Report and Accounts 2012

Transcription

REPORT AND ACCOUNTS
2012
For the year ended 31st March 2012
Toa Re’s advanced capabilities are founded on the accumulated skills and experience of its professional staff.
The Toa Reinsurance Company, Limited
ToaRe
ToaReMission
MissionStatement
Statement
Providing
ProvidingPeace
PeaceofofMind
Mind
Toa
ToaRe
Reaims
aimstotorealize
realizeitsitsmission
missionbyby
working
workingwith
withsociety
societyand
andapplying
applyingthe
theprinciples
principlesofoffairness
fairness
and
andintegrity
integritytotoallallaspects
aspectsofofour
ourbusiness
business
offering
offeringlong-term,
long-term,solid
solidsupport
supporttotoour
ourclients
clientsbybysupplying
supplying
reinsurance
reinsuranceproducts
productsand
andservices
servicesthat
thatenable
enablethem
them
totomaintain
maintainstable
stableoperations
operations
striving
strivingtotofurther
furtherthe
theinterests
interestsofofour
ourshareholders
shareholders
and
andkeeping
keepingthem
themfully
fullyinformed
informedatatallalltimes
times
respecting
respectingthe
thecreativity
creativityofofour
ouremployees
employeesand
andvaluing
valuing
their
theircontributions
contributions
conserving
conservingthe
theenvironment
environmentand
andcontributing
contributingtoto
the
thecommunity
community
Profile
Profile
The
TheToa
ToaReinsurance
ReinsuranceCompany,
Company,Limited
Limited(Toa
(ToaRe),
Re),was
wasestablished
establishedin in1940.
1940.With
Withthe
the
reinsurance
reinsurancemarket
marketevolving
evolvingand
andcustomers’
customers’needs
needsexpanding,
expanding,wewehave
haverecognized
recognizedthethe
importance
importance
of of
being
being
able
able
toto
provide
provide
a diverse
a diverse
line
line
of of
lifelife
and
and
non-life
non-life
reinsurance
reinsurance
products
products
totolead
leadthethemarket
marketasasJapan’s
Japan’sprimary
primaryprofessional
professionalreinsurer.
reinsurer.Toa
ToaReReis isbased
basedin inTokyo
Tokyo
with
withsubsidiaries
subsidiariesin inNew
NewJersey
Jerseyand
andGraubünden
Graubünden(Switzerland).
(Switzerland).Increasing
Increasingdemand
demandforfor
reinsurance
reinsuranceproducts
productsin inAsian
Asiancountries
countriesprompted
promptedusustotoexpand
expandour
ouroperations
operationsin inthat
that
region
region
and
and
establish
establish
branch
branch
offices
offices
in in
Singapore,
Singapore,
Kuala
Kuala
Lumpur
Lumpur
and
and
Hong
Hong
Kong.
Kong.
In Inacknowledgment
acknowledgmentofofToa
ToaRe’s
Re’soutstanding
outstandingfinancial
financialprofile,
profile,credit
creditrating
ratingagencies
agencies
Standard
Standard
&&
Poor’s,
Poor’s,
A.M.
A.M.
Best
Best
Company,
Company,
Inc.
Inc.and
and
Japan
Japan
Credit
Credit
Rating
Rating
Agency,
Agency,
Ltd.,
Ltd.,
have
have
assigned
assignedToa
ToaReReratings
ratingsof ofA+,
A+,A+A+and
andAA+,
AA+,respectively.
respectively.AsAsof of31st
31stMarch
March2012,
2012,thethe
Toa
ToaReReGroup
Groupboasted
boastedtotal
totalassets
assetsof of¥588.4
¥588.4billion.
billion.Net
Netpremiums
premiumswritten
writtenduring
duringthe
the
fiscal
fiscal
year
year
ended
ended
31st
31st
March
March
2012,
2012,
totaled
totaled
¥161.3
¥161.3
billion.
billion.
Tomoatsu Noguchi
(President and Chief Executive)
Teruhiko Ohtani
(Chairman)
Contents
2
Consolidated Financial Highlights· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 4
Non-Consolidated Financial Highlights · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 5
Corporate History · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 6
Worldwide Network · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 7
Toa Re America · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 8
Risk Management Structure· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 9
Compliance Structure· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 10
Inspection and Audit Structure· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 11
Corporate Governance Structure · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 12
Basic Policies on Establishment of Internal Control Systems· · · · · · · · · · · · · · · · · · > 13
Declaration of Protection of Personal Data· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 15
Corporate Social Responsibility (CSR) · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 17
Review of Operations· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 21
Consolidated Summary of Underwriting · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 22
Consolidated Summary of Investments· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 23
Consolidated Financial Statements· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 24
Organization· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 47
Board of Directors / Corporate Data· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · > 48
Message from the President· · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · · >
Notes:
All U.S. dollar figures in this report have been converted from yen, for convenience only, at the rate of ¥82.19=US$1, which prevailed on 31st March 2012.
When truncating figures and rounding off percentages, no attempt was made to reconcile totals and breakdowns. Minor discrepancies may therefore be found when individual numbers are
added together and compared with the totals shown.
All premiums shown are net of profit commissions.
Message from the President
Operating Environment
During fiscal 2011, the year ended March 31, 2012, the
Japanese economy continued to encounter a generally
challenging set of circumstances, although it regained
momentum to some extent, supported by a modest
recovery of economic activity and the beneficial impacts
of government policies. In addition to a slowdown of
industry owing to the constraints on the supply of electricity as a result of the Great East Japan Earthquake and
the nuclear accident, other factors adversely affecting the
Japanese economy included a slowdown of overseas
economies brought about by the European sovereign
debt crisis and rising oil prices, as well as fluctuation of
exchange rates, deflationary pressure, and concerns
about the deterioration of the labor market in Japan.
The non-life insurance industry in Japan saw an increase
in premium income because the number of purchasers
of earthquake insurance increased after the Great East
Japan Earthquake and the government’s scheme to provide subsidies to people purchasing environmentally
friendly automobiles boosted sales of automotive insurance. However, the financial foundation of non-life insurance companies in Japan suffered from heavy losses
incurred because of the flooding in Thailand and other
major natural disasters. The life insurance industry in
Japan also continued to operate in a challenging business environment. Although the number of new policies
trended upward, the total number of policies in force has
been flat and fund management performance remained
lackluster.
The reinsurance market hardened centering on the property field, reflecting the frequency of major natural disasters continuing from the previous year. In addition, the
turmoil in international financial markets owing to the
European sovereign debt crisis made the outlook even
more unclear.
In order to respond swiftly and precisely to these changes in the operating environment and to further enhance
corporate value, the Toa Re Group established a new
vision and launched a new medium-term management
plan, Forward 2014, in April 2012.
Strategic Vision for Future Growth of the Toa Re
Group – “Forward 2014”
With fulfillment of corporate social responsibility (CSR) as
the foundation of the new vision, the other key issues are
system and personnel development to strengthen managerial resources, provision of enterprise risk management
(ERM)-based solutions to clients, and further reinforcement of Group management through the concerted
efforts of subsidiaries, branch offices and the head office
to enhance international competitiveness. Corresponding
to these key issues, we have articulated the ideal profile
of the Group from the medium- to long-term perspective
and have drawn up a roadmap.
The Toa Re Group will implement the strategic policies
outlined in Forward 2014 with the aim of realizing the
ideal profile of the Group and make a Group-wide effort
to achieve sustainable growth.
Tomoatsu Noguchi
President and Chief Executive
2
New Vision and the New Medium-term Management Plan “Forward 2014”
Moving forward together with all of our stakeholders
Valued Reinsurance Group
Sustainable
Growth
Global
Quality
Expertise &
Intelligence
Utilizing sophisticated E&I, we provide peace of mind with high-quality solutions and services
with the goal of being a growing profitable global reinsurance group trusted by all stakeholders.
Information
Solution/
Service
Group
Management
Forward 2014
Professional
Development
ERM
CSR
○Long-term vision
Our long-term vision is to become a “Valued Reinsurance
Group” advancing hand in hand with our stakeholders
based on “Sustainable Growth,” “Global Quality,” and
“Expertise & Intelligence.”
○New medium-term management plan “Forward 2014”
◆Medium-term vision
Our medium-term vision is to become a growing, profit-
Vision Facets
able, global reinsurance group trusted by our stakeholders utilizing sophisticated expertise and intelligence (E&I)
to provide high-quality solutions and services.
◆Six facets of the vision
With the aim of achieving the ideal profile of the Group,
we have established six facets of the vision from the
viewpoints of stakeholders.
Strategic Policies
Realization of Forward 2014
Solution / Service
Providing of solutions
/services that increase customer satisfaction
Propose and develop solution methods
Strengthen business development that supports profitable growth
ERM
Strengthen capital management
Promote the ERM PDCA cycle
Group Management
Achieve group-based international franchise value
Strengthen governance
Greater sophistication for risk-based management
Promotion of group-based management
Information
Promotion of an information
and communication technology(ICT) strategy
Strategically address regulatory and system changes
Enhance the operation infrastructure
Professional Development
Secure/nurture human resources able to excel on a global stage
Make strategic use of intelligence/data
CSR
Make a sustainable contribution as a good corporate citizen
Maintain compliance
An organization of experts pursuing sophisticated E&I
Sound ongoing implementation of CSR activities
The Toa Re Group will implement the strategic policies
corresponding to the six facets of the vision with the aim
of realizing the ideal profile of the Group and achieving
sustainable growth through a Group-wide effort.
3
Consolidated Financial Highlights
The Toa Reinsurance Company, Limited and Subsidiaries
For the years ended 31st March
Thousands of
U.S. dollars
Millions of yen
2012
2011
2010
2009
2008
2012
¥ 271,516
161,363
(7,664)
(18,268)
¥179,275
149,566
10,194
7,731
¥166,749
143,959
19,846
10,256
¥171,289
148,205
8,353
8,457
¥191,110
155,494
16,693
11,689
$3,303,516
1,963,292
(93,247)
(222,265)
93,523
588,494
126,138
581,558
137,184
588,615
111,274
538,741
161,274
615,972
1,137,887
7,160,165
For the fiscal year
Ordinary income
Net premiums written
Ordinary profit (loss)
Net income (loss)
At fiscal year-end
Total net assets
Total assets
Yen
U.S. dollars
Per share data
¥ 1,032.92
(201.76)
Shareholders’ equity
Net income (loss)
¥1,393.15
85.38
¥1,515.15
104.97
¥1,131.50
86.00
¥1,639.93
118.86
$12.56
(2.45)
Percent
Key ratios
Shareholders’ equity ratio
Return on equity (ROE) ratio
Net Premiums Written
(Billions of yen)
160
155.4
148.2 143.9
161.3
149.5
15.89%
-16.63
21.69%
5.87
23.31%
8.26
Net Income
26.18%
6.52
Total Assets (Billions of yen)
(Billions of yen)
12.0
20.65%
6.21
588.6 581.5
615.9
11.6
600
10.2
8.4
588.4
538.7
7.7
120
8.0
450
80
4.0
300
40
0
150
0
-20.0
0
-18.2
2008 2009 2010
4
2011
2012
2008 2009 2010
2011
2012
2008 2009 2010
2011
2012
Non-Consolidated Financial Highlights
For the years ended 31st March
Thousands of
U.S. dollars
Millions of yen
2012
2011
2010
2009
2012
2008
For the fiscal year
Underwriting profit (loss)
Interest and dividends income
Net income (loss)
¥ 134,079
(38,076)
11,279
(7,060)
(15,522)
¥125,354
(2,877)
8,479
4,647
3,807
¥120,329
3,595
7,308
14,874
6,758
¥124,001
3,408
7,623
5,624
6,485
¥124,143
(9,483)
9,257
7,670
5,451
$1,631,330
(463,278)
137,238
(85,899)
(188,859)
409,570
497,910
157,634
5,000
79,094
383,869
482,194
226,694
5,000
106,545
395,628
481,915
238,701
5,000
115,704
359,209
447,618
231,790
5,000
101,389
413,466
480,963
222,385
5,000
131,784
4,983,219
6,058,040
1,917,925
60,834
962,333
At fiscal year-end
Invested assets
Total assets
Underwriting reserves
Capital stock
Total net assets
U.S. dollars
Yen
Per share data
¥873.56
7.00
(171.43)
Declared dividends
Net income (loss)
¥1,176.75
7.00
42.05
¥1,277.91
7.00
69.17
¥1,030.98
7.00
65.94
¥1,340.06
7.00
55.43
$10.62
0.08
(2.08)
Percent
Key ratios
Net loss ratio
Net expense ratio
Return on investment
Shareholders’ equity ratio
Return on equity (ROE) ratio
Payout ratio
59.45%
30.88
2.20
24.01
6.23
10.12
7.5
125.3
6.4
60.47%
32.19
2.37
22.65
5.56
10.62
58.23%
28.57
3.10
27.40
3.57
12.63
Total Assets
(Billions of yen)
134.0
124.1 124.0 120.3
59.20%
30.24
2.56
22.10
3.43
16.65
Net Income
(Billions of yen)
160
97.47%
29.43
3.35
15.89
-16.72
—
(Billions of yen)
6.7
600
480.9
5.4
120
5.0
80
2.5
300
40
0
150
0
-20.0
481.9 482.1
497.9
447.6
450
3.8
0
-15.5
2008 2009 2010
2011
2012
2008 2009 2010
2011
2012
2008 2009 2010
2011
2012
5
Corporate History
1940 10
1945 4
4
6
8
1947 4
1948 2
1952 4
1953 4
1962 3
1971 10
1974 10
1975 4
1977 10
1979 4
7
12
1980 10
11
1982 4
10
1986 10
1988 4
1991 4
1995 10
1997 2
9
9
12
Established as The Toa Fire and Marine Reinsurance Company, Limited, capitalized at ¥50 million.
Ceased business as a reinsurance company due to the establishment of a government reinsurance agency.
Became a direct insurance company, changing our name to The Toa Fire and Marine Insurance Company, Limited.
Started direct business at branches in Tianjin and Shanghai.
Decreased capital to ¥25 million from ¥50 million.
Re-established as a reinsurance company.
Changed name back to The Toa Fire and Marine Reinsurance Company, Limited.
Started to transact overseas reinsurance business.
Increased capital to ¥50 million from ¥25 million.
Opened representative office in London.
Opened representative office in Hong Kong.
Held “Reinsurance Seminar of Toa (RST) Vol. 1.”
Established The Toa-Re Insurance Company (U.K.) Limited.
Increased capital to ¥1,000 million from ¥750 million.
Started the “JTT” (Jump To Ten) management plan.
Opened representative office in New York.
Established The Toa Reinsurance Company of America. (Consolidated subsidiary)
Increased capital to ¥2,000 million from ¥1,000 million.
Started the “Challenge 50” management plan.
