Tokio Marine Holdings, Inc. · TSE:8766

Tokio Marine — FY2019 Earnings Presentation

76 slides from Tokio Marine's earnings presentation, Nov 25, 2019

1. Slide 1: Tokio Marine Group Business Strategy

   Tokio Marine Group Business Strategy November 25, 2019

2. Slide 2: Blank Page

   （Blank Page） Copyright (c) 2019 Tokio Marine Holdings, Inc. 1

3. Slide 3: Table of Contents

   Table of Contents I. New Management Structure/Management Policy ...... P. 3 II. Highlights of Results and Projections .......................... P. 11 III. Business Strategy ............................................................ P. 15 IV. M&A Strategy ..........................................

4. Slide 4: New Management Structure

   I. New Management/ Ⅴ. Shareholder Management Policy II. Results III. Business Strategy IV. M&A Strategy Return New Management Structure Our new management team consists of members who have supported our track record to date. We will continue promoting an aligned group management on a global basis Ca

5. Slide 5: Our Goal and Strategy

   I. New Management/ Ⅴ. Shareholder Management Policy II. Results III. Business Strategy IV. M&A Strategy Return Our Goal and Strategy Continue the existing management strategy and turn the cycle at a faster speed Our Goal A global insurance group delivering attractive value to all stakeholders Stable

6. Slide 6: Acquisition of Pure Group (1)

   I. New Management/ Ⅴ. Shareholder Management Policy II. Results III. Business Strategy IV. M&A Strategy Return Acquisition of Pure Group (1) Acquisition of the Pure Group in alignment with our M&A strategy and criteria Solid business model Strong profitability Cultural fit Provided customized value

7. Slide 7: Acquisition of Pure Group (2)

   I. New Management/ Ⅴ. Shareholder Management Policy II. Results III. Business Strategy IV. M&A Strategy Return Acquisition of Pure Group (2) Highly complementary business portfolio with limited overlaps Homeowners Auto etc. Specialized in HNW Commercial insurance market Focused in NPO, package educa

8. Slide 8: Tokio Marine Group's Growth Track Record

   I. New Management/ Ⅴ. Shareholder Management Policy II. Results III. Business Strategy IV. M&A Strategy Return Tokio Marine Group’s Growth Track Record We have enhanced our capabilities through a stable domestic profits base and growth overseas which include M&As Japan Overseas Direct net premiums w

9. Slide 9: Portfolio Diversification

   I. New Management/ Ⅴ. Shareholder Management Policy II. Results III. Business Strategy IV. M&A Strategy Return Portfolio Diversification Risk diversification Trends of premiums and risk* FY2018 Diversification effects 47% ¥4.6tn Risk after diversification Sustainable 10% 23% ¥2.6 trillion growth 22%

10. Slide 10: Stable Business Platform

    I. New Management/ Ⅴ. Shareholder Management Policy II. Results III. Business Strategy IV. M&A Strategy Return Stable Business Platform • We have increased ROE by enhancing profitability and risk diversification through large-scale M&As in the U.S. and Europe • We will endeavor to further increase R

11. Slide 11: Maturing of Management Strategy for Further Growth

    I. New Management/ Ⅴ. Shareholder Management Policy II. Results III. Business Strategy IV. M&A Strategy Return Maturing of Management Strategy for Further Growth Build an agile and robust company to keep improving corporate value in the fast-changing environment ▶ Further promotion of an aligned gro

12. Slide 12: FY2019 Full-Year Projections

    I. New Management/ Ⅴ. Shareholder II. Results III. Business Strategy IV. M&A Strategy Management Policy Return FY2019 Full-Year Projections Despite the downward revision from original projections, our revised projections are almost as projected excluding factors such as the increase in domestic natu

13. Slide 13: Response to Natural Catastrophe Risk

    I. New Management/ Ⅴ. Shareholder II. Results III. Business Strategy IV. M&A Strategy Management Policy Return Response to Natural Catastrophe Risk Further promotion of geographical and business diversification and steady rate increase of fire insurance Our risk recognition Global risk diversificati

