Policies Related to Japan’s Stewardship Code

Tokio Marine & Nichido Fire Insurance Co., Ltd. (hereinafter referred to as “we,” “our,” or “us”) announces that we adhere to the objective of the Principles for Responsible Institutional Investors (Japan’s Stewardship Code) and accept the Code.
For details of Japan’s Stewardship Code, please refer to the website of the Financial Services Agency.

Website of the Financial Services Agency

Our policy and approach are as follows:

• Principle 1
• Principle 2
• Principle 3
• Principle 4
• Principle 5
• Principle 6
• Principle 7

• We believe that making efforts to improve corporate value of investee companies and prevent damage of it as well as promoting sustainable growth of investee companies through constructive “purposeful dialogues” based on in-depth understanding of them and their business environment and consideration of sustainability (medium- to long-term sustainability, including ESG factors), etc. will lead to the interests of insurance policyholders and insured persons, etc. in the medium to long term.
• Specifically, as we are engaged in the non-life insurance business, we believe that We the improvement of corporate value and sustainable growth of investee companies will increase our asset value and will eventually lead to the enhancement of our capabilities to pay out insurance claims, etc. in the medium to long term.
• We hold shares mainly for the purpose of strengthening our business relationships, and in fulfilling our stewardship responsibilities, will pay attention to the management of specific information, including stock transaction information and customer related information.
• Furthermore, we will make efforts to reduce the total volume of our shareholding from the standpoint for our equity capital to be less susceptible to stock market fluctuations.

• We, in our stewardship activities, will take actions to ensure that the interests of insurance policyholders and insured persons, etc. are not unduly harmed. Our structure and method for the management of conflicts of interest, including the above activities, is as set forth in “The Tokio Marine Group’s Management Policies for Conflict-of-interest Transactions, etc.”

The Tokio Marine Group Policy for Management of Conflicts of Interest

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  Link will open in a new window (website of Tokio Marine Holdings, Inc.)

• We will strive to understand the investee companies’ situation of governance, corporate strategy, business performances, capital structure, management of risks including environmental and social issues, so that we can appropriately fulfill our stewardship responsibilities with an orientation towards the sustainable growth of the investee companies.

• We will make efforts to arrive at an understanding in common with investee companies and work to solve problems, by engaging in constructive dialogues with the investee companies, based on long-term trusting relationships with them.

• We believe that promoting the improvement of investee companies’ corporate value and their sustainable growth through constructive “purposeful dialogues” based on in-depth understanding of the investee companies and their business environment, etc. will lead to the enhancement of our asset value and the interests of insurance policyholders and insured persons, etc. in the medium to long term, and on exercising our voting rights, we make decisions comprehensively in consideration of the contents of such dialogues and objective indicators (ROE, payout ratio, etc.). We also fully consider initiatives toward sustainability including environmental problems, social contributions, and corporate governance.
• With regard to the disclosure of the results of voting rights, while we refrain from publicly disclosing the names of individual companies from the viewpoint of management of individual transaction information as an asset owner and the necessity to maintain constructive dialogues with investee companies based on mutual trust with them, we disclose examples of dialogues with investee companies (including the results of exercise of voting rights and reasons for the votes for or against the proposals), agenda items which we voted against and reasons for our decision, and aggregate results of the exercise of voting rights, due to the importance of enhancing the transparency of our stewardship activities and in order to encourage the understanding of the contents of such activities.
• With regard to proposals that may significantly damage the investee companies’ corporate value, we make decisions to vote for or against the proposals following a detailed examination of these proposals. In conducting a detailed examination, we focus on the following items.
  
