For the attention of our Investors / Analysts. Company Presentation. (including FY2004 Interim Earnings) 6 December 2004

Transcription

1 For the attention of our Investors / Analysts Company Presentation (including FY2004 Interim Earnings) 6 December 2004

2 CONTENTS I. FY2004 Interim Earnings Summary 1. Key Points 2. Premium Income 3. Claims 4. Catastrophe Reserves 5. Operating Expenses 6. Asset Management 7. Capital Ref: Fortress Re aviation reinsurance data 8. Aioi Life - Key Points of Interim Performance P1 P2 P3 P5 P6 P7 P8 P9 P10 II. FY2004 Earnings Forecast 1. Key Points P11 III. 2H Initiatives in Key Areas 1. Securing growth 2. Enhancing productivity/efficiency 3. Expanding group income P12 P17 P18 Data (Attachment) FY2004 Interim Earnings Data

3 I. FY2004 Interim Earnings Summary

4 I. FY2004 Interim Earnings Summary 1. Key Points [Lower line excludes special factors] Net profit posted in first half, offsetting the impact of major natural disasters and the early adoption of fixed asset impairment accounting NB: Excl. special factors = excl. the impact of abolition of the state CALI reinsurance scheme and Fortress Re issue Change +/- % Net Premiums Net Claims Net Operating Expenses Unde rwriting Profit Asset Management Profit/Loss Ordinary Profit Extraordinary Profit/Loss Extraordinary Profit Extraordinary Loss Interim Net Profit Net loss ratio Net expense ratio Combined ratio P P P P P P 1 NB: The net loss ratio includes loss adjusting expenses (Billion yen, %)

5 I. FY2004 Interim Earnings Summary 2. Premium Income (1) Premiums by Class Net Premiums by Class [Excl. special factors] Class 30-Sep-03 (Billion yen, %) 30-Sep-04 Amount +/- % Amount Change +/- % Fire Marine P.A Motor CALI Other TOTAL Long-term fire + 900MN Fire Reduction in outward R/I premiums + 1.7BN P.A. 3rd Sector + 900MN Savings-type P.A MN Downturn in unit prices - 5.8BN* Motor Reduction in overseas inward R/I premiums - 2.4BN Other Liability + 1.6BN (* operating result basis) 2

6 I. FY2004 Interim Earnings Summary 2. Premium Income (2) Premium Result Operating Result by Class (Billion yen, %) Operating Result by Channel Class 30-Sep Sep Sep-03 Channel Amount +/- % Amount Change +/- % Pro Fire Motor Marine Toyota Group P.A Other dealers Motor Corporates CALI Financial Other TOTAL Amount +/- % Amount Change +/- % Toyota Gp outlets o/w Toyota Gp cos o/w bancassurance Other TOTAL (Billion yen, %) 30-Sep Last year s domestic operating result maintained Higher income in all classes, except motor Increase in number of cars insured, but significant impact from fall in unit prices Solid increase in Toyota Group and Motor income Smaller reduction in income in the pro channel 3

7 I. FY2004 Interim Earnings Summary 3. Claims Net Claims / Loss Ratio Trend [Excl. special factors] 30-Sep-03 (Billion yen, %) 30-Sep-04 Claims Paid Loss ratio Claims paid Loss ratio +/- % Fire P Marine P P.A P Motor P CALI P Other P TOTAL P Natural Disasters Motor E/I Loss Ratio 60.0 % /9/2002 FY2002 (Billion yen) 30-Sep-04 Direct Net Incurred Loss Claims paid Outstanding loss reserve (Japan; excl. loss adjusting costs) /9/ Excl. major natural disasters FY /9/ point improvement in overall loss ratio due to reduction in overseas inward reinsurance contracts etc. 1.4-point deterioration due to the impact of major natural disasters, but only a 0.4- point rise excluding this impact, i.e. the ratio remains stable 4

