ＳＯＭＰＯホールディングス（8630） – Corporate Governance Report

Corporate Governance Report Last Update: April 1, 2022 Sompo Holdings, Inc. Group CEO & Chairman Kengo Sakurada Contact: Corporate Legal Department, +81-3-3349-3000 Securities Code: 8630 https://www.sompo-hd.com/en/ Note: This is a translation of the Japanese language original for convenience purposes only, and in the event of any discrepancy, the Japanese language original shall prevail. The corporate governance of Sompo Holdings, Inc. (the “Company”) is described below. I. Basic Views on Corporate Governance, Capital Structure, Corporate Profile and Other Basic Information 1. Basic Views (1) Management Philosophy etc. Sompo Group (hereinafter “the Group”) has established the following Group Management Philosophy and SOMPO’s Purpose. Group Management Philosophy We will at all times carefully consider the interests of our customers when making decisions that shape our business. We will strive to contribute to the security, health, and wellbeing of our customers and society as a whole by providing insurance and related services of the highest quality possible. SOMPO’s Purpose Realize a society where everyone can enjoy a healthy and prosperous life in one’s own way with “A Theme Park for Security, Health & Wellbeing”: – Protect people from future risks facing society – Create a healthy, happy future society – Foster the power to change future society through diverse talent and connections Guided by the Management Philosophy, Sompo Group will face various social challenges from a medium- to long-term perspective to protect and support the people and society by focusing on “Security”, “Health”, and “Wellbeing”. We hope to contribute to a sustainable society by working to address these challenges. The Group will create a society in which everyone can enjoy a healthy and prosperous life in one’s own way. We have also established seven materiality (SOMPO’s materiality) as key themes for realizing our “Purpose”. (2) Basic Views on Corporate Governance At the core of management strategy lies “Sompo’s Purpose” which is to address various social challenges from a medium- to long-term perspective based on the Management Philosophy and realize a society where everyone can enjoy a healthy and prosperous life in one’s own way with “A Theme Park for Security, Health & Wellbeing”. Sompo Holdings, as the holding company of all Group companies, considers continuous improvement of transparency and fairness of the Group’s corporate governance and fulfillment of corporate social – 1 – responsibility through business as essential for maintaining strong relations of trust with stakeholders. The Board of Directors has accordingly established this Policy to clarify basic policies regarding the overall vision for the governance structure and the development of governance framework. We continue to make efforts to enhance corporate governance in pursuit of the best corporate governance. Further information on the Group’s Corporate Governance Policy may be viewed on the Company website at https://www.sompo-hd.com/en/company/governance/overview/policies/ Sompo Holdings, Inc. (hereinafter “the Company”) has changed its governance structure to “Company with committees”, effective June 2019, as part of efforts to strengthen corporate governance structure by separating management supervision from business execution in order to reinforce the supervisory function of the Board of Directors and to accelerate business execution by delegating substantial authorities from the Board of Directors to executive functions The Company also established three committees; Nomination Committee, Audit Committee, and Compensation Committees and established governance structure that works to improve transparency and fairness. In addition, executive officers make executive decisions and perform duties on the matters delegated from the Board of Directors under the comprehensive supervision by the Group CEO and the Group COO, while business owner system and Group Chief Officer (hereinafter “Group CxO”) system are in place to ensure agile and flexible decision-making and duty practice, with clearly defined authorities and responsibilities. The Board of Directors sets the basic policy and the basic policies for Group management and for internal control which forms the foundation of Group management, appoints Executive Officers/Executive Officers (shikkouyakuin), and supervises the performance of duties by Directors and Executive Officers. Additionally, the Board of Directors delegates executive decisions to Executive Officers in principle, as far as the laws permit, to further strengthen the supervisory function of the Board of Directors and accelerate business execution. Additionally, the Company established the Global Executive Committee (hereinafter “Global ExCo”), which is, the highest executive committee and an advisory body to the Group CEO to discuss important matters that significantly impact management, such as Group management strategy and business executive policy. The Company also established Managerial Administrative Committee (hereinafter “MAC”) as an advisory body to the Group COO to discuss important matters related to execution of business strategies and managerial administrative matters of the Company and Group companies. (3) View on the Corporate Governance Code We understand that the Corporate Governance Code (the “Code”) is established in order to contribute to company’s sustainable corporate growth and the increase of corporate value in the medium term by improving the system for transparent, fair, prompt, and decisive decision-making based on the perspective of all stakeholders, including the company’s shareholders, customers, employees and local communities. In the spirit of the Code, the Group constantly seeks to improve its corporate governance to promote the Group’s ongoing growth and the enhancement of corporate value in the medium term. [Reasons for Non-compliance with the Principles of the Corporate Governance Code] The Group complies with all principles of the Code revised in June 2021. [Disclosure Based on the Principles of the Corporate Governance Code] Principle 1.4 Cross-Shareholdings Policy on Cross-Shareholdings – Cross-Shareholdings refers to shares held by the Company and its domestic subsidiaries for purposes other than net investment, excluding shares of its subsidiaries and affiliates. As part of its capital policy, our group allocates part of the capital buffer generated by the continued reduction of cross-shareholdings to growth investments such as M & As in order to ensure financial soundness and improve capital efficiency. -The Company’s subsidiary Sompo Japan Insurance Inc.