Company Presentation (including FY2005 Interim Earnings) 1st - PowerPoint PPT Presentation

To our Investors and Analysts Company Presentation (including FY2005 Interim Earnings) 1st December 2005

CONTENTS I. FY2005 Interim Earnings Summary 1. Key Points P1 2 ． Premium Income P2 3 ． Claims P5 4 ． Operating Expenses P6 5 ． Asset Management P7 6 ． Capital P8 7 ． Catastrophe Reserves P9 8. Aioi Life: Key Earnings Points P10 II. FY2005 Earnings Forecast P11 1. Key Points of Forecast III. 2H Initiatives in Key Areas 1 ． Business Strategy (1) Establishing a revenue growth capability P12 2. Business Strategy (2) Enhancing productivity/efficiency P16 3. Business Strategy (3) Strengthening profitability P17 4 ． Business Strategy (4) Diversifying sources of earnings P19 5 ． Capital Policy P21 Reference: (1) Medium-term management targets; (2) Fortress Re aviation reinsurance data P22 Data Attachments: FY2005 Interim Earnings Data

I. FY2005 Interim Earnings Summary I. FY2005 Interim Earnings Summary

I. FY2005 Interim Earnings Summary 1. Key Points (Billion yen, %) ◆ Net premium income up 0.9% 2004 2005 Change Change % 30 Sep 30 Sep due to increase in direct net 4 1 6 . 3 4 1 8 . 8 2 . 5 0 . 6 premiums Net premiums 3 8 2 . 2 3 8 5 . 5 3 . 3 0 . 9 ◆ Net claims payments down 2 3 0 . 4 2 2 6 . 5 △ 3 . 8 △ 1 . 7 substantially (-5.8%) due to a Net claims 2 1 3 . 8 2 0 1 . 4 △1 2 . 3 △ 5 . 8 decrease in major natural disasters 1 3 4 . 2 1 3 6 . 8 2 . 5 1 . 9 and overseas inwards reinsurance Net operating expenses 1 3 4 . 2 1 3 6 . 8 2 . 5 1 . 9 claims △ 9 . 2 △ 4 . 2 5 . 0 - Underwriting profit ◆ Underwriting profit down ¥4.2bn, 1 9 . 2 1 6 . 1 △ 3 . 1 △ 1 6 . 2 Asset management profit (loss) due to an increase in cat reserves to 7 . 2 8 . 9 1 . 7 2 3 . 5 Ordinary profit guard against natural disaster risks, etc. △ 0 . 0 5 . 8 5 . 9 - Extraordinary profit/loss 9 . 4 1 1 . 5 2 . 0 2 1 . 6 Extraordinary profit ◆ Extraordinary profits of ¥11.5bn 9 . 5 5 . 6 △3 . 8 △4 0 . 6 Extraordinary loss posted on proceeds from Fortress 5 . 1 9 . 2 4 . 1 8 0 . 3 Re-related litigation, etc. 1H net profit 5 9 . 6 5 8 . 3 △ 1 . 3 P NB: The net loss ◆ Interim net profits of ¥9.2bn Net loss ratio 6 0 . 6 5 6 . 9 △ 3 . 7 P Ratio includes loss 3 2 . 2 3 2 . 7 0 . 5 P Net expense ratio adjusting expenses 3 5 . 1 3 5 . 5 0 . 4 P 9 1 . 9 9 1 . 0 △0 . 9 P Combined ratio 9 5 . 7 9 2 . 4 △3 . 3 P NB: The lower line excludes the effect of abolition of the state CALI reinsurance scheme 1

I. FY2005 Interim Earnings Summary 2. Premium Income (1) Net Premiums ■ Net Premiums by Class ■ Main Factors of changes (Billion yen) (Billion yen, %) 30-Sep-04 30-Sep-05 Direct net long-term fire +4.8 Class Fire Amount Change % Amount Change Change % Overseas inwards R/I premiums -2.0 4 1 . 7 6 . 0 4 4 . 7 3 . 0 7 . 2 Fire 2 . 5 2 . 8 2 . 8 0 . 2 8 . 9 Marine Motor Increase in direct net income +1.5 2 5 . 2 1 . 1 2 5 . 3 0 . 0 0 . 3 Casualty 2 3 1 . 4 △ 3 . 0 2 3 3 . 2 1 . 8 0 . 8 Motor 4 4 . 4 1 . 0 4 3 . 4 △ 1 . 0 △ 2 . 3 CALI 3 6 . 7 2 . 9 3 5 . 9 △ 0 . 7 △ 2 . 2 Other 3 8 2 . 2 △ 0 . 8 3 8 5 . 5 3 . 3 0 . 9 Total NB: Excludes the impact of abolition of the state CALI reinsurance scheme 2