8 I. FY2004 Interim Earnings Summary 4. Catastrophe Reserves Reserves by Class 140.0% (Billion yen, %) 31-Mar Sep-04 Amount Ratio Amount Ratio +/- % Fire P Marine P P.A P Motor P Other P Reserve Ratio by Class: Comparison with Competitors 138.6% Rise in reserve ratio across all classes, excl. P.A. Reserve transfer rate for fire amended to 5.8% (raised from 3.8% last FY) (30/9/2004) Fire 140.0% Motor 140.0% P.A % 120.0% 120.0% 100.0% 82.6% 80.0% 90.7% 88.9% 96.6%100.9% 100.0% 80.0% 100.0% 80.0% 60.0% 40.0% 20.0% 60.0% 40.0% 20.0% 20.2% 24.1% 22.6% 15.4% 21.7% 17.6% 60.0% 40.0% 20.0% 54.8% 64.2% 59.1% 55.4% 43.4% 48.5% 0.0% IOI Co. A Co. B Co. C Co. D Co. E 0.0% 0.0% IOI Co. A Co. B Co. C Co. D Co. E IOI Co. A Co. B Co. C Co. D Co. E The reserve ratios for fire, motor and P.A. weighted highly within premium income stand comparison with the other classes The outwardly low overall reserve ratio is due to the high weighting of motor 5

9 I. FY2004 Interim Earnings Summary 5. Operating Expenses Operating Expense Reduction [Excl. special factors] Personnel Non-Personnel SG&A expenses relating to underwriting Commissions and collection costs Net operating costs Net expense ratio (Billion yen, %) Change +/- % % 35.3% -0.7P NB: Non-personnel expenses include donations/burden charges/taxes 6 (Billion yen) Steady fall in expense ratio Non-personnel Personnel Net expense ratio /9/ /9/ /9/2004 % BN YoY reduction in net operating expenses thanks to ongoing efforts to achieve efficiencies Net expense ratio has also steadily fallen YoY, offsetting the impact of lower premiums

10 I. FY2004 Interim Earnings Summary 6. Asset Management Asset Management Profit/Loss (Billion yen) Change Asset management profit/loss Interest and dividend income Gain on sale of marketable securities Valuation gain on marketable securities Other profit/loss on assets managed Transfer to profit, incl. reserve premiums BN YoY improvement in profit on assets managed 2.4BN improvement in interest/ dividend income, in spite of continued low-interest environment 6.4BN increase in realized gains on marketable securities due to the sale of strategic holdings etc. Early Adoption of Fixed Asset Impairment Accounting < Impairment losses by asset group > (Billion yen) Land Buildings Rental assets Idle and other assets TOTAL Early adoption from this term with a view to ensuring asset soundness 8.4BN in impairment losses posted as extraordinary loss 7

11 I. FY2004 Interim Earnings Summary 7. Capital Solvency Margin (Billion yen) FY Change Total assets 2, , , Equity capital Catastrophe reserves Solvency margin 798.8% 910.1% 892.3% -17.8P Unrealised Gains/Losses on Securities (Billion yen) FY Change Gvt & Corp Bonds Shares Overseas securities Other TOTAL Reduction of Strategic Shareholdings (Book value basis) FY Reduction Balance (Billion yen) Solvency margin fell by only 17.8 points, in spite of lower unrealised stock profits, and remains at an adequate level Lower unrealised profits on strategic shareholdings Sale of strategic shareholdings promoted in 2H with a view to achieving the target of 40BN in sale value NB: Reduction and Balance figures are after adjustment for impairment 8

12 I. FY2004 Interim Earnings Summary Ref: Fortress Re Aviation Reinsurance Data Claims Payments (Billion yen) FY2001 FY2002 FY Claims Paid Outstanding Reserve An international auditor regularly examines claims estimates Steady progress on claims payments Settlement agreed with Fortress Re BN FY2001 FY 2002 FY2003 FY2004 FY Claims estimate 30 and its Directors 8.5BN in settlement booked as extraordinary profit Inward R/I contracts 0 Jan 2001 Jan 2002 Jan 2003 Jan

13 I. FY2004 Interim Earnings Summary 8. Aioi Life - Key Points of Interim Performance New policy total Personal / pensions Group / group pensions Policies in force Personal / pensions Group / group pensions Premium and other income Asset management profit Claims and other payments Asset management costs Total Assets 29,628 29,740 1,617 1,892 9,148 9, , ,846 (Units: billion yen, %) Change +/- % , , , , (Units: million yen, %) Solvency Margin % 1, , P , Reserves increased by 950MN in order to achieve statutory level NB: Real 1H net profit if no increase had been made: 955MN Steady growth in policies in force New personal policies (Billion yen) FY FY2003 Personal policies in force (Billion yen) 4,000 3,500 3,000 2,500 2,000 2,916.0 FY2002 Sep 3,201.9 FY2003 Sep +22.1% YoY FY % YoY 3,617.2 FY2004 Sep 10

