In line with its Management Philosophy, MS&AD, as a holding company overseeing all group businesses, has established a transparent management framework that incorporates internal checking functions. The Company's objectives are to sustain consistent growth over the long term by using corporate resources efficiently and managing risks properly and ultimately, to further increase corporate value.

As a company whose operations are reviewed by corporate auditors, MS&AD is working to improve corporate governance in large part by reinforcing the functions of the Board of Directors and Board of Corporate Auditors, and through the active disclosure of information.
MS&AD has introduced an executive officer system and is strengthening the control of MS&AD management by clarifying the roles of the Board of Directors, who are responsible for management decision-making and supervision, and the Executive Officers, who are responsible for business execution. Moreover, MS&AD believes that in order to reinforce the management monitoring and supervision functions, and thereby making the management highly transparent, it is crucial to incorporate perspectives independent of the management. Consequently, 4 of the 13 members on the Board of Directors and 3 of the 5 Corporate Auditors are selected from outside. In addition, the Board of Directors has two internal committees: the Nomination Committee and Remuneration Committee, which are chaired by outside directors who also account for the majority of the members.

MS&AD has a business management agreement with its directly invested insurance subsidiaries (Mitsui Sumitomo Insurance Co., Ltd., Aioi Nissay Dowa Insurance Co., Ltd., Mitsui Direct General Insurance Co., Ltd., Mitsui Sumitomo Aioi Life Insurance Co., Ltd., Mitsui Sumitomo Primary Life Insurance Co., Ltd.) to provide business administrative support.
MS&AD believes that obtaining timely and accurate information regarding the business of its subsidiary companies is beneficial to the smooth operations of the group. Therefore, MS&AD board members concurrently serve as directors of the subsidiary companies. Furthermore, directors from the subsidiary companies participate in Group Management Committees depending on the topic.
MS&AD also has a business management agreement with each of its directly invested affiliated business companies to do business administration and management of them as the parent company.

Akira Watanabe: Attorney at Seiwa Meitetsu Law Office.

Daiken Tsunoda: Attorney at Law of Nakamura, Tsunoda and Matsumoto Law Firm.

Tadashi Ogawa: Director-Chairman of The Bank of Yokohama, Ltd.

Mari Matsunaga: President & Director, Mari Matsunaga Office

Plans, operations and outcomes of auditing shall be reported by Accounting Auditors at regular meetings.
Additionally, various issues surrounding accounting audit shall be discussed when necessary.

Regular liaison meetings shall be convened to discuss issues such as audit policy and its operations.

All audit results from Internal Audit Department shall be reported to Corporate Auditors.

Sousuke Yasuda: Senior Adviser of Gyosei & Co., Former Managing Partner of Gyosei & Co.

Kuniaki Nomura: Attorney at Nomura Sogo Law Office

Hiroyuki Tezuka: Attorney at Nishimura Asahi Law Office

The total remuneration of all Board of Directors combined as well as the total remuneration of all Corporate Auditors combined shall be disclosed. Of the amounts involved, each shall also disclose the total remuneration of Outside Directors and that of Outside Corporate Auditors respectively.
Directors and Auditors of the Board receive compensation in cash. We have obliged eight Directors who execute businesses of MS&AD or MSI out of the nine internal Directors to buy our stocks monthly at the market price by a specified amount of money or more based on the remuneration rules that apply. We have no stock option grants. We do not make any loans to Directors and Auditors of the Board. We do not have any pension plans for Directors and Auditors of the Board, and do not make any lump-sum payments to them upon retirement.

Outside Directors shall be supported by the Corporate Planning Department and Outside Auditors shall be supported by the Corporate Auditors' Office.
The Corporate Planning Department, serving as the administrative office of the Board of Directors, shall explain the agenda of Board of Directors meeting to Outside Directors and Outside Auditors prior to the meeting. In addition, information regarding risks shall be reported as needed to all Directors and Auditors, including those from outside.

(1) Board of Directors

To strengthen the functions of decision-making and monitoring of important business operations, the Board of Directors appoints 4 Outside Directors.
The Chairman chairs the Board and does not serve as the chief executive officer from the standpoint of separating supervision and execution.

(2) Group Management Committee

The Group Management Committee is responsible for deliberating certain key issues of the Company and MS&AD, including management policy and strategy. It also monitors specific business operations by receiving reports on approved matters from the director in charge.

(3) Task-Specific Committee Meetings

The Task-Specific Committee Meetings have been set with the aim to deliberate various key issues in management when executing operations as well as to coordinate perspectives across various departments. The main committees are listed as below.

• • Group Management and Monitoring Committee Meeting (basically 3 times a month)
  Upon receiving reports on matters related to board of directors and management committee of direct subsidiaries of MS&AD, the committee meeting ensures healthy finance of the group companies and insures appropriate risk management and operation.
• • Risk Compliance Committee Meeting (basically 4 times a year)
  While monitoring the overall risk management and compliance matters of MS&AD, it also deliberates and coordinates the key issues.
• • Information Disclosure Committee Meeting (basically 4 times a year)
  With the aim to appropriately disclose MS&AD corporate information including the financial data, it examines in-house operation procedures and evaluates the effectiveness of internal control.

The Nomination Committee and Remuneration Committee have been established as internal committees of the Board of Directors, to ensure transparency.

• • Nomination Committee
  It advises the Board of Directors by deliberating important personnel matters such as nominees for MS&AD Directors and Corporate Auditors or the appointment of Directors and Corporate Auditors for subsidiaries directly invested in by MS&AD.
• • Remuneration Committee
  It advises the Board of Directors on matters related to remuneration of MS&AD's Directors and Executive Officers as well as the director compensation system of subsidiaries directly invested in by MS&AD.
  In order for the Remuneration Committee to function sufficiently, there are no overlaps between Directors or Auditors of the Board of MS&AD and the entities to which the outside Directors of the Remuneration Committee belong.

(1) Board of Auditors

The Board of Auditors consists of 2 full-time and 3 part-time Auditors (Outside Auditors). Following the principles and plans of audit laid out by the Board of Auditors, each Corporate Auditor audits the performance of the Directors, internal control and other affairs, by attending key meetings including the Board of Directors Meeting as well as consulting important settlement documents, monitoring each in-house department, and inspecting the subsidiaries. In addition, an Auditor of the Board may utilize outside advisors at MS&AD's expense as required.

(2) Audit Committee

KPMG AzSA & Co. is to be the appointed accounting auditor, which does not have any conflict of interest with MS&AD.