(hereinafter Sompo Japan) engages in cross-shareholdings for the purposes of receiving investment return in the form of dividend income and share price appreciation, fortifying relations with the insurance sales channels and business partners, and maintaining and strengthening insurance transactions with corporate clients. The Board of Directors decides on a medium– 2 – term plan for holding and selling of cross-shareholdings in Sompo Japan. In the previous medium-term management plan for FY 2016 to FY 2020, Sompo Japan achieved a cumulative reduction of ¥542.7 billion from the target of ¥500 billion. During the current medium-term management plan from FY 2021 to FY 2023, we plan to reduce emissions by ¥150 billion. -The Company and its domestic subsidiaries (excluding Sompo Japan) hold shares for the purpose of strengthening collaboration and relationships with companies with various advanced technologies and business models, including digital technologies, in order to realize “A Theme Park for Security, Health & Wellbeing”. Examination by the Board of Directors -The Board of Directors annually examines the rationale for continuing to maintain our group’s cross-shareholdings of listed companies. In the examination, it reviews shares held by Sompo Japan from the view of contribution to profit such as insurance profits and dividends, and the formation of unrealized gains from value appreciation, as well as the future use of the shares based on the cross-shareholding objectives such as supporting insurance transactions and strengthening alliances. In reviewing profit contribution, the Company sets quantitative risk and return assessment benchmarks for the associated insurance transactions and share values. -Shares held by domestic subsidiaries (excluding the Company and Sompo Japan) are comprehensively considered not only long-term profitability as stock but also the degree of contribution to our group strategy, such as collaboration (business alliances) with investees, and the state of achievements in business alliances. Exercising voting rights for cross-shareholdings -The Company’s subsidiary Sompo Japan maintains a Policy for Conformance to the Japanese version of the Stewardship Code. The Policy for the Exercise of Voting Rights is as follows. 1. Basic Policy on Exercise of Voting Rights Sompo Japan exercises its voting rights following a basic policy of supporting the sustainable growth of the invested company and as deemed appropriate in consideration of the invested company’s activities to address environmental issues, corporate governance status, compliance structure, and other areas. 2. Policy on Discussions The discussion of items considered as requiring careful examination from various perspectives, such as the significance related to raising corporate value, includes a thorough examination of the purpose and objectives. Final decisions for such discussion items are determined based on the dialogue with the invested company and other information. Items given special attention include the following. (1) Transfer of important assets (2) Share transfers related a merger or wholly owned subsidiary (3) Provision of retirement benefits to officers of companies with a capital deficiency or poor business performance (4) Capital increase from a third-party allocation with an advantageous placement (5) Introduction of hostile acquisition defensive measures (6) Posting net losses consecutively for a certain period of time (7) Design of corporate governance 3. Disclosure of voting records The Company considers it important to contribute to the enhancement of corporate value, damage prevention, and sustainable growth of invested companies through such activities as constructive dialogues and provision of risk management with investee companies in order to fulfill its stewardship responsibilities. Positioning the exercise of voting rights as part of these activities, the Company discloses aggregate voting records, examples of dialogues held with investee companies, and cases of exercising the right of dissent for a more accurate understanding of its activities. Upon comprehensive consideration of the impact on the overall activity mentioned above of the Company to fulfill its stewardship responsibilities, the Company does not disclose voting records on an individual agenda item basis. Principle 1.7 Related Party Transactions When the Company engages in transactions or other dealings defined as a related party transaction, the Company conducts proper oversight, which shall include consulting with experts as considered necessary and presenting the transaction for approval and/or reporting the transaction at the Board of Directors Meeting attended by outside directors in compliance with all laws, regulations, and Company internal rules. The execution of such a transaction shall be properly disclosed as a material fact base as stipulated by law. – 3 – Supplementary Principle 2.4.1 Ensuring diversity in appointing core human resources We are promoting “New Work Style” to fulfill “Sompo’s Purpose”. The Group has positioned “Diversity and Inclusion (D&I)” as one of the key management strategies essential to the growth of the Group, along with ”mission-driven” and ”professionalism”, which are the Three Core Values of “The Ideal Group of Talents” that we aim for, and is promoting it under the slogan “Diversity for Growth”. The purpose of promoting D&I is to facilitate sustainable growth of Sompo Group and enhance corporate value by bringing forth innovation and improving employee happiness and motivation. To fulfill Sompo Group’s Purpose of serving as “A Theme Park for Security, Health & Wellbeing”, we need to welcome the good crashes that happen when a diverse set of people come together, and build on that to innovate and find new value. It is important to achieve true D&I and tie it into major innovation under the idea that each and every employee at the workplace, regardless of gender, disability, nationality, age, etc., can leverage their individual talents and strengths, take advantage of change, and create new value. The Diversity & Inclusion Promotion Headquarter has been established to promote Diversity & Inclusion as defined in the Human Resources Core Values. With the Diversity and Inclusion Promotion Headquarter as the driving force, our group promotes diversity throughout the Group, reflecting the perspectives of diverse human resources in the various services it provides, leading to the creation of innovation, and promoting sustainable growth and enhancing corporate value through “Improving employee happiness and motivation” through the creation of a culture in which employees can work and feel that they are contributing to the team by demonstrating their individuality and strengths. At our group, we are promoting initiatives to make the most of the diversity of each and every employee. For example, we hold town hall meetings to think about “My Purpose” through dialogue with the Group CEO, focusing on the diverse values of each and every employee. We also hold “One on One” training sessions at each group company for management to enable each employee to face “My Purpose” and pursue a self-driven work style. □ Advancement of Woman With regard to the promotion of women’s participation in the workplace, we are implementing a group-wide development program designed to