Tokio Marine Holdings, Inc. · TSE:8766

Tokio Marine — H1 FY2015 Earnings Presentation

56 slides from Tokio Marine's earnings presentation, November 2015

  1. Slide 1: Mid-Term Business Plan 'To Be a Good Company 2017' FY2015 Update

    Tokio Marine Group Mid-Term Business Plan “To Be a Good Company 2017” FY2015 Business Plan Update November 2015 Tokio Marine Holdings, Inc.

  2. Slide 2: Table of Contents

    Table of Contents Ⅰ Tokio Marine Group Business Strategy 1. Progress of FY2015 Business Plan 2. Update of the Mid-Term Business Plan 3. ERM & Shareholder Returns Ⅱ Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance Reference ◆Abbreviations used in t

  3. Slide 3: Key Message

    Key Message  Adjusted net income for FY2015 is revised downward by ¥31B mainly due to an increase in natural catastrophe losses including typhoons in Japan and large losses Whereas, premium growth is revised upward due to steady progress of growth measures in each domain (billions of yen, except fo

  4. Slide 4: Tokio Marine Group Business Strategy

    Ⅰ Tokio Marine Group Business Strategy Copyright (c) 2015 Tokio Marine Holdings, Inc. 3

  5. Slide 5: Tokio Marine Group Business Strategy

    Ⅰ. Tokio Marine Group Business Strategy 1. Progress of FY2015 Business Plan 2. Update of the Mid-Term Business Plan 3. ERM & Shareholder Returns Copyright (c) 2015 Tokio Marine Holdings, Inc. 4

  6. Slide 6: 1-1. 2Q FY2015 Results

    1-1. 2Q FY2015 Results Adjusted Net Income (Group Total) (billions of yen) -19.2 159.5 140.3 Adjusted Adjusted net income decreased by ¥19.2B YoY due to an Net impact of natural catastrophes in domestic non-life, etc. Income despite an increase in overseas subsidiaries and domestic life 2014 2015 1H

  7. Slide 7: 1-2. FY2015 Full-Year Projections

    1-2. FY2015 Full-Year Projections Adjusted Net Income (Group Total) -31 (billions of yen) 323.3 327 296 Adjusted Adjusted net income is revised downward by ¥31B Net reflecting natural catastrophe losses including typhoons in Income Japan, as well as large losses 2014 2015 Projections (Original) (Rev

  8. Slide 8: Tokio Marine Group Business Strategy

    Ⅰ. Tokio Marine Group Business Strategy 1. Progress of FY2015 Business Plan 2. Update of the Mid-Term Business Plan 3. ERM & Shareholder Returns Copyright (c) 2015 Tokio Marine Holdings, Inc. 7

  9. Slide 9: 2-1. Acquisition of HCC

    2-1. Acquisition of HCC  Completed acquisition of HCC in Oct. 2015, total consideration is approx. USD7.5 billion  Balance sheet will be consolidated from 3Q FY2015 (end of Dec. 2015)  Earnings (Jan. - Mar. 2016) will be consolidated from 1Q FY2016 (Apr. - Jun. 2016) ■ Key Strengths of HCC ■ Stra

  10. Slide 10: 2-2. A Truly Global Insurer with Premier Specialty Franchises

    2-2. A Truly Global Insurer with Premier Specialty Franchises ■ Growth in Business Unit Profits of our Past Acquisitions (2014 vs. First Year after Acquisition) All three acquired specialty companies grew significantly post acquisition as part of Tokio Marine Group Tokio Marine Kiln Philadelphia Del

  11. Slide 11: 2-3. Creating Group Synergies

    2-3. Creating Group Synergies  Developing new businesses and further expanding profit by combining strengths of Tokio Marine Group and HCC  Establishing joint initiatives to promote synergy creation by HCC and Group companies worldwide • Leverage Tokio Marine’s global • Cross sell HCC’s specialty

  12. Slide 12: 2-4. Objectives of the Mid-Term Business Plan (Update)

    2-4. Objectives of the Mid-Term Business Plan (Update) Reflecting the completion of HCC acquisition, we have a clearer outlook of an adjusted ROE of upper 9% range and adjusted net income of approx. ¥400B in FY2017 FY2017 Target *1 Outlook (Update) FY2014 Results Enhance Adjusted ROE 7.6% 1 capital

  13. Slide 13: 2-5. Updated Roadmap of the Mid-Term Business Plan

    2-5. Updated Roadmap of the Mid-Term Business Plan upper 9% range 8.9% 8.2% 7.8% 7.8% Cost of capital 7.6% 6.5% 6.7% Adjusted 5.1% ROE 3.2% 1.3% 2011 2012 2013 2014 2015 Projections 2017 (Original) (Revised) Target Previous Mid-Term Business Plan Mid-Term Business Plan ROE (Financial accounting) 0.3

