SUMMARY OF FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2016

Transcription

1 This document has been translated from the Japanese original solely for reference purposes, and the Japanese original shall prevail if any discrepancy is identified. SUMMARY OF FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 2016 February 14, 2017 Name of Listed Company: MS&AD Insurance Group Holdings, Inc. Stock Exchange Listing: Tokyo Stock Exchange and Nagoya Stock Exchange Securities Code Number: 8725 URL: Representative: Yasuyoshi Karasawa, President Contact: Noriyuki Horie, Manager, Consolidated Accounting Section, Accounting Department Telephone: Scheduled date to file the Quarterly Securities Report: February 14, 2017 Scheduled date to commence dividend payments: - Explanatory material for business results: Available IR Conference (for institutional investors and analysts): To be held (Note) Amounts of less than one million yen are truncated. 1. Consolidated Financial Highlights for the Nine Months Ended (April 1, 2016 to ) (1) Consolidated business performance Ordinary income 4,069, % 318,850 3,730, % 261,934 Percent figures represent changes from the corresponding period of the preceding year. (Note) Comprehensive income For the nine months ended : 101,742 million % For the nine months ended : 45,839 million (93.0) % (Yen) Net income attributable to owners Net income attributable to owners of the parent per share of the parent per share - Basic - Diluted (2) Consolidated financial conditions Total assets Ordinary profit Net assets Net income attributable to owners of the parent 21.7 % 209,655 (10.9) % 170,752 (17.4) % Ratio of net assets less noncontrolling interests to total assets 20,792,687 2,748, % 22.8 % March 31, ,303,649 2,725, (Reference) Net assets less non-controlling interests As of : 2,724,138 million As of March 31, 2016: 2,698,168 million % 2. Dividends Dividends per share 1st quarter 2nd quarter 3rd quarter 4th quarter Annual total (Yen) Year ended March 31, Year ending March 31, Year ending March 31, 2017 (Forecast) (Note) Revision of the latest announced dividends per share forecast: None Consolidated Earnings Forecasts for the Year Ending March 31, 2017 (April 1, 2016 to March 31, 2017) Ordinary profit Net income attributable to owners of the parent Net income attributable to owners of the parent per share (Yen) Year ending March 31, ,000 (2.3) % 183, Percent figures represent changes from the preceding year. (Note) Revision of the latest announced earnings forecasts: None %

2 * Notes (1) Changes in significant subsidiaries for the period (changes in specified subsidiaries resulting in changes in scope of consolidation): Yes Increase 0 Decrease 1 (MS Frontier Reinsurance Limited) (2) Adoption of special accounting methods allowed to be applied to quarterly consolidated financial statements: Yes (Note) For details, please refer to Adoption of Special Accounting Methods Allowed to be Applied to Quarterly Consolidated Financial Statements on page 2 of the Appendix. (3) Changes in accounting policies and accounting estimates and restatements 1. Changes in accounting policies due to revisions of accounting standards: None 2. Changes in accounting policies other than above: None 3. Changes in accounting estimates: None 4. Restatements: None (4) Number of shares of issued stock (common stock) 1. Number of shares of issued stock (including treasury stock) As of : 633,291,754 shares As of March 31, 2016: 633,291,754 shares 2. Number of shares of treasury stock As of : 33,830,072 shares As of March 31, 2016: 29,618,854 shares 3. Average number of shares of outstanding stock For the nine months ended : 601,117,174 shares For the nine months ended : 608,287,836 shares * Disclosure regarding the execution of the quarterly review process This report is outside the scope of the external auditor's quarterly review process required by Financial Instruments and Exchange Act but the review process for the quarterly consolidated financial statements under Financial Instruments and Exchange Act has been completed as of the disclosure date of the report. * Notes to the earnings forecasts and others (Earnings forecasts) Any earnings forecasts in this report have been made based on the information available to the Company as of the disclosure date of the report and certain assumptions, and therefore do not guarantee future performance. Actual results may differ substantially from these forecasts depending on various factors. The forecast of consolidated ordinary income for the current fiscal year is not disclosed due to difficulties in calculating reasonable forecast figures stemming from a high susceptibility to natural disasters and market conditions. (Others) The provisional accounting treatment of the business combination occuring in the year ended March 31, 2015 was finalized in the year ended March , which is reflected in this report.

3 [Appendix] Contents Page 1. Qualitative Information on Business Results (1) Explanation for Business Performance 2 (2) Explanation for Financial Conditions 2 (3) Explanation for Future Forecast Information including Consolidated Earnings Forecasts 2 2. Notes to Summary of Financial Statements Adoption of Special Accounting Methods Allowed to be Applied to Quarterly Consolidated Financial Statements 2 3. Consolidated Financial Statements (1) Consolidated Balance Sheets 3 (2) Consolidated Statements of Income and Comprehensive Income 4 (3) Notes to Consolidated Financial Statements 6 (Notes to Going Concern Assumptions) 6 (Notes to Significant Changes in Shareholders' Equity) 6 Explanatory Material for Business Results 1. Summary of Consolidated Business Results 7 2. Non-Consolidated Business Results of Mitsui Sumitomo Insurance Co., Ltd Non-Consolidated Business Results of Aioi Nissay Dowa Insurance Co., Ltd Supplementary Information (1) Supplementary Information on Consolidated Business Results 18 (2) Summary of Business Results of Main Consolidated Subsidiaries 20 1

