Tokio Marine acquires IAG s Thailand and Indonesian businesses to become a leading insurer in Thailand

Transcription

1 June 19, 2018 Tokio Marine Holdings, Inc. Tokio Marine acquires IAG s Thailand and Indonesian businesses to become a leading insurer in Thailand Tokio Marine Holdings, Inc. (President and Group CEO: Tsuyoshi Nagano) today announced that it has entered into a definitive agreement to acquire Thailand and Indonesia insurance businesses of Insurance Australia Group Limited ( IAG ) which predominantly comprises of Safety Insurance Public Company Limited ( Safety ) in Thailand. The total consideration is approximately 525 Million Australian Dollars (approximately 42.8 Billion Yen) 1. The transaction enables Tokio Marine to be among the Top 3 P&C insurer in Thailand with the 2 nd market position in motor. These acquisitions are expected to be completed in sequence subject to regulatory procedures required in respective countries. 1. Background of the acquisition (1) Tokio Marine Group has been focused on expanding its international business as the driving force of the Group`s growth strategy. Tokio Marine Group is aiming to pursue strategic M&A initiatives in both developed and emerging markets to achieve this objective. (2) In the developed markets we have significantly expanded our presence through a series of acquisitions starting from acquisition of Kiln in 2008 and the latest being acquisition of HCC in (3) With respect to Asia and other emerging markets, its present contribution to the total profit of our international business remains at around 10%. We aspire to significantly expand our business in these markets with high growth potential through acceleration of our strategic M&A initiatives to achieve further diversification of our global portfolio, which is stated as one of the key initiatives of our current Mid-Term Business Plan To Be a Good Company 2020 announced in May Total consideration is subject to closing adjustment. FX date: the end of Mar 2018(AUD/JPY exchange rate: 81.6)

2 2. Overview of the acquisition Company name Safety Insurance Public Company PT Asuransi Parolamas Limited (Parolamas) (Safety) Main location Bangkok, Thailand Jakarta, Indonesia Established Paid up Capital THB 377 Million IDR 192,000 Million (JPY 1.3 Billion) (JPY 1.5 Billion) Gross Written Premium THB 9,159 Million (JPY 31.1 Billion) IDR 18,081 Million (JPY 0.2 Billion) Profit after Tax THB 136 Million 2 (JPY 0.5 Billion) IDR 32,708 Million (JPY 0.2 Billion) Number of employees (as of Dec 2017) 1,281 employees 126 employees IAG s ownership 98.6% 80% Business model #8 P&C insurer 3 (with 4% #4 in motor market (with 6% Extensive network of 67 branches including HQ and 16 claims service centers nationwide Well-diversified distribution network comprising of agents, dealers and brokers High business efficiency and stable profitability Enhancing sales/service efficiency utilizing digital technology FX Date: the end of Mar 2018(THB/JPY exchange rate: 3.4, IDR/JPY exchange rate: ) 3. Transaction structure TMNF to acquire outstanding shares of Safety and Parolamas held by IAG in cash Profit After Tax average is THB 347 Million (JPY 1.2Billion). 3 All of rankings are based on Direct Written Premium (FY 2017). 4 TMNF intends to acquire 20% held by minority shareholders.

3 4. Funding Cash on hand (no debt / equity financing). 5. Strategic rationale of this transaction The combination of Safety and TMITH will create the third largest P&C insurer with 8% market share (the largest among the foreign owned insurers) and the second largest motor insurer in Thailand, which is the largest P&C insurance market among the South East Asian countries. We aspire to contribute to the development of the Thai insurance market and further profitable growth of our international business by implementing the following: With the scale, strong brand recognition and extensive distribution and claim service network of the combined operations, we aim to further enhance our market presence across Thailand. Safety s business portfolio complements TMITH existing business whose core strength is in commercial lines. The combination of the two operations will enable Tokio Marine Group to offer variety of high quality products and services with high quality meeting the needs of wide range of clients in both personal and commercial sectors. Various synergies are expected to be generated through initiatives such as cross-selling Tokio Marine group companies specialty insurance products through Safety s nationwide distribution channels, and utilizing Safety s expertise and infrastructure to enhance Tokio Marine Group s overall claim servicing quality and efficiency in Thailand. <FYR> Overview of the Tokio Marine Group companies Company name Tokio Marine Insurance Thailand Public Company Limited (TMITH) PT Asuransi Tokio Marine Indonesia (TMI) Main location Bangkok, Thailand Jakarta, Indonesia Established Paid up Capital THB 3,720 Million IDR 100,000 Million (JPY 12.6 Billion) (JPY 0.8 Billion) Gross Written Premium THB 7,999 Million (JPY 27.2 Billion) IDR 1,270,585 Million (JPY 9.8 Billion) 5 The year when former company Hua Sieng was established. Tokio Marine acquired equity shares in 1971.

4 Profit after Tax THB 655 Million (JPY 2.2 Billion) IDR 107,804Million (JPY 0.8 Billion) % of Tokio Marine Group shares 99.96% 60% Number of employees (as of Mar 2018) 777 employees 349 employees Business model #10 P&C insurer (with 4% Mainly provides motor insurance through car maker/dealer channel, and property and marine insurance directly to the Japanese companies and other commercial clients #14 P&C insurer (with 2% Mainly provides motor insurance through Japanese finance company, and property and marine insurance directly to the Japanese companies and other commercial clients FX Date: the end of Mar 2018(THB/JPY exchange rate: 3.4, IDR/JPY exchange rate: ) 6. Overview of P&C Insurance Markets in South East Asia 6 (1) Thailand Population 69 Million # of companies (domestic/ foreign) 60 (domestic 37/ foreign 23) Market Size Approximately JPY 720 Billion Major Line of Business Motor (60%), Personal Accident (13%) CAGR 2% CAGR (Forecast) 8% (2) Indonesia Population 264 Million # of companies (domestic/ foreign) 76 (domestic 55/ foreign 21) Market Size Approximately JPY 460 Billion Major Line of Business Motor (29%), Property (29%) CAGR 9% CAGR (Forecast) 12% 6 Source:Swiss Re Insight (2017)

5 (3) Singapore Population 6 Million # of companies (domestic/ foreign) 62 (domestic 5/ foreign 57) Market Size Approximately JPY 320 Billion Major Line of Business Motor (30%), Property (13%) CAGR 1% CAGR (Forecast) 4% (4) Malaysia Population 32 Million # of companies (domestic/ foreign) 22 (domestic 11/ foreign 11) Market Size Approximately JPY 470 Billion Major Line of Business Motor (49%), Property (19%) CAGR 2% CAGR (Forecast) 7% (5) Vietnam Population 95 Million # of companies (domestic/ foreign) 30 (domestic 16/ foreign 14) Market Size Approximately JPY 200 Billion Major Line of Business Motor (33%), Personal Accident (27%) CAGR 15% CAGR (Forecast) 14% (6) Philippines Population 105 Million # of companies (domestic/ foreign) 64 (domestic 53/ foreign 11) Market Size Approximately JPY 180 Billion Major Line of Business Motor (33%), Property (32%) CAGR 15% CAGR (Forecast) 11% (FX Date: the end of Mar 2018(THB/JPY exchange rate: 3.4, IDR/JPY exchange rate: , SGD/JPY exchange rate: 81.0, MYR/JPY exchange rate: 27.5, VND/JPY exchange rate: , PHP/JPY exchange rate: 2.0)