Tokio Marine Holdings, Inc. · TSE:8766
Tokio Marine — Investor Presentation (July 2024)
36 slides from Tokio Marine's investor presentation, Jul 1, 2024
Slide 1: Special IR Meeting in London
Tokio Marine Presents Special IR Meeting in London July 1, 2024 TMK CEO TMHCC CEO Co-Head of Int’l Co-Head of Int’l CEO/CCO CFO DFG CEO PHLY CEO Matthew Shaw Copyright (c) 2024 Susan Tokio Marine Rivera Holdings, Inc. Brad Irick Kit Yamamoto Satoru Komiya Kenji Okada Don Sherman John Glomb
Slide 2: Table of Contents
Table of Contents I. Strategy of International......................................................................... P. 3 M&A...................................................................................... P. 7 PHLY............................................................................
Slide 3: Profit Target for International Business
I. Strategy of International M&A PHLY DFG TMHCC TMK Profit Target for International Business International business profit growth target is CAGR of +7% or more (excl. past reserves takedown) under the Mid-Term Plan (MTP) Realize growth driven by strong underwriting while factoring in a certain l
Slide 4: Top-class Underwriting Growth (Comparison with North American Peers)
I. Strategy of International M&A PHLY DFG TMHCC TMK Top-class Underwriting Growth (Comparison with North American Peers) North American underwriting profit is expected to grow at CAGR +10%, representing top tier growth vs. peers Underwriting profit 北⽶Peers North American peers当社北⽶事業 *1 ■ TMHD Nort
Slide 5: Rate Increases
I. Strategy of International M&A PHLY DFG TMHCC TMK Rate Increases Achieve growth while maintaining C/R at low levels, leveraging the competitive advantage built through strategic focus on niche markets and specialty insurance*1 and carrying out rate increases exceeding forward- looking loss cost
Slide 6: (Ref.) External Evaluation of Our North American GCs
I. Strategy of International M&A PHLY DFG TMHCC TMK (Ref.) External Evaluation of Our North American GCs Scored the highest favorability rating in the Americas* *: A survey for risk managers in large companies with 250 or more employees by FT Commercial Insurance GIST 2024 Survey (Nov. 2023-Feb. 2
Slide 7: Disciplined In / Out Strategy
I. Strategy of International M&A PHLY DFG TMHCC TMK Disciplined In / Out Strategy Our large-scale M&A track record (ROI) is +21.5%. Successful track record makes Tokio Marine an attractive acquirer for the next M&A Valuations are currently high, and we need to continue being patient with large-s
Slide 8: Track Record of large-scale M&A
I. Strategy of International M&A PHLY DFG TMHCC TMK Track Record of large-scale M&A Five subsidiaries acquired with large-scale M&A have continually outperformed market growth ROI is significantly above TMHD capital cost (7%) at 21.5% Growth after joining the Group*1 ROI of large M&As*2 ＜Top-lin
Slide 9: Track Record of Bolt-on M&A
I. Strategy of International M&A PHLY DFG TMHCC TMK Track Record of Bolt-on M&A Room for bolt-on M&A based on in-depth understanding of mutual business Leverage the experience and expertise of TMHCC as our strength and steadily execute transactions Advantages High success rate : In-depth underst
Slide 10: (Ref.) Rate Cycle and M&A Opportunities
I. Strategy of International M&A PHLY DFG TMHCC TMK (Ref.) Rate Cycle and M&A Opportunities Valuations remain high for high-quality M&A transactions, requiring patience The market is cyclical and attractive M&A opportunities increase when the market softens; we will remain diligent Rate Cycle*1(
