Company Presentation (Including FY2004 Earnings) 3rd June 2005 - PowerPoint PPT Presentation

To our Investors and Analysts Company Presentation (Including FY2004 Earnings) 3rd June 2005

CONTENTS I. FY2004 Earnings Summary 1. Key Points P1 2 ． Premium Income P2 3 ． Claims P4 4 ． Operating Expenses P5 5 ． Asset Management P6 6 ． Capital P7 7 ． Catastrophe Reserves P8 Ref: Fortress Re Aviation Reinsurance Data P9 8. Aioi Life: Key Earnings Points P10 Ref: Aioi Life Embedded Value P11 II. New Mid-Term Business Plans 'IOI ACT II' 1. Basic Mid-Term Strategy P12 2. Mid-Term Management Targets (FY2005-FY2006) P14 3. Business Strategy P15 4. Capital Policy P24 5. Promotion of CSR Management P25 Ref: General Image of New Mid-Term Business Plans 'IOI ACT II' P26 Data (Attachments): FY2004 Earnings Data

I. FY2004 Earnings Summary I. FY2004 Earnings Summary

I. FY2004 Earnings Summary 1. Key Points Note: Lower line excludes special factors (abolition of the state CALI reinsurance scheme and impact of the Fortress Re issue) ◆ Last year's direct net premium (Billion yen, %) result maintained, but net FY2003 FY2004 Change +/- % premium income from 836.5 827.8 -8.7 -1.1 Net Premiums overseas reinsurance down, 758.2 757.6 -0.5 -0.1 471.4 498.9 27.4 5.8 leading to 1.1% fall Net Claims 417.3 431.5 14.1 3.4 279.8 274.4 -5.4 -1.9 ◆ Underwriting loss of ¥9.9BN Net Operating Expenses 279.5 274.3 -5.1 -1.8 due to the impact of natural Underwriting Profit (Loss) 13.0 (9.9) -22.9 -176.1 Asset Management Profit (Loss) 41.5 38.0 -3.5 -8.5 disasters and other factors Ordinary Profit (Loss) 45.3 22.3 -22.9 -50.6 ◆ Net expense ratio improved Extraordinary Profit (Loss) 4.9 1.2 -3.7 -74.8 Extraordinary Profit 19.0 17.3 -1.7 -9.0 0.3P in spite of fall in Extraordinary Loss 14.0 16.0 2.0 14.2 premiums Net Profit 27.3 16.1 (11.1) -41.0 Dividend per share Y8.00 Y8.00 Y0 ◆ Dividend maintained at ¥8 60.8 64.6 3.8P Net loss ratio 59.9 61.7 1.8P per share NB: The net loss 33.5 33.2 -0.3P Net expense ratio ratio includes loss 36.9 36.2 -0.7P adjusting expenses 94.3 97.7 3.4P Combined ratio 96.8 97.9 1.1P 1

I. FY2004 Earnings Summary 2. Premium Income (1) Net Premiums ■ Net Premiums by Class ■ Main Factors [Excluding special factors] (Billion yen) (Billion yen, %) FY2003 FY2004 Long-term fire Fire +4.5 Class Amount +/- % Amount Change +/- % 83.7 3.3 88.5 4.8 5.8 Fire Third sector +1.7 P.A. Savings-type P.A. -1.1 5.2 0.5 5.3 0.1 2.2 Marine 49.0 -1.6 49.2 0.1 0.3 P.A. Downturn in unit prices -7.4* 471.7 -3.7 460.6 -11.1 -2.4 Motor Reduction in overseas Motor inward R/I premiums -4.6 86.9 4.5 87.5 0.6 0.7 CALI Other 61.3 -3.9 66.3 4.9 8.0 Liability +4.3 Other Total 758.2 -1.9 757.6 -0.5 -0.1 （ * Operating result basis) 2