  14. Slide 14: (Blank Page)

    (Blank Page) Copyright (c) 2015 Tokio Marine Holdings, Inc. 13

  15. Slide 15: Tokio Marine Group Business Strategy

    Ⅰ. Tokio Marine Group Business Strategy 1. Progress of FY2015 Business Plan 2. Update of the Mid-Term Business Plan 3. ERM & Shareholder Returns Copyright (c) 2015 Tokio Marine Holdings, Inc. 14

  16. Slide 16: 3-1. Promoting Strong ERM

    3-1. Promoting Strong ERM (Disciplined capital management ) Maintain financial soundness Enhance profitability Balance capital and risk to maintain Sustainable profit growth and AA credit ratings enhance capital efficiency • • Advance natural catastrophe risk management Ensure our financial base can

  17. Slide 17: 3-2. ESR Control through Capital Circulation

    3-2. ESR Control through Capital Circulation • ESR becomes 111% due to the acquisition of HCC, etc. which stays within the range of comfortable level, maintaining financial soundness • Lead to further utilization of capital in the future by continuous reduction of risks associated with business-rela

  18. Slide 18: 3-3. Shareholder Returns

    3-3. Shareholder Returns  Our primary means of shareholder returns is dividends, which we plan to increase in line with profit growth  We pursue steady growth of dividends, and payout ratio as a guide is above 35% of average Steady growth of adjusted net income dividends  Interim dividend is ¥52.

  19. Slide 19: 3-4. Group Asset Management Strategy

    3-4. Group Asset Management Strategy  With asset and liability management (ALM) at the core, we aim to secure sufficient Group Asset Management liquidity and profit Concept  Further promote global portfolio diversification, as the Group expands globally  Aim to enhance profitability within the ra

  20. Slide 20: Business Plan and Strategy by Domain

    Ⅱ Business Plan and Strategy by Domain Copyright (c) 2015 Tokio Marine Holdings, Inc. 19

  21. Slide 21: Business Plan and Strategy by Domain

    Ⅱ. Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance Copyright (c) 2015 Tokio Marine Holdings, Inc. 20

  22. Slide 22: 1-1. TMNF - Progress of the Mid-Term Business Plan

    1-1. TMNF - Progress of the Mid-Term Business Plan Premiums expand in line with the original projections due to steady execution of growth strategies Business unit profits is revised downward due to impact of natural catastrophes and large losses  Net Premiums Written (billions of yen) CAGR +3.8% a

  23. Slide 23: 1-2. TMNF - Combined Ratio

    1-2. TMNF - Combined Ratio Combined ratio (private insurance basis*) is projected to increase from the original projections mainly due to an increase in net incurred losses relating to natural catastrophes and large losses ■ After normalizing natural C/R after normalizing natural catastrophes to ave

  24. Slide 24: 1-3. TMNF - Measures to achieve sustainable growth (1)

    1-3. TMNF - Measures to achieve sustainable growth (1) Significantly enhance the value delivered to customers through every opportunity to become “the best choice ” ●TMNF Number of auto insurance policies (millions of policies) 1.89 （managerial accounting basis, changes over the past one-year） • Fur

  25. Slide 25: 1-4. TMNF - Measures to achieve sustainable growth (2)

    1-4. TMNF - Measures to achieve sustainable growth (2) Promoting R&D for capitalizing on changes in business environment Changes in Demographics IoT New Risks & Medical Environment Drive Agent (for corporate clients) Cyber Risk Insurance Corporate Health Management “Proactive measures” (current prog

  26. Slide 26: Business Plan and Strategy by Domain

    Ⅱ. Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance Copyright (c) 2015 Tokio Marine Holdings, Inc. 25

  27. Slide 27: 2-1. TMNL - Progress of the Mid-Term Business Plan

    2-1. TMNL - Progress of the Mid-Term Business Plan Steady growth in both premiums and profits in line with the original projections by promoting sales shift from saving-type products to protection-type products  New Policies Annualized Premiums (ANP) (billions of yen)  New Policies ANP CAGR ̶ In l

  28. Slide 28: 2-2. TMNL - Life Insurance Revolution to Protect One's Living

    2-2. TMNL - Promotion of “Life Insurance Revolution to Protect One’s Living” Expand and strengthen our unique product line-up which meets the diverse customer needs and serve as a source of stable profit Strengthen competitiveness by actively developing living-protection products which cover convent

  29. Slide 29: 2-3. TMNL - Strengthening Growth Potential

    2-3. TMNL - Strengthening Growth Potential Promote multi-channel strategies with the main focus of unlocking the potential of the integrated business model for life and non-life Strengthen sales capability of life products at non-life agents for sustainable growth Strengthen agent’s capability to ma

