For the attention of our Investors / Analysts Aioi Insurance Company Presentation (including FY2002 Earnings) 23 May 2003 Aioi Insurance Co., Ltd.
I. FY2002 Earnings Summary 1. Key Points P1 2. Premium Income P2 3. Loss Ratio P5 4. Operating Expenses P6 5. Asset Management P7 Reference: Fortress Re related data P8 II. New Medium Term Plans 1. Medium Term Management Goals P9 2. Target Stance & Pillars of Strategy P10 3. Establishing a Structure for Revenue Growth P11 4. Enhancing Productivity/Efficiency through Business Model Reform P16 5. Streamlining Operating Expenses P17 6. Improving the Loss Ratio P18 7. Strengthening Asset Management Capability P19 8. Developing the Life Operation P20 9. Enhancing Shareholder Value P21 Data FY2002 Earnings Data
I. FY2002 Earnings Summary I. FY2002 Earnings Summary
'Outwards and Onwards – Fast' I. FY2002 Earnings Summary 1. Key Points Unit: Yen bn Unit: Yen bn FY2001 FY2002 FY2001 FY2002 YoY Change % YoY Change % Net Premium Income 777.3 836.8 59.4 7.7% Total Assets 2,663.4 2,496.3 (1,671) -6.30% Net Paid Claims 480.2 463.6 (16.6) -3.5% Net Worth 394.3 308.8 (855) -21.70% Net Operating Expenses 302.6 295.2 (7.3) -2.4% Loss Reserve 1,721.7 1,676.2 (455) -2.60% Operating Balance (45.7) 38.9 84.7 - Increase in Loss Reserve 119.6 (28.5) (148.1) - Extraordinary Loss Reserve 172.5 184.4 119 6.9% Increase in Extraordinary Loss Reserve (35.4) 11.9 47.3 - Solvency Margin 783.0% 683.4% -99.60% - Underwriting Profit (127.4) 7.3 134.8 - Profit/Loss on assets under management 43.3 19.3 (24.0) -55.4% Ordinary Profit (92.1) 20.3 112.4 - ○ Net Premium Income + 7.7% Net Profit (83.4) 10.3 93.7 - Net Loss Ratio 67.0% 60.1% -6.9% Excluding special factors -0.4% (domestic direct motor -¥4.2bn) Net Expense Ratio 38.9% 35.3% -3.6% ○ Net Claims Paid –3.5% Combined Ratio 105.9% 95.3% -10.6% * Net Loss Ratio includes loss adjustment expenses Excluding special factors –4.7% (incl. domestic direct motor -¥15.2bn) [Special Factors (abolition of government CALI reinsurance, impact of Fortress Re)] ○ Net Operating Expenses –2.4% FY2001 FY2002 YoY Change % Excluding special factors -¥2.6bn reduction (-0.9%) Net Premium Income 0.8 63.6 62.7 - ○ Underwriting Profit ¥7.3bn Abolition of gvt CALI reinsurance 48.3 48.3 - Fortress Re 0.8 15.2 14.3 - ○ Profit on assets under management ¥19.3bn Net Paid Claims 32.2 36.8 4.5 14.1% ○ Ordinary Profit ¥20.3bn Abolition of gvt CALI reinsurance 0.6 0.6 - Fortress Re 32.2 36.2 4.0 12.3% Net Operating Expenses 6.7 1.9 (4.8) -70.9% ○ Extraordinary Profit Abolition of gvt CALI reinsurance - Fortress Re 6.7 1.9 (4.8) -70.9% Reversion of pension fund management ¥7.5bn [Excluding Special Factors] ○ Extraordinary Loss FY2001 FY2002 YoY Change % Merger costs, including systems integration – ¥10.4bn Net Premium Income 776.4 773.2 (3.2) -0.4% Net Paid Claims 447.9 426.7 (21.2) -4.7% ○ Net Profit ¥10.3bn Net Operating Expenses 295.9 293.3 (2.6) -0.9% Net Loss Ratio 62.9% 60.2% -2.7% Net Expense Ratio 38.1% 37.9% -0.2% Combined Ratio 101.0% 98.2% -2.8% 1
'Outwards and Onwards – Fast' I. FY2002 Earnings Summary 2. Premium Income (1): Net Premium/Operating Result Trend ■ Net Premium/Operating Result by FY [Net premiums exclude Special Factors] Result 834.9 Yen bn Net Premium 840 815.8 816.0 - 2 . 2 % 820 +0.02% Results secured on an 783.6 776.4 800 operating basis 773.2 780 760 Halt to revenue decline 740 720 700 FY2000 FY2001 FY2002 ■ FY2002: Operating Result Monthly Increase Ratio % 3 +2.4 Revenues increasing from 2 +1.4 2H, reflecting: +1.3 +0.9 1 +0.6 +0.5 +0.5 +0.1 0 New product launches/ A p r M a y J u n J u l A u g S e p 1 H t o t a l O c t N o v D e c J a n F e b M a r 2 H t o t a l -0.3 steady efforts in - 1 -0.8 -1.3 Networks etc. - 2 -1.7 -1.9 -2.5 - 3 2
