II. Business Strategy II. Business Strategy II. Business Strategy - PDF document

II. Business Strategy II. Business Strategy

II. Business Strategy 1. Pillars of strategy ■ Establish a structure to raise domestic non ■ ■ Establish a structure to raise domestic non-life income and profits Establish a structure to raise domestic non- -life income and profits life income and profits Achieve continuous growth / enhance corporate value Achieve continuous growth / enhance corporate value Develop regional markets Cultivate Toyota market Grow risk-adjusted earnings Broaden scope for new investments Securing Securing Advanced motor products / personal products growth growth / platform products Customer No. 1 for loss adjusting / lifestyle service Strengthen asset Boost earnings Cut losses Boost earnings Reform product portfolio m’gment capability Productivity / efficiency up Reform sales structure Productivity / efficiency up ■ Grow Group earnings ■ ■ Grow Group earnings Grow Group earnings Overseas Life ■ Enhance capital level and efficiency ■ ■ Enhance capital level and efficiency Enhance capital level and efficiency Strengthen risk management (risk capital allocation) Gauge management Mitigate management risk risk (reduce risk assets/inefficient assets) ■ Establish a trusted corporate culture founded on ■ ■ Establish a trusted corporate culture founded on ‘Communication’ Establish a trusted corporate culture founded on ‘ ‘Communication Communication’ ’ Strong ties with Strong ties with stakeholders Agency partnership stakeholders Customer First Enhance IR Staff training/ES Promote CSR 12

II. Business Strategy 2. Medium Term Targets (FY2004-FY2005) *Figures in brackets exclude special factors ■ Secure growth above the market and promote bottom-up expense efficiency FY2003 FY2004 FY2005 Change 2003-05 ¥836.5bn ¥837.0bn ¥856.0bn ¥19.5bn Net premiums (¥758.2bn) (¥766.0bn) (¥783.0bn) (¥24.8bn) 0.0% 0.0% 2.3% 2.3% YoY % (-1.9%) (1.0%) (2.2%) (3.3%) 60.8% 63.1% 62.2% 1.4P Loss ratio (59.9%) (59.6%) (58.7%) (-1.2P) 33.5% 33.3% 32.7% -0.8P Net expense ratio (36.9%) (36.3%) (35.7%) (-1.2P) 94.3% (96.3%) 94.9% 0.6P Combined ratio (96.8%) (95.9%) (94.4%) (-2.4P) Ordinary profit ¥45.3bn ¥24.5bn ¥28.0bn -¥17.3bn Net profit ¥27.3bn ¥13.0bn ¥15.0bn -¥12.3bn Adj. ROE 9.1% 4.2% 4.7% -4.3P Note: Adj. ROE: ROE is calculated by deducting ‘Other gain on marketable securities’ from ‘Capital’ 13

II. Business Strategy 3. Securing growth (1) Plan to increase domestic direct income * Operating result basis ■ Secure higher motor insurance income primarily from Toyota Group sales. Substantially grow fire and personal insurance revenue by strengthening Pro multi-product sales, developing financial institution/ housing / affinity markets Upper: premiums FY2003 FY2004 FY2005 Change 2003-05 (Lower: change %) ¥465.4bn ¥466.0bn ¥473.0bn ¥7.6bn Motor (-2.2%) (0.1%) (1.5%) (1.6%) ¥145.3bn ¥147.0bn ¥150.0bn ¥4.7bn CALI (2.0%) (1.2%) (2.0%) (3.2%) ¥91.1bn ¥95.0bn ¥104.5bn ¥13.4bn Fire (6.0%) (4.3%) (10.0%) (14.7%) Personal ¥39.9bn ¥44.0bn ¥47.0bn ¥7.1bn (Third Sector) (2.5%) (10.4%) (6.8%) (17.8%) Miscellaneous ¥63.9bn ¥64.5bn ¥62.0bn -¥1.9bn Accident (-1.4%) (1.0%) (-3.9%) (-3.0%) ¥8.5bn ¥8.5bn ¥8.5bn ¥0bn Marine (0.3%) (0.4%) (0.0%) (0.0%) ¥813.9bn ¥825.0bn ¥31.1bn ¥845.0bn General Classes (2.4%) (-0.3%) (1.4%) (3.8%) 14

II. Business Strategy 3. Securing growth (2) Product strategy (1) Motor insurance strategy ■ New risk-segmented comprehensive motor insurance Top Run (Apr 2004) A step ahead in motor insurance Sector first Omoiyari rider Omoiyari rider Expanded coverage Expanded coverage < Financial assistance for injured/disabled party > < Financial assistance for injured/disabled party > Legal fee rider Legal fee rider ー Speed kaiketsu 3 kyoudai ー ー Speed kaiketsu 3 kyoudai ー Rider for portion of vehicle repair cost exceeding market Rider for portion of vehicle repair cost exceeding market value value Sector No. 1 Additional coverage service 55km tow truck assistance Additional coverage service 55km tow truck assistance ◆ Gain new customers by appealing with full coverage and sector No. 1 service ◆ Raise unit prices by switching existing customers to Top Run and adding riders 15

