use of technology and data  Need to review operation model in response to digitalization

Resilience

• Preparing for uncertainties is essential for management

New normal

work-style

• Need for HR system review to enable flexible workstyle
• HR development to enhance digital capability
• Need for flexible organization design that can respond to rapid and dynamic environmental changes

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Incorporate details to strategy of each group company to build sustainable competitiveness

10

, etc.

, etc.

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Tokio Marine Group Digital Strategy

Utilize technology and data to implement digital transformation (DX) that builds competitive advantage

Achieve growth through internal systems reform and building new business model

Internal Systems

Reform (DX)

Improve productivity to achieve lean management system

Business Process/Operations DX

• Promote remote work and online sales
• Digitalize business process

(paperless operation, utilization of AI/RPA)

,

Corporate Culture DX

• Promote new workstyle, create corporate culture that supports employee initiatives change
• Enhance digital resource recruitment and

development

Values Creation

Reform (DX)

Create new growth axis, enhance capacities

for resolving issues

model DX towards new growth

Enhance customer contact with digitalization

core insurance function CX with digitalization

Enhance measures targeting active seniors/digital

generation, etc.

Resolution of Social Issues DX

• Develop new products, services, and solutions that lead to prevention and reduction of

disasters

Global Digital Synergies

Copyright (c) 2020 Tokio Marine Holdings, Inc.

11

I．Group (Strategy)

Power of Execution

Next Step

Next MTP

Enhance Digital Strategy Platform

Recruit / develop digital resource and utilize external knowledge; boost competitiveness with lateral deployment

Digital resource recruitment / development		Collaboration with diverse partners

• Actively utilize external personnel with diverse career history and strong expertise
• Established "Data Science Hill Climb," a program for data scientist development under supervision by Professor Yutaka Matsuo of the University of Tokyo (TMHD original program)
• "Tokio Marine Innovation Program" seeks ideas for implementation from employees to promote innovation

• Accelerate data collaboration in various areas leveraging on the strength of algorithms and machine learning. JV established in November
• Trade platform JV utilizing blockchain established with NTT Data, Mitsubishi Corporation and MUFG Bank, etc.

5 Labs

• AI reenactment of accident. Introduced new function for automatic calculation of liabilities between parties in auto accident
• As part of strategic alliance under consideration, participated in reinsurance program

London Established in April 2020

• Daljitt Barn appointed as Global Head of Cyber to supervise the area
• Identify start-ups

Tokyo

• Supervise Global Labs
• Research on latest technologies and business model trends

Silicon Valley

• Identify start-ups
• Support DX by group companies in North America

Periodic Digital Round Table among
Group companies for global knowledge	Singapore	Taipei
sharing and synergy effect
・ Research/identify digital technologies	Research/identify digital
	and new business models	technologies and new
Copyright (c) 2020 Tokio Marine Holdings, Inc.	・ Support DX by group companies in Asia	business models

NY Established in July 2020

12

I．Group (Strategy)	Power of Execution	Next Step	Next MTP
Strategic Direction for Next Mid-Term Business Plan	ESG

To realize our long-term vision, enhance capabilities through business model reform and improving profitability of the insurance business

A global insurance group that delivers sustainable growth

Long-termvision by providing safety and security to customers worldwide - Our timeless endeavor to be a Good Company -

	Our aspirations for the long-term vision
Growth and stable high profit	Glocal × Synergy	Win-Win situation with
(Medium- to long-term target of over ¥500.0 bn

adjusted net income/around 12% adjusted ROE)	Stakeholders
2+1 Growth Strategy
New Markets × New Approach	Enhance profitability of
insurance business

• Precisely respond to the quickly changing customer needs and implement products/services and channel strategies reflecting the market

• Acknowledge issues including intensified natural catastrophes and low interest rates while utilizing business opportunities presented by hardening of premium rates and digitalization to enhance profitability of insurance business

+

Business investment for the next growth stage

Business Platform

(Human Resources / Integrated Group Management / Culture / Technology / ERM)

Copyright (c) 2020 Tokio Marine Holdings, Inc.

13

I．Group (Strategy)	Power of Execution	Next Step	Next MTP
Win-Win Situation with Stakeholders		ESG

Search for optimal solution to provide balanced values to all stakeholders based on our purpose

Our unchanging	Protect our customers and society in times of need by delivering safety and security
purpose

Alleviate concerns of households and
provide support to move forward	Customers	Society

Resolve social issues and contribute to

creation of a resilient society

Provide an environment that enables

Employees

Share-

diverse employees to actively	holders
participate and grow

Provide returns matching investment

through profit growth

Robust and agile organization

Passion to realize our	Many wisdoms and	Stay ahead of customers		Agility to adjust and
solidarity to overcome	and society to capture	Pursuit of speedy reform	ability to execute
purpose
difficulties	their needs		strategies
Copyright (c) 2020 Tokio Marine Holdings, Inc.				14

I．Group (Strategy)

Power of Execution

Next Step

(Reference)

History of Resolving Social Issues and Sustainable Growth

	1914			1998			2001
	Launched Japan's first auto insurance	Launched Japan's first auto insurance		Launched microinsurance in India
	to support motorization	with coverage for personal injury and		and contributed to addressing
			realized early insurance payment		poverty problems

Next MTP

ESG

2020

Launched indexed insurance to protect the livelihood of people directly following an earthquake

	1959			1999			2002			2020

Launched Japan's first liability insurance to contribute to minimize consumer losses

Amid rising cyber risk worldwide, UK-based Tokio Marine Kiln (TMK) offered cyber-related coverage from early on

Launched Super Insurance, a globally unique integrated life and non-life insurance product

Developed insurance for offshore wind power generation projects to support the spread of renewable energy

Premiums

Direct Net Premiums Written*1 (Bar Graph) and Total Dividends (Line Graph)

￥3.99 trillion

Domestic non-

International

Total

life insurance*2

insurance*3

dividends*4

Dividends

Tokyo Marine Holdings	￥133.0 billion
established

Founding

1879	1960	1965	1970	1975	1980	1985	1990	1995	2000	2005	2010	2015	2019	(FY)
			*1: Excludes deposit premiums from policyholders
			*2: Premiums from Tokio Marine from FY2001 and prior, and combined premiums from Tokio Marine & Nichido and Nisshin Fire, etc. from FY2002 onward
Copyright (c) 2020 Tokio Marine Holdings, Inc.	*3: Premiums from FY2002 onward when Tokio Marine Holdings was established						15
*4: Does not include one-time dividends provided as capital level adjustment

I．Group (Strategy)	Power of Execution	Next Step	Next MTP
Management Focused on People		ESG

Promote diversity and spread our core identity to enhance Group competitiveness

Promotion of Diversity & Inclusion

Promoting overseas talent

• Excellent talent who join the Group through overseas M&A, are appointed to positions such as Group Co-Heads and global committee leaders

Spreading the core identity

• CEO to engage in town hall meetings in Japan and overseas to engage in a global dialogue with employees
• Promote spread of group culture through town hall meetings to further enhance group governance

Promoting Success for Women

• Tokio Marine Group Women's Career College (TWCC) was established in Sep 2019 to assist female employees in voluntary career planning, and to ensure that women are active in their workplaces

Promoting Success for Young

• An in-house venture program was established to support young talent who are eager to innovate

Promoting D＆I

• Continue discussions on D&I around the world
• Establish global Diversity Council chaired by Group CEO to accelerate initiatives

(FY2021)

TMNAS' Diversity & Inclusion Committee

Developing Future Management Talent, etc.