14. Slide 14: Our Target KPIs

    I. New Management/ Ⅴ. Shareholder II. Results III. Business Strategy IV. M&A Strategy Management Policy Return Our Target KPIs FY2019 revised projections FY2020 target Mid-Term goal ¥400 - 450bn Adjusted net income ¥390bn*1 Over ¥500bn (CAGR 3 - 7%)*2 Adjusted ROE 10.1%*1 10% or higher Around 12% Sh

15. Slide 15: Blank Page

    （Blank Page） Copyright (c) 2019 Tokio Marine Holdings, Inc. 14

16. Slide 16: Domestic Non-Life: Growth Track Record (TMNF)

    I. New Management/ IV. M&A Strategy Ⅴ. Shareholder Management Policy II. Results III. Business Strategy Return Domestic Non-Life: Growth Track Record (TMNF) The top-line has grown faster than projected at a CAGR of 2.1%. While capturing continuous growth in auto insurance, steady progress is being m

17. Slide 17: Domestic Non-Life: Strategy for Sustaining Stable Growth

    I. New Management/ IV. M&A Strategy Ⅴ. Shareholder Management Policy II. Results III. Business Strategy Return Domestic Non-Life: Strategy for Sustaining Stable Growth Utilizing technology, reduce workloads by 20-30% in the long run. Reallocate the workforce or their time to expand the specialty ins

18. Slide 18: Establishing Specialty Franchises in Developed Market

    I. New Management/ IV. M&A Strategy Ⅴ. Shareholder Management Policy II. Results III. Business Strategy Return Establishing Specialty Franchises in Developed Market Achieve high growth exceeding the market by establishing profitable business model in the U.S. Achieve sustainable profit growth Establ

19. Slide 19: Far-Reaching Business Expansion in Emerging Countries

    I. New Management/ IV. M&A Strategy Ⅴ. Shareholder Management Policy II. Results III. Business Strategy Return Far-Reaching Business Expansion in Emerging Countries Strategic expansion focusing on large markets with high growth potential <Our major P&C business network in emerging countries> India T

20. Slide 20: Development of International Business

    I. New Management/ III. Business Strategy Ⅴ. Shareholder Management Policy II. Results IV. M&A Strategy Return Development of International Business Established strong growth and profit diversification led by key cross-border M&A 2000 2007 2012 2015 2018 2019 Capture further growth and pursue busine

21. Slide 21: Bolt-on M&As

    I. New Management/ III. Business Strategy Ⅴ. Shareholder Management Policy II. Results IV. M&A Strategy Return Bolt-on M&As Execute strategic bolt-on M&A leveraging our international group companies’ insight and experience High success rate : In-depth understanding based on a long-term business rela

22. Slide 22: Strong M&A Track Record

    I. New Management/ III. Business Strategy Ⅴ. Shareholder Management Policy II. Results IV. M&A Strategy Return Strong M&A Track Record The three U.S. companies exceeded market growth after joining the Tokio Marine Group We will achieve further growth with the acquisition of Pure （billions of USD） To

23. Slide 23: Our M&A Strategy and Criteria

    I. New Management/ III. Business Strategy Ⅴ. Shareholder Management Policy II. Results IV. M&A Strategy Return Our M&A Strategy and Criteria Capture further growth and pursue business diversification through strategic and disciplined M&A M&A strategy Strict acquisition criteria to maintain disciplin

24. Slide 24: Our Group Synergies

    I. New Management/ III. Business Strategy Ⅴ. Shareholder Management Policy II. Results IV. M&A Strategy Return Our Group Synergies Expand synergies by leveraging our global network and Group-wide expertise, etc. Group synergies Impact on profits from expanded group synergies (millions of USD) Revenu

25. Slide 25: Blank Page

    （Blank Page） Copyright (c) 2019 Tokio Marine Holdings, Inc. 24

26. Slide 26: Disciplined Capital Policy

    I. New Management/ Ⅴ. Shareholder II. Results III. Business Strategy IV. M&A Strategy Management Policy Return Disciplined Capital Policy Capital policy based on ESR ESR (trillions of JPY) ESR* 174% 173% Implementation of; Business investment, and/or 4.6 4.6 Additional risk-taking, and/or Shareholde

27. Slide 27: Further Growth Through A Flexible Capital Strategy

    I. New Management/ Ⅴ. Shareholder II. Results III. Business Strategy IV. M&A Strategy Management Policy Return Further Growth Through A Flexible Capital Strategy Utilize hybrid capital to secure the necessary level of capital to implement future growth strategies while improving capital efficiency.

