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Nipponkoa Insurance Co., Ltd. Annual Report 2005(PDF/2288KB) ANNUAL REPORT NIPPONKOA INSURANCE CO., LTD. 2005 IPPONKOA Insurance Co., Ltd. was established in April 2001 through a merger of The Nippon Fire & Marine Insurance Co., Ltd. (founded in 1892) and The Koa Fire & Marine Insurance Co., Ltd. (founded in 1918). Japan’s third-oldest non-life insurance provider, the Company commands over 10% of the domestic non-life insurance market and plays a leading role in the industry, which is Nsecond in size only to that of the United States. In line with its fundamental philosophy of enhancing customer satisfaction, the CONTENTS Company, which is not affiliated with any financial group, has developed operations involv- ing a wide range of customers—beyond the keiretsu (corporate group framework)—and established numerous strategic business alliances. NIPPONKOA’s strength lies in its power- ful sales network of highly capable professional sales agents and its extensive close ties with p01 financial institutions, including nationwide and regional banks. At the same time, it has dis- Consolidated Financial Highlights tinguished itself as a creative force in the industry by developing new products that reflect a solid understanding of changing lifestyles and customer needs. Making full use of these unique features and competitive advantages, the Company will strive to Credit Ratings deepen the trust of customers and meet the expecta- NIPPONKOA has received the following p02 tions of shareholders by expanding its operations and ratings from credit rating agencies To Our Shareholders Our Consolidated Financial Highlights Shareholders (as of July 31, 2005): improving profitability. It will at the same time step Standard & Poor’s A+ up activities aimed at fulfilling its corporate social responsibilities in terms of compliance, environmental Moody’s A2 p06 issues and other matters, and by actively disclosing A.M. Best A Strategies in Focus in Focus corporate information. p14 Corporate Social Responsibility Corporate Social Responsibility Corporate Philosophy With an independent spirit, guided by its liberal corporate culture, the NIPPONKOA p 21 Insurance Group will contribute to the development of an affluent and healthy society, Overview of Operations Overview of Operations through unremitting effort and innovative ideas that transform old ways of thinking. Guiding Principles p28 1. We make our customers the starting point of all our corporate activities, thereby earning Financial Review Review their full trust. 2. We work all-out to boost corporate value and promote disclosure, thereby meeting the expectations of our shareholders. p39 3. Guided by a high standard of corporate ethics, we promote sincere, fair and environmen- Financial Section tally friendly corporate activities. 4. We foster a vigorous corporate setting in which individuals feel free to express their opinions and put them into practice. 5. Working together with our agents, we provide our customers with the highest level of p 57 comfort and satisfaction. Corporate Information Corporate Information Financial Section CONSOLIDATED FINANCIAL HIGHLIGHTS NIPPONKOA INSURANCE CO., LTD. Years ended March 31, 2005, 2004, 2003 and 2002 THE NIPPON FIRE & MARINE INSURANCE CO., LTD. Year ended March 31, 2001 THE KOA FIRE & MARINE INSURANCE CO., LTD. Year ended March 31, 2001 Thousands of Millions of Yen U.S. Dollars*1 2005 2004 2003 2002 2001 2001 2005 NIPPONKOA NIPPONKOA NIPPONKOA NIPPONKOA NIPPON KOA NIPPONKOA Operating income ¥1,047,293 ¥1,053,793 ¥1,053,827 ¥1,060,141 ¥ 660,229 ¥ 443,109 $ 9,752,239 Net premiums written for non-life insurance 728,421 732,486 724,979 671,823 413,307 265,904 6,782,950 Consolidated Financial Highlights Life insurance premiums 58,124 54,864 45,559 38,862 17,364 18,557 541,245 Ordinary profit (loss) 21,634 49,390 (34,208) (31,052) 27,533 18,865 201,456 Net income (loss) 13,467 19,319 (25,890) (22,741) 7,561 6,406 125,407 Net income (loss) per share (in yen and U.S. dollars): Basic 16.35 23.18 (30.72) (26.90) 13.47 22.28 0.152 Diluted*2 16.35 — — — — 22.20 0.152 Total assets 3,422,186 3,432,069 3,217,703 3,240,237 2,100,668 1,345,396 31,866,905 Shareholders’ equity 582,408 598,360 444,144 533,019 427,059 194,978 5,423,301 Shareholders’ equity ratio 17.0% 17.4% 13.8% 16.4% 20.3% 14.5% To Our Shareholders Return on equity (ROE) 2.3% 3.7% -5.3% -4.0% 2.3% 3.9% Net cash provided by (used in): operating activities (22,283) 65,645 55,698 (40,374) (47,340) (37,026) (207,502) investing activities 23,836 (96,072) (12,128) 78,336 50,571 (5,817) 221,964 financing activities (12,987) (11,998) (14,604) (32,430) (7,124) (8,712) (120,937) Strategies in