Corporate Governance Report
CORPORATE GOVERNANCE

MS&AD Insurance Group Holdings, Inc.

Last Update:

Nov 19, 2020

MS&AD Insurance Group Holdings, Inc.
Noriyuki Hara, President & CEO
Contact:

Human Resources & General Administration Dept.
e-mail:ms_ad_ir@ms-ad-hd.com
Securities Code:8725

https://www.ms-ad-hd.com/en/index.html

This document has been translated from the Japanese original (as submitted to the Tokyo Stock Exchange)
for reference purposes only.
In the event of any discrepancy between this translated document and Japanese original, the original shallprevail. MS&AD Insurance Group Holdings, Inc. assumes no responsibility for this translation or for direct,
indirect or any other forms of damages arising from this translation.
(Note)"Audit & Supervisory Board Member” in this report is used in the same sense of "Kansayaku" in thereference format provided by Tokyo Stock Exchange.

The corporate governance of MS&AD Insurance Group Holdings, Inc. (the “Company”) is described
below.

I.

Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other
Basic Information

1. Basic Views(1) In line with its Corporate Philosophy (Mission), MS&AD, as a holding company overseeing all group businesses, hasestablished a management framework that ensures transparent, fair, swift and decisive decision-making that takes into
account the standpoint of all stakeholders. The Company's objectives are to sustain stability and consistent growth overthe long term by using corporate resources efficiently and managing risks properly and ultimately, to further increase
enterprise value.
(2) To this end, the “MS&AD Insurance Group Corporate Philosophy (Mission), Corporate Vision and Values” were
formulated as something all officers and employees of the Group should adhere to in all situations. In addition to
working to disseminate these principles among all officers and employees of the Company and its Group companies,
corporate governance, compliance and risk management are positioned as important management issues in theMedium-term Management Plan, and efforts shall be made to actively promote that Plan.
■Aspirations of MS&AD Insurance Group<Our Mission>
To contribute to the development of a vibrant society and help secure a sound future for the planet, by enabling safety andpeace of mind through the global insurance and financial services business.
<Our Vision>
To create a world-leading insurance and financial services group that consistently pursues sustainable growth andenhances corporate value<Our Values>
・CUSTOMER FOCUS
Striving to provide security and satisfaction to our customers
・INTEGRITY
Being sincere, kind, and fair in our dealings with people
・TEAMWORK
Growing together as a team by respecting one another’s individuality and opinions and sharing knowledge and ideas
・INNOVATION

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Always improving the way we work while responding to stakeholders’ interests
・PROFESSIONALISM
Providing high-quality services by constantly enhancing our skills and proficiency
Please see attached “the MS&AD Insurance Group Basic Policies on Corporate Governance (hereinafter referred to as“Basic Policies on Corporate Governance”)” at the end of this report for more-detailed information.
The Group insurance companies in which the Company has a direct investment are notated as follows:
Mitsui Sumitomo Insurance Co., Ltd.

Mitsui Sumitomo Insurance, MSI

Aioi Nissay Dowa Insurance Co., Ltd.

Aioi Nissay Dowa Insurance, ADI

Mitsui Direct General Insurance Co., Ltd.

Mitsui Direct General Insurance, MD

Mitsui Sumitomo Aioi Life Insurance Co., Ltd

Mitsui Sumitomo Aioi Life Insurance, MSI Aioi Life

Mitsui Sumitomo Primary Life Insurance Co., Ltd.

Mitsui Sumitomo Primary Life Insurance, MSI Primary Life

[Reasons for Not Implementing the Principles of the Corporate Governance Code]
The Company has implemented all principles of the Corporate Governance Code[Disclosure Based on the Principles of the Corporate Governance Code](1)[Principle 1.4] Policy for Strategic Equity Holdings
a. MS&AD Insurance Group Basic Policy for Reduction of Strategic Equity Holdings
Strategic equity holdings is shares held under the assumption of long-term holding for the purpose of long-term
increase of asset value and maintaining and strengthening comprehensive business relationships mainly withinsurance transactions with issuers, etc.
We have adopted a policy to reduce the aggregate amount of our strategic equity holdings, aiming to build a solid
financial base less affected by fluctuations in stock prices and to improve the capital efficiency (Note).
The suitability of holding strategic equities is assessed from the perspective of the equity issuers’ growth potential
and profitability for each equity and the medium- to long-term business relationship.
If the rationale is not confirmed, we shall proceed with sales of those strategic equity holdings after obtaining theequity issuers’ understanding. Otherwise, we may sell our holdings, taking into account the market environment andour business and financial strategies.
(Note) The Group’s strategic equity holdings of ¥500 billion are planned to be sold over the 5 years from fiscal 2017
to fiscal 2021. We shall proceed with sales of our holdings based on the planning. The Group sold equity
holdings of ¥399.9 billion by the end of fiscal 2019 and is proceeding with the plan after fiscal 2020. Thebalance of market value of the strategic equity holdings held by the Company as of March 31, 2020 is¥2,124.1billion.
b. Verification of propriety of strategic equity holdings and reduction efforts
・Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance shall examine the propriety of their strategic holdings
by each equity based on profitability and balance of insurance contract as to whether the purpose of the holding isappropriate and whether the benefits and risks associated with the holding are commensurate with the capital cost.
The results of these examinations shall be confirmed by MS&AD’s Board of Directors.
・Based on the results of the examinations of each equity, constructive dialogue shall take place with regard to equities
that do not meet the objective of the rationale and are particularly in need of improvement. The equity will continue
to be held in the event that an improvement is anticipated, and sale negotiations will be entered into in the event thatan improvement is not anticipated.
c. Criteria for Ensuring Appropriate Handling of the Exercise of Voting Rights Pertaining to Strategic Equity
Holdings
The basic policy on the exercise of voting rights for strategic equity holdings is as follows.
(a) Basic approach to the exercise of voting rights
The exercise of voting rights is seen to be an important means of influencing the management and improving theenterprise value of investee companies. Therefore, decisions are not made uniformly based on formulaic
short-term criteria, but rather in terms of enhancement of enterprise value in the medium-to-long term and2

improvement in shareholder returns, among others, based on dialogue with investee companies.
(b) The process for exercising voting rights
When exercising voting rights, items such as those listed below are verified for each proposal, with a focus onsuch aspects as whether the company in question is managed with an emphasis on growth of the company andthe interests of shareholders, and whether the company is engaged in any antisocial behavior. Proposals are also
judged based on the results of dialogue with the company concerned following a detailed examination ofindividual issues as required.
<Main evaluation criteria for each type of proposal>
Type of proposal
Appropriation of surplus
Election of Directors

Election of Audit & Supervisory
Board Members and Accounting
Auditors
Officers’ remuneration andbonuses
Retirement benefits andcondolence money for officers
Issuance of stock acquisitionrights and stock remuneration

Matters for verification• Status of shareholder returns• Status of enhancement of corporate value• Status of occurrence of scandals, etc.
• Status of election of Independent Outside Directors• Status of attendance at Board of Directors meetings, etc.
• Status of occurrence of scandals, etc.
• Status of attendance at Board of Directors meetings and Audit &Supervisory Board meetings• Status of enhancement of corporate value• Status of attendance at Board of Directors meetings, etc.
• Status of occurrence of scandals, etc.
• Any application of performance-linked remuneration, and recipients• Any decrease of equity ratio by existing shareholders

Changes to the Articles ofIncorporation• Examined individually

Takeover defense measures
Shareholder proposals• Examined individually• Examined individually(c) Criteria for judging proposals relating to the exercise of voting rights
Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance have established specific evaluation criteria andguidelines for the exercise of voting rights of shares held. In the event that the criteria and guidelines are met,
dialogue will take place as necessary with the investee companies, and proposals shall be judged based on the
dialogue.
* Both companies will periodically report on its details on their websites.
(2)[Principle 1.7] Procedures for related Party Transactions
a. With respect to transactions between the Company and a related party, to ensure that they do not harm the common
interests of the Company and the Company’s shareholders, such transactions as competition transaction by a director,
transactions between a corporate officer and the Company, and other transactions with conflict-of-interest
characteristics, such transactions will require prior deliberation and approval of a Board of Directors’ meeting withthe attendance of multiple outside directors, and in the case of similar transactions by executive officers will requirea report to the Board of Directors.
b. Transactions falling under Related Party Transactions as set forth in the Companies Act and the Ordinance on
Financial Statements, etc. are noted in the Securities Report. Note that preparation of the Securities Report is amatter to be reported to the Board of Directors.
(3)[Principle 2.6] Exercise of functions as an asset owner of a corporate pension plan
・The Mitsui Sumitomo Insurance Corporate Pension Fund and the Aioi Nissay Dowa Insurance Corporate Pension
Fund have been established in order for Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance, which are themain operating companies of the Group, to implement defined-benefit corporate pension plans and manage thepension assets separately from the companies.
・Decisions regarding asset management are made by the Board of Representatives based on deliberations by the AssetManagement Committee. Personnel in the asset management, accounting, and human resources departments in eachcompany who possess appropriate qualities shall be appointed to the Asset Management Committee and the Board ofRepresentatives, and labor union executives are appointed as representatives of the beneficiaries.
・Personnel who have extensive experience in asset management shall undertake asset management operations of thecorporate pension fund. In addition, both funds accepted the Stewardship Code.

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・The incorporation of shares and the exercise of voting rights by investees are in accordance with the evaluation criteriaof the party to whom asset management has been delegated, and there are no matters that constitute a conflict ofinterest.
(4)[Principle 3.1] Full Disclosurea. Aspiration of the Group (Mission etc.) and business strategies and business plans; ( [Principle 3.1(i)])(a) Business Objectives, etc.;
Please see the above I.1 ”Aspiration of the MS&AD Insurance Group” .
(b) Business strategies and business plans
Please see our group Medium-Term Management Plan, "Vision 2021” on our company web site as below.
https://www.ms-ad-hd.com/en/group/what/strategy/management_plan.html
b. Basic policy and guidelines on corporate governance; [Principle 3.1(ii)]
Please see the above I.1 “Basic Views” and the attached “the Basic Policies on Corporate Governance”.
c. Board policies and procedures in determining the remuneration of the senior management and directors; [Principle
3.1(iii)]
Please see the below II.1 “Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods<Remuneration Determination Processes>”.
d. Board policies and procedures in the appointment and dismissal of the senior management and the nomination of
directors and Audit & Supervisory Board Members candidates;[Principle 3.1(iv)]

・For policies regarding the nomination of directors and Audit & Supervisory Board Members candidates, please see
the below“Criteria for the Selection of Director Candidates and Audit & Supervisory Board Member Candidates”,
in the Appendix of the attached “Basic Policies on Corporate Governance”.
・For policies regarding the nomination of director candidates who engage in managing affairs continuously(including the Chairman of the Board, the Vice Chairman of the Board and the President), please see theabove-mentioned criteria as well as “(6) Succession plan for the Chief Executive Officer (CEO), etc. a. Criteria
for CEO Selection”.
・For procedures regarding the appointment of the senior management and the nomination of directors and Audit &Supervisory Board Members candidates, please see the below II.1 “Committee’s Name, Composition, andAttributes of Chairperson” Supplementary Explanation “1. Nomination Committee (Nomination Process)”.
・For policies regarding the dismissal of directors who engage in daily business (including the Chairman of theBoard, the Vice Chairman of the Board and the President), please see “(7) Objective, timely and transparent
procedures for the dismissal of a CEO”.
・The dismissal of executive officers and the dismissal of directors andAudit & Supervisory Board Members ofdomestic insurance companies in which the Company has direct investments shall be deliberated by the
Nomination Committee and determined by the Board of Directors upon receipt of the results of deliberations by
the Nomination Committee.
e. Explanations with respect to the individual appointments, dismissals and nominations based on d.[Principle 3.1(v)].
Please see [Reasons for selection as a candidate] in the “Notice of Convocation of Annual Shareholders Meeting”(page 6-13)
https://www.ms-ad-hd.com/en/ir/ir_event/meeting.html(5)[Supplementary Principle 4.1.1] Scope and content of the matters delegated to the management
Please see Chapter 3. 2. “Role of the Board of Directors” in the attached “Basic Policies on Corporate Governance”.
(6) [Supplementary Principle 4.1.3] Succession plan for the Chief Executive Officer (CEO), etc.
The Company has formulated the succession plan that stipulates the selection of the Group CEO (hereinafter referred
to as “CEO”) and the fostering of successors. The outline of the plan is as follows.
a. Criteria for CEO selection
・ Ability to embody the Group’s Mission, Vision and Values, and having the concept of CSV (Creating Shared
Value with society) in his/her own system of values
・ Ability to plan and build future visions
・ Fairness and impartiality
・ Ability to develop human assets
・ Ability to demonstrate leadership4