2000
2001
2002
2003
2006
2009
2012
6
3
1
4
6
7
11
4
1
4
3
4
4
4
1962: New head office opened (at the
site of the present head office)
Started the “Action 21” management plan.
Increased capital to ¥5,000 million from ¥2,000 million.
Obtained approval to begin offering life reinsurance products.
Opened branch office in Singapore.
Received “Reinsurance Company of the Year” award.
Acquired all outstanding stock in M&G Re America
and merged it with The Toa Reinsurance Company of America.
1998
1999
1941: Head office
The Toa Reinsurance Co. of America
Received additional approval to offer a complete range of life reinsurance products.
Opened branch office in Kuala Lumpur.
Changed name to The Toa Reinsurance Company, Limited.
Opened branch office in Hong Kong.
Obtained approval to handle co-operative non-life reinsurance.
Opened representative office in Taipei.
Started “Progress 21” medium-term management plan.
Established The Toa 21st Century Reinsurance Company Limited. (Consolidated subsidiary)
Obtained approval to handle co-operative life reinsurance.
Sold The Toa-Re Insurance Company (U.K.) Limited.
Launched “PROCEED 2008” medium-term management plan.
Launched “Crescendo 2011” medium-term management plan.
Launched “Forward 2014” medium-term management plan.
The present head office
Worldwide Network
Branches
Singapore
50 Raffles Place #26-01, Singapore Land Tower, Singapore 048623
Telephone: 65-6220-0123
Facsimile: 65-6222-5383
Kuala Lumpur
28th Floor, UBN Tower 10, Jalan P. Ramlee, 50250 Kuala Lumpur, Malaysia
Telephone: 60-3-2732-5911
Facsimile: 60-3-2732-5915
Hong Kong
Room 801, 8th Floor, Tower 1, Admiralty Centre, 18 Harcourt Road, Hong Kong
Telephone: 852-2865-7581
Facsimile: 852-2865-2252
Subsidiaries
U.S.A.
The Toa Reinsurance Company of America
177 Madison Avenue, P.O. Box 1930, Morristown, NJ 07962-1930, U.S.A.
Telephone: 1-973-898-9480
Facsimile: 1-973-898-9495
The Toa Reinsurance Company of America (Agricultural Office)
18301 Von Karman Avenue, Suite 301, Irvine, CA 92612, U.S.A.
Canada
The Toa Reinsurance Company of America (Toronto branch)
200 King Street West, Suite 1001, P.O. Box 41, Toronto, Ontario M5H 3T4, Canada
Telephone: 1-416-366-5888
Facsimile: 1-416-366-7444
Switzerland
The Toa 21st Century Reinsurance Company Ltd.
Quaderstrasse 8, 7000 Chur, Graubünden, Schweiz
Representative Offices
U.K.
70 St Mary Axe, London, EC3A 8BE, U.K.
Telephone: 44-20-3102-4050
Facsimile: 44-20-3102-4478
U.S.A.
177 Madison Avenue, P.O. Box 1930, Morristown, NJ 07962-1930, U.S.A.
Telephone: 1-973-898-9816
Facsimile: 1-973-539-2483
Taiwan
4F-2, 128 Min Sheng East Road, Section 3, Taipei 105, Taiwan, R.O.C.
Telephone: 886-2-2715-1015
Facsimile: 886-2-2715-1628
7
Toa Re America
2011 Results and 2012 Forecast
The U.S. economy continued its sluggish recovery during
2011 and into 2012. Real GDP grew 1.7% in 2011 and
increased at an annualized rate of 1.9% in the first quarter of 2012. The U.S. stock market had a significant
rebound from the bottom of the trough in March, 2009 to
its recent peak on May 2, 2012, but is now languishing
from European fiscal uncertainty. The U.S. unemployment rate has steadily improved to 8.2% in May, 2012,
although the measurement of under employment
remains high at 14.8%. Core inflation (all items excluding
food and energy) has continued to slowly increase, however the volatility in the cost of energy has caused the 12
month seasonally unadjusted change in the Consumer
Price Index (for all items including food and energy) to
decrease to 1.7% in May, 2012.
According to estimates by A.M. Best Co., the U.S. property and casualty industry premium volume increased for
the second consecutive year in 2011, and there
appeared to be across-the-board stabilization in prices,
with rates firming in a number of segments.
Policyholders’ surplus decreased 1.1% caused by net
income and contributed capital being offset by unrealized
capital losses, stockholder dividends and other changes.
Net investment yield was 3.5% and the combined ratio
was 106.5%. Catastrophe losses were 5.6 combined
ratio points higher than the previous four year average.
After adjusting for favorable loss development from prior
years, the 2011 accident year combined ratio was
109.5%.
Non-life reinsurance renewal activity in North America as
of June 1, 2012 has been generally stable except for
companies that incurred property catastrophe losses in
2011. Reinsurers are very well capitalized and both A.M.
Best and Standard & Poor’s have continued to maintain
a stable outlook for the global non-life reinsurance industry.
Gross Premiums by Class
Agriculture Re
8.7%
Auto Liability
16.8%
Toa Re America’s strategic focus on regional and specialty clients insulates the Company somewhat from the
general competitiveness of the North American reinsurance market. Conservative risk management will continue to limit the Company’s exposure to natural catastrophes
thereby reducing the volatility of underwriting results.
The forecast for 2012 anticipates an increase in profitable premium revenue from agricultural reinsurance,
increased participation on incumbent treaty accounts
and prudent growth in new business. The Toa Re
America team has built an exceptional franchise in North
America and is firmly positioned to offer significant and
stable capacity and mutually beneficial reinsurance solutions to our clients.
Financial Highlights
Other
0.1%
Property
35.0%
Casualty
39.4%
8
Toa Re America’s 2011 gross premiums written
increased 17.5% over 2010, with about three-fifths of the
growth attributable to successfully entering the North
American agricultural reinsurance market at January 1,
2011. Toa Re America had a GAAP combined ratio of
94.0% for 2011. The combined ratio excluding the
impact of foreign exchange was 95.0%. Property catastrophe activity contributed 3.0 points to the combined
ratio for 2011. U.S. GAAP net income was $64.7 million
and net cash flow from operations was $62.2 million for
2011. For the year, the market value of Toa Re America’s
cash and invested assets increased by $72 million or
5.3%. Toa Re America’s fixed income portfolio (80% of
invested assets) had an overall return of 10.24% while
equities had a 0.13% return for 2011. Shareholders’
equity increased 8.8% to $647.8 million during 2011,
mainly from capital gains following the continued
rebound in the financial markets offset by a $20.0 million
dividend paid to Toa Re (Japan) in March, 2011.
Years ended 31st December
U.S. GAAP
Thousands of U.S. dollars
Percentage
Change
2011
2010
Summary of Operations
Gross Premiums Written
Pre-Tax Net Income
After-Tax Net Income
$360,083
293,655
89,175
64,671
$306,374
252,411
93,964
67,504
17.5%
16.3
-5.1
-4.2
Balance Sheets
Total Assets
Total Liabilities
Total Stockholders' Equity
1,719,089
1,071,339
647,750
1,617,098
1,021,803
595,295
6.3
4.8
8.8
Cash Flows
Net Cash from Operations
62,170
40,613
53.1
Risk Management Structure
Risk Management Policy
Risks are classified into reinsurance underwriting risk,
In line with the changes reshaping the business environment, Toa Re has exposure to increasingly complex and
investment risk, operational risk, overseas operational
risk, and reserve risk concerning underwriting reserve
diverse risks. Positioning risk management as a critically
important task for management, the Company has put in
place the policy and rules concerning risk management
and reserve for outstanding claims. Each of these risks is
handled by a specific risk management department.
Each department in charge manages specific risks in
accordance with the risk management rules and manu-
established by the board of directors. Based on such
policy and rules, we select, clarify, and assess risks and
control them in an appropriate manner with the objective
of enhancing financial soundness and profitability.
Prompted by the recognition that risk management is a
key to enhancing enterprise value, we are continually
upgrading our risk management.
Major Risks and Their Management
In accordance with the risk management policy established by the board of directors, the board of directors
has also established rules on enterprise risk management (ERM), which is a process involving the continuous
enhancement of corporate value, and individual risk
management rules. Moreover, the board of directors
deliberates and makes decisions on material matters
concerning risk management and receives reports from
risk management departments periodically and, additionally, whenever necessary on the situation regarding risk.
Thus, systems and structures are put in place that
enable the Company’s directors to grasp the situation
regarding risk throughout the Company.
als. The ERM Committee and the Management Planning
Department execute corporate-wide control and work to
upgrade the structure.
In addition to quantitative assessment and management
of major risks, the Company measures the integrated risk
amount of reinsurance underwriting risk, investment risk,
etc., using a stochastic approach for risk-amount monitoring and risk-return assessment. Moreover, based on
scenarios, such as the occurrence of a major earthquake
or a great decline in the stock market, that would have
significant impacts on operations of a reinsurance company, the Company assesses and analyzes by means of
stress tests the extent and the degree of impact on the
Company of such risks that exceed any normal projection and utilizes the results of the tests for verification of
capital adequacy.
Board of Directors
Executive Management Committee
Policy
and
instructions
Reporting of the situation
regarding risk, etc.
Audit
report
ERM Committee and Management Planning Department (integrated risk management)
Risk management departments (specific risk management)
Reinsurance underwriting risk
Investment risk
Internal
audit
Administrative risk
Computer system risk
Internal
Audit
Department
Operational risk
Liquidity risk
Overseas operational risk
Reserve risk concerning underwriting reserve and reserve for outstanding claims
9
Compliance Structure
1. Basic Compliance Policies and
Compliance Activities Guidelines
Basic Compliance Policies and Compliance
Structure
Toa Re has established the Basic Compliance Policies,
In the non-life insurance industry, which is an important
which articulate the Company’s mission expressed by its
element of public infrastructure, companies are required
motto “Providing Peace of Mind,” and the Compliance
to comply with laws and regulations and demonstrate
Activities Guidelines to ensure that the policies are put
high ethical standards in every aspect of their profession-
into practice. Toa Re has never received any administra-
al conduct. The business of Toa Re, the only full-line
tive order.
specialty reinsurance company headquartered in Japan,
is based on globally accepted, free and fair business
practices, and moreover, on strict compliance with the
laws and regulations and the high ethical standards that
constitute the essential foundation for those practices.
Our company has never received any administrative
order.
Social Contributions
Awareness of Corporate
Social Responsibility of
the Reinsurance Industry
Communication with Society
and
Information Handling
Response to
Antisocial Forces
Basic
Compliance
Policies
Environmental
Protection
2. Compliance Structure
(1) History of Toa Re’s promotion of compliance
AUG.2000T he Basic Compliance Policies is established.
SEP. 2000The Compliance Department is established.
Fair and Appropriate Treatment
and
Prohibition of Any Discrimination
Compliance with Laws,
Ordinances, and
Ethical Standards
MAR.2004The Compliance Handbook is prepared and
distributed to all officers and employees.
APR. 2005T h e P r i v a c y P o l i c y a n d t h e P e r s o n a l
Information Handling Regulations are established.
APR. 2001The Compliance Activities Guidelines, the
MAR.2009The Rules concerning the Act on Prevention
Compliance Program and the Rule of
of Transfer of Criminal Proceeds are estab-
Compliance are established. The Compliance
lished.
Manual is formulated and distributed to all
officers and employees.
AUG.2002The Compliance Manual for the three overseas branches is formulated.
APR. 2003T he Information Security Policy is established.
JUN. 2009The Conflict of Interest Management Policy
and the Conflict of Interest Management
Rules are established.
The Basic Policy for the Anti-Social Forces is
established.
APR. 2011The Compliance Manual is published on the
intranet.
10
(2) Compliance Structure and Activities
(3) In-house Help Desk
The Company has constituted the Compliance
The Company has set up an in-house help desk within
Committee, which is chaired by the president and com-
the Compliance Department to ensure the prevention
posed of committee members and an external lawyer.
and detection of dishonest activities and inappropriate
In addition, the Company established the Compliance
behavior and to promote compliance and has introduced
Steering Committee comprising department managers
the Compliance Hotline to make it easy for employees to
who are appointed as compliance officers. Each
seek consultation and advice.
department assigns a person to serve as a compliance
(4) Whistle-blower System
supervisor.
The Company has put in place an internal whistle-blower
Each fiscal year, the Board of Directors establishes the
system as a mechanism for employees to alert the
Compliance Program, a concrete compliance implemen-
Compliance Committee to inappropriate behavior or
tation plan, and on the basis of the program the
dishonest activities committed by employees of Toa Re
Company conducts education and training and engages
and to scandals within the Company as well as to accept
in other compliance activities.
complaints from inside and outside the Company, has
devised measures to rapidly correct problems, and put in
Having also established compliance committees and
place a system for reporting to the Financial Services
assigned compliance managers at overseas branches in
Agency.
April 2011, the Company is striving to strengthen compliance throughout the Group.
Compliance Structure
Compliance Committee
Committee Chairman: Toa Re President and Chief Executive
Committee Members: Director responsible for Management Planning Department, Lawyer, Manager of the Compliance Department
Report
Compliance
Steering
Committee
Instruct
improvements
Compliance Officers
Compliance Department
(contact)
Report
Seek
advice
Respond
Departments
Queries,
concerns,
etc.
Report
Instruct
improvements
Report
Seek
advice
Respond
Inappropriate
conduct
Instruct
improvements
Compliance Supervisors
Misconduct
Complaints
Report
Respond
Person who discovered the problem, person seeking advice, etc.
Inspection and Audit Structure
Toa Re is required to undergo inspection by the Inspection Bureau of the Financial Services Agency pursuant to the
Insurance Business Law. The Company is also required to receive accounting audits by independent auditors. There
are two types of in-house audits: audits defined by the Companies Act conducted by Corporate Auditors and internal
audits conducted by the Internal Audit Department in accordance with the internal rules.
11
Corporate Governance Structure
To ensure swift decision-making and risk management in response to the fast-evolving business
environment, the Company implements the corporate governance described below.
1. Management structure and outside officers
5. Compliance structure
The Company employs a corporate auditor system and
at present has eleven directors, of whom three are “outside directors” as defined in Article 2 Paragraph 15 of the
Companies Act, and four corporate auditors, of whom
two are “outside auditors” as defined in Article 2
Paragraph 16 of the Companies Act.
The Company has established the Compliance
Committee, which consists of four members, including
the president who chairs the committee and an external
lawyer, in addition the Compliance Steering Committee,
which is composed of department managers. Based on
the compliance program drawn up by the board of directors for each fiscal year, the Company is enhancing the
corporate-wide compliance structure.
2. Structures for execution and supervision
The Company holds a meeting of the board of directors
once every month as a rule, and an extraordinary meeting of the board of directors, whenever necessary. At a
meeting of the board of directors significant matters are
reported and resolutions are made on such matters.