  30. Slide 30: (Blank Page)

    (Blank Page) Copyright (c) 2015 Tokio Marine Holdings, Inc. 29

  31. Slide 31: Business Plan and Strategy by Domain

    Ⅱ Business Plan and Strategy by Domain 1. Domestic Non-Life 2. Domestic Life 3. International Insurance Copyright (c) 2014 Tokio Marine Holdings, Inc. 30

  32. Slide 32: 3-1. International Insurance - Progress of the Mid-Term Business Plan

    3-1. International Insurance - Progress of the Mid-Term Business Plan  Continue initiatives to achieve further growth with profitability by maintaining underwriting discipline even under the softening market and negative impact from large losses  With HCC acquisition, promote further diversificati

  33. Slide 33: 3-2. International Insurance - FY2015 Revised Projections

    3-2. International Insurance - FY2015 Revised Projections Net Premiuns Written Business Units Profits FY2015 Projections FY2015 Projections FY2014 FY2014 Original → Revised from FY2014 Results Original → Revised from FY2014 Results Results Results Original (a) Revised (b) (Ref.) Original (a) Revised

  34. Slide 34: 3-3. North America

    3-3. North America Maintaining profit growth outperforming the market through underwriting discipline and action 91% 92% 91% C/R (billions of yen) (billions of yen) Combined Ratio Net Business Premiums +1 Unit Written Profits +1 110% US market average Philadelphia 339 340 44 43 100% 42.3 323.9 90% 8

  35. Slide 35: 3-4. Europe / Reinsurance

    3-4. Europe / Reinsurance Europe Strengthen business platform in the Lloyd’s market and Corporate market under the integrated brand, “Tokio Marine Kiln” (billions of yen) (billions of yen) Net -4 Business Premiums Unit C/R Composition of Net Premiums Written of Written 161 Profits 94% 93% 91% Tokio

  36. Slide 36: 3-5. Emerging Countries

    3-5. Emerging Countries Asia South & Central America Achieve growth in the retail market (targeting the middle-income class) by Continue profit growth by providing products and expanding distribution channels and rolling-out the best-practice within the Group services which meet the needs of custome

  37. Slide 37: Reference

    Reference ・Tokio Marine Holdings Key Statistics a ・Return to Shareholders ・2Q FY2015 Results Overview ・FY2015 Projections Overview b ・Reconciliation of Adjusted Net Income, Adjusted Net Assets and Business Unit Profits ・Definition of Adjusted Net Income and Business Unit Profits ・Long-term Vision an

  38. Slide 38: Tokio Marine Holdings Key Statistics

    Tokio Marine Holdings Key Statistics FY2015 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 Projections Net income (billions of yen) *1 89.9 93.0 108.7 23.1 128.4 71.9 6.0 129.5 184.1 247.4 220.0 Shareholders' equity after tax 3,209.8 3,398.4 2,563.5 1,627.8 2,169.0 1,886.5 1,8

  39. Slide 39: Return to Shareholders

    Return to Shareholders FY2015 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 (Projections) Dividends per share 30yen 36yen 48yen 48yen 50yen 50yen 50yen 55yen 70yen 95yen Dividends per share 105yen Dividends total 25.2bn yen 29.8bn yen 38.7bn yen 38.0bn yen 39.4bn yen 38.6bn y

  40. Slide 40: 2Q FY2015 Results Overview (Consolidated)

    2Q FY2015 Results Overview (Consolidated) (billions of yen, except for %)  Net Premiums Written FY2014 FY2015 YoY • Increased in Group total due to an increase in domestic non-life 2Q 2Q Change % Results Results mainly in fire and auto, in addition to organic growth and a positive ■Ordinary income

  41. Slide 41: 2Q FY2015 Results Overview (Business Unit Profits)

    2Q FY2015 Results Overview (Business Unit Profits) (billions of yen) FY2014 FY2015 Business Domain 2Q 2Q YoY Results Results Change – Domestic Non-Life TMNF： Decreased by ¥23.5B YoY to ¥46.1B Domestic Non-Life 75.7 47.9 -27.7  Increase in net incurred losses relating to natural TMNF 69.7 46.1 -23.5

  42. Slide 42: FY2015 Projections Overview (Consolidated)

    FY2015 Projections Overview (Consolidated)  Net Premiums Written • Upward revision due to (billions of yen, except for %) i. Steady growth in domestic non-life in 1H FY2014 FY2015 FY2015 Projections Projections Difference (b) - (a) Change ii. Expansion of non-catastrophe business in reinsurance Res