steadily foster the awareness and mindset of female employees. In addition, we are building a culture and environment to support women’s career advancement by introducing diagnostic tools and training videos for unconscious bias. At our company, three outside directors and one executive officer are female, while two directors and two outside directors are female in Sompo Japan. In order to further increase the number of female directors and managers in our group, we have set a target for the ratio of female managers in our group at the end of FY 2023 of 30%. As of July 2013, the number of women in managerial positions was 305, and the percentage of women in managerial positions was 5.0%. As a result of specific initiatives, as of March 31, 2021, the number of women in managerial positions was 1,384, and the percentage of women in managerial positions was 24.2%. In recognition of these proactive efforts to promote the advancement of women, in March 2021, the Company was selected for the 4th consecutive year as a “Nadeshiko Brand for FY 2020,” a joint initiative of the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange. Sompo Japan has received various evaluations from outside the company, including the Prime Minister’s Commendation of the Cabinet Office’s Award for Advanced Companies in which Women Shine. □ Appointment of Foreign Nationals and External Personnel Our group has formed a diverse workforce, including foreign nationals, through the development of its overseas insurance business. In addition, we are working to further promote D&I and globalize our business by launching programs to actively recruit personnel from overseas group companies, mainly in Sompo Japan. In April 2020, our company introduced a job-based personnel system for external personnel. This system creates positions based on the content of duties (jobs), and hires and assigns personnel with the necessary experience and skills. By expanding the number of job-based personnel through external career recruitment, etc., this system contributes to building a human resource group with diverse experience and skills. In addition, we actively promote highly specialized personnel to key positions such as directors, general managers, and specialists. We are working to ensure diversity by promoting strategic personnel assignments that are not restricted to gender or nationality. – 4 – In our company, 13.6% of executive officers and senior vice presidents are foreign nationals. As of March 31, 2021, the ratio of foreign nationals employed in our company is 2.0%, while that of external personnel is 5.2%. In the future, we will further diversify our personnel system by expanding our job-based personnel system and promoting strategic staffing. □ Promoting advancement of people with disabilities Our group is working to promote the employment of people with disabilities with the aim of creating new value as a component of D&I, while providing a stable place for people with disabilities to demonstrate their abilities and achieve self-fulfillment in their professional lives. Our group hires people with disabilities all over the country, and is making efforts to create workplaces where they can play an active role and secure employment. Sompo Japan Insurance Inc. has placed vocational life consultants for people with disabilities throughout Japan, and has established a system to provide support for creating comfortable workplaces. SOMPO Challenged Inc., a special-purpose subsidiary established in April 2018, also plays a role in driving the employment and activities of people with disabilities in the Sompo Group. The target for the employment rate of people with disabilities at the end of FY 2023 is 2.5% and the rate is 2.38% as of June 1, 2021. Principle 2.6 Demonstration of Functions as a Corporate Pension Asset Owner The Company’s key subsidiaries in Japan, including Sompo Japan and Sompo Himawari Life Insurance, Inc., employ defined-contribution pension plans to reduce future risks in corporate accounting and to support free asset building in accordance with economic rationality and individual employees’ life plans. Based on its high degree of specialized expertise, the Company’s subsidiary Sompo Japan DC Securities Inc. is designated as the asset-management agency. It provides employees of individual companies that have adopted these plans with thorough member training using e-learning and encourages use of the matching-contribution program, among other efforts to promote the pension plans. Principle 3.1 Full Disclosure The Company has established the Group Management Philosophy and the SOMPO’s Purpose and publically communicates its management strategy and medium-term management plans to deliver value to society and to realize society aimed at in the medium to long term. The Company’s management strategy and medium-term management plans are presented on the Company website. https://www.sompo-hd.com/en/ir/strategy/ The basic philosophy on corporate governance is based on the principles of the Corporate Governance Code, which are presented in the section “1. Basic Views, (2) and (3)” of this report. As the decision-making policy and process for setting director compensation amounts, the Company makes the policies on decisions pertaining to compensation for officers and describes in section “7. Policies on Decisions pertaining to Compensation for Officers” of the Corporate Governance Policy on the Company website. https://www.sompo-hd.com/en/company/governance/overview/policies/ The reasons for selecting a candidate for director and policies for appointment of officers are presented in the reference materials provided with the Notice of Convocation of the General Meeting of Shareholders for discussions and election at the Meeting. Decisions on selection and dismissal of executive officers are made by the Board of Directors following review by the Nomination Committee based on the content of the director selection policies and other considerations. https://www.sompo-hd.com/en/ir/stock/meeting/ Supplementary Principle 3.1.3 Sustainability initiatives and investment in human capital and intellectual property At our group, the realization of a society in which all people can enjoy their own lives in good health and abundance through “A Theme Park for Security, Health & Wellbeing” is at the core of our management as the “Sompo’s Purpose”. Through this realization, we are tackling issues related to sustainability. In order to realize the “Sompo’s Purpose”, we aim to realize a sustainable society and increase corporate value over the medium to long term by creating customer value and solving social issues through diverse businesses and human – 5 – resources. These policies are formulated in a transparent manner by the Board of Directors after multiple management discussions. Under the supervision of the Board of Directors, the Company builds an appropriate business portfolio through investments in human capital, intellectual property, and other capital, and promotes various initiatives to