Tokio Marine Holdings, Inc. · TSE:8766
Tokio Marine — Merger or Acquisition (July 2008)
28 slides from Tokio Marine's merger presentation, Jul 23, 2008
Slide 1: Acquisition of Philadelphia Consolidated Holding Corp.
Acquisition of Philadelphia Consolidated Holding Corp. July 23, 2008 Tokio Marine Holdings, Inc. President: Shuzo Sumi
Slide 2: Disclaimer
Disclaimer Cautionary Statement Regarding Forward-Looking Statements Certain statements in this presentation may constitute "forward-looking statements." Actual results could differ materially from those projected or forecast in the forward-looking statements. The factors that could cause actual res
Slide 3: Contents
Contents 1. Transaction summary 2. Strategic rationale 3. Overview of Philadelphia Consolidated 4. Commitment of management 5. Joint initiatives toward future growth 6. Valuation, financial impact and dividend and share buyback policy Appendix 1: 1H 2008 Financial Results of Philadelphia Consolidate
Slide 4: Transaction Rationale at a Glance
1. Transaction Summary Transaction Rationale at a Glance Transaction allows the Tokio Marine Group to establish a significant presence in the U.S, the world's largest insurance market. Transaction leads Tokio Marine to significant expansion of revenues and profits of the international insurance busi
Slide 5: Philadelphia Consolidated: Excellent strategic fit
1. Transaction Summary Philadelphia Consolidated Excellent strategic fit One of the best performers in the U.S. P&C market through all cycles Consistently achieved superior growth and profitability since its foundation in 1962 Focus on targeted markets in specialty and commercial line Most business
Slide 6: Transaction Terms
1. Transaction Summary Transaction Terms Transaction Consideration per Share Consideration Details Aggregate Consideration $61.50 per fully diluted share Expected Closing Date Approvals All cash acquisition of 100% of Philadelphia Consolidated's outstanding shares Employment agreements with key mana
Slide 7: Mid-to-long Term Corporate Strategy of the Tokio Marine Group
FY 2008 (Forecast) Tokio Marine plans to triple its FY 2005 group adjusted earnings of JPY 138.7B by FY 2015. Expansion of international insurance business is a driving force for our growth strategy. Domestic Non-Life Domestic Life International Insurance Business Asset Management and Other Non-insu
Slide 8: Establish a significant presence in the U.S
2. Strategic Rationale Establish a significant presence in the U.S Geographical Distribution of Global P&C Premium (2007) Historical U.S. P&C market size and growth rate (Direct Premiums Written) Asia 7% Other 3% Japan 6% EU 35% U.S. 39% Canada/Central and South America 6% Other Europe^^^ 4% (Unit:
Slide 9: International expansion of revenue and profits
2. Strategic Rationale International expansion of revenue and profits Pro-forma Basis Approx. JPY 740B JPY 547.3B Approx. JPY 195B up 35%up Net Premiums Written of International Business Adjusted Earnings of International Business Pro-forma Basis Approx. JPY 62B JPY 31.7B Acquisition of Philadelphia
Slide 10: Expansion of profits and a well-balanced global portfolio
2. Strategic Rationale Expansion of profits of Tokio Marine Group and create a well- balanced global portfolio After Acquisition^^^^ Before Acquisition Philadelphia Consolidated enables Tokio Marine to significantly increase its international business which has higher growth potential Adjusted Earni
Slide 11: Greater geographic balance in international portfolio
North & Central America 35% (Philadelphia Consolidated 27%) Asia/Oceania 24% Reinsurance 13% Europe/ Middle East 19% (Kiln: 15%) North & Central America 12% South America 32% Asia/Oceania 18% Reinsurance 9% Europe/Middle East 14% (Kiln 11%) South America 24% .. Before Acquisition of Philadelphia Con
Slide 12: Philadelphia Consolidated - Competitive Advantages
3. Overview of Philadelphia Consolidated Philadelphia Consolidated - Competitive Advantages Founded in 1962, based in Bala Cynwyd, in the suburbs of Philadelphia, PA 47 Offices in the US, 1400 Employees Chairman James J. Maguire and CEO James J. Maguire, Jr. <Competitive Advantages> Capital strength
Slide 13: Philadelphia Consolidated's network across the U.S.