I. FY2005 Interim Earnings Summary 2. Premium Income (2) Premium result (1) ■ Operating Result by Class (Billion yen, %) （ ％） 30-Sep-04 30-Sep-05 Income growth trend by main class 12.0 10.6 Class Fire Amount Change % Amount Change Change % 10.0 4 6 . 1 3 . 5 5 1 . 0 4 . 9 1 0 . 6 Fire 8.0 6.6 6.6 Casualty 5.4 4 . 4 0 . 2 4 . 5 0 . 1 3 . 0 Marine 6.0 2 2 . 0 5 . 4 2 3 . 4 1 . 5 6 . 6 2.9 4.0 Casualty 3.5 2 3 3 . 3 △ 1 . 9 2 3 5 . 0 1 . 7 0 . 7 2.0 Motor Motor 0.7 -0.3 7 0 . 6 0 . 6 7 8 . 1 7 . 4 1 0 . 5 0.0 CALI -2.0 3 4 . 5 4 . 3 3 5 . 0 0 . 6 1 . 6 Other -1.9 -4.0 4 1 0 . 8 0 . 0 4 2 7 . 0 1 6 . 2 3 . 9 Total 1H 2004 2H 2004 1H 2005 ◆ Significant increase in fire due to higher long-term fire premiums ◆ Motor insurance income turns upward thanks to unit price improvement ◆ 3.9% increase in total combined income, due to higher revenues in all categories 3

I. FY2005 Interim Earnings Summary 2. Premium Income (2) Premium result (2) ■ Operating Result by Channel Income growth trend by main channel （ ％） (Billion yen, %) 6.5 7.0 Toyota 30-Sep-04 30-Sep-05 Channel Amount Change % Amount Change Change % 6.0 5.3 Motor 1 4 5 . 9 △ 1 . 4 1 4 9 . 4 3 . 6 2 . 4 Pro 5.0 8 1 . 9 0 . 8 8 6 . 2 4 . 3 5 . 3 Motor 3.6 4.0 8 6 . 7 2 . 9 9 2 . 3 5 . 7 6 . 5 Toyota Group 2.9 7 4 . 6 0 . 8 7 9 . 9 5 . 4 7 . 2 Toyota Gp outlets 3.0 Pro 1 2 . 1 1 9 . 9 1 2 . 4 0 . 3 2 . 3 Toyota Gp cos. 2.0 2.4 0.9 1 3 . 8 △ 8 . 2 1 3 . 7 △ 0 . 0 △ 0 . 4 Other dealers 0.8 1.0 4 2 . 9 0 . 1 4 5 . 2 2 . 3 5 . 3 Corporates 0.5 1 4 . 1 0 . 5 1 3 . 5 △ 0 . 6 △ 4 . 6 0.0 Financial 2 . 1 △ 1 1 . 7 1 . 8 △ 0 . 3 △ 1 6 . 0 bancassurance -1.0 2 5 . 5 1 . 8 2 6 . 6 1 . 1 4 . 4 Other -1.4 -2.0 4 1 0 . 8 0 . 0 4 2 7 . 0 1 6 . 2 3 . 9 Total 1H 2004 2H 2004 1H 2005 ◆ Income climbs 2.4% in the heaviest-weighted Pro channel, due to higher fire/casualty premiums ◆ 5.3% increase in Motor, thanks to higher CALI premium income ◆ 6.5% increase in Toyota Group business, thanks to higher motor and CALI premiums 4

