2018 Integrated Annual Report CORPORATE PHILOSOPHY With customer trust as the foundation for all its activities, Tokio Marine Group continually strives to raise corporate value. Through the provision of the highest quality products and services, Tokio Marine Group aims to deliver safety and security to all our customers. By developing sound, profitable and growing businesses throughout the world, Tokio Marine Group will fulfill its mandate to shareholders. Tokio Marine Group will continue to build an open and dynamic corporate culture that enables each and every employee to demonstrate his or her creative potential. Acting as a good corporate citizen through fair and responsible management, Tokio Marine Group will broadly contribute to the development of society. We will be there for our customers, playing our part in society in times of need. We will balance our strength as an organization with compassion as individuals, looking beyond profit to deliver fully on our commitments. Through our collective efforts, we will strive to be a Good Company, living up to the trust placed in us. CONTENTS 2 What’s Tokio Marine Group 2 139-Year History 4 Current Strengths 5 Financial and Non-Financial Highlights Integrated Annual Report 2018 6 Tokio Marine Group’s Value Creation Model 8 Management Strategy Section 9 Message from the President and Group CEO 14 Explanation of Management Strategies by Group CFO 20 Aligned Group Management 22 Message from Group CRO 24 Message from Group CSSO and Group CDO 26 Message from Group CRSO and Group Co-CRSO 28 Message from Group CIO and Group Co-CIO 30 Message from Group CHRO 32 Message from Group CITO and Group CISO Editorial Policy Tokio Marine Group has established a Group message, “To Be a Good Company,” 34 Operations Section to show its resolve to continue to aim to be a “Good Company.” To present our ideas 35 Domestic Non-Life Insurance Business and measures for continuing to aim to be 40 Domestic Life Insurance Business a “Good Company” in a format that is easy for our stakeholders to understand, we 43 International Insurance Business have prepared this report in the format of an integrated report that comprehensively compiles non-financial information, such 52 Sustainably Enhancing Corporate Value as the value creation models and CSR 53 Initiatives to Enhance Corporate Value: Environment / Society activities that are the foundation of our sustainable growth, in addition to financial 54 Providing Safety and Security information such as business results and 56 Protecting the Earth management strategies. 57 Supporting People Note: In preparing this report, we have 58 A Mechanism That Will Support Initiatives Aimed referred to the International Integrated Reporting Framework at Enhancing Corporate Value: Group Governance proposed by the International 60 Directors and Audit & Supervisory Board Members Integrated Reporting Council (IIRC) and the Guidance for Integrated 62 Dialogue on Corporate Governance with Outside Officers Corporate Disclosure and Company- 66 Overview of Corporate Governance System Investor Dialogues for Collaborative Value Creation advocated by Japan’s 68 Measures to Strengthen Corporate Governance Ministry of Economy, Trade and 69 A Diverse, High-Quality Supervisory Function Industry and have aimed to take the perspective of our stakeholders. 70 Conditions for Selection / Compensation 71 Dialogue with Shareholders and Investors 72 Internal Control System 76 A Mechanism That Will Support Initiatives Aimed at Enhancing Corporate Value: The Power of Our People 76 Group Synergies and Personnel Exchanges in Japan and Overseas Forward-Looking Statements 79 Workplace Environments and Cultures Supporting Diverse Talent This report contains information on forecasts, targets, and other matters that are not based on historical fact. These 82 Financial Data forward-looking statements include a certain degree of risk and uncertainty, and, accordingly, actual results and 143 Corporate Data performance may differ materially from the information provided in this report. Tokio Marine Holdings | Integrated Annual Report 2018 1 139-Year History Since its founding, Tokio Marine Group has relied on its comprehensive strengths to weather a myriad of challenges, including the Great Kanto Earthquake and Japan’s defeat in World War II. Throughout our history, all of our activities have been based on earning customer trust. We have continued to support customers and society in times of needs, thereby helping them step forward to take on new challenges. 