Glossary

A

Adjusted Net Income: Adjusted net income is a profitability index for the entire Tokio Marine Group, which is the basis for capital efficiency (Adjusted ROE) and the source of dividends. To improve transparency and comparability from the market's perspective and secure a link with shareholder returns, it is calculated by applying certain adjustments to financial accounting profit.

C

Catastrophe Loss Reserve: Catastrophe loss reserve is a kind of underwriting reserve under the Insurance Business Act in Japan, for which a certain amount of money is set aside every year in preparation for insurance payments that exceed normal expectations. The amount obtained by multiplying net premiums written by a certain percentage is accumulated for each insurance category group as catastrophe loss reserve. It is taken down when a catastrophe loss occurs. In a non-life insurance business, the law of large numbers may sometimes hold true in a single fiscal year, but in some cases, such as a case when a large-scale disaster occurs, the losses even out only after a long period of time—some tens or hundreds of years. Catastrophe loss reserve is thus necessary.
Combined Ratio (C/R): Combined Ratio is the sum of the loss ratio and the expense ratio of a non-life insurance company. It represents the ratio of insurance payments and operating expenses to premium income or insurance revenue, and is one of the important indices of the profitability of a non-life insurance company. The lower the combined ratio, the higher the insurance profitability. Conversely, if it exceeds 100%, it indicates that the company is not making a profit in its insurance business.
CSM (Contractual Service Margin): CSM stands for Contractual Service Margin. Under IFRS 17, it is a liability item that represents the future profit from insurance contracts and is recognized as profit over the insurance coverage period.

E

Earned Premiums: As the insurance period of each insurance contract spans multiple business years of an insurance company, in order to compute the total premiums to be recognized for a certain period, it is necessary to divide the premiums for individual contracts received during the period by their respective insurance periods to calculate earned premiums. Calculations for financial accounting purposes are based on the 1/12 method.
ERM (Enterprise Risk Management): ERM means risk-based management. It is a risk management method that comprehensively manages risks from the perspective of an entire enterprise with regard to all risks in decision-making and business execution that an enterprise, such as a company, does to achieve its objectives. Tokio Marine Holdings and Tokio Marine & Nichido Fire Insurance are working to strengthen the risk-based management system, and maintain soundness by assessing risks from qualitative and quantitative aspects to perform comprehensive risk management and strive to increase profitability (capital efficiency) by effectively utilizing the limited capital through measures, including employment of reinsurance. The Financial Services Agency also conducts ERM interviews with major insurance companies and groups to verify the status of development of risk management systems.
Expense Ratio: Expense ratio is the ratio of expenses of the insurance business of an insurance company to premium income or insurance revenue. Like the loss ratio, it is used for business analysis of insurance companies and for calculating premium rates.

F

Financial Income/Expense: Under IFRS, financial income/expense refers to gains or losses related to the investment activities of insurance contracts. Specifically, it is the sum of investment gains and losses related to asset management, interest income or expense on insurance contract liabilities (or assets), and interest income or expense on reinsurance contract liabilities (or assets).

G

General Underwriting Reserve: General underwriting reserve is a kind of underwriting reserve, for which the amount of unearned premiums (premiums that correspond to the liabilities for the time period remaining on insurance policies) or the underwriting result for the first year (reserve under the Insurance Business Act in Japan, which is premiums received during a fiscal year less claims paid, outstanding claims, operating expenses, etc. incurred under the contracts), whichever is greater, is set aside at the end of the fiscal year. The premiums received by an insurance company are recognized as underwriting income. However, at the end of a fiscal year, there will be many contracts whose insurance periods have not expired even though premiums have been received. Therefore, it is necessary to recognize the amount required to undertake the insurance liabilities for the unexpired portions as a liability. General underwriting reserve is accumulated in the liabilities section of the balance sheet, but the entire amount will be taken down in the next fiscal year and the necessary amount will be newly accumulated.