4 1. Qualitative Information on Business Results (1) Explanation for Business Performance During the nine months ended, the global economy was on a gradual recovery trend on the whole with a continuing recovery in the US and moderate recovery in Europe while a sluggishness was shown in some emerging countries. Japanese economy also moderately recovered with a steady trend in consumer spending supported by an improvement in employment situation while an improvement in corporate earnings paused. However, an uncertainty increased with economic situations in the US and some emerging countries including China and an issue of the UK leaving the EU. Under these conditions, the business performance of the Group for the nine months ended was as follows. Underwriting income was 3,665.5 billion (of which net premiums written were 2,608.9 billion), investment income was billion and other ordinary income was 10.2 billion, resulting in total ordinary income of 4,069.2 billion. Ordinary expenses amounted to 3,750.4 billion. This breaks down into underwriting expenses of 3,208.3 billion (of which net claims paid were 1,347.8 billion), investment expenses of 52.0 billion, operating expenses and general and administrative expenses of billion and other ordinary expenses of 11.5 billion. As a result, the Company posted an ordinary profit of billion, marking an increase of 56.9 billion from the same period last year. After factoring in extraordinary income and losses, income taxes and other factors, net income attributable to owners of the parent of billion was reported with an increase of 38.9 billion year on year. (2) Explanation for Financial Conditions As of, total assets stood at 20,792.6 billion with an increase of billion from March 31, And net assets stood at 2,748.2 billion with an increase of 22.9 billion from March 31, 2016 primarily due to an increase in retained earnings. (3) Explanation for Future Forecast Information including Consolidated Earnings Forecasts The Company keeps the previously announced forecasts of ordinary profit of billion and net income attributable to owners of the parent of billion on a consolidated basis for the year ending March 31, 2017 unchanged. 2. Notes to Summary of Financial Statements Adoption of Special Accounting Methods Allowed to be Applied to Quarterly Consolidated Financial Statements (Calculation of income tax expenses) The domestic consolidated companies calculate their income tax expenses primarily by multiplying income before income taxes by the effective income tax rate, after adding or deducting the permanent difference if this amount is significant. 2

5 3. Consolidated Financial Statements (1) Consolidated Balance Sheets Assets Cash, deposits and savings Call loans Receivables under resale agreements Receivables under securities borrowing transactions Monetary claims bought Money trusts Investments in securities Loans Tangible fixed assets Intangible fixed assets Other assets Assets for retirement benefits Deferred tax assets Customers' liabilities under acceptances and guarantees Bad debt reserve Total assets Liabilities Policy liabilities: March 31, ,083,838 1,203,293 31,175 15,000 29,999 6, , , , , , ,950 14,670,914 15,270, , , , , , ,917 1,251,615 1,204,144 32,815 31,690 45,871 45,602 55,500 53,530 (10,300) (8,536) 20,303,649 20,792,687 15,283,850 15,824,737 Outstanding claims 1,967,518 1,894,482 Underwriting reserves 13,316,332 13,930,254 Bonds issued 349, ,786 Other liabilities 1,299,598 1,123,767 Liabilities for pension and retirement benefits 188, ,477 Reserve for retirement benefits for officers Accrued bonuses for employees 33,589 10,011 Reserve for reorganization by function - 18,470 Reserves under the special laws: 161, ,367 Reserve for price fluctuation 161, ,367 Deferred tax liabilities Acceptances and guarantees Total liabilities Net assets 205, ,636 55,500 53,530 17,578,374 18,044,440 Shareholders' equity: Common stock 100, ,000 Capital surplus 670, ,458 Retained earnings 628, ,994 Treasury stock (80,065) (93,590) Total shareholders' equity 1,319,143 1,450,862 Accumulated other comprehensive income: Net unrealized gains/(losses) on investments in securities 1,324,886 1,450,094 Net deferred gains/(losses) on hedges 40,113 28,264 Foreign currency translation adjustments 22,369 (198,797) Accumulated actuarial gains/(losses) on retirement benefits (8,343) (6,285) Total accumulated other comprehensive income 1,379,024 1,273,275 Stock acquisition rights Non-controlling interests 27,106 23,800 Total net assets 2,725,274 2,748,246 Total liabilities and net assets 20,303,649 20,792,687 3

6 (2) Consolidated Statements of Income and Comprehensive Income (Consolidated Statements of Income) Ordinary income: 3,730,643 4,069,259 Underwriting income: 3,441,318 3,665,530 Net premiums written 2,340,785 2,608,957 Deposit premiums from policyholders 95,092 79,361 Investment income on deposit premiums from policyholders 35,569 36,353 Life insurance premiums 965, ,551 Investment income: 280, ,507 Interest and dividends income 208, ,625 Investment gains on money trusts ,869 Investment gains on trading securities - 40,739 Gains on sales of securities 94,455 68,915 Gains on derivative transactions 7,250 - Investment gains on separate accounts - 73,415 Transfer of investment income on deposit premiums from policyholders (35,569) (36,353) Other ordinary income 9,233 10,221 Ordinary expenses: 3,468,708 3,750,408 Underwriting expenses: 2,933,124 3,208,361 Net claims paid 1,212,639 1,347,843 Loss adjustment expenses 118, ,937 Commissions and collection expenses 485, ,947 Maturity refunds to policyholders 226, ,211 Life insurance claims 307, ,930 Provision for outstanding claims 32,855 67,126 Provision for underwriting reserves 543, ,505 Investment expenses: 98,895 52,066 Investment losses on money trusts 15,403 13,298 Losses on sales of securities 7,547 6,938 Impairment losses on securities 10,433 1,589 Losses on derivative transactions - 25,390 Investment losses on separate accounts 15,168 - Operating expenses and general and administrative expenses 427, ,403 Other ordinary expenses: 9,232 11,577 Interest expense 5,387 6,573 Ordinary profit 261, ,850 Extraordinary income: 706 1,695 Gains on sales of fixed assets 706 1,695 Extraordinary losses: 30,730 35,101 Losses on sales of fixed assets 1, Impairment losses on fixed assets 9,409 2,187 Provision for reserves under the special laws: 5,599 6,335 Provision for reserve for price fluctuation 5,599 6,335 Other extraordinary losses 14,067 25,646 Income before income taxes 231, ,444 Income taxes 60,387 74,618 Net income 171, ,826 Net income attributable to non-controlling interests 770 1,170 Net income attributable to owners of the parent 170, ,655 4