  
  • Appointment and dismissal of directors (companies reporting net losses for a given consecutive period of time, companies reporting a low ROE or operating profit margin for a given consecutive period of time, companies with an insufficient number of independent outside directors, companies with scandals, companies for which ESG issues, including diversity, were a major topic of dialogues, reappointment of outside directors with low rates of attendance of meetings of the Board of Directors, etc.)
  • Appointment and dismissal of corporate auditors (companies with scandals, reappointment of outside directors and outside corporate auditors with low rates of attendance of meetings of the Board of Directors and the Board of Corporate Auditors, respectively)
  • Appointment of the accounting auditor (accounting auditors that have been involved in scandals, audit errors, etc.)
  • Awarding of retirement benefits to directors and corporate auditors (companies reporting net losses for a given consecutive period of time, companies reporting a low ROE or operating profit margin for a given consecutive period of time, companies reporting a low payout ratio for a given consecutive period of time, companies with scandals, etc.)
  • Increase in the amount of remuneration for directors and corporate auditors (companies reporting net losses for a given consecutive period of time, companies reporting a low ROE or operating profit margin for a given consecutive period of time, companies reporting a low payout ratio for a given consecutive period of time, companies with scandals, etc.)
  • Issuance of shares and subscription rights to shares
  • Organizational restructuring such as merger, acquisition, and transfer and inheritance of business
  • Acquisition of treasury shares (acquisition of shares from specific shareholders at a price above the fair value, etc.)
  • Introduction/updating of takeover defense measures (companies reporting a low ROE or operating profit margin for a given consecutive period of time, etc.)
  • Appropriation of surplus (companies reporting a low payout ratio for a given consecutive period of time)
  • Amendment of Articles of Incorporation (if the weight on the requirements for resolutions for dismissal of directors cannot be seen as reasonable)
  • Shareholder proposals (cases that may impair shareholders’ common interests, etc.), etc.
  
  We will definitely vote against proposals in violation of laws and regulations or constituting antisocial behavior, regardless of the existence of any circumstances.

• In order to encourage the understanding of our stewardship activities, we report examples of dialogues with investee companies (including the results of exercise of voting rights and reasons for the votes for or against the proposals), agenda items which we voted against and reasons for its decision, and aggregate results of the exercise of voting rights.
  
  

  Summary of Stewardship Activities from July 2022 to June 2023

• This report will be disclosed periodically on our website.

• In order to conduct stewardship activities appropriately, we will strive to improve our initiatives by deepening our understanding of the investee companies and their business environments, etc. and periodically reviewing such activities at the Board of Directors’ meetings.

Tokio Marine & Nichido Fire Insurance Co., Ltd. (hereinafter “TMNF”) aims to be a “Good Company”, which supports customers and society in times of need, for 100 years and beyond. To this end, TMNF incorporates consideration of social and public welfare-related issues into its investment process and contributes to creating a safe, secure and sustainable society, in view of its social responsibility as a property and casualty insurance company.
Specifically, as a signatory of the United Nations-supported Principles for Responsible Investment (PRI), TMNF promotes ESG investment that takes account of not only financial information but also environmental, social, and governance factors, and aims to improve long-term investment performance and counter social issues.

TMNF aims to enhance both corporate value and sustainable growth of its investee companies through;

• Encouraging the improvement of non-financial disclosures, including ESG issues, to facilitate proper performance assessment, and
• Enriching ESG-related themes for the purpose of engagement to enable constructive and purposeful dialogues.

TMNF adopts ESG integration to evaluate financial information and ESG factors comprehensively in its investment decision-making process.
Specifically, TMNF excludes antisocial forces and confirms information on the environmental, social (including human rights), governance and other issues in its investment decision-making process. Through these efforts, TMNF will accumulate knowledge of ESG evaluation and strive to enhance its investment decision-making process.

Financial Planning Department conducts ESG investment planning and promote the implementation of ESG investment initiatives in collaboration with Global Investment Department and Corporate Investment Department, which execute transactions.
In addition, by receiving evaluations from an external organization through the PRI's annual reporting and assessment, TMNF identifies challenges in initiatives and processes related to ESG investment and strives for continuous improvement.