14 II. FY2004 Earnings Forecast

15 II. FY2004 Earnings Forecast 1. Key Points [Lower line excludes special factors] Draw-down of catastrophe reserves absorbs the impact of major natural disasters, ensuring an estimated 17.0bn in net profit for the period Net Premiums Net Claims Net Operating Expenses Underwriting Profit Asset Management Profit/Loss Ordinary Profit Net Profit for the period Net loss ratio Net expense ratio Combined ratio 11 (Billion yen, %) FY2003 FY2004 Est Change +/- % P P P P P P NB: The net loss ratio includes loss adjusting expenses

16 III. 2H Initiatives in Key Areas

17 III. 2H Initiatives in Key Areas 1. Securing Growth (1) Product Strategy (1) Motor insurance strategy A step ahead in motor insurance Increase in motor insurance income achieved by encouraging existing customers to switch and by gaining new customers Sector first Expanded coverage - Speedy accident resolution - Packaging of various riders according to need - Supports agency sales growth - Personal accident compensation rider for pedestrians etc. (Oct 2004) < Pays out for the portion of fault attributable to the victim = aids the vulnerable party > New New fixed plan Top Run Easy (Oct 2004) < Rider package, simplified renewal, cashless > New customers gained as a result of further coverage enhancements Unit prices boosted by switching existing customers to Top Run and adding riders 12

18 III. 2H Initiatives in Key Areas 1. Securing Growth (1) Product Strategy (2) Personal insurance strategy Expanded sales of personal insurance, primarily Health Comprehensive Insurance Health Club Support/guidance from Personal Insurance Specialists Personal insurance sales channel expansion Introduction of QLIC staff Pro Corp/Fin Dealers Motor (3) Platform strategy All-out promotion of Platform products in order to strengthen multi-product sales Transportation market Personal market New Small-mid co. market Construction market Transportation Comprehensive (Dec 2004) Home Comprehensive Traders Comprehensive Construction Comprehensive 30-Sep-04 Change +/- % 1.1BN 5.4% 3rd Sector 800MN 21.8% Personal insurance Highest level of coverage for the transportation sector Introduction of discount system, reflecting safety, environment Sep-04 Change Increase Home Comp 400MN 8.6% Traders Comp 200MN 54.5% Construction Comp 400MN 21.1%

19 III. 2H Initiatives in Key Areas 1. Securing Growth (2) Channel / Market Strategy (1) Toyota market strategy Further efforts to boost revenues Increase Group sales outlets 74.0BN 74.6BN 0.8% Group cos. 10.1BN 12.1BN 19.9% TOTAL 84.2BN 86.7BN 2.9% Steady growth in sales of jointly developed products 30-Sep Sep-04 Policies Premiums Policies Premiums Increase Convini Plan 23, BN 25, BN 6.4% Nagaraku Plan* 3, MN 10, BN 212.0% * Sales commenced Jul 2003 Expansion of business with group sales outlets promoted FY2001 FY2002 FY New partner outlets New outlets (IOI coinsurer) New outlets (IOI leader) Product development with Toyota Develop products allied to Toyota s advanced technology, financing operations Telematics/ITS-supported motor insurance P A Y D Life cover for TS CUBIC CARD members Zutto Luck Support to outlets to raise income Proactive proposals on reorganizing Toyota sales channel Acceleration of insurance business enhancement activities Utilization of dealer ranking system and follow-up programme Expand business with Group companies Steady share building in Toyota Group property/ group insurance markets Expanded selling of long-term fire insurance with housing loan for Toyota Home customers 14 New