・ Global response capability
・ Acting in the Group’s best interestb. CEO Selection Process(a) Recommendation by Current CEO
・ The current CEO prioritizes the candidates and recommends them to the Nomination Committee (the majority ofwhose members and the chairperson are appointed from among Outside Directors).
・ Candidates may be from within the Group as well as outside the Group.
(b) Deliberation by the Nomination Committee
・ The Nomination Committee deliberates on candidates recommended by the CEO.
・ Outside Directors can recommend other candidates.
(c) Resolution by the Board of Directors
After (a) and (b) above, the Nomination Committee advises the Board of Directors which makes the final decision.
c. Development Plan for CEO Candidates
The CEO must position the development of a large number of candidates as an important role for him/her andprovide the candidates from inside the Group with the following experience as needed.
・ Multiple departments (Management, operations, international, sales, claims services, systems, etc.)
・ Management of domestic operating companies and overseas subsidiaries(7) [Supplementary Principle 4.3.3] Objective, timely and transparent procedures for the dismissal of a CEO
The objective, timely and transparent procedures for dismissing a CEO are as follows.
a. When an Outside Director deems it necessary to discuss dismissal, such as when the CEO is subject to theprohibitions stipulated in the Executive Officers Rules (violating obligations set forth in the Companies Act andother laws and regulations or company regulations, etc.) or when it is determined that it is difficult for the CEO toproperly continue his/her duties due to health reasons or other reasons, the Outside Director shall deliberate on
his/her own initiative with members of the Nomination Committee excluding the CEO.
Based on the results of the deliberation, necessary procedures are carried out in accordance with the Companies Act
and internal regulations.
b. Directors who are not Outside Directors may request a meeting of the Board of Directors to be convened inaccordance with the Rules of the Board of Directors and submit proposals for dismissal of Directors at the
Shareholders Meeting.
(8) [Supplementary Principle 4.2.1] Management remuneration
In order to realize a Director remuneration system functioning as an appropriate incentive for improving linkage
between Director remuneration and business performance and achieving sustainable growth for the purpose ofstrengthening governance and increasing medium term corporate value, the Company is introducing a restricted stock
remuneration plan to be allotted to the Directors excluding Outside Directors, in place of the existing stock-based
compensation stock options, from fiscal 2019.
For details, please see II 3. [Incentives].
(9)[Principle 4.9] Independence Standards and Qualification for Independent (Outside）Directors
Please see the below II.1 [Independent Directors/Audit & Supervisory Board Members] “Matters relating to
Independent Directors/Audit & Supervisory Board Members” in this report, as well as 1.(1)”Eligibility “and1.(3)”Independence” of ”Criteria for the Selection of Director Candidates and Audit & Supervisory Board Member
Candidates”, in the Appendix of the attached” Basic Policies on Corporate Governance”.
(10)[Supplementary Principle 4.11.1] A view on the balance, diversity and Board size, and policies and procedures
for nominating directors.
a. Policies on the Board of Directors’ Overall Balance of Expertise, Experience, Capabilities, Diversity, and Scale・5 of the 12 Directors (10 men and 2 women) and 2 of the 4 Audit & Supervisory Board Members (2 men and 2
women) have been appointed from outside the Company to incorporate perspectives independent from management,
strengthen monitoring and oversight functions, and conduct highly transparent management. As shown below, weare striving to ensure diversity including gender, race, and nationality, while considering the balance of knowledge,
experience and abilities of the Board of Directors as a whole.
・Outside Director candidates must satisfy the eligibility requirements as defined in the Companies Act and the5Insurance Business Act. In addition, with the goal of selecting candidates able to accurately and fairly supervise theoverall management of insurance companies, candidates are selected based on consideration of specialized expertisesuch as that stemming from experience working as a general business company corporate officer, government
administration officer, lawyer, and academic as well as specialized expertise regarding social, cultural, andconsumer issues.
・Director candidates other than Outside Director candidates must meet legal eligibility requirements. In addition, withthe goal of selecting candidates able to accurately and fairly supervise the overall management of insurancecompanies, candidates are selected based on consideration of specialized expertise, such as that stemming fromextensive experience working as a manager in an insurance company as well as on consideration of varied
experience, highly specialized experience, and the ability to exercise leadership in accordance with the Company’s
corporate philosophy.
・At least 1 candidate for Audit & Supervisory Board Member must have sufficient knowledge of accounting or
finance.
Outside Audit & Supervisory Board Member Mr. Kunio Chiyoda is qualified as a certified public accountant andhas considerable knowledge of finance and accounting.
b. Criteria for the Selection of Director CandidatesPlease see “Criteria for the Selection of Director Candidates and Audit & Supervisory Board Member Candidates” in
the Appendix of the attached “Basic Policies on Corporate Governance”.
c. Overview of the Director Appointment Process
Regarding the appointment of Directors, upon deliberation by the Nomination Committee, the Board of Directors
determines its candidate(s), whose appointment is then decided by the Shareholders’ Meeting.
Please see the below II.1 “Committee’s Name, Composition, and Attributes of Chairperson” Supplementary
Explanation “1. Nomination Committee (Nomination Process)”.
(11)[Supplementary Principle 4.11.2] A status for concurrent positions of Outside Directors and Outside Audit &Supervisory Board Membersa. Outside Directors
Please see the below II.1 [Directors]“Outside Directors’ Relationship with the Company(2 )Supplementary
Explanation of the Relationship”．
b. Outside Audit & Supervisory Board Members
Please see the below II.1 [Audit & Supervisory Board Members] “Outside Audit & Supervisory Board Members’
Relationship with the Company(2)Supplementary Explanation of the Relationship”(12)[Supplementary Principle 4.11.3] Disclosure of summary results of analysis and evaluation of overall
effectiveness of the Board of Directors＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝
1. Analysis and Evaluation Process
・As noted in Chapter 3.5 of the attached “Basic Policies on Corporate Governance,” an analysis and evaluation of
the overall effectiveness of the Board of Directors is conducted annually.
An outline of the analysis and evaluation for fiscal 2019 is as follows.
(1) Questionnaires conducted for Directors’ self-evaluation and its summary
・A questionnaire consisting of 11 questions (concerning the roles and responsibilities of the Board of Directors, its
operation, etc.) was distributed to each Director in advance and the secretariat conducted an interview with each
Director based on the questionnaire.
・Evaluation mainly focused on whether initiatives to enhance effectiveness of the Board of Directors were
implemented or not in accordance with the improvement measures (measures for improving capabilities to be
implemented in fiscal 2019) which had been formulated based on the evaluation of the Board of Directors infiscal 2018.
(2) Exchange of opinions at the Outside Director Council
・At a meeting of the Outside Director Council (consisting of all the Outside Directors), Outside Directors
exchanged opinions about analysis and evaluation based on the results of the questionnaire.
(3) Analysis and evaluation by the Governance Committee and formulation of measures for improving capabilities
・The Governance Committee (consisting of all the Outside Directors, the Chairman of the Board of Directors, theVice Chairman of the Board, and the President) conducted analysis and evaluation and formulated measures for6improving capabilities by identifying issues to be addressed in fiscal 2020.
(4) We will promptly commence and strengthen measures for improving capabilities in fiscal 2020, and link them toa PDCA cycle aimed at enhancing effectiveness.
2. Summary of the Results of Analysis and Evaluation(1) Content of deliberations at the Board of Directors and fulfilling function<Improved >・At meetings of the Board of Directors, joint meetings of outside directors and corporate auditors, etc., members
discussed on important themes of "Vision 2021" (Pursuing the Group’s

comprehensive strength Promoting

digitalization, Promoting of diversity & inclusion) and strategies by business domain (domestic non-life
insurance business, domestic life insurance business, international business). Active discussions focusing onimportant issues are accelerated through selecting themes to be discussed.
・The importance of the “value creation story” that embodies the Group's management philosophy and the CSV(creating shared value with society) initiatives of each group company are disseminated inside and outside thegroup through “sustainability contests”, executive messages, integrated reports, employee awareness surveys,
and corporate advertising.
・We strengthened information dissemination to further increase awareness and enhance effectiveness of the“speak up system” mainly through disseminating workplace improvement cases within the company anddistributing posters in the workplace. In addition, we have strengthened our system to listen to a wide range ofvoices, including the establishment of a new global whistleblowing contact desk at the holding company.
<To be improved from now on>
・Regarding the analysis and assessment of the Board of Directors’ effectiveness, we will consider to consult withexternal organizations from the viewpoint of improving the functions of the Board of Directors.
・Regarding the penetration of management principles, etc., we will deepen our understanding of the “value
creation story” and CSV initiatives of the Group, including overseas bases, and work to further disseminate
MVV (Mission Vision Value).
(2) Operation of the Board of Directors<Improved >・The number of agenda items has decreased and the deliberation time per agenda item has increased because themeeting time has been set longer than before and the agenda items have been narrowed down.
・Started paperless operation using tablets. In addition, we have improved the visibility of the materials and data
by devising a displaying.
<To be improved from now on>
・Make further efforts such as simplifying agenda materials.
・We will improve the paperless operation introduced in fiscal 2019 from the viewpoints of readability andusability.
(3) Other<Improved >・Executive officers of operating companies had a chance to exchange opinions on sales strategy, human assets
strategy, and domestic life insurance business with outside executive officers at holding company study
sessions.
・Provide an opportunity for outside executive officers to come into contact with employees working for theoperating company.
＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝＝(13)[Principle 4.14] [Supplementary Principle 4.14.1] [Supplementary Principle 4.14.2] Criteria for Directors andAudit & Supervisory Board Members Training
Please see Chapter 3.8 ”Support Systems for Directors and Audit & Supervisory Board Members” in theattached ”Basic Policies on Corporate Governance”.
(14)[Principle 5.1] [Supplementary Principle 5.1.2]Policies concerning the measures and organizational structures
aimed at promoting constructive dialogue with shareholders＜Policy for Constructive Dialogue with Shareholders＞(14)-1. Basic Approach

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The Company will actively engage in constructive dialogue with shareholders for the Company's sustained growthand enhancement of its medium- to long-term enterprise value, and will endeavor to generate further enterprise value
by utilizing such dialogue in managing the Company.
In addition, the Company is engaged in establishing internal structure for disclosure of reliable information that canform a foundation for this dialogue, and in creating mechanisms to more effectively provide management and theBoard of Directors with feedback regarding the content of such dialogue.
(14)-2. Control Manager for Constructive Dialogue
This shall be Director & Senior Executive Officer (responsible for the Corporate Communications and Investor
Relations Department).** Tetsuji Higuchi, Representative Director, Senior Executive Officer, Chief Financial Officer, is currently in chargeof this assignment.
(14)-3. Specific efforts regarding constructive dialogue with shareholder
a. The Corporate Communications and Investor Relations Department, which assists with shareholder dialogue, andvarious other departments within the Company, and efforts to expand means of dialogue. [Supplementary Principle
5.1.2(ii)(iii)]
・Holding regular meetings for the Corporate Communications and Investor Relations Department to provide
feedback to other relevant departments
・Holding investor briefings led by the heads of each business unit
・Holding exchanges of opinion with investors for the purpose of dialogue between senior management andinvestors
・Enhancement of the Integrated Report, a tool for constructive dialogue.
b. Measures for providing senior management and the Board of Directors with feedback regarding shareholder
dialogue [Supplementary Principle 5.1.2(iv)]
・Semiannual IR activity reports and feedback on the equity market’s perspective of the Company to the GroupManagement Committee and the Board of Directors.
・Quarterly reports to senior management on the status of the Company’s share price.
・Reports to senior management on areas of interest and evaluation of investors regarding overseas IR trips and,financial results announcements.
c. Measures concerning control of insider information in the course of shareholder dialogue [Supplementary Principle
5.1.2(v)]・Timely and fair disclosure of information fully utilizing the Company’s website
・Compliance with rules on the prevention of insider trading, etc., and refraining from dialogue related to earnings in
the quiet period established in the IR policy.
(15)Status of enactment of principles other than the above
a. [Principle 1.3] Basic Capital Management Policy; [Principle 5.2] Formulation and Announcement of Management
Strategy and Management Plans■ The Group’s “Vision 2021” medium-term management plan sets forth policies for financial soundness, capitalefficiency and shareholder returns, while also setting out targets for profitability, capital efficiency and so on.
https://www.ms-ad-hd.com/en/group/what/strategy/capital.html■ We aim to enhance corporate value by pursuing an optimal balance among financial soundness, capital efficiency
and shareholder returns.
・Financial soundness: The Group aims to ensure financial soundness equivalent to an AA rating by enhancing thecapital base and controlling risks.
・Capital efficiency: Aware of the cost of capital, we aim for a Group Adjusted ROE (Note) of 10%, a level that is on apar with that of major insurance companies in Europe and the U.S., and will optimally allocate resources in addition
to growth and portfolio diversification. We estimated 7% for the cost of capital based on the capital asset pricing
model (CAPM).
・Shareholder return policy: We will return approximately 40%-60% of Group Adjusted Profit to shareholders throughdividends and share buybacks.
■ One of our key strategies: Reform Portfolio