• Discussions on talent development for future management and corporate function talents held at global CXO meetings

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Overseas town hall meeting led by	A town hall meeting led by the president of
the Group CEO (Before COVID-19)	Tokio Marine & Nichido (During COVID-19)

Exciting and Rewarding Work Environments

Culture & value survey*

4.3 points out of 5

(Proud to work for Tokio Marine Group)

*FY2019 survey result (total of overseas and HD)

Placing in best place to work rankings around the world

(Ceremony for Great Place to Work Award in Brazil)

16

I. Group	FY20 Projections	Shareholder	Capital Policy
(Shareholder Return)
Return Policy

FY2020 Revised Projections and Target KPIs

TSR/EPS

Adjusted net income

Adjusted ROE

Shareholder return

Payout ratio*3

Capital level adjustments

FY2020 projections (Normalized basis)*1

¥420bn

12.5%

40%

¥50bn*5

capital level adjustment as of end of September 2020

FY2020 target

¥400 - 450bn*2

10% or higher*2

35% or higher

Flexible execution

Mid-term Goal

Over ¥500bn

Around 12%

Gradually increase to

levels on par with global

peers*4

Flexible execution

*1: Normalizing natural catastrophes to an average annual level and excluding the impact of COVID-19.

*2: Calculated based on FY2017 normalized basis of ¥372bn.

Specifically, net incurred losses relating to natural catastrophes are normalized to an average annual level, and the impact of FX fluctuations and the one-time impact of U.S. tax reforms are excluded.

*3: Payout ratio is based on the five-year average adjusted net income. Based on original projections.

*4: Payout ratio of global peers is currently approx. 50%.

*5: The figure includes one-time dividends of approx. ¥25bn.

Copyright (c) 2020 Tokio Marine Holdings, Inc.

17

I. Group	FY20 Projections	Shareholder	Capital Policy	TSR/EPS
(Shareholder Return)	Return Policy

Shareholder Return Policy

Our primary means of shareholder return is dividends and we plan to sustainably increase total dividends along with profit growth

Dividends

• Payout ratio is at or above 35% of the 5-year average adjusted net income
• Gradually increase the payout ratio*1 to levels that are on par with global peers to achieve mid-term goal

Capital level adjustment

• Adjust capital levels flexibly through share buybacks, etc. based on a comprehensive consideration of the market environment, business investment opportunities, etc.

High level shareholder return

Ninth consecutive year of higher dividends projected

			190	200	Global Peer Level*4
		180
DPS (JPY)	160
140				40%
			38%
35%	35%	36%

Payout ratio*1

2016	2017	2018	2019	2020	Our Goal

(Projections)

*1: Payout ratio based on the original projection basis.

Total dividends*2 (billions of JPY)	105.3	117.6	128.0	133.0	139.6
Capital level adjustment*3	50.0	150.0	125.0	50.0	50.0
(share buybacks, etc.) (billions of JPY)

*2: The figure for 2020 (projections) is before reflecting share buybacks.

*3: Total amount approved by the announcement date of financial results of each fiscal year. The figures include approx. ¥50.0bn for 2018 and approx. ¥25.0bn for 2019 and 2020, respectively as one-time dividends.

*4: Payout ratio of global peers is currently approx. 50%.

Copyright (c) 2020 Tokio Marine Holdings, Inc.

18

I. Group	FY20 Projections	Shareholder	Capital Policy	TSR/EPS
(Shareholder Return)	Return Policy

Disciplined Capital Policy

Capital policy based on ESR		ESR

ESR*1

210%

Target

Range

150%

100%

Implementation of;

• Business investment, and/or
• Additional risk-taking, and/or
• Shareholder return

Strategic consideration of;

• Business investment, and/or
• Additional risk-taking, and/or
• Shareholder return
• Aim to recover capital level through accumulation of profits
• Control risk level by reducing risk-taking activities
• De-risking
• Consideration of capital increase
• Review of shareholder return policy

(trillions of JPY)

153%163%

	4.2				4.3
2.7	Net	2.6	Net	(Reference)
	asset				asset	ESR after deducting
Risk	value	Risk	value	restricted capital
			117%
End of Mar 2020			End of Sep 2020
	18,917 yen		Nikkei Stock			23,185 yen
		Average
	0.44%		30Yr JPY interest		0.60%
		rate
	2.72%			1.36%
		Credit Spread

ESR sensitivity*2 (End of Sep 2020)

+30% -30%	+50bp -50bp	10%	10%	-50bp +50bp
appreciation	depreciation

+5pt	+6pt
+1pt	+1pt

-1pt

*1: Economic Solvency Ratio

Risk is calculated using a model based on 99.95%VaR (AA credit rating equivalent)

Copyright (c) 2020 Tokio Marine Holdings, Inc.

-6pt	-6pt
-8pt
*2: Sensitivity based on parallel shift	*3: See p73 of reference material for details	19

I. Group	FY20 Projections	Shareholder	Capital Policy	TSR/EPS
(Shareholder Return)	Return Policy

Strong Track Record

Our steady implementation of management strategies has resulted in above-market TSR and an EPS that is comparable to our peers

TSR*1

EPS*3CAGR(2014-2019)

Performance

3Y

6Y

(Before Sep. 2020)

As of end of Sep. 2020

Tokio Marine

118

169

Peers*2

Peers*2

97

143

Average Maximum Minimum

400

MSCI World Insurance

100

135

TOPIX (Insurance)

97

141

337

+6.6%

TOPIX

104

141

300

Peers*2

241

+2.7%

TOPIX

+1.9%

216

200

TOPIX (Insurance)

-5.0%

214

MSCI World

100

Insurance

210

0

Source: Bloomberg

*1: Total Shareholder Return (TSR): Capital return after reinvesting dividends.

April 2002

April 2004

April 2006

April 2008

April 2010

April 2012

April 2014

April 2016

April 2018

April 2020

Stock price indexed at 100 as of April 1, 2002.

*2: Allianz, AXA, Chubb, Zurich

Copyright (c) 2020 Tokio Marine Holdings, Inc.

*3: Financial accounting basis

20

II

Domestic Business Strategy

Tokio Marine & Nichido

President & CEO	Shinichi Hirose
Tokio Marine & Nichido Life
President & CEO	Katsumi Nakazato

Copyright (c) 2020 Tokio Marine Holdings, Inc.

21

II. Domestic Non-Life

Our Position

Next Step

Next MTP

Largest Japanese Non-life Insurer with Growth Outperforming the Market

Secure business efficiency advantages and steadily increase share in the domestic market with stable growth potential

	Growth outperforming the market			Share in domestic non-life market
 Top line*1 (billions of JPY)	■ TMNF		 FY2019*1,3	 vs FY2010*1,3
		■ Market*2

CAGR + 2.7%

CAGR + 3.3%

											2,486.2
1,851.4												Market
									26.5%
25.0%
											Share
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019

Other,		2.0%	1.5%
				1.1%
15.0%	TMNF,	1.0%
	26.5%
AD,
14.0%		0.0%
	SJ,
MS, 18.5%	-1.0%
-0.8%
26.0%
		-2.0%
		-1.7%

Competitive business efficiency

 Expense Ratio (all lines)		TMNF
35.0%		Market*4

 Net income	CAGR	33.5%
+6.0%
				169.9
100.7
2010		2019

*1: Direct net premiums written

*2: Total of the members of The General Insurance Association of Japan. Source: Website of the General Insurance Association of Japan, Insurance Statistics (Sompo Toukeigo)

*3: Total of the members of The General Insurance Association of Japan. Source: Website of the General Insurance Association of Japan, company websites	2010
*4: Total of the members of The General Insurance Association of Japan (excluding TMNF). Source: Website of the General Insurance Association of Japan

Copyright (c) 2020 Tokio Marine Holdings, Inc.

