Tokio Marine : Business Strategy (6.2MB

TOKIO MARINE GROUP BUSINESS STRATEGY

NOVEMBER 24, 2022

Table of Contents

I. EPS Growth with Confidence .................................		P 4
II. DPS Growth with Disciplined Capital Policy .......	P 26
III. High-Quality Management ..................................	P	28
IV. Reference ...............................................................	P	35

• Abbreviations used in this material

TMNF	: Tokio Marine & Nichido Fire Insurance Co., Ltd.	PHLY	: Philadelphia
NF	: Nisshin Fire & Marine Insurance Co., Ltd.	DFG	: Delphi
TMNL	: Tokio Marine & Nichido Life Insurance Co., Ltd.	TMHCC	: Tokio Marine HCC
		TMK	: Tokio Marine Kiln
		TMSR	: Tokio Marine Seguradora

• "Normalized basis" in the material generally refers to the definition where natural catastrophes are adjusted to average level (other adjustments will be stated in the text)

Copyright (c) 2022 Tokio Marine Holdings, Inc.

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Key Messages

EPS Growth with

Confidence

DPS Growth with Disciplined Capital Policy

High-Quality

Management

• FY2022 adjusted net income projection is revised downward by -JPY150.0bn to JPY400.0bn due to transient effects including COVID-19 loss in Taiwan and natural catastrophes, etc. However, our underlying capabilities are steadily improving with adjusted net income of JPY560.0bn (+9% YoY) on a normalized basis*
• With strong latest performance, maintain ability to achieve top-class EPS growth among global peers through implementation of appropriate measures against the volatile business environment
• With the "further confidence", realize world's top-class EPS growth and lift the level of ROE equivalent to global peers
• Maintain DPS growth underpinned by and consistent with EPS growth. Maintain JPY100 DPS for FY2022 (+18% YoY, JPY300 before stock split) and continue to increase DPS for FY2023 and beyond based on growth in moving average of source of dividends and increase in dividend payout ratio (48.5% in FY2022 original plan, 50% in FY2023) (No decrease in dividends, in principle)
• Strong ESR as of end of September 2022 is in the middle of our target range at 122%. Originally announced JPY100.0bn share buybacks for FY2022 will be maintained (JPY50.0bn already executed) and buyback of remaining JPY50.0bn has been approved
• Global risk diversification is the cornerstone of our strategy, and we pride ourselves in achieving profit growth through controlling and optimizing the risks for 20 years
• Execute high ROI M&A transactions that contribute to risk diversification and synergy effects based on determination of intrinsic value of the target. Large-scale M&A require patience and steady market intelligence activities (in the meantime, expanded to Canada, exited Highland and run-off TMK reinsurance business)
• As a result of further efforts, considering acceleration of divestment to the tune of JPY120~130bn in FY2023 and to about 1.5X current level from FY2024 for business- related equities. Use funds and capital generated with discipline to achieve world's top- class EPS growth and ROE improvement

Copyright (c) 2022 Tokio Marine Holdings, Inc.

*: See *4 on P4 for revised contents

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I. EPS Growth with	FY2022 Results	Biz/Environment Analysis,	Beyond JPY500bn/12%
Confidence
	Sustainable EPS Growth

FY2022 Results and Analysis (Actual Basis)

• FY2022 adjusted net income projection is revised downward by -JPY150.0bn to JPY400.0bn due to transient effects (-JPY160.0bn) including COVID-19 loss in Taiwan and mainly domestic natural catastrophes, etc.

Adjusted Net Income*1

(Reference) Adjusted ROE

(billions of JPY)

-150.0

-2.8pt

550.0

12.5%

+3.0

+4.0

+19.0

9.7%

-41.0

-24.0

+6.0

+7.0*4

-2.0

+28.0

+13.0

400.0

+46.0

-37.0

-16.0*5

[Adjusted Net Assets*6]

-34.0

-3.0 (NF)

±0

-JPY0.3tn

-130.0

c.JPY4.4tn

-25.0 (Domestic Non-Life*2)

c.JPY4.1tn

-9.0 (Domestic Life*3)

-96.0 (International)

Adjusted net assets for Mar. 31, 2023 are projected to decrease due to;

- Decrease in unrealized gains/losses on bonds due to interest rate hikes, etc. -JPY0.8tn

- Increase in net assets for overseas entities due to depreciation of JPY: +JPY0.5tn

2022 Original

2022 Revised

Transient effects

Copyright (c) 2022 Tokio Marine Holdings, Inc.

*1: Adjusted net income is the sum of business unit profits (same for subsequent pages)

*2: Domestic Non-Life: TMNF (same applies hereafter)

*3: Domestic Life: TMNL (same applies hereafter)

*4: Mainly due to FX between foreign currencies +11.0, business-related equities +5.0 (for part of sale exceeding JPY100.0bn), war -11.0, capital gains in North America -9.0, South African floods -3.0, and rounding

*5: Mainly due to domestic life and rounding4

*6: Average balance of Mar. 31, 2022 and Mar. 31, 2023

I. EPS Growth with	FY2022 Results	Biz/Environment Analysis,	Beyond JPY500bn/12%
Confidence
	Sustainable EPS Growth

FY2022 Results and Analysis (Normalized Basis)

• Underlying capabilities are steadily improving with normalized profit excluding transient effects at JPY560.0bn (+9% YoY)
• Impact of the depreciation of JPY on FY2022 results will be limited to +JPY3.0bn with the increase in overseas profits (+JPY46.0bn) to offset domestic transient losses (-JPY43.0bn for provision for foreign currency denominated loss reserves, etc.); however, it will become a factor for upswing in FY2023 profit (assuming same FX rate*1)

Adjusted Net Income

(Reference) Adjusted ROE*3

(billions of JPY)

+10.0

+0.8pt

560.0

13.3%

550.0

(+9% YoY)

12.5%

+19.0 -16.0*2

+3.0 +4.0

Negative impact of domestic provision for foreign currency denominated reserves, etc. (-JPY43.0) is posted only in FY2022

-41.0 (Domestic Non-Life)	-24.0	+6.0
-2.0 (Domestic Life)	+28.0	+13.0
+46.0 (International)

Details		Details
on P.6		on P.7

					2022 Original	2022 Revised
		*1: FX rate as of Sep. 30, 2022 at JPY144.8/$ used for this page	5
Copyright (c) 2022 Tokio Marine Holdings, Inc. *2: Mainly due to domestic life and rounding

*3: Adjusted net assets used for calculating ROE is the sum of net assets on actual basis and the difference between actual and normalized adjusted net income