28. Slide 28: Shareholder Return Policy

    I. New Management/ Ⅴ. Shareholder II. Results III. Business Strategy IV. M&A Strategy Management Policy Return Shareholder Return Policy Our primary means of shareholder return is dividends and we plan to sustainably increase total dividends along with profit growth Dividends Capital level adjustmen

29. Slide 29: Strong Track Record

    I. New Management/ Ⅴ. Shareholder II. Results III. Business Strategy IV. M&A Strategy Management Policy Return 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*3 CAGR（2014-2018） Performance 3Y

30. Slide 30: Blank Page

    （Blank Page） Copyright (c) 2019 Tokio Marine Holdings, Inc. 29

31. Slide 31: Reference

    Reference • Robust Business Model • Reconciliation of Business Unit Profits • 2Q FY2019 Results • Mid-Term Business Plan Group Management • FY2019 Full-Year Projections (each business) Framework • Social Inflation in the U.S. and Our Initiative • ESR and Sensitivity • Tokio Marine Holdings Key Stati

32. Slide 32: Robust Business Model

    Robust Business Model Realize further growth through well diversified business model with a stable profit base in Japan as well as a strong specialty franchise in developed countries and a business footprint capturing high market growth in emerging countries Profit Area Contribution* Role Strategy S

33. Slide 33: 2Q FY2019 Results

    2Q FY2019 Results Income grew in both Japan and overseas (billions of JPY) Adjusted net income rose by ¥85.4bn YoY due to +85.4 a decrease in natural catastrophes, an increase in 175.4 investment income and improved profitability in Adjusted Net international insurance Income 89.9 1H 2018 1H 2019 Ne

34. Slide 34: FY2019 Full-Year Projections: TMNF

    FY2019 Full-Year Projections: TMNF Net premiums written Business unit profit Combined ratio • Revised upward given the first half revenue • Revised downward mainly due to the impact of natural results mainly of fire and specialty insurance catastrophes • The Mid-Term Business Plan projects a CAGR of

35. Slide 35: FY2019 Full-Year Projections: TMNL

    FY2019 Full-Year Projections: TMNL New policies ANP Business unit profits • No changes have been made to the original projections • Business unit profit is revised downward due to factors of new policies ANP such as the impact of lower interest rates • The Mid-Term Business Plan projects a CAGR of +

36. Slide 36: FY2019 Full-Year Projections: International Insurance

    FY2019 Full-Year Projections: International Insurance Net premiums written Business unit profit • Revised downward reflecting the impact of the • Revised downward due to the impact of the appreciation of appreciation of yen (approx. -65.0bn yen) and the yen (approx. -6.0bn yen), an increase in reser

37. Slide 37: Social Inflation in the U.S. and Our Initiative

    Social Inflation in the U.S. and Our Initiative Social inflation Impact on Tokio Marine Group and our initiative • Non-economic damages payouts are rising significantly due to robust activities by lawyers and an increase in jury award favoring plaintiff. The weight of general The weight of general l

38. Slide 38: Tokio Marine Holdings Key Statistics

    Tokio Marine Holdings Key Statistics FY2019 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Projections *1 Net income (billions of yen) 23.1 128.4 71.9 6.0 129.5 184.1 247.4 254.5 273.8 284.1 274.5 325.0 Shareholders' equity after tax 1,627.8 2,169.0 1,886.5 1,839.6 2,34

39. Slide 39: Return to Shareholders

    Return to Shareholders FY2019 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 Projections Dividends per share 48yen 50yen 50yen 50yen 55yen 70yen 95yen 110yen 140yen 160yen 180yen 190yen *3 Dividends total 38.0bn yen 39.4bn yen 38.6bn yen 38.3bn yen 42.2bn yen 53.7bn yen

