(As of July 1, 2022)
The Company has implemented all principles (including those for Prime Markets) of the Corporate Governance Code.
The response situations and disclosure scope regarding the following 14 principles of the Corporate Governance Code are as follows:
‹ 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 maintaining and strengthening comprehensive business relationships.
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 the equity issuers’ understanding. Otherwise, we may sell our holdings, taking into account the market environment and our business and financial strategies.
(Note) The Group's strategic equity holdings of JPY 620.8 billion have been sold from FY2017 to FY2021. The initial plan was JPY500 billion. The Group plans to sell JPY400 billion next 4 years by the end of FY2025. The balanace of market value of the strategic equity holdings held by the Company as of March 31, 2022 is JPY2,834.9 billion.
‹ 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 is appropriate 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 that an improvement is not anticipated.
‹ 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 the enterprise 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 and 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 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.
<Main evaluation criteria for each type of proposal>
|Type of proposal||Matters for verification|
|Appropriation of surplus||Status of shareholder returns|
|Election of Directors|| 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
|Election of Audit & Supervisory
Board Members and Accounting Auditors
| Status of occurrence of scandals, etc.
Status of attendance at Board of Directors meetings and Audit & Supervisory Board meetings
|Officers' remuneration and bonuses
Retirement benefits and condolence money
| Status of enhancement of corporate value
Status of attendance at Board of Directors meetings, etc.
Status of occurrence of scandals ,etc.
|Issuance of stock acquisition rights and stock remuneration|| Any application of performance-linked remuneration, and recipients
Any decrease of equity ratio by existing shareholders
|Changes to the Articles of Incorporation||Examined individually|
|Takeover defense measures||Examined individually|
|Shareholder proposals||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 and guidelines 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.
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 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.
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 a matter to be reported to the Board of Directors.
- 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 the main operating companies of the Group, to implement defined-benefit corporate pension plans and manage the pension assets separately from the companies.
- Decisions regarding asset management of each Corporate Pension Fund are made by the Board of Representatives based on deliberations by the Asset Management Committee. Personnel in the asset management, accounting, and human resources departments in each company who possess appropriate qualities shall be appointed to the Asset Management Committee and the Board of Representatives, 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 each corporate pension fund. In addition, both funds accepted the Stewardship Code.
- For each corporate pension fund, the incorporation of shares and the exercise of voting rights by investees are in accordance with the evaluation criteria of the party to whom asset management has been delegated, and there are no matters that constitute a conflict of interest.
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. 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.
Please see to II.1 “Disclosure of Policy on Determining Remuneration Amounts and Calculation Methods <Remuneration Determination Processes>” in the “Corporate Governance Report”.
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.”
Please see [Reasons for selection as a candidate] in the “Notice of Convocation of Annual Shareholders Meeting” (page 10-20)
a. Initiatives for sustainability
Please see our “Sustainability Report”.
b. For information on the impact of climate change risks and opportunities on our business activities and earnings,
please see our “TCFD Report”.
c. Investment in human capital and intellectual property
(a) Human capital
Please see page 33 in “Integrated Report 2021”.
(b) Intellectual property
Regarding investment in intellectual property in our group, base on CSV × DX, we are developing new services that come before and after coverage and protection using digital data. In addition, Digitalization Committee has been set up as a task group to regularly discuss the promotion of digitalization.
In addition, through investment in startup companies, we are collaborating with these companies to make use of cutting-edge technology to provide new services and enhance business operations. The main activities are as follows.
・Providing new services for individuals and companies that contribute to risk measurement (quantification) and security and safety measures for customers
*Our company provides Climate Change Risk Analysis Venture Jupiter Intelligence Launches TCFD Quantitative Assessment Service for Climate Change Impact ~ Global Assessment of the Impact of Natural Disaster Risks Due to Climate Change ~
・Enhancing and streamlining operations such as product development, insurance underwriting, and claims services.
Please see the following;
･II1. [Directors] ”Committee’s Name, Composition and Attributes of Chairperson” and its Supplementary Explanation
･Chapter 3. 10. Nomination Process and 11. Process of Determining Remuneration in the attached “Basic Policies on Corporate Governance”
- 5 of the 11 Directors (8 men and 3 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. Our company selects the skills necessary to ensure the effectiveness of the Board of Directors, creates a skills matrix, and confirms that the Board as a whole has the necessary skills. The Board of Directors as a whole strives 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.
