Millea Holdings, Inc. ("Millea Holdings", President and Director: Kunio Ishihara), has announced its business plan for the fiscal year ending March 31, 2007 ("FY2006").
In the fiscal year ended March 31, 2006 ("FY2005"), the Millea Group actively promoted a profit increase in its domestic insurance business and the expansion of its business domain in the overseas insurance business as well as the financial business and other peripheral businesses. The Millea Group achieved 177.0 billion yen in adjusted earnings and 4.7% adjusted ROE for FY2005. The increase in adjusted earnings is attributable primarily to an increase in sales of variable benefit pension insurance and changes in the assumptions used in life insurance EV profit calculation. Excluding the impact of changes in the assumptions used in life insurance EV profit calculation, the Millea Group acheived 138.7 billion yen in adjusted earnings and 3.7% adjusted ROE.
In FY2006, the Millea Group aims to grow its domestic property and casualty insurance business, which is the key business in terms of earnings, its domestic life insurance business, which is the driving force of growth, and its overseas insurance business and other peripheral businesses. The Millea Group targets 165.5 billion yen in adjusted earnings and 3.9% adjusted ROE in FY2006.
| Adjusted earnings by business segment | Business Plan for FY2005 | Actual results FY2005 | Business Plan for FY2006 |
| Domestic property and casualty insurance business | 95.5 | 91.5 | 104.0 |
| Domestic life insurance business | 22.0 | 72.9 | 39.8 |
| Tokio Marine & Nichido Life | 23.0 | 57.5 | 26.8 |
| Tokio Marine & Nichido Financial Life | -0.8 | 15.4 | 13.0 |
| Overseas insurance business | 5.5 | 7.7 | 19.0 |
| Asia | 0.5 | 1.3 | 1.3 |
| North America | 5.0 | 5.1 | 5.2 |
| Europe & Middle east | 1.0 | 2.7 | 1.5 |
| South America | 2.0 | 3.3 | 4.2 |
| Others | 0.5 | 1.2 | 1.4 |
| Reinsurance | -3.0 | -5.2 | 6.3 |
| Financial and other businesses | 3.5 | 4.9 | 2.8 |
| Group Total | 126.5 | 177.0 | 165.5 |
| Adjusted ROE | 3.7% | 4.7% | 3.9% |
Excluding the impact of changes of assumptions used in life insurance EV profit calculation
| Domestic life insurance business | 34.6 |
| Tokio Marine & Nichido Life | 29.4 |
| Tokio Marine & Nichido Financial Life | 5.2 |
| Group Total | 138.7 |
| Adjusted ROE | 3.7% |
Details of the above impact of changes in the assumption used in life insurance EV profit calculation are as follows:
| Tokio Marine & Nichido Life | Changes in the assumptions used in life insurance EV (note 1) | 28.7 |
| Changes in interest rates | -0.6 |
| Tokio Marine & Nichido Financial Life | Changes in the assumptions used in life insurance EV (note 2) | 0.8 |
| Changes in interest rates, stock price and exchange rate | 6.8 |
| Changes in reduction of capital cost due to subordinated loan | 2.7 |
(note 1) Changes in the frequency of death occurrence, rate of surrender and assumption of expense
(note 2) Change in the rate of surrender
* In order to capture the corporate value of the Millea Group and to aim for the enhancement thereof, the management uses "adjusted earnings" to determine adjusted income and adjusted ROE (see Appendix for details).
* See next page for business performance indices for each major business segment.
Business performance indices for major business segments
1. Domestic property and casualty business
Indices for Tokio Marine & Nichido Fire Insurance Co., Ltd. are as follows:
| | FY2005 (plan) | FY2005 (actual) | FY2006 (plan) |
| Net premiums written | 1,903.0<1,756.7> | 1,892.7<1,746.1> | 1,920.0 |
| Expense ratio (%) | 30.3<32.9> | 30.2<32.8> | 30.6 |
| Adjusted earnings | 95.0 | 91.2 | 102.3 |
* Figures in < > exclude the impact of revisions to the Compulsory Automobile Liability Insurance regulations.
2. Domestic life insurance business
Indices for Tokio Marine & Nichido Life Insurance Co., Ltd. and Tokio Marine & Nichido Financial Life Insurance Co., Ltd. are as follows:
| | FY2005 (plan) | FY2005 (actual) | FY2006 (plan) |
| Annualized premiums for new policies | 85.5 | 88.4 | 115.6 |
| Tokio Marine & Nichido Life | 57.3 | 45.6 | 55.6 |
| Tokio Marine & Nichido Financial Life | 28.2 | 42.8 | 60.0 |
* Annualized premiums for new policies are derived by dividing the aggregate amount of premiums by the duration of insurance policies to show the amount of premiums per year.
3. Overseas insurance business
We continue to position Asia as a main market in the overseas insurance business with high growth and profitability potential. We also intend to expand insurance operations in the Brazil, Russia, India and China group of countries, or BRICs, where the economy and the insurance market are expected to grow significantly. The indices for the overseas insurance business are as follows:
| | FY2005 (plan) | FY2005 (actual) | FY2006 (plan) |
| Net premiums written | 229.3 | 240.2 | 284.5 |
| Asia | 43.7 | 47.1 | 70.2 |
| North America | 51.2 | 52.3 | 56.7 |
| Europe, Middle east | 13.5 | 13.5 | 17.1 |
| South America | 86.2 | 87.3 | 96.3 |
| Others | 6.0 | 6.9 | 8.8 |
| Reinsurance | 28.7 | 32.9 | 35.4 |
* Net premiums written are calculated taking into account the ratio of respective equity interest of Millea Holdings in each local subsidiary.
Adjusted Earnings and Adjusted ROE (Appendix 2)
