Rebuilding trust and entering a new stage of growth
Transformation aiming for the global top tier

To our shareholders, investors, and all stakeholders, I extend my heartfelt gratitude for your continued tremendous support of the MS&AD Group. In recent years, a series of inappropriate incidents have occurred at our affiliated insurance companies, including fraudulent insurance claims by agents, improper premium adjustments, and the leakage of customer information. I sincerely apologize again for the significant inconvenience and concern this might have caused.
I would like to earnestly confront the structural issues behind the series of incidents and convey, in my own words, a concrete path toward restoring trust and our sustainable growth strategy for the future.

I take seriously that this series of misconduct stems from complex and structural issues rooted in longstanding industry practices, management attitudes, and corporate culture. For any industry, it is an extremely difficult challenge for a company to eliminate conduct risk. However, I believe that the issues likely to arise in the insurance industry going forward will no longer be uniform across the sector. Instead, they will be highly individualized, testing each company’s management stance and the quality of its governance. In my view, the next company to cause a major problem will lose the market’s trust and be forced to withdraw. With that level of resolve, I am committed to preventing any recurrence.
Governance is not merely a defensive measure. Thoroughly preventing recurrence is the greatest weapon for winning against our competitors. I firmly believe that in the insurance industry going forward, the competitiveness of a company will hinge on the soundness of its governance framework.
That is precisely why I take the Financial Services Agency’s business improvement order seriously and am committed not only to formulating a plan but also to executing it with absolute resolve. I am fully confident that the business improvement plan we have formulated represents best practices, and I believe that its implementation will serve as the foundation for restoring trust in the Group and enhancing our corporate value.
To make this transformation effective, we transitioned our corporate structure from a company with an Audit & Supervisory Board to a company with an Audit & Supervisory Committee. This will strengthen the supervisory and checks-and-balances functions of the Board of Directors. By establishing a board structure where Outside Directors constitute a majority, it will dramatically enhance the objectivity and transparency of management decision-making. The key is to ensure that this mechanism functions effectively, rather than merely serving as a formality. The Board of Directors shall correctly understand social demands and establish and operate internal controls to ensure sound business operations. To that end, top management, including myself as CEO, will spare no effort to carefully explain the background of management decisions to our Outside Directors and gain their understanding. Only when Outside Directors, who represent the interests of external stakeholders, understand our intentions can we truly fulfill our accountability to society.

The background to the misconduct involved long-standing industry practices. The insurance industry, for better or worse, has traditionally been built on a business model where being chosen by agents was paramount. However, rule changes such as stricter regulations on comparative recommendation sales and revisions to regulations concerning specified insurance contracts will be a game changer for the industry. The era when long-standing relationships and vested interests were considered acceptable has ended. The time has come for the industry to be evaluated based on the fundamental value of insurance itself: the ability to underwrite risk, the ability to analyze risk and set appropriate prices, and the ability to provide high-quality services.
We will fundamentally transform our business model to respond to this major shift in trends. It is a complete shift from “agent-focused” to “customer-focused” operations. From now on, we cannot survive unless we become the insurance company most chosen by our customers, rather than by agents. We will review the role of agents and establish a new competitive axis on the intrinsic value of insurance.
This transformation is in no way meant to belittle agents. While respecting them as business partners, we will thoroughly review practices such as excessive core business support and inappropriate secondments while rebuilding sound and transparent partnerships. We are also committed to providing products and services of true value to our customers, at appropriate prices, in a speedy manner. This path of transformation might not be smooth. However, we intend to lead an industry-wide transformation through a meticulous process where every employee deeply understands the intent behind each individual measure and carefully explains it to our agents.

What should we do to achieve our goal of becoming the “company most chosen by our customers” in the most reliable and swiftest manner? After thorough consideration, we have determined that the merger of our core non-life insurance companies, Mitsui Sumitomo Insurance and Aioi Nissay Dowa Insurance, is optimal. Until now, the two-company structure has had its merits in terms of top-line growth by maintaining numerous touchpoints with agents. However, MS&AD Holdings, the holding company, had been allocating significant resources to coordinating functions between the two companies and failed to adequately fulfill its role as the central command center driving the Group’s overall growth strategy.
Three elements are essential to succeed in the competitive environment ahead: strengthening governance, reducing the underwriting expense ratio, and enhancing underwriting capabilities. We believe that the most effective way to achieve these goals is to merge the two companies into one. We will leverage the merger as an opportunity to establish a true Group management structure.
The new company formed through the merger will become Japan’s largest non-life insurance company. However, our goal is not simply to be No. 1 in scale. We must not be satisfied with merely becoming the largest insurance company in the country. We aim to become a leading company that is truly trusted and chosen by our customers, both in name and substance, by fulfilling our social responsibilities commensurate with our scale, and by delivering high-quality services at competitive prices.
This merger is only the “starting point” of the transformation of the domestic non-life insurance business. With this decision, the holding company will move beyond its coordination function and demonstrate strong leadership to drive the growth of the entire Group. We will expand the transformation model established in our domestic non-life insurance business to our domestic life insurance business and international businesses to achieve sustainable growth for the entire Group. This is the strong resolve we have embodied with this merger.