Slide 11: Expansion of Group Synergies
I. Strategy of International M&A PHLY DFG TMHCC TMK Expansion of Group Synergies Group synergies are our unique strength and steadily expanding to USD618mn as a result of Globally Integrated Group Management Group Synergies Example of revenue synergies Cross-selling Cross-sell reference to custome
Slide 12: Factors for Growth Exceeding the Market (1) PHLY
I. Strategy of International M&A PHLY DFG TMHCC TMK Factors for Growth Exceeding the Market (1) PHLY High customer loyalty and risk sensitivity What’s PHLY Current Focus Results Focus on niche customer segments Steady profit growth High renewal ratio and rate increases while managing social in
Slide 13: Factors for Growth Exceeding the Market (2) DFG
I. Strategy of International M&A PHLY DFG TMHCC TMK Factors for Growth Exceeding the Market (2) DFG Ability to implement rigorous U/W profit and expand investment income leveraging its strengths What’s DFG Current Focus Results Strength in employee benefits and Initiatives to improve profitabili
Slide 14: Stable Increase in Investment Income
I. Strategy of International M&A PHLY DFG TMHCC TMK Stable Increase in Investment Income Stable growth in investment income on the back of an increase in long-term and predictable insurance cashflows (AUM), yields maintained by investing in asset class with attractive RoR <2023 Results> <MTP> <Inc
Slide 15: Features and Track Record of DFG’s Investment
I. Strategy of International M&A PHLY DFG TMHCC TMK Features and Track Record of DFG’s Investment DFG’s strength of specialized investment team and strong collaboration with outside asset managers enable establishment / execution of flexible investment strategies corresponding to the investment en
Slide 16: Factors for Growth Exceeding the Market (3) TMHCC
I. Strategy of International M&A PHLY DFG TMHCC TMK Factors for Growth Exceeding the Market (3) TMHCC Risk diversification and strong bottom-line focus What’s TMHCC Current Focus Results Highly profitable and well- Latest bolt-on M&As Stable profitability*6 balanced business portfolio • Underw
Slide 17: Factors for Growth Exceeding the Market (4) TMK
I. Strategy of International M&A PHLY DFG TMHCC TMK Factors for Growth Exceeding the Market (4) TMK Top Class Profitability in Lloyd’s Market What’s TMK Current Focus Results One of the largest underwriting Fully focused on “profitability” Favorable combined ratio capacity in Lloyd’s market wi
Slide 18: Key messages (FY2024 IR Conference on May 24, 2024)
II. Reference Group International Investment Governance Key messages (FY2024 IR Conference on May 24, 2024) Deliver top-tier EPS growth at +8% or more (3Y CAGR) for the MTP (+16% or more including capital gains from sale of business-related equities). The driver is attributable to top-tier U/W and
Slide 19: EPS Growth Target for the MTP (FY2024~FY2026)
II. Reference Group International Investment Governance EPS Growth Target for the MTP (FY2024~FY2026) Deliver top-tier EPS growth at +8% or more*1 EPS growth, when including the impact of the accelerated sale of business-related equities, is projected at +16% or more*1 Adjusted EPS Adjusted Net In
Slide 20: Top-Tier Stable EPS Growth
II. Reference Group International Investment Governance Top-Tier Stable EPS Growth We have achieved the top-tier EPS growth while managing volatility EPS Growth EPS Growth Volatility (2013-2023 CAGR) (2013-2023) Tokio Marine Peer 1 Peer 2 Peer 3 Peer 4 Tokio Marine Peer 1 Peer 2 Peer 3 Peer 4 +12.