I. FY2004 Earnings Summary 2. Premium Income (2) Premium result ■ Operating Result by Class ■ Operating Result by Channel (Billion yen %) (Billion yen, %) FY2003 FY2004 FY2003 FY2004 Channel Class Amount +/- % Amount Change +/- % Amount +/- % Amount Change +/- % Pro 290.2 -1.9 288.8 -1.4 -0.5 Fire 92.3 6.0 97.1 4.8 5.2 Motor 162.4 1.1 163.8 1.4 0.9 Toyota Group 170.3 4.3 175.9 5.6 3.3 Marine 8.5 0.3 8.5 0.0 0.1 Toyota Gp outlets 150.3 2.7 152.7 2.4 1.6 P.A. 40.0 2.5 41.7 1.7 4.2 o/w Toyota Gp cos. 20.0 18.3 23.2 3.2 15.9 Other dealers 29.6 -11.1 27.6 -2.0 -6.9 Motor 465.4 -2.2 460.3 -5.1 -1.1 Corporates 83.2 2.6 84.3 1.1 1.3 CALI 145.3 2.0 145.7 0.4 0.3 Financial 27.6 -2.4 27.4 -0.2 -0.6 o/w bancassurance 4.8 23.3 4.3 -0.5 -10.8 Other 62.5 -1.4 64.4 1.8 2.9 Other 50.7 -6.8 49.8 -0.9 -1.8 Total 814.0 -0.3 817.6 3.6 0.4 Total 814.0 -0.3 817.6 3.6 0.4 ◆ Long-term fire insurance posts solid ◆ Smaller reduction in income in the performance, increase in income maintained highest-weighted Pro channel ◆ Motor insurance income continues downward, ◆ Smaller increase in Toyota Group income, but smaller reduction ◆ Increase in income achieved on total basis across but rising income trend maintained all categories 3

I. FY2004 Earnings Summary 3. Claims ■ Net Claims / Loss Ratio Trend ■ Major Natural Disasters (Unit: Billion yen) FY2004 [Excluding special factors] (Billion yen, %) Direct Net FY2003 FY2004 Incurred Loss 53.7 35.9 Paid Paid Loss ratio Claims paid 49.7 33.6 Loss ratio Change Loss ratio Claims Claims + / - Claims reserve 4.0 2.3 ■ Motor E/I Loss Ratio 34.1 42.4 55.8 21.7 65.0 22.6P Fire （％） (excl. domestic loss adjusting costs) 3.8 76.5 2.9 -0.9 56.1 -20.4P 59.6 Marine 60.0 17.7 40.4 16.2 -1.5 36.5 -3.9P P.A. 58.0 56.9 266.6 61.3 263.8 -2.8 62.0 0.7P Motor 56.0 54.6 54.4 49.0 65.7 46.8 -2.2 62.7 -3.0P CALI 55.2 54.0 Excl. major 45.7 79.4 45.7 0.0 72.8 -6.6P Other natural disasters 52.0 FY2001 FY2002 FY2003 FY2004 417.3 59.9 431.5 14.1 61.7 1.8P Total ◆ Incurred loss from major natural disasters ◆ The impact of major natural disasters on net amounted to Y53.7BN on a direct basis, but the claims paid was ¥33.6BN, but on a total basis net net impact was cut to Y35.9BN thanks to claims only increased ¥14.1BN. cautious reinsurance coverage ◆ The net loss ratio rose only 1.8P due to ◆ The motor E/I loss ratio was low and stable at improvement in the loss situation, inclusive of the 55.2%, excluding the impact of major natural disasters impact of major natural disasters. 4