Corporate auditors attend each meeting of the board of
directors, too. This enables corporate auditors to continually monitor the performance of directors’ concerning
execution.
Chief actuaries appointed by the board of directors are
involved in actuarial matters, and submit written opinions
to the board of directors in each fiscal term, verifying
matters specified in the Insurance Business Law.
The board of corporate auditors meets once every
month as a rule, and additionally whenever necessary.
At meetings of the board of auditors significant matters
concerning audits reported by the auditors are discussed
and resolutions are made on such matters.
3. Internal audit structure
W ith regard to internal audits, the Internal Audit
Department performs internal audits under the authorization of the board of directors and reports the results of
internal audits periodically to the board of directors and
other relevant organizations. The Inter nal Audit
Department provides recommendations and, based on
the results of internal audits, makes proposals to audited
organizations. The progress of improvement is monitored, as necessary, with the aim of ensuring an effective
internal audit structure.
4. Cooperation between Corporate Auditors
and the Internal Audit Department
Corporate Auditors and the Internal Audit Department
exchange information on the situation regarding each audit.
12
The Company has set up and run hotlines (an in-house
help desk and an in-house whistle-blower system) for the
reporting of inappropriate conduct.
6. Risk management structure
Using quantitative and qualitative approaches, the company executes integrated risk management by classifying
risks to be managed and by specifying the departments
in charge in accordance with the risk management policy
and risk management rules established by the board of
directors.
The board of directors deliberates and makes decisions
on material matters concerning risk management and
receives reports from risk management departments
periodically and, additionally, whenever necessary concerning the situation regarding risk. Thus, systems and
structures are put in place that enable the Company’s
directors to grasp the situation regarding risk throughout
the Company.
The Company continues to upgrade its risk management
structure in response to changes in the business environment and the situation regarding risk.
7. Involvement of third parties (lawyers,
accounting auditors, etc.)
The Company consults external lawyers concerning significant legal matters and compliance issues whenever
necessary. Also, the Company consults the accounting
auditors about significant accounting issues, in addition
to the usual accounting audits, whenever necessary.
Basic Policies on Establishment of Internal Control Systems
The Company shall establish systems to ensure appropriateness of the Company’s operations (internal
control systems), as described below, in accordance with the Companies Act and the Ordinance for
Enforcement of the Companies Act.
1. Systems for ensuring compliance of
execution of duties by directors and
employees with laws and regulations and
the Company’s Articles of Incorporation
(1) The board of directors shall establish basic compliance policies, action guidelines and compliance rules
as the basis for systems ensuring legal compliance in
accordance with Toa Re’s mission of “Providing
Peace of Mind.”
(2) T he Company shall establish the Compliance
Committee chaired by the president and composed
of committee members, including an external lawyer.
In addition, the Company shall appoint department
managers as compliance officers and establish the
Compliance Steering Committee composed of such
officers. The Compliance Committee shall be responsible for corporate-wide promotion of compliance and
formulation of measures for ensuring effectiveness of
compliance systems, and the Compliance Steering
Committee shall be responsible for promotion and
implementation of compliance.
(3) T he Company shall establish the Internal Audit
Department independent of organizations subject to
internal audit and shall establish the Compliance
Department as an organization responsible for supervising compliance.
(4) In the event that an officer or an employee detects
inappropriate conduct, he/she shall follow the prescribed reporting procedures in accordance with the
compliance rules. Moreover, the Company shall
establish an internal contact within the Compliance
Department for facilitation of prevention and detection
of inappropriate conduct in house and consultation
regarding laws and regulations. Furthermore, the
Company shall establish an internal whistleblower
system to enable direct report by employees to the
Compliance Committee. The Compliance Department
shall investigate the details of any report, formulate
measures to prevent recurrence in cooperation with
the relevant department, and report to the
Compliance Committee. The Compliance Committee
shall instruct improvements to the relevant department (s) based on the details of the report by the
Compliance Department.
(5) The board of directors shall formulate a compliance
program, which is an annual action program concerning compliance, and compliance education and other
compliance activities shall be executed in accordance
with such program.
(6) In the event that any breach of laws and regulations
and/or the Articles of Incorporation, significant unjustifiable conduct, or any matter that may cause significant damage to the Company is detected concerning
the Company’s operations, directors, the accounting
auditor, and the chief audit executive shall report such
fact to the corporate auditors. When a corporate
auditor receives a report of such fact or detects such
fact by himself/herself, he/she shall report to the
board of corporate auditors, and, based on discussion, report to the board of directors or provide proposals, advice or recommendations to directors for
remediation, as necessary.
(7) The Company shall firmly and systematically deal with
antisocial forces that are a threat to public order and
security in cooperation with lawyers, law enforcement
agencies, and other relevant institutions. The
Company shall have no relationship, including any
transaction, with any antisocial force and shall prevent
any surreptitious deal therewith or provision of funds
thereto.
2. Systems governing the storage and
management of information relating to the
execution of duties by directors
Information relating to the execution of duties by directors shall be, either in writing or in electromagnetic
record, retained and stored in accordance with the document management rules determined by the board of
directors. Directors and corporate auditors shall have
access to these documents whenever they so desire.
3. Rules and other systems governing
management of risk of losses
(1) The board of directors shall establish a basic policy
and rules concerning integrated risk management in
order to appropriately manage risk associated with
business operation.
(2) In accordance with the policy and rules mentioned in
the preceding paragraph, the Company shall put in
place a structure for implementation of appropriate
risk management, including establishment of a
department for integrated risk management and
departments responsible for individual risk categories
and determining of necessary procedures. The situation regarding risk and risk management shall be
reported to the board of directors.
(3) T he Internal Audit Department shall formulate the
internal audit plan in accordance with the internal
audit charter and perform internal audits concerning
the situation of risk management in each risk control
department. An officer responsible for the Internal
Audit Department shall report the results of internal
audits to the executive management committee and
to the board of directors.
13
4. System for ensuring efficient execution of
duties by directors
(1) As the basis for the system for ensuring efficient execution of duties by directors, meetings of the board of
directors shall be held periodically in accordance with
the board of directors’ rules and, as necessary,
extraordinarily.
(2) Significant matters concerning management policies
and management strategies shall be discussed in
advance at the executive management committee,
which meets periodically in accordance with the executive management committee rules, and a decision
on such matters shall be made by the board of directors, reflecting the deliberation at the executive management committee.
(3) Regarding execution in accordance with the resolution of the board of directors, the job description rules
and the authority rules shall specify officers responsible for execution and their responsibilities.
(4) A corporate business plan to be shared by directors
and employees shall be formulated in accordance
with the above-mentioned decision-making structure,
and the plan shall be thoroughly communicated to all
officers and employees by means of internal management meetings held semiannually, etc.
(5) The board of directors shall periodically review the
results of each department’s activities for achievement
of targets in accordance with the corporate business
plan and establish a system that contributes to
enhancement of operating efficiency throughout the
Company by promoting continuous improvement,
including utilization of IT contributing to enhancement
of operating efficiency, and removal or reduction of
factors impeding efficiency enhancement.
5. Systems for ensuring the appropriateness
of operations throughout the Group
(consisting of the Company and its
subsidiaries)
(1) O fficers responsible for business segments of the
Group shall be appointed, who will have authority and
responsibility for establishing systems for ensuring the
appropriateness of operations, including the compliance structure. Such officers shall report to the board
of directors periodically concerning the situation
regarding operation of each segment and the status
of risk management.
(2) A system for cooperation within the Group shall be
established, including holding of a management
meeting periodically, which is to be attended by officers of the Company and its subsidiaries, and discussion of internal control and information sharing shall
be promoted within the Group.
(3) T he relevant organizations at the head office shall
execute ongoing management concerning appropriateness of operations at subsidiaries, and the Internal
14
Audit Department shall perform internal audits in
accordance with the internal audit charter.
6. Systems concerning employees who
provide assistance to corporate auditors
No employee (s) shall be appointed to provide assistance
to corporate auditors. However, if corporate auditors
consider that they require assistants in order to perform
effective audits, directors shall discuss with corporate
auditors and implement a system as necessary.
7. Systems concerning independence of the
aforesaid employees from directors
The Company has no provision concerning independence of such assistants from directors, as such assistants have not been appointed. In the event that such
assistants were to be appointed in the future, systems
for securing their independence from directors shall be
established.
8. Systems for reporting to corporate
auditors applicable to directors and
employees and other reporting to
corporate auditors
(1) In the event that any breach of laws or regulations
and/or the Articles of Incorporation, significant unjustifiable conduct, or any matter that may cause significant damage to the Company is detected concerning
the Company’s operations, directors shall report such
fact to the board of corporate auditors.
(2) Corporate auditors shall have access to major managerial decision documents, reports and other significant documents concerning execution of operations
and shall have the right to request directors or other
personnel to provide a report and/or explanation, as
necessary.
(3) Operating departments shall refer managerial decision
documents and reports to corporate auditors in
accordance with the document control rules.
(4) The Internal Audit Department shall refer the internal
audit plan, reports on the results of internal audits,
and other documentation to corporate auditors in
accordance with the internal audit charter.
9. Other systems for ensuring effective
implementation of audits by corporate
auditors
Opportunities shall be secured for corporate auditors to
exchange views as necessary and respectively with the
representative directors, the accounting auditor, the
Internal Audit Department, and subsidiaries’ corporate
auditors, for efficient conduct of audits by corporate
auditors.
Declaration of Protection of Personal Data
to increase public trust in the non-life insurance industry
Compliance with the Act for Protection of
Personal Data
the Company has established the Privacy Policy presented below in accordance with the fundamental
The Company considers the management of information
requirement of complying with the Act for Protection of
assets such as customer information, company informa-
Personal Data and other relevant laws, ordinances, and
tion, and information systems to be an important man-
guidelines. The Company has also put in place internal
agement task.
regulations, including the Personal Information Handling
Regulations, and is working to ensure the proper use
Furthermore, attendant on the full-scale enforcement of
and secure management of personal information.
the Act for Protection of Personal Data in April 2005 and
in light of the importance of personal information protection,
Privacy Policy
The Toa Reinsurance Company's
Handling of Personal Information
In light of the importance of protecting private information and to increase public trust in the non-life insurance
industry, we, Toa Re, shall comply with the Act for Protection of Personal Data and other relevant laws, ordinance,
and guidelines, strive to ensure that personal information obtained from other insurance companies and other
sources is properly used and managed, maintain the accuracy and confidentiality of personal information, and
implement appropriate measures for the secure management of personal information.
The Company will conduct education and training for its employees so as to ensure that personal information is
handled properly. The Company will also continuously work to improve the handling of personal information by,
from time to time, reviewing and improving the handling of personal information, and implement appropriate
measures to ensure that personal information is securely handled.
1. Acquisition of Personal Information
The Company collects personal information through individuals’ contract data, accounts, schedules and other
documentation provided by other insurance companies in a lawful and proper manner to the extent necessary for
the conduct of business.
2. Purposes of Use of Personal Information
The Company receives personal information from other insurance companies to the extent necessary for the
purposes of use described below in order to contribute to the management stability and the expansion of the
scope of underwriting of other insurance companies through reinsurance. The Company may modify a purpose of
use described below only to the extent reasonably deemed to have significant relevance to the original purpose of
use. In such cases, the Company will officially announce the details of the modification on its website or by other
means. The Company will not use personal information for any other purpose.
15
Reinsurance contract underwriting examinations
The execution of reinsurance contracts or the provision of incidental services
Payment of reinsurance claims
The maintenance or management of reinsurance contracts
Other matters incidental to the Company’s business
3. Items of Personal Information Collected
The personal information collected is information necessary for the conclusion of reinsurance contracts or the
payment of reinsurance claims.
4. Provision of Personal Information to Third Parties
The Company shall not provide personal data it has collected to any third party except in accordance with laws or
ordinances.
5. Outsourcing of Handling of Personal Data
When outsourcing the handling of personal data to external institutions within the scope necessary for
achievement of the purposes of use, the Company applies criteria for selection of institutions to which the handling
is to be outsourced, checks in advance the personal information management systems of the institutions, and
carries out necessary supervision of the institutions, including monitoring of the institutions’ business execution
after outsourcing of handling of personal data.
6. Handling of Credit Information
The Company will not use information provided by any credit information organization (which means any
organization that collects information regarding individuals’ ability to repay debts and provides such information to
the Company) regarding individuals’ ability to repay debts for any purpose other than investigating the individuals’
ability to repay debts.
7. Handling of Sensitive Information
The Company will not collect, use, or provide to any third party any personal information regarding political views,
faith (which means religion, philosophy, or creed), membership in a labor union, race or ethnicity, ancestry or
domicile by birth, healthcare or sexual life, or criminal record.
8. Notification, Disclosure, Correction, or Cessation of Use of Personal Data in Accordance with the
Act for Protection of Personal Data
The Company responds appropriately and promptly when it receives requests for notification, disclosure,
correction, or cessation of use of personal data.
9. Summary of Measures to Ensure the Secure Management of Personal Data
The Company has established the Personal Information Handling Regulations and other rules to prevent any
divulgence or loss of or damage to personal data handled by the Company and to ensure that personal data is
otherwise securely managed and has implemented security measures, including the establishment of a structure
for enforcing security management measures based on those rules and regulations. When handling personal
information, the Company always implements appropriate measures to ensure personal information is accurate
and current.
16
Corporate Social Responsibility (CSR)
Positioning environmental protection and contribution to the community as essential elements of the Mission Statement, We are
striving to promote its Corporate Social Responsibility (CSR). In accordance with Forward 2014, our new medium-term
management plan launched in April 2012, with fulfillment of CSR as the foundation of our corporate vision, we are implementing
various measures to realize this vision.
Initiatives for Customers
Toa Re holds various reinsurance seminars and workshops in Japan and overseas to improve communication and
share knowledge with our customers.
Non-life Insurance and Reinsurance Seminars
Seminar of Toa Elementary Program (STEP)
In October 2011, we held a reinsurance seminar for
Every year, Toa Re holds STEP, a seminar for junior staff
customers of Toa Re’s branch in Kuala Lumpur on
working in direct non-life insurance companies in Japan
underwriting of Non-Proportional Treaty. We dispatched
(generally, with less than one year of experience). The
instructors for the seminar. In Asia, we intend to continue
STEP curriculum incorporates numerous case studies
holding various seminars corresponding to local needs in
involving trainee participation and straightforward
order to deepen our fruitful relationships with customers
explanations of fundamental principles of reinsurance and
and contribute to the sound development of the
practices. The seminar is appreciated by participating
reinsurance industry in the region.
companies as valuable training of practical benefit in
business.