II. Business Strategy ３ ． 増収構造の確立（ ３ ） 人保険戦略 3. Securing growth (2) Product strategy (2) Personal insurance strategy ■ Expanded sales of personal insurance, primarily a doubling in sales of Health Comprehensive Insurance Health Club ◆ Sales channel expansion Large-scale recruitment of 300 QLIC personnel for joint selling of personal insurances Promotion of dealers/motor agents as multi-product sales channels FY2004 Target ◆ Expanded product line-up Health Club 110,000 Launch of simple and reasonable products policies sales ◆ Additional coverage service Sector first Prime Doctor Service (specialist doctor introduction service) Addition of telephone/e-mail based Mental Health Consultation Service ◆ Reinforcement of sales promotion structure Allocation of Personal Insurance Specialists to handle personal insurance sales promotion Support/guidance from Introduction Launch of Personal Insurance Specialists of QLIC staff simple products Personal Insurance sales channels Pro Corp/Fin Dealers Motor 16

II. Business Strategy 3. Securing growth (2) Product strategy (3) Platform strategy ■ Bottom-up promotion of ‘Platform products’, thereby strengthening multi-product sales ◆ Selling of motor insurance as a package with other classes ◆ Targeted ratio of ‘motor+fire’ Sales up multi sales through Pro channel Platform Products Other classes Max 10% package discount 15.0 % Customers up ‘Cashless’ 8.7% 6.0% 5mn motor insurance customers FY2002 FY2003 FY2005 ◆ Sale of dedicated products by market FY2003 result FY2004 target Personal market Home Comprehensive Policies Increase Policies Increase ('000s) (¥bn) ('000s) (¥bn) Home Comp 290 3.2 290 2.9 Small-mid co. market Traders Comprehensive Traders Comp 10 0.5 50 1.3 Construction Comp 10 3.2 3 1.5 Construction 建設業総合保険 Construction market TOTAL 310 6.8 340 5.7 Comprehensive 17

II. Business Strategy 3. Securing growth (2) Channel/market strategy (1) Toyota market strategy ■ Steady climb in Toyota market revenue ¥bn Up ¥27.8bn in 3yrs Product development with Toyota Product development with Toyota Group cos. 200 Gp sales outlets ◆ Develop products linked to advanced technologies, 20.0 16.9 14.4 150 10.7 financing operations Support to outlets to raise income Support to outlets to raise income 100 150.3 146.4 ◆ Active proposals on reorganizing Toyota sales channel 139.1 131.8 50 ◆ Acceleration of insurance business enhancement activities ◆ Utilization of dealer ranking system 0 FY2000 FY2001 FY2002 FY2003 Expand business with Group cos. Expand business with Group cos. ■ Business with group outlets also growing yoy ◆ Steady share building in Toyota Group property/ FY2001 FY2002 FY2003 group insurance markets New partner outlets 98 80 96 ◆ Expanded selling of long-term fire insurance with New outlets (Aioi coinsurer) 19 10 8 home loan for Toyota Home customers New outlets (Aioi leader) 4 1 2 18

II. Business Strategy 3. Securing growth (2) Channel/market strategy (1) Toyota market strategy ■ Develop motor insurance products linked to Toyota advanced technologies, financing operations FY2003 sales FY2003 sales Dedicated installment-based motor insurance Motor financing ¥5.1bn ¥5.1bn Feb 2000 – launch of Convini Plan Long-term motor for TS 3 card members FY2003 sales FY2003 sales Card operations Feb 2002 – launch of Ashinaga Plan ¥3.4bn ¥3.4bn Jul 2003 – launch of Nagaraku Plan Communication/ITS Motor insurance supporting Telematics/ITS operations (Telematics: on-board device information service) April 2004: mileage-linked motor insurance Sector 1st ‘P A Y D’ (= Pay As You Drive) - Premiums paid for the distance driven, similar to telephone call costs - Employs advanced ITS technology – developed based on Toyota G-BOOK 19

II. Business Strategy 3. Securing growth (2) Channel/market strategy (1) Toyota market strategy ■ ‘P A Y D’ structure PAYD Customer Premium Mileage Center Data Communication requested info TS 3 Card TS 3 Card module Center Aioi On-board device Insurance Paid 2 months (car navigation) later ◆ Telematics market forecast ● Market size ● Market penetration of car navigation, incl. advance ¥bn function in-car devices ‘000 units 7000 45000 ITS info-comm. service 6000 40000 35000 In-car devices 5000 30000 4000 25000 20000 3000 15000 2000 10000 1000 5000 0 0 FY2000 FY2005 FY2010 FY2015 FY2000 FY2005 FY2010 FY2015 Source: Compiled by Telecommunications Technology Council based on ITS Info-Communications Systems Committee Report 20