Corporate Governance to Create the Future

We are committed to “Corporate governance to create the future” by establishing “Strengthen corporate governance,” “Enhance risk management” and “Respect corporate ethics” in our materiality priority issues.

Given the public nature and sociality of the insurance business, we aim to strengthen corporate governance to ensure management transparency and to enhance the supervision and effectiveness of the management organization system.

In addressing this Materiality, we have established the following indicators base on the recognition of the importance of continuously strengthening the supervisory function of the Board of Directors in order to enhance governance.

Based on our mission: Help our customers embrace life more fully through management with integrity, and offering easy-to-understand, affordable, convenient products and services, as given the public nature and sociality of the insurance business, we aim to promote sustainable growth in corporate value, with strengthening and enhancing corporate governance through emphasizing management transparency, monitoring a management structure and improving effectiveness of the structure.

We have adopted a company with an audit and supervisory committee to strengthen the supervisory function of the Board of Directors and corporate governance.

Corporate governance structure

The Board of Directors makes key management decisions and supervises the execution of business operations in accordance with the Rule of Board of Directors. In principle, the Board of Directors meets monthly, and extraordinary meetings are held as necessary.
With the aim of strengthening the supervisory function of the Board of Directors and further separating the supervisory and executive functions, the majority of the Board of Directors is composed of independent outside directors. In addition, the percentage of female directors on the Board of Directors is 29%, ensuring diversity.

The following is a content of the main discussions and reports made by the Board of Directors during FY2023.

• Matters related to the formulation of mid-term business plans and budgets
• Sustainability matters
• Matters concerning the issuance of new shares, secondary offering of shares, etc.
• Matters related to IR
• Corporate governance matters
• Matters related to the evaluation of the effectiveness of the Board of Directors
• Matters related to nomination and compensation of directors and appointment of executive officers
• Matters concerning the status of internal control system
• Compliance matters
• Risk management matters
• Matters concerning complaints and consultations from customers
• Matters related to internal audit
• Matters related to subsidiary management
• Other important matters related to laws and regulations, and the Articles of Incorporation, etc.

In order to ensure the effectiveness and appropriateness of the Board of Directors, we have conducted an evaluation of the effectiveness of the Board of Directors once a year in principle since FY2016.

The results of the evaluation are reported to the Board of Directors, where deliberations are held and improvement plans are formulated to further enhance the functions of the Board of Directors. 
We also evaluate the overall governance system, including the Audit and Supervisory Committee, the voluntary Nomination and Compensation Committee, and the Outside Directors' Meeting. Please see the overview of the evaluation results below.

We have established a discretionary Nomination and Compensation Committee to strengthen the independence, objectivity and accountability of the functions of the Board of Directors concerning the nomination, dismissal, and compensation of officers. The Board of Directors enacts the nomination and dismissal policy of officers upon deliberations by the Nomination and Compensation Committee.

We disclose the knowledge, experience and abilities of each Director in a skills matrix based on our business and management strategies to ensure the effectiveness of the Board of Directors.

We reviewed the knowledge, experience and abilities required for the Board of Directors in order for the Board of Directors to perform its roles of making important management decisions and supervising the execution of duties by Directors to realize the new Management Policy and FY2028 mid-term business plan.
The relationship between the Management Policy and the medium-term business plan and the skills items, and the reasons for selecting the skills items are as follows.

The amount of individual compensation for directors who are not audit and supervisory committee members is determined by the Board of Directors after deliberation by the discretionary Nomination and Remuneration Committee. This is based on consideration of the duties and responsibilities of each director, as well as surveys of the remuneration levels of domestic company executives by third parties.
In addition, performance-linked compensation is determined based on the amount calculated based on the fixed compensation amount. The amount of compensation is determined according to the degree of achievement of the targets related to the financial indicators (the corporate value improvement, etc.) and non-financial indicators (the customer satisfaction, etc.) set by the Board of Directors.
The amount of individual compensation for directors who are members of the audit and supervisory committee members is determined through discussions at the Audit and Supervisory Committee. In order to ensure that the role of the Committee functions fully, audit and supervisory committee members receive only fixed compensation.

Based on the Rule of the Audit and Supervisory Committee, the Audit and Supervisory Committee (the Committee) receives reports regarding significant issues related to audit. It consists of three Directors including chairperson of the Committee (all independent and outside Directors). In addition, the Committee Secretariat (the Secretariat) assists the Committee in its duties. Based on auditing policies and plans determined by the Committee, the head of the Secretariat under the direction of the Committee attends the Board of Directors and other significant meetings, interviews Directors (excluding Directors who are the Committee Members) and Representatives of each business division and audits the Company's operations and assets. The head of the Secretariat keeps close collaboration with Accounting Auditors and the Internal Audit Division, receiving reports from them. The head of the Secretariat monitors business execution by the Directors accordingly and reports the Committee with additional congregations as deemed necessary.

We have established the discretionary Nomination and Compensation Committee (the Committee) with the aim of strengthening the independence and objectivity and its accountability of the Board of Directors’ functions related to the nomination and compensation of Directors, and the design of the executive compensation system.
The committee deliberates on the election and dismissal of directors (including audit and supervisory committee members), the selection and dismissal of representative directors and directors with specific titles, the system of executive compensation, and the details of individual compensation for directors, and then makes proposals to the Board of Directors.
The Committee consists of all four independent outside directors and one representative director as determined in advance by the Board of Directors.
As observers, directors who are not members of the Committee but are the Audit and Supervisory Committee members may attend. The Committee chairperson is selected by mutual vote from among the independent outside directors.