Overseas Seminar in Kuala Lumpur (October 2011)
STEP-2011 (June 2011)
17
Life Insurance and Reinsurance Seminars
STEP LIFE
The aim of holding seminars on life insurance and
In fiscal 2008 Toa Re launched STEP LIFE, a training
reinsurance for local and international clients is to share
program for employees of direct life insurance companies
technical knowledge and reinsurance expertise with our
in Japan who are engaged in underwriting of new
clients.
business. We held this two-day program twice (in
October and November) in fiscal 2011 and received
In Japan, we organized seminars on medical underwriting
favorable feedback.
and financial underwriting, which are tailored to clients’
needs and are highly reputed among local life insurance
We consider that offering our expertise through these
companies.
programs on underwriting techniques to direct life
insurance companies, who are our customers, is an
Internationally, we organized a seminar for direct life
important part of our customer services as a reinsurance
insurance companies in Indonesia jointly with our local
company.
partner. In addition, our representatives made
presentations at international conferences and seminars
We intend to continue STEP LIFE while responding to
in Indonesia and China.
requests of participants.
We continue such seminars to deepen our relationship
and share our knowledge and expertise with our clients.
STEP LIFE-2011 (October 2011)
Overseas Seminar in Indonesia (June 2011)
Seminars for Co-operative Insurers (regulated Kyosai) and Small Amount and Short Term Insurers
Toa Re is vigorously promoting the co-operative
In addition to seminars on reinsurance, seminars on
reinsurance business as well as holding various
product development, and seminars on regulations, we
seminars for co-operative insurers and small amount
hold various seminars in response to customers’
and short term insurers in order to enhance customer
requests. Our seminars are highly appreciated by the
services and cultivate new customers.
participants.
We intend to continue providing such seminars to
contribute customers’ business development.
18
Initiatives for Shareholders
Toa Re continues to build a stable management-base as a strategic objective. A major part of this effort focuses on
reinforcing the solid relationships we have with our shareholders.
We are stepping up our investor relations activities. For example, we meet with our shareholders after our Ordinary
General Meeting of Shareholders to report on the closing of our financial accounts. Furthermore, we make every effort
to respond quickly to inquiries from our shareholders. In this way, we hope to build on the long-term relationships of
trust we enjoy with our shareholders. (The latest Consolidated Financial Statements are available on our corporate
website. http://www.toare.co.jp/english/index.htm)
WEB SITE
http://www.toare.co.jp/english/index.htm
REPORT AND ACCOUNTS
REPORT AND ACCOUNTS
2012
ToaRe
Toa Re’s advanced capabilities are founded on the accumulated skills and experience of its professional staff.
Printed in Japan with vegetable oil ink
005_0506301372408.indd
1
2012/08/08
9:57:52
Initiatives for Employees
It is our belief that a strong framework encourages employees both in their work and in achieving their personal selfdevelopment goals. We have in place performance appraisal and salary systems which provide a fair evaluation of
employees’ abilities and performance.
To help employees achieve a healthy work-life balance, we have introduced child and nursing care leave systems
together with shorter working hours for employees with young children. We aim to create a workplace environment
where employees are encouraged to make full use of these systems. We also provide welfare programs and various
other programs for our employees.
Toa Re’s greatest asset is its human resources. The personal growth of our employees underpins our ability as a
reinsurance service provider to enhance the value of the products and services that we provide to customers and for
the benefit all our stakeholders.
We strive to develop employees who are not only equipped with professional expertise but also with a sense of
humanity and responsibility. Our employees are committed to making use of their experiences and knowledge for the
benefit of society and customers. Toa Re puts in place various systems to foster excellent human resources while
striving to cultivate a vigorous corporate culture that encourages employees to embrace challenges.
Environmental Protection and Social Contribution Activities
Our environmental protection activities are focused on the mitigation of global warming, an issue with profound
implications for the insurance business.
We also engage in social contribution activities to support the realization and continuation of “peace of mind” and
development of communities and society in Japan and around the world as a good corporate citizen.
Hereafter, we continue to improve such activities to contribute to lower environmental burden for preservation our
environment. Toa Re also facilitates employees to understand and to get interested in social contribution activities.
19
Econosaurus 2012 Eco-Calendar
The ECONOSAURUS Eco-Calendar is a fun way to
learn about the environmental impact of what we do in
our daily lives. By keeping a record on the EcoCalendar of the amounts of electricity, gas and water
consumed, you can calculate the equivalent amount of
emissions of carbon dioxide, a substance implicated in
global warming. The Eco-Calendar shows you just how
environmentally friendly your household is based on
self-assessment and encourages you to do better.
To encourage as many people as possible to adopt
eco-friendly lifestyles, we also distribute the EcoCalendar to children at public elementary schools in
Chiyoda Ward as well as to our customers.
Facility for Immunisation (IFFim) and funds raised by the
bond issue are used to promote the availability of
vaccination programs and strengthen healthcare
systems in developing countries through the Global
Alliance for Vaccines and Immunization (GAVI Alliance).
Book Donations
Wishing to inspire children to take an informed interest
in environmental issues, Toa Re donates books on
environmental themes to the eight public elementary
schools in Chiyoda Ward every year on Earth Day (April
22).
ECONOSAURUS 2012
Eco-Calendar
Books donated on Earth Day 2012
Campaign to Save Electricity
Lectures on Environmental Issues
To contribute to protection of the global environment,
Toa Re and the Non-Life Insurance Institute of Japan
jointly hold a series of lectures on environmental issues.
In fiscal 2011, Mr. Shigetada Kishii, a journalist, gave a
lecture concerning Japan’s current circumstances and
future prospects. He expressed the view that Japan is
at a turning point and discussed environmental issues,
including their political implications, in the context of the
country’s history, culture, and traditions.
In fiscal 2011 we achieved approximately a 14%
reduction in electricity consumption compared with
fiscal 2010. In addition to our usual measures, namely,
optimized control of air-conditioning systems in our
offices, turning off all the lighting at head office on
“leave work early days,” and use of thermal storage
utilizing late-night electricity, we introduced new
measures, including stricter control of the airconditioning temperature settings.
Participation in TABLE FOR TWO
We participate in TABLE FOR TWO, a program
simultaneously addressing issues concerning hunger in
developing countries and obesity and lifestyle-related
diseases in developed countries.
The price of healthy-option lunches served at our
cafeteria includes a donation used to provide school
lunches for children in developing countries. We made
donations of 78,200 yen in fiscal 2011, and a total of
268,700 yen donations were performed.
2011 Lecture (November 17, 2011)
Nature’s Revenge on Civilization—Warning by Woodpeckers 100
Years ago
Purchase of Vaccine Bonds
We purchased “vaccine bonds” to assist children in
developing countries who have little or no access to
healthcare.
These bonds are issued by the International Finance
20
Review of Operations
The Toa Reinsurance Company, Limited, and Subsidiaries
For the years ended 31st March 2012 and 2011
Underwriting Income and Expenses
year to ¥7,765 million mainly owing to an increase in
losses on sales of securities. As a result, consolidated
Consolidated underwriting income in the year under
investment profit amounted to ¥33,136 million, an
review increased ¥69,384 million year on year to
increase of ¥18,060 million year on year. The return on
¥230,360 million mainly owing to an increase in reversal
investment (income yield) decreased 0.03 percentage
of underwriting reserves. On the other hand, consolidat-
points to 2.73%.
ed underwriting expenses increased ¥106,180 million
year on year to ¥261,884 million mainly owing to increas-
Ordinary Profit
es in net claims paid and provision for outstanding
claims. As a result, the consolidated underwriting loss
The consolidated ordinary profit/loss figure is calculated
amounted to ¥31,524 million for the year under review,
by deducting underwriting, investment, and operating
a deterioration of ¥36,796 million from the figure for the
and general administrative expenses and other ordinary
previous year.
expenses from underwriting income and investment
income. For the year under review, the consolidated ordi-
Investment Income and Expenses
nary loss amounted to ¥7,664 million, a decrease of
Consolidated investment income increased ¥22,777 mil-
accounting for current income taxes, refunded income
lion year on year to ¥40,901 million mainly owing to an
taxes, and deferred income taxes, the net loss amounted
increase in gains on sales of securities. Consolidated
to ¥18,268 million, a deterioration of ¥25,999 million from
investment expenses increased ¥4,717 million year on
the figure for the previous year.
as of the end of March, 2012
Invested Assets
as of the end of March, 2012
¥17,859 million from the figure for the previous year. After
Others
13.72%
Life Reinsurance
20.89%
Land and buildings
2.15%
Fire
33.12%
Marine
5.83%
Liability
12.33%
Loans
0.24%
Deposits
2.10%
Money held in trust
1.24%
Securities
94.27%
Motor
14.11%
21
Consolidated Summary of Underwriting
Thousands of
U.S. dollars
Millions of yen
2012
2011
2012
¥53,437
73,866
138.23%
¥50,371
22,549
44.77%
$650,165
898,731
9,404
7,328
77.92%
8,305
6,713
80.83%
114,429
89,165
22,767
14,232
62.51%
23,113
16,190
70.05%
277,010
173,170
19,905
13,310
66.87%
20,935
10,973
52.41%
242,188
161,953
33,715
27,841
82.58%
24,893
20,714
83.21%
410,216
338,750
22,132
14,118
63.79%
21,948
12,155
55.38%
269,282
171,781
¥161,363
150,699
93.39%
¥149,566
89,296
59.70%
$1,963,292
1,833,544
Fire
Net claims paid
Net loss ratio
Marine
Net claims paid
Net loss ratio
Motor
Net claims paid
Net loss ratio
Liability
Net claims paid
Net loss ratio
Life Reinsurance
Net claims paid
Net loss ratio
Others
Net claims paid
Net loss ratio
Total
Net claims paid
Net loss ratio
22
Consolidated Summary of Investments
• Invested Assets
Millions of yen
2012
Deposits
Monetary receivables bought
Money held in trust
Securities
Loans
Land and buildings
Total
Total assets
• Securities
¥ 10,406
—
6,109
465,874
1,199
10,608
494,198
¥588,494
2012
2011
¥
3,313
999
4,216
451,259
1,232
10,894
471,916
¥581,558
¥100,488
5,535
67,767
55,556
224,243
12,282
¥465,874
¥ 70,951
6,852
65,790
87,359
212,710
7,595
¥451,259
0.57%
0.17
0.73
77.60
0.21
1.87
81.15
100.00%
Percentage of total
2012
2011
2011
21.57%
1.19
14.55
11.92
48.13
2.64
100.00%
• Interest and Dividend Income
15.72%
1.52
14.58
19.36
47.14
1.68
100.00%
2012
¥
8
1
22
11,081
23
62
11,199
232
¥11,431
• Overseas Investment
Millions of yen
2012
Foreign currency
Foreign bonds
Foreign stocks
Others
Subtotal
Yen
Nonresident loans
Foreign bonds
Others
Subtotal
Total
2011
2011
¥
6
0
3
11,045
32
83
11,171
357
¥11,529
Percentage of total
2012
2012
$ 126,609
—
74,327
5,668,256
14,588
129,066
6,012,874
$7,160,165
Thousands of
U.S. dollars
2012
$1,222,639
67,346
824,523
675,952
2,728,357
149,443
$5,668,256
Thousands of
U.S. dollars
Millions of yen
Cash in bank
Money held in trust
Securities
Loans
Land and buildings
Subtotal
Others
Total
Thousands of
U.S. dollars
2011
1.77%
—
1.04
79.16
0.20
1.81
83.98
100.00%
Millions of yen
2012
Government bonds
Municipal bonds
Corporate bonds
Stocks
Foreign securities
Other securities
Total
Percentage of total
2011
2012
$
99
13
277
134,830
283
762
136,267
2,823
$139,091
Thousands of
U.S. dollars
2012
¥190,903
14,575
14,681
220,159
¥173,725
15,597
6,773
196,096
83.00%
6.34
6.38
95.72
80.98%
7.27
3.16
91.41
$2,322,705
177,334
178,627
2,678,668
100
4,591
5,143
9,835
¥229,994
100
8,904
9,426
18,431
¥214,527
0.04
2.00
2.24
4.28
100.00%
0.05
4.15
4.39
8.59
100.00%
1,216
55,863
62,582
119,662
$2,798,331
23
Consolidated Financial Statements
Consolidated Balance Sheets
As of 31st March 2012 and 2011
•
Assets
Millions of yen
2012
Cash and deposits
Money held in trust
Securities (Notes 4 (3) and (5))
Loans (Note 4 (4))
Tangible fixed assets (Notes 4 (1) and (2))
Land
Buildings
Leased assets
Other tangible fixed assets
Intangible fixed assets
Other intangible fixed assets
Other assets
(including Foreign reinsurance accounts receivable amounting to
¥26,930 million (US$327,655 thousand) and ¥18,561 million
for 2012 and 2011, respectively)
Deferred tax assets
Less: Allowance for doubtful accounts
Total assets
• LIABILITIES AND NET ASSETS
Thousands of
U.S. dollars
(Note 1(2))
2011
2012
¥10,406
—
6,109
465,874
1,199
¥3,313
999
4,216
451,259
1,232
$126,609
—
74,327
5,668,256
14,588
6,668
3,940
133
149
10,891
6,805
4,088
110
172
11,177
81,129
47,937
1,618
1,812
132,510
2
2
2
2
24
24
44,086
50,398
(473)
¥588,494
58,003
51,734
(381)
¥581,558
Millions of yen
2012
536,391
613,188
(5,754)
$7,160,165
Thousands of
U.S. dollars
(Note 1(2))
2011
2012
¥264,295
167,536
431,832
30,000
21,570
3,743
487
¥193,948
236,608
430,557
—
12,447
3,673
469
$3,215,658
2,038,398
5,254,069
365,007
262,440
45,540
5,925
7,336
7,336
—
¥494,970
7,091
7,091
1,181
¥455,420
89,256
89,256
—
$6,022,265
¥5,000
0
88,065
(5,737)
87,327
¥5,000
0
106,967
(5,737)
106,230
$60,834
0
1,071,480
(69,801)
1,062,501
31,171
(24,975)
6,195
¥93,523
¥588,494
41,300
(21,391)
19,908
¥126,138
¥581,558
379,255
(303,869)
75,374
$1,137,887
$7,160,165
Liabilities
Underwriting funds
Outstanding claims
Corporate bonds
Other liabilities
Accrued retirement benefits for employees
Accrued retirement benefits for directors
Reserve under the special law
Reserve for price fluctuations
Deferred tax liabilities
Total liabilities
Net assets
Capital stock
Capital surplus
Retained earnings
Treasury stock
Accumulated other comprehensive income
Net unrealized gains on available-for-sale securities, net of tax
Foreign currency translation adjustments
Total net assets
Total liabilities and net assets
24
The accompanying notes are an integral part of the statements.