7 (Consolidated Statements of Comprehensive Income) Net income Other comprehensive income: Net unrealized gains/(losses) on investments in securities Net deferred gains/(losses) on hedges Foreign currency translation adjustments Accumulated actuarial gains/(losses) on retirement benefits Share of other comprehensive income of equity method investments Total other comprehensive income Total comprehensive income Allocation: Comprehensive income attributable to owners of the parent Comprehensive income attributable to non-controlling interests 171, ,826 (72,235) 122,899 2,250 (11,849) (42,025) (219,179) (1,292) 2,059 (12,380) (3,013) (125,682) (109,083) 45, ,742 49, ,907 (3,466) (2,164) 5

8 (3) Notes to Consolidated Financial Statements (Notes to Going Concern Assumptions) Not applicable. (Notes to Significant Changes in Shareholders' Equity) Not applicable. 6

9 Explanatory Material for Business Results 1. Summary of Consolidated Business Results (1) Consolidated Business Performance Ordinary income and expenses: Underwriting income: Net premiums written Deposit premiums from policyholders Life insurance premiums Underwriting expenses: Net claims paid Loss adjustment expenses Commissions and collection expenses Maturity refunds to policyholders Life insurance claims Provision for outstanding claims Provision for underwriting reserves Investment income: Interest and dividends income Investment gains on money trusts Gains on sales of securities Investment gains on separate accounts Investment expenses: Investment losses on money trusts Losses on sales of securities Impairment losses on securities Investment losses on separate accounts Operating expenses and general and administrative expenses Other ordinary income and expenses: Gains/(losses) on equity method investments Ordinary profit Extraordinary income and losses: Extraordinary income Extraordinary losses Extraordinary income/(losses) Income before income taxes Income taxes Net income Net income attributable to non-controlling interests Net income attributable to owners of the parent Items Change 1 34,414 36,651 2, % 2 23,409 26,086 2, (157) (16.5) 4 9,654 9,355 (298) (3.1) 5 29,332 32,080 2, ,126 13,478 1, ,185 1, ,859 5, ,262 1,812 (450) (19.9) 10 3,078 2,449 (629) (20.4) ,436 7,061 1, ,800 3,935 1, ,088 2,086 (2) (0.1) , (255) (27.0) (468) (47.4) (21) (13.7) (6) (8.1) (88) (84.8) (151) (100.0) 23 4,274 4, (13) (13) Change ratio (216,686.5) (9) (52.8) 26 2,619 3, (300) (334) (33) ,319 2, ,715 2, ,707 2, (Notes) 1. The figures in the above table are presented exclusive of Good Result Return premiums of Mitsui Sumitomo Insurance's proprietary automobile insurance product ModoRich, which contains a special clause related to premium adjustment and refund at maturity. 2. Extraordinary losses for the nine months ended include costs of 11.3 billion associated with the implementation of the career/transition assistance measures such as special severance payments at Aioi Nissay Dowa Insurance Co., Ltd., one of the consolidated subsidiaries. 3. Extraordinary losses for the nine months ended include system-related costs that were recognized by the reorganization by function at domestic insurance consolidated subsidiaries under the umbrella of the Company in the amount of 21.4 billion. 7

10 (2) Breakdown of Results by Company (Net Premiums Written, Ordinary Profit and Net Income Attributable to Owners of the Parent) (Note 1) Net premiums written (Note 1) Mitsui Sumitomo Insurance Aioi Nissay Dowa Insurance Mitsui Direct General Insurance Overseas insurance subsidiaries Ordinary profit Mitsui Sumitomo Insurance Aioi Nissay Dowa Insurance Net income attributable to owners of the parent Mitsui Sumitomo Insurance Aioi Nissay Dowa Insurance Mitsui Direct General Insurance Mitsui Sumitomo Aioi Life Insurance Mitsui Sumitomo Primary Life Insurance Overseas insurance subsidiaries Others Consolidation adjustments and holding company Items Change Change ratio 1 23,409 26,086 2, ,463 11,043 (419) (3.7) 3 9,027 9, ,608 5,672 3, ,619 3, ,389 1, ,707 2, ,001 1, (21) (0) (24) (28.8) (9) (63.4) 17 (247) (407) (159) - % (Notes) 1. The figures in the above table are presented exclusive of Good Result Return premiums of Mitsui Sumitomo Insurance's proprietary automobile insurance product ModoRich, which contains a special clause related to premium adjustment and refund at maturity. 2. Items 10 to 16 represent the net income or loss on a non-consolidated basis after taking into account the Company s ownership interests in its subsidiaries. (3) Breakdown of Results of Overseas Insurance Subsidiaries Net premiums written Items Change Change ratio 1 2,608 5,672 3, % Asia Europe Americas Reinsurance MS Amlin Net income attributable to owners of the parent Asia Europe Americas Reinsurance MS Amlin 2 1,294 1,167 (126) (9.8) (105) (13.7) (18) (5.1) (24) (13.5) 6-3,339 3, (34) (23.2) 9 (5) (55) (49) (0) (2.6)

11 (4) Summary of Results of Domestic Life Insurance Business Items Change Change ratio Year ended March 31, 2016 Amount of new policies Mitsui Sumitomo Aioi Life Insurance Mitsui Sumitomo Primary Life Insurance 1 18,190 16,051 (2,139) (11.8) % 24, ,374 7,591 (1,782) (19.0) % 12,626 Amount of policies in force Mitsui Sumitomo Aioi Life Insurance Mitsui Sumitomo Primary Life Insurance 3 224, ,758 2, % 225, ,990 54,888 5, % 49,108 Annualized premiums for policies in force Mitsui Sumitomo Aioi Life Insurance Mitsui Sumitomo Primary Life Insurance 5 3,697 3, % 3, ,766 5, % 4,840 (Notes) 1. The figures in the above table represent the total sum of individual insurance and individual annuities. 2. Changes and Change ratio make comparisons with the nine months ended for items 1 and 2 and the year ended March 31, 2016 for items 3 to 6. 9