I. FY2004 Earnings Summary 4. Operating Expenses ■ Operating Expense Reduction [Excluding special factors] (Billion yen, %) Personnel Non-Personnel Expense ratio FY2003 FY2004 ¥BN Change +/- % 160 38.5% 38.1% Personnel expenses 70.7 69.8 -0.9 -1.3 37.9% Non-Personnel expenses 67.8 65.8 -1.9 -2.9 140 38.0% o/w systems expenses 22.0 20.1 -1.9 -8.8 67.8 120 72.1 65.8 37.5% 69.6 Underwriting-related operating 138.6 135.6 -2.9 -2.1 36.9% 100 expenses and SG&A 37.0% Commissions and collection 80 140.9 138.6 -2.2 -1.6 36.2% costs The expense ratio 36.5% 60 is steadily falling Net operating expenses 279.5 274.3 -5.1 -1.8 36.0% 40 78.1 76.9 70.7 69.8 － Net expense ratio 36.9 36.2 -0.7P 35.5% 20 NB: Non-personnel expenses include donations/burden charges/taxes 0 35.0% FY2001 FY2002 FY2003 FY2004 ◆ ¥5.1BN reduction in net operating expenses thanks to ongoing streamlining efforts ◆ ¥1.9BN reduction in systems costs after new business investments concluded ◆ The net expense ratio also improved 0.7P, offsetting the impact of the fall in net premiums 5

I. FY2004 Earnings Summary 5. Asset Management ■ Asset Management Profit/Loss (Unit: Billion yen) ◆ ¥3.1BN increase in FY2003 FY2004 interest/dividend income, in spite of Change continued low interest rates Asset Management Profit (Loss) 41.5 38.0 -3.5 Interest and dividend income 35.5 38.7 3.1 ◆ Gain on sale of shares (part of Gain on sale of marketable securities 22.0 20.8 -1.1 gain/loss on sale of marketable Valuation loss on marketable securities 0.9 1.3 0.4 securities) was ¥23.3BN, down Other profit/loss on assets managed 5.9 0.6 -5.3 ¥3.5BN YoY Transfer to profit, incl. reserve premiums -21.0 -20.7 0.2 ■ Debts subject to Risk Control (Unit: Billion yen) ◆ ¥12.4BN reduction in debts subject FY2003 FY2004 Change to risk control, due to improving Debts subject to risk control 24.6 12.1 -12.4 Debts with failed companies 0.1 0.1 0.0 debtor results and bulk sales, etc. Debts overdue 18.3 11.4 -6.8 ◆ At 3.5% of loans, significant Debts overdue for more than 3 months 0.6 0.3 -0.3 Loans with eased conditions 5.5 0.2 -5.2 progress in enhancing asset Loans 352.9 343.0 -9.9 soundness As a proportion of loans 7.0% 3.5% -3.5P 6

I. FY2004 Earnings Summary 6. Capital 6. Capital ■ Solvency Margin (Unit: Billion yen) FY2003 FY2004 ◆ The solvency margin rose thanks to Change Total assets the steady build-up of equity capital 2,597.8 2,569.1 -28.7 Equity capital and reduction in risk 446.8 452.0 5.2 Catastrophe reserves 194.2 194.8 0.5 Solvency margin 910.1% 951.9% 41.8P ■ Unrealized gains/losses on securities (Unit: Billion yen) FY2003 FY2004 ◆ ¥17.7BN fall in unrealized stock gains Change on the sale of strategic shareholdings, Gvt/corp bonds 3.6 7.7 4.0 etc. Shares 223.8 206.1 -17.7 ◆ ¥7.6BN fall in unrealized losses on Foreign securities -14.9 -7.2 7.6 foreign securities due to portfolio Other 5.7 4.1 -1.6 enhancements TOTAL 218.3 210.6 -7.7 NB: Monetary receivables purchased are included under 'Other' ■ Reduction of strategic shareholdings (book value basis) (Unit: Billion yen) ◆ Reduction of almost ¥130BN achieved FY2003 FY2004 Change in 2yrs Reduction 96.6 32.8 -63.8 ◆ Strategic shareholdings realigned to Balance 303.6 270.8 -32.8 further business policy Balance before change 368.9 340.8 -28.1 NB: Reduction and Balance figures are after adjustment for impairment 7