Consolidated Statements of Income
Thousands of
U.S. dollars
(Note 1(2))
Millions of yen
2012
2011
2012
¥149,566
467
10,941
160,976
$1,963,292
3,954
835,515
2,802,774
Ordinary Income and Expenses:
Ordinary income
Underwriting income
Investment income on deposit premiums
Reversal of underwriting reserves
Investment income
Gain on money held in trust
Gain on sales of securities
Gain on redemption of securities
Gain on derivatives
Other investment income
Transfer of investment income on deposit premiums
Other ordinary income
Ordinary expenses
Underwriting expenses
Net claims paid
Commissions and brokerage (Note 5 (1))
Provision for outstanding claims
Other underwriting expenses
Investment expenses
Loss on money held in trust
Loss on sales of securities
Impairment losses on securities
Loss on redemption of securities
Other investment expenses
Operating and general administrative expenses (Note 5 (1))
Other ordinary expenses
Interest expenses
Provision for allowance for doubtful accounts
Other expenses
¥161,363
325
68,671
230,360
11,409
7
29,441
369
—
0
(325)
40,901
254
271,516
11,526
90
6,234
738
0
2
(467)
18,123
175
179,275
138,812
85
358,206
4,489
—
0
(3,954)
497,639
3,090
3,303,516
150,699
37,139
73,766
278
261,884
89,296
35,109
30,504
793
155,704
1,833,544
451,867
897,505
3,382
3,186,324
114
6,786
291
234
338
7,765
—
2,421
255
283
87
3,048
1,387
82,564
3,540
2,847
4,112
94,476
9,359
10,086
113,870
44
106
19
171
279,181
¥(7,664)
0
216
24
241
169,081
¥10,194
535
1,289
231
2,080
3,396,775
$(93,247)
25
Thousands of
U.S. dollars
(Note 1(2))
Millions of yen
2012
2011
2012
Extraordinary Income and Loss:
Extraordinary income
Gain on disposal of fixed assets
Extraordinary loss
Loss on disposal of fixed assets
Impairment losses on fixed assets (Note 5 (2))
Provision for reserve under the special law
Provision for reserve for price fluctuations
Income (loss) before income taxes
¥248
248
¥127
127
$3,017
3,017
6
3
5
82
73
36
245
256
(7,672)
4
92
10,229
2,980
3,114
(93,344)
1,717
(433)
9,311
10,595
4,149
(439)
(1,212)
2,498
20,890
(5,268)
113,286
128,908
(18,268)
7,731
(222,265)
7,731
$(222,265)
Income Taxes:
Current
Refund
Deferred
Income (loss) before minority interests
Net income (loss)
26
¥(18,268)
¥
Consolidated Statements of Comprehensive Income
For the year ended 31st March 2012 and 2011
Millions of yen
2012
Comprehensive Income
Income (loss) before minority interests
Other comprehensive income
Net unrealized gains on available-for-sale securities, net of tax
Total other comprehensive income (Note 6 (1))
(Breakdown)
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to minority interests
2011
Thousands of
U.S. dollars
(Note 1(2))
2012
¥(18,268)
¥7,731
$(222,265)
(10,128)
(3,584)
(13,712)
¥(31,981)
(11,592)
(6,551)
(18,143)
¥(10,412)
(123,226)
(43,606)
(166,832)
$(389,110)
(31,981)
—
(10,412)
—
(389,110)
—
27
Consolidated Statements of Changes in Shareholders’ Equity
Thousands of
U.S. dollars
(Note 1(2))
Millions of yen
2012
2011
2012
¥5,000
¥5,000
$60,834
—
5,000
—
5,000
—
60,834
0
0
0
—
0
—
0
—
0
106,967
99,870
1,301,460
(633)
(18,268)
(18,902)
88,065
(633)
7,731
7,097
106,967
(7,701)
(222,265)
(229,979)
1,071,480
(5,737)
(5,737)
(69,801)
—
(5,737)
—
(5,737)
—
(69,801)
106,230
99,132
1,292,493
(633)
(18,268)
(18,902)
87,327
(633)
7,731
7,097
106,230
(7,701)
(222,265)
(229,979)
1,062,501
Capital stock
Balance at the beginning of the period
Changes during the period
Total changes during the period
Balance at the end of the period
Capital surplus
Retained earnings
Dividends from retained earnings
Net income (loss) for the period
Treasury stock
Total shareholders’ equity
28
Millions of yen
2012
Thousands of
U.S. dollars
(Note 1(2))
2011
2012
¥41,300
¥52,892
$502,494
(10,128)
(10,128)
31,171
(11,592)
(11,592)
41,300
(123,226)
(123,226)
379,255
(21,391)
(14,840)
(260,262)
(3,584)
(3,584)
(24,975)
(6,551)
(6,551)
(21,391)
(43,606)
(43,606)
(303,869)
19,908
38,052
242,219
(13,712)
(13,712)
6,195
(18,143)
(18,143)
19,908
(166,832)
(166,832)
75,374
126,138
137,184
1,534,712
(633)
(18,268)
(13,712)
(32,615)
93,523
(633)
7,731
(18,143)
(11,046)
126,138
(7,701)
(222,265)
(166,832)
(396,824)
1,137,887
Accumulated other comprehensive income
Net unrealized gains on available-for-sale securities, net of taxes
Net changes in items other than shareholders’ equity
Total accumulated other comprehensive income
Total net assets
29
Consolidated Statements of Cash Flows
Thousands of
U.S. dollars
(Note 1(2))
Millions of yen
2012
2011
2012
Cash flows from operating activities
Income (loss) before income taxes
Depreciation and amortization
Impairment losses on fixed assets
Increase (decrease) in outstanding claims
Increase (decrease) in underwriting reserves
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in accrued retirement benefits for employees
Increase (decrease) in accrued retirement benefits for directors
Increase (decrease) in accrued bonuses to employees
Increase (decrease) in reserve for price fluctuations
Loss (gain) on securities
Interest expenses
Foreign exchange loss (gain)
Loss (gain) on tangible fixed assets
Loss (gain) on money held in trust
Decrease (increase) in other assets (other than investing and financing activities)
Increase (decrease) in other liabilities (other than investing and financing activities)
Others, net
Subtotal
Interest and dividends received
Interest paid
Income taxes paid
Income taxes refund
Net cash provided by (used in) operating activities
¥(7,672)
357
3
73,766
(68,671)
106
103
18
(21)
245
(11,409)
(22,436)
44
33
(241)
107
10,945
10,641
22
(14,053)
12,234
(0)
(2,635)
2,787
(1,668)
¥10,229
351
82
30,504
(10,941)
216
176
(17)
8
4
(11,526)
(4,004)
0
57
(122)
(90)
(2,842)
(389)
29
11,727
11,879
(0)
(11,634)
—
11,971
$(93,344)
4,343
36
897,505
(835,515)
1,289
1,253
219
(255)
2,980
(138,812)
(272,977)
535
401
(2,932)
1,301
133,167
129,468
267
(170,981)
148,850
(0)
(32,059)
33,909
(20,294)
(8,000)
5,992
(240,151)
235,962
(28)
62
(6,162)
(5,000)
3,054
(218,872)
201,670
—
529
(18,618)
(97,335)
72,904
(2,921,900)
2,870,933
(340)
754
(74,972)
(7,830)
(178)
397
—
(5,943)
(6,646)
(182)
583
(0)
(18,217)
(95,267)
(2,165)
4,830
—
(72,308)
30,000
(633)
(49)
29,316
—
(633)
(35)
(669)
365,007
(7,701)
(596)
356,685
(280)
21,424
5,018
¥26,443
(474)
(7,389)
12,407
¥5,018
(3,406)
260,664
61,053
$321,730
Cash flows from investing activities
Increase in money held in trust
Decrease in money held in trust
Purchases of securities
Proceeds from sales or redemption of securities
Loans made
Proceeds from collection of loans
Total of net cash provided by (used in) investment transactions
Total of net cash provided by (used in) operating activities and investment
transactions
Purchase of tangible fixed assets
Proceeds from sales of tangible fixed assets
Purchase of intangible fixed assets
Net cash provided by (used in) investing activities
Cash flows from financing activities
Proceeds from issuance of corporate bonds
Dividends paid
Repayment for lease liabilities
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period(Note 8 (1))
30
Notes to the Consolidated Financial Statements
1. Basis of Presenting the Consolidated Financial Statements
(1) The accompanying consolidated financial statements of The
Toa Reinsurance Company, Limited (the "Company") and its
subsidiaries (collectively, the "Companies") are prepared on
the basis of accounting principles generally accepted in
Japan, which are different in certain respects as to both
application and disclosure requirements of International
Financial Reporting Standards, and are compiled from the
consolidated financial statements prepared by the Company
as required by the Financial Instruments and Exchange Act
of Japan.
The consolidated financial statements are not intended to
present the consolidated financial position, results of
operations and cash flows in accordance with accounting
principles and practices generally accepted in countries and
jurisdictions other than Japan.
The accompanying consolidated financial statements
incorporate certain reclassifications and rearrangements in
order to present them in a form that is more familiar to
readers outside Japan.
(2) Amounts in U.S. dollars are included solely for the
convenience of readers outside Japan. The rate of
¥82.19=US$1, the rate of exchange on 31st March 2012,
has been used in translation. The inclusion of such amounts
is not intended to imply that Japanese yen has been or
could be readily converted, realized or settled in U.S. dollars
at this rate or any other rate.
(3) Fractional amounts of less than ¥1 million or $1 thousand
are rounded down. Accordingly, the totals in yen and US
dollars do not necessarily agree with the sum of the
individual amounts.
(4) Basis of Accounting Principles
A. Financial Instruments
(a)Stocks of Non-consolidated Subsidiaries not Accounted
for by the Equity-Method
S t o c k s o f n o n - c o n s o l i d a t e d s u b s i d i a r i e s n o t
accounted for by the equity-method are recorded at
cost determined by the moving average method.
(b)Securities
Available-for-sale securities with fair value are carried at
fair value based on the prices prevailing in the market
on the balance sheet date. Unrealized gains or losses,
net of tax are included in a separate component of net
assets. Cost of sales is calculated using cost
determined by the moving average method. Availablefor-sale securities extremely difficult to measure fair
value are recorded at cost or amortized cost
determined by the moving average method.
(c)Money Held in Trust
Securities included in money held in trust are carried
at fair value.
(d)Derivatives
Derivatives are carried at fair value with changes in fair
value.
B. Depreciation Method for Tangible Fixed Assets
Depreciation of tangible fixed assets (except for leased
assets) held by the Company is calculated by the declining
balance method based on estimated useful lives.
However, the depreciation of buildings, except for their
attached facilities, acquired on or subsequent to 1st April
1998, is calculated by the straight-line method.
2. Principal Matters for Preparation of Consolidated Financial
Statements
(1) Scope of Consolidation
A.O f the Company’s subsidiaries, two subsidiaries are
consolidated. The names of the consolidated subsidiaries
are as follows:
• The Toa Reinsurance Co. of America
• The Toa 21st Century Reinsurance Co., Ltd.
Depreciation of property and equipment held by
consolidated subsidiaries is calculated by the straight-line
method based on estimated useful lives.
B. Non-consolidated Subsidiary
The other subsidiary is a small-scale operation, in terms
of total assets, ordinary profit (loss), net income (loss) for
the year and retained earnings, and is excluded from the
scope of consolidation, due to its insignificant effect on
the consolidated financial statements of the Company.
C.Accounting Policies for Major Reserves
(a)Allowance for Doubtful Accounts
The Company books an allowance for doubtful
accounts, in accordance with the standard for selfassessment of assets and rules for write-offs and
provisions, as follows:
(i) For debts of debtors who are legally bankrupt (due
to bankruptcy, special liquidation or suspension of
service at clearing houses, etc.) or virtually
bankrupt, a reserve is provided based on the
amount that remains after anticipated proceeds
from the disposal of collateral and the recovery of
debt through guarantees are deducted from the
debt balances.
<Name of non-consolidated subsidiary>
• Sundai Company, Limited.
(2) Application of the Equity Method
The effect exerted by the non-consolidated subsidiary on
the net income (loss) for the year and the retained earnings
is negligible and, accordingly, this company is not
accounted for by the equity-method.
(3) Fiscal Years of Consolidated Subsidiaries
The fiscal year ends of both consolidated subsidiaries are
31st December. Since the differences in the fiscal year ends
do not exceed three months, financial statements as of the
fiscal year end of each subsidiary are used in preparing the
consolidated financial statements. As for significant
transactions occurring between that date and the date of
the Company’s fiscal year end, necessary adjustments are
made upon consolidation.
Depreciation of leased assets shown as a breakdown of
the tangible fixed assets is calculated by the straight-line
method over a period up to the length of the relevant
lease contracts with no residual value.
(ii) For debts of debtors who are likely to become
bankrupt, a reserve is provided based on the
amount considered to be necessary to cover the
amount that remains after anticipated proceeds
from the disposal of collateral and the recovery of
debt through guarantees are deducted from the
debt balances. This reserve amount is based on an
overall judgment regarding the solvency status of
each debtor.
31
(iii)For debts other than those described above, a
reserve is provided for an amount determined by
multiplying debt balances by the default rate,
which is computed based on historical loan loss
experience in certain previous period.
All debts are assessed by each asset management
department of the Company in accordance with
the standard for asset self-assessment. The
allowance for doubtful accounts mentioned above
is computed based on the result of this
assessment. These results are audited by the
Internal Audit Department which is independent
from each department.
(b)Accrued Retirement Benefits for Employees
Accrued retirement benefits for employees are
provided based on projected benefit obligations and
plan assets. The Company fully amortizes prior
service costs in the fiscal year. The consolidated
subsidiaries amortize prior service costs using the
straight-line method over the average remaining
service period of employees at the time of occurrence.
The Company fully amortizes actuarial differences in
the following fiscal year.
(Additional Information)
The Company introduced defined benefit pension
plans as a replacement of tax-qualified pension plans
on 1st August 2011. The effect caused by this change
was negligible.
(c)Accrued Retirement Benefits for Directors
Accrued retirement benefits for directors are provided
on the basis of the estimated amounts to be paid,
based on internally established rules.
(d)Reserve under the Special Law (Reserve for Price
Fluctuations)
The Company books a reserve for price fluctuations in
accordance with Article 115 of the Insurance
Business Law to provide for contingent losses caused
by price fluctuations on stocks and other investments.
D.Consumption Tax Accounting Treatment
Consumption tax is accounted for separately from the
transactions subject to such tax. However, the
consumption tax on certain expenses, such as operating
and general administrative expenses, is included in those
expenses. Non-deductible consumption tax on the
purchase of assets is included in “Other assets” and
amortized evenly over a period of five years.
E. Lease Transactions
Finance leases other than those which are deemed to
transfer the ownership of the leased assets to the lessee
that were entered into a contract on or before 31st
March 2008 are accounted for by a method similar to
that applicable to ordinary operating leases.
F. Hedge Accounting
With regard to forward foreign exchange contracts
utilized to hedge future foreign exchange risk associated
with financial assets and liabilities denominated in foreign
currencies, the Company applies the allocation method.