12 2. Non-Consolidated Business Results of Mitsui Sumitomo Insurance Co., Ltd. The figures in the tables below are presented exclusive of Good Result Return premiums of Mitsui Sumitomo Insurance's proprietary automobile insurance product ModoRich, which contains a special clause related to premium adjustment and refund at maturity. (1) Business Performance Items Change Change ratio % (+) Net premiums written 1 11,463 11,043 (419) (3.7) (-) Net claims paid 2 5,948 5, (-) Loss adjustment expenses (-) Commissions and collection expenses 4 2,013 1,887 (125) (6.2) (-) Operating expenses and general and administrative expenses for underwriting 5 1,472 1, Underwriting profit before movements in reserves 6 1,400 1,055 (345) (24.6) (-) Movement in outstanding claims (13) (6.6) (-) Movement in ordinary underwriting reserves (126) (728) (120.9) (-) Movement in catastrophe reserve (104) (23.0) (+) Other Underwriting profit (+) Interest and dividends income (131) (13.5) (-) Transfer of investment income on deposit premiums from policyholders Net interest and dividends income (item 12 - item 13) (133) (19.2) (+) Gains/(losses) on sales of securities (118) (18.3) (-) Impairment losses on securities (36) (97.4) (+) Other 17 (53) (44) 9 - Investment profit 18 1,250 1,043 (206) (16.5) (+) Other ordinary profit/(loss) 19 (27) (29) (2) - Ordinary profit 20 1,389 1, (+) Extraordinary income/(losses): 21 (115) (36) 79 - Gains/(losses) on reserve for price fluctuation 22 (24) (27) (2) - Income before income taxes 23 1,274 1, (-) Income taxes Net income 25 1,001 1, Ratios Net loss ratio % 59.8 % 2.4 % Net expense ratio % 30.6 % 0.2 % Combined ratio % 90.4 % 2.6 % (Notes) 1. Net loss ratio = (net claims paid + loss adjustment expenses) / net premiums written x Net expense ratio = (commissions and collection expenses + operating expenses and general and administrative expenses for underwriting) / net premiums written x Combined ratio = net loss ratio + net expense ratio (Reference) Business performance excluding residential earthquake insurance and CALI* Net premiums written 29 10,039 9,651 (387) (3.9) Net loss ratio % 56.0 % 1.8 % Ratios Net expense ratio % 32.5 % 0.1 % Combined ratio % 88.5 % 1.9 % * CALI stands for compulsory automobile liability insurance, and the same hereinafter. 10

13 Mitsui Sumitomo Insurance Co., Ltd. (Non-consolidated) (2) Premiums written Net premiums written Direct premiums written (excluding deposit premiums from policyholders) Amount Change ratio Amount Change ratio Amount Change ratio Amount Change ratio % % % % Fire and allied 1, ,366 (29.6) 2, ,966 (23.2) Marine (13.5) (15.6) Personal accident 1,041 (5.5) 1, ,100 (4.9) 1, Voluntary automobile 4, , , , CALI 1, ,385 (2.3) 1, , Other 1, , , , Total 11, ,043 (3.7) 12, ,109 (3.1) (3) Net claims paid Fire and allied Amount Change ratio Net loss ratio Amount Change ratio Net loss ratio Change % % % % % 979 (15.8) (0.6) Marine Personal accident 561 (5.1) (4.8) 55.2 (3.5) Voluntary automobile 2,414 (0.8) ,368 (1.9) 56.3 (1.6) CALI 1, , Other (0.1) Total 5,948 (2.2) , (Note) Net loss ratio = (net claims paid + loss adjustment expenses) / net premiums written x 100 (Reference) Incurred losses caused by natural disasters in Japan Incurred losses Net claims paid Outstanding claims Incurred losses Net claims paid Fire and allied Voluntary automobile Other Total (Note) The above table describes losses caused by natural disasters in Japan, which exclude residential earthquake insurance, incurred during the respective period. The figures for the nine months ended include incurred losses related to the Kumamoto earthquakes, which exclude residential earthquake insurance, as follows: Incurred losses 9.6 billion, Net claims paid 4.9 billion and Outstanding claims 4.6 billion. (4) Expenses <Company expenses> Items Amount Change Change ratio Amount Change Change ratio % % Personnel expenses 1 1,238 (7) (0.6) 1, Non-personnel expenses (43) (4.9) Taxes and contributions (1) (1.4) Total 4 2,173 (47) (2.1) 2, (Note) Total = loss adjustment expenses + operating expenses and general and administrative expenses <Expenses for underwriting> Items Amount Change Change ratio Amount Change Change ratio % % Operating expenses and general and administrative expenses 5 1,472 (56) (3.7) 1, Commissions and collection expenses 6 2, ,887 (125) (6.2) Total 7 3, ,380 (105) (3.0) Net expense ratio % (1.4) 30.6 % 0.2 % Outstanding claims 11