8The MS&AD Insurance Group’s current earnings structure is dependent on the domestic non-life insurance business.
We are transforming our earnings structure into one able to steadily generate profits by working to increase geographic
and business diversification in the international business and life insurance business.
・Medium-term goals: 50% of profits to come from businesses other than the domestic non-life insurance business・Future aspiration: 50% of profits to come from international business
Moreover, the Group’s risk portfolio currently has a high ratio of risk in strategic equity holdings, which cause highexposure to fluctuations in share prices. We will continue reducing strategic equity holdings in a bid to transform into a
more stable risk portfolio.
・Medium- to long-term goals: Strategic equity holdings below 30% of integrated risk amount and below 10% ofconsolidated total assets at the end of fiscal 2021
■ Reinforce R&D
We will continue to proactively invest in R&D that addresses environmental changes and increases
productivity/quality.
Note: Group Adjusted Profit and Group Adjusted ROE are the MS&AD Insurance Group’s own profitability indices.
They are calculated by the following formula.
Group Adjusted Profit = consolidated net income + provision *2 for catastrophe loss reserve and others*1 – otherincidental factors (amortization of goodwill and other intangible fixed assets and others)+ equity in earnings of the non-consolidated Group companies
Group Adjusted ROE = Group Adjusted Profit ÷ average of beginning and ending amounts on B/S of adjusted
net assets (consolidated net assets + catastrophe loss reserve and others*1 (remainingbalance) – goodwill and other intangible fixed assets (remaining balance))*1 Catastrophe reserves, contingency reserves and reserve for price fluctuation of domestic non-life insurance

business and MSI Aioi Life
*2 Subtraction in case of reversal

b. [Principle 4.8] [Supplementary Principle 4.8.1] [Supplementary Principle 4.8.2] Independent(Outside）Directors
The Board of Directors comprises 12 members, and more than one-third of the Directors (5 members) are nominatedas Independent Outside Directors.
Aiming to enable Outside Directors to engage freely in constructive discussions and opinion exchanges, we haveformed the following committee and meetings.
■ Governance Committee■ Outside Directors Council■ Outside Directors and Outside Auditors Joint Council(a) Governance Committee
The Governance Committee whose chairperson is elected by mutual vote of the Outside Directors has been
established for the purpose of discussion by all Outside Directors, the Chairman of the Board, the Vice Chairman of
the Board and the President regarding matters related to the status of policies regarding and stance on corporate
governance. The Governance Committee met twice in fiscal 2019.
(b) Outside Director Council
We have established an Outside Director Council, whose members are only Outside Directors.
The Governance Committee uses discussions within the Outside Director Council as a basis to discuss matters with
the Chairman of the Board, the Vice Chairman of the Board and president, and also make recommendations to theBoard of Directors as required. The Outside Director Council met once in fiscal 2019.
(c) Outside Directors-Audit & Supervisory Board Members Joint Council
We have established the Outside Directors-Audit & Supervisory Board Members Joint Council, whose members are
the Outside Directors (5) and Audit & Supervisory Board Members (2 outside, 2 internal), to liaise between the9Outside Directors and Audit & Supervisory Board Members. The Outside Directors-Audit & Supervisory Board
Members Joint Council met 3 times in fiscal 2019.
c. [Principle 4.12] [Supplementary Principle 4.12.1] Efforts to encourage active discussion at meetings of the Board of
Directors(a) Operation of the Board of Directors
For the overview, please refer to the attached MS&AD Insurance Group Basic Policies on Corporate Governance,
Chapter 3, 4. Operation of the Board of Directors.
The following efforts have been implemented to encourage active discussion at meetings of the Board of Directors.
・Materials for the proceedings are distributed in advance, with supplementary explanations provided during
meetings of the Board of Directors. The Corporate Planning Department, which serves as secretariat for the
Board of Directors, also provides explanations in advance to Outside Directors and Outside Audit & Supervisory
Board Members.
・To encourage attendance, members of the Board are notified of the annual schedule of meetings, which isdetermined in advance, basically ensuring an attendance rate of 75% or greater.
・Agenda items are set appropriately based on a once-monthly meeting schedule, with additional meetings held as
required. Care is taken to ensure sufficient time for discussion based on the number of agenda items.
・For efforts in fiscal 2019 refer to (12) [Supplementary Principle 4.11.3] Disclosure of summary results of analysis
and evaluation of overall effectiveness of the Board of Directors, Item 2 (2) Operation of the Board of Directors.

2. Capital Structure
Foreign Shareholding Ratio

20% or more, less than 30%【Status of Major Shareholders】
Name / Company Name

Number of Shares

Percentage (%)

Owned
Toyota Motor Corporation

52,610,933

9.32

The Master Trust Bank of Japan, Ltd. (Trust account)

50,511,600

8.95

Nippon Life Insurance Company

36,325,258

6.43

Custody Bank of Japan, Ltd. (Trust account)

27,049,400

4.79

Custody Bank of Japan, Ltd. (Trust account7)

14,948,400

2.65

Custody Bank of Japan, Ltd. (Trust account5)

10,754,600

1.91

JPMorgan Securities Japan Co., Ltd.

9,415,005

1.67

JP MORGAN CHASE BANK 380055

8,827,047

1.56

Custody Bank of Japan, Ltd. (Trust account9)

8,050,100

1.43

JP MORGAN CHASE BANK 385781

7,795,500

1.38

Controlling

Shareholder(except

for

Parent－Company)
Parent Company

None

Supplementary Explanation―――

3. Corporate Attributes
Listed Stock Market and Market Section

Tokyo Stock Exchange and Nagoya Stock Exchange (First
Section)Fiscal Year-End

MarchType of BusinessInsurance

Number of Employees (consolidated) as of the End

More than 1,000of the Previous Fiscal Year

10

Sales (consolidated) as of the End of the Previous

More than ¥1 trillion

Fiscal Year
Number of Consolidated Subsidiaries as of the End

50 or more, less than 100of the Previous Fiscal Year

4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with
Controlling Shareholder―――

5. Other Special Circumstances which may have Material Impact on Corporate Governance―――

II. Business Management Organization and Other Corporate Governance Systems
regarding Decision-making, Execution of Business, and Oversight in Management
1. Organizational Composition and Operation
Organization Form

Company with Board of Corporate Auditors[Directors]
Maximum Number of Directors Stipulated in

15

Articles of Incorporation
Term of Office Stipulated in Articles of

1 year

Incorporation
Chairperson of the Board

Chairman(except holding concurrent post of President）

Number of Directors

12

Number of Outside Directors

5

Number of Independent Directors

5Outside Directors’ Relationship with the Company (1)NameAttribute

Relationship with the Company*aMariko Bando

From another company

Akira Arima

From another company

Kazuhito Ikeo

Professor

Junichi Tobimatsu
Rochelle Kopp

LawyerFrom another company

b

c

d

*

Categories for “Relationship with the Company”*“○” when the director presently falls or has recently fallen under the category;

e

f

g

h

i

j

k

“△” when the director fell under the category in the past*“●” when a close relative of the director presently falls or has recently fallen under the category;“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaries
b. Non-executive director or executive of a parent company of the Company
c. Executive of a fellow subsidiary company of the Company
d. A party whose major client or supplier is the Company or an executive thereof
e. Major client or supplier of the listed company or an executive thereof
f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or otherproperty from the Company besides compensation as a Director/Audit & Supervisory Board Members
g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)

11

h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) (thedirector himself/herself only)
i. Executive of a company, between which and the Company Outside Directors/Audit & Supervisory Board Members
are mutually appointed (the director himself/herself only)
j. Executive of a company or organization that receives a donation from the Company (the director himself/herself
only)
k. Others

Outside Directors’ Relationship with the Company (2)NameMarikoDesignation as
Independent
Director○

Bando

Supplementary
Explanation of theRelationship

Reasons of Appointment

Chancellor (Rijicho and

Ms. Mariko Bando previously served as

Socho), Showa Women’s

Director General of Gender Equality

University

Bureau of the Cabinet Office, Consul

Outside Director, Mitsubishi

General of Japan in Brisbane, Australia,

Research Institute, Inc.

President of Showa Women’s University,
etc. She has broad knowledge andexperience in public administration andeducation, as well as wide insight into
promotion of diversity. She has beenstating opinions at meetings of theCompany’s Board of Directors and onother occasions based on her knowledge
and experience. We appointed her as
Outside Director in order to draw on her
knowledge and experience in the

Akira Arima○

management of the Company.
-

Mr. Akira Arima previously served as
Director of Nippon Telegraph andTelephone Corporation, President, Chief
Executive Officer of NTT Communications
Corporation, etc. He has been stating
opinions at meetings of the Company’s
Board of Directors and on other occasions
based on his broad knowledge concerning
telecommunications business andexperience as a management executive. We
appointed him as Outside Director in orderto draw on his knowledge and experience

Kazuhito
Ikeo○

in the management of the Company.
Professor, Faculty of

Mr. Kazuhito Ikeo has held a number of

Economics, Rissho University

posts, including university professors andmembers of the Financial Services
Agency’s Financial System Council. He
has been stating opinions at meetings of theCompany’s Board of Directors and onother occasions based on his broad
knowledge and experience concerning
economic and financial fields as well as
financial administration. We appointed him
as Outside Director in order to draw on his
knowledge and experience in the12Junichimanagement of the Company.

○

Tobimatsu

Attorney-at –law, GAIEN

Mr. Junichi Tobimatsu has a wealth of

PARTNERS

knowledge and experience concerning

Outside Director(Auditor),

overall corporate legal affairs including

AI, Inc.

those overseas companies as an attorney-at

Outside Auditor, Amana Inc.

law and has been stating opinions at

Outside Auditor, CANDEAL

meetings of the Company’s Board ofCo., Ltd

Directors and on other occasions based on
his broad knowledge and experience. We
appointed him as Outside Director in orderto draw on his knowledge and experience

Rochellein the management of the Company.

○

Kopp

Managing Principal, Japan

Ms. Rochelle Kopp has a wealth ofIntercultural Consulting

knowledge and experience in Japan and theProfessor of Faculty of

U.S. as a management consultant, and has

Foreign Studies, The

wide insight into cross-cultural

University of Kitakyushu

communication. We appointed her as
Outside Director in order to draw on her
knowledge and experience in the
management of the Company.

Voluntary Establishment of Committee(s)Established

Corresponding to Nomination Committee orRemuneration Committee

Committee’s Name, Composition, and Attributes of Chairperson
Committee Corresponding
Nomination Committee

toCommittee
Corresponding
Remuneration Committee

Committee’s Name

Nomination Committee

Remuneration Committee

All Committee Members

88

Full-time Members

00Inside Directors

33Outside Directors

55Outside Experts

0

0

Other

0

0

Chairperson

Outside Director

Outside Director

toSupplementary Explanation
For the purpose of maintaining high transparency, the Company has formed the Nomination Committee andRemuneration Committee as internal committees of the Board of Directors. Please note that these 2 committees comprise
8 members each, and the chairpersons and other members are appointed from among members of the Board of Directors.
With respect to each of the 2 committees, a majority of the members and the chairperson have been appointed fromamong the Outside Directors.
1. Nomination Committee (Nomination Process) <At least once a year>
・The Nomination Committee deliberates on major management personnel matters and provides advice on thesematters to the Board of Directors. Such matters include the selection of candidates for the positions of Director,
Audit & Supervisory Board Member, and Executive Officer of the Company as well as the selection of Directors
and Audit & Supervisory Board Members for domestic insurance companies in which the Company has direct
investments.

13

・Outside directors shall comprise a majority of Committee members and the Committee chairman, who shall beselected by the Board of Directors. In fiscal 2020, the Committee has 8 members made up of all 5 outside directors,
the Chairman of the Board, the Vice Chairman of the Board and the President.
・With respect to the evaluation of candidates for Director and candidates for Executive Officer, evaluation items
include performance evaluations (corporate performance) and other items.
・The Board of Directors appoints candidates for Director as well as candidates for Audit & Supervisory Board
Member.and Executive Officers based on advice from the Nomination Committee. The utmost respect is given tothat advice in making selections. The consent of the Audit & Supervisory Board must be obtained for candidates for
Audit & Supervisory Board Member.
・From the perspective of making effective discussions to strengthen corporate governance at the Nomination
Committee, policy for selecting candidates for Directors and Audit & Supervisory Board Members is added to thedeliberation items. It has been clarified that the Nomination Committee shall meet at least once a year.
・In fiscal 2019, the Nomination Committee met 5 times, and held discussions on issues, including the selection ofcandidates for Outside Director.
■ Please see “Criteria for the Selection of Director Candidates and Audit & Supervisory Board Member Candidates”
in the Appendix of the attached “Basic Policies on Corporate Governance”.
2. Remuneration Committee<At least once a year>
・This committee advises the Board of Directors regarding the remuneration of Directors and Executive Officers of theCompany as well as the remuneration systems for management of domestic insurance companies in which theCompany has direct investments. In fiscal 2020, the Committee has 8 members made up of all 5 outside directors,
the Chairman of the Board, the Vice Chairman of the Board and the President.
・From the perspective of making effective discussions to strengthen corporate governance at the Remuneration
Committee, policy for remuneration of Directors and Executive Officers is added to the deliberation items. It has
been clarified that the Remuneration Committee shall meet at least once a year.
・In fiscal 2019, the Remuneration Committee met twice.
■ For an overview of the process of determining remuneration, see the “Disclosure Regarding Policies for Determining
Amount of Remuneration and Method of Calculation,” below.

[Audit & Supervisory Board Member]
Establishment of Board of Auditors
Maximum Number of Audit & Supervisory
Board Member Stipulated in Articles ofIncorporation
Number of Audit & Supervisory Board
MemberEstablished6

4

Cooperation among Audit & Supervisory Board Member, Accounting Auditors and Internal Audit
Departments
1. Cooperation between Audit & Supervisory Board Member and Accounting Auditor
Audit & Supervisory Board Members shall receive reports and explanations on plans, operations and outcomes ofauditing from the Accounting Auditor in regular liaison meetings with the Accounting Auditor, also attended by theInternal Audit Department, and various issues on accounting audit shall be discussed when necessary. Furthermore,
Audit & Supervisory Board Members shall make an effort to share information with the Accounting Auditor, such asproviding information obtained in audit activities that is useful for audits by the Accounting Auditor.
2. Cooperation between Internal Audit Department and Audit & Supervisory Board Members (and Directors)
Internal Audit Department has been established as an organization to report directly to the Board of Directors. The
General Manager of the Internal Audit Department (General Manager of the Audit Department) shall report the resultsof internal audits at the Board of Directors, share information with Directors and Audit & Supervisory Board
Members, conduct regular liaison meetings with Full-time Audit & Supervisory Board Members and discussions with
Outside Directors and Outside Audit & Supervisory Board Members, to discuss issues such as internal audit planning

14

and internal audit operations. Furthermore, outcomes of internal audits by the Internal Audit Department shall bereported all matters to Audit & Supervisory Board Members.
3. Cooperation between Accounting Auditors and the Internal Auditing Department
When so required, the Accounting Auditors and the Internal Auditing Department share information, and are working
to strengthen cooperation between them in order to conduct proper audits.