- In addition to meeting the eligibility requirements under the Companies Act and the Insurance Business Act, outside directors are selected based on their skills in areas such as corporate management, human resources, human resource development and legal affairs, which are generally required. In addition, outside directors are selected based on their skills based on the characteristics of our group's business, such as insurance business and internationality, as well as their knowledge and experience in areas such as IT and digital sustainability.
- 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.
- Skills Matrix of the Board
･The Company deliberated regarding skills necessary to assure the effectiveness of the Board of Directors (knowledge, experience, and capability), and from the standpoint of supervising the decisions made and execution of duties on matters required for management strategy, we set forth the following.
1. Base skills that are generally required
“Corporate management”, “human resources and human asset development”, “legal affairs and compliance”, “risk management” and “finance and accounting”
2. Skills complementing the fact that the core business of the MS&AD Group is insurance, and that we engage in business globally
“Insurance business” and “internationality”
3. Skills that take into account our current business environment and that are necessary to address business reform and issues considered important by the market “IT and digital” and “sustainability”
･Furthermore, regarding Audit & Supervisory Board Members, we also consider “finance and accounting” to be important skills.
･As demonstrated in the “Skills Matrix of Director, Audit & Supervisory Board Member and Executive Officer” we believe that the Board of Directors as a whole has the necessary skills.
*Please see to “Skills Matrix of Director, Audit & Supervisory Board Member and Executive Officer”in the “Corporate Governance Report”
・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 2021 is as follows.
(1) Questionnaires conducted for Directors’ self-evaluation and its summary
・A questionnaire consisting of 12 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.
*Excluding the Chairman & Director, the Vice Chairman & Director, and the President & Director
・Evaluation responses mainly focused on whether or not Directors had carried out initiatives to enhance the effectiveness of the Board of Directors in accordance with the improvement measures (measures for improving capabilities in FY2021) that had been formulated based on the evaluation of the Board of Directors in FY2020.
(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 Outside Directors, Chairman & Director, Vice Chairman & Director and President) conducted analysis and evaluation and formulated measures for improving capabilities by identifying issues to be addressed in fiscal 2022.
(4) We will promptly commence and strengthen measures for improving capabilities in fiscal 2022, and link them to a PDCA cycle aimed at enhancing effectiveness.
(1) Content of deliberations at the Board of Directors and fulfilling function
< Evaluation results >
- Constructive discussions were conducted aiming to improve corporate value over the medium to long term, including growth strategies taking into account the environment surrounding the Company and other factors, with a view to formulating the next medium-term management plan. In the discussions, active use was made of meetings outside of the Board of Directors (Outside Officers Study Sessions, etc.)
- Sufficient explanation was provided regarding the investment objectives and risks, particularly around overseas business investments, and in-depth discussions and examinations were conducted.
- The results of employee awareness surveys are regularly reported to the Board of Directors, and the permeation of the Company’s Mission, Vision, Value, and other factors are appropriately supervised.
- With regard to sustainability initiatives, we actively disclosed and disseminated the details of our efforts on climate change risks, including reports in line with TCFD.
< To be improved from now on >
- Expand opportunities for Outside Officers to talk with management teams of overseas subsidiaries in order to grasp the potential risks at outside subsidiaries.
- Provide opportunities for Outside Officers to observed operating companies and opportunities for them to talk directly with operating company members.
- Expand opportunities to report on specific customer comments and how they are linked to improvements in products and services of operating companies, including their mechanisms.
(2) Operation of the Board of Directors
< Evaluation results >
- An atmosphere that allows free and direct discussion has been fostered in the Board of Directors, and frank discussions were held, mainly on important proposals.
- The participation of the executive officers of the operating companies in observing the board meetings provided an opportunity to get to know the internal officers (including the operating companies) and to provide appropriate advice to the personnel committee.
< Evaluation results >
- Opportunities such as training for outside directors were fully provided and useful information was obtained.
< To be improved from now on >
- In the study meetings for executives, themes related to highly specialized fields (Climate change, DX, etc.) will be taken up.
- Provide opportunities for free exchanges of opinion between Outside Officers and small groups of Executive Officers.