The following is a content of the main discussions and reports made by the Nomination and Compensation Committee during FY2023.

• Election of candidates for directors who are not audit and supervisory committee members 
• Targets and evaluation items for internal directors
• Composition of the Board of Directors
• Succession plan
• Review of the skills matrix (change of skills items, reasons for selecting the items)
• Executive compensation for the current fiscal year and the following fiscal year and beyond

Under the monitoring of the President and Representative Director, we have established an Audit Department (Internal Audit Division) that is independent of the audited departments. The department is separate from all other lines of business execution, enabling it to conduct internal audits from an independent and objective standpoint. It examines and evaluates operational adequacy, risk management effectiveness, and the status of legal compliance, and makes recommendations for improvements as needed. The results of internal audits are reported to the President and Representative Director, the Board of Directors, and Audit and Supervisory Committee (the Committee).
The department also has regular and additional meetings with the accounting auditors. At these meetings, it collaborates closer, by exchanging ideas regarding the status of accounting audits, reporting about the status of main internal audit and providing internal audit report.
Furthermore, the department also provides internal audit reports to the Committee or head of the Committee Secretariat based on Supervisory Standards.

We have established the Compliance Committee, Risk Management Committee, Sustainability Committee, Claim Payment Committee, Marketing Committee, Asset Management Committee, ALM Committee, and System Committee for the purpose of obtaining useful advice on important management matters. These committees primarily serve an advisory function to the business execution departments. The Compliance Committee, Risk Management Committee, and Sustainability Committee are chaired by the President and Representative Director.

We have established the Board of Executive Officers to separate decision-making and supervision from business execution and strengthen the decision-making function. 
Executive officers execute their duties in accordance with the responsibilities assigned to them by the President and Representative Director. In principle, the Board of Executive Officers is held once a week.
The Board is attended by the President and Representative Director, who chairs the meeting, and eight executive officers (including one concurrently serving as a director). The head of the Audit and Supervisory Committee Secretariat also attends the Board.

We recognize that the development and establishment of a risk management system is extremely important for management in order to realize our risk strategy while ensuring the financial soundness and appropriateness of our operations as a life insurance company.

In order to further enhance risk management through continuous monitoring, the indicators are to hold regular meetings of the "Risk Management Committee" chaired by the President and Representative Director, and to implement the PDCA^*1 cycle for dealing with risks to be managed.

We have set a basic approach to risk management in its "Basic Policy on Risk Management."  We have established an internal organizational structure to assess and improve each risk. Our subsidiary applies these basic ideas on risk management for appropriate business operations.

We have designated primary risk management departments for each risk to be managed, with the Risk Management Department serving as the secondary risk management department. In addition, based on the belief that cross-organizational efforts are effective for comprehensive risk management, we have established a "Risk Management Committee" composed of relevant officers and department heads. Furthermore, based on the recognition that comprehensive management of assets and liabilities is the cornerstone of risk management for a life insurance company, the ALM^*1 Committee has been established separately from the Risk Management Committee. In order to promote the development and operation of internal control systems, we have established the Compliance Committee, which is a cross-organizational body that discusses and follows up on the development and promotion of compliance systems, consisting of relevant directors and division heads.

For more information, please see the Securities Report (Japanese version only)

Based on the fact that we have great social responsibility and public mission as a life insurance company and the Manifesto, we have set as a material issue for our executives and employees to strictly comply with laws and regulations to ensure sound and appropriate business operations and fairness in insurance solicitation.

The indicator is based on the regular holding of the Compliance Committee and the implementation of appropriate PDCA cycles in response to compliance issues.
The Compliance Committee is responsible for ensuring that information regarding compliance with laws and regulations, including information regarding insurance solicitation management systems and customer protection management systems, is recognized and understood in a timely and accurate manner, and that this information is shared among relevant officers and employees.

We have established the Basic Policy on Compliance with Laws and Regulations, and work to develop compliance and promote the system.
We have formulated a "Compliance Manual" that specifically explains the laws and regulations to be complied with, and shares its contents with officers and employees.
In addition, we formulate a "Compliance Program," which is a practical compliance plan, each year and provides appropriate guidance and management in accordance with this Program. Furthermore, we have established the "Compliance Committee" as a cross-organizational body for timely and accurate recognition and understanding of compliance-related information. In principle, the Compliance Committee meets once every three months and reports its findings to the Board of Directors.
It is expressly stipulated that any director, officer, or employee may report any suspected compliance violation to the Legal Department, the Audit and Supervisory Committee, or the contact point stipulated in the Internal Reporting Rules. We will not treat the reporter in any disadvantageous manner because of his/her report.

We have introduced a whistleblowing system to secure and increase social trust as a life insurance company through the early detection and rectification of illegal activities and protection of whistleblowers. 
Not only our officers and employees but part-time and temporary workers can utilize the system. We protect anonymity unless we have the consent of the whistleblower. Furthermore, the safety of whistleblowers is ensured so that they are not subjected to disadvantageous handling by the company.

We have established Conflict of Interest Management Policy (Japanese only) and strive to manage conflict of interest transactions by ensuring that our officers and employees comply with this policy so that the interests of our customers are not unfairly impaired.

As a life insurance company with a high public nature, we have established the “Basic Policy against Antisocial Organizations (Japanese only)" to prevent our stakeholders from being harmed by antisocial organizations.