Appointment of Outside Audit & Supervisory
Board Member
Number of Outside Audit & Supervisory
Board Member
Number of Independent Audit & Supervisory
Board Member

Appointed
22Outside Audit & Supervisory Board Member’s Relationship with the Company (1)NameAttribute

Relationship with the Company*a

Kunio Chiyoda

Certified public accountant

Kyoko Uemura

Lawyer

b

c

d

e

f

*

Categories for “Relationship with the Company”*“○” when the director presently falls or has recently fallen under the category;

g

h

i

j

k

l

m

“△” when the director fell under the category in the past“●” when a close relative of the director presently falls or has recently fallen under the category;*“▲”when a close relative of the director fell under the category in the pasta. Executive of the Company or its subsidiaryb. Non-executive director or accounting advisor of the Company or its subsidiaries
c. Non-executive director or executive of a parent company of the Company
d. Audit & Supervisory Board Member of a parent company of the Company
e. Executive of a fellow subsidiary company of the Company
f. A party whose major client or supplier is the Company or an executive thereof
g. Major client or supplier of the Company or an executive thereofh. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property
from the Company besides compensation as a Audit & Supervisory Board Member
i. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a legal entity)
j. Executive of a client or supplier company of the Company (which does not correspond to any of f, g, or h) (the Audit& Supervisory Board Member himself/herself only)
k. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (theAudit & Supervisory Board Member himself/herself only)
l. Executive of a company or organization that receives a donation from the Company (the Audit & Supervisory Board
Member himself/herself only)
m. Others

Outside Audit & Supervisory Board Member’s Relationship with the Company (2)Name

Kunio Chiyoda

Designation as
Independent
Audit &
Supervisory
Board Member○

Supplementary
Explanation of theRelationship

Reasons of Appointment

Outside Director (Audit &Mr. Kunio Chiyoda is an expert inSupervisory Committee

accounting and auditing and has served as

Member), TERASAKI

a university professor and a member of a15

ELECTRIC CO.,LTD

public institution. He has been stating

Outside Director, SEIWA

opinions at meetings of the Company’s

ELECTRIC MFG. Co., Ltd.

Board of Directors and on other occasions(Audit and Supervisory

based on his knowledge and experience.

Committee Member)

We appointed him as Outside Audit &Supervisory Board Member in order todraw on his knowledge and experience inthe management of the Company.

○

Kyoko Uemura

Attorney-at-Law, Miyama,

Ms. Kyoko Uemura is a legal expert. She

Koganemaru & Associates

previously served as a judge and practices

Outside Director, SoftBanklaw as an attorney-at-law. We appointed

Corp.

her Outside Audit & Supervisory Board
Member to reflect her wealth of knowledge
and experience in the management of theCompany.

[Independent Directors/Audit & Supervisory Board Members]
Numberof

Independent

Director/Audit&

7

Supervisory Board Member

Matters relating to Independent Directors/Audit & Supervisory Board Members
1. Outline
5 Directors and 2 Audit & Supervisory Board Members have been appointed from outside the Company toincorporate perspectives independent from management, strengthen monitoring and oversight functions, and conduct
highly transparent management.
Please note that there are no concerns that the interests of these Outside Directors and Outside Audit & Supervisory
Board Members of the various companies will be in conflict, in terms of human, capital, transactions, or otherrelationships, with the interests of shareholders in general. These Directors and Audit & Supervisory Board Members
are independent, and their names as independent outside officers have been filed with the Tokyo Stock Exchange Co.,
Ltd., and Nagoya Stock Exchange Co., Ltd.
2. [Principle 4.9] Independence standards and qualification for independent directors
Outside Directors and Audit & Supervisory Board Members are contributing to the strengthening of oversight andauditing functions to the Board and to ensuring the transparency of management. In addition, by receiving advice
from these Outside Directors and Audit & Supervisory Board Members based on their knowledge and experience as
professionals in the fields of law and accounting, the Company ensures that this system will enable proper decision
making on important matters.
Note that as stated in the attached Appendix to the “Basic Policies on Corporate Governance”, the Company has
formulated criteria for appointing candidates for Director and Audit & Supervisory Board Member, and under 1. (1) of
those standards has set forth criteria regarding eligibility and qualifications. 1. (3) also sets forth criteria regarding
independence from the company when appointing Outside Directors.
3. In the section on “Applicable Supplemental Information,” the minimum criteria set by the company fortransactions to be noted as attributes for Outside Directors are summarized as follows:(1) If the amount of transactions with the Company is less than 2% of the annual net sales of the Company or the otherparty;(2) A consultant, accounting professional, or legal professional who has received, other than officer compensation,
average cash or other financial benefits of less than 10 million yen per year for the past 3 years from the Company
or subsidiaries of the Company;[Incentives]
Incentive Policies for Directors

Performance-linked Remuneration / other

Supplementary Explanation
16

The Company has introduced performance-based remuneration (linked to corporate and personal performance) into its
corporate officer remuneration system. Please refer to Disclosure of Policy on Determining Remuneration Amounts andCalculation Methods below.
In order to realize a director remuneration system functioning as an appropriate incentive for improving linkage between
director remuneration and business performance and achieving sustainable growth for the purpose of strengthening
governance and increasing medium term corporate value of the Group, the Company has introduced a restricted stock
remuneration plan for Directors (excluding Outside Directors). The plan involves granting treasury stock or new stock(allotment of restricted stock) by replacing a portion of the Company’s performance-based monetary remuneration with
monetary remuneration receivables provided by means of contribution in kind.
The Company introduced the same system as mentioned above and granted treasury stock or new stock (allotment of
restricted stock) to the Company’s executive officers and the Directors (excluding Outside Directors) and Executive
Officers of Group domestic insurance companies in which the Company has direct investments, by replacing a portion of
the Company’s performance-based monetary remuneration with monetary remuneration receivables provided by meansof contribution in kind.
―――

Recipients of Stock Options

Supplementary Explanation―――[Director Remuneration]
Disclosure of Individual Directors’ Remuneration

Selected Directors

Supplementary Explanation
We disclose the total amounts of remuneration to all Directors and to all Audit & Supervisory Board Members according
to the category (Directors/Audit & Supervisory Board Members) and according to the types of remuneration. We also
disclose total amounts of consolidated remuneration to officers amounting to 100 million yen or more.
Remuneration for fiscal 2018 is prior to the revision of the system. The standard ratio of performance-based remuneration
was 40% to 20% of the total remuneration amount, according to position, and the standard ratio of stock-based
compensation was 10% to 20% of the total remuneration amount, according to position.
Performance-based remuneration is calculated based on the Group Adjusted Profit and consolidated net income, andstock-based compensation consists of the allocation of stock acquisition rights as stock compensation-type stock options.
<Total amounts of remuneration to Directors and Audit & Supervisory Board Members for fiscal 2019>(Millions of yen)
Total amount of remuneration

Total amount by type of remuneration
Fixed remuneration

Performance-based
remuneration

Directors (7 persons*)

235

152

82

Audit & Supervisory Board

55

55

-

96

96

-

Members (3 persons*)
Outside Officers (7 persons)*Excluding Outside Directors and Outside Audit & Supervisory Board Members<Total amounts of consolidated remuneration amounting to 100 million yen or more>(including remuneration for corporate officer posts at main consolidated subsidiaries)(Millions of yen)
Total amount of consolidated

Total amount by type of remuneration

remuneration

Fixed remuneration

Performance-based
remuneration

Director Hisahito Suzuki

111
131

Director Yasuyoshi Karasawa

17

57
67

54
64

Director Noriyuki Hara

131

67

64

Director Yasuzo Kanasugi

124

63

60

Policy on Determining Remuneration Amounts andEstablishedCalculation Methods

Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods
1. Amount of Directors’ Remuneration(1) Determination Processes
Remuneration for each Director is set within overall limits approved by the Shareholders’ Meeting. Consideration is
given to the function of remuneration as an incentive for improvement in performance, long-term contribution tocorporate profits and enterprise value, the level of compensation appropriate for competitiveness as a global
corporation, and other factors. To ensure transparency, the Remuneration Committee, which is composed of amajority of Outside Directors, considers remuneration amounts, and the final decisions are made by the Board of
Directors. The Remuneration Committee deliberates on the policy on remuneration for the Company’s Directors
and Executive Officers. The Board of Directors respects the advice of the Remuneration Committee to the
maximum extent.
■ For more about the Remuneration Committee, see the above “Status of Establishment of Voluntary Committees,
Committee Membership, and Attributes of Committee Chair,” along with the “Supplemental Explanation”.
(2) Composition of remuneration
Remuneration for Directors (excluding Outside Directors) consists of fixed compensation and performance-based
remuneration.
The standard ratio of performance-based remuneration is 50% to 30% of the total remuneration amount, according
to position.
Performance-based remuneration is composed of monetary remuneration and stock-based compensation, and thestandard ratio of stock-based compensation is 9% to 25% of the total remuneration amount, according to position(revised in April 2019).
Outside Directors receive fixed compensation only because they are independent from business execution.
(3) Key Performance Indicators for Remuneration
Performance-based remuneration shall be linked with the business performance of the Company and determinedbased on the results of key performance indicators (KPIs).
These indicators are selected in accordance with the Group’s Medium-Term Management Plan, “Vision 2021”.
(Main KPIs)<Financial indicator (single-year performance)>
・Group Adjusted Profit (Note)
・Consolidated Net Income
・Group Adjusted ROE
Note: For Group Adjusted Profit, please refer to (15)a “Disclosure Based on the Principles of the Corporate
Governance Code”, above.
<Non-financial indicator (medium term performance)>・Achievement status of initiatives “Sustainability Priority Issues” aimed at Creating Shared Value (CSV) withsociety using SDGs as the guideposts including “create accident-free and comfortable mobility society” and“contributing to mitigation and adaptation of climate change”, etc.
・Achievement status of “Key Strategies” (Pursue Group’s comprehensive strength, Promote digitalization and
Reform portfolio) in the Medium-Term Management Plan “Vision 2021”
The ratio between the financial indicator and non-financial indicator shall be 50 : 50 as the standard and thefinancial indicators and non-financial indicator vary within a range of 0 to 3.0 and 0.5 to 1.5, respectively, with 1.0
as the standard.
Restricted stock shall be provided as stock-based compensation and in principle, the transfer restrictions shall be18

released upon retirement of the related Director.
If it is found that a Director was involved in a fraudulent act while in office, the Company acquires the restricted
stock for free during the transfer restriction period or the Director is made to return it after the transfer restriction isreleased.
(4) Maximum Total Compensation
As a result of decisions made by the Shareholders’ Meeting, maximum total annual compensation for Directors(excluding any salaries for work performed by Directors concurrently in employee positions) is set at ¥500 million(including a total allocation of ¥100 million for Outside Directors). With a separate framework, the remuneration of
Directors (excluding Outside Directors) includes “total amount of monetary remuneration receivables provided forallotting restricted stock” with a maximum value of ¥200 million per year.
2. Amount of Audit & Supervisory Board Members’ Remuneration(1) Determination Processes
Remuneration for Audit & Supervisory Board Members is set within overall limits approved by the Shareholders’Meeting. Consideration is given to whether Audit & Supervisory Board Members are full-time or part-time, theirshare of the auditing activities, and the content and level of remuneration of Directors. Decisions on remunerationlevels are decided in discussions among the Audit & Supervisory Board Members.
(2) Composition of Compensation
Audit & Supervisory Board Members receive fixed compensation only because they are independent from businessexecution.
(3)Maximum Total Compensation
As a result of decisions made by the Shareholders’ Meeting, maximum total compensation for Audit & Supervisory
Board Members is set at ¥110 million.

[Supporting System for Outside Directors and/or Audit & Supervisory Board Members]
Support for the activities of the Outside Directors is provided by the Corporate Planning Department, and support for theOutside Audit & Supervisory Board Members is supplied by the Internal Audit Department. The agenda for the Board of
Directors’ Meetings is explained to the Outside Directors and Outside Audit & Supervisory Board Members in advance ofthe meetings by the Corporate Planning Department, which acts as the secretariat for the Board of Directors. In addition,
information, such as important risk information, is reported on an ongoing basis to all Directors and Audit & Supervisory
Board Members, internal and external.
■ For more-detailed information, please see Chapter 3.8 ”Support Systems for Directors and Audit & Supervisory Board
Members” in the attached “Basic Policies on Corporate Governance”.

[Retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)]
Employment terms
Job title/(Full/part time,
Name
Responsibilities
position
with/withoutcompensation, etc.)
YoshiakiShin
ToshiakiEgashira
Takeo
Inokuchi
Hiroyuki
UemuraMasao
OkazakiSenior Advisor,
Mitsui Sumitomo
Insurance
Senior Advisor,
Mitsui Sumitomo
Insurance
Honorary Advisor,
Mitsui Sumitomo
Insurance
Honorary Advisor,
Mitsui Sumitomo
Insurance
Advisor,Aioi Nissay Dowa
Insurance

External relations in the business
community (not involved inmanagement)
External relations in the business
community (not involved inmanagement)
External relations in the business
community (not involved inmanagement)
External relations in the business
community (not involved inmanagement)
Important external relations withGroup companies (not involved inmanagement)

19

Date whenformer role aspresident/
CEO ended

TermPart time
With compensation

2010/6/29

Yearlycontract

Part time
With compensation

2016/6/22

Yearlycontract

Part time
Without compensation

2006/6/28

Yearlycontract

Part time
Without compensation

2006/6/28

Yearlycontract

Part time
Without compensation

2006/6/29

YearlycontractNumber of retired presidents/CEOs holding advisory positions (sodanyaku, komon, etc.)：5
Others
1. Those who have formerly served as Chairman or President of the Company or its core subsidiaries (Mitsui Sumitomo
Insurance and Aioi Nissay Dowa Insurance; including their predecessors prior to the mergers) may be nominated as
Advisors, etc. of the core subsidiaries as follows. We do not have a counsel system.
(1) Mitsui Sumitomo Insurance
Mitsui Sumitomo Insurance nominates former Chairman or President as “Senior Advisors(Jonin-Komons)” (with aterm of office of up to 4 years). Persons who have retired as Senior Advisors(Jonin-Komons) may then be nominatedas “Senior Advisors(Tokubetsu-Komons).” In either case, the term of office is up to the end of the fiscal year in which
he/she turns 75 years old. Compensation is paid to those who will be newly nominated as Senior
Advisors(Jonin-Komons) in and after fiscal 2018, only for the period they were Senior Advisors(Jonin-Komons). In
addition, those who retired as Senior Advisors may be titled “Honorary Advisor” without compensation.
(2) Aioi Nissay Dowa Insurance
Aioi Nissay Dowa Insurance may nominate former Chairman, vice Chairman,or former President as KOMONs;“Advisor” without compensation or “Senior Advisor”. Their contract

term is up to 3 years.

2. Advisors, etc. do not participate in management meetings, meetings of the Board of Directors and any other internal
meetings, and do not engage in management decision making in any form.
* The dates listed under “Date when former role as president/CEO ended” are the most recent dates they retired as
Chairman or president/CEO.

2. Matters on Functions of Business Execution, Auditing, Oversight, Nomination andRemuneration Decisions (Overview of Current Corporate Governance System)(1) Matters on Functions of Business Execution and Oversight■ For the Outline, please see the Chapter 3 in the attached ”Basic Policies on Corporate Governance”.
(1)-1 Board of Directors
a. Role of the Board of Directors [Principle 4.1] [Supplementary Principle 4.1.1](a) In addition to matters specified by law and the Articles of Incorporation, the Board of Directors discusses anddecides upon important matters involving Group management strategy and corporate management, including theGroup’s management policies, management strategies, and capital policy, in addition to overseeing the duties of
directors and executive officers.
(b) The Board of Directors allocates management resources according to risk appetite controlled with a balance of risk,
return, and capital, and aims to increase enterprise value in the medium-to-long term by achieving sustainablegrowth and improvement in earnings and capital efficiency with a foundation of soundness.
(c) In addition to appointing executive officers, the Board of Directors aims to separate management decision making
and oversight by the Board of Directors from business execution by executive officers by clarifying their respectiveroles.
(d) Executive officers are responsible for executing business in the respective areas of business entrusted to them by
the Board of Directors, and report on the status of business execution to the Board of Directors.
b. Composition of the Board of Directors
・More than one-third of the Board of Directors which has 12

members (10 men and 2 women) are nominated as

Outside Directors to incorporate perspectives independent from management, strengthen monitoring and oversightfunctions, and conduct highly transparent management.
c. Important responsibilities of the Board of Directors (determining the Group’s strategic direction and the
management plan)
・Under the Group Medium-term Management Plan, the Board of Directors has put forward the Group’s Corporate
Philosophy (Mission), Corporate Vision and Values (see III 3., Efforts Involving Respect for the Position of
Stakeholders), and continues its efforts to realize and achieve them.
・In formulating Stage 2 of the Group Medium-Term Management Plan, constructive discussions are being held at the20Group Management Committee and the Board of Directors. Regarding execution of the Group Medium-termManagement Plan, timely summarization is provided, a PDCA cycle is being run to achieve that plan based on
discussions among the Board of Directors, and constructive discussions will continue to be held in the future. The
Board of Directors also checks the progress of medium-term management plans for each of the Group’s operatingcompanies. Note that explanations are provided at the Shareholders’ Meeting and at Group Information Meetings.
(1)-2 Group Management Committee （About twice a year）
The Governance Committee whose chairperson is elected by mutual vote of the Outside Directors has been established
for the purpose of discussion by all Outside Directors, the Chairman of the Board, the vice Chairman of the Board and thePresident regarding matters related to the status of, policies regarding and stance on corporate governance.
(1)-3 Group Management Committee
The role of the Group Management Committee is to discuss management policies, management strategies, and othermatters that are key issues to the Company and the other Group companies. Regarding items determined by executive
officers, the committee also monitors specific business operations by receiving reports on approved matters under therules for the Group Management Committee. The Group Management Committee met 12 times in fiscal 2019.
In addition, from fiscal 2017, the presidents of the Group’s 5 domestic insurance companies in which the Company has adirect stake have attended as committee members and discussed key issues related to the Group’s domestic insurancecompanies.
(1)-4 Task-Specific Committees
The task-specific committees have been established to deliberate on various key management issues regarding theexecution of operations as well as to coordinate perspectives across various departments. When necessary, the Director(s)and/or Executive Officer(s) in charge summarize the results of discussions in these committees and report them to theBoard of Directors and/or the Group Management Committee.
a. Sustainability Committee （Basically 4 times a year）
The committee discusses matters related to the Group’s initiatives and plans related to sustainability, promotion ofdiversity & inclusion, improvement of capability of human assets (Work Style Reforms) and policies and plans related
to branding strategy and advertising strategy of the entire Group. The Sustainability Committee met 3 times in fiscal
2019
b. Quality Improvement and Compliance Committee （Basically 4 times a year）
The committee monitors issues in improving quality such as promotion of business operation on a customer-first basis,and compliance matters in pursuit of establishment of corporate ethics at the Group and each company, and deliberates
and coordinates important matters related thereto. Quality Improvement and Compliance Committee met 5 times(including once in writing) in fiscal 2019.
c. Group Management and Monitoring Committee（Prior-monitoring: Basically 12 times a year,

Post-monitoring:

Basically 6 times a year）
・Upon receiving reports on matters related to the Board of Directors and the Management Committee of directly
invested Group insurance companies, the committee meeting confirms matters that include whether the related
matters have been approved and/or reported, ensures healthy finance of the Group companies, and ensuresappropriate risk management and operations. The Group Management and Monitoring Committee met 11 times infiscal 2019.
d. Digitalization Committee（Basically 4 times a year）
・The committee deliberates and coordinates such issues as promotion of digitalization of the Group companies, andmanages the progress thereof. The Digitalization Committee met 3 times in fiscal 2019.
e. Group Systems Committee（Basically 4 times a year）
・The committee deliberates, coordinates, and manages such issues as IT strategy, system risk management, and thelarge-scale system development of the Group companies. The Group Systems Committee met 16 times (including
10 times in writing) in fiscal 2019.
f. Group International Business Committee（Basically 4 times a year）
・The Committee confirms and discusses the vision for International Business strategy (International Business
investment, etc.) that contributes to sustainable Group growth. It also shares common understanding of issues
regarding the role of International Business in strengthening overall Group profitability and demonstrating synergies,
and confirms and discusses the direction of measures for handling those issues and their progress. The Group21

International Business Committee met 3 times in fiscal 2019.
g. Risk Management Committee（Basically 4 times a year）
・While monitoring overall risk, return and capital, and the status of risks of the entire Group, it also deliberates andcoordinates the key issues. The Risk Management Committee met 8 times(including 4 times in writing) in fiscal
2019.
(2)Matters on Functions of Nomination and Remuneration■ Matters on Functions of Nomination
Please see the above II.1 “Supplementary explanation” 1.Nomination Committee (Nomination Process)■ Matters on Functions of Remuneration
Please see the above II.1 “Disclosure of Policy on Determining Remuneration Amounts and Calculation”.
(3)Matters on Functions of Auditing and Oversight(3)-1 Audit & Supervisory Board Members and Audit & Supervisory Board
a. Roles and Responsibilities of Audit & Supervisory Board Members
・As an independent entity entrusted with authority by the shareholders, the Audit & Supervisory Board Members are
responsible for ensuring the sound and sustainable growth of the Company and the Corporate Group, andestablishing good corporate governance in response to the public trust by supervising the performance of duties of
the Directors, and work to maintain an independent position and a fair and unbiased attitude, acting in accordancewith their own beliefs.
・Each Audit & Supervisory Board Member shall appropriately exercise his/her legal investigating authority, including
the authority to audit operations and assets, and supervises the performance of duties of the Directors by attending
meetings of the Board of Directors and other important meetings, viewing important approval documents,
investigating departments within the Company, and investigating subsidiaries in accordance with the auditing
policies and plans stipulated by the Audit & Supervisory Board.
・Audit & Supervisory Board Members participate in joint meetings of Outside Directors and Auditors, etc. and work toshare information with Outside Directors.
b. Composition and Roles of the Audit & Supervisory Board
・The Audit & Supervisory Board comprises a majority of Outside Audit & Supervisory Board Members. As
independent officers, Outside Audit & Supervisory Board Members have independence, and a significant degree ofexpertise and knowledge. Full-time Audit & Supervisory Board Members also have sophisticated information
gathering capabilities based on extensive operational experience, and the organic combination of the 2 serves toenhance audit effectiveness.
・The Audit & Supervisory Board receives reports from Audit & Supervisory Board Members on the status of theperformance of their duties and reports from officers and employees, etc. on important matters related to auditing,and also makes decisions regarding auditing policies and auditing plans.
(3)-2 Appointment of Accounting Auditors, etc.
・The Audit & Supervisory Board makes decisions regarding proposals submitted to the General Shareholders’ Meeting on
the appointment or dismissal of Accounting Auditors. It also has the right to consent to decisions regarding
remuneration of the Accounting Auditors.
・The Audit & Supervisory Board prepares criteria for appropriately selecting and evaluating Accounting Auditor. To
promote appropriate accounting by the Accounting Auditors, measures are taken to confirm the independence,
specialist capabilities, and other requisite characteristics of the Accounting Auditors.
・The Company has appointed KPMG AZSA LLC as its independent audit corporation. Please note that there are no
special conflicts of interest between KPMG AZSA LLC and the Company.
(3)-3 Efforts to Enhance Outside Audits
a. Prior to an audit, we works with the Accounting Auditors to confirm schedules and provide information that cancontribute to audit efficiency and effectiveness, ensuring sufficient time to conduct the audit.
b. The Accounting Auditors meet for discussions with the Representative Director & President biannually (at the midterm
and at fiscal year end), and with officers in charge of accounting, etc. at fiscal year end.
c. The Accounting Auditors work to coordinate with both the Audit & Supervisory Board Members and the Internal Audit
Department by attending regular liaison meetings, while also exchanging opinions with each individually as needed.

22

d. In the event the Accounting Auditors have pointed out deficiencies in internal control audits relating to financial reports,
the department in charge promptly formulates measures for improvement, the implementation of which is verified by
the internal auditors and the Accounting Auditors. The results of internal control audits and the status of improvement
measures are reported to the Risk Management Committee (task-specific committee), and those results are thenreported to the Board of Directors. A system is also in place for timely reporting in the event an internal control audit
uncovers a deficiency that might be considered an important deficiency that should be disclosed.
(4) Conclusion of Agreements Limiting Liability
To ensure that Outside Directors and Outside Audit & Supervisory Board Members can fully perform the roles expectedof them, the Company has entered into agreements with its Outside Directors (5) and Outside Audit & Supervisory Board
Members (2) limiting their liability in the event of damage caused to the Company by the failure to perform the duties of
Director or Audit & Supervisory Board Member, and providing that if those duties have been conducted in good faith andwithout gross negligence, the amount of liability shall be limited to the sum of the amounts stipulated in the items of
Article 425, Paragraph 1 of the Companies Act.

3. Reasons for Adoption of Current Corporate Governance System
・As a company with an Audit & Supervisory Board, the Company will endeavor to improve governance by ensuring thatindependently appointed Audit & Supervisory Board Members appropriately act in their auditing functions, in addition
to ensuring that the Board of Directors appropriately acts in its oversight functions, while strengthening the functionsof each and actively disclosing information.
・The Company has formed the Governance Committee (made up of all outside directors, the Chairman of the Board, theVice Chairman of the Board and the President) in addition to the Nomination Committee and Remuneration
Committee (a majority of the members and a chairperson each have been appointed from among the Outside Directors)
as internal committees of the Board of Directors, thus building a highly effective and transparent corporate governancesystem.
・In addition to appointing executive officers, the Board of Directors aims to separate management decision making andoversight by the Board of Directors from business execution by executive officers by clarifying their respective roles.
Under the above structure, the Company believes that the Board of Directors is fully capable of carrying out its roles andresponsibilities as required under Basic Principle 4 of the Corporate Governance Code.
■ For governance structure, please see “Management Structure Diagram” described at the end of this report.