As the forward foreign exchange contract meets the
required condition to apply the allocation method, the
Company omits the hedge accounting effectiveness
testing. The allocation method requires foreign currency
32
a s s e t s a n d l i a b i l i t i e s t o b e re c o rd e d u s i n g t h e
corresponding foreign exchange contract rates.
G.Cash and Cash Equivalents
Cash and cash equivalents in the consolidated
statements of cash flows comprise cash on hand, bank
deposits able to be withdrawn on demand and shortterm investments with an original maturity of three
months or less and which have minimal risk of
fluctuations in value.
3. Additional Information
Effective from the beginning of the fiscal year ended 31st
March 2012, the Company has applied Accounting
Standards Board of Japan Statement No.24 “Accounting
Standard for Accounting Changes and Error Corrections”
(4th December 2009) and Accounting Standards Board of
Japan Guidance No.24 “Guidance on Accounting Standard
for Accounting Changes and Error Corrections” (4th
December 2009).
4. Notes to the Consolidated Balance Sheets
(1) Accumulated depreciation of tangible fixed assets as of 31st
March 2012 and 2011 amounted to 7,587 million yen
(92,310 thousand U.S. dollars) and 7,539 million yen,
respectively.
(2) Advanced depreciation of tangible fixed assets as of 31st
March 2012 and 2011 amounted to 29 million yen (352
thousand U.S. dollars) and 30 million yen, respectively.
(3) Investments in non-consolidated subsidiaries at cost as of
31st March 2012 and 2011 amounted to 10 million yen (121
(4) Impaired Loans
There was no balance of impaired loans, including loans to
borrowers under bankruptcy proceedings, overdue loans,
loans past due for three months or more and loans with
altered lending conditions, as of 31st March 2012 and 2011.
The definitions of impaired loans are as follows:
A. “Loans to borrowers under bankruptcy proceedings” are
non-accrual loans (excluding loans written off) for which
circumstances apply as stated in Article 96-1-3 or Article
96-1-4 of the Implementation Ordinances for the
Corporation Tax Law (Government Ordinance No. 97,
1965) which have no prospects for recovery or
repayment of principal or interest, or for which payment
of principal or interest has not been received for a
substantial period, or for other reasons.
B. “Overdue loans” are those loans on which accrued
interest income has not been recognized, excluding
loans to borrowers under bankruptcy proceedings and
excluding loans for which interest payments have been
rescheduled with the objective of assisting these
borrowers in management restructuring.
C.“Loans past due for three months or more” are those
loans for which payments of principal or interest has not
been received for a period of three months or more,
beginning with the next day following the last due date
for such payments, and are not included in loans to
borrowers under bankruptcy proceedings or non-accrual
past due loans.
D.“Loans with altered lending conditions” are those loans
for which the Company has provided more favorable
terms and conditions than those contained in the original
loan agreement (including reducing interest rates,
rescheduling interest and principal payments, or the
waiving of claims on the borrowers) to the borrowers with
the aim of providing restructuring assistance and
support. Such loans exclude loans to borrowers under
bankruptcy proceedings, non-accrual past due loans and
loans past due for three months or more.
(5) Assets pledged as collateral were securities, whose carrying
value as of 31st March 2012 and 2011 amounted to 5,184
million yen (63,073 thousand U.S. dollars) and 2,059 million
yen, respectively. These securities were pledged mainly to
establish letters of credit.
5. Notes to the Consolidated Statements of Income
(1) The significant component of business expenses is as
follows:
Thousands of
U.S. dollars
(Note 1(2))
Millions of yen
Commissions, net of reinsurance
2012
¥37,139
2012
$451,867
2011
¥35,109
Business expenses are the total of “Operating and general
administrative expenses” and “Commissions and brokerage”
in the consolidated statements of income.
6. Notes to the Consolidated Statements of Comprehensive Income
(1) Each component of other comprehensive income for the
year ended 31st March 2012
Millions of yen
2012
Net unrealized gains on available-for-sale
securities, net of tax:
Gains arising during the period
Reclassification adjustments to profit or
loss
Amount before income tax effect
Income tax effect
Total
Foreign currency translation adjustments:
Gains arising during the period
Amount before income tax effect
Income tax effect
Total
Total other comprehensive income
Real estate for
sale
Purpose of use
Real estate for
sale
Land
Tokyo
Category
Land
(Millions of yen)
Impairment losses
3
(Thousands of U.S. dollars)
Location
Impairment losses
36
Tokyo
Category
Location
Land, buildings Tokyo
and others
Land
48
(Millions of yen)
Impairment losses
Buildings Others
Total
33
0
82
Properties used for reinsurance operations are grouped by
each business unit (the head office and each overseas
branch). Investment properties owned by the Company are
grouped individually.
Carrying amount of the above mentioned asset was reduced
to its recoverable value due to decline in real estate price
and the resulting decrease in the carrying amount was
recognized as impairment losses in the amount of 82 million
yen in the extraordinary losses.
The recoverable value of the asset concerned is determined
at the net realizable value on sale which is the fair value less
the costs to sell.
¥ 3,367
$40,966
(22,679)
(275,933)
(19,311)
9,183
(10,128)
(234,955)
111,728
(123,226)
¥(3,827)
(3,827)
243
(3,584)
¥(13,712)
$(46,562)
(46,562)
2,956
(43,606)
$(166,832)
(Thousand shares)
Number of
Number of
Number of
Number of
shares as of shares increased shares decreased shares as of
1st April 2011 during the period during the period 31st March 2012
Outstanding shares
Common stock
Total
Treasury stock
Common stock
Total
100,000
100,000
—
—
—
—
100,000
100,000
9,458
9,458
—
—
—
—
9,458
9,458
(2) Detailed information for cash dividends
Dividends paid
Type of
shares
Total dividends
Dividend per
(*Millions of Yen)
share (*Yen) Dividend Effective
(**Thousands of
(**U.S. dollar record date
date
U.S. dollars
(Note 1(2)))
(Note 1(2)))
General meeting of Common
shareholders on
stock
28th June 2011
¥633*
$7,701**
31st March 29th June
¥7*
2011
2011
$0.09**
Of dividends with record date within the fiscal year ended
31st March 2012, dividends with the effective date after 31st
March 2012
Type of
shares
As for the year ended 31st March 2011
Real estate
for sale
Location
Properties used for reinsurance operations are grouped by
each business unit (the head office and each overseas
branch). Investment properties owned by the Company are
grouped individually.
Carrying amount of the above mentioned asset was reduced
to its recoverable value due to decline in real estate price
and the resulting decrease in the carrying amount was
recognized as impairment losses in the amount of 3 million
yen (36 thousand U.S. dollars) in the extraordinary losses.
The recoverable value of the asset concerned is determined
at the net realizable value on sale which is the fair value less
the costs to sell.
Purpose of use
Category
2012
7. Notes to the Consolidated Statements of Changes in Shareholders’
Equity
(1) Detailed information for outstanding shares and treasury
stock
(2) Impairment losses were recognized for the following assets:
As for the year ended 31st March 2012
Purpose of use
Thousands of
U.S. dollars
(Note 1(2))
Total dividends
(*Millions of Yen)
of
(**Thousands of Source
dividends
U.S. dollars
(Note 1(2)))
Dividend per Dividend
share (*Yen)
Effective
(**U.S. dollar record
date
date
(Note 1(2)))
¥633* Retained ¥7* 31st March 29th June
shareholders on
stock
2012
$7,701** earnings $0.09** 2012
28th June 2012
(1) Detailed information for outstanding shares and treasury
stock
(Thousand shares)
Number of
Number of
Number of
Number of
shares as of shares increased shares decreased shares as of
1st April 2010 during the period during the period 31st March 2011
Outstanding shares
Common stock
Total
Treasury stock
Common stock
Total
100,000
100,000
—
—
—
—
100,000
100,000
9,458
9,458
—
—
—
—
9,458
9,458
33
(2) Detailed information for cash dividends
Dividends paid
Type of
shares
shareholders on
stock
25th June 2010
Total dividends Dividend per Dividend
(Millions of Yen) share (Yen) record date
¥633
Effective
date
2010
2010
¥7
Of dividends with record date within the fiscal year ended
31st March 2011, dividends with the effective date after 31st
March 2011
Type of
shares
shareholders on
stock
28th June 2011
Total
Dividend Dividend
dividends Source of per share record
(Millions of Yen) dividends (Yen)
date
¥633
Retained
earnings
¥7
Effective
date
2011
2011
8. Notes to the Consolidated Statements of Cash Flows
(1) Reconciliation of the balance of cash and cash equivalents
at the end of the period with the itemized amounts shown in
the consolidated balance sheets as of 31st March 2012 and
2011 are as follows:
Millions of yen
Cash and deposits
Securities
Securities other than cash equivalents
Cash and cash equivalents
2012
2011
¥10,406 ¥3,313
—
999
465,874
451,259
(449,837) (450,554)
¥26,443 ¥5,018
Thousands of
U.S. dollars
(Note 1(2))
2012
$126,609
—
5,668,256
(5,473,135)
$321,730
(2) Cash flows from investing activities include those related to
insurance business.
9.Leases
(1) Information on finance leases other than those that were
deemed to transfer the ownership of the leased assets to the
lessees, and which were accounted for by a method similar
to that applicable to ordinary operating leases, for the years
ended 31st March 2012 and 2011 is summarized as follows:
A.A cquisition Cost, Accumulated Depreciation and Net
Value of Tangible Fixed Assets Leased:
Millions of yen
Acquisition cost
Accumulated depreciation
Net value
2012
¥20
20
¥—
2011
¥165
149
¥16
Thousands of
U.S. dollars
(Note 1(2))
2012
$243
243
$ —
Acquisition costs are calculated using the inclusive-ofinterest method since the percentage of the future lease
payments to the balance of tangible fixed assets is
immaterial.
B. Future Lease Payments:
Millions of yen
Within one year
Over one year
Total
2012
¥—
—
¥—
2011
¥16
—
¥16
Thousands of
U.S. dollars
(Note 1(2))
2012
$—
—
$—
Future lease payments costs are calculated using the
inclusive-of-interest method since the percentage of the
future lease payments to the balance of tangible fixed
assets is immaterial.
34
C. Lease Expenses
L e a s e e x p e n s e s ( t h e a m o u n t c o r re s p o n d i n g t o
depreciation expense) for the years ended 31st March
2012 and 2011, amounted to 16 million yen (194
D. Computation of Depreciation Expenses
Depreciation expenses are computed by the straight-line
method over a period up to the length of the relevant
lease contracts with no residual value. The figures shown
in this note include the portion of interest thereon.
(2) Future lease payments due under non-cancelable operating
leases for the years ended 31st March 2012 and 2011 are
as follows:
Millions of yen
Within one year
Over one year
Total
2012
¥8
4
¥12
2011
¥9
9
¥19
Thousands of
U.S. dollars
(Note 1(2))
2012
$97
48
$146
10. Financial Instruments
(1) Overview of Financial Instruments
A.Policy for Financial Instruments
The Company underwrites non-life reinsurance (such as
Fire, Marine, Motor, General liabilities reinsurance) and life
re i n s u r a n c e . T h e C o m p a n y i n v e s t s i n f i n a n c i a l
instruments paying attention to adequate safety, liquidity
and profitability, as a funding source of the reinsurance
claims to be paid securely and promptly.
The Company maintains Enterprise Risk Management
system to control investment risk, to keep adequate
solvency in case of the risk occurrence.
Additionally, in order to further strengthen financial
foundation, the Company substantially enhanced capital
adequacy by issuing subordinated notes with an
established equity content level recognized by major
rating companies.
B.Types of Financial Instruments and Related Risk
The Company holds financial instruments mainly for the
purpose of investment and business cooperation. Main
components of the instruments are bonds, stocks and
investment trust funds, which are exposed to price risk
due to market fluctuations (interest rate, foreign exchange
rate and stock price), and credit risk of the issuers.
Derivatives utilized by the Company are forward foreign
exchange contracts. Forward foreign exchange contracts
are utilized for hedging fluctuations risk in future foreign
exchange rates, regarding to redemptions and interests
arising from foreign bonds.
Derivatives are only taken out with counterparties or
referenced entities with a suitable credit rating.
Loans are exposed to credit risk due to breach of
contracts.
Subordinated notes issued by the Company are exposed
to market risk due to interest-rate fluctuations.
C.Risk Management for Financial Instruments
The board of directors establishes risk management
policies and internal rules for investment, and defines risk
management methodologies, process and which
department to be responsible for risk managements. The
department in charge performs the risk managements in
accordance with the policies and the rules, and condition
of the risk is reported to the board regularly or properly, to
enable the board to recognize the actual condition of the
risk.
Foreign subsidiaries establish investment policies and
manage the risk in accordance with the policies, and hold
investment committee and other meetings regularly to
discuss condition of risk management and future
i n v e s t m e n t p o l i c i e s . T h e t h i rd p a r t y i n v e s t m e n t
management arrangements are made in accordance with
the investment guidelines and compliance with the
guidelines is monitored.
Internal audit department performs internal audit under
inter nal audit plan regarding to condition of risk
management mentioned above.
(2) Fair Value of Financial Instruments
The table below shows the amount on consolidated balance
sheet, fair value and unrealized gain (loss) of financial
instruments as of 31st March 2012 and 2011. Financial
instruments extremely difficult to measure fair value are not
included in the table. Also please see note (b) below.
As of 31st March 2012
(a)Market risk management
(i) Interest rate fluctuations risk management
The department in charge analyzes risk amount by
“Value at Risk” (hereafter VaR), sensitivity analysis for
interest rate and other methods. Compliance with
the rules is monitored and reported to the board
regularly.
D.Supplementary Explanation for the Fair Value of Financial
Instruments.
The fair value of financial instruments includes market
price and price measured reasonably by the Company if
market price is not available. Measurement for price of
financial instruments depends on certain assumptions,
the use of different assumptions could result in a different
price.
Unrealized
gain (loss)
Cash and deposits
Money held in trust
Securities
Available for sale
Total assets
¥10,406
6,109
¥10,406
6,109
¥—
—
465,163
¥481,679
465,163
¥481,679
—
¥—
Corporate bonds
Total liabilities
¥30,000
¥30,000
¥29,951
¥29,951
¥(48)
¥(48)
Cash and deposits
Money held in trust
Securities
Available for sale
Total assets
$126,609
74,327
$126,609
74,327
$—
—
5,659,605
$5,860,554
5,659,605
$5,860,554
—
$—
Corporate bonds
Total liabilities
$365,007
$365,007
$364,411
$364,411
$(584)
$(584)
(iii)Price fluctuations risk management
VaR, sensitive analysis for market and other
methods. Compliance with the rules is monitored
and reported to the board regularly.
(c)Liquidity risk management
T h e C o m p a n y p e r f o r m s a p p r o p r i a t e f u n d
management, and management for liquidity risk by
holding assets with adequate liquidity, and obtaining
committed lines of credit from several financial
institutions.