40. Slide 40: Business Unit Profits

    Business Unit Profits (billions of JPY) FY2019 FY2018 Projections Business Domain Results Original (a) Revised (b) (b)-(a) Domestic Non-Life 18.9 142.0 48.0 -94.0 TMNF 18.7 135.0 50.0 -85.0 NF 0.7 8.0 -1.0 -9.0 Other -0.6 -2.0 -1.0 1.0 *1 Domestic Life -158.6 49.0 -36.0 -85.0 TMNL -158.6 49.0 -36.0

41. Slide 41: Reconciliation of Business Unit Profits and Adjusted Net Income

    Reconciliation of Business Unit Profits and Adjusted Net Income Domestic life difference (billions of JPY) between MCEV Other and financial adjustments, Gains on etc accounting sales of +64.0 ＋8.0 305.0 business- related Total 173.0* equites +60.0 International Financial insurance /general 156.0 5.0

42. Slide 42: Adjusted Net Income and Business Unit Profit

    Adjusted Net Income and Business Unit Profit Adjusted Net Income (Group total) Business Unit Profits Enhancing transparency and comparability / Creating long-term corporate value Linking with shareholder returns For the Group total, Adjusted Net Income based on For each business domain, Business Uni

43. Slide 43: Definition of Terms

    Definition of Terms Definition of Adjusted Net Income / Adjusted Net Assets / Adjusted ROE Provision for Provision for Provision for Gains or losses on sales or Adjusted Net income = + catastrophe loss + contingency + price fluctuation - valuation of ALM*4 bonds Net Income*1 (consolidated)*2 reserve

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

    Reconciliation of Adjusted Net Income / Adjusted Net Assets (billions of JPY) Adjusted Net Income*1 Adjusted Net Assets*1 Adjusted ROE FY2019 FY2019 FY2019 FY2019 FY2019 FY2019 FY2018 FY2018 FY2018 Projections Projections (b)-(a) Projections Projections (b)-(a) Projections Projections (b)-(a) Result

45. Slide 45: Reconciliation of Business Unit Profits

    Reconciliation of Business Unit Profits (billions of JPY) Domestic Non-Life*1 （TMNF） ） FY2018 FY2019 FY2019 FY2019 2Q 2Q YoY FY2018 Projections Projections (b)-(a) Results Results Results Original (a) Revised (b) Net income for accounting purposes -10.3 41.5 51.9 Net income for accounting purposes 2

46. Slide 46: Mid-Term Business Plan Group Management Framework

    Mid-Term Business Plan Group Management Framework Based on ERM, realize profit growth while maintaining financial soundness and strategically allocating capital Generate profits Sustainable profit growth Efficient deployment of capital Domestic non-life insurance business Invest for growth Sustainab

47. Slide 47: ESR and Sensitivity

    ESR and Sensitivity ESR as of end of September 2019 was 173% (within target range) due to shareholder return, etc. offsetting positive impact associated with the profit contribution in 1H FY19 ESR ESR Sensitivity After consideration of Pure Group acquisition Sep. 30, 2019 173% 174% 173% 161%* Stock

48. Slide 48: Basic Information: Domestic Non-Life (TMNF)

    Basic Information: Domestic Non-Life (TMNF) Trends of net premiums written（all lines; billions of JPY) and C/R*1 (private insurance E/I basis) Premium composition by line (FY2018 net premiums written basis) 103.8% Marine 101.4% 102.2% 99.6% 2.9% CALI 97.2% 98.3% 93.9% 12.5% 92.7% 90.6% 90.4% Fire Au

49. Slide 49: Basic Information: Domestic Non-Life (TMNF)

    Basic Information: Domestic Non-Life (TMNF) Trends of C/R*1 (private insurance E/I basis) in Auto insurance Auto insurance market share*2 (FY2017 direct net premiums written basis) 103.2% 102.9% 100.2% Direct insurer*3 8.0% 95.7% 95.0% 93.1% TMNF 91.6% 91.4% 91.8% 91.0% 25.5% Other 2010 2011 2012 20