33.3%

Reduce workloads

on a long-term basis

By 20-30%

30.8%

2019

22

II. Domestic Non-Life

Our Position

Next Step

Next MTP

Presence in Auto Insurance Market

Support growth of non-life business by steadily increasing market share with increased coverage that meets the needs of our customers

		Auto insurance growth potential						Solid unit premiums growth
								 Achieved unit premiums growth with development of DAP*5 which
 Top line*1 (billions of JPY)
					CAGR								contributes to accident prevention, increase in coverage that
								1,078.3		meets the needs of customers, and strengthening sales force, etc.
					+2.7%
												Strengthen initiatives by increasing added values with further
														increase in coverage (new DAP in Apr. 2021) and sophisticated AI
														utilization, etc.
850.8										25.6%
											Policy coverage with room for growth (current ratio)
24.3%											Market Share*2		• DAP: several percentage points
															• Car rental expense coverage: about 60%
2010	2011	2012	2013	2014	2015	2016	2017	2018	2019				• Vehicle insurance: about 70%

Number of policies outperforming the market

*Growth rate, TMNF non-fleet unit premiums in FY2010 is set at index value of 100

• Achieved strong growth with attractive products/services, superior agency system, increased activities, and high-quality claims service, etc.
• As the number of owned automobiles gradually decrease (CAGR: -0.4%), steadily capture number of insured automobiles by enhancing our strength

*Growth rate, FY2010 is set at index value of 100

			TMNF number of insured
115.0	111.7		automobile*3
	Number of owned

115

110

105

100

113.8

110.0

automobiles in Japan*4

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

105.0				103.7
							*1: Net premiums written
100.0								*2: Direct net premiums written Source: Insurance Statistics (Sompo Vol.4864)
							*3: Managerial accounting basis
95.0								*4: Source: "Joyosha Dealer Vision (Passenger Vehicle Dealer Vision)" (FY2019)
							*5: Drive Agent Personal (DAP). A product using original driving recorder with communications function that
2010	2015	2019	2025	2030	provides accident prevention and accident response services.
Copyright (c) 2020 Tokio Marine Holdings, Inc.				23

II. Domestic Non-Life

Our Position

Next Step

Next MTP

Specialty Insurance Growth

Realize sustainable growth by contributing to solving social issues through expansion of specialty insurance with high growth potential, etc.

Specialty insurance growth potential

• Top line*1(billions of JPY)

CAGR	646.
+4.1%
448.7

Presence in renewable energy area

• Strong expansion expected for transition to a carbon-free society
• Enhance initiatives by utilizing the expertise of Gcube and cooperation with major trading houses, etc.

Enhance initiatives in SME market that supports

regional revitalization

• Market size of about ¥400bn, penetration ratio of 5-10%*2
• Started digital sales to employees of SMEs belonging to Chamber of Commerce to enhance the SMEs company benefits

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Capturing increased needs created by COVID-19

• Respond to increase in teleworking, companies considering business succession, and restaurants providing to-go services

1H20 News Releases

1H20 News Releases

Packaged products for SMEs:

• Legal trouble resolution support service (July 2020)
• Business suspension clause/infectious disease coverage rider (January 2021)

Group long-term disability income insurance:

• Treatment and work support rider (October 2020)
• Nursing care and work support rider (October 2020)

Packaged products for SMEs

(billions of JPY)

60.0	4.4倍	52.2
600

40040.0

20020.0 11.9

0 0

2010 2013 2016 2019

• Microsoft Azure user cloud insurance (June 2020)
• M&A NEXT (M&A insurance) (July 2020)
• To-go/deliverycomprehensive coverage plan (July 2020)

*1: Direct net premiums written, including P.A.

*2: Estimated from actual sales of our packaged products for SMEs and public data on the number of SMEs.

*3: As the risk may involve significant concentration of losses, build a system for capturing concentration/risk management in addition to establishment of appropriate Group level underwriting framework.

*4: The General Insurance Association of Japan (Survey on Cyber Insurance 2018)

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Protection for increasing cyber risks

(cyber risk insurance)

• FY2019 uptake was several billion yen, but double-digit growth each term*3
• Market size of about ¥180bn (according to research firm), penetration ratio of 12%*4
• In response to increased teleworking and Revised Personal Information Protection Act of 2022, further enhance

efforts with coverage/services expansion and webinars	24

II. Domestic Non-Life

Our Position

Next Step

Next MTP

Profitability Improvement of Fire Insurance

In addition to fire insurance rate revision, contribute to building a society resilient to catastrophes through initiatives on disaster prevention and reduction, and realize continuous RoR improvement

Fire insurance rate revision

Increase in natural catastrophes and water leak

Issues	damage in aging buildings
	Industry insurance payment trend*1 (billions of JPY)

Arrange reinsurance/catastrophe loss reserves

• Appropriate arrangement of reinsurance and catastrophe loss reserves based on natural catastrophe risk and reinsurance market environment

900.0

300.0		Over ¥1.3tn
				Natural
				catastrophes*2
	200.0
		Over ¥900bn

100.0

0

2013

2014

2015

2016

2017

2018

2019

Other (water leakage, etc.)

Fire/lightning/ruptur e/explosion Natural catastrophes

*1

Actual data for residential properties up to FY2017. General Insurance Rating Organization of Japan "Kasai hoken/jishin hoken no gaikyo (Overview of fire insurance and earthquake insurance)"

*2

Actual results for fire insurance in FY2018 and FY2019. Calculated based on figures published by The General Insurance Association of Japan

Safety in preparation

• Personalized video sent from Mobile Agent (app)
  Information on preparation for typhoons and rainstorms delivered to customers in an easy-to-understand video
• Alert on disaster prevention/mitigation Cooperate with agents to deliver useful information on disaster prevention/mitigation, measures against wind/salt damage, measures against flooding
• NADIAct: Enterprise Disaster Prevention and Mitigation Alert System
  Distribute disaster prevention information utilizing real time disaster prevention weather report and flooding risk management expertise (September 2020)

Advisory	May 2018	Oct 2019			(TBD)
rate
+5.5%	+4.9%
revision
		Oct 2019		Jan 2021
		Advisory rate revision +α		Advisory rate
			revision +α
		＋Approx. ¥16bn
			＋		20
Our action				Approx. ¥	bn
	(Before tax/net basis)		(Before tax/net basis)

Breaking down water damage rate for corporate fire insurance

Continuous efforts on various issues including long-term contracts

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Safety in recovery

• Restoration by BELFOR Support early business reopening with advanced cleaning technology of a disaster

recovery specialist	Before restoration	After restoration

• Enhance insurance payout process
  Digitalize whole process to complete insurance claim process online

25

II. Domestic Non-Life

Our Position

Next Step

Next MTP

Further Improve Business Efficiency (1)

Further reduce 20-30% of office work by FY2026 by reforming business process and work-style with effective use of digitalization. Use the time generated to provide optimal service for customers through pursuit of more value-added business

Initiatives between 2008-2019

Initiatives from 2020

2008-2014	2015-2019
 Business process reform	 Work-style reform
project

 Sales

Build remote sales framework with superior customer experience

(CX) and flexibility (smartphone contracting process and online

negotiations, etc.), minimize internal administration/inquiry

response

Simplify business process with streamlined products / administration / IT systems (policy reporting/credit management, etc.)

Respond to inquiries using AI, promote paperless process and use of tablets, etc.

 Claims

Build remote claims services framework with superior CX and

flexibility (complete insurance claims online, etc.), minimize

internal administration

 Work-style, etc.

Build paperless business process, renew internal communication

• Empowering employees
  Rotating employees from administrative positions to sales

• Reduce sales administration by

about 30%

• Increase area course sales force

FY2008: 120

FY2019: 1,951

tools and office environment, build a structure that supports

motivation

		High value-
Sales		added business
administ-		Sales
ration
	Reduce internal	administ-
	ration
Claims	administration
By 20-30%	Claims
administ-
ration		administ-
	ration

20192026

Copyright (c) 2020 Tokio Marine Holdings, Inc.

26

II. Domestic Non-Life

Our Position

Next Step

Next MTP

Further Improve Business Efficiency (2)

Enhance CX by effective use of digitalization and build a business model with focus on productivity and flexibility

Sales	Claims
Reduce internal administration and build a structure focusing on sales	Reduce internal administration and expand areas for providing value

Sales activity, etc.

Inquiries

Policy management

/ reporting

Other internal administration (Various inspections, etc.)

• Utilize AI and chatbot to automate inquiry response, self-application
• Centralize in Group company, etc.
• Digitalize contract related business

(Online procedures, etc.)