realize the “Sompo’s Purpose”. In addition, we will enhance corporate value by appealing the Group’s brand value improvement strategy to multi-stakeholders. For example, we will implement steady PDCA by focusing on the seven “materialities” that we have established as priority issues in light of the social issues surrounding our group. < Materiality > 1.Provide preparedness for all types of risk 2.Prevent accidents and disasters, contribute to a resilient society 3.Contribute to a greener society where the economy, society and environment are in harmony 4.Provide solutions for healthy and happy lives 5.Contribute to a sustainable aging society 6.A group of talent who can change future society 7.Build a platform for partnerships towards creating value In addition, in order for our group to contribute to the realization of a resilient and sustainable society, we have established the Group Sustainability Vision and are strengthening our promotion system to enhance the effectiveness of our efforts at the Group Sustainability Management Committee. Details can be found on our company website. (https://www.sompo-hd.com/en/csr/system/) Our company has been working since FY 2021 to formulate a medium-term management plan consisting of 3 basic strategies over 3 years, with the aim of achieving the goals by advancing specific initiatives to resolve social issues. Our three basic strategies are to reform our business portfolio and improve capital efficiency by pursuing scale and diversification, to create new customer value by developing new businesses in priority areas that are highly compatible with existing businesses and by building a real data platform as intellectual property, and to reform the way we work with the aim of realizing a human resource group that embodies the three core values. We will position SDGs Management as one of our management foundations, which is committed to creating economic and social value by solving social issues through our core businesses, and will work to realize “A Theme Park for Security, Health & Wellbeing”, and the “Sompo’s Purpose”. Details of the Medium-Term Management Plan are available on our company website. (https://www.sompo-hd.com/en/company/strategy/) Details of our sustainability initiatives and efforts to improve our human and intellectual capital are available on our company website and/or Integrated Annual Report. [Initiatives for Sustainability] (https://www.sompo-hd.com/en/csr/) In response to climate change, which has become increasingly critical as a global social issue in recent years, the Sompo Group has set “adopt to climate change,” “mitigate climate change,” and “contribute to societal transformation” as its “Sompo Climate Action,” and has established KPIs such as greenhouse gas reduction targets and targets for the introduction of renewable energy. In addition, we declare support for the recommendation of the Task Force on Climate-related Financial Disclosures (TCFD) and work on climate scenario analysis and highly transparent disclosure of these information via our Annual Securities Report and/or Integrated Annual Report. （https://www.sompo-hd.com/en/csr/materiality/topic2/） Supplementary Principle 4.1.1 Roles and Responsibilities of the Board (Scope and content of matters delegated to management) The roles and responsibilities of the Company’s Board of Directors are stipulated by law and the Articles of Incorporation, and matters to be resolved the Board of Directors Meeting are stipulated in the Company’s “Rules and Regulations for the Board of Directors.” Decisions regarding other matters of business execution are delegated to management under the Group CEO, the Group COO, and business owners, and the content – 6 – of such matters is clearly stipulated in the internal rules, including the basic policies and the managerial decision rules.

-Important matters concerning Group management policy -Matters related to the exercise of voting rights at the General Meeting of Shareholders of Sompo Japan and Sompo Japan Himawari Life Insurance, Inc. -The establishment, purchase, or sale of important subsidiaries Principle 4.9 Independence Standards and Qualification for Independent Directors The Company has established “outside director independence criteria” based on the decisions of the Nomination Committee and by resolution of the Board of Directors in accordance with the standards required for Financial Instruments Exchange. The Board of Directors appoints outside directors who have broad range of knowledge and experiences as corporate management, academia, legal or finance profession to facilitate objective decision making with respect to management issues from a diverse and independent viewpoint and perspective and diversity in terms of gender and nationalities; and the majority of the Board of Directors consists of outside directors. As a result of this policy, the Company’s independent outside directors contribute to frank, active, and constructive deliberations and discussions at meetings of the Board of Directors, the Nomination Committee, the Audit Committee and the Compensation Committee. Note: In this principle, gender means all the phenomena, knowledge, and viewpoints relating to sexuality such as gender division of labor and LGBTQ. Supplementary Principle 4.11.1 Policy and Procedure regarding the Board of Directors Skillset and the Appointment of Directors The Company’s views on the overall balance of knowledge, experience, and capabilities and the diversity and scope of the Board of Directors as well the policy and procedure for selecting a candidate for director and a skill matrix that lists the skills and areas of expertise that each director is particularly expected to have are presented in sections “3. Board of Directors and Committees” and “5. Policies for Appointment of Directors and Executive Officers” of the Corporate Governance Policy and “Directors’ Skills Matrix” on the Company website. – Corporate Governance Policy https://www.sompo-hd.com/en/company/governance/overview/policies/ – Directors’ Skills Matrix https://www.sompo-hd.com/en/company/summary/skillmatrix/ Supplementary Principle 4.11.2 Concurrent Positions of Directors In the event a director would be holding a concurrent position at another company, the Board of Directors determines the appropriateness of the appointment upon verifying the appropriateness of such positions as stipulated by law and by verifying the business content, volume of duties, and other conditions of the concurrent position. The Company seeks candidates with minimum of concurrent positions. Supplementary Principle 4.11.3 Evaluation of the Effectiveness of the Board of Directors At our company, every director, including the Chairman of the Board of Directors, is keenly aware of the need for initiatives to enhance the effectiveness of the Board of Directors, and we have established a cycle in which discussions are constantly held throughout the year and actions are taken. In addition, we place a high priority on actively incorporating the