3. Overview of Philadelphia Consolidated Philadelphia Consolidated's network across the U.S. Philadelphia Consolidated's significant US presence will afford Tokio Marine a strong base of operations 47 offices in 13 regions covering the U.S. Direct sales organization initiates proactive risk selectio
Slide 14: Superior growth and profitability
3. Overview of Philadelphia Consolidated Superior growth and profitability (Unit: $ in millions) Historical Net Income ** (1997-2007) CAGR (1997-2007) 34.5% (US P&C Insurance industry Average: 7.4%) Philadelphia Consolidated has the proven ability to deliver consistent premium growth and profits thr
Slide 15: Superior underwriting performance
3. Overview of Philadelphia Consolidated Superior underwriting performance Loss and LAE Performance (1997-2007)* Combined Ratio Performance (1997-2007)* Culture of disciplined underwriting, product development and loss control has allowed Philadelphia Consolidated to consistently beat the industry a
Slide 16: Commitment of management
4. Commitment of management Employment agreements with key management including retention package Substantial personal investment in Tokio Marine Holdings stock by Philadelphia Consolidated's Chairman and significant personal investment by executive management Exchange of board members between Phila
Slide 17: Joint initiatives toward future growth
5. Joint initiatives toward future growth Expand growth of Philadelphia Consolidated's business in U.S., supported by the Tokio Marine's superior credit ratings and financial strength. - - Accelerate expansion of high-quality portfolios by utilizing Tokio Marine's capital strength. - - Improved effi
Slide 18: Valuation, Financial Impact and Dividend and Share Buyback Policy
6. Valuation , Financial Impact and Dividend and Share Buyback Policy Our valuation is based upon fundamental analysis. This represents a premium to the last twelve months average share price of 66.5%. When compared to the last full calendar year of trading, 2007 being a calmer period in financial m
Slide 19: Appendix 1: 1H 2008 Financial Results
Appendix 1: 1H 2008 Financial Results of Philadelphia Consolidated - - Second Quarter & Year-to Date Highlights - - Commercial Lines Segment - - Specialty Lines Segment (Professional / Management Liability)
Slide 20: Second Quarter & Year-to-Date Highlights
Philadelphia Consolidated Second Quarter & Year-to- Date Highlights (Dollars in millions, except per share data) QTD 2008 YTD 2008 Gross Written Premiums $445.3 $888.4 Net Earned Premiums $393.0 $772.4 Net Investment Income $32.3 $64.3 Net Income $52.9 $115.6 After Tax Realized Investment Gain (Loss
Slide 21: Commercial Lines Segment
Philadelphia Consolidated Commercial Lines Segment 2002 2003 2004 2005 2006 2007 YTD 2008 QTD 2Q07 QTD 2Q08 473 662.3 874 960.3 1169.4 1388.2 723 321.9 364.6 CAGR 2002-2007 = 24.0% 13.3% Q/Q Growth 14.2% Y/Y Growth
Slide 22: Specialty Lines Segment
Philadelphia Consolidated Specialty Lines Segment (Professional/Management Liability) 2002 2003 2004 2005 2006 2007 YTD 2008 QTD 2Q07 QTD 2Q08 110.2 154.1 184.4 205.3 227.6 245.2 134.3 60 65.2 CAGR 2002-2007 = 17.3% 8.7% Q/Q Growth 11.3% Y/Y Growth
Slide 23: Appendix 2: Additional Information
Appendix 2: Additional Information of Philadelphia Consolidated - - Organization Chart - - Experienced Management Team - - Income Statement - - Balance Sheet
Slide 24: Philadelphia Consolidated Organizational Chart
Philadelphia Consolidated Organizational Chart Philadelphia Consolidated's companies include four statutory entities, 7 service companies and an investment company All subsidiaries are owned 100% Appendix Philadelphia Consolidated Holding Corp. Maguire Insurance Agency, Inc. PCHC Investment Corp. Li
Slide 25: Experienced Management Team
Experienced Management Team Name Position Comment James J. Maguire Chief Executive Officer, President & Director Served as CEO since 2002 and President since 1999. Before Philadelphia Consolidated, he served as Assistant Vice President of Underwriting at American International Group, Inc. James J. M
Slide 26: Philadelphia Consolidated Income Statement
Philadelphia Consolidated Income Statement Historical Income Statement Appendix Figures are on a U.S. GAAP basis.
Slide 27: Philadelphia Consolidated Balance Sheet
Philadelphia Consolidated Balance Sheet Historical Balance Sheet Appendix Figures are on a U.S. GAAP basis.
Slide 28: Company Contacts
Name: Joe Barnholt Title: Assistant Vice President, Investor Relations Phone: 1-610-617-7626 Email: jbarnholt@phlyins.com Company Contacts Appendix Tokio Marine Holdings, Inc. Philadelphia Consolidated Name: Toshihiko Aizawa Title: General Manager and Group Leader, Corporate Communications and Inves
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