(As of June 25, 2018)
1. Principles Items Not to Be Implemented (To Explain) and Reasons for Not Implementing
The Company complies with all of the Corporate Governance Code.
2. Principle Items to Be Implemented (To Comply)
The response situations and disclosure scope regarding the following 11 principles are as follows:
Principle 1.4 Policy regarding holding Strategic Equity Holdings and standards with respect to the voting rights as to their cross-shareholdings
‹MS&AD Insurance Group Basic Policy for 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 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 1).
The economic rationale for holding strategic equities is assessed from the perspective of the equity issuers' growth potential and profitability and the medium-to long-term business relationship (Note 2).
If the rationale is not confirmed, we shall proceed with sales of those strategic equity holdings after obtaining the equity issuers' understanding. Otherwise, we may sell our holdings, taking into account the market environment and our business and financial strategies.
(Note 1) The Group's strategic equity holdings of ¥500 billion are planned to be sold over the 5 years from FY2017 to FY2021. We shall proceed with sales of our holdings based on the planning. The Group sold equity holdings of \151.3 billion by the end of fiscal 2017 and will proceed with the plan after fiscal 2018.
(Note 2) Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance shall examine economic rationale of their major strategic equity holdings (Equities owned by the two companies whose values on the balance sheet exceed one hundredth of the amount of common stock are listed in the securities report.). The results of these examinations shall be reported to MS&AD's Board of Directors.
‹Criteria for Ensuring Appropriate Handling of the Exercise of Voting Rights Pertaining to Strategic Equity Holdings›
① 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 the enterprise value of investee companies. Decisions are not made uniformly based solely on formulaic short-term criteria, but rather in terms of enhancement of enterprise value in the medium-to-long term and improvement in shareholder returns, among others.
② The process for exercising voting rights
When exercising voting rights, items such as those listed below are verified for each potential investment, with a focus on such aspects as whether the company in question is managed with an emphasis on growth of the company and the 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 of individual issues as required.
- Profit distribution plan (such as low payout ratios in proposals for appropriation of surplus)
- Appointment and dismissal of directors (such as poor performance, the occurrence of scandals, etc., or no outside directors being elected)
- Directors' remuneration, retirement benefits (such as poor performance or the occurrence of scandals, etc.)
- Issuance of subscription rights to shares (recipients being outside corporate auditors, etc.)
- Changes to the articles of incorporation (such as changes that may be significantly detrimental to the rights of shareholders)
- Takeover defense measures (Poison Pills)
- Business restructuring, etc.
③ Publication of the results of the exercise of voting rights
The Company believes that, when conducting stewardship activities, it is important to hold continuous and constructive dialogue to enhance corporate value and support sustained growth of investee companies in the medium- to long-term , leading to the sharing of awareness and the improvement of problems.
Therefore, in order to encourage the understanding of the Company's stewardship activities, the Company will publish aggregate voting records on the main types of proposals voted upon, along with examples of proposals which the Company voted against.
Note that the results of the exercise of voting rights in individual investee companies will not be published because this may affect constructive dialogue with such companies.
Principle 1.7 Procedures for related Party Transactions
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 with the attendance of multiple outside directors, and in the case of similar transactions by executive officers will require a report to the Board of Directors.
Principle 3.1 Full Disclosure
(ⅰ) Aspiration of the Group (Mission etc.) and business strategies and business plans;
‹Business Objectives , etc.›
Please see “Aspiration of the MS&AD Insurance Group” on our company web site.
‹Business strategies and business plans›
Please see our group Medium-Term Management Plan, “Vision 2021” on our company web site.
(ⅱ) Basic policy and guidelines on corporate governance;
Please see “Basic Policies on Corporate Governance” on our company web site.
(ⅲ) Board policies and procedures in determining the remuneration of the senior management of Directors and Audit & Supervisory Board Members;
Please see “Directors and Audit & Supervisory Board Members Remuneration” on our company web site.
（ⅳ） Board policies and procedures in the appointment of the senior management and the nomination of Directors and Audit & Supervisory Board Members candidates;
Please see Chapter 3. 10 “Nomination Process” in the “Basic Policies on Corporate Governance” and “Criteria for the Selection and Independence of Outside Directors and Outside Audit & Supervisory Board Members.”
（ⅴ） Explanations with respect to the individual selection and appointment.
Please see [Reasons for selection as a candidate] in the “Notice of Convocation of Annual Shareholders Meeting” (page 6-13)
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 “Basic Policies on Corporate Governance.”
Principle 4.8 A road map if a company in its own judgement believes it needs to appoint at least one-third of directors as independent directors.
The Board of Directors comprises 12 members (10 men and 2 women), and more than one-third of the Directors (four Directors) are nominated as Outside Directors.
Principle 4.9 Criteria of determining the independence of outside directors
Please see 1. (1) “Eligibility” and 1. (3) “Independence” of “Criteria for the Selection of Director Candidates and Audit & Supervisory Board Member Candidates.”
Supplementary Principle 4.11 ① Policies on the Board of Directors' Overall Balance of Expertise, Experience, Capabilities, Diversity, and Scale
- Five of the twelve Directors (ten men and two women) and two of the four 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. We take into consideration overall balance of the Board of Directors in terms of expertise, experience, and capabilities of Directors and strive to ensure diversity, including that of gender.