Liquidity risk is monitored by the department in
charge, and reported to the board regularly.
Fair value
Thousands of U.S. dollars (Note 1(2))
Amount on
Unrealized
consolidated Fair value
gain (loss)
balance sheet
(ii) Foreign exchange risk management
VaR of foreign bonds, sensitive analysis and other
methods. Compliance with the rules is monitored,
and foreign exchange risk (offsetting foreign currency
a s s e t s a n d l i a b i l i t i e s ) i s re c o g n i z e d b y t h e
department in charge of integrated risk
management, and reported to the board regularly.
Forward foreign exchange contracts are utilized for
hedging fluctuations risk in future foreign exchange
rates, regarding to redemptions and interests arising
from foreign currency bonds hedged are recorded at
the contact rate by the allocation method.
(b)Credit risk management
With respect to credit risk of bond issuer and the
referenced entities’ credit in credit derivatives, the
department in charge regularly recognizes market
conditions, financial condition, credit information and
fair value. For loans, the department in charge
performs credit management by extending credit
assessment, determining when to obtain collateral
and guarantees, on individual debtor basis.
Compliance with the rules is reported to the board
regularly.
Millions of yen
Amount on
consolidated
balance sheet
Securities
Available for sale
Total assets
Millions of yen
Amount on
consolidated
balance sheet
Fair value
Unrealized
gain (loss)
¥999
¥999
¥—
450,311
¥451,311
450,311
¥451,311
—
¥—
(Notes)
(a) Measuring method for fair value of financial instruments
(i) Assets
Cash and deposits
Fair value of cash and deposits is deemed as book value
since it is scheduled to be settled in a short period of time
and fair value approximates book value.
Fair value of monetary receivables bought is based on price
provided by financial institution.
Money held in trust
Fair value of deposits is deemed as book value since it is
scheduled to be settled in a short period of time and fair
value approximates book value. Fair value of stocks is based
on market quoted price, fair value of bonds based on quoted
p r i c e , p r i c e re l e a s e d b y J a p a n S e c u r i t i e s D e a l e r s
Association, price quoted by counterparties and price
provided by financial institutions. Fair value of quoted
derivative is based on market quoted price.
Securities
Fair value of stocks is based on market quoted price. Fair
value of bonds is based on quoted price, price released by
35
Japan Securities Dealers Association, price quoted by
counterparties and price provided by financial institutions.
Fair value of investment trust funds is based on publicly
announced price or unit price provided by financial
institution. With respect to investment in partnership,
partnership’s property is measured at fair value if available,
and then the part of the Company’s share is recorded to
balance sheets.
Corporate bonds
Fair value of corporate bonds is calculated by financial
institution as the amount of future cash flow discounted at
the risk free rate for the corresponding period, considering
the factors of market environment and other similar
securities with an established equity content level.
(b)Financial instruments extremely difficult to measure fair value
were as follows:
Millions of yen
2012
¥2
708
¥710
Foreign bonds
Non-listed stocks
Total
Thousands of
U.S. dollars
(Note 1(2))
2011
¥2
944
¥947
2012
$24
8,614
$8,638
Above mentioned financial instruments where there are no
available market prices and extremely difficult to measure fair
value, are not subject to disclosure of fair value.
(c)The redemption schedules as of 31st March 2012 and 2011
for monetary receivables and available-for-sale securities
with maturities were as follows:
Millions of yen
Due after 5
Due in 1 year Due after 1
year through years through
or less
5 years
10 years
Deposits
¥10,406
Securities
Available-for-sale
securities with maturities
Government bonds
56,400
Municipal bonds
402
Corporate bonds
8,588
Foreign securities
37,489
Total
¥113,287
Due after
10 years
¥—
¥—
¥—
27,400
2,321
34,135
69,793
¥133,650
15,200
2,550
21,725
47,473
¥86,949
—
—
—
32,680
¥32,680
Due after 5
Due after
or less
10 years
5 years
10 years
Deposits
$126,609
Securities
Available-for-sale
Government bonds
686,214
Municipal bonds
4,891
Corporate bonds
104,489
Foreign securities
456,126
Total
$1,378,355
$— $— $—
333,373
184,937
—
28,239
31,025
—
415,318
264,326
—
849,166
577,600
397,615
$1,626,110 $1,057,902 $397,615
Millions of yen
Due after 5
or less
5 years
10 years
Monetary receivables
¥1,000
bought
Securities
Available-for-sale
Government bonds
3,400
Municipal bonds
301
Corporate bonds
2,500
Foreign securities
14,373
Total
¥21,574
36
(Millions of yen)
Due after
Due in 1
1 year
year or less through
2 years
Corporate
bonds
(ii) Liabilities
(d) The repayment schedule as of 31st March 2012 and 2011
for corporate bonds is follows:
Due after
10 years
¥— ¥— ¥—
26,300
38,950
—
500
5,850
—
27,688
32,847
—
70,201
52,503
41,039
¥124,690 ¥130,150 ¥41,039
¥
— ¥
Due after
2 years
through
3 years
— ¥
Due after
3 years
through
4 years
— ¥
Due after
4 years
through
5 years
— ¥
Due after
5 years
— ¥30,000
Thousands of U.S.dollars (Note 1(2))
Due after
Due in 1
1 year
year or less through
2 years
Corporate
bonds
$
— $
Due after
2 years
through
3 years
— $
Due after
3 years
through
4 years
— $
Due after
4 years
through
5 years
— $
Due after
5 years
— $365,007
None
11. Investments in Securities
(1) There were neither trading securities nor held-to-maturity
securities.
(2) Information regarding available-for-sale securities with fair
value as of 31st March 2012 and 2011 is as follows:
Millions of yen
Fair value
Securities for which fair value exceeds their cost
Government, municipal and
corporate bonds
¥101,973
Stocks
51,570
Foreign securities
170,678
Other securities
264
Subtotal
¥324,486
Cost
¥99,132
14,198
158,857
261
¥272,450
Securities for which fair value does not exceed their cost
corporate bonds
¥71,817
¥72,017
Stocks
3,278
3,896
Foreign securities
53,562
58,466
Other securities
12,018
12,085
Subtotal
140,677
146,465
Total
¥465,163
¥418,915
Unrealized
gain (loss)
¥2,840
37,372
11,820
2
¥52,036
¥(199)
(618)
(4,903)
(66)
(5,788)
¥46,247
Unrealized
Fair value
Cost
gain (loss)
corporate bonds
$1,240,698
Stocks
627,448
Foreign securities
2,076,627
Other securities
3,212
Subtotal
$3,947,998
$1,206,132
172,746
1,932,802
3,175
$3,314,880
corporate bonds
$873,792 $876,225
Stocks
39,883
47,402
Foreign securities
651,685
711,351
Other securities
146,222
147,037
Subtotal
1,711,607
1,782,029
Total
$5,659,605 $5,096,909
$34,554
454,702
143,813
24
$633,118
$(2,421)
(7,519)
(59,654)
(803)
(70,422)
$562,684
* Available-for-sale securities which are extremely difficult to
measure fair value are not included in the above table.
Millions of yen
Fair value
corporate bonds
¥100,960
Stocks
83,365
Foreign securities
118,945
Other securities
835
Subtotal
¥304,105
Cost
¥97,955
19,707
110,588
797
¥229,049
corporate bonds
¥42,634
¥43,093
Stocks
3,048
3,532
Foreign securities
93,762
102,001
Other securities
7,760
8,450
Subtotal
147,206
157,077
Total
¥451,311
¥386,126
Unrealized
gain (loss)
¥3,004
63,657
8,356
37
¥75,056
¥(459)
(483)
(8,239)
(689)
(9,871)
¥65,184
* Available-for-sale securities which are extremely difficult to
measure fair value are not included in the above table.
** Commercial papers classified as monetary receivables bought
in the consolidated balance sheet are included in “Other
securities” above.
(3) Sales of securities classified as available-for-sale and the
aggregate gain and loss were as follows:
Millions of yen
2012
2011
Thousands of
U.S. dollars
(Note 1(2))
(4) Securities for which impairment losses are recognized
For the years ended 31st March 2012, the Company
recognized impairment losses regarding available-for-sale
securities with fair value (Foreign securities) and available-forsale securities extremely difficult to measure fair value
(Stocks) in the amount of 33 million yen (401 thousand U.S.
dollars) and 236 million yen (2,871 thousand U.S. dollars) in
the consolidated statements of income. Consolidated
subsidiaries recognized impairment losses regarding
available-for-sale securities with fair value (Foreign securities)
in the amount of 21 million yen (255 thousand U.S. dollars) in
the consolidated statements of income.
For the years ended 31st March 2011, the Company
recognized impairment losses regarding available-for-sale
securities with fair value (Foreign securities) and available-forsale securities extremely difficult to measure fair value
(Stocks) in the amount of 110 million yen and 32 million yen
in the consolidated statements of income.
Consolidated subsidiaries recognized impairment losses
regarding available-for-sale securities with fair value (Foreign
securities) in the amount of 112 million yen in the
consolidated statements of income.
In principle, impairment losses on available-for-sale securities
with fair value held by the Company are recognized when
the fair value have declined by 30% or more of their book
value. Impairment losses on available-for-sale securities with
fair value held by consolidated subsidiaries are recognized
when the fair value have declined below their book value and
the decline in fair value is deemed to be other than
temporary.
12. Money Held in Trust
(1) Money held in trust for trading purposes
2012
Thousands of
U.S. dollars
(Note 1(2))
Millions of yen
2012
2011
¥ 155
¥
2012
Proceeds from sales
corporate bonds
Stocks
Foreign securities
Other securities
Total
¥59,462
30,940
78,106
21,886
¥190,395
¥62,854 $723,470
849
376,444
66,504
950,310
2,166
266,285
¥132,375 $2,316,522
Gain on sales
corporate bonds
Stocks
Foreign securities
Other securities
Total
¥1,190
25,907
2,303
41
¥29,441
¥1,543 $14,478
213
315,208
4,427
28,020
48
498
¥6,233 $358,206
13.Derivatives
None
Loss on sales
corporate bonds
Stocks
Foreign securities
Other securities
Total
¥434
0
5,530
821
¥6,786
¥4 $5,280
41
0
2,375
67,283
—
9,989
¥2,421 $82,564
The Company may pay additional retirement allowances in
the case of retirements of employees.
Additionally, a subsidiary has defined benefit retirement
plans.
The Company introduced defined benefit pension plans as a
replacement of tax-qualified pension plans on 1st August
2011.
Net unrealized gains (losses)
recognized for the fiscal year
(8)
$1,885
(2) Money held in trust for being held to maturity
None
(3) Money held in trust not for trading purposes or not being
held to maturity
None
14. Accrued Retirement Benefits for Employees
(1) Outline of retirement benefit plans
The Company has defined benefit retirement plans and
lump-sum payment retirement plans covering substantially all
employees.
37
(2)The balance of accrued retirement benefits for employees as
of 31st March 2012 and 2011 is analyzed as follows:
Thousands of
U.S. dollars
(Note 1(2))
Millions of yen
Projected benefit obligations
Plan assets
Unfunded retirement
benefit obligation ∙∙∙ (a)
Unrecognized actuarial
differences ∙∙∙ (b)
Net amount in the consolidated
balance sheets (a)+(b)
Accrued retirement benefits
for employees
2012
¥(9,487)
4,942
2011
¥(8,255)
4,577
2012
$(115,427)
60,128
(4,544)
(3,677)
(55,286)
800
4
9,733
(3,743)
(3,673)
(45,540)
¥(3,743)
¥(3,673)
$(45,540)
15. Deferred Tax
(1) The major components of the net deferred tax assets as of
the years ended 31st March 2012 and 2011 are as follows:
Millions of yen
2012
Deferred tax assets
Tax loss carryforwards
Outstanding claims
Reserve for price fluctuations
Accrued retirement benefits for
employees
Impairment losses on securities
Others
Subtotal of deferred tax assets
Valuation allowance
Total deferred tax assets
(3)Retirement benefit cost for the years ended 31st March
2012 and 2011 are as follows:
Thousands of
U.S. dollars
(Note 1(2))
Millions of yen
Service cost
Interest cost
Expected return on plan assets
Amortization of unrecognized
actuarial differences
Amortization of unrecognized
prior service costs
Retirement benefit cost
2012
¥363
223
(91)
37
(58)
¥475
2011
¥361
223
(91)
2012
$4,416
2,713
(1,107)
450
64
1
¥559
(705)
$5,779
Additional retirement allowances paid for the year ended
31st March 2012 amounted to 71 million yen (863 thousand
U.S. dollars). The allowances are included in the operating
and general administrative expenses and are not included in
the above.
(4)Assumptions used in calculation of the above information
A.Method of attributing the projected benefits to periods of
service
Straight-line basis
B.Discount rate and expected rate of return on plan assets
Discount rate
Expected rate of return
on plan assets
2012
Mainly 2.0%
2011
Mainly 2.0%
Mainly 0.7%
Mainly 0.8%
C.Amortization of unrecognized prior service cost
1 year for the Company
9.6 years for consolidated subsidiaries
D.Amortization of actuarial differences
Mainly 1 year (fully amortized in the following fiscal year)
38
Deferred tax liabilities
Net unrealized gains on
available-for-sale securities
Deferred policy acquisition costs
Others
Total deferred tax liabilities
Net deferred tax assets
Thousands of
U.S. dollars
(Note 1(2))
2011
2012
¥28,243 ¥50,453 $ 343,630
19,882
—
241,902
17,122
19,541
208,322
2,258
2,567
27,472
1,625
1,656
303
351
1,273
1,969
70,708
76,540
(5,065)
(855)
¥65,643 ¥75,685 $
19,771
3,686
15,488
860,299
(61,625)
798,673
¥ (14,416) ¥(23,529) $(175,398)
(587)
(506)
(7,141)
(240)
(1,096)
(2,920)
¥ (15,244) ¥(25,132) $(185,472)
¥ 50,398 ¥50,552 $ 613,188
(2) The reconciliation of the statutory income tax rate to the
effective income tax rate for the years ended 31st March
2012 is not shown due to loss before income taxes.
The reconciliation of the statutory income tax rate to the
effective income tax rate for the years ended 31st March
2011 is as follows:
2011
Statutory income tax rate of the Company
(Adjustments)
Non-taxable dividends received
Undistributed profits of controlled foreign companies
Others
Effective income tax rate of the Companies
36.2%
(14.6)
5.5
(2.7)
24.4%
(3) Impact of Changes in the Corporate Tax Rate
“Act on Partial Amendment to the Income Tax Act, etc. in
order to Create a Tax System Responding to Structural
Changes of Economy and Society” (Act No. 114, 2011) and
“Act on Special Measures Concerning Securing Financial
Resources Necessary for the Implementation of Measures to
recover from the Great East Japan Earthquake” (Act No.
