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Tokio Marine Holdings Fundamental Corporate Governance Policy

[English Translation for reference purposes]

CHAPTER I Fundamental Views on Corporate Governance

(Fundamental views on corporate governance)

Article 1

  1. Tokio Marine Holdings, Inc. (the "Company"), shall define the "Tokio Marine Group Corporate Philosophy" and is committed to the continuous enhancement of corporate value by fulfilling its responsibilities to shareholders, customers, society, employees and other stakeholders. For this purpose, the Company hereby establishes a sound and transparent corporate governance system and, based on its Basic Policies for Internal Controls, aims to exercise appropriate control over the Tokio Marine Group companies as a holding company.

CHAPTER II Rights of Shareholders and Securing Fairness

(Rights of shareholders and securing fairness)

Article 2

  1. The Company shall maintain an environment in which voting rights at General Meetings of Shareholders can be appropriately executed.
  2. 2
    The Company shall work to improve shareholder return by methods such as stable maintenance of shareholder dividend measures.
  3. 3
    For the exercise of voting rights at General Meetings of Shareholders or the payment of dividends of surplus, the Company shall handle these in a fair manner, based on the type and number of shares held.

(Policy on holding business-related equities)

Article 3

  1. Business-related equities are implemented by a portion of the Company’s business subsidiaries (companies at which the Company directly holds a majority of voting rights) with the intent of strengthening transaction relationships, held with the intent to improve corporate value of the Group. However, the Company will continue to improve its capital to items that are not easily affected by fluctuations in share price, and from the viewpoint of improving capital efficiency, continue to work to reduce the total amount.

(Related party transactions)

Article 4

  1. The Company shall define Rules of the Board of Directors and the "Tokio Marine Group Basic Policies for Management of Intragroup Transactions," and the Board of Directors shall monitor related party transactions between Officers and subsidiaries, etc., in an effort to ensure that the joint interests of the Company and shareholders are not harmed.

CHAPTER III Appropriate Cooperation with Stakeholders Other Than Shareholders

(Appropriate cooperation with stakeholders other than shareholders)

Article 5

  1. The Company shall define the "Tokio Marine Group Corporate Philosophy," and respond to the trust of shareholders through global business expansion that incorporates profitability, growth, and health, providing peace of mind and safety to customers, and establishing a corporate environment that encourages creativity from employees. Through contributing to the development of society on a wide scale, the Company shall work to perpetually improve its corporate value.

CHAPTER IV Appropriate Information Disclosure and Securing of Transparency

(Appropriate information disclosure and securing of transparency)

Article 6

  1. The Company shall define the "Tokio Marine Group Basic Policies for Disclosure," and with the aim of securing transparency and fairness in management, shall disclose appropriate information at the appropriate time regarding financial information such as business results, etc., corporate principles, and non-financial information such as business plans.

CHAPTER V Responsibilities of The Board of Directors, etc.

(Responsibilities of the Board of Directors and its Members)

Article 7

  1. The Board of Directors is responsible for decisions on important matters relating to the execution of the Company’s business and for supervising the performance of individual Directors.
  2. 2
    The Company shall define Rules of the Board of Directors, and define the content of significant business execution to be determined by the Board of Directors. Determination of significant business execution includes formulating Group management strategies, formulating Group management plans, establishing internal control systems within the Group, and business investment that is larger than a certain level.
  3. 3
    Each Director shall endeavor to enable the Board of Directors to fulfill the responsibilities and functions outlined in the first paragraph above.
  4. 4
    The Company shall entrust decision-making to Executive Officers of matters that do not require decisions to be made by the Board of Directors.

(Composition of the Board of Directors and Directors’ term of office)

Article 8

  1. The number of Directors shall generally be approximately ten members, of whom, as a general rule, at least three shall be Outside Directors.
  2. 2
    To secure effectiveness of the Board of Directors, when selecting Directors, a balanced composition shall be established, with various viewpoints and specializations.
  3. 3
    Directors shall be appointed for a term of office of one year. Directors may be re-appointed.