14 Mitsui Sumitomo Insurance Co., Ltd. (Non-consolidated) (5) Catastrophe reserve March 31, 2016 Fire and allied Marine Personal accident Voluntary automobile Other Balance Reversal Provision Balance Reserve ratio Reserve ratio % % 1, , , , Total 4, , (Note) Reserve ratio = catastrophe reserve / net premiums written (excluding premiums of residential earthquake insurance and CALI and Good Result Return premiums of the automobile insurance product ModoRich ) x 100 Reserve ratio for is calculated on an annualized basis using net premiums written multiplied by four thirds as a denominator. (6) Investment assets Domestic bonds Domestic stocks Foreign securities Other securities (Reference) (7) Breakdown of interest and dividends income Domestic bonds Domestic stocks Foreign securities Other securities March 31, 2016 Change Cash, deposits and savings 5,127 4,255 (872) Investments in securities: 51,737 53,624 1,886 18,653 18,403 (250) 17,565 18,850 1,284 15,259 16, Loans 4,486 4,167 (318) Land and buildings 2,049 2,006 (43) Total 63,401 64, Long-term investment assets 13,645 13,153 (491) Change Investments in securities: (114) (11) (22) (65) (14) Loans (9) Land and buildings Other 18 9 (9) Total (131) 12

15 Mitsui Sumitomo Insurance Co., Ltd. (Non-consolidated) (8) Investments in securities Unrealized gains and losses on investments in securities Cost Fair value Difference Change from March 31, 2016 Domestic bonds 16,759 18,403 1,644 (266) Domestic stocks Foreign securities Other securities Total Domestic bonds Domestic stocks Foreign securities Other securities Total (Notes) 6,490 18,499 12,008 1,605 4,459 4, (72) (7) 28,041 41,825 13,784 1,259 March 31, 2016 Cost Fair value Difference 16,743 18,653 1,910 6,784 17,187 10,403 4,008 4, ,898 40,423 12, The above tables describe available-for-sale securities with practically determinable fair value. 2. Other securities includes loan receivable trust beneficiary certificates and commercial papers included in Monetary claims bought on the balance sheets. Gains and losses on sales of securities Domestic bonds Domestic stocks Foreign securities Other securities Total Gains/(losses) Gains/(losses) Gains Losses (0) Impairment losses on securities Domestic bonds Domestic stocks Foreign securities Other securities Total Change (36) (36) 13

16 3. Non-Consolidated Business Results of Aioi Nissay Dowa Insurance Co., Ltd. (1) Business Performance Items (+) Net premiums written 1 9,027 9, (-) Net claims paid 2 4,860 4, (-) Loss adjustment expenses (6) (1.4) (-) Commissions and collection expenses 4 1,698 1,691 (6) (0.4) (-) Operating expenses and general and administrative expenses for underwriting 5 1,377 1,302 (75) (5.5) Underwriting profit before movements in reserves (-) Movement in outstanding claims 7 (35) (8) 27 - (-) Movement in ordinary underwriting reserves (8) (197) (104.5) (-) Movement in catastrophe reserve (+) Other (9) (25.4) Underwriting profit (+) Interest and dividends income (37) (8.0) (-) Transfer of investment income on deposit premiums from policyholders Net interest and dividends income (item 12 - item 13) (40) (12.2) (+) Gains/(losses) on sales of securities (-) Impairment losses on securities (25) (66.9) (+) Other 17 (48) (64) (16) - Investment profit (11) (3.8) (+) Other ordinary profit/(loss) Ordinary profit (+) Extraordinary income/(losses): 21 (163) (60) Gains/(losses) on reserve for price fluctuation 22 (12) (12) (0) - Income before income taxes Change Change ratio (-) Income taxes Net income % Ratios Net loss ratio % 58.8 % (0.1) % Net expense ratio % 33.1 % (1.0) % Combined ratio % 91.9 % (1.1) % (Notes) 1. Net loss ratio = (net claims paid + loss adjustment expenses) / net premiums written x Net expense ratio = (commissions and collection expenses + operating expenses and general and administrative expenses for underwriting) / net premiums written x Combined ratio = net loss ratio + net expense ratio 4. Extraordinary income/(losses) for the nine months ended includes costs of 11.3 billion associated with the implementation of the career/transition assistance measures such as special severance payments. (Reference) Business performance excluding residential earthquake insurance and CALI Net premiums written 29 7,722 7, Net loss ratio % 54.7 % (0.8) % Ratios Net expense ratio % 34.7 % (1.6) % Combined ratio % 89.4 % (2.4) % 14

17 Aioi Nissay Dowa Insurance Co., Ltd. (Non-consolidated) (2) Premiums written Net premiums written Direct premiums written (excluding deposit premiums from policyholders) Amount Change ratio Amount Change ratio Amount Change ratio Amount Change ratio % % % % Fire and allied 1, ,126 (11.8) 1, ,417 (22.4) Marine 43 (31.2) 40 (8.2) (0) (100.5) (0) - Personal accident 490 (8.0) 471 (3.9) 513 (7.7) 499 (2.7) Voluntary automobile 5, , , , CALI 1, ,252 (3.6) 1, ,388 (0.4) Other , , Total 9, , , ,366 (3.3) (3) Net claims paid Amount Change ratio Net loss ratio Amount Change ratio Net loss ratio Change % % % % % Fire and allied 637 (15.0) (1.0) Marine 19 (45.5) Personal accident 231 (5.0) (11.8) 47.4 (3.4) Voluntary automobile 2,624 (4.8) ,562 (2.4) 55.8 (1.9) CALI 935 (0.7) (1.0) Other Total 4,860 (5.4) , (0.1) (Note) Net loss ratio = (net claims paid + loss adjustment expenses) / net premiums written x 100 (Reference) Incurred losses caused by natural disasters in Japan Incurred losses Net claims paid Outstanding claims Incurred losses Net claims paid Fire and allied Voluntary automobile Other Total (Note) The above table describes losses caused by natural disasters in Japan, which exclude residential earthquake insurance, incurred during the respective period. The figures for the nine months ended include incurred losses related to the Kumamoto earthquakes, which exclude residential earthquake insurance, as follows: Incurred losses 3.7 billion, Net claims paid 1.9 billion and Outstanding claims 1.8 billion. (4) Expenses <Company expenses> Items Amount Change Change ratio Amount Change Change ratio % % Personnel expenses (24) (2.6) Non-personnel expenses (72) (7.8) 803 (50) (6.0) Taxes and contributions (1) (1.6) Total 4 1,893 (0) (0.0) 1,816 (77) (4.1) (Note) Total = loss adjustment expenses + operating expenses and general and administrative expenses <Expenses for underwriting> Items Amount Change Change ratio Amount Change Change ratio % % Operating expenses and general and administrative expenses 5 1,377 (42) (3.0) 1,302 (75) (5.5) Commissions and collection expenses 6 1, ,691 (6) (0.4) Total 7 3, ,994 (81) (2.6) Net expense ratio % (0.9) % 33.1 % (1.0) % Outstanding claims 15

