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| Tokio Marine Holdings, Inc. (formerly "Millea Holdings, Inc.", hereinafter "Tokio Marine Holdings" or the "Company") was incorporated in April 2002 as the insurance holding company. Over the course of six years since its formation, the business environment surrounding the Company and its group ("Tokio Marine Group") has significantly changed, and the trend of globalization continues to accelerate. In order to respond to those changes effectively and efficiently, the Company decided to change its name from "Millea Holdings, Inc." to "Tokio Marine Holdings, Inc." effective as of July 1, 2008 using the name "Tokio Marine", which it believed to have world-wide recognition. Taking advantage of the name change, the Tokio Marine Group will strive to further advance the growth strategies of the entire group on a world-wide basis and commit itself to continually enhancing its corporate value. The management would like to express its sincere appreciation to all shareholders of the Company for their continued guidance and support. <Business activities in FY2007> Tokio Marine & Nichido Fire Insurance Co., Ltd. (“Tokio Marine & Nichido”) and Nisshin Fire & Marine Insurance Co., Ltd. (“Nisshin Fire”), which had received administrative orders (a suspension order regarding certain operations and a business improvement order) related to certain improper non-payment of insurance claims, submitted Business Improvement Plans (the “Plans”) to the Financial Services Agency of Japan in April 2007. Both companies took the administrative orders seriously, and have strived to enhance and reinforce their claims payment management and confirm and correct the details of policies, in order to ensure proper operations in accordance with the Plans. Tokio Marine & Nichido Life Insurance Co., Ltd. (“Tokio Marine & Nichido Life”) and Tokio Marine & Nichido Financial Life Insurance Co., Ltd. (“Tokio Marine & Nichido Financial Life”) have also made efforts to prevent the recurrence of payment omissions by reinforcing systems such as the insurance claims payment management system. Tokio Marine Holdings, as the holding company overseeing the businesses of the entire group, has been committed to managing its subsidiaries more attentively through a full assessment of their status and by monitoring their improvement in a timely manner. Domestic Property and Casualty Insurance Business Tokio Marine Holdings aims to improve the quality of its domestic property and casualty insurance business and solidify its continuous profit expansion in this segment. To promote appropriate business practices, Tokio Marine & Nichido established the “Business Quality Improvement Commission”, chaired by its President, and, in order to enhance its efforts for the improvement of the quality of its business operations from the customers’ perspective, appointed two members to the Commission to represent consumers in July 2007. Tokio Marine & Nichido also established “Anshin Quality” as a quality standard indispensable to providing insurance products and services to customers, and began to implement this standard on a company-wide basis so that from the customers’ perspective, it will be available in all business operations irrespective of time and location. For several years, Tokio Marine & Nichido had steadily moved forward with preparations for the start of a new business renovation project called “Drastic Reform of Business Process” which was launched in May 2008 as planned. This project aims to reform operational processes from the perspective of customers as well as to improve the platform of insurance products, operational routines and systems so that Tokio Marine & Nichido can carry out its duties, ranging from insurance solicitation to the payment of claims, quickly, accurately and efficiently. The project is also an effort to establish an infrastructure to improve business quality. Domestic Life Insurance Business Tokio Marine Holdings seeks to further expand its domestic life insurance business as a core business of the Tokio Marine Group by strengthening its life insurance subsidiaries. Since its establishment, Tokio Marine & Nichido Life has continued to grow at a pace that is among the highest in the life insurance industry. Currently, Tokio Marine & Nichido Life is engaged in the “Second Foundation Project” and continuing to focus on the innovation of distribution channel strategies according to the market environment and the reform of operational processes from the perspective of customers. In this project, Tokio Marine & Nichido Life is also focusing on combining the services of insurance and support to customers. As part of these efforts, Tokio Marine & Nichido Life launched the “Cancer Care-Support Insurance” in September 2007. Tokio Marine & Nichido Financial Life is seeking to expand its sales network for variable