opinions of directors by, for example, always ensuring that supervisors have the means to proactively grasp the actual conditions of the executive officers, and by providing an opportunity to comprehensively analyze and evaluate the effectiveness of the entire Board of Directors by conducting a questionnaire once a year that includes the self-evaluation of each director. Our company’s Board of Directors is composed of a large number of outside directors to ensure effectiveness of supervision. In order to ensure sufficient diversity, outside directors are appointed from among corporate managers, academics, and members with expertise in legal, financial, and accounting fields, taking gender or nationality into consideration as well. This system of governance ensures high levels of transparency and fairness. In addition, our company holds preliminary briefing sessions for all outside directors each time the meetings of the Board of Directors are held, so that constructive and productive discussions can be held. The – 7 – Board of Directors also holds discussions based on the opinions and questions raised at each meeting. At the Company, integrated management of preliminary briefing sessions and the Board of Directors ensures efficient and fruitful discussions and that the views and perspectives of outside directors are directly reflected in the Board of Directors. In addition, it has been 2 years since the Company adopted a Company with Committees in June 2019 in order to strengthen management supervision and speed up business execution. Under this structure, discussions are deepened in order for each organization to perform its roles more faithfully and fulfill its accountability to stakeholders, including intensive deliberations on important management themes at the Board of Directors, appointment and remuneration decisions of officers and supervision of the legality and appropriateness of execution of duties at the Nomination, Audit, and Compensation Committees. Furthermore, in order to maintain a sense of distance between the Board of Directors and the executive departments and to maintain sufficient communication even after the delegation of authority, the Company will proactively take measures that contribute to the exercise of governance functions of supervision, such as strengthening information coordination for directors to grasp the status of execution. Concretely, Business Owners and Group Chief Officers reports on the current status of their business execution at the Board of Directors; directors have accesses to the Global Executive Committee and the Managerial Administrative Committee, which are the meeting body of the executive officers; information sharing meetings are held to report the status of the execution of business to the outside directors in a timely manner; and the outside directors exchange opinions with the representative executive officers. Regarding the Company’s efforts and the current governance system in our company, the Board of Directors of our company state that the governance system, including the function of decision-making bodies in the executive departments and the function of supervision and monitoring of the executive departments, is optimal in accordance with our company’s management and business strategies, and that a mechanism to enhance the effectiveness of the Board of Directors is sufficiently secured through discussions on important management policies and the enhancement of preliminary briefing sessions at each Board of Directors meeting. As a major initiative in fiscal 2020, free and vigorous discussions were held regarding such basic strategies as “Sompo’s Purpose”, “Pursuit of Scale and Diversification”, “New Customer Value Creation”, and “New Work Style” which form the basis of our company’s management strategies, including meetings other than the Board of Directors meetings, before the Board of Directors finally submits the formulation of the mid-term management plan, which is an important management policy, and the opinions of each Director and social perspectives were reflected in the discussions. In addition to the view that substantial discussions were held on the following themes, which were raised as themes to be discussed at the Board of Directors meetings in the previous fiscal year, there were also evaluations that “New Work Style”, which is a particularly important theme, took time to engage in meaningful discussions, and that it proceeded to the concrete and implementation phases although it was a comprehensive theme. On the other hand, there were also comments such as that further discussions should be held especially on ESG initiatives, and that we should have seek ways to further deepen awareness and discussions with the Executive departments, in light of the ideal way of future management policy discussions, regarding the “realization of A Theme Park for Security, Health & Wellbeing” and the examination of the medium-term management plan. • Realization of “A Theme Park for Security, Health & Wellbeing” • Challenges and possible solutions relating to ESG • Future reforms to cope with With Corona / After Corona • Formulation of the next mid-term management plan Furthermore, the following are themes that our company’s directors consider necessary to deepen discussions at future meetings of the Board of Directors, and initiatives that may be effective in enabling the Board of Directors to further fulfill its functions. With these in mind, the Company will continue to implement measures to enhance the effectiveness of these measures. – 8 – • Valuation and value enhancement of invisible asset (brand, engagement, etc.) • Policy for addressing ESG-related issues • Constructive communication with capital markets • Building a Real Data Platform • Enhancing communication between directors and executive officers through combination of face-to-face and remote meetings • Deliberations on high-priority issues • To clarify matters to be discussed at the Board of Directors and utilize preliminary briefing sessions • To ensure a system that contributes to understanding the status of execution, such as observation on site and ensuring multiple reporting lines • Directors and statutory committees to well communication and coordinate information Finally, the Company’s directors have commented that the Global Executive Committee which is the highest decision-making body for execution and other bodies share a common understanding of the Company’s medium-term management plan, which forms the basis of management strategy, and the realization of “A Theme Park for Security, Health & Wellbeing”, and that this is a result of the functioning of an advanced governance system and the ongoing active deliberation of these matters. The Company’s executive officers will continue to take an active role in receiving various opinions and advice to improve the quality of decision-making. At the same time, the executive officers intend to meet the expectations of shareholders and other stakeholders by holding free