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.

 

1. ​In line with its Corporate Philosophy (Mission), MS&AD, as a holding company overseeing all group businesses, has established 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 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 Code of 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 and employees 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.

 

1. In order to realize our Corporate Philosophy (Mission), the Company aims toward the sustainability of society and sustainable enhancement of corporate value by fulfilling our responsibilities to seven types of 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 Group
   In order to realize our Corporate Philosophy (Mission), the MS&AD Insurance Group will create shared value and aim toward a resilient and sustainable society through corporate activities that implement “Story of 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 the following efforts.

 

4. Schemes for Receiving Feedback from Customers
   The MS&AD Insurance Group has formulated a “Basic Policy for Responding to Customers’ Voices ” in order to 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, etc. can speak up their concerns and worries in a frank and positive way. One such initiative is a whistleblowing system enabling all employees, etc. of the Company and its subsidiaries to directly report illegal or improper behavior to internal and external contact points. All these efforts aim to receive a wide range of employee, etc. 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 full potential regardless of gender, nationality or disability, and aims to establish a corporate culture that respects diversity and diverse values.

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 as that the Board of Directors appropriately act in its oversight functions, and will endeavor to improve governance through strengthening of each functions and actively disclosing information.
• The Company has formed the Governance Committee (made up of all Outside Directors, the Chairperson of the Board, the Vice 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 governance system.
• The Company has introduced an Executive Officer System and is proceeding to delegate authority over business execution to these Executive Officers to ensure rapid execution.
   

2. Role of the Board of Directors

(1)In addition to matters specified by laws and regulation and the Company’s articles of Incorporation, the Board 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.
(2) The Board of Directors allocates management resources according to risk appetite controlled with a balance of risk, return and capital, and aims to increase corporate value in the medium-to-long term by achieving sustainable growth and improvement in profitability and capital efficiency with a foundation of soundness.
(3) 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.
(4) 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. Composition of the Board of Directors and Roles of Outside Directors

(1)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, and conduct 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 and increasing 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. Operation of the Board of Directors

(1) Resolutions of the Board of Directors
Except in cases otherwise stipulated by law, resolutions of the Board of Directors are made by a majority of the directors attending the meeting, where a majority of Directors are in attendance.
(2) Operation of the Board of Directors

• To allow for required, adequate discussion of important decisions regarding business execution and oversight of the performance of duties, the Board of Directors defines the agenda, length of deliberation and 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. Audit & Supervisory Board Members and Audit & Supervisory Board

(1) 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 for establishing a good corporate governance stance in response to the public trust by supervising the performance of duties of the Directors
(2) Authority and Roles of Audit & Supervisory Board Members
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.

(3) 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 with the 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 the status 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 the non-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 and exchange 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 specific business 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, and Executive 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 the selection of Directors and Audit & Supervisory Board Members for domestic insurance companies in which 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 the amount 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 the President regarding matters related to the status of, policies regarding and stance on corporate governance.

 

13. Task-Specific Committees
The Company has established the Sustainability Committee, Quality Improvement and Compliance Committee, Digitalization Committee, Group Systems Committee, Group International Business Committee, ERM Committee   and Group Standardization Committee with the aim of deliberating important management issues involving business execution, to coordinate perspectives across various departments.

 

1. Roles of the Company (Holding Company)

• The Company has executed into business management agreements with the domestic Group insurance companies 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-term Management 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 internal management systems based on the Group’s Basic Policies, in addition to formulating management plans in 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.

 

1. Constructive Dialogue with Shareholders
The Company has disclosed the Policy on Constructive Dialogue with Shareholders and has established the system 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 the exercise of voting rights of shareholders.
• The Company provides adequate explanation of capital policies, etc., that have a material impact on the interests of shareholders.
• In the event a proposal by the Company is approved in the General Shareholders Meeting but with a considerable 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, prior approval 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.

 

• 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 and promptly understand important information.
• In addition to disclosure required by law, the Company also discloses non-financial information of significant interest to shareholders, including ESG (Environment, Society, Governance) along with financial 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, and other 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
Last Amended, June 1, 2022