50. Slide 50: Basic Information: Domestic Life (TMNL's Growth Track Record)

    Basic Information: Domestic Life (TMNL’s Growth Track Record) Continue achieving high growth and increase new business margin amidst the low interest rate environment by expanding protection-type products Growth at an industry-leading speed Shift to protection-type products Number of in-force polici

51. Slide 51: Basic Information: Domestic Life (TMNL Major Products)

    Basic Information: Domestic Life (TMNL Major Products) (Product lineup as of November 2019) Receive benefits as if receiving Variable annuities for future (whole life insurance/ term insurance/ Whole life insurance for monthly salary in times of needs asset accumulation while longevity in case of de

52. Slide 52: Basic Information: International Insurance (FY2019 Projections by regions)

    Basic Information: International Insurance (FY2019 Projections by regions) FY2018 FY2019 Projections FY2019 Revised Projections FY2018 FY2019 Projections vs FY2018 Actual Net Premiums Written (billions of JPY) Applied FX rate Actual Original Revised Actual Original Revised YoY YoY Difference Change

53. Slide 53: Basic Information: International Insurance (Strategies of Major Subsidiaries)

    Basic Information: International Insurance (Strategies of Major Subsidiaries) Business unit profit Strategies Results Focus on niche markets High renewal ratio and rate increases Other 11% 89.0% 89.3% Renewal ratio 88.7% Auto 7% Human services (billions of JPY) 32% Public services Market 8% composit

54. Slide 54: Basic Information: International Insurance (Strategies of Major Subsidiaries)

    Basic Information: International Insurance (Strategies of Major Subsidiaries) Business unit profit Strategies Results Strength in employee benefits and High investment returns retirement products/services Average returns compared with the market Life insurance 55% Non-life insurance 45% (billions of

55. Slide 55: Basic Information: International Insurance (Strategies of Major Subsidiaries)

    Basic Information: International Insurance (Strategies of Major Subsidiaries) Business unit profit Strategies Results Bolt-on M&A to reinforce our Stable profitability strengths Highest C/R Volatility Lowest • A UK-based insurance agency holdings Lowest TMHCC company ProAssurance RLI Arch (billions

56. Slide 56: Basic Information: International Insurance (Strategies of Major Subsidiaries)

    Basic Information: International Insurance (Strategies of Major Subsidiaries) Business unit profit Strategies Results Restructuring of European operations Improve loss ratio • Announced restructuring the European operations in June 2019 (billions of JPY) for TMK to focus on businesses in 72.2% Lloyd

57. Slide 57: Basic Information: International Insurance (Strategies of Major Subsidiaries)

    Basic Information: International Insurance (Strategies of Major Subsidiaries) Business unit profit Strategies Results Expanding the number of brokers Growth exceeding the market Growth rate of gross premiums with 2014 set as 100 (billions of JPY) Approx. 24 thou. 175 CAGR Approx. 15 thou. TMSR* +12.

58. Slide 58: Basic Information: International Insurance (Net Premiums Written)

    Basic Information: International Insurance (Net Premiums Written) Net premiums written in international insurance business (billions of JPY) 2,000 1,766.3 1,800 1,741.0 1,654.4 1,683.0 Life 1,600 Reinsurance (Divested Mar. 2019) 1,400 1,302.6 1,304.0 1,200 1,074.5 1,000 North America 800 734.3 600 5

59. Slide 59: Basic Information: Domestic Non-Life (E.design Insurance)

    Basic Information: Domestic Non-Life (E.design Insurance) Strong growth in the direct sales market Profitability improved while pursuing growth <Direct net premiums written in the last 5 years (billions of JPY)> <Combined ratio in the last 5 years (private insurance E/I basis)> ■ E.design ■ Market*

60. Slide 60: Group Asset Management

    Group Asset Management Secure long-term and stable investment income under a policy reflecting the characteristics of insurance liabilities with ALM at the core while enhancing investment structures across the Group Enhance ALM and diversify assets Maintain stable yield based on insurance liabilitie