discussions with directors on important management issues. < Management of the Board of Directors under the circumstance of the COVID-19 > At the Board of Directors meeting in our company, it was highly evaluated that, despite of remote operations under the circumstance of novel coronavirus, sufficient time was secured for discussion at preliminary briefing sessions and the Board of Directors meetings, and they were conducted extremely efficiently and effectively. On the other hand, the Company is taking measures to further improve the effectiveness of its operations in the COVID-19 crisis, taking into consideration the issues of communication with the executive departments as well as the fact that, after discussions on the formulation of the medium-term management plan, there remain themes on which all directors should share a deeper understanding in the future. Supplementary Principle 4.14.2 Policy on Director Training The Company’s policy on training directors is presented in section “6. Policies for Training of Directors and Executive Officers” of the Corporate Governance Policy on the Company website. https://www.sompo-hd.com/en/company/governance/overview/policies/ Principle 5.1 Policy for Constructive Dialogue with Shareholders The Company, to a reasonable extent, proactively responds to requests from shareholders and engages in positive and constructive dialogue. To further promote constructive dialogue with shareholders, the Board of Directors decides the matter for carrying out the Investor Relations framework and Investor Relations activities. The Company sets an Investor Relations Action Plan and reports to the Board of Director in addition to the summary of last year. 2. Capital Structure Percentage of Foreign Shareholders More than 30% [Status of Major Shareholders] Name / Company Name Number Owned of Shares Percentage (%) – 9 – The Master Trust Bank of Japan, Ltd. (Trust account) account) Custody Bank of Japan, Ltd. (Trust 35,049,600 20,093,500 JP Morgan Chase Bank 380055 16,176,447 Government of Norway 11,071,426 Custody Bank of Japan, Ltd. (Trust account 7) Sompo Holdings Employee Shareholders Association 10,267,600 8,760,666 Nippon Express Co., Ltd. 6,501,221 Custody Bank of Japan, Ltd. (Trust 5,331,200 account 5) 505234 account 4) State Street Bank West Client-Treaty 5,252,370 Custody Bank of Japan, Ltd. (Trust 5,245,100 Controlling Shareholder (except for Parent Company) Parent Company None None Supplementary Explanation 9.85 5.65 4.54 3.11 2.88 2.46 1.83 1.50 1.48 1.47 Major Shareholders mentioned above are based on the shareholder’s list as of March 31, 2021. *1. The percentage above represents a ratio of Number of Shares Owned to the total number of issued shares excluding treasury stock owned by the Company (17,382,000 shares). The number of said treasury stock does not include 991,000 shares of the Company’s stock owned by Mizuho Trust & Banking Co., Ltd. (Retrustee: Custody Bank of Japan, Ltd. (Trust account E), which was set up for the purpose of the “Board Benefit Trust (BBT)” plan. *2. The number of shares held by Nippon Express Co., Ltd., includes 1,600,000 shares contributed by that company as trust assets for a retirement benefit trust (In the shareholder register, the shares are listed in the name of Mizuho Trust & Banking Co., Ltd., Nippon Express Retirement Benefit Trust). *3. While the Report on Major Shareholders provided for public viewing on March 7, 2017, indicated that Mizuho Bank, Ltd., and four of its joint shareholders owned 20,995,000 shares of Company stock (5.05% of total shares issued and outstanding) as of February 28, 2017, they were not included under Status of Major Shareholders above because the Company was unable to confirm the effective number of shares owned. *4. While the Report on Major Shareholders (Change Report) provided for public viewing on October 19, 2018, indicated that Blackrock Japan Co., Ltd., and seven of its joint shareholders owned 20,948,000 shares of Company stock (6.03% of total shares issued and outstanding) as of October 15, 2018, they were not included under Status of Major Shareholders above because the Company was unable to confirm the effective number of shares owned. *5. While the Report on Major Shareholders provided for public viewing on January 8, 2020, indicated that Nomura Securities Co., Ltd., and three of its joint shareholders owned 18,871,000 shares of Company stock (5.05% of total shares issued and outstanding) as of December 31, 2019, they were not included under Status of Major Shareholders above because the Company was unable to confirm the effective number of shares owned. – 10 – *6. While the Report on Major Shareholders provided for public viewing on March 5, 2020, indicated that Sumitomo Mitsui Trust Asset Management Co., LTD, and its joint shareholder Nikko Asset Management Co., Ltd. owned 18,781,000 shares of Company stock (5.03% of total shares issued and outstanding) as of February 28, 2020, they were not included under Status of Major Shareholders above because the Company was unable to confirm the effective number of shares owned. *7. While the Report on Major Shareholders provided for public viewing on April 6, 2020, indicated that Mitsubishi UFJ Trust and Banking Corporation and three of its joint shareholders owned 18,893,000 shares of Company stock (5.06% of total shares issued and outstanding) as of March 30, 2020, they were not included under Status of Major Shareholders above because the Company was unable to confirm the effective number of shares owned. *8. While the Report on Major Shareholders (Change Report) provided for public viewing on January 6, 2021, indicated that First Eagle Investment Management, LLC owned 24,103,000 shares of Company stock (6.46% of total shares issued and outstanding) as of December 31, 2020, they were not included under Status of Major Shareholders above because the Company was unable to confirm the effective number of shares owned. *9. While the Report on Major Shareholders (Change Report) provided for public viewing on April 1, 2021, indicated that Norges Bank owned 15,923,000 shares of Company stock (4.27% of total shares issued and outstanding) as of March 22, 2021, they were not included under Status of Major Shareholders above because the Company was unable to confirm the effective number of shares owned. Listed Stock Market and Market Section Tokyo Stock Exchange First Section 3. Corporate Attributes Fiscal Year-End Type of Business Number of Employees (consolidated) as of the End of the Previous Fiscal Year Sales (consolidated) as of the End of the Previous Fiscal Year March Insurance More than 1000 More than ¥1 trillion Number of Consolidated Subsidiaries as of the End of the Previous Fiscal Year From 50 to less than 100 4. Policy on Measures to Protect Minority Shareholders in Conducting Transactions with Controlling Shareholder None None 5. Other Special Circumstances which may have Material Impact on Corporate Governance II. Business Management Organization and Other Corporate Governance