- Outside Director candidates must satisfy the eligibility requirements as defined in the Companies Act and the Insurance Business Act. In addition, with the goal of selecting candidates able to accurately and fairly supervise the overall management of insurance companies, candidates are selected based on consideration of specialized expertise such 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, and consumer issues.
- Director candidates other than Outside Director candidates must meet legal eligibility requirements. In addition, with the goal of selecting candidates able to accurately and fairly supervise the overall management of insurance companies, candidates are selected based on consideration of specialized expertise, such as that stemming from extensive 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 one candidate for Audit & Supervisory Board Member must have sufficient knowledge of accounting or finance.
- 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 other relationships, 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.
Supplementary Principle 4.11 ② A status for concurrent positions of Outside Directors and Outside Audit & Supervisory Board Members
Please see [Important Concurrent Positions] in the “Notice of Convocation of Annual Shareholders Meeting” (page 9-13, page 27-28, page 30-31)
Supplementary Principle 4.11 ③ A summary of the results from analysis and evaluation of overall effectiveness of the Board of Directors.
1. Analysis and Evaluation Process
As noted in Chapter 3.5 of “Basic Policies on Corporate Governance,” an analysis and evaluation of the overall effectiveness of the Board of Directors is conducted annually.
In fiscal 2017, analysis and evaluation was conducted in accordance with the following process.
(1) Questionnaires conducted for Directors’ self-evaluation and its summary
- A questionnaire consisting of nine 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.
- In light of implementation of a PDCA cycle, 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) which had been formulated based on the evaluation of the Board of Directors in fiscal 2016.
(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
- Following the exchange of opinions in (2) above, the Governance Committee (consisting of all the Outside Directors, the Chairman of the Board of Directors, and the President) conducted analysis and evaluation and formulated measures for improving capabilities by identifying issues to be addressed in fiscal 2018.
(4) Results of the analysis and evaluation are outlined in 2. below. We will implement the improvement measures (measures for improving capabilities) based on the results.
2. Summary of the Results of Analysis and Evaluation
(1) Content of deliberations at the Board of Directors and fulfilling function
- Toward formulating the new Medium-Term Management Plan (hereinafter “Vision 2021”), the Board of Directors deepened recognition of environment and risk factors, etc., and held a discussion in light of significant technological innovation, among others.
- The Board of Directors has made its best efforts to achieve the Medium-Term Management Plan. One such initiative was the active investments made in new businesses in anticipation of future changes to the business environment.
- As a result of measures such as greater application of package deliberation, in which explanation of some agenda items during the meetings is simplified, number of ordinary agenda items has been decreasing year on year, making it possible to secure more time for deliberations on important agenda items regarding strategic decisions and achieving some other improvements.
- It has become customary practice to promptly provide information on new projects involving significant risks, including overseas investment projects, through exploiting the opportunities of workshop for outside officers.
- “MS&AD's Story of Value Creation” that shows the linkage of employees' daily activities to the realization of the Group's Corporate Philosophy (Mission) has been widely inculcated internally and externally. Our contribution to SDGs (sustainable development goals) through the initiatives under MS&AD's Story of Value Creation was incorporated into the “Vision 2021.”
- Sustainability (CSR) initiatives can be regarded to have been progressed, as shown in the evaluation by an external ESG assessment body, among others.
<To be improved from now on>
- Toward realizing the “Vision 2021,” in light of the rapidly changing business environment, including technological innovation, it is desirable to deepen careful deliberations responding to changes in the business environment with attention to the trends in relevant business categories.
- In the course of explanation of the “Vision 2021” to all Group employees and having them understand the Vision, it is desirable that all employees deepen their understanding of the significance of contribution to SDGs, the Group’s Corporate Philosophy (Mission), MS&AD’s Story of Value Creation, and sustainability initiatives.
- Although a whistleblowing system and other systems to collect opinions within and outside the Company have been established, extra efforts are required for familiarization and dissemination. Terming the entire system to receive a wide range of employee feedback, including the whistleblowing system, as “Speak Up,” the Company strives to establish an environment where anyone can speak up their concerns and worries in a frank and positive way.
(2) Operation of the Board of Directors
- As a result of our efforts from fiscal 2015, the operation of the Board of Directors has been improved, with average time spent for deliberation per agenda item at regular meetings of the Board of Directors increasing every year. It operates appropriately, with materials distributed prior to meetings, and sufficient time allowed for deliberations.
- Visualization of agenda items including the use of graphs, as well as an effort to reduce page counts are also progressing.
<To be improved from now on>
- At briefings on agenda items prior to the meetings of the Board of Directors, explanation on such matters as past background should be provided as detailed as possible, especially to newly appointed outside officers.
- Further efforts should be made to simplify the explanation on agenda items at an actual meeting of the Board of Directors by focusing on key points, given that briefings are held prior to the meetings.
- Regarding education and provision of information to outside officers, we held workshops (four times in fiscal 2017) primarily on the themes in accordance with the requests of outside officers. In addition, work-site study tours were held at operating companies (Sales Divisions, accident report reception call center, etc.). Thus, outside officers now have great opportunities for education and access to information.
Supplementary Principle 4.14 ② Criteria for Directors and Audit & Supervisory Board Members Training
Please see Chapter 3. 8 “Support Systems for Directors and Audit & Supervisory Board Members” in the “Basic Policies on Corporate Governance.”