Focus Corporate Social Responsibility Overview of Operations Financial Review Corporate Information Cash and cash equivalents at end of year 141,861 153,399 196,689 155,114 79,248 68,043 1,320,997 *1: U.S. dollar amounts are translated from yen at the rate of ¥107.39 = US$1, the approximate rate prevailing at March 31, 2005. *2: There were no potential common shares to be issued from the year ended March 31, 2002 to the year ended March 31, 2004. Operating income Net premiums written Ordinary profit (loss) Net income (loss) Total assets Shareholders’ for non-life insurance equity Billions of Yen Billions of Yen Billions of Yen Billions of Yen Billions of Yen Billions of Yen 13.9 19.3 13.4 Financial Section -25.8 -22.7 46.3 49.3 21.6 -34.2 -31.0 1,103.3 1,060.1 1,053.8 1,053.7 1,047.2 679.2 671.8 724.9 732.4 728.4 3,446.0 3,240.2 3,217.7 3,432.0 3,422.1 622.0 533.0 444.1 598.3 582.4 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 ’01 ’02 ’03 ’04 ’05 Figures for the year ended March 31, 2001 in the above graphs are combined totals of The Nippon Fire & Marine Insurance Co., Ltd. and The Koa Fire & Marine Insurance Co., Ltd. NIPPONKOA Insurance Co., Ltd. Annual Report 2005 01 TO OUR SHAREHOLDERS Moving Consolidated Financial Highlights Forwardwith To Our Shareholders Our Customers Fiscal 2004 in Review The business environment that encompassed the Japanese non-life insurance industry in Strategies in Focus the fiscal year that ended on March 31, 2005 was exceptionally challenging, due to a suc- cession of natural disasters. These included a record 10 typhoons, the most ever to make landfall in a single year, as well as the powerful Niigata Chuetsu earthquake and other events. Under these conditions, NIPPONKOA Insurance Co., Ltd. posted ordinary profit of ¥22.5 billion and net income of ¥14.5 billion. (All figures in this section are non- Corporate Social Responsibility consolidated results for NIPPONKOA Insurance Co., Ltd.) Net premiums written totaled ¥722.8 billion, a slight decline of 0.8% from the preceding year. Average unit price in our mainstay voluntary automobile insurance business fell 3.4% year on year; however, the number of insured vehicles grew 4.0% on brisk sales through allied life insurance compa- nies, which is a new sales channel. As a result, net premiums written for this product line rose 0.1% compared with fiscal 2003. In non-automobile insurance business, we also Overview of Operations secured an increase in net premiums written in marine insurance, thanks to an upsurge in foreign trade within Asia, and the “Other” line was supported by continued brisk sales of general liability and comprehensive workers’ compensation insurance. Financial Review Most of our decrease for the year came in the fire line, and these were mainly the result of increased reinsurance costs. On the other hand, net losses paid increased by 20.9% to ¥428.8 billion, due to the large number of natural disasters that occurred during the year. The amount of net losses paid deriving from natural disasters in fiscal 2004 totaled ¥68.9 billion, an increase of ¥64.0 billion compared with the previous year. In relation with this, we reversed our catastrophe reserve by ¥35.9 billion. However, to ensure that our financial condition remained sound, we added to the catastrophe reserve by making an irregular provisioning of ¥29.5 billion. As a result, at the end of the term we recorded only a limited decline in the catastrophe reserve. Corporate Information Financial Section 02 NIPPONKOA Insurance Co., Ltd. Annual Report 2005 Underwriting expenses fell 3.9% to ¥248.3 Consolidated Financial Highlights Strategies in Focus Corporate Social Responsibility Overview of Operations Financial Review Corpor billion, primarily because of the reduction in costs related to IT investment. The expense ratio was 34.4%, a year-on-year decrease of 1.1 per- centage points. Our underwriting balance (excluding compulsory automobile liability insurance), calculated by deducting net losses paid and underwriting expenses from net premi- To Our Shareholders ums written, showed a net loss of ¥12.7 billion in fiscal 2004. This was significantly down from the net gain of ¥41.3 billion that we posted in fiscal 2003; however, this result was clearly attributable to the exceptional number of natural Ken Matsuzawa disasters that struck Japan during the year. With President & CEO regard to our asset management operations, gains from the sale of securities and revaluation loss on securities increased from ¥19.8 bil- lion in fiscal 2003 to ¥53.4 billion in fiscal 2004. This reflected our proactive efforts to reduce relationship stocks to improve risk management.
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