117, 2011) were promulgated on 2nd December 2011, and
accordingly, the corporate income tax rate has been lowered
and the special corporation tax for restoration has been
imposed from the fiscal year beginning on or after 1st April
2012.
Accordingly, the effective statutory income tax rate used to
calculate deferred tax assets and deferred tax liabilities will
generally change from 36.2% used previously, to 33.3% for
temporary differences expected to be reversed in the fiscal
years from the fiscal year beginning 1st April 2012 up to and
including the fiscal year beginning 1st April 2014, and 30.8%
for temporary differences expected to be reversed from the
fiscal year beginning 1st April 2015 onwards. As a result of
this change in the corporate tax rate, deferred tax assets
(net of deferred tax liabilities) decreased by 6,236 million yen
(75,872 thousand U.S. dollars), underwriting reserves
decreased by 375 million yen (4,562 thousand U.S. dollars),
net unrealized gains on available-for-sale securities, net of
tax increased by 2,084 million yen (25,355 thousand U.S.
dollars), deferred income taxes increased by 8,320 million
yen (101,228 thousand U.S. dollars) and net loss increased
by 7,945 million yen (96,666 thousand U.S. dollars).
Additionally, beginning from fiscal years starting on or after 1st
April 2012, the use of tax loss carryforwards will be limited to the
equivalent of 80% of taxable income before deducting tax loss
carryforwards. As a result of this change, deferred tax assets
decreased by 3,691 million yen (44,908 thousand U.S. dollars)
and deferred income taxes increased by 3,691 million yen
(44,908 thousand U.S. dollars).
16. Segment Information
(1) Overview of reportable segments
The company’s reportable segments are components of the company about which separate financial information is available that is
evaluated regularly by the management in deciding how to allocate resources and in assessing performance.
Our Reportable segments are “The Toa Reinsurance Company, Limited (hereafter Toa)”, “The Toa Reinsurance Co. of America (TRA)”
and “The Toa 21st Century Reinsurance Co., Ltd (TTFC)”.
The company’s business is assuming reinsurance, and within the company TRA is in charge of North America area, Toa and TTFC
are in charge of others in the main.
(2) Measurement of sales, profit or loss, assets, liabilities, and other items for each reportable segment
Accounting policies of each reported segment are in a manner consistent with that in the “Basis of Accounting Principles”
Profit or loss of each reportable segment shown in the following table represents “Net income (loss)”.
Inter-segment revenues are measured on the basis of market transactions on arm’s length terms.
(3) Information about sales, profit or loss, assets, liabilities, and other items on each reportable segment
Millions of yen
Reportable segments
Toa
TRA
TTFC
Total
Sales
Sales to external customers
Inter-segment sales or transfers
Total
Profit or loss by reportable segments
Assets by reportable segments
Liabilities by reportable segments
Other items
Depreciation
Interest expenses
Extraordinary loss
Income tax expense
¥132,654
1,424
134,079
(15,522)
497,910
418,816
¥28,587
(5,112)
23,474
5,147
128,238
77,882
311
11,279
44
248
248
256
3
245
8,454
46
4,207
—
—
—
—
—
—
1,980
¥
—
3,703
3,703
(5,138)
34,678
10,838
¥161,242
15
161,257
(15,512)
660,827
507,536
—
739
—
—
—
—
—
—
(1,689)
357
16,226
44
248
248
256
3
245
8,746
39
Reportable segments
Toa
TRA
TTFC
Total
Sales
Total
Profit or loss by reportable segments
Other items
$1,613,991
17,325
1,631,329
(188,855)
6,058,036
5,095,705
$ 347,816
(62,197)
285,606
62,623
1,560,262
947,584
3,783
137,230
535
3,017
3,017
3,114
36
2,980
102,859
559
51,186
—
—
—
—
—
—
24,090
Depreciation
Interest expenses
Extraordinary loss
Income tax expense
$
—
45,054
45,054
(62,513)
421,924
131,865
$1,961,820
182
1,962,002
(188,733)
8,040,236
6,175,155
—
8,991
—
—
—
—
—
—
(20,549)
4,343
197,420
535
3,017
3,017
3,114
36
2,980
106,411
*Sales represent “Net premiums written”.
Millions of yen
Reportable segments
Toa
TRA
TTFC
Total
Sales
Total
Profit by reportable segments
Other items
Depreciation
Interest expenses
Extraordinary loss
Income tax expense
40
¥122,611
2,743
125,354
3,807
482,194
375,648
¥ 27,026
(4,764)
22,262
5,985
126,797
78,264
310
8,479
0
127
127
92
82
874
40
4,259
—
—
—
—
—
2,313
¥
—
1,896
1,896
1,320
32,486
2,760
¥149,637
(123)
149,514
11,114
641,478
456,674
—
649
—
—
—
—
—
520
351
13,388
0
127
127
92
82
3,709
(4) Reconciliations of the total reportable segments amounts to amounts presented in the financial statements and descriptions of the
reconciliations.
A. Sales
(Note 1(2))
Millions of yen
2012
Elimination of inter-segment transactions
Other adjustments
Net premiums written in consolidated financial statements
2012
2011
¥161,257
(15)
121
¥161,363
Total of reportable segments
$1,962,002
(182)
1,472
$1,963,292
¥149,514
123
(71)
¥149,566
B. Profit or loss
(Note 1(2))
Millions of yen
2012
Net income (loss) in consolidated financial statements
2012
2011
¥(15,512)
(2,755)
¥(18,268)
$(188,733)
(33,519)
$(222,265)
¥11,114
(3,383)
¥ 7,731
C. Assets
(Note 1(2))
Millions of yen
2012
Total assets in consolidated financial statements
2012
2011
¥660,827
(72,333)
¥588,494
$8,040,236
(880,070)
$7,160,165
¥641,478
(59,919)
¥581,558
D. Liabilities
(Note 1(2))
Millions of yen
2012
Total liabilities in consolidated financial statements
2012
2011
¥507,536
(12,565)
¥494,970
$6,175,155
(152,877)
$6,022,265
¥456,674
(1,254)
¥455,420
E. Other items
(Note 1(2))
Millions of yen
2012
2012
2011
Adjustments*
Amounts in consolidated financial statements
¥16,226
(4,817)
¥11,409
¥13,388
(1,862)
¥11,526
$197,420
(58,608)
$138,812
¥ 8,746
1,849
¥10,595
¥ 3,709
(1,211)
¥ 2,498
$106,411
22,496
$128,908
Income tax expense
Adjustments*
Amounts in consolidated financial statements
*Adjustment represents “elimination of inter-segment transactions”.
41
(Related information)
(1) Information about revenue derived from its products or services
Millions of yen
Fire
Marine
¥53,437
¥9,404
Motor
¥22,767
General
Liabilities
¥19,905
Life
¥33,715
Others
¥22,132
Total
¥161,363
Fire
Marine
$650,164
$114,417
Motor
$277,004
General
Liabilities
$242,182
Life
$410,208
Others
(2) Information by geographic area
A. Sales
Millions of yen
Japan
¥106,453
United States
¥30,550
Others
¥24,358
Total
¥161,363
Japan
$1,295,206
United States
$371,699
*Sales are classified by country based on the geographic area of customers.
** Sales represent “Net premiums written”.
42
Others
$296,362
Total
$269,278 $1,963,292
Total
$1,963,292
B. Tangible fixed assets
Millions of yen
Japan
Others
¥9,988
Total
¥902
¥10,891
Japan
$121,523
Others
Total
$10,974
$132,510
(3) Information about major customers
None
(1) Information about revenue derived from its products or services
Millions of yen
Fire
Marine
¥50,371
¥8,305
Motor
¥23,113
General
Liabilities
¥20,935
Life
¥24,893
Others
¥21,948
Total
¥149,566
(2) Information by geographic area
A. Sales
Millions of yen
Japan
¥98,490
United States
¥28,242
Others
¥22,833
Total
¥149,566
*Sales are classified by country based on the geographic area of customers.
** Sales represent “Net premiums written”.
B. Tangible fixed assets
Millions of yen
Japan
¥10,231
Others
¥946
Total
¥11,177
(3) Information about major customers
None
(Information about Impairment Losses on Fixed Assets by Reportable Segments)
For the information about Impairment losses on fixed assets by reportable segments, please see “Segment Information”.
(Information about Amortization of Goodwill and Carrying Amount by Reportable Segments)
None
(Information about Gains on Negative Goodwill by Reportable Segments)
None
17. Related Party Transactions
There were no material transactions with related parties to report for the fiscal year ended 31st March 2012 and 31st March 2011.
43
18. Per Share Information
U.S. dollars
(Note 1(2))
Yen
2012
¥1,032.92
(201.76)
Net assets per share : Basic
Net income (loss) per share : Basic
2012
2011
¥1,393.15
85.38
$12.57
(2.45)
*There were net loss per share and no potential common shares, therefore diluted net income per share is not described for the fiscal
year ended 31st March 2012.
**There were no potential common shares, therefore diluted net income per share is not described for the fiscal year ended 31st March
2011.
***Basis for computing net income (loss) per share is as follows:
For the fiscal year ended 31st March 2012
Net income (loss) (Millions of yen)
Amounts not attributable to common shareholders (Millions of yen)
Net income (loss) attributable to common shareholders (Millions of yen)
Average number of common shares outstanding for the year (Thousand shares)
(18,268)
—
(18,268)
90,542
For the fiscal year ended 31st March 2011
7,731
—
7,731
90,542
19. Significant Subsequent Events after Balance Sheet Date
The Company has resolved to transfer the treasury stock by third party allotment for the purpose of the capital adequacy at the
general shareholders’ meeting held on 28th June 2012.
The details of the resolution are as follows:
(1) Type of the shares to be transferred
Common stock
(2) Number of the shares to be transferred
5,000,000 shares (the upper limit)
(3) Transfer price
573 yen per share (the lower limit)
44
The Board of Directors of the Company has been delegated on the decision of specific conditions regarding this transfer.
Related Information to the Consolidated Financial Statements
1.
The Details of Corporate Bonds
Issuer
The Toa Reinsurance
Company, Limited
Series
Toa Reinsurance #1 Step-up
Callable Subordinated Notes
(Qualified Institutional Investors Only)
Issue
Date
21st
March
2012
As of
1st April
2011
As of
31st March
2012
—
30,000
million yen
(365,007 thousand
U.S.dollars)
Coupon
(%)
Collateral
Maturity
5.34
None
20th
July
2062
(Notes)
There is no amount to mature within 5years after 31st March 2012.
2. The Details of Borrowings
Millions of yen
As of 1st April
2011
¥ 41
Lease liabilities due in 1 year or less
Lease liabilities (except for those due in 1 year or less)
Total
As of 31st March
2012
Average interest
rate (%)
¥ 47
The term of repayment
—
—
73
92
—
From 1st April 2013
to 28th February 2018
¥115
¥139
—
—
As of 1st April
2011
$ 498
Lease liabilities due in 1 year or less
Lease liabilities (except for those due in 1 year or less)
Total
As of 31st March
2012
Average interest
rate (%)
$ 571
The term of repayment
—
—
888
1,119
—
From 1st April 2013
to 28th February 2018
$1,399
$1,691
—
—
(Notes)
(a)The above amount is included in “Other liabilities” in the consolidated balance sheets.
(b)“Average interest rate” on lease liabilities is not stated above because lease liabilities in the consolidated balance sheets are recognized without deducting
lease interest included in the total lease charges.
(c)The repayment for the lease liabilities (except for those due in 1 year or less) scheduled within 5 years following the consolidated balance sheet date are as
follows:
Due after 1 year
through 2 years
Lease liabilities
(Millions of yen)
33
Due after 1 year
through 2 years
Lease liabilities
(Thousands of U.S.
dollars(Note 1(2)))
401
Due after 2 years
through 3 years
26
Due after 2 years
through 3 years
316
Due after 3 years
through 4 years
20
Due after 3 years
through 4 years
243
Due after 4 years
through 5 years
10
Due after 4 years
through 5 years
121
3. The Details of Asset Retirement Obligations
None
About Independent Auditors
Independent auditors for the years ended 31st March 2012 were Ernst & Young ShinNihon LLC.
45
Independent Auditors’ Report
46
Organization
As of 28th June 2012
General Meeting of Shareholders
Board of Corporate Auditors
Board of Directors
Corporate Auditors
Chief Actuary
President and Chief Executive
Executive Officers
Executive Management Committee
Internal Audit Dept.
Compliance Dept.
Management Planning Dept.
Accounting Dept.
Communication & Coordination Dept.
Information Technology Dept.
Underwriting & Planning Dept.
Life Underwriting & Planning Dept.
Client Service Dept. 1
Client Service Dept. 2
Reinsurance Pool Dept.
International Dept.
Investment Dept.
47
Board of Directors
Corporate Data
As of 28th June 2012
CHAIRMAN
HEAD OFFICE
Teruhiko Ohtani
6, Kanda-Surugadai 3-chome,
Chiyoda-ku, Tokyo 101-8703, Japan
Telephone: 81-3-3253-3171
Facsimile: 81-3-3253-1208
URL: http://www.toare.co.jp
PRESIDENT AND CHIEF EXECUTIVE
Tomoatsu Noguchi
MANAGING DIRECTORS
Tetsuro Kanda
Toshiyuki Sugawara
Takeshi Masumi
DIRECTORS
Hiroshi Fukushima
Satoru Koizumi
Kazuhito Oura
Ryosaku Minato
Shin-ichiro Okada
Toshio Irie
CORPORATE AUDITORS
Yutaka Akiyama
Katsumi Deguchi
Kazuo Kondo
Jun Kimura
DATE ESTABLISHED
15th October 1940
NUMBER OF SHARES OF COMMON STOCK
Authorized: 400,000,000
Issued:
100,000,000
PAID-IN CAPITAL
¥ 5,000 million
TOTAL ASSETS
¥ 497,910 million
NUMBER OF EMPLOYEES
332
LINES OF BUSINESS
Reinsurance of the following:
Fire Insurance
Marine Insurance
Transit Insurance
Personal Accident Insurance
Voluntary Automobile Insurance
Compulsory Automobile Liability Insurance
General Liability Insurance
Shipowners’ Liability Insurance for Passengers’ Personal Accident
Workers’ Accident Compensation Liability Insurance
Aviation Insurance
Credit Insurance
Guarantee Insurance (including Surety Bond)
Glass Insurance
Machinery Insurance
Contractors’ All Risks Insurance
Atomic Energy Insurance
Movables Comprehensive Insurance
Theft Insurance
Windstorm and Flood Insurance
Boiler and Turbo-Set Insurance
Livestock Insurance
Miscellaneous Pecuniary Loss Insurance
Life Reinsurance
48
ToaRe
Printed in Japan with vegetable oil ink

Report and Accounts 2012

Transcription

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