'Outwards and Onwards – Fast' I. FY2002 Earnings Summary 2. Premium Income (2): By Class / Channel ■ Net Premiums by Class (excl. Special Factors) Units: Yen bn, % Fire: low-profit overseas FY2001 FY2002 Class Amount YoY % Amount Change YoY % inwards reinsurance curtailed Fire 91.0 -1.7 81.0 -9.9 -11.0 Marine 5.3 -1.3 5.2 -0.1 -2.2 Casualty 51.8 -9.7 49.8 -1.9 -3.8 -¥8bn Motor 488.1 -0.3 490.0 1.8 0.4 CALI 78.5 -3.2 83.1 4.6 5.9 Other 61.5 2.8 63.8 2.3 3.8 TOTAL 776.4 -1.2 773.2 -3.2 -0.4 Toyota Group sales outlets solid Recovery in motor channel, revenues up ■ Operating Result by Channel (total of general classes) Smaller reduction in professional channnel ■ FY2002 Revenue Trend in Main Channels Unit: Yen bn, % FY2001 FY2002 ％ Channel Amount YoY % Amount Change YoY % Toyota Gp outlets Motor Pro All 8 6.8 Professional 296.0 -2.7 291.7 -4.3 -1.4 6.5 7 Motor 160.7 -1.1 161.6 0.9 0.6 6 5.1 Toyota Group outlets 139.1 5.5 146.4 7.3 5.3 5 Other dealers 36.7 -13.6 33.3 -3.4 -9.3 3.6 4 Companies 103.8 1.2 107.9 4.1 4.0 3 Financial 29.0 -16.5 28.8 -0.2 -0.5 1.3 2 1.2 1.0 of which banks 2.8 - 3.9 1.1 42.9 0.7 0.5 1 Other 51.0 -9.2 46.3 -4.7 -9.2 0 TOTAL 815.8 -2.2 816.0 0.2 0.0 -1 -0.3 -0.3 -0.5 -1.2 -2 -1.3 -1.9 -2.1 -3 Q1 Q2 Q3 Q4 3
'Outwards and Onwards – Fast' I. FY2002 Earnings Summary 2. Premium Income (3): Toyota Market ■ Toyota Group Premium Trend (total of general classes) ■ Sales of Products Developed Jointly Yen bn, % Units: No. of policies, Yen bn FY2000 FY2001 Change % FY2002 Increase Change % 00-02 Increase FY2001 FY2002 Product Group sales outlets 131.8 139.1 5.5% 146.4 7.3 5.3% 14.6 No. sold Premium No. sold Premium Increase % Toyota 117.4 123.8 5.5% 130.6 6.8 5.5% Convini Plan 22,063 2.4 38,074 4.2 75.0% Rentalease etc 6.6 7.3 10.6% 7.4 0.1 1.9% － － － Ashinaga Plan 20,629 4.6 Daihatsu 7.1 7.3 2.8% 7.7 0.4 5.0% － － － By Toyota sales outlets 12,505 2.9 － － Hino 0.7 0.7 0.7 － － － Via other channels 8,124 1.7 Group companies 10.7 14.4 34.6% 16.9 2.5 17.4% 6.2 Hosho ga tsukushi 1.3 1.9 46.2% Toyota Motor 6.2 9.2 48.4% 11.6 2.4 26.1% Longrun Warranty 1.7 2.0 16.4% Group companies 3.7 4.4 18.9% 4.5 0.1 3.3% － － Daihatsu 0.7 0.7 0.7 － － Hino 0.1 0.1 0.1 * ‘Convini Plan’ = motor insurance with auto-loan ‘Ashinaga Plan’ = long-term motor insurance for Ｔ TOTAL 142.5 153.5 7.7% 163.3 9.8 6.4% 20.8 S 3 card members ‘Hosho ga tsukushi’, ‘Longrun Warranty’ = extended warranty insurance ■ Business with Toyota Group Sales Outlets Steady business expansion FY2001 FY2002 based on joint product Newly Expanded as Newly Expanded as Newly Newly Gained a Leader Gained a Leader Gained Gained development (Coinsurer) Insurer (Coinsurer) Insurer Toyota 71 4 54 1 Rentalease etc. 4 7 9 8 Daihatsu 17 12 ２ Hino 6 12 5 TOTAL 98 19 4 80 10 1 4
'Outwards and Onwards – Fast' I. FY2002 Earnings Summary 3. Loss Ratio ■ Net Claims Paid / Loss Ratio Trend Overall / Motor Loss Ratios - Unit: Yen bn best improvement in the sector FY2001 FY2002 Class Claims Paid Loss Ratio Claims Paid Loss Ratio YoY % ■ Motor E/B Loss Ratio Trend (result basis: E/I) Fire 77.1 86.8% 37.1 48.2% -38.6% Marine 3.8 77.3% 2.7 55.0% -22.3% (Excl. domestic loss adjusting expenses) ％ Casualty 20.1 43.7% 18.7 42.8% -0.9% 64 Motor 286.1 63.5% 273.3 60.4% -3.1% 63.3 62 CALI 49.3 73.6% 51.2 45.0% -28.6% 59.6 -5.0% Other 43.5 74.8% 80.4 106.1% 31.3% 60 TOTAL 480.2 67.0% 463.6 60.1% -6.9% 58 -8.7% 56 NB: FY2002 - Fortress Re related business moved from Fire to Casualty 54.6 54 [Excluding Special Factors] FY2001 FY2002 52 Class Claims Paid Loss Ratio Claims Paid Loss Ratio YoY % 50 FY2000 FY2001 FY2002 Fire 44.8 51.3% 37.1 48.2% -3.1% Marine 3.8 77.3% 2.7 55.0% -22.3% Casualty 20.1 43.7% 18.7 42.8% -0.9% Motor 286.1 63.5% 273.3 60.4% -3.1% FY2002 Loss Improvement ○ Product response CALI 49.3 73.6% 50.6 70.5% -3.1% -0.9% ○ U/W response Other 43.5 75.8% 44.1 74.7% -1.1% -1.4% ○ Loss adj. response -1.6% TOTAL 447.9 62.9% 426.7 60.2% -2.7% (Vehicle theft down/Road Traffic Act reform -0.6%) 5
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