• Centralize administration in Group company
• Internal infrastructure renewal (Utilize Office 365, etc.)
• Review various inspection operations

Accident reception

/ initial response

Loss review, etc.

Settlement negotiation

/ progress report

Various inspections / insurance payment

Prevention / Follow-up Services

• Complete online (self- application)
• Reenactment of accident
• Expand coverage areas of Group companies
• AI image recognition (efficiency)
• AI elimination of fraud (support decision making, etc.)
• Chat format communication
• Complete online (self-application)
• AI speech recognition (automate records)
• Automated approval

Copyright (c) 2020 Tokio Marine Holdings, Inc.

27

II. Domestic Non-Life

Our Position

Next Step

Next MTP

Strategic Direction for Next Mid-Term Business Plan

Build a framework that enables stable profit generation in uncertain environment with development of a business model based on best mix of digitalization and people's power, and aim to become a company of choice by the customers that addresses social issues and continue growing

Creation of new markets

Create markets focusing on growth markets by leveraging on collective Group strength while contributing to resolution of social issues in Japan

Priority	•	Health care (contribute to healthy longevity society)
	• SMEs (contribute to regional revitalization)
	• Renewable energy (contribute to carbon-free society)
area	• New corporate risks (increased cyber risks, etc.)
•	Data strategy

Building a lean business operation

• Utilize digitalization to build simple and speedy business process and realize flexible and productive workstyle
• Pursue high value-added business at the same

time for further growth

ＤＸ

Products /

Services

MarketingCustomer

Contact

Digital × Point

People's

power

Sales	Internal
process	process

Claims

process

Enhance profitability of insurance business

• Enhance initiatives for improving profitability of fire insurance and enhancing underwriting discipline to build a sustainable fire insurance system
• Enhance sustainable growth with combination of investment and thorough business expense reduction
• Increase growth of profitable specialty insurance

Development of digital-integrated channels

• Enhance customer contact point and sales capacity of agencies with renewal of agency systems, etc.
• Build a sales model utilizing online negotiation, etc.

Organizational culture and people that create initiatives and motivation

Improve employee	Corporate culture	Promote D&I	Human resource
engagement	reform	development

Joint creation of social values, contribution to sustainable society

Copyright (c) 2020 Tokio Marine Holdings, Inc.

28

II. Domestic Life

Growth Strategy

Integrated life & non-life

Risk Control

Next MTP

Growth Strategy

Maintain growth exceeding the market by focusing on profitable "protection-type products and installment variable annuities" and implementing unique product strategy

Focus on profitable "protection-type products and installment variable annuities"

• Mainstay product for TMNL secured RoR above capital cost (7%)

Growth exceeding the market

• Unique products in focus area to achieve growth exceeding the market

Return*2

TMNL mainstay product risk/return*1 (image)

TMNL product portfolio

TMNL growth capacity*5

(FY2019 New Policies ANP ¥40.5bn)

＜Protection-type products>

Household

income

Term

ROR 7%

(Cost of capital)

Medical

insurance*4

Medical Kit R

Market Link

Installment		Protection-	+7.8%
variable		type	+5.0%
annuities
	Products
20%	Medical
65%
Other
Kit R
15%		TMNL	Market*6
18%

Market Link	Medical
20%	insurance*4

17%+66.9%

Other	Household
protection-
type	Income	+24.7%
Term
13%
17%
	TMNL	Market*6

Numerous unique products supporting strong growth

0 Risk*3

Household

Income Term

First in Japan*7 insurance for inability to work

Medical Kit R

First in Japan medical insurance that returns unused premiums

Market Link

Reduce investment risk with long-termdiversified investment

*1: Size of the bubble indicates new policies ANP for the product (FY2019 actual)

*2: Value of new business and future release of cost of non-hedgeable risks (FY2020 forecast-basis)

*3: Sum of necessary capital for future fiscal years

*4: Excludes Medical Kit R

Copyright (c) 2020 Tokio Marine Holdings, Inc.

*5: CAGR (2014-2019) of number of in-force policies for protection-type products and YoY % of number of new policies in FY2019 for variable insurance

*6: Medical, cancer and fixed-term insurance for protection-type products, fixed-term for variable insurance Source: Insurance Statistics (Seimei Hoken Toukeigo), the Life Insurance Association of Japan website

*7: In addition to instance of death, fixed coverage provided for reduced income throughout insurance period

in case of inability to work caused by the five diseases

29

II. Domestic Life

Growth Strategy

Integrated life & non-life

Risk Control

Next MTP

Enhance Integrated Business Model for Life and Non-life

Accelerate cross-selling by introducing competitive products for clear targets.

Enhance integrated business model for life and non-life with further development of Group customer base to establish advantage in increasingly competitive market

		Further develop Group customer base
Current cross-selling

• Utilize "Super Insurance" to cross-sellwith integrated business model for life and non-life

Deep cultivation of senior generation

＜TMNL & TMNF Policy Portfolio (Mar. 31, 2020)＞

Room for
cultivation of	TMNL
senior customers
	TMNF

Results

About 20,000 policies sold

Visualize risks for the family		0 10 20 30 40 50 60 70 80 (Policyholder age)
to propose optimal insurance	+	×
 Super Insurance policies exceeded
1.9 million
	Product that captures the needs of the market/agencies
 Latest cross-sell ratio of 24.4%
	New product "Medical Kit Yell"
		(Medical insurance with relaxed underwriting criteria, August 2020)
policies with either life or third sector>		Big data analysis achieved improved product appeal and ease of sales

			 Relaxed underwriting standard for seniors with preexisting conditions or
		24.4%	concerns over health and simplify sales administration
		 Industry top level price competitiveness for seniors
	23.9%
22.6%			 Strong coverage/services
			Online medical	Support health
			consultation and	maintenance with
Mar. 2019	Mar. 2020	Sep. 2020	hospital/doctor	health advice app
appointment service

selling-cross Accelerate



in first two months

 Record sales second only to

mega-hit product "Medical

Kit R"

(about 200,000 policies sold

in a year, about 50,000

policies in first two months)

Further cultivate the

customer base with the

product to enhance integrated business model for life and non- life

Copyright (c) 2020 Tokio Marine Holdings, Inc.

30

II. Domestic Life

Growth Strategy

Integrated life & non-life

Risk Control

Next MTP

Addressing Risks

Partially due to COVID-19 pandemic, accelerated digital sales initiatives, including fully online contracting process. With prolonged low interest rate environment expected, control interest rate risk by shifting to protection-type products and installment variable annuities and implementing strict ALM

Response to COVID-19 pandemic

• Led the industry with online contracting process and online consulting by agencies and prevented fall in sales during the COVID-19 pandemic

Key processes for insurance application by customers (current)

Agency consultation	Contracting process
Available online or in person	Can be completed by post
	without face-to-face
	transaction
Impact on top line

Interest rate risk control

Shift to protection-type products / installment variable annuities

• Stop sales of long-termsaving-type products with significant interest rate risks, and promote shift to protection-type products / installment variable annuities with lower interest rate risks

20152019

Oct. 2016

Sales Suspension of long-termsavings-type products

4% Other

<1Q FY2020 New policies ANP YoY (individual insurance + individual annuities)>

TMNL	Non-life affiliated	Market*2
life insurance*1

-21.5%	-26.4%

Ratio of protection- type products and installment variable annuities*3

New business margin*4

30Y JGB*5

(Yearly average)

Promote

	43%	shift
57%	96%

4.5%6.3%

1.28%0.40%

-55.4%

Accelerate digital sales initiatives including fully online contracting process

*1: Average of Sompo Himawari Life and Mitsui Sumitomo Aioi Life

*2: Total of the members of the Life Insurance Association of Japan (excluding TMNL and non-life affiliated life insurance)

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Strict ALM

• As a result of investment in super-long-term bonds in the past 18 months, hedge ratio improved to about 90% as of end of Sep 2020