(Conditions for selection of Directors)

Article 9

  1. Directors of the Company and its principal business subsidiaries (Tokio Marine & Nichido Fire Insurance Co., Ltd., Nisshin Fire and Marine Insurance Co., Ltd., and Tokio Marine & Nichido Life Insurance Co., Ltd.) shall have a deep understanding of the company’s business type, possess a wide range of knowledge required for management, and as a member of the Board of Directors, have the ability to make decisions that are necessary to determine significant business execution matters.
  2. 2
    In addition to meet the conditions outlined in the previous paragraph, Outside Directors of the Company and its principal business subsidiaries shall have deep insights and plentiful experiences in their fields (such as global corporate management, financial affairs, financial and accounting, law, compliance and internal control, technological innovation, and human resource management), and in principle, meeting the independence standards defined in Article 16.
  3. 3
    Directors who are involved in the management of insurance companies within the Group shall not only meet the requirements in the first paragraph, but have "knowledge and experience to manage operations of an insurance company fairly and efficiently" as defined in Article 8-2 of the Insurance Business Act, and also have "adequate social trust."

(Responsibilities of Audit & Supervisory Board Members)

Article 10

  1. Audit & Supervisory Board Members, as an independent body entrusted by shareholders, shall audit the performance of Directors, with the aim to ensure sound and fair management and accountability.

(Conditions for selection of Audit & Supervisory Board)

Article 11

  1. The number of the Audit & Supervisory Board Members shall generally be around five. As a general rule, a majority of the Audit & Supervisory Board Members shall be outside Members.

(Selection of Audit & Supervisory Board Members)

Article 12

  1. Audit & Supervisory Board Members of the Company and its principal business subsidiaries shall have operational abilities and previous achievements and experience, etc., as Audit & Supervisory Board Members, and through implementation of high quality audits, secure sound and continuous growth of the company, contributing to the establishment of a superior corporate control system that can respond to societal trust.
  2. 2
    In addition to meet the conditions outlined in the previous paragraph, Outside Audit & Supervisory Board Members of the Company and its principal business subsidiaries shall have deep insights and plentiful experiences in their fields (such as global corporate management, financial affairs, financial and accounting, law, compliance and internal control, technological innovation, and human resource management), and in principle, meeting the independence standards defined in Article 16.
  3. 3
    Audit & Supervisory Board Members who are involved in the management of insurance companies within the Group shall not only meet the requirements in the second paragraph, but have "knowledge and experience to audit performance of Directors of an insurance company fairly and efficiently" as defined in Article 8-2 of the Insurance Business Act, and also have "adequate social trust."

(Conditions for selection of Executive Officers)

Article 13

  1. Executive Officers of the Company and its principal business subsidiaries shall be evaluated based on competency as officers, achievements, experience and personality among others and may become responsible for the execution of business at the company.

(Responsibilities of the Nomination Committee)

Article 14

  1. The Company shall establish a Nomination Committee to serve as an advisory body to the Board of Directors.
  2. 2
    The Nomination Committee shall deliberate on the following matters and report to the Board of Directors:
    1. The appointment and dismissal of Directors, Audit & Supervisory Board Members and Executive Officers of the Company and its principal business subsidiaries; and
    2. The criteria for the appointment of Directors, Audit & Supervisory Board Members and Executive Officers of the Company and its principal business subsidiaries.

(Composition of the Nomination Committee)

Article 15

  1. The Nomination Committee shall generally consist of approximately five members.
  2. 2
    As a general rule, a majority of the members shall be selected from outside of the Company, and the chairman shall be one of the outside members.

(Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members)

Article 16

  1. Independence of Outside Directors and Outside Audit & Supervisory Board Members is judged when none of the following is applicable. Further details are defined in Exhibit.
    1. A manager, former manager, employee, or former employee of the Company
    2. A manager or employee of a company with which the Company has significant transactions.
    3. A relative of Directors or Audit & Supervisory Board Members of the Company
    4. A person in an advisory role who has been receiving more than a certain amount, as a compensation from the Company other than due to performance of duties as a Director or Audit & Supervisory Board Member of the Company
    5. A person who is a major shareholder, a manager or an employee of such legal entity

(Responsibilities of the Compensation Committee)

Article 17

  1. The Company shall establish a Compensation Committee to serve as an advisory body to its Board of Directors.
  2. 2
    The Compensation Committee shall deliberate on the following matters and report to the Board of Directors:
    1. Evaluation of the performance of Directors (full-time) and Executive Officers of the Company and its principal business subsidiaries; and
    2. The compensation system for Directors, Audit & Supervisory Board Members and Executive Officers of the Company and its principal business subsidiaries and the level of compensation for Directors (full-time) and Executive Officers of the Company and its principal business subsidiaries.

(Composition of the Compensation Committee)

Article 18

  1. The Compensation Committee shall generally consist of approximately five members.
  2. 2
    As a general rule, a majority of the members of each committee shall be selected from outside of the Company, and the chairman of each committee shall be one of the outside members.

(Policies on determination of compensation for Directors, Audit & Supervisory Board Members and Executive Officers)

Article 19

  1. Policies to determine compensation for Directors, Audit & Supervisory Board Members and Executive Officers of the Company and its principal business subsidiaries are as follows:
    1. Ensure "transparency," "fairness" and "objectivity" regarding compensation for Directors, Audit & Supervisory Board Members and Executive Officers.;
    2. Strengthen incentives for improving the business performance of the Company by introducing a performance-linked compensation system;
    3. Enhance accountability through sharing returns with shareholders by introducing compensation system linked to meeting the Company's business results indices based on the management strategy and Company share price; and
    4. Fully implement a performance-based pay system through processes designed to objectively evaluate individual performance of Directors (full-time) and Executive Officers with respect to management objectives.
  2. 2
    In order to determine the level of compensation for Directors, Audit & Supervisory Board Members and Executive Officers, of the Company and its principal subsidiaries, the Company shall set the standard of compensation for each position, depending on the responsibilities of Directors, Audit and Supervisory Board Members and Executive Officers and take the business performance of the Company and the level of compensation of other companies into consideration.
  3. 3
    Based on ability to meet business results indices, etc., defined by the management strategy, evaluations on business results shall be made on a yearly basis, and the results of such evaluations will be incorporated into compensation for Directors (full-time) and Executive Officers.

(Compensation System for Directors, Audit & Supervisory Board Members and Executive Officers)

Article 20

  1. Compensation for Directors (full-time) and Executive Officers consists of three elements: fixed compensation, bonuses related to the business performance of the Company and the performance of the individual and stock options.
  2. 2
    Compensation for Directors (part-time) consists of two elements: fixed compensation and stock options.
  3. 3
    Compensation for Audit & Supervisory Board Members consists of one element: fixed compensation.

(Governance system for business subsidiaries)

Article 21

  1. In the various basic business policies for the Tokio Marine Group, the Company shall prescribe basic terms for the management of the business subsidiaries and compliance, risk management and internal auditing of the Tokio Marine Group, and the Company shall manage its subsidiaries through the establishment and operation of a governance system based on these basic terms.
  2. 2
    The Company shall evaluate the business results of each business subsidiary of the Tokio Marine Group on an annual basis, comparing actual results with the Company's business results indices based on the management strategy.
  3. 3
    Compensation system for Directors, Audit & Supervisory Board Members and Executive Officers of the Company’s principal business subsidiaries shall generally be identical to that applied to Directors, Audit & Supervisory Board Members and Executive Officers of the Company.

