MS&AD INSURANCE GROUP HOLDINGS, INC. 
By
January 31, 2013
MS & AD Insurance Group Holdings, Inc. Mitsui Sumitomo Insurance Company, Limited Aioi Nissay Dowa Insurance Company, Limited
Following their business integration on April 1, 2010, MS&AD Insurance Group Holdings, Inc. (Mr. Toshiaki Egashira, President) (Hereafter known as "MS&AD Holdings" or "the Holding Company), Mitsui Sumitomo Insurance Company, Limited (Mr. Yasuyoshi Karakawa, President) (Hereafter known as "Mitsui Sumitomo Insurance"), and Aioi Nissay Dowa Insurance Company, Limited (Hisahito Suzuki, President) (Hereafter known as "Aioi Nissay Dowa Insurance") have deliberated the reorganisation of the insurance companies under the umbrella of the Holding Company and today, based on the assumption that approval will be obtained from of the concerned authorities, they have reached an agreement to reorganize their various functions as of April 1, 2014.
I. The aim of functional reorganization 1. Functional reorganization focused on 'A structure that realizes our target business group'
Market shrinkage caused by the decreasing birthrate and aging population and a succession of large-scale natural disasters and slumps in the financial markets over recent years have meant that the business environment for the insurance industry has become very tough. Another major problem is how to respond to the diversification of customer needs and sales methods, and changes to regulations on domestic and foreign markets.
After the inauguration of the MS&AD Group in April, 2010, we took the first step towards a business merger by advancing the merger of Aioi Insurance Company, Limited, and Nissay Dowa Insurance Company, Limited, and the merger of Mitsui Sumitomo Kirameki Life, Limited, and Aioi Life Insurance Company, Limited, in order to improve the business efficiency of the management of the group. They are also responding to system integration, the biggest task facing the merger, by steadily advancing preparations that include starting up agent systems for full operation in the 2013 fiscal year.
For the second step in the merger, we continuously considered the reorganization of the insurance companies under the umbrella of the Holding Company (Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance. Hereafter known as "the Two Core Non-life Insurance Companies"), and consequently decided to reorganize the group by functions to achieve the following goals.
1) Improve entire group enterprise value: 'Growth' and 'Efficiency' across entire group
2) Respond to diverse customer needs: Utilise merits of the Two Core Non-life Insurance Companies
3) Strengthen group governance: Strengthen governance system centered on the Holding Company
Due to the revised Insurance Business Law that will be implemented in April, 2013, there will be a transfer of insurance contracts and a review of the regulations which enables the recommission of insurance sales. Based on the system review, the style of this functional reorganization will be like nothing before.
Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance pursued strength and efficiency in their respective business domains, exerted themselves to improve their competitiveness and established an unshakeable presence.
The functional reorganization will clarify the business concept between the Two Core Non-life Insurance Companies, strengthen their respective business foundations more than ever, and utilize efficient management to increase their earning power.
(1) Mitsui Sumitomo Insurance will utilise this comprehensive strength to provide superior products and services and will evolve into global insurance and financial services, both in domestic and foreign markets.
(2) Aioi Nissay Dowa Insurance will strengthen its relationship with its unique partner Toyota Group/Nippon Life Group and capitalize on these merits to deliver superior products and services and develop into a region-based business. Furthermore, their development into foreign markets will focus on the continued retail business from Toyota dealers.
The aim for the domestic insurance business is to improve management efficiency through the reorganization of business and sales channels and integrate the common company functions into the Holding Company, etc, hereby optimizing the group's functions.
Clarifying the business concept and optimizing the companies' functions will concentrate the merits of the Two Core Non-life Insurance Companies, capitalize on their synergy, increase the support and satisfaction we gain from our customers, and move us closer to the unassailable position of Japan's No.1 Insurance Group.
1) Hull, cargo, as well as aviation insurance will move to Mitsui Sumitomo Insurance.