Slide 21: Source of Well-Balanced Profit Growth
II. Reference Group International Investment Governance Source of Well-Balanced Profit Growth Continue delivering top-tier profit growth under the MTP with a growth rate of 7% or more through organic growth (3-year CAGR; 15% or more incl. capital gains on business-related equities)*1 The growth
Slide 22: Disciplined Capital Management
II. Reference Group International Investment Governance Disciplined Capital Management Capital generated is allocated to risk-taking and business investment that will contribute to improving the ROE. In the absence of good opportunities, share buybacks are executed. We will continue to implement d
Slide 23: Track Record of ROE Improvement and MTP Quantitative Targets
II. Reference Group International Investment Governance Track Record of ROE Improvement and MTP Quantitative Targets Our profit increased due to the rebalance of risk portfolio based on ERM, without unnecessary capital increase. Consequently, FY2023 adjusted ROE reached 15.0% With the “top-tier
Slide 24: Top-tier DPS Growth
II. Reference Group International Investment Governance Top-tier DPS Growth DPS growth trajectory with confidence in line with EPS growth can be maintained for the next three years DPS for FY2024 is projected at JPY159 (+29％ YoY). We will continue to increase DPS (we are committed not to cut div
Slide 25: Strong Capital Stock and Disciplined Capital Management (Share Buyback)
II. Reference Group International Investment Governance Strong Capital Stock and Disciplined Capital Management (Share Buyback) Strong ESR*1 as of March 31, 2024 at 140%. Current plan for FY2024 share buyback is JPY200.0bn throughout the year, comprehensively considering the current M&A pipeline,
Slide 26: Review of Indicators for Introduction of IFRS / ICS
II. Reference Group International Investment Governance Review of Indicators for Introduction of IFRS / ICS IFRS / ICS to be introduced at the end of FY2025 Considering the impact of the introduction and comparability with peers (who revised various KPI indicators upon introduction of IFRS 9 and
Slide 27: Inflation Resilience
II. Reference Group International Investment Governance Inflation Resilience Resilience against economic / social inflation is enhanced Continue to take pro-active measures to manage rapid environment change Inflation Type by Loss Reserve Split*1 Our Measurements Cost of Goods and Services Medic
Slide 28: Inflation Resilience (Social Inflation)
II. Reference Group International Investment Governance Inflation Resilience (Social Inflation) PHLY Business Strength*1 Ability to avoid impact Ability to mitigate impact ▶ Disciplined underwriting ▶ Robust portfolio Continued proactive actions to identify policies with Continued reduction of u
Slide 29: Inflation Resilience (Medical / Wage Inflation)
II. Reference Group International Investment Governance Inflation Resilience (Medical / Wage Inflation) Impact Existing New Initiatives Business Business Prior Year Loss Reserves Loss Cost Medical stop-loss Short-tail with limited prior year reserve impact Continued rate increases, if (Short-tail)
Slide 30: Emerging Market Business
II. Reference Group International Investment Governance Emerging Market Business Building “pillars” with focus on regions with large market and strong expected growth <Our major P&C business network in emerging countries> India Thailand Brazil IFFCO-TOKIO General Tokio Marine Safety Insurance
Slide 31: Group Asset Management Policy
II. Reference Group International Investment Governance Group Asset Management Policy Maintain long-term, stable income based on ALM aligned with characteristics of insurance liabilities Investment Portfolio (Mar. 31, 2024) Securing a stable yield Assets other than investments <Group income yield>
Slide 32: DFG Investment Track Record
II. Reference Group International Investment Governance DFG Investment Track Record DFG investment performance (investment income + realized gains / losses) remained positive during the collapse of Lehman Brothers <Investment Return*1 and Portfolio Change> 8.0% DFG 6.0% 4.0% Market*2 2.0% 0.0% -2.
Slide 33: Reduction of Business-Related Equities
II. Reference Group International Investment Governance Reduction of Business-Related Equities Business-related equities outstanding will be “zero*1” in six years (JPY3.5tn in market value as of Mar. 31, 2024 and JPY0.4tn in book value) with a three-year reduction of 50%. We will not merely reclas
Slide 34: Enhancement of Governance and Risk Management
II. Reference Group International Investment Governance Enhancement of Governance and Risk Management Further enhancement of governance at Group-level is set as one of key strategies in the MTP and will be executed rigorously through the newly established “Group Audit Committee” and full utilizati
Slide 35: Copyright (c) 2024 Tokio Marine Holdings, Inc.
Copyright (c) 2024 Tokio Marine Holdings, Inc. 35
Slide 36: 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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