annuity insurance, which is mainly distributed through over-the-counter sales at banks, by increasing business alliances with financial institutions. In an effort to ensure stable sales of variable annuity insurance by Tokio Marine & Nichido Financial Life, Tokio Marine Bluebell Re Limited, a reinsurance subsidiary of the Company, started to accept reinsurance for variable annuity insurance from the fiscal year ended March 31, 2008. Overseas Insurance Business Tokio Marine Holdings is continuously working to expand its overseas insurance business by placing an emphasis on markets with attractive profitability and growth potential. Tokio Marine & Nichido acquired Kiln Ltd and made it a subsidiary in March 2008. Kiln Ltd operates insurance businesses globally, primarily in Lloyd’s of the U.K. Net premiums written by Kiln stood at 66.1 billion yen in 2007, with net income amounting to 11.8 billion yen. Through the acquisition of Kiln, the Tokio Marine Group expanded the scale of its operations and earnings in the overseas insurance business, and established a position as a major player in Lloyd’s of the U.K., one of the world’s leading insurance markets. Tokio Marine & Nichido is reinforcing its focus on the promising Takaful (Islamic insurance) market. In the course of this process, it has established a local subsidiary company in Dubai which engages in the development of Takaful products. In addition, it has decided to set up another local subsidiary company in Egypt, which will serve as a base for its Takaful business. Asset Management, Financing Operations and Other Businesses During the fiscal year ended March 31, 2008, Tokio Marine & Nichido, which provides the core asset management function for the Tokio Marine Group, focused on the enhancement and development of risk management, as well as improvement on investment returns. In order to meet the obligations for claims, maturity refunds and other payments, Tokio Marine & Nichido continued its efforts to strengthen its asset liability management and to ensure the stability and liquidity of its assets. In the fiscal year ended March 31, 2008, partially due to the turbulence of the global financial markets in connection with the subprime loan problem, Tokio Marine & Nichido and other group companies incurred losses including impairment losses of 2.1 billion yen in total in subprime loan-related investments, and impairment losses and other losses of 22.0 billion yen in credit risk-related investments other than subprime loan-related investments. Tokio Marine Holdings took group-wide measures to expand its finance-related business, centered around the asset management business. This effort resulted in assets under the management of Tokio Marine Asset Management Co., Ltd. exceeding 5 trillion yen in the fiscal year ended March 31, 2008. Tokio Marine & Nichido successively made active efforts to increase assets in corporate defined-contribution pension plans under its administration in the fiscal year ended March 31, 2008. The number of sponsors with assets under its administration, including those in preliminary agreements, amounted to more than 2,000, which is a top-level performance among plan administrators. As for other businesses, Tokio Marine Holdings aimed to create value primarily in business sectors related to safety and security. The Company focused on medical and health services and risk consulting services in the fiscal year ended March 31, 2008. <Issues Facing the Tokio Marine Group in FY2008> The Tokio Marine Group is determined to make all efforts to improve the quality of all operational processes of the Tokio Marine Group, with a particular focus on regaining the trust of its customers and society, in accordance with its management philosophy to place “customer trust at the base of all its activities”. In the domestic property and casualty insurance business, it was transpired from the extensive review on existing insurance policies that there were certain numbers of policies whose premiums were overcharged. We deeply regret those errors in calculation of premiums and will make every effort to ensure these do not happen again. Tokio Marine Holdings, as the holding company of the group, is striving to emphasize to its subsidiaries the basic policies of the Tokio Marine Group with respect to risk management, compliance and customer protection, and to enhance internal audit, in accordance with the "Basic Policies for Internal Control". In order to achieve further growth as a corporate group characterized by high profitability, sustainability and soundness, the Tokio Marine Group will endeavor to expand its strategic stage in the areas of products and services, sales channels and business regions, in line with "Stage Expansion 2008", a three-year plan which will end in the fiscal year ending March 31, 2009. |
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