(Training Policies for Directors, Audit & Supervisory Board Members and Executive Officers)

Article 22

  1. The Company will provide opportunities for training, as necessary, to Directors, Audit & Supervisory Board Members and Executive Officers, to allow them to appropriately fulfill duties required in each respective area.

CHAPTER VI Conversation with Shareholders

(Policy on constructive conversation with shareholders)

Article 23

  1. To promote constructive conversation with shareholders, the Company shall work to establish structures according to the following basic principles.
    1. The Company shall establish Executive Officers in charge of business execution to conduct overall management for conversations with shareholders, and establish a dedicated department (IR department) to plan and implement these activities.
    2. Toward conversations with shareholders such as earnings announcements and presentation meetings for investors, etc., IR department of the Company shall work with other relevant departments to provide accurate and truthful information to shareholders.
    3. Taking into account shareholding conditions and the views of shareholders, etc., the Company shall work to provide various methods to communicate with shareholders.
    4. Concerning comments acquired during the course of conversations with shareholders, the Company shall periodically organize and analyze these comments, and report to the Board of Directors.
    5. The Company, pursuant to its "Insider Trading Prevention Regulations", shall exercise the utmost care with regard to unpublicized information, and shall have conversations with shareholders without utilizing any significant unpublicized information.

CHAPTER VII : Authority for Revision and Termination

(Authority for revision and termination)

Article 24

  1. Revision and termination of this policy shall be made at a Board of Directors meeting. However, insignificant changes may be made by the Executive Officer in charge of the Legal Department.

Exhibit: Independence Standards for Outside Directors and Outside Audit & Supervisory Board Members

Outside Directors and Outside Audit & Supervisory Board Members of the Company are judged to be independent from the Company if they do not fall within any of the following categories:

  1. an executive of the Company or a subsidiary or affiliate of the Company;
  2. a person who has been an executive of the Company or a subsidiary or affiliate of the Company in the past ten years;
  3. a party whose major client or supplier is the Company or a principal business subsidiary of the Company (a party whose transactions with the Company or a principal business subsidiary of the Company in the most recent fiscal year amount to 2% or more of its consolidated net sales), or an executive thereof;
  4. a party who is a major client or supplier of the Company or a principal business subsidiary of the Company (a party whose transactions with the Company or a principal business subsidiary of the Company in the most recent fiscal year amount to 2% or more of consolidated ordinary income of the Company), or an executive thereof;
  5. a financial institution or other major creditor which the Company or a principal business subsidiary of the Company relies on to the extent that it is an indispensable funding source that cannot be replaced, or an executive thereof;
  6. an executive of a corporation or association or any other organization that receives donations from the Company or a principal business subsidiary of the Company in excess of a certain amount in the most recent fiscal year (10 million yen or 2% of the total revenue of such organization in the most recent fiscal year, whichever is larger);
  7. a spouse or relative within the third degree of kinship of a Director, Audit & Supervisory Board Member, or Executive Officer of the Company or a subsidiary or affiliate of the Company;
  8. a consultant, accountant, lawyer, or other specialist who receives compensation from the Company or a principal business subsidiary of the Company other than compensation for Directors, Audit & Supervisory Board Members and Executive Officers of the Company or a principal business subsidiary of the Company in excess of a certain amount in the most recent fiscal year (10 million yen or 2% of the total revenue of a corporation or association or any other organization to which such specialist belongs in the most recent fiscal year, whichever is larger); or
  9. a party who holds 10% or more of the voting rights of all shareholders of the Company at the end of the most recent fiscal year, or an executive thereof.

Adopted on May 27, 2005
Revised on July 5, 2007
Revised on December 17, 2007
Revised on July 1, 2008
Revised on June 29, 2009
Revised on June 28, 2010
Revised on June 27, 2011
Revised on May 1, 2015
Revised on April 28, 2016
Revised on May 1, 2017
Revised on May 15, 2017
The Board of Directors of Tokio Marine Holdings, Inc