61. Slide 61: Group Asset Management

    Group Asset Management Ongoing efforts to reduce business-related equities • Book value of business-related equities declined to 38% from Mar. 31, 2002 through steady action • Sold total amount of approx. ¥2.1 trillion*1 since FY2002 • In this mid-term business plan, we will also plan to sell ¥100 b

62. Slide 62: Group Asset Management

    Group Asset Management Investment Portfolio (End of Sep 2019) Investment synergy with Delphi ■ By business segment AUM in Delphi (excl. Delphi’s own AUM) International Domestic non-life (billions of USD) insurance 27% 32% 14.5 Domestic life 12.4 41% 10.7 5.5 4.8 7.7 4.3 4.0 ■ Bonds and similar asset

63. Slide 63: Digital Strategy Promotion

    Digital Strategy Promotion Collaborate with diverse partners and pursue new value provision based on three concepts: “Mission Driven,” “Fusion of People’s Power and Technologies” and “Global Digital Synergies” Improve Operational Increase contact points Enhance claims services Improve Upgrade insura

64. Slide 64: ESG (Sustainable Enhancement of Corporate Value) – External Evaluation –

    ESG (Sustainable Enhancement of Corporate Value) – External Evaluation – Tokio Marine Group has promoted ESG (Environment, Society and Governance) through our business activities and has received numerous awards and praises in Japan and overseas SRI/ESG indices including Tokio Marine Group Awards re

65. Slide 65: ESG – Promoting ESG –

    ESG – Promoting ESG – Participate in various international initiatives and conduct surveys, researches and proposals in order to contribute to building a safe, secure and sustainable future. Also, actively work on SDGs and contribute to solving social issues utilizing our expertise in insurance and

66. Slide 66: Tokio Marine Group's Value Creation Story

    Tokio Marine Group’s Value Creation Story Continue to contribute solving social issues with the changes in time so as to realize a sustainable society, which will in turn result in the sustainable growth of our company 100 years from now Vision for A company that keeps supporting customers and socie

67. Slide 67: ESG – Environment –

    ESG – Environment – Global climate change and increase in natural disasters Various changes in the environment caused by Industrial foundations supporting economic technological innovation growth and innovation Actively contribute to environmental protection, biodiversity preservation and the creati

68. Slide 68: ESG – Society –

    ESG – Society – Global climate change and increase in natural disasters Rising burden of medical and aged care Various changes in the environment caused by Equal opportunities and inclusion technological innovation Contribute to solving social issues by providing safety and security to customers and

69. Slide 69: ESG – Society –

    ESG – Society – Rising burden of medical and aged care Equal opportunities and inclusion Industrial foundations supporting economic growth and innovation ■ Promote health & productivity management Companies supporting health & • Steadily implement PDCA to improve employees’ health, productivity mana

70. Slide 70: ESG – Governance –

    ESG – Governance – Equal opportunities and inclusion Industrial foundations supporting economic growth and innovation In April 2016, we introduced a function-based Chief Officer system and enhanced and newly established committees to globalize and strengthen our management structure Top executives i

71. Slide 71: ESG – Governance –

    ESG – Governance – Equal opportunities and inclusion Industrial foundations supporting economic growth and innovation Realize a balanced corporate governance system and a directors’ compensation system linked to performance and stock price We are currently promoting various initiatives to achieve so

72. Slide 72: Impact of FX Rate Change on the Group's Financial Results

    Impact of FX Rate Change on the Group’s Financial Results Estimated impact of the appreciation of JPY to USD by 1 yen*1 (Compared with the revised projection) Impact on net income on financial accounting basis*2 Impact on adjusted net income*2 Decrease in overseas subsidiaries profit: Approx. -¥0.9b

73. Slide 73: MEMO

    MEMO Copyright (c) 2019 Tokio Marine Holdings, Inc.

74. Slide 74: MEMO

    MEMO Copyright (c) 2019 Tokio Marine Holdings, Inc.

75. Slide 75: MEMO

    MEMO Copyright (c) 2019 Tokio Marine Holdings, Inc.

76. Slide 76: 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

Tokio Marine Holdings — FY2019 Earnings Presentation on 6ix