One of the key factors in being chosen by customers is price competitiveness. To achieve this, we must fundamentally transform our business structure and elevate our cost efficiency to the world’s highest level. We have set a very ambitious target of maximizing synergies from the merger and reducing our business expense ratio to below 30%, the global benchmark.
This target is by no means just a pipe dream. This merger will facilitate further efficiency improvements in our middle and back-office departments in addition to system integration and site optimization. We are thus aiming for overall cost reductions on the order of approximately ¥150 billion. What is even more important is the utilization of human resources.
We will move away from the seniority-based employment system and fully implement a “skill-based personnel system” that fairly evaluates the skills and expertise of each employee. This will enable us to make progress in personnel placement that puts the right people in the right roles, dramatically boosting organizational productivity.
In addition, to support our employees’ diverse career paths, we offer early retirement options such as the “Career Challenge Support Program.” This is not one-sided downsizing. In fact, many employees who were proactively reevaluating their own careers expressed a desire for such a program. This is a forward-thinking measure where each employee proactively considers their own career path, and the Group supports employees who are ready to move to the next stage of their career.
By combining these initiatives, I believe the goal of achieving a business expense ratio below 30% is entirely achievable. We will create a virtuous cycle that channels the resources generated by this structural transformation into further growth investment and shareholder returns.

Our focus extends beyond the domestic market. In today’s world, where risks are increasingly global and complex, achieving sustainable growth requires incorporating the world’s most advanced information and technology and converting it into strengths for the entire Group.
An emblematic initiative in this regard is our strategic partnership with the founding family of W. R. Berkley Corporation (hereinafter “WRB”), a leading U.S. specialty insurance company, and our investment in the company. WRB is a world-leading company in niche and highly specialized insurance lines, boasting exceptional risk analysis capabilities and underwriting expertise. For its part, the MS&AD Group has established a solid business foundation in the Japanese and Asian markets. This partnership is an ideal complementary relationship that leverages each other’s strengths.
Through this partnership, we will expand profits originating from the United States, the world’s largest insurance market, while taking advantage of WRB’s advanced expertise to create new synergies through collaboration in domestic and Asian insurance operations. We are going far beyond mere investment, dispatching a director under a cooperative relationship with the founding family to build deep ties at the leadership level. By breaking away from traditional business models and providing world-class insurance solutions, we will be on par with the true top-tier companies in Japan, Asia, and Europe and America. We will advance our global strategy with this strong resolve.
In addition, to strengthen the asset management capabilities of the entire Group, we are considering strategic investments in the overseas asset management business. Through initiatives in alternative assets, particularly in the United States and Europe, and through collaboration with local asset management companies, we are expanding our global asset management platform and enhancing our investment income.
After implementing these measures, we will proceed with rebuilding our global management structure. International businesses have been managed under the auspices of operating companies up to now, but going forward, we will transition to a structure where the holding company will be more involved. This will enable the Group to manage its domestic and international businesses in a cross-functional manner, further strengthening risk management, compliance, and the optimal allocation of management resources. We will establish a framework capable of executing management decisions agilely and accurately from a global perspective, thereby enhancing our competitiveness in the global market.
Furthermore, the Group will strengthen its think tank capabilities, centered on MS&AD InterRisk Research & Consulting, and build a framework capable of actively offering opinions and proposals to society, government, and the world. This is a pivotal initiative aimed at fulfilling our social responsibilities as an insurance company and becoming a leading company that contributes to solving social issues. We will leverage the Group’s expertise and experience to the fullest extent to drive the creation of social value.

Capital circulation plays a key role in our business strategies. This approach aims to maximize corporate cash flow and promote the efficient circulation of capital. Specifically, we aim to invest in highly profitable businesses and swiftly channel the generated cash into growth investment and shareholder returns.

This will enable us to provide stable dividends to our investors while enhancing shareholder value through share buybacks and other measures. We will also endeavor to implement sustainable resource allocation to support long-term growth and strengthen our competitiveness. We will consistently manage our business with transparency through capital circulation to meet the expectations of our shareholders and to achieve continuous growth and improved profitability.

The world’s top-tier insurers, especially in Europe, are leading in terms of capital efficiency. They possess high underwriting capabilities backed by this foundation, which in turn leads to creditworthiness and ultimately brand value. Our aim is to stand shoulder to shoulder with the world’s top tier and then surpass them. To that end, we will steadily advance the transformations outlined thus far while also laying the groundwork to achieve our medium- to long-term targets of profit of “¥1 trillion and market capitalization of ¥10 trillion” at an early juncture. That is precisely what I consider to be my mission.

Since becoming CEO, I have placed the highest priority on dialogue with our stakeholders. As Group CEO, I will continue to actively seek opportunities to engage directly in dialogue with investors. I sincerely appreciate your opinions and suggestions, and I am committed to incorporating them into our management practices to enhance corporate value.

My creed is to match words with action, and I do not engage in management that tries to satisfy everyone. I will personally spearhead the governance and business model transformation, the merger, and the other initiatives that I have mentioned. Through this transformation, we will establish a virtuous cycle of trust and growth, and I am confident that we will achieve top-tier corporate value globally in the form of profits of ¥1 trillion and market capitalization of ¥10 trillion.

We will share this journey of transformation with you openly and transparently, and we earnestly request your rigorous evaluation of our progress. And we sincerely hope that those who share our vision for the future and are willing to accompany us with a long-term perspective will become our shareholders.

Our challenge has only just begun. Please look forward to the future transformation and growth of the MS&AD Group. We sincerely ask for your continued understanding and support.
 

August, 2025