Systems regarding Decision-making, Execution of Business, and Oversight in Management 1. Organizational Composition and Operation – 11 – Company with Three Committees (Nomination, Audit and Remuneration) Organization Form [Directors] Maximum Number of Directors Stipulated in Articles of Incorporation Term of Office Stipulated in Articles of Incorporation Chairperson of the Board Number of Directors 15 1 year Chairman 12 [Outside Directors] Number of Outside Directors Number of Independent Directors Outside Directors’ Relationship with the Company (1) Name Attribute Scott Trevor Davis Kazuhiro Higashi Takashi Nawa Misuzu Shibata Meyumi Yamada Naoki Yanagida Hideyo Uchiyama Isao Endo Kumi Ito Academic From another company From another company Attorney at law From another company Attorney at law CPA From another company From another company Relationship with the Company* b c d e f g h i j k * * * Categories for “Relationship with the Company” ”○” when the director presently falls or has recently fallen under the category; “△” when the director fell under the category in the past “●” when a close relative of the director presently falls or has recently fallen under the category; “▲”when a close relative of the director fell under the category in the past a. Executive of the Company or its subsidiaries b. Non-executive director or executive of a parent company of the Company c. Executive of a fellow subsidiary company of the Company d. A party whose major client or supplier is the Company or an executive thereof e. Major client or supplier of the listed company or an executive thereof f. Consultant, accountant or legal professional who receives a large amount of monetary consideration or other property from the Company besides compensation as a director/kansayaku g. Major shareholder of the Company (or an executive of the said major shareholder if the shareholder is a h. Executive of a client or supplier company of the Company (which does not correspond to any of d, e, or f) legal entity) (the director himself/herself only) i. Executive of a company, between which and the Company outside directors/kansayaku are mutually appointed (the director himself/herself only) 9 9 a – 12 – j. Executive of a company or organization that receives a donation from the Company (the director himself/herself only) k. Others Name Outside Directors’ Relationship with the Company (2) Membership of Committees Designation as Independent Director Scott Trevor Davis Nomination / Remuneration ○ Supplementary Explanation of the Relationship the Professor of Department of Global Business, College of Business, Rikkyo University Director Bridgestone Corporation of Chairman and Director of Resona Holdings, Inc. Chairman and Director of Resona Bank, Limited Vice Chairman of The Osaka Chamber of Commerce and Industry Director of Honda Motor Co., Ltd. Reasons of Appointment with with from the Nominated expectation providing of Company management with pertinent advice from wide-ranging knowledge as an academician, gained particularly through university research strategic in management, ESG and CSR, and multifaceted advice from a global perspective. Appointed independent as director as concern is judged not to exist for a conflict of general interest with shareholders the perspectives of a personal, capital, transaction, or other interests or relationships. the Nominated expectation providing of Company management with from his pertinent advice and abundant experience as a top-level large-scale executive corporations including Chairman of Osaka Bankers Association Vice Chairman of The Osaka Chamber of Commerce and Industry, as well as his experience finance and corporate management in the banking business. Appointed independent as director as concern is judged not to exist for a conflict of general interest with shareholders the perspectives of a personal, capital, transaction, or other interests or relationships. Nominated expectation the providing knowledge from with and of of in Kazuhiro Higashi Nomination / Remuneration ○ Takashi Nawa Nomination / Remuneration ○ Guest Professor of School of – 13 – International Corporate Strategy, Hitotsubashi University Business School President of Genesys Partners, Inc. Member of the Board of NEC Capital Solutions Limited (Outside Director) Director of FAST RETAILING CO., LTD. (Outside Director) Member of the Board of Ajinomoto Co., Inc. (Outside Director) Attorney at law Director of DELICA FOODS HOLDINGS CO., LTD. (Outside Director) Director of SPACE VALUE HOLDINGS CO.,LTD. (Outside Director) Director of istyle Inc. Director of JAPAN POST INSURANCE Co., Ltd. (Outside Director) Director of SEINO HOLDINGS CO., LTD. (Outside Director) Company management with pertinent advice from his abundant business experience as a management consultant, combined with his profound academic knowledge from a global perspective, in addition to his practical experience in a trading Japanese major company and global consulting firms. Appointed independent as director as concern is judged not to exist for a conflict of general interest with shareholders the perspectives of a personal, capital, transaction, or other interests or relationships. from with from terms the Nominated expectation providing of Company management with advice pertinent on diversity & governance, inclusion, of in reinforcing supervisory and decision-making functions of the Board of Directors, as well as her abundant knowledge and experience as a legal expert. Appointed as an independent director as concern is judged not to exist for a conflict of general with interest shareholders the perspectives of a personal, capital, transaction, or other interests or relationships. the Nominated expectation providing of Company management with pertinent advice from her wealth of practical business experience in marketing, including digital marketing. She possesses a high level of by knowledge participating policy formulation, having served on government-related committees and she is also actively involved in initiatives on women’s empowerment in such in with as Misuzu Shibata Nomination / Remuneration ○ Meyumi Yamada Nomination / Remuneration ○ – 14 – an on with from from the workplace, and can be expected to provide valuable diversity & advice inclusion, important strategy of the Company. Appointed as an independent director as concern is judged not to exist for a conflict of general with interest shareholders the perspectives of a personal, capital, transaction, or other interests or relationships. the Nominated expectation providing of Company management with pertinent advice from his specialized abundant knowledge and experience as a legal professional. Appointed as an independent director as concern is judged not to exist for a conflict of general interest with shareholders the perspectives of a personal, capital, transaction, or other interests or relationships. the Nominated providing of expectation Company management with pertinent advice from his abundant experience as a manager at one of