18 Aioi Nissay Dowa Insurance Co., Ltd. (Non-consolidated) (5) Catastrophe reserve March 31, 2016 Fire and allied Marine Personal accident Voluntary automobile Other Balance Reversal Provision Balance Reserve ratio Reserve ratio % % 1, , Total 2, , (Note) Reserve ratio = catastrophe reserve / net premiums written (excluding premiums of residential earthquake insurance and CALI) x 100 Reserve ratio for is calculated on an annualized basis using net premiums written multiplied by four thirds as a denominator. (6) Investment assets Domestic bonds Domestic stocks Foreign securities Other securities (Reference) (7) Breakdown of interest and dividends income Domestic bonds Domestic stocks Foreign securities Other securities March 31, 2016 Change Cash, deposits and savings 1,495 1, Investments in securities: 24,975 26,137 1,161 9,855 9, ,927 8, ,757 7, Loans 2,218 2,093 (124) Land and buildings 1,709 1,636 (72) Total 30,398 31,536 1,137 Long-term investment assets 4,837 4,603 (234) Change Investments in securities: (28) (20) (9) Loans (3) Land and buildings Other 9 3 (6) Total (37) 16

19 Aioi Nissay Dowa Insurance Co., Ltd. (Non-consolidated) (8) Investments in securities Unrealized gains and losses on investments in securities Cost Fair value Difference Change from March 31, 2016 Domestic bonds 9,195 9, (141) Domestic stocks Foreign securities Other securities Total Domestic bonds Domestic stocks Foreign securities Other securities Total (Notes) 4,267 8,268 4, ,702 6, (71) ,542 24,823 5, March 31, 2016 Cost Fair value Difference 9,016 9, ,415 7,663 3,248 5,244 5, ,022 23,759 4, The above tables describe available-for-sale securities with practically determinable fair value. 2. Other securities includes loan receivable trust beneficiary certificates included in Monetary claims bought on the balance sheets. Gains and losses on sales of securities Domestic bonds Domestic stocks Foreign securities Other securities Total Gains/(losses) Gains/(losses) Gains Losses (45) (25) Impairment losses on securities Domestic bonds Domestic stocks Foreign securities Other securities Total Change (32) (25) 17

20 4. Supplementary Information (1) Supplementary Information on Consolidated Business Results (a) Premiums Written and Net Claims Paid by Line of Insurance Direct Premiums Written by Line of Insurance (including Deposit premiums from policyholders) Lines of Insurance Share Change ratio Share Change ratio Amount Amount (%) (%) (%) (%) Fire and allied 528, , (16.0) Marine 104, , Personal accident 246, (6.4) 250, Voluntary automobile 1,108, ,156, CALI 269, , Other 399, , Total: 2,656, ,745, Deposit premiums from policyholders 95, (14.7) 79, (16.5) (Reference) Direct Premiums Written excluding Good Result Return premiums of the automobile insurance product ModoRich Voluntary Automobile 1,109, ,156, Total 2,657, ,745, Net Premiums Written by Line of Insurance Lines of Insurance Amount Share Change ratio Share Change ratio Amount (%) (%) (%) (%) Fire and allied 373, , Marine 82, , Personal accident 163, (4.9) 175, Voluntary automobile 1,123, ,188, CALI 272, , (2.9) Other 324, , Total 2,340, ,608, (Reference) Net Premiums Written excluding Good Result Return premiums of the automobile insurance product ModoRich Voluntary automobile 1,124, ,188, Total 2,340, ,608, Net Claims Paid by Line of Insurance Lines of Insurance Amount Share Change ratio Share Change ratio Amount (%) (%) (%) (%) Fire and allied 178, (13.9) 227, Marine 34, , Personal accident 82, (4.2) 80, (1.9) Voluntary automobile 576, (0.8) 590, CALI 197, , Other 143, , Total 1,212, (2.1) 1,347, (Note) The figures in the above tables include elimination of intersegment transactions. 18

21 (b) Available-for-Sale Securities Items Cost March 31, 2016 Carrying amount Difference Cost Carrying amount Difference Domestic Bonds 3,998,967 4,413, ,810 4,015,640 4,369, ,744 Domestic Stocks 1,193,600 2,486,048 1,292,448 1,147,154 2,677,760 1,530,606 Foreign Securities 1,908,714 2,030, ,173 2,012,483 2,112,199 99,715 Other Securities 175, ,283 8, , ,988 9,571 Total 7,276,587 9,114,998 1,838,410 7,296,695 9,290,333 1,993,637 March 31, Available-for-sale securities without practically determinable fair value are not included in the above table. 1. Available-for-sale securities without practically determinable fair value are not included in the above table. 2. Other Securities includes certificates of deposits included in Cash, deposits and savings, and commercial papers and loan receivable trust beneficiary certificates included in Monetary claims bought on the consolidated balance sheet. 3. The Company and its consolidated subsidiaries recognized impairment losses of 17,440 million on Available-for-sale securities with practically determinable fair value (comprised of 16,088 million on Domestic stocks and 1,351 million on Foreign securities). In principle, the Company and its domestic consolidated subsidiaries recognize impairment losses on securities with practically determinable fair value if the fair value declines by 30% or more from the cost. 2. Other Securities includes certificates of deposits included in Cash, deposits and savings, and commercial papers and loan receivable trust beneficiary certificates included in Monetary claims bought on the consolidated balance sheet. 3. The Company and its consolidated subsidiaries recognized impairment losses of 1,523 million on Available-for-sale securities with practically determinable fair value (comprised of 657 million on Domestic stocks and 865 million on Foreign securities). In principle, the Company and its domestic consolidated subsidiaries recognize impairment losses on securities with practically determinable fair value if the fair value declines by 30% or more from the cost. 19