Regarding hull, cargo, as well as aviation insurance, the contracts that Aioi Nissay Dowa Insurance undertakes are to move to Mitsui Sumitomo Insurance. Of these contracts, in regards to hull and cargo insurance, product supply functionality will be unified within Mitsui Sumitomo Insurance; and at Aioi Nissay Dowa Insurance, they will receive product supplies from Mitsui Sumitomo Insurance and sell it by recommission. Also, regarding aviation insurance, employees of Aioi Nissay Dowa Insurance will be seconded to Mitsui Sumitomo Insurance and will work together on the sales of said insurance. By carrying out the above, Mitsui Sumitomo Insurance will enhance its position in regards to hull, cargo plus
aviation insurance; moreover, it will exhibit its comprehensive strength as a member of the Group by further utilizing strength in the corporate market.
In the business market it will make further use of its strength and exhibit its overall ability.
2) Migration of the insurance contracts handled by Mitsui Sumitomo Insurance motor channel agencies, which have Aioi Nissay Dowa Insurance as a main business partner
Of the motor channel agencies (see note) from which both Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance maintain business results, the insurance contracts for those motor channel agencies that Aioi Nissay Dowa Insurance mainly does business that Mitsui Sumitomo Insurance receives will be transferred to Aioi Nissay Dowa Insurance. In this way, Aioi Nissay Dowa Insurance will enhance its position within motor channels and will go on to build substantially its sales network within the local community, which will strengthen the sales foundations of the Group.
(note) Sideline agencies that have the main businesses such as repair shops, used car sales, auto related businesses, and bike sales other than automobile dealers.
1) Reorganization of local sales networks and bases
In regards to agencies which are found in areas where Mitsui Sumitomo Insurance has a base but Aioi Nissay Dowa Insurance does not, or conversely where Aioi Nissay Dowa Insurance has a base but Mitsui Sumitomo Insurance does not, business will be transferred to the insurance company that has the base. Also, in regards to the areas where both companies have a base, the bases will be reorganized based on the scale or effectiveness of business activity. By transferring insurance contracts that are received by the company that has bases to be reorganized to the company that has the remaining bases, we aim to have increased productivity of business activities.
2) Joint use of bases
When Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance have bases in neighboring buildings, we will set forward joint use of the same building. By doing so, we aim to reduce costs relating to logistics within the group and improve effectiveness of joint projects.
Third sector long term contracts that Mitsui Sumitomo Insurance or Aioi Nissay Dowa Insurance sell will be transferred to Mitsui Sumitomo Aioi Life Insurance Co., Ltd. (herein MSI Aioi Life). This action aims to reduce product development and management costs.
4. Reorganization of overseas business
By integrating business management of foreign subsidiaries in each country, we aim to reduce management costs, improve effectiveness of the reinsurance arrangement and increase the overall profitability of the group. Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance will play the
following roles in carrying out overseas business.
1) Mitsui Sumitomo Insurance will implement general overseas business including new project investment and M & A.
2) Aioi Nissay Dowa Insurance will focus on overseas business related to Toyota dealerships.
Also, in order to enhance our governance on overseas business, we will establish new organizations in the Holding Company that will be able to manage and control the integrated risk management of overseas business and the maintenance of business management preparedness of overseas subsidiaries.
5. Enhancing governance of the Holding Company and the reorganization of this company's functionality
By integrating some part of the Two Core Non-life Insurance Companies' functions, we will enhance governance system of the Holding Company.
Specifically besides overseas business referred above, we will strengthen the overall risk management of the whole group; for example, a sophisticated level of risk management, establishing risk appetite policy, enhancing capital efficiency and verifying capital adequacy; thereby aiming to build strong system of group governance.
[Examples of company's organizations that will have functionality integrated into the Holding Company] Risk management department; International Management Department; Financial Management
Department; Business Auditing Department (Planning and Overseas Audit) etc.
Diagram
Partial
Headquarters'
