T&D (8795) Investor Day 2024 summary

Strategic Growth and Business Development

• Balance sheet expanded from $32 billion in 2020 to over $76 billion in 2024, driven by 14 global transactions and a diversified liability portfolio focused on annuities, life, and P&C insurance.

• Achieved an A3 Moody's rating and positive outlook from Fitch, enhancing capital efficiency and opening new origination channels.

• Japan is considered a second home market, with a strong pipeline and capabilities in block and flow transactions, protection, and annuities; established a representative office and local partnerships.

• Growth to $140 billion in GAAP reserves is targeted, with a balanced approach between self-funding and potential capital raising, depending on business mix.

• Executive team brings deep industry experience, supporting growth and operational excellence.

Financial Guidance and Capital Management

• Paid first $200 million dividend to shareholders in 2023, with over $2 billion distributed from operating companies since inception; cash flow generation remains strong with $1 billion in dividends paid in 2021, $750 million in 2022, and $300 million in 2024.

• Dividend policy is to maintain similar payouts annually, but may adjust based on episodic growth opportunities and capital needs.

• Normalized base profit is expected to be at least $585 million, with 2024 performance anticipated to be modestly ahead.

• Book yield increased from 4.3% in 2020 to 4.8% in 2024, mainly due to new transactions in higher-rate environments; future yield increases are not expected to be linear.

• Group capital ratio exceeds 170% and NAIC RBC ratio is over 800%, reflecting robust capitalization and strong regulatory capital levels.

Risk Management and Market Positioning

• Liability portfolio is long-dated and illiquid, with 75% of reserves projected to remain after a decade and two-thirds non-callable or uneconomic to call.

• Commercial mortgage loan exposure is about 4% of the portfolio, with a 60% loan-to-value and modest office exposure, reviewed quarterly.

• Lapse and interest rate risks are managed through explicit pricing, macro hedges, and ongoing monitoring, with U.S. experience informing Japanese market practices.

• Competition in Japan is increasing, but differentiation is achieved through track record, local presence, operational excellence, and value-based pricing rather than lowest cost.

• Portfolio is 94% fixed income, with 95% investment grade, and maintains high persistency.