22 (2) Summary of Business Results of Main Consolidated Subsidiaries (a) Mitsui Sumitomo Insurance Co., Ltd. (Non-consolidated) Non-Consolidated Balance Sheets Items March 31, 2016 (Assets) Cash, deposits and savings Receivables under resale agreements Monetary claims bought Money trusts Investments in securities Loans Tangible fixed assets Intangible fixed assets Other assets Customers' liabilities under acceptances and guarantees Bad debt reserve Total assets (Liabilities) Policy liabilities: Outstanding claims Underwriting reserves Bonds issued Other liabilities: Income taxes payable Lease obligations Asset retirement obligations Other liabilities Reserve for pension and retirement benefits Reserve for retirement benefits for officers Accrued bonuses for employees Reserve for reorganization by function Reserves under the special laws: Reserve for price fluctuation Deferred tax liabilities Acceptances and guarantees Total liabilities (Net assets) Common stock Capital surplus Retained earnings Total shareholders' equity Net unrealized gains/(losses) on investments in securities Net deferred gains/(losses) on hedges Total valuation and translation adjustments Total net assets Total liabilities and net assets 442, ,103 29,999 6,999 28,785 22,829 11,564 3,585 5,173,738 5,362, , , , ,671 43,039 40, , ,381 45,803 43,731 (3,115) (2,823) 6,786,590 6,847,838 3,994,619 3,987, , ,094 3,344,890 3,318, , , , ,080 31,780 21, ,189 3,765 3, , , , , , ,133 66,872 64,133 66, , ,790 45,803 43,731 5,259,108 5,179, , ,595 93,107 93, , , , , , ,696 40,113 36, ,133 1,031,480 1,527,481 1,668,768 6,786,590 6,847,838 20

23 Mitsui Sumitomo Insurance Co., Ltd. (Non-consolidated) Non-Consolidated Statements of Income Items Ordinary income: Underwriting income: Net premiums written Deposit premiums from policyholders Investment income on deposit premiums from policyholders Reversal of underwriting reserves Investment income: Interest and dividends income Investment gains on money trusts Gains on sales of securities Transfer of investment income on deposit premiums from policyholders Other ordinary income Ordinary expenses: Underwriting expenses: Net claims paid Loss adjustment expenses Commissions and collection expenses Maturity refunds to policyholders Provision for outstanding claims Provision for underwriting reserves Investment expenses: Investment losses on money trusts Losses on sales of securities Impairment losses on securities Operating expenses and general and administrative expenses Other ordinary expenses: Interest expense Ordinary profit Extraordinary income Extraordinary losses Income before income taxes Income taxes Net income 1,389,092 1,333,885 1,243,310 1,215,043 1,146,128 1,104,659 69,418 56,329 27,631 27,856-26, , ,849 97,300 84, ,910 54,076 (27,631) (27,856) 3,270 2,993 1,250,093 1,164,931 1,078, , , ,353 62,813 64, , , , ,015 20,738 19,364 35,948-12,016 5, ,470 1,447 3, , ,355 4,654 4,835 4,543 4, , , ,782 4, , ,340 27,328 40, , ,178 21

24 Mitsui Sumitomo Insurance Co., Ltd. (Non-consolidated) Non-Consolidated Solvency Margin Ratio Insurance companies running their business in Japan calculate the non-consolidated solvency margin ratio pursuant to the provisions of Articles 86 and 87 of the Insurance Business Act Enforcement Regulations and Public Notice No. 50 issued by the Ministry of Finance in While insurance companies set aside reserves to provide for payments of insurance claims should an insured event occur, they are also required to maintain sufficient funds to pay out in an event outside the normal range of estimates such as a major catastrophe and a significant drop in the value of their assets. The non-consolidated solvency margin ratio, or item (C) in each of the tables below, which is calculated in accordance with the Insurance Business Act, is the ratio of solvency margin of insurance companies calculated based on their capital and other reserves, or (A) the total amount of solvency margin, to risks exceeding the normal range of estimates, or (B) the total amount of risks. The non-consolidated solvency margin ratio is one of the objective indicators used by the insurance regulatory authorities to supervise insurance companies. A non-consolidated solvency margin ratio of 200% or over indicates adequate ability to satisfy insurance claims and other payment requirements. March 31, 2016 (A) Total amount of solvency margin Total net assets Reserve for price fluctuation Contingency reserve Catastrophe reserve General bad debt reserve Net unrealized gains/(losses) on investments in securities and net deferred gains/(losses) on hedges (prior to tax effect deductions) Net unrealized gains/(losses) on land Excess of policyholders' contract deposits (a) Subordinated debts, etc. (b) Amount excluded from the margin, out of (a) and (b) Deductions Others (B) Total amount of risks 2 2 ( R1 R 2) ( R 3 R 4) R 5 R 6 2,612,098 2,901, , ,288 64,133 66, , , ,126,342 1,241,871 39,762 45, , ,191 14,674 14, , , , ,928 General insurance risk (R 1 ) 120, ,506 Insurance risk of third sector insurance contracts (R 2 ) Assumed interest rate risk (R 3 ) 17,579 17,280 Asset management risk (R 4 ) 682, ,857 Business administration risk (R 5 ) 19,645 19,782 Catastrophe risk (R 6 ) 161, ,482 (C) Solvency margin ratio [(A) / {(B) x 1/2}] x % % (Note) The non-consolidated solvency margin ratio for is calculated by partially applying the simplified method where components such as the catastrophe risk (R 6 ) are calculated based on the data used for September 30,