*3: Ratio among products for individuals (excluding business insurance), new policy ANP basis

*4: Value of new business / Present value of new business premiums, including business insurance

*5: Source: Bloomberg

31

II. Domestic Life

Growth Strategy

Integrated life & non-life

Risk Control

Next MTP

Strategic Direction for Next Mid-Term Business Plan

To resolve the social issues in the era of 100-year lifespan, deploy integrated product/sales strategy in the three areas of seniors, healthcare and asset formation; and accelerate digitalization for overall customer contact point/business process also in preparation for post-COVID-19 era, to create a new growth path

Market-oriented integrated product/sales strategy

Seniors

• Develop products/services responding to the needs of seniors and improve underwriting
• Strongly promote cultivation of Group customer base to enhance the integrated business model for life and non-life

Healthcare

• Provide unique set of products and services in response to the development of healthcare technologies
• New market cultivation starting with healthcare service

Asset formation

• Improve asset formation product appeal by responding to the customers' needs in the 100-year lifespan era
• Develop/increase sales force with high financial literacy

Enhance customer contact and business process improvement with digitalization

Accelerate DX in preparation of post-COVID-19 era

Promote R&D to secure competitive advantage

Digital sales

Maintenance/

Products / Services

Marketing

Business process

insurance payout

enhancement

•

Build fully online

•

Promote fully online

•

Big data analysis

• Digital marketing

•

Business process

contracting process

maintenance procedures

•

Leading-edge

improvement

•

Build online consulting

•

Automated assessment

•

medical technology

•

Promote digital

know-how

of insurance payout

IoT/wearables

technology utilization

Unchanging values and business platform

Spirit of insurance professional that	Human Resource development /
protects customers	New normal work-style
ERM	Pursuit of quality to be chosen by
customers
Copyright (c) 2020 Tokio Marine Holdings, Inc.	32

Ⅲ International Business Strategy

Co-Head of International Business

Akira Harashima

Copyright (c) 2020 Tokio Marine Holdings, Inc.

33

III. International

Strengths

Current MTP

Next MTP

M&A Transactions

Creating strong franchise by acquiring blue chip companies with unique strength

In recent years, promoting selection and diversification of business to optimize business portfolio

2000

2007

2012

2015

2018

2020

	Expand into non-
	Japanese businesses
	P&C in	Life in
	emerging	emerging
	markets	markets
(-2000)	Reinsurance

Businesssubsidiary development

focused on

Japanese clients

							Business diversification
				Regional diversification	Acquired
				Secure entry point to	Feb 2020
				emerging markets
		Growth and business	Acquired	Invested	Announced
		Aug 2018	Dec 2018	Jan 2020
		diversification in the U.S.
Established
material presence in	Acquired	Acquired
the U.S. and Europe
May 2012	Oct 2015
Acquired	Acquired				Review business portfolio
Mar 2008	Dec 2008
						TMK UK non-
						Japanese
						Business
						Run-off	Tokio Marine
						July 2019

Egypt Family

Takaful

Divested

Sep 2020

Divested

Mar 2019

Copyright (c) 2020 Tokio Marine Holdings, Inc.

34

III. International

Strengths

Current MTP

Next MTP

Profitable Business Model in Developed Market (1)

Achieve high profit growth and profitability exceeding the market by establishing robust specialty franchises in the U.S.

Robust specialty franchises

Top 10

べ

in commercial lines*1

Best in Class

Specialty Markets

Focus in niche markets,	Specialized in HNW
such as NPO, etc.	insurance market

Strength in	Mainly provides
employee benefit, etc.	specialty products

*1. The U.S. commercial P&C direct premiums written in FY2019, Source: S&P Global

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Bottom-line focus

(High profit growth and profitability exceeding the market)

＜Bottom-line*2＞ ＜Combined ratio＞

2015-2019 CAGR	2015-2019 Ave.
6.6%	95.5%
vs Market*3	+4.7pt	vs Market*3 4.0pt Favorable
	＜Bottom-line*2＞	FY2020 ~
（USD mn）
1,600

1,200

800

400

0

	2008	2015	2016	2017	2018	2019
*2.	Annual after-tax profit on a local accounting basis.
	For 2017, the one-time impact of U.S. tax reforms was excluded.
*3.	Source: S&P Global					35

III. International

Strengths

Current MTP

Next MTP

Profitable Business Model in Developed Market (2)

Maintaining competitive advantages of higher profitability and lower volatility based on diversified portfolio

Diversified business portfolio

100+ business portfolio in "our U.S. business"

Medical Stop Loss			Human Services
Crop	Premium Composition		Real estate
		Non profit
U.S. Surety	（image）		organization
		D&O、E&O

Disability (life)

Excess Workers'

Compensation

Other non-life

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Higher profitability and lower volatility

10-year C/R in "U.S. P&C market"

LowProfitability High

	Peer 3		0.0%	Low
	Peer 4		Peer 2	Volatility
		SD
	U.S. P&C 3				C/R
			5.0%		*
	Japan P&C 1	U.S. P&C 1
	Peer 1
U.S. P&C 2	Japan P&C 2
			10.0%
	105.0%	97.5%	90.0%	High

Average C/R*

*︓C/R of U.S. P&C business through 2010 to 2019, Source: S&P Global
Peer︓Allianz, AXA, Chubb, Zurich
U.S. P&C︓Tokio Marine selected from P&C insurers focusing mainly on U.S. commercial business with market cap of	36
¥1.5+ trillion （Travelers, AIG, Hartford）

III. International

Strengths

Current MTP

Next MTP

Far-Reaching Business Expansion in Emerging Countries

Strategic expansion focusing on markets with high growth potential in order to develop businesses generating ¥5bn-level profit in a stable manner

		India				Thailand
	 IFFCO-TOKIO General			 Tokio Marine Safety Insurance
		Insurance (49.0%)			(Thailand) (99.3%)
		2018	2019				Profit	2018	2019
	Profit	1.2 → ¥1.3 bn				2.0 → ¥4.7 bn
	M/S	No. 9 (4%)			M/S	No. 4 (8%)

			¥1.0tn
			¥2.9tn
		¥1.0tn	¥0.5tn
	South Africa			Malaysia
 Hollard Holdings (22.5%)		 Tokio Marine Insurans
				(Malaysia) (100%)
	2018	2019			2018	2019
Profit		→ ¥1.3 bn		Profit	2.3 → ¥2.8 bn
	Consolidation)
	(New－
M/S	No. 2 (10%)		M/S	No. 8 (5%)

Profits: Business unit profits

M/S: Source: AXCO, IPRB, SUSEP, Swiss Re, FSCA Financial Sector Conduct Authority

Copyright (c) 2020 Tokio Marine Holdings, Inc. Figures in brackets by the company name: Ownership ratio as of Mar. 2020 Figures in circles: GWP as of FY2019, Source: Swiss Re

Brazil

• Tokio Marine Seguradora
  (97.8%)

Profit	2018	2019
9.1 → ¥10.8 bn
M/S	No. 6 (5%)

¥3.6tn

<> Premiums>

2015-2019CAGR

9.8%

vs Market +2.2pt

Non-Life Premiums: NWP for Tokio Marine,

GWP for others37 Source: Swiss Re

III. International

Strengths

Current MTP

Next MTP

Strength in International Insurance

Achieve stable profit growth supported by the strength

Well-balanced business portfolio,		Well-disciplined underwriting /
strong specialty franchise		Adequate risk control
	Strength
	Competitive Advantages
Group level financial strength and		Integrated Group Management
sophisticated ERM

International: Business Unit Profits

Further Risk Diversification

&

Lower Volatility

■ Philadelphia	■
■ Delphi	■ Asia	¥179.5bn
■ Europe	■ Life
■ TMHCC	■

¥52.7bn*

¥3.5bn

2002	2010	2019
Copyright (c) 2020 Tokio Marine Holdings, Inc.	*: Before adjustment relating to natural catastrophe in 1Q 2011	38