III. Implementation of Measures for Shareholders and Other Stakeholders
1. Measures to Vitalize the General Shareholder Meetings and Smooth Exercise of Voting
RightsSupplementary Explanations

Early Notificationof General
Shareholder
Meeting
Scheduling AGMs
Avoiding the PeakDay
Allowing
Electronic
Exercise of Voting
RightsParticipation inElectronic Voting
Platform
ProvidingConvocation

In order to ensure shareholders have adequate time to consider the agenda for the General
Shareholders’ Meeting, the Company works to send out notification early. Notification of the
12th Regular General Shareholders’ Meeting was sent out June 2 (Tuesday). The content of
the notices is also published on TDnet and the Company’s website prior to their being sent.
In the interest of enhancing constructive dialog with shareholders, General Shareholders’Meetings are scheduled to avoid peak dates.
The 11th Regular General Shareholders’ Meeting was held on June 25 (Thursday).
Allowing electronic exercise of voting rights via the internet.

Participating in electronic voting platform.

Providing Convocation Notice in English on our web site.

23

Notice in English
Other

Because the General Shareholders’ Meeting is an opportunity for constructive dialog withshareholders, the Company has put in place a suitable environment, as noted above andbelow, for the exercise of rights at the General Shareholders’ Meeting from the viewpoint of
the shareholders and with the goal of operating the Meeting in a way that is easy tounderstand.
・To ensure shareholders are able to make suitable decisions at the General Shareholders’Meeting, and to provide shareholders with accurate information along with an outline of a
medium-term management plan, have been included in the Notification of the General
Shareholders’ Meeting.
・In the event institutional investors owning shares in the name of a trust bank, etc. wish to
exercise their voting rights at the General Shareholders’ Meeting, the Company shallreview whether or not to allow said voting rights to be exercised based on discussion withthe trust bank, etc. in whose name they are held.

2. IR Activities
Briefings
Supplementary Explanations

conducted by the
representative
him/herself

Preparation and

The Company has established "MS&AD Insurance Group Basic Policy for

Publication ofDisclosure of Information” which stipulated basic stance, standards andDisclosure

methods for disclosure of information, and has posted it on the website.

Policyhttps://www.ms-ad-hd.com/en/group/value/dialogue/disclosure.html

Regular Investor

In addition to holding briefings at securities firms and elsewhere for

Briefings forindividual investors, led by the executive officer in charge of the Corporate

Individual

Communications and Investor Relations Department, briefings are also held

Investors

several times a year by the General Manager of the Corporate

No

Communication and Investor Relations Department or the person in chargeof IR.
Regular Investor

Information Meetings to explain management strategy are held twice a

Briefings foryear, led by the President.

Analysts andFinancial briefings (conference calls) are held quarterly, 4 times per year,

Institutional

led by the general manager of the Corporate Communications and Investor

Investors

Relations Department, and the general manager of the Accounting

Yes

Department.
As part of an effort to enhance dialog under a stated Policy for Constructive
Dialog with Shareholders, the Company holds “MS&AD IR Day” that
contains briefings by the top management of each operating companies
regarding particular businesses and exchange of opinions between investors
and management including the Chairman and the President, with the goal ofengaging investors in a constructive dialog.
Regular Investor

The President and the Senior Executive Officer in charge of Corporate

Briefings forCommunications and Investor Relations visit North America, Europe andOverseas

Asia regularly to meet with overseas investors.

Investors

The Senior Executive Officer in charge of Corporate Communications andInvestor Relations also participates in conferences for overseas investors
hosted by securities firms.
Presentations and Q&A transcripts from the above briefings for analysts
and institutional investors are translated into English and posted on the
Company website.

Posting of IR

The following materials are posted on the Company website

Materials on(https://www.ms-ad-hd.com/en/).

Website・Timely disclosure information including financial results t(News release

24

Yes

and topics)
・Financial report and quarterly report
・Materials for Information Meeting, video and summery of Q&A session
・Status of Corporate Governance・Stock and Bonds information

including the notice of General Meeting of

Shareholders
・Disclosure documents, Sustainability Report, Annual report andShareholders newsletter.
Mail notifications are also sent out when a news release or otherinformation is posted.
Establishment of

Officer in charge of IR : Tetsuji Higuchi, Representative Director, Senior

Department

Executive Officer, CFO

and/or Manager

Department in charge of IR : Corporate Communications and Investor

in Charge of IR

Relations Department

Preparation andInformation for timely disclosure and other IR disclosures are primarily

Publication

made in Japanese through the website, as well as in English at a level thatofDisclosure

ensures no significant disparities arise.

PolicyThe Company is also constantly working to improve disclosures in English
to ensure no gaps arise with disclosures in Japanese in terms of volume ortiming of information disclosed.

3. Measures to Ensure Due Respect for Stakeholders
Stipulation ofInternal Rules for
Respecting the
Position of
Stakeholders

Supplementary Explanations
We state in the “Chapter 2: Relationship with Stakeholders in the “Basic Policies on
Corporate Governance” that we will fulfill our responsibilities to stakeholders based on theposition of our stakeholders through active dialogue with our stakeholders. With regard tosustainability issues in particular, we revised the “Strategic Approach for Sustainability”
formulated in June 2019, and published it in September 2020 as the "Business Activities with
Consideration for Sustainability".
https://www.ms-ad-hd.com/en/csr/summary/materiality.html"MS & AD Insurance Group Basic Policy on Human Rights" stipulates that we recognize our
responsibility for the actual and potential negative impact of our business activities on humanrights, including the value chain, and we promote actions and dialogue that will show respect
towards human rights.
(URL for Policy on Human Rights)
https://www.ms-ad-hd.com/en/csr/community/human_rights.html

Implementation ofEnvironmental
Activities, CSR
Activities etc.

To realize its Corporate Philosophy (Mission) of “Contributing to the development of avibrant society and helping secure a sound future for the earth,” the Company is putting into
practice “Story of Value Creation” as its business model, whereby the Company identifies
and informs of risks arising from social issues, prevents risks from occurring or minimizes
their impact, and reduces the economic burden in the case of a risk occurring.
In the Group’s Medium-Term Management Plan (Vision 2021), we defined the image of thesociety that we aim for in 2030 as a “resilient and sustainable society.” For the Group tosustain growth in the future, with a presence widely supported by stakeholders in society, it iseven more essential that it continues creating shared value (CSV) through corporate
activities. Based on this recognition, we will implement the “Story of Value Creation” andrealize a “resilient and sustainable society,” following SDGs (sustainable development goals)
as our milestone.
Toward the Realization of "Resilient and Sustainable Society", in fiscal 2018 we began
discussing “Strategic Approach for Sustainability” and in fiscal 2019 we expressed acommitment to considering sustainability issues such as environmental, social, and corporate
governance (ESG) factors in all business activities.
In September 2020, we announced our initiatives in the underwriting and financing processin" Business Activities with Consideration for Sustainability "25

（URL for " Business Activities with Consideration for Sustainability "）https://www.ms-ad-hd.com/en/csr/summary/materiality.html
Defining and tackling 7 priority issues for “Creating shared value”, the Company is working
toward “Quality that earns the trust of society” and “Management platforms that enable
employees to play active roles” that support “Creating shared value.”
In fiscal 2019, each Group company offered products and services contributing to the solving
issues related to climate change, took measures for protecting customers’ sustainability suchas disaster prevention and reduction and accident avoidance, and held symposiums
contributing to enhancing the sustainability of natural capital, etc.
In addition, from fiscal 2018, we have hold our “Sustainability Contest” every year for all
Group companies both inside and outside Japan in order to deepen Group employees’
understanding towards the importance of pursuing SDGs and creating shared value (CSV),
and to encourage the employees to incorporate these approaches into their day-to-day
operations. Resolving social issues via the creation of new business models and sharing
approaches among entire Group employees through the Sustainability Contest has led to a
virtuous cycle that extends these approaches laterally across the Group.
For details of the initiatives, please see our website.
https://www.ms-ad-hd.com/en/csr.html
Development of

The Company adopted "MS&AD Insurance Group Basic Policy for Disclosure of

Policies on

Information” for the purpose of communicating important information with our stakeholders

Information

in a manner that is accurate, timely and faire.

Provision tohttps://www.ms-ad-hd.com/en/group/value/dialogue/disclosure.html

Stakeholders
Other

1. Diversity & Inclusion
・Respecting each individual, accepting each other and making use of each otherʼs strengths,
regardless of the external attributes of individuals such as race, gender or age or internal
attributes such as religion, beliefs, background and values in order to demonstrate to the
maximum extent diversity and diverse values, which are strengths of the Group.
・ Each employee works enthusiastically, displays their abilities as professionals anddemonstrates teamwork.
・We are further strengthening diversity & inclusion initiatives under the group-wide
promotion system.
(1) Promoting Career Development for Womena. Women in management positions
The Group believes that it is important for the “growth of employees” and the “growthof the company” that female employees take on the challenge of work and roles where
they may be more active while leveraging their own strengths and characteristics. As aresult of setting the target ratio of women in management positions at 15% for fiscal
2020 (Group Domestic Total) and continually holding trainings, etc. to foster anawareness of increasing skill levels and advancing their careers in order to take on
management positions, the number of women in management positions (manager andabove) reached 944 and the ratio of women in management positions reached 14.8% (asof April 2020) and is steadily increasing every year. And furthermore, the Group has thetarget ratio of hiring new graduates and permanent employees for women is 50 % or
more, and had achieved them every year. In addition, the CEO has announced his
support for the “Declaration on Action by a Group of Male Leaders who will Create aSociety in which Women Shine”, which comprises male leaders of companies actively
working to promote the career advancement of women.
[Share of management positions held by women]
Target for FY2020: 15% (Group Domestic Total)

26

Following is the status of major group companies
FY2017
MSI

10.1%

(259)

12.7%

(331)

FY2019
15.1% （396）

ADI

10.4%

(256)

12.1%

(308)

14.5%

（376）

MD

11.5%

(11)

15.8%

(16)

14.5%

（16）

8.0%

(49)

11.5%

(71)

13.9%

（86）

8.6%

(15)

12.0%

(22)

14.3%

（27）

9.4%

(23)

14.1%

(34)

16.9%

（43）

9.9%

(613)

12.4%

(782)

14.8%

（944）

MSI

Aioi

FY2018Life
MSI
Primary Life
The
Company
Total*As of April 1 following the end of each fiscal year, figures in parentheses indicate numberof persons
b. Female officers
In May 2019, the CEO became a member of the 30% Club Japan, which is a global
campaign for the advancement of female officers. The ratio of female members of theBoard of Directors in the holding company (Directors + Audit & Supervisory Board
Members) is currently 25% (4 out of 16) but the aim is to increase this figure to 30% ormore by fiscal 2025, and to increase the figure at Mitsui Sumitomo Insurance Co., Ltd.
and Aioi Nissay Dowa Insurance Co., Ltd. to 10% or more by fiscal 2030.
The Group has implemented leadership training programs and mentor programs for
women in management positions.
In order to build a "pipeline" for fostering candidates for female officer on a continuous
basis, the Group has set up the Female Managers Committee, an organization made up of
about 50 female managers in total from each group company. The committee has been
engaged in activities including organizing an event where female managers from different
group companies gathered to learn how they can overcome unconscious bias. Some
members of the committee have been appointed part-time director of affiliated companies.
They are learning about management-level decision making.
c. Changing awareness of officers and management
Diversity & inclusion officer training was held for the Group’s officers with the objectiveof deepening the understanding of unconscious bias. In addition, a D&I evaluation factor
was reflected in officers’ compensation and performance evaluations in order to enhancethe effectiveness of diversity at the management level.
As initiatives to change awareness of management, the Company is undertaking
management training and e-Learning to teach methods of understanding unconscious bias,“realizing” one’s own bias, and “controlling” this bias.
In addition we have positioned management that respects diversity regardless ofnationality, gender, age or disability as an evaluation factor for those in management
positions.
(2) Employment of People with Disabilities
・Group companies continue to engage in hiring activities to expand and anchor places of
employment for the disabled. They are also adapting workplaces into friendly
environments and developing duties performed by people with disabilities.
As of April 1, 2020, the percentage of employees with disabilities stood at 2.43%(Group Domestic Total), which exceeds the minimum employment rate required bylaw.
・On June 1, 2018, the Company has established “MS&AD ABILITYWORKS Co., Ltd.”for the purpose of employing people with disabilities and enabling them to play active

27

roles.
MS&AD ABILITYWORKS Co., Ltd. establishes an environment where people withdisabilities can maximize their abilities and aptitudes, and creates a workplace where
people with disabilities can work actively. In addition, as a specialty institution within
the Group for the employment of people with disabilities, the Company is working incollaboration with all Group companies to promote the employment of people withdisabilities throughout the Group.
(3) Employment of the Elderly
Group companies have a rehiring program for employees who have reached retirementage. This program allows employees to utilize their experience and skills and make fulluse of their capabilities. Participation can be renewed if required by the work involved
and by the individual’s job description, with employment available to a maximum of 65
years of age.
As of April 1, 2020, the number of re-employed retirees (total of new hires and continuing
employees) was 645 at MSI and 617 at ADI.
(4) Work Style Reforms
The Group has been promoting work style reforms since fiscal 2016 and, as well as
reducing working hours, including through “leaving the office by 7:00 p.m. in principle”,“promoting the taking of annual leave”, and “improving the efficiency of operations”,
while also working to improve productivity, including through management practices that
improve the expertise and leverage the diverse abilities of each individual employee.
In addition, the Group is creating an environment where diverse employees can continue
to work and play active roles through the spread of flexible work styles effectively
utilizing working hours and work space, including shift work that enables different
working hours each day, and a paid-leave system in units of half days or hours, while
promoting the active use of remote work such as working from home and online meetings.