25 (b) Aioi Nissay Dowa Insurance Co., Ltd. (Non-consolidated) Non-Consolidated Balance Sheets Items March 31, 2016 (Assets) Cash, deposits and savings Call loans Monetary claims bought Money trusts Investments in securities Loans Tangible fixed assets Intangible fixed assets Other assets Prepaid pension expenses Deferred tax assets Customers' liabilities under acceptances and guarantees Bad debt reserve Total assets (Liabilities) Policy liabilities: Outstanding claims Underwriting reserves Bonds issued Other liabilities: Income taxes payable Lease obligations Asset retirement obligations Other liabilities Reserve for pension and retirement benefits Accrued bonuses for employees Reserve for reorganization by function Reserves under the special laws: Reserve for price fluctuation Acceptances and guarantees Total liabilities (Net assets) Common stock Capital surplus Retained earnings Total shareholders' equity Net unrealized gains/(losses) on investments in securities Total valuation and translation adjustments Total net assets Total liabilities and net assets 131, ,196 15,000 15, ,511 2,590 2,497,578 2,613, , , , ,518 23,976 20, , ,235 28,175 27,406 14,544 10,033 12,500 12,530 (1,309) (1,257) 3,418,516 3,498,711 2,404,819 2,410, , ,750 1,893,259 1,900,222 50,000 50, , ,136 3,000 16, , ,683 20,239 22,317 5, ,525 37,807 36,525 37,807 12,500 12,530 2,673,351 2,682, , ,005 81,207 81, , , , , , , , , , ,300 3,418,516 3,498,711 23

26 Aioi Nissay Dowa Insurance Co., Ltd. (Non-consolidated) Non-Consolidated Statements of Income Items Ordinary income: Underwriting income: Net premiums written Deposit premiums from policyholders Investment income on deposit premiums from policyholders Reversal of outstanding claims Investment income: Interest and dividends income Investment gains on money trusts Gains on sales of securities Transfer of investment income on deposit premiums from policyholders Other ordinary income Ordinary expenses: Underwriting expenses: Net claims paid Loss adjustment expenses Commissions and collection expenses Maturity refunds to policyholders Provision for underwriting reserves Investment expenses: Losses on sales of securities Impairment losses on securities Operating expenses and general and administrative expenses Other ordinary expenses: Interest expense Ordinary profit Extraordinary income Extraordinary losses Income before income taxes Income taxes Net income 998, , , , , ,141 25,674 23,031 13,797 14,095 3, ,213 41,272 46,519 42, ,930 11,929 (13,797) (14,095) 4,196 4, , , , , , ,725 45,807 45, , ,199 65,113 54,196 10,320 6,962 13,659 7,733 7,184 3,284 3,853 1, , ,471 1,773 1, ,601 80, ,399 16,805 7,412 44,223 74,086 10,375 17,756 33,847 56,329 24

27 Aioi Nissay Dowa Insurance Co., Ltd. (Non-consolidated) Non-Consolidated Solvency Margin Ratio March 31, 2016 (A) Total amount of solvency margin Total net assets Reserve for price fluctuation Contingency reserve Catastrophe reserve General bad debt reserve Net unrealized gains/(losses) on investments in securities and net deferred gains/(losses) on hedges (prior to tax effect deductions) Net unrealized gains/(losses) on land Excess of policyholders' contract deposits (a) Subordinated debts, etc. (b) Amount excluded from the margin, out of (a) and (b) Deductions Others (B) Total amount of risks 2 2 ( R1 R 2) ( R 3 R 4) R 5 R 6 1,246,991 1,386, , ,223 36,525 37, , , , ,123 9,267 14,638 50,000 50,000 9,747 10,747 62,975 79, , ,196 General insurance risk (R 1 ) 100, ,287 Insurance risk of third sector insurance contracts (R 2 ) Assumed interest rate risk (R 3 ) 8,919 8,637 Asset management risk (R 4 ) 207, ,233 Business administration risk (R 5 ) 7,431 7,784 Catastrophe risk (R 6 ) 54,827 54,066 (C) Solvency margin ratio [(A) / {(B) x 1/2}] x % % (Note) The non-consolidated solvency margin ratio for is calculated by partially applying the simplified method where components such as the catastrophe risk (R 6 ) are calculated based on the data used for September 30,

28 (c) Mitsui Direct General Insurance Co., Ltd. (Non-consolidated) Non-Consolidated Balance Sheets Items March 31, 2016 (Assets) Cash, deposits and savings Investments in securities Tangible fixed assets Intangible fixed assets Other assets Bad debt reserve Total assets (Liabilities) Policy liabilities: Outstanding claims Underwriting reserves Other liabilities: Income taxes payable Asset retirement obligations Other liabilities Reserve for pension and retirement benefits Accrued bonuses for employees Reserves under the special laws: Reserve for price fluctuation Deferred tax liabilities Total liabilities (Net assets) Common stock Capital surplus Retained earnings Total shareholders' equity Net unrealized gains/(losses) on investments in securities Total valuation and translation adjustments Total net assets Total liabilities and net assets 3,918 10,508 38,973 40, ,396 2,301 5,586 5,366 (1) (4) 51,086 58,530 43,044 42,876 22,978 23,329 20,066 19,546 1, , ,646 44,040 35,101 39,106 5,001 9,006 (33,816) (33,747) 6,285 14, ,440 14,490 51,086 58,530 26