III. International

Strengths

Current MTP

Next MTP

Initiatives During Current Mid-Term Business Plan

Steadily addressed issues and prepared for capturing "opportunities" in the future

Strengthening of

Management Structure

• Establish "Co-Head of International Business" structure
• Strengthen business platform through large M&A (PURE, etc.), Bolt-on M&A, and divestment
• Globalize corporate function (ERM・Internal Audit・IT Support, etc.)
• Group-widetalent management (strategic allocation of executive candidates and experts)

			Social Inflation /	 Reserve review, enhancement of underwriting discipline, reduction of limit, rate increase above
			loss cost, prompt claim settlement (PHLY)
			Medical Cost Inflation
			 Rate and Self Insured Retention increase on Medical Stop Loss (TMHCC)
Response to
Changing Social				 Shift to improve underwriting profit based on lower interest rate on each Group Company
/ Business			Lower Interest Rate	 Rate and Self Insured Retention increase on Excess Workers' Compensation (DFG)
Environment				 Optimization of investment portfolio under lower interest rate environment
			Risk Control by	 Reduction of profit volatility through controlling group retention
			Reviewing
			 Appropriate reinsurance program based on NatCat and market environment
			Reinsurance Program
			Review of	 Divestment of TMR
Strengthening			 Restructuring of UK/EU business, Strengthening of TMK Management structure, and profitability
		Management Strategy/
of GC's			improvement through focusing on areas / products where TMK has competitive advantage
		Business Restructuring
Management			 Integration of Safety (acquired) and an existing subsidiary in Thailand
Structure and			Allocation of Group
Operation			 Group-wide digital utilization and busuness process improvement
		Resources
				39
Copyright (c) 2020 Tokio Marine Holdings, Inc.

III. International

Strengths

Current MTP

Next MTP

Strategic Direction for Next Mid-Term Business Plan

Contribute to the Group through both profit growth and risk-diversification

Strategic Direction for Next Mid-Term Business Plan

Our Key Initiatives

Enhance capability to increase underwriting profits

Foster and increase "Pillars of profit", including continued enhancement of synergies within the Group

Further accelerate innovation and improve operational efficiency under post COVID-19 environment

Effectively manage investment within Group risk appetite

Steady implementation of revival plan for respective group company

Seek further opportunity for strategic M&A

Strengthen global business management and governance capabilities

Copyright (c) 2020 Tokio Marine Holdings, Inc.

40

III. International

Strengths

Current MTP

Next MTP

Enhance Capability to Increase Underwriting Profits (1)

Key lines have realized rate increases above hardening market

Aim to achieve higher profitability

													Figures in brackets for
													FY2019 Premiums
		General Liability (32.4%)		Commercial Auto (16.6%)		Umbrella (8.3%)
	13.0%			12.3%		13.0%			10.6%		30.0%
PHLY	11.0%					11.0%				25.0%			22.1%
Market*1	9.0%					9.0%			9.6%	20.0%			20.0%
									15.0%
	7.0%			6.8%	7.0%					10.0%
	5.0%					5.0%					5.0%
	2019.4Q	2020.1Q	2020.2Q	2019.4Q	2020.1Q	2020.2Q	2019.4Q	2020.1Q	2020.2Q

TMHCC

Market*1

For Medical Stop Loss, estimated loss cost (Leveraged Trend) is used because there is no market data

	Medical Stop Loss*2 (37.3%)		U.S. D&O*3 (8.6%)				Property D&F*4 (2.3%)
30.0%	Shown on a yearly basis due to heavy volume in 1Q	30.0%			24.7%		30.0%
25.0%				23.5%		25.0%				25.0%			19.3%
						23.4%
							20.0%
				21.0%
20.0%				20.0%
							15.0%
													13.3%
15.0%						15.0%					10.0%
10.0%						10.0%					5.0%
									2019.4Q	2020.1Q	2020.2Q
2018	2019	2020.1H	2019.4Q	2020.1Q	2020.2Q

*1: U.S. Commercial P&C Market (Excluding Medical Stop Loss & U.S. D&O ) Source: COMMERCIAL PROPERTY / CASUALTY MARKET INDEX Q2/2020,

Copyright (c) 2020 Tokio Marine Holdings, Inc. The Council of Insurance Agents & Brokers

*2: TMHCC: Effective rate change basis, including higher deductible effect Market: Estimated loss cost (Leveraged Trend)

*3: Market: Public Primary D&O, Source: Aon41

*4: Market: Rate increase data for "Property" line total

III. International

Strengths

Current MTP

Next MTP

Enhance Capability to Increase Underwriting Profits (2)

Continue / enhance improving profitability for some entities to increase profits

Improve profitability for PHLY (measures for social inflation)

• Implemented past reserve provision in FY2019 ($273M) and strengthened underwriting discipline

*1>		102.0%
				97.8%
	93.5%	95.3%
	2017	2018	2019	2020 1H		*1: Local management
accounting basis

Improve profitability for TMK (Lloyd's)

• Restructuring of UK/EU business
• • Refocus on Lloyd's business and focus on areas / products where TMK has competitive advantage to improve profitability
  • Run-offunprofitable UK non-Japanese company business
• Capturing market hardening expected in most lines of business in FY2020 & FY2021

• Implemented proactive rate increase initiative ahead of peers. Profitability will improve going forward

＜Rate Increase＞

12%9.9%

8%	PHLY	7.2%
3.2%		Market*2
4%
0%
2018	2019	2020 1H

*2: Source: Willis Towers Watson

• Strengthened underwriting discipline on new and renewal book. The ability to win new business book remains strong
• In line with 2020 plan even under COVID-19

（USD mn）

490 520 490

10y ave.

2019

2020 Plan

80%			TMK(Syndicate510) *3
		Lloyd's Total *4
69.2%
61.1%
Steady progress of
	profitability		48.4%	Around 50%
40%	improvement
2017	2018	2019	2020 1H *5

*3: Local management accounting basis

*4: Source: Lloyd's Annual Report

*5: Excluding impact of COVID-19

Copyright (c) 2020 Tokio Marine Holdings, Inc.

42

III. International

Strengths

Current MTP

Next MTP

Foster and increase "Pillars of profit" (1)

Stable profit growth through fee-driven Pure Group in HNW market with high growth potential

Pure's Strong top-line growth*1

Customer loyalty supporting Pure's growth (NPS*2)

	Achieved 22%
	growth during
CAGR	COVID-19
pandemic
24%	(As of 1H20)

35 39

71 77

47 52

（USD mn）

1,153

963

781

Homeowners

Auto

Apple

Intel

Pure

Starbucks

insurance insurance

industry industry

average average

*2: Net Promoter Score

Source: Customer GURU, NICE Satmetrix 2019 Consumer Net Promoter Benchmark Study

640

Original Services

responding to client needs

490

2015

2016

2017

2018

2019

2020 (image)

*1: Premiums under management company

(Example)

Aug. / Sep. 2020, Western U.S. Response to record scale wildfire

• Information gathering from forecast companies or SNS and alert emailing to client
• Worked tirelessly around the clock to prevent fire spread to multiple properties

Coating property with gel

to prevent fire spread

Copyright (c) 2020 Tokio Marine Holdings, Inc.