20 III. 2H Initiatives in Key Areas 1. Securing Growth (2) Channel / Market Strategy (2) Strategy for fire insurance with housing loan market Bancassurance channel Weak housing loan growth results in negative YoY sales growth Housing industry channel Steady increase in revenues offsets bancassurance 6.5BN decrease 8.0BN BN 2.1BN /9/ /9/2004 Shift in the handling of fire insurance with housing loan from banks to the housing industry, where contact with the customer occurs at an earlier stage Increase in revenues achieved by promoting alliances with the housing industry channel and regional financial institutions, where IOI has a significant share 0 30/9/ /9/2004 Cultivation of regional financial institutions based on unique IOI strategy Tie-up with housing industry channel Positive responses from regional fin. institutions Small Loan Credit Insurance for Small/Midsize Companies provided Life: promotion of non-selective pensions, Group Credit Life Insurance with Cancer Benefit Regional Info Network 15 Alliances with regional financial institutions Housing industry seminars held jointly with financial institutions, thereby cultivating the housing industry

21 III. 2H Initiatives in Key Areas 1. Securing Growth (2) Channel / Market Strategy (3) Small-midsize business market strategy Cultivate small-midsize business/retiree market by expanding sales channels / strengthening product features (utilizing alliances) and through the regional information network IOI Feature tie-up Nomura Securities Gp Channel Gateway AXA Sales staff Life 6,000 Sales tie-up Chamber of Expand sales channel Commerce CCI Existing channel Strengthen features Existing products/services/features 401k IOI insurance products Toyota Asset Inv. Trust Nomura Asset Inv. Trust Other financial products IOI Club Core Markets Retirees Small-Midsize Businesses Regional Info Network 16 IOI Club (Inc)

22 III. 2H Initiatives in Key Areas 2. Enhancing Productivity/Efficiency Drastically enhance productivity/efficiency through reform of the business structure Equip agency system Dedicated agency system IONOS Web-based agency system I-BROAD New Mobile POS system < Trial Roll-Out > Paperless Cashless Direct accounting Daily settlement IONOS Administrative reform Contracting agency Cooperating agency Umbrella agency Bring in Non-independent agent Reform channel structure Outsource corp. administration 30-Sep-04 FY2004 Target Contracting 1,495 2,000 Cooperating Umbrella 9 50 Dedicated sales guidance Dedicated admin. guidance Dedicated management Reform sales outlets Tri-Function Sales Structure Pro sales section Administrative promotion centre Sales centre Boost sales power / streamline costs Oct 2004 FY2004 Target Pro sales sections 5 11 Admin prom center 6 14 Sales centers/teams

23 III. 2H Initiatives in Key Areas 3. Expanding Group Income (1) Aggressive Expansion of Overseas Business Toyota global strategy and associated F&I business developing smoothly Strengthen the F&I operation in the Asian market and invest opportunistically in China Local direct premium income Mar FY2003 (Billion yen) /3 Target FY2004 EUR Jan 2005: launch of Aioi Motor and General Insurance Company of Europe - Promote F&I business and general insurance aimed at Japanese companies - FY2004: 5-office structure (open 2 offices) FY2005: Establish direct business structure through new branches China Thai Investment in local non-life insurer; reorganization into Bangkok Aioi in Jan 2005, promoting F&I business AUS Promote F&I business in alliance with IAG IAG: Australia s leading general insurance company 18

24 III. 2H Initiatives in Key Areas 3. Expanding Group Income (2) Life Insurance Business (Billion yen) Accelerate increase in statutory reserves New policy total (Personal/Pensions) Sep FY Grow Embedded Value Policies in force Personal/pensions Group/gp pensions 4, , , , Expand line-up of unique products to meet needs of customers/channels Feb 2004: Launch of Group Credit Life Insurance with Cancer Benefit for financial institutions Jun 2004: Launch of package product New Income Guarantee Insurance Just One combining income and medical guarantee Nov 2004: Launch of Zutto Luck dedicated credit card payment product for TS CUBIC CARD members New Enhance customer service and strengthen measures to prevent lapses/cancellations Strengthen policy retention structure through establishment of Customer Service Centre (Apr 2004) Full-scale roll-out of Direct Policy Amendment Service 19

25 Contact Point for Enquiries Corporate Planning Division IR Group Ebisu , Shibuya-ku, Tokyo Tel: +81 (3) Fax: +81 (3) This presentation contains statements relating to future performance, which entail certain risks and uncertainties. You should bear in mind that future performance, management policy or strategy could be subject to alteration or fluctuation due to changes in the external environment.