I

IFRS: IFRS stands for International Financial Reporting Standards. Formulated by the IASB (International Accounting Standards Board) in the United Kingdom with the aim of creating a single set of accounting standards in the world, it has been mandated by the European Union (EU) on listed companies in the region. Tokio Marine Holdings has voluntarily applied IFRS to its consolidated financial statements from the annual securities report for the fiscal year ended March 31, 2026.
Incurred Claims: Claims incurred during the accounting period by an insurance company.
Insurance Acquisition Cash Flows: Cash flows arising from costs directly attributable to the acquisition of insurance contracts.
Insurance Revenue: Revenue recognized for services provided under insurance contracts.
Insurance Service Expenses: Expenses related to insurance services. These mainly consist of incurred claims, amortization of insurance acquisition cash flows, and losses on onerous contracts.
Insurance Service Result: Profit calculated as insurance revenue less insurance service expenses, plus reinsurance result.

L

Loading (Ratio): Loading (ratio) is the portion of gross premium (ratio) that is appropriated for various expenses, such as operating expenses (personnel expenses and non-personnel expenses), agency commissions, and collection commissions, necessary for management of an insurance company and profit. Loading (ratio) is determined by each insurance company. In actuarial science, loading (ratio) and net premium (ratio) constitute gross premium (ratio).
Loss Ratio: Loss Ratio is the ratio of claims paid to premium income or insurance revenue. It is used, together with the expense ratio, for business analysis of insurance companies and for calculating premium rates.

N

Net Income: Net income is the ordinary profit after deducting extraordinary gains/losses (gains/losses on disposal of fixed assets, provision for price fluctuation reserves, etc.), income taxes - current, and income taxes - deferred in the statement of income. It represents the profit/loss generated by all the transactions that occurred during a business year. Net income is also called the bottom line as it is listed at the bottom of the statement of income.
Net Premiums Written: Net premiums written are direct premiums written with elements of reinsurance added and deposit premiums from policyholders deducted. It is calculated with the following formula. Net premiums written are the equivalent to net sales of a general business company and a value used for computing underwriting income in the income statement of a non-life insurance company. Net premiums written = direct premiums written + reinsurance premiums written – reinsurance premiums ceded - deposit premiums from policyholders

P

Pure Premium (Ratio): In actuarial science, pure premium (ratio) and loading (ratio) constitute gross premium (ratio). Pure premium (ratio) is the portion for the insurance company to use to pay claims when insured events occur. Pure premium (ratio) is calculated based on the probability of insured events according to the law of large numbers computed with past statistical data.

R

Reinsurance: Reinsurance occurs when part or all of the liabilities of primary insurance (original insurance) is transferred from an insurance company (cession) and assumed by another insurer (assumption). As it is insurance of insurance, it is called reinsurance. An insurance company may purchase reinsurance from another insurance company or from a professional reinsurance company. This system is used by the primary insurer in order to diversify risks and pursue profits. The act of an primary insurance company to assume the insurance liabilities on its own without ceding is called retention.
ROE: ROE stands for return on equity (return on shareholders’ equity). It is the ratio of net income to equity (shareholders’ equity plus retained earnings) in a company, and one of the criteria for investing in stocks. ROE is an index that indicates capital efficiency; in other words, how efficiently a company utilizes equity it possesses to make profit, that is, how much the shareholder value is enhanced. ROA is a similar index, which is the ratio of net income to total assets (equity plus liabilities, such as borrowings), and indicates how profitable businesses a company invests in.

U

Underwriting Profit: Underwriting profit is the amount of profit calculated by subtracting underwriting expenses (net claims paid, loss adjustment expenses, maturity refunds to policyholders, etc.) and operating and general administrative expenses on underwriting from underwriting income, including net premiums written (net premiums written, deposit premiums from policyholders, investment income on deposit premiums), and adjusting it with other miscellaneous income and expenses (the amount equivalent to income taxes related to compulsory automobile liability insurance, etc.). It represents the final profit/loss in the main business of an insurance company.
Underwriting Reserve: Underwriting Reserve is funds set aside as a liability by an insurance company in order to fulfill its policy obligations. Whereas the outstanding claim corresponds to the claims which have already occurred and have not been paid, the underwriting reserve is the reserve prepared for the payment of claims which have not occurred and will occer after the next fiscal year. Non-life insurance companies’ underwriting reserves include general underwriting reserve, catastrophe loss reserve, contingency reserve, refund reserve and policyholders’ dividend reserve, etc.