43

III. International

Strengths

Current MTP

Next MTP

Foster and increase "Pillars of profit" (2)

Steady execution of strategies to increase future profit in market with high growth potential

Bolt-on M&A by TMHCC

Establish JV with Caixa Bank	Completed integration with Safety
No.4 market share in country

Tokio Marine

Insurance (Thailand)

Insurance JV	Tokio Marine Safety
Insurance (Thailand)

• May 2020: TMHCC acquired UK insurance agent handling insurance in the area of renewable energy business
• Insurance market size in the area is $500- 700mn*1 and is expected to expand further(GCube's top-lineto exceed $150mn in FY2023)
• Contribute to promoting creation of a sustainable future through insurance business

• Established insurance JV with Caixa Bank, who has 70% market share in mortgage market, to sell highly profitable home insurance (mortgage insurance, homeowners insurance)
• Steady progress towards start of operation in February 2021
• Aim at about ¥6 billion after-taxprofit*3 in five years (FY2025) (equivalent to Tokio Marine's 25% equity holding)

• February 2020: Completed integration of existing subsidiaries with Safety (acquisition in Aug. 2018)
• Affected by impact from COVID-19 at the moment, but maximize synergy in the largest insurance market in Southeast Asia and fast-growing insurance market to sell personal and business insurance

Growth of		CAGR
renewable	6%
energy		Renewable Energy

Brazil

2019

$1.8bn Home insurance Top-line*4

2019

$9.3bn Top-line*5

Thailand

business	51%
18%	27%

Market

2015-2019

Market

2015-2019

(Ratio to global	2005	2020(E) 2035(E) 2050(E)
power supply)

*1: Estimated by TMHD

*2: Source: McKinsey

Copyright (c) 2020 Tokio Marine Holdings, Inc.

+7.6% Home insurance Top-line CAGR*4

*3: FX on announcement

*4: Source: Brazilian insurance regulator SUSEP

+7.2% Top-line CAGR*5

*5: Source: Swiss Re

44

III. International

Strengths

Current MTP

Next MTP

Foster and increase "Pillars of profit" (3)

Create synergies by leveraging our global network and Group-wide expertise, etc.

Group synergies

Revenue	Investment
Leverage our	Leverage
global network	Delphi's asset
	management
	capabilities
	Group
	synergies
	Annual results:
	USD 318mn
Capital	Cost
Optimize retention /	Leverage group resources
reinsurance on a group	and economies of scale
basis

Impact on profits from expanded group synergies

318 (USD mn）

170

20162019

＞

Revenue Synergy in Pure group

• Sell TMHCC products like crisis management insurance and event cancellation insurance to Pure policy holders
• Partnership between leading PHLY and Pure agents (sales partnership)
• Joint marketing by Hawaii subsidiary and Pure for Hawaiian agent
• Private jet UW support by TMNF

Copyright (c) 2020 Tokio Marine Holdings, Inc.

45

III. International

Strengths

Current MTP

Next MTP

Further Accelerate Innovation and Improve Operational Efficiency under Post COVID-19 Environment

Accelerate digitalization to prepare for post-COVID-19 environment

Tackle operational reform by making the most of advantages of integrated group management

Examples of digital utilization

in Asia

Improve CX	Introduce new sales model	Cost reduction
Aim at CX improvement to earn	Introduce new sales model to	Aim at significant cost reduction
customer loyalty in Asia	capture growth potential in Asia	to reduce large volume of
		manual processes in Asia

• Digital recommendation tool for sales agent standardizing information and quality to customers
  Our life business in India grew despite

market decline under COVID-19

 Expand partnership with platformers

(E-commerce, ride sharing, etc.)

 Customer inquiry response and

product recommendation by chat-bot

 AI fraud detection on automobile

insurance

＜Top-line growth*＞

14%

Tokio Marine

Life biz. in India

Market

-11%

 Customer targeting and tele-

marketing with bank data to millions

of bank clients

 Considering up and cross-selling with

 Streamline claim service operation

with RPA

 Considering to establish "RPA Library"

• Prompt insurance payment with AI (within 30 mins)

*: Top-line growth in FY2020 1H (individual insurance)

Copyright (c) 2020 Tokio Marine Holdings, Inc.

information from healthcare platform

each GC can utilize to share RPA

know-how

46

III. International

Strengths

Current MTP

Next MTP

Seek Further Opportunity for Strategic M&A

Determination of intrinsic value will remain the key even in post-COVID-19 environment Capture further growth and pursue business diversification through various strategic options while maintaining discipline

M&A strategy

Developed markets		Emerging markets

M&A

M&A including bolt-on M&A

Partnership (Bancassurance, etc.)

Strict acquisition criteria to maintain discipline

Cultural fit

Target

High profitability

Hurdle rate

Solid business model

Additional risk taking

Developed / Emerging

markets

Establish new offices

Cost of capital (7%)

• risk premium
• country interest rate spread

Copyright (c) 2020 Tokio Marine Holdings, Inc.

47

Ⅳ	Investment Strategy

Group CIO Yoshinari Endo

Copyright (c) 2020 Tokio Marine Holdings, Inc.

48

IV. Asset Management

Group

International

Domestic

Future Plans

Group Asset Management Policy

Secure long-term and stable investment income under a policy reflecting the characteristics of insurance liabilities

with ALM at the core

Investment Portfolio (Sep. 30, 2020)

Non-Investment Assets

		12.6%	Investment
			Assets
			¥22.3 trillion
Other 5.1%
Domestic	8.4%	HD Total
equities		Assets	Domestic bonds
(Mostly business-related
¥25.5 trillion
equities)		42.6%
Loans	6.1%	(Sep. 30, 2020)

(Mainly overseas CRE 3.6%)

Foreign

securities, etc. 25.3%

(Foreign bonds 21.8%, CLO 3.5%)

1. Domestic bonds: Enhance ALM based on insurance liabilities

2. Foreign securities, etc./Loans: Profit contribution by asset

diversification

3. Domestic equities: Mainly business-related equities

Secure stable yield

Interim

Japan		Overseas		Group

(Reference) Open Market Rates

FY2020

Interim

Period

US 10Y Treasury 10Y JGB

Copyright (c) 2020 Tokio Marine Holdings, Inc.

49

IV. Asset Management

Group

International

Domestic

Future Plans

Investment Risk Appetite

Each risk is managed within the ERM framework from an overall Group perspective Aim at profit contribution by taking credit risks under appropriate risk control

Control of interest rate risk

• Control of interest rate risk with appropriate ALM in each country/entity
• For domestic life, interest rate risk is managed by matching asset and liability interest rate sensitivity rather than by using duration, which lacks the concept of volume (about 90% hedge ratio, Sep. 30, 2020)

Control of credit risk

• Take certain credit risk mainly with highly rated bonds
• Diversify domestic and overseas risks and investment methods
• Leverage on the strength of DFG for appropriate integrated risk control and risk taking in US/Japan
• HD engaged in cautious monitoring including risk limit management, etc.

Control of FX risk

• Each country/entity mainly makes investments in own currency corresponding to insurance liabilities
• Foreign currency denominated assets are fully hedged using currency options and derivatives

Control of equities risk

• Continue to reduce business-related equities to improve capital efficiency

Bonds and similar assets by rating (Sep. 30, 2020)

Others

Copyright (c) 2020 Tokio Marine Holdings, Inc.

50

IV. Asset Management

Group

International

Domestic

Future Plans

DFG's Strong Asset Management Capabilities

Achieved strong track record steadily outperforming the market utilizing profound investment expertise and abundant experience

Long-term investment style

• Invest in interest rate assets such as bonds and loans that match the cash flow structure of the long-term, stable insurance liabilities (liquidity risk is acceptable)
• Hold to maturity based on ALM regardless of short-term market fluctuation (average duration: 4 years for assets, 6 years for liabilities)

Strength of DFG investment team

• Team experienced numerous market events including the collapse of Lehman Brothers, and produced stable returns throughout the market cycles
• Data gathering and analysis leveraging on broad network
• Continuous portfolio rebalancing in response on the economy, etc.

Category	Amount
(FY2020 interim

Stable track record

[Investment Returns*2]

• Secured positive returns throughout the period despite some negative effects such as collapse of Lehman Brothers

8.0%

DFG

6.0%

Market*3

4.0%

2.0%

0.0%

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

-2.0%

*2: (Income + gains/losses on sale + impairment loss)/AUM

*3: Average of US P&C companies (market cap $10bn+) (Source) SNL, Factset

[Track record vs. index]

			period)
Group Total Assets		¥25.5 trillion
		DFG Proprietary	Approx. ¥2.8
		assets
Of which DFG		trillion
AUM*1
	Group company	Approx. ¥1.5
		assets
		trillion

*1: Amount as of Sep. 30, 2020, with JPY / USD rate as of Sep. 30

Copyright (c) 2020 Tokio Marine Holdings, Inc.