  43. Slide 43: FY2015 Projections Overview (Business Unit Profits)

    FY2015 Projections Overview (Business Unit Profits) (billions of yen) FY2015 FY2014 Projections – Domestic Non-Life Business Domain Results Original (a) Revised (b) (b)-(a) TMNF： Downward revision by ¥24B from the original projections to ¥106B Domestic Non-Life 122.5 134.0 110.0 -24.0 TMNF 113.7 130

  44. Slide 44: Reconciliation of Adjusted Net Income/Adjusted Net Assets

    Reconciliation of Adjusted Net Income/Adjusted Net Assets (billions of yen)  Adjusted Net Income*1  Adjusted Net Assets FY2014 FY2015 YoY FY2015 FY2015 FY2015 FY2015 FY2014 FY2014 2Q 2Q Projections Projections (b)-(a) Projections Projections Results Results Results Results Change Original (a) Revi

  45. Slide 45: Reconciliation of Business Unit Profits

    Reconciliation of Business Unit Profits  Domestic Non-Life*1 （TMNF） (billions of yen) FY2014 FY2015 FY2015 FY2015 FY2014 2Q 2Q YoY Projections Projections (b)-(a) Results Results Results Original(a) Revised(b) Net income for accounting purposes 130.2 65.7 -64.5 Net income for accounting purposes 18

  46. Slide 46: Definition of Adjusted Net Income and Business Unit Profits

    Definition of Adjusted Net Income and Business Unit Profits Adjusted Net Income (Group Total)  Adjusted Net Income*1 Provision for Provision for Provision for Adjusted Net income = + catastrophe loss + contingency + price fluctuation Net Income (consolidated)*2 reserves*3 reserves*3 reserves*3 Gain

  47. Slide 47: Long-term Vision and the Mid-Term Business Plan

    Long-term Vision and the Mid-Term Business Plan "To Be a Good Company 2017" A global insurance group that delivers sustainable growth Long-term vision by providing safety and security to customers worldwide - Our timeless endeavor to be a Good Company - Aiming for globally competitive-level earnings

  48. Slide 48: Initiatives for 'Sustainable Profit Growth'

    Initiatives for “Sustainable Profit Growth”  Domestic insurance: Enhancing the integrated business model for life and non-life, strengthening claims-service capabilities, and Unlocking our further utilizing our risk consulting service Enhancement potential  International insurance: Enhancing organ

  49. Slide 49: Framework of the Mid-Term Business Plan and Group Management

    Framework of the Mid-Term Business Plan and Group Management Enhancing Enterprise Risk Management (ERM) to realize sustainable profit growth and higher capital efficiency even in a changing environment, while maintaining financial soundness Generate capital and cash Achieve sustainable profit growth

  50. Slide 50: Basic Information (Domestic Non-Life 1) - TMNF

    Basic Information (Domestic Non-Life 1) - TMNF  Trend of net premiums written and combined ratio  Premium composition by Line 103.3% (FY2014 net premiums written basis) C/R（Private insurance W/P Basis) Net premiums written 99.4% Others (billions of yen) 97.9% 97.2% 12.9% 97.4% CALI Auto 93.1% 13.6

  51. Slide 51: Basic Information (Domestic Non-Life 2) - TMNF

    Basic Information (Domestic Non-Life 2) - TMNF  Trend of underwriting results in auto insurance （W/P basis combined ratio） ＜Factors of profitability deterioration＞ ＜Measures to improve profitability＞  Increase in senior drivers with high accident  Efforts to decrease business expenses frequency s

  52. Slide 52: Basic Information (Domestic Life) - TMNL

    Basic Information (Domestic Life) - TMNL  Growing "Medical & Cancer" market  Growth rate of number of in-force policies at TMNL 【Composition of number of in-force policies】 【CAGR of in-force policies from FY2000 to FY2014】*1 （Individual insurance basis, total of Japanese life insurance market） *1:

  53. Slide 53: Basic Information (International Insurance)

    Basic Information (International Insurance)  Net premiums written in international insurance business (billions of yen) 1,302.6 1,280 Life 1,200 1,074.5 Reinsurance 1,000 800 734.3 North America 544.0 526.5 600 499.7 413.9 362.6 400 Europe & 319.5 Middle East 240.2 South & Central 200 America 118.7

  54. Slide 54: Asset Portfolio

    Asset Portfolio  Domestic Non-Life (TMNF)  Domestic Life (TMNL)  With regard to "long-term insurance liabilities," we aim to maximize the value of surplus by controlling the interest rate risk based on the  Excluding assets in separate accounts, most assets are assets principle of strict ALM inv

  55. Slide 55: MEMO

    MEMO Copyright (c) 2015 Tokio Marine Holdings, Inc. 54

  56. Slide 56: Disclaimer

    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 a

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