(5) Work-life Balance
The Group is developing various systems to enable employees to feel a sense of job
satisfaction and a sense of growth, and to work actively in good health while maintaining
a work-life balance.
・There are systems where employees who are not subject to transfer entailing a change ofresidence can change their place of employment under certain circumstances, andsystems whereby employees who have retired due to life events can return to work after
their retirement and systems for self-development leave.
・We are promoting male employees to take childcare leave for a specified period of time
(Papa Childcare Leave) so that each individual employee can have flexible andwide-ranging values through experiences such as being present at the birth of theirchild, childcare observation days, and housework.
・We have established an external contact desk where employees can discuss various
concerns or questions regarding nursing care and health 24 hours a day, 365 days of theyear by telephone or online.
Going forward, we will continue to work as a Group to create an environment where
employees can continue to work and to expand support measures.
Information on efforts to promote the career development for women and other
CSR-related reports are widely available on the Company’s website at:https://www.ms-ad-hd.com/ja/csr/quality/diversity.html

IV. Matters Related to the Internal Control System28

1. Basic Views on Internal Control System and the Progress of System Development(1) Basic Views on Internal Control System
The Company has established its MS&AD Insurance Group Basic Policy Pertaining to System for Internal Controls, andin addition to the systems required under Japan's Company Law, the Company regards the “systems for assuring thereliability of financial reporting” to be an important perspective in the context of enhancing related systems.
Please see “MS&AD Insurance Group Basic Policy Pertaining to System for Internal Controls”, adoptedbythe Boardof Directors is on the Company’s website.
https://www.ms-ad-hd.com/en/group/value/group/system/main/01/teaserItems1/0/linkList/0/link/basicpolicy.pdf(2) Establishment of an Internal Control System
The Company maintains a system in accordance with this Basic Policy, and reports to the Board of Directors regarding
the results of an inspection conducted every year about the system building and the appropriate operation.

2. Basic Views on Eliminating Anti-Social Forces(1) Basic Approach to Elimination of Antisocial Forces
The Company is working to put in place a system for the elimination of antisocial forces, to which it takes a resolute
posture, ensuring that all employees aware that the Company refuses to respond to unreasonable, inappropriate demands.
(2) Status of Efforts to Eliminate Antisocial Forces
a. The Company’s “MS&AD Insurance Group Basic Policy Concerning Antisocial Forces” sets forth a common basic
posture shared by all employees and officers and policies for responding to antisocial forces, and is published both
inside and outside the Company.
b. The Company has established an organization responsible for dealing with inappropriate demands from antisocial
forces and a manual for dealing with such forces, both of which are published within the Company.
c. The Company regularly works closely with outside specialist organizations including the police, Centers for Removalof Criminal Organizations and attorneys, etc., building a system for proactive gathering of information and consulting.
d. The Company regularly conducts internal training regarding antisocial forces.

V. Other
1. Adoption of Anti-Takeover Measures
Adoption of Anti-Takeover Measures

Not Adopted

Supplementary Explanation―――

2. Other Matters Concerning to Corporate Governance System[Outline of Timely Disclosure Structure](1) Basic Approach
The Company has formulated internal Rules. The objective of these Rules is to establish internal controls aimed at
producing documents in a timely and appropriate manner for disclosure, to evaluate the effectiveness of disclosure
control, and to establish disclosure controls and procedures for verifying the appropriateness of the contents of disclosure
documents, based on the recognition that prompt, accurate and fair disclosure of corporate information is indispensablefor MS&AD Group in ensuring compliance and fulfilling its corporate social responsibility in relation to disclosure.
(2) Internal Controlsa. Risk Management Committee
A Risk Management Committee has been established by resolution of the Board of Directors. The Risk Management
Committee comprises officers and general managers in charge of corporate planning, accounting, and otherdepartments related to information disclosure, and conducts deliberations regarding information disclosure and reviews
the appropriateness of information to be disclosed.
b. Controls and Procedures Regarding Information Disclosure
Based on the internal Rules noted in (1) above, the departments listed below fulfill their respective roles, and regularly
review the effectiveness of their internal controls and the appropriateness of their procedures.
(a) The Company’s individual departments and subsidiaries determine whether information disclosed in matterssubmitted to the Board of Directors and Group management meetings falls under matters for timely disclosure as
stipulated by the stock exchanges.

29

(b) In the event the information is deemed to fall under matters for timely disclosure as noted in (a), above, theCompany’s individual departments and subsidiaries then report that information to the general managers of the
Human Resources and General Administration Department.
(c) Upon receipt of the report noted in (b), above, the general managers of the Human Resources and General
Administration Department will make the final determination of whether timely disclosure is required, and in theevent the information falls under matters for timely disclosure, the information will be disclosed following theprescribed procedure.
(d) The Risk Management Committee receives reports regarding the content of timely disclosures, and reviews theappropriateness of those disclosures. Note that, when required, the Risk Management Committee may deliberate
those matters in advance.
c. Audits of Controls Regarding Information Disclosure
The Audit Department regularly conducts internal audits targeting information disclosure controls and procedures, andreports the results of those audits to the Board of Directors.
<Attachments>[Management Structure Diagram (the Company’s management structure)][Overview of Timely Disclosure Structure][MS&AD Insurance Group Basic Policies on Corporate Governance]- End -

30

(As of June 25, 2020)*MS&AD Holdings has 10 affiliated operating companies: MS&AD InterRisk Research Institute &Consulting, Inc., MS&AD Business Support Co., Ltd., MS&AD Staffing Service Co., Ltd., MS&AD
Systems Co., Ltd., MS&AD Research Institute Co., Ltd., MS&AD Loan Services Co., Ltd., ANSHIN DIAL
Co., Ltd., MS&AD ABILITYWORKS Co., Ltd., Japan Assist International Co., Ltd., and MS&AD Ventures
Inc.

31

Overview of Timely Disclosure Structure

Information Disclosure

Risk Management Committee

General Manager, Human Resources &Internal Audit Department

General Administration Department

Head Office, Departments, etc.

Subsidiaries

32

MS&AD Insurance Group Basic Policies on Corporate Governance
MS&AD Insurance Group Holdings, Inc. (hereinafter referred to as “MS&AD” or “the Company”) has
established the MS&AD Insurance Group Basic Policies on Corporate Governance for the purpose of
indicating the basic approach to and framework for corporate governance.
Chapter 1: The Company’s Basic Approach to Corporate Governance
1. In line with its Corporate Philosophy (Mission), MS&AD, as a holding company overseeing all groupbusinesses, has established a management framework that ensures transparent, fair, swift and decisivedecision-making that takes into account the standpoint of all stakeholders. The Company’s objectives
are to sustain stability and consistent growth over the long term by using corporate resources efficiently
and managing risks properly and ultimately, to further increase corporate value.
2.

To this end, the “MS&AD Insurance Group Corporate Philosophy (Mission), Corporate Vision and Codeof Conduct (Values)” were formulated as something all officers and employees of the Group should
adhere to in all situations. In addition to working to disseminate these principles among all officers andemployees of the Company and its Group companies, the Company positions corporate governance,compliance and risk management as important management issues in the Medium-term Management
Plan and actively promotes that Plan.

Chapter 2: Relationship with Stakeholders
1. In order to realize our Corporate Philosophy (Mission), the Company aims toward the sustainability ofsociety and sustainable enhancement of corporate value by fulfilling our responsibilities to seven typesof stakeholders (customers, shareholders, agents, business partners, employees, local
communities/global society and the environment) based on the “Perspective of Sustainability of the
MS&AD Insurance Group.”
2. Perspective of Sustainability of the MS&AD Insurance GroupIn order to realize our Corporate Philosophy (Mission), the MS&AD Insurance Group will create sharedvalue and aim toward a resilient and sustainable society through corporate activities that implement “Storyof Value Creation.”
We will consistently strive for supreme quality that lives up to the trust and expectations upon us. Together
with our stakeholders, we continue to contribute to the creation of society where anyone can pursue a stable
life and boldly engage in dynamic business activities, while preserving the sustainability of the global
environment and society.
3. Efforts to engage stakeholders
We will fulfill our responsibilities to stakeholders and create shared value by working with them through thefollowing efforts.
Stakeholder
Efforts
Customers
Provide products and services of high quality that meet customer trust andexpectations.
Shareholders
Provide appropriate disclosure of information and appropriate return toshareholders. Strive to raise corporate value (See Chapter 2: Relationship with
Shareholders).
AgentsGrow together as partners.
Business partners
Maintain sound relationships and cooperate to fulfill corporate social
responsibilities.
Employees
Provide a comfortable working environment, and opportunities to haverewarding experiences and opportunities to grow.
Local communities
As a member of society, take steps to create a resilient and sustainable society.
/Global Society
The environment
Secure sustainability of the Planet.
4. Schemes for Receiving Feedback from Customers
The MS&AD Insurance Group has formulated a “Basic Policy for Responding to Customers’ Voices” in orderto receive all customer feedback (in the form of inquiries, consultations, requests, complaints, disputes,
compliments and gratitude, etc.). This feedback is used to make quality improvements.
5. Speak Up
The MS&AD Insurance Group has established an environment where all employees can speak up theirconcerns and worries in a frank and positive way. One such initiative is a whistleblowing system enabling all
employees of the Company and its subsidiaries to directly report illegal or improper behavior to internal andexternal contact points. All these efforts aim to receive a wide range of employee feedback and enable early
detection and resolution of problems.
6. Promotion of Diversity and Inclusion
In order to conduct Group management with awareness of changes in the global environment, the MS&AD
Insurance Group establishes a working environment that enables employees to demonstrate their fullpotential regardless of gender, nationality or disability, and aims to establish a corporate culture that
respects diversity and diverse values.

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Chapter 3: The Company’s Corporate Governance Stance
1. The Company’s Organizational Structure
As a Company with an Audit & Supervisory Board, the Company will ensure that independently
appointed Audit & Supervisory Board Members appropriately act in their auditing functions as well asthat the Board of Directors appropriately act in its oversight functions, and will endeavor to improvegovernance through strengthening of each functions and actively disclosing information.

The Company has formed the Governance Committee (made up of all Outside Directors, theChairperson of the Board, the Vice Chairman of the Board and the President) in addition to theNomination Committee and Remuneration Committee (a majority of the members and a chairperson
each have been appointed from among the Outside Directors) as internal committees of the Board of
Directors, thus building a highly effective and transparent corporate governance system.

The Company has introduced an Executive Officer System and is proceeding to delegate authority overbusiness execution to these Executive Officers to ensure rapid execution.
2.
(1)

(2)

(3)
(4)

Role of the Board of Directors
In addition to matters specified by laws and regulation and the Company’s articles of Incorporation, theBoard of Directors discusses and decides upon important matters involving Group management
strategy and corporate management, including the Group’s management policies, management
strategies and capital policy, in addition to overseeing the duties of Directors and Executive Officers.
The Board of Directors allocates management resources according to risk appetite controlled with abalance of risk, return and capital, and aims to increase corporate value in the medium-to-long term byachieving sustainable growth and improvement in profitability and capital efficiency with a foundationof soundness.
In addition to appointing Executive Officers, the Board of Directors aims to separate management
decision making and oversight by the Board of Directors from business execution by Executive Officers
by clarifying their respective roles.
Executive Officers are responsible for executing business in the respective areas of business entrusted
to them by the Board of Directors and report on the status of business execution to the Board of
Directors.

3.
(1)

Composition of the Board of Directors and Roles of Outside Directors
The Board of Directors defined in the Company’s articles of Incorporation has having up to fifteen (15)members, with a balanced composition that includes diverse knowledge and expertise. Candidates for
Directors are nominated by the Board of Directors based on the “Criteria for the Selection of Director
Candidates and Audit & Supervisory Board Member Candidates” (see 10. Nomination Process below).
Furthermore, at least one third of the Directors are nominated as Outside Directors to incorporate
perspectives independent from management, strengthen monitoring and oversight functions, andconduct highly transparent management.
(2) Outside Directors are expected to perform the following roles.
Provisioning of advice from a broad perspective on management policies and management improvement
based on their knowledge and experience, with the aim of promoting sustainable corporate growth andincreasing corporate value over the medium- to long-term.
Supervising of management through important decision-making at the board level.
Monitoring of conflicts of interest between the Company and related parties such as management (Note)
and/or major shareholders.

Realizing supervising function from a standpoint independent of management by fulfilling
accountability for stakeholders, including shareholders.
(Note) Collectively refers to the Directors, Audit & Supervisory Board Members and Executive Officers of
the Company and domestic insurance companies in the Group in which the Company has a direct
investment (same applies hereinafter)
4.
(1)
(2)




Operation of the Board of Directors
Resolutions of the Board of Directors
Except in cases otherwise stipulated by law, resolutions of the Board of Directors are made by a majorityof the directors attending the meeting, where a majority of Directors are in attendance.
Operation of the Board of Directors
To allow for required, adequate discussion of important decisions regarding business execution andoversight of the performance of duties, the Board of Directors defines the agenda, length of deliberationand frequency of meetings of the Board of Directors.
To enable meaningful views, comments and questions to be presented in its meetings, the Board of
Directors makes efforts to send out and explain proposals to the Board of Directors, giving adequate
consideration to the time required for preparation by attendees.
The Board of Directors determines its annual schedule and anticipated agenda items in advance.