I. FY2005 Interim Earnings Summary 3. Claims ■ Net Claims / Loss Ratio Trend ■ Main Factors of changes (Billion yen) (Billion yen, %) 30-Sep-04 30-Sep-05 -1.5 Nat cat impact Loss ratio Fire (+1.4) (Impact last FY) Claims paid Loss ratio Claims paid Loss ratio (Impact this FY) (-2.9) + / - △5 . 0 Ｐ 1 6 . 8 4 2 . 4 1 5 . 9 3 7 . 4 Fire 1 . 2 5 0 . 9 1 . 4 5 2 . 4 1 . 5 Ｐ -2.1 Nat cat impact Marine Motor (+0.1) (Impact last FY) 8 . 0 3 5 . 5 7 . 9 3 4 . 8 △0 . 7 Ｐ Casualty (Impact this FY) (-2.2) 1 2 6 . 2 5 9 . 2 1 2 3 . 4 5 7 . 4 △1 . 8 Ｐ Motor 2 3 . 6 6 1 . 8 2 2 . 7 6 1 . 6 △0 . 2 Ｐ CALI Other -7.9 Overseas inwards R/I 3 7 . 7 1 0 6 . 6 3 0 . 1 8 7 . 9 △1 8 . 7 Ｐ Other 2 1 3 . 8 6 0 . 6 2 0 1 . 4 5 6 . 9 △3 . 7 Ｐ Total NB: Excludes the impact of abolition of the state CALI reinsurance scheme 5

I. FY2005 Interim Earnings Summary 4. Operating Expenses ■ Operating Expense Trend (Billion yen, %) 2004 2005 (%) ¥BN Personnel Non- Net expense 80.0 37.5 30 Sep 30 Sep Change Change % Personnel ratio 37.0 3 4 . 8 3 4 . 6 △ 0 . 2 △ 0 . 7 Personnel 70.0 37.0 3 0 . 2 3 1 . 5 1 . 3 4 . 4 60.0 Non-Personnel 36.5 33.3 31.8 50.0 31.5 30.2 U/W-related operating 36.0 6 5 . 1 6 6 . 1 1 . 0 1 . 7 expenses and SG&A 40.0 35.5 expenses 35.8 35.5 35.1 30.0 Fees & collection 6 9 . 1 7 0 . 6 1 . 5 2 . 2 expenses 35.0 20.0 38.7 35.1 34.8 34.6 1 3 4 . 2 1 3 6 . 8 2 . 5 1 . 9 Net operating expenses 34.5 10.0 3 5 . 1 3 5 . 5 0 . 4 P Net expense ratio 0 34.0 Note 1: Non-personnel expenses include donations/burden charges/taxes 30 Sep 2002 30 Sep 2003 30 Sep 2004 30 Sep 2005 Note 2: Excludes the impact of abolition of the state CALI reinsurance scheme ◆ ¥2.5bn increase in net operating expenses due to higher fees and collection costs associated with the increase in premiums ◆ 0.4P rise in the net expense ratio, in spite of a higher net premium denominator 6

I. FY2005 Interim Earnings Summary 5. Asset Management ■ Asset Management Profit/Loss (Billion yen) 2004 2005 30 Sep 30 Sep Change ◆ Flat interest/dividend income, due to 1 9 . 2 1 6 . 1 △ 3 . 1 Asset management profit (loss) ongoing low interest rates 2 1 . 5 2 1 . 7 0 . 1 Interest and dividend income ◆ ¥5.5bn fall in profit on the sale of 9 . 9 4 . 4 △ 5 . 5 Gain on sale of marketable securities securities, due to lower profits from 1 . 3 0 . 9 △ 0 . 3 Valuation loss (-) on marketable securities the sale of strategic shares △ 0 . 5 1 . 1 1 . 6 Other profit/loss on assets managed △ 0 . 1 0 . 0 0 . 1 Profit/loss on money in trust ◆ ¥1.6bn increase in other profit/loss on △ 1 . 0 △ 0 . 6 0 . 4 Profit/loss on financial derivatives assets managed, due to improved 0 . 4 1 . 5 1 . 0 Profit/loss on securities held for trading profits on securities held for trading - 0 . 0 0 . 0 Gain on redemption of securities 0 . 0 0 . 1 0 . 0 Forex gain/loss 0 . 0 0 . 0 0 . 0 Other profit/loss on assets managed △ 1 0 . 3 △ 1 0 . 1 0 . 2 Transfer to profit, incl. reserve premiums 7