1879 Japan’s First Non-Life Insurance 1970 Company, Overseas Expansion Establishment of Auto from the Start Claims Service Centers Tokio Marine Insurance contributed to In 1970, Tokio Marine & Fire Insurance the modernization of Japan as the coun- opened auto claims service centers to try’s first non-life insurance company. In 1914 strengthen points of contact with cus- 1880, the year after its founding, the tomers in order to respond effectively to Launch of Japan’s First company began direct underwriting the sudden increase in accidents that operations in London, Paris, and New Auto Insurance accompanied the growth in the volume York, a testament to the global focus we Tokio Marine Insurance launched of automobile insurance policies. have held since the start. an automobile insurance prod- uct at a time when there were only about 1,000 vehicles in Japan. The number of domestic auto insurance policies issued by the Group has grown to more than 15 million, the outcome of our continuous efforts to address motorization after World War II. The power of our people, the constant driving History of growing our business in force for supporting customers in times of need line with changing times 1894 1945 Young Employees’ Efforts to Improve Recovery After Japan’s Defeat in World War II Business Results World War II shrunk the marine insurance market, and In 1890, we established three local agents in the premiums dropped to around 40% of pre-war levels United Kingdom, the home of marine insurance. In over the four years following the war’s conclusion. 1891, premiums income from overseas hull insurance Tokio Marine Fire Insurance responded to this situa- grew rapidly to account for more than 50% of total tion with a focus on fire insurance. Through flexible premiums income. The company fell into a financial strategies not relying solely on marine insurance, we crisis in 1894 due to a rapid deterioration in finances were able to overcome the post-war trials to recover as a result of underwriting a large volume of high-risk performance. properties. It was young employees, including Kenkichi Kagami, who had joined the company four years previously, and Hachisaburo Hirao, a newcomer to the company, that thoroughly re-examined policies 1923 in the United Kingdom and were thereby able to bring Response to the Great Kanto Earthquake about a financial recovery within a few years. Many lives and assets were lost in the Great Kanto Earthquake. The fire insurance of the time offered no coverage for damage caused by earthquakes, but each non-life insurance company offered payouts as a form of consolation. While other companies received subsidies from the government for the consolation payments, Tokio Marine Insurance made use of its sound financial base, becoming the sole insurer in the industry to fund the payments on its own. Members of Tokio Marine Insurance Company, London Branch 2 Tokio Marine Holdings | Integrated Annual Report 2018 Major Topics from Fiscal 2017 July 2017 announced by the Cabinet Office Headquarters for Formulating Increased Shareholdings in IFFCO-TOKIO Measures for Building Up Towns, People and Jobs and the Marine Group Tokio What’s We increased our shareholdings in local India recognition is bestowed by Minister of State for Regional subsidiary IFFCO-TOKIO from 26.0% to 49.0% Revitalization. in order to better capitalize on the growth of February 2018 emerging markets. Selected as a Health & Productivity Stock October 2017 The Company received recognition as one of Receipt of Good Design Award for Aruku Hoken the corporations practicing excellent health A Good Design Award was received for Aruku management under the “Health & Hoken in reflection of praise for its business Productivity Stock Selection” program, which design, which entails supporting health is jointly administered by the Ministry of improvement of customers and helping them Economy, Trade and Industry and the Tokyo Stock Exchange. avoid lifestyle diseases and other serious illnesses. This is our third consecutive year of selection. February 2018 March 2018 Ministerial Commendation as Model Example of Financial Selected as “FY2017 Nadeshiko Brand” Institution Initiatives for Revitalizing Regional Economies We were selected for inclusion in the Tokio Marine & Nichido’s initiative for “FY2017 Nadeshiko Brand” in reflection supporting inbound business operators of our superior initiatives for empower- has received ministerial commendation ing female employees in order to for two consecutive years as a model generate success for management. The Company has previ- example of initiatives being promoted by financial institutions ously been chosen in fiscal 2013 and 2015, making this its third to revitalize regional economies. These examples are year of inclusion. Development of revolutionary Creation of global network products leveraging refined expertise After that... and balanced portfolio and specialties 2012 2008–2017 Release of One Day Auto Insurance Expansion of the International We began offering One Day Auto Insurance. Based on Insurance Business the concept of allowing customers to receive insurance Tokio Marine Group acquired both Kiln (U.K.) only for the days they need it and offering easy applica- and Philadelphia Consolidated Holding (U.S.) tion via mobile phone, this product was an industry first. in 2008 and started full-scale expansion of operations in the European and U.S. markets. In our search for additional growth opportu- nities abroad, we acquired Delphi Financial Group (U.S.) in 2012 and HCC Insurance Holdings (U.S.) in 2015. These companies have strong growth potential and high profit- ability.