5. Evaluation of the Board of Directors
The Board of Directors periodically analyzes and evaluates its own overall effectiveness, and publishes an
overview of the results.
6.
(1)

(2)

Audit & Supervisory Board Members and Audit & Supervisory Board
Responsibilities of Audit & Supervisory Board Members
As an independent entity entrusted with authority by the shareholders, the Audit & Supervisory Board
Members are responsible for ensuring the sound and sustainable growth of the Company, and forestablishing a good corporate governance stance in response to the public trust by supervising theperformance of duties of the Directors.
Authority and Roles of Audit & Supervisory Board Members

34

(3)





Each Audit & Supervisory Board Member shall appropriately exercise his/her legal investigating
authority, including the authority to audit operations and assets, and supervises the performance of
duties of the Directors by attending meetings of the Board of Directors and other important meetings,
viewing important approval documents, investigating departments within the Company, andinvestigating subsidiaries in accordance with the auditing policies and plans stipulated by the Audit &Supervisory Board.
Composition and Roles of the Audit & Supervisory Board
The Audit & Supervisory Board is defined in the Articles of Incorporation and has having up to 6
members, a majority of which shall be Outside Audit & Supervisory Board Members in accordance withthe law. Candidates for Audit & Supervisory Board Member are nominated by the Board of Directors
with the approval of the Audit & Supervisory Board, based on the “Criteria for the Selection of Director
Candidates and Audit & Supervisory Board Member Candidates” (see 10. Nomination Process below).
The Audit & Supervisory Board receives reports from Audit & Supervisory Board Members on thestatus of performance of duties, and reports from officers and employees on important matters related
to auditing, and also makes decisions regarding auditing policies and auditing plans.
The Audit & Supervisory Board makes decisions regarding proposals to be submitted to the General
Shareholders Meeting on the appointment or dismissal of Accounting Auditors, and thenon-reappointment of Accounting Auditors. It also has the right to consent to decisions regarding
remuneration of the Accounting Auditors.

7. Accounting Auditors
The Board of Directors and the Audit & Supervisory Board endeavor to take appropriate action to ensure
adequate auditing by the Accounting Auditors.
8. Support Systems for Directors and Audit & Supervisory Board Members / Training Policy
The Company has the following systems in place as required for Directors and Audit & Supervisory Board
Members to effectively fulfill their roles and responsibilities.
(1) The Company has assigned a person in the secretariat of the Board of Directors to each of the Outside
Directors and Outside Audit & Supervisory Board Members (hereinafter referred to as “Outside
Officers”) to provide support in areas such as providing briefings in advance.
(2) The Company has established a system for ongoing provision of information and training at the time of
appointment and during the term of Directors and Audit & Supervisory Board Members.
(3) The Company provides appropriate opportunities for Outside Officers to share information andexchange opinions with management and senior employees.
(4) The Company bears the expenses required to enable Outside Officers to fulfill their roles.
9. Group Management Committee
The role of the Group Management Committee is to discuss management policies, management strategies
and key issues for the management of the Company and its Group companies. It also monitors specificbusiness operations by receiving reports on matters decided upon by Executive Officers.
10. Nomination Process

The Board of Directors appoints candidates for Directors and Audit & Supervisory Board Members, andExecutive Officers based on advice from the Nomination Committee. The Audit & Supervisory Board’s
consent needs to be obtained for candidates for Audit & Supervisory Board Members.

The Nomination Committee deliberates on important management personnel matters and provides
advice on these matters to the Board of Directors. Such matters include the selection of candidates for
Director and Audit & Supervisory Board Member, and Executive Officer of the Company as well as theselection of Directors and Audit & Supervisory Board Members for domestic insurance companies inwhich the Company has direct investments.

The Nomination Committee is made up of 3 or more members.

A majority of members and the chairperson shall be appointed from among the Outside Directors by the
Board of Directors.
11. Process of Determining Remuneration(1) Remuneration of Directors

The amount of remuneration for each Director is determined by the Board of Directors within theamount specified by resolution of the General Shareholders Meeting, after deliberation by the
Remuneration Committee.

The Remuneration Committee provides advice to the Board of Directors on matters such as performance
evaluations and remuneration for the Company’s Directors and Executive Officers.
The Remuneration Committee is made up of 3 or more members.

A majority of members and the chairperson have been appointed from among the Outside Directors by
the Board of Directors.
(2) Remuneration of Audit & Supervisory Board Members

The amount of remuneration of each Audit & Supervisory Board Member is determined by discussion by
Audit & Supervisory Board, within the amount specified by resolution of the General Shareholders
Meeting.
12. Governance Committee
The Governance Committee whose chairperson is elected by mutual vote of the Outside Directors has been
established for the purpose of discussion by all Outside Directors, the Chairman, the Vice Chairman and thePresident regarding matters related to the status of, policies regarding and stance on corporate governance.

3513. Task-Specific Committees
The Company has established the Sustainability Committee, Quality Improvement and Compliance
Committee, Group Management Monitoring Committee, Digitalization Committee, Group Systems
Committee, Group International Business Committee and Risk Management Committee with the aim ofdeliberating important management issues involving business execution, to coordinate perspectives acrossvarious departments.
Chapter 4: Group Management Structure
1. Roles of the Company (Holding Company)

The Company has executed into business management agreements with the domestic Group insurancecompanies in which it has invested directly (hereinafter referred to as the “Directly Invested
Companies”), and supervises management of Group companies in order to realize management
strategies, improve management efficiency and ensure financial soundness and appropriate operations
within the Group.

The Company has established “Basic Policy Pertaining to System for the Group’s Internal Controls,”“The Group’s Risk Management Basic Policy,” “The Group’s Compliance Basic Policy,” “The Group’s
Internal Audit Basic Policy,” “The Group’s Risk Appetite Statement,” and “The Group’s Basic Policy on
Information Technology Governance.” In addition to requiring compliance with these policies by Group
companies, either the approval of or reporting to the Company is required for important matters
involving the Directly Invested Companies in line with the business management agreements.

The Company establishes a group management strategy such as the Group’s Medium-termManagement Plan.
The Company provides guidance and supervision through monitoring of the progress of management
plans formulated by Group companies and the status of business execution, with the aim of achieving
the goals of the Group.
2.


Role of Directly Invested Companies
The Directly Invested Companies formulate their own policies and appropriately establish internalmanagement systems based on the Group’s Basic Policies, in addition to formulating management plansin each company based on the Group’s Medium-term Management Plan to conduct management as
individual companies.
The Directly Invested Companies also appropriately supervise the management of their subsidiaries
under business management agreements.

Chapter 5: Relationship with Shareholders
1. Constructive Dialogue with Shareholders
The Company has disclosed the Policy on Constructive Dialogue with Shareholders and has established thesystem for promoting constructive dialogue with shareholders from the perspective of enabling deeper
dialogue in the medium- to long-term and enhancing corporate value.
2. Ensuring Shareholder Rights and Equality
The Company acts appropriately to effectively ensure the rights of shareholders, and endeavors to enable
shareholders to appropriately exercise those rights as follows.
The Company will take appropriate action to enable shareholders to effectively exercise their voting
rights in the General Shareholders Meeting.
The Company will provide accurate information to contribute to appropriate decision-making in theexercise of voting rights of shareholders.
The Company provides adequate explanation of capital policies, etc., that have a material impact on theinterests of shareholders.
In the event a proposal by the Company is approved in the General Shareholders Meeting but with aconsiderable number of votes in opposition, the Company analyzes the reason and volume of opposing
votes, and responds appropriately.

3. Prevention of Transactions that Conflict with the Interests of Shareholders
When the Company does business with a related party such as a Director or a major shareholder, priorapproval of the Board of Directors is required for important or non-standard transactions to ensure they do
not harm the joint interests of the Company and the Company’s shareholders.
4. Strategic Equity Holdings
The Company has disclosed the “Basic Policy on Reduction of Strategic Equity Holdings” and the Criteria for
Ensuring Appropriate Handling of the Exercise of Voting Rights Pertaining to Strategic Equity Holdings
from the perspective of contributing to the increase in the Company’s corporate value and that of companies
in which shares are held by the Company in the medium-to long-term.

36

Chapter 6: Appropriate Disclosure
The Company and the Group’s domestic insurance companies conduct disclosure based on the “Basic
Policy for Disclosure of Information,” to ensure that they act in accordance with law and disclosure rules
stipulated by financial instrument exchange, and that their stakeholders are able to fairly, correctly andpromptly understand important information.

In addition to disclosure required by law, the Company also discloses non-financial information ofsignificant interest to shareholders, including ESG (Environment, Society, Governance) along withfinancial information, in an easily viewable “Integrated Report” format, intended to contribute to a
constructive dialogue with stakeholders, including shareholders.

In addition, this information is also disclosed in easily-accessible format on the Company’s website, andother efforts, including the use of video, will be made to provide stakeholders with a better
understanding on the website.
Supplementary Provision
Revision and abolition of this basic policies shall be determined by resolution of the Board of Directors.
END
Established, June 22, 2015
Amended, June 26 2017
Amended, April 1, 2018
Amended, November 19, 2018
Amended, March 1, 2019
Last Amended, April 1, 2020

37

MS&AD Insurance Group Basic Policies on Corporate Governance - Appendix
Criteria for the Selection of Director Candidates and Audit & Supervisory Board Member Candidates
1. Outside director candidates and outside Audit & Supervisory Board Member candidates
Candidates must meet the following requirements.
・ Must not be disqualified from serving as a director or Audit & Supervisory Board Member pursuant to the Companies
Act.
・ Must not be disqualified from serving as a director or Audit & Supervisory Board Member of an insurance holding
company pursuant to the Insurance Business Act.
・ Must have a sufficient level of public credibility.
・ An outside Audit & Supervisory Board Member must satisfy the eligibility requirements for a Audit & Supervisory
Board Member pursuant to the Insurance Business Act.
Additionally, candidates must satisfy the following three requirements(1) Eligibility
A candidate must have the qualities listed below that are necessary to monitor the overall management of the company andprovide advice, based on a general knowledge of company management and a basic understanding of the roles of thedirectors and board of directors.
・ Ability to discern facts from materials and reports
・ Capability to detect problems and risks and apply own knowledge to solve them・ Capacity to appropriately monitor business strategy and provide advice
・ Mental independence to openly question, debate, re-examine, continuously deliberate, and propose ideas in opposition toa resolution(2) ExpertiseMust have knowledge in a specialized field such as management, accounting, finance, law, administration, or
social/cultural affairs, and have a record of achievement in that field.
(3) Independence
The following persons are ineligible.
① An executing person of the Company or a subsidiary of the Company.
② A director or Audit & Supervisory Board Member of a subsidiary of the Company.
③ A person for whom the Company is a major business partner (i.e. a person who received payments from the Company
or subsidiaries of the Company that represent 2% or more of annual consolidated sales for the most recent fiscal year),or an executing person thereof (in the case of a consulting firm, auditing firm or law firm, a consultant, accounting
professional, or legal professional who belongs to said corporation, partnership, etc.).
④ A major business partner of the Company (i.e. a person who made payments to subsidiaries of the Company
representing 2% or more of the Company consolidated direct premiums written excluding deposit premium frompolicy holders for the most recent fiscal year), or an executing person thereof.
⑤ Any of the Company’s top 10 largest shareholders (or, if the shareholder is a corporation, an executing person thereof).
⑥ An executing person of a company to which the Company or a subsidiary of the Company has appointed a director.
⑦ A consultant, accounting professional, or legal professional who has received, other than officer compensation, average
cash or other financial benefits of at least 10 million yen per year for the past three years from the Company or
subsidiaries of the Company.
⑧ A person falling under any of the items ② through ⑦ during the past five years.
(Note) “During the past five years” means five years from the time the content of a proposal to the General Shareholders Meeting toelect the outside director or outside Audit & Supervisory Board Member was resolved by the Board of Directors.

⑨ An individual who was an executing person of the Company or subsidiaries of the Company in the past (in the case ofan outside Audit & Supervisory Board Member, including an individual who has been a director of the Company or asubsidiary of the Company.)⑩ A spouse or second-degree or closer relative of a person listed in items ① through ⑨ above (an executing personmeans an executive director, executive officer or an employee in a position of general manager or higher.)(4) Term limits
The total terms of office for newly elected outside directors and outside Audit & Supervisory Board Members from April 1,2015 onwards are as listed below.
① For outside directors, the expectation is 4 terms, 4 years, renewable for a maximum of 8 terms, 8 years.
② For outside Audit & Supervisory Board Members, in principle the total term is 1 term, 4 years, but this is renewable fora maximum of 2 terms, 8 years.
2. Candidates for director other than outside director and candidates for Audit & Supervisory Board Member otherthan outside Audit & Supervisory Board Member
Candidates must meet the following requirements.
・ Must not be disqualified from serving as a director or Audit & Supervisory Board Member pursuant to the Companies
Act.
・ Must not be disqualified from serving as a director or Audit & Supervisory Board Member of an insurance holding
company pursuant to the Insurance Business Act.
・ Must satisfy the eligibility requirements for a director or Audit & Supervisory Board Member who engages in daily
business at an insurance company pursuant to the Insurance Business Act.
Additionally, a candidate must have varied experience as well as highly specialized experience and must embody our
corporate philosophy in the exercise of leadership.
END

38