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"To Be a Good Company 2020" Mid-Term Business Plan

Launched in fiscal 2018, the "To Be a Good Company 2020" mid-term business plan expresses the commitments, actions, and targets based on which we will realize our value creation story.
This plan defines three priorities: further diversification of our portfolio, enhancement of our business structure, and strengthening of aligned Group management. I would now like to explain some of the details of our initiatives pertaining to these priorities and our progress therein.

First, I will discuss initiatives targeting the further diversification of our portfolio.
To reiterate, Japan, our home market, is frequently hit by natural disasters. As such, ensuring that we are able to support customers and societies around the world in their times of need requires that we diversify risks in both geographical and business terms.
For this reason, we have been diversifying the risks we face through overseas M&As, etc. since 2008.
We have thereby been able to claim a position as a top player in the specialty insurance market of the United States, the largest target of our international insurance business. Furthermore, all companies that have been incorporated into the Group through M&As are posting growth rates that outperform the market.
Recently, we have been aggressively conducting bolt-on M&As for the purpose of complementing and strengthening existing businesses while also driving business diversification. Successes are achieved through these activities on a yearly basis.
As for geographical diversification, we are advancing initiatives in emerging countries. At the moment, only around 10% of our profits in the international insurance business comes from emerging countries. However, we aim to raise this ratio to the level of 20%, the same seen in other global insurance businesses, while also effectively capitalizing on the growth in these countries.
On this front, we acquired Safety Insurance of Thailand, which is the largest non-life insurance market in Southeast Asia, in fiscal 2018. This move earned us the No. 3 position overall in this country in terms of insurance premiums and the No. 1 position among foreign companies. In addition, the Company commenced business investment to claim a 22.5% share in Hollard Holdings, the No. 2 company in the rapidly growing South African market.
Tokio Marine Group has made good progress in developing the desired portfolio, but I still see room for further risk diversification. We will therefore be moving ahead with further geographical and business diversification through organic growth and M&As.
As another priority of the mid-term business plan, we plan to assemble digital technology representatives from around the world to leverage technologies as we work to enhance our business structure.
However, Tokio Marine is an insurance company, and not a technology company. Therefore, what is important is that we use the latest technologies to enhance our business structure and to increase the value that we deliver to customers and societies. Once again, using technology is not, itself, our purpose; technology is rather a tool that will be fully utilized to achieve our business purpose and to fulfill our mission. This distinction is critical.
This mission-driven approach constitutes our basic strategy for utilizing technology. Implementing this strategy will require that we thoroughly research the issues faced by customers and society and carefully examine these issues to determine what value Tokio Marine Group can create and what value we should supply.
In this undertaking, it will be crucial that we continue to adhere to our focus on the pertinent locations, articles, and frontline sites that has guided us thus far. All the necessary hints for fostering innovation can be gleaned from the front lines of operations. From this perspective, we will see that the key to winning out in this era of digital and artificial intelligence (AI) technologies can be found by focusing on the work that only people can do.
Tokio Marine Group has an extensive overseas network that grants it access to various sales channels and markets. Group employees around the world go about testing innovations and hypotheses for resolving the social issues for which they are responsible as part of their daily work. These self-driven initiatives are gaining steam as employees sit down at the digital roundtable and other forums to share their experiences, discuss, and mutually drive each other’s growth. This cycle of growth is in place at Tokio Marine Group, and it is one of our greatest strengths.
As one initiative in pursuit of innovation, we formed an alliance with Orbital Insight Inc. in fiscal 2018. Through this alliance, we seek to ensure that we are always able to make swift claims payments to customers, even after large-scale natural disasters. Orbital Insight boasts strengths in analyses of satellite image big data, and this alliance has made it possible for us to use AI in combination with satellites to survey disaster damage.
Another alliance was formed with Metromile Inc., a U.S. automobile insurance company that aspires to deliver the world’s highest level of response to automobile accidents. Metromile uses its world-leading technologies to automate the automobile insurance claims service process to the greatest degree possible. We are currently examining how specifically we can introduce this innovation to Japan. Going forward, Tokio Marine Group will continue to tackle the challenges placed before it to create genuine value.

Furthermore, strengthening of aligned Group management is also our priority of the mid-term business plan.
As I explained, the expansion of our international insurance business was not simply a form of overseas investment. The greatest benefit of the overseas M&As conducted to date is that they have enabled us to acquire talented human resources and specialized expertise.
The world is interconnected and the speed of change in the operating environment is blinding. It is therefore no longer possible to resolve social issues by focusing purely on Japan or on non-life insurance.
We also realize that diversity is indispensable to the resolution of social issues. For this reason, we have appointed senior managers of overseas Group companies to the positions of Co-Head of International Business and Group Co-Chief Investment Officer, granting them responsibility for their respective areas on a Groupwide basis. We have positioned other overseas talent in the most ideal posts, with non-Japanese individuals placed in Groupwide internal audit, insurance reserving, human resource, and risk management positions. Tokio Marine Group also has global committees related to areas such as enterprise risk management and insurance underwriting that engage in exhaustive discussion from global and Groupwide perspectives to formulate strategies for these areas.
A major strength of Tokio Marine Group is this ability to effectively incorporate its diverse talent and specialized expertise into its strategies.
To ensure that our 40,000 diverse employees are united, it is crucial for us to disseminate our shared value—our core identity of "To Be a Good Company." If we view our management foundation as a matrix with the vertical axis formed by diversity, then the horizonal axis would be our core identity. To entrench the core identity as such, we hold town hall meetings in Japan and overseas to provide venues for communication in which members of senior management engage in a global dialogue with employees. The results of these efforts are clear as the score for the question on the pride that employees feel for working at Tokio Marine Group in the culture and values survey administered to all of our 40,000 employees was 4.1 out of 5.
Tokio Marine Group’s aligned Group management approach is unprecedented among its peers.
This approach is also producing quantitative benefits through Group synergies. These benefits, which appear in the four categories of revenue, investment, capital, and cost, have produced total profit contributions of ¥33.0 billion, and the rate of growth of these contributions is accelerating.
We will continue to evolve this aligned Group management approach going forward in order to augment our ability to contribute to the resolution of social issues.

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