7.63%
	6.66%
4.04%	4.27%
3-year average	2007-2019
(2017-19)	Average

• DFG ■ Barclays Aggregate

	3.26%	3.21%
2.87%
1.56%
3-year average	2007-2019
(2017-19)	Average

51

IV. Asset Management

Group

International

Domestic

Future Plans

DFG Asset Management Strategy

Aim to improve profitability with allocation based on return on risk among similar investment assets that generate profit from credit risk

DFG Investment Portfolio

(including assets entrusted by Group company)

Risk/return ratio for key assets

Other 7%

Loans 24%

(Of which CRE loans 20%)

	Mar. 31, 2018
	¥2.8 trillion
Securitized bonds 27%
(Of which CLO 15%)
Other 6%
Loans 31%	Sep. 30, 2020
(Of which CRE loans
¥4.3 trillion
25%)

Securitized bonds 23%

(Of which CLO 15%)

Copyright (c) 2020 Tokio Marine Holdings, Inc.

Bonds 42%

Bonds 40%

Returns

High	Improved profitability
	with DFG's strength
	CRE
	Loan
	CLO	CMBS
	(A)	(A)

Bonds

(BBB)

Bonds (AAA)

Low

Low

High

Risks

52

IV. Asset Management

Group

International

Domestic

Future Plans

Control of US Credit Risk Assets (CLO)

Invest in CLO, leveraging on DFG's strong expertise and abundant experience

CLO investment (Sep. 30, 2020)

Balance	Approx. ¥900bn
Main asset	DFG
management entity
Currency	USD
Insurance liabilities	USD*1
Underlying assets	Corporate loans
Average rating	A

*1: Includes some JPY denominated insurance liabilities with FX risk hedged

DFG's strength in CLO investment

• Insurance liabilities allow holding to maturity
• Data gathering network built over the years
• Expertise to accurately capture the CLO tranche structure from contracts
• Detailed risk management (monthly monitoring, stress testing based on conservative scenarios, strong checks on outside managers*2)

*2: Asset manager for replacing underlying assets

Copyright (c) 2020 Tokio Marine Holdings, Inc.

CLO investment scheme and status

• The Group mainly holds CLOs rated BBB or above which are unlikely to default at present
• Stress testing indicates that CLOs rated BBB or above will not incur losses unless in case of 3 consecutive years of 10% or more default ratio

					CLO
	Asset manager						Group
	selects/replaces				AAA	investment
	securities
				60ー65%	targets
		Leveraged
Leveraged
	loans for 100-			AA 7ー15%	Portfolio
loan
	300			A 3ー8%	composition
market
	companies		BBB 3ー7%	(Sep. 30, 2020)
				BBーB 5ー8%	AAA-AA: 30%
				Equities 9ー10%	A	: 39%
							BBB	: 26%

• Default ratio for corporate loans underlying CLOs is increasing, but was 4.2% as of September 2020

Leveraged loan default ratio

12.0%

Long-term

Nov. 2009

10.0%

average

10.8%

Sep. 2020

(from 1999)

8.0%

4.2%

2.9%

6.0%

4.0%

2.0%

0.0%

May-02

Mar-03

Jan-04Nov-04Sep-05Jul-06May-07

Mar-08

May-12

Mar-13

May-17

Mar-18

Jan-99

Nov-99

Sep-00

Jul-01

Jan-09

Nov-09

Sep-10

Jul-11

Jan-14Nov-14Sep-15

Jul-16

Jan-19

Nov-19

Sep-20

53

IV. Asset Management

Group

International

Domestic

Future Plans

Control of US Credit Risk Assets (CRE Loans)

Invest in CRE loans, strictly selecting prime transactions, based on close cooperation between DFG and outside managers

CRE loans investment (Sep. 30, 2020)

Balance	Approx. ¥920bn
Main asset	DFG
management entity
Currency	USD
Insurance liabilities	USD*1
Loan to Value*2	62%
Main property	Office
Rental housing
category
Hotel

*1: Includes some JPY denominated insurance liabilities with FX risk hedged

*2: Loan balance / collateral value

DFG's strength in CRE loans investment

• Active involvement in decision making by attending the outside manager's investment committee (careful investment process and monitoring)
• Active collection activities (workout) for underperforming loans possible as the sole lender

CRE loans investment scheme and status

• Invest in real estates strictly selected with consideration of LTV and ease of attachment and collection, based on the outside manager's broad network (TMHD has right to veto)
• Short average holding period of about 3 years. Easy to change sectors after maturity
• Diversified investment without concentrating in specific region/sector

		Provide loans		Agency	Tokio
	CRE		Outside	agreement	Marine
CRE		Manager		Group
Loan	Collect
Tenant		principal		Active	(Investor)
	and interest
			involvement

Lease agreement

(Rent payment)Equity Property ownership

Sponsor

• Some interest deferral request has been made due to the impact of COVID-19, but appropriateness of payment plan has been confirmed through negotiation with the sponsors
• New investments are limited to multi-family housing, warehouses and logistics facilities, etc., which are less affected by COVID-19 (shift of portfolio target sectors)

Copyright (c) 2020 Tokio Marine Holdings, Inc.

54

IV. Asset Management

Group

International

Domestic

Future Plans

Reduce Business-related Equities

Ongoing efforts to reduce business-related equities from the perspective of capital efficiency improvement

• Book value of business-related equities declined to 35% from Mar. 31, 2002 through steady action
• Sold total amount of approx. ¥2.2tn*1 since FY2002
• In this mid-term business plan, we will also plan to sell ¥100bn or more a year

Book value of business-related equities*2

			Non-Investment Assets
				12.6%	Domestic
			Other
				Bonds
			5.1%
				42.6%
	Domestic	Total Assets
100	equities
	¥25.5 trillion
	8.4%
			(Sep. 30, 2020)
			Loans
	82		6.1%
			Foreign securities, etc.
				25.3%
	57
		42	36
				35

End of Mar 2002

End of Mar 2007

End of Mar 2012

End of Mar 2017

End of Mar 2020

End of Sep 2020

*1: Market price at the time of sale

Sales amount

	Fiscal Year	Plan	Results
Previous	2015		¥122.0bn
Mid-Term		¥100.0bn
Business	2016	¥117.0bn
or more
Plan
	2017		¥108.0bn
Current	2018		¥107.0bn
Mid-Term		¥100.0bn
2019	¥107.0bn
Business
or more
Plan
2020	¥72.0 bn
		(Sep. 30, 2020)

Continue selling efforts to reduce risk

Copyright (c) 2020 Tokio Marine Holdings, Inc.	*2: Indexed to the end of Mar. 2002 as 100.	55

IV. Asset Management

Group

International

Domestic

Future Plans

Future Plans in Light of COVID-19

Promote initiatives to secure stable investment returns in COVID-19 affected market environment

FY2020	Japan	Overseas
Decrease in
investment return	-¥4.0bn	-¥34.0bn
due to COVID-19

COVID-19>

Existing policies were prepared for the risk of decreased return, but implement following measures

1. Continue ALM reflecting the characteristics of insurance liabilities
2. • Steady implementation of ALM reflecting the characteristics of insurance liabilities under any environment
3. Agile response to change in market environment (interest rate volatility and further economic downturn)
4. • Increase the ratio of cash and deposits to prepare for further economic downturn from COVID-19 and agile investment upon market recovery
   • Considering the interest rate risks including sudden fluctuation, make balanced investment between fixed and variable rates
5. Investment based on risk and return
6. • Utilize DFG's data network and analysis capacities, strictly select attractive investments based on risk and return with consideration of default losses for each asset

Copyright (c) 2020 Tokio Marine Holdings, Inc.

56

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 : www.tokiomarinehd.com/en/inquiry/

TEL : [phone]

Copyright (c) 2020 Tokio Marine Holdings, Inc.