Japan’s leading auditing corporations and a global consulting firm in addition to his professional knowledge and experience as a certified public accountant. Appointed as an independent director as concern is judged not to exist for a conflict of general interest with shareholders the perspectives of a personal, capital, transaction, or other interests or relationships. the Nominated expectation providing of Company management with pertinent advice from his broad insight based on his practical experience global at consulting firm and academic knowledge as a graduate school to professor, addition from with with in a Attorney at law Audit and Supervisory Board Member of YKK Corporation (External Audit & Supervisory Board Member) Director, Kusuri No Aoki Holdings Co., Ltd. public Certified accountant Executive Advisor of ASAHI Tax Corporation & Audit Supervisory Board Member of OMRON Corporation (Independent Audit & Supervisory Board Member) Director, Eisai Co., Ltd. Director of Ryohin Keikaku Co., Ltd. Director of NEXTAGE Co., Ltd. Naoki Yanagida Audit ○ Hideyo Uchiyama Audit ○ Isao Endo Audit ○ – 15 – Advisor of 4U Lifecare Inc. Director of FUJI FURUKAWA ENGINEERING & CONSTRUCTION CO. LTD. (Outside Director) with from abundant experience as a company manager. Appointed as an independent director as concern is judged not to exist for a conflict of general interest with shareholders the perspectives of a personal, capital, transaction, or other interests or relationships. the Nominated expectation providing of Company management with pertinent advice from her high level of knowledge in IT, digital and marketing, with experience such as in business strategy planning and strategy consulting at an electronics manufacturer other business companies, as well as serving as Chief Marketing Officer (CMO) at a healthcare business company. She is also expected to provide valuable diversity & advice inclusion, important an strategy of the Company, as she participates the establishment of a non-profit organization that promotes women’s empowerment in the workplace. Appointed as an independent director as concern is judged not to exist for a conflict of general interest with the shareholders perspectives of a personal, capital, transaction, or other interests or relationships. from and on in Kumi Ito Audit ○ [Committees] Committee’s Composition and Attributes of Chairperson All Committee Members Full-time Members Inside Directors Chairperson Outside Directors Nomination Committee Remuneration Committee Audit Committee 5 5 5 0 0 1 5 5 4 Outside Director Outside Director Outside Director 0 0 1 – 16 – [Executive Officers (Shikkoyaku)] Number of Executive Officers (Shikkoyaku) 14 Status of Additional Duties Name Representative Authority Kengo Sakurada Mikio Okumura Giichi Shirakawa James Shea Yasuhiro Oba Ken Endo Koichi Narasaki Masahiro Hamada Shinichi Hara Koji Ishikawa Yoshihiro Uotani Ryoko Shimokawa Hirofumi Shinjin Taisei Kawazoe Yes Yes No No No No No No No No No No No No Yes No No No No No No No No No No No No No Additional Duties as Director Nomination Committee Member No Remuneration Committee Member No Additional Duties Employee as No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No No Yes Yes Yes No Yes Yes [Auditing Structure] Appointment of Directors and/or Staff to Support the Audit Committee Appointed Matters Related to the Independence of Such Directors and/or Staff from Executive Officers (Shikkoyaku) To ensure the effectiveness of audits by the Audit Committee, the Company has established the Audit Committee Office as an organization dedicated to assisting the duties of the Audit Committee. Cooperation among Audit Committee, Accounting Auditors and Internal Audit Departments The Company has changed its governance structure to “Company with committees”, effective June 2019, as a part of efforts to strengthen corporate governance structure. The Internal Audit Department discusses with the Audit Committee when the department makes internal audit plans. The results of audits by the Internal Audit Department are all reported to the Audit Committee. The Audit Committee requests the Internal Audit Department to conduct investigations as necessary, and uses the results of these investigations for audit by the Audit Committee. In addition, the Internal Audit Department works closely with the Accounting Auditor and regularly exchanges opinions. The Audit Committee formulates audit plans and conducts audits. It strives to implement efficient audits by requesting General Manager of Internal Audit Department to attend the Audit Committee and regularly exchanging opinions and information with the Internal Audit Department. It also deepens mutual – 17 – understanding with the accounting auditors about the content of audits, including risk recognition and audit plans, and it exchanges opinions with the Internal Audit Department upon receiving explanations on the implementation status of audits. Also, the quality of the audits by the accounting auditors is maintained by consenting to the decision for the accounting auditors’ audit fee after verifying that adequate time will be able to be provided for the audits. Steps have also been taken to provide a supportive environment for the accounting auditor, including enabling access to senior management personnel such as the Representative Executive Officer and promoting collaboration with the internal audit and other departments. When the Audit Committee receives reports on the results of audits from the accounting auditor, the Internal Audit Department attends so that the three parties could have the same understanding. During the audits and other activities, the internal audit department, the Audit Committee and accounting auditors exchange opinions and information with the internal control departments (corporate management / accounting). The internal control department uses the results of the opinion and information exchanges by three audit parties to strengthen the internal controls. [Independent Directors] Number of Independent Directors 9 Matters relating to Independent Directors The Company has designated all outside directors as independent directors. The criteria for independence from the Company for appointing outside directors are as follows. The Company will determine the independence from the Company of outside directors based on the matters set forth below: 1. Personal Relationships: A kinship between the candidate and any officer or employee of the Group, status of mutual appointments of officers between the Company and the company which the candidate is originally from. 2. Capital Relationships: The holding of shares in the Company by the candidate and the status of shareholding by the Group. 3. Business Relationships: Business transactions or donations between the Group and the candidate. 4. Significant interests other than the above. In the event that a candidate for outside director falls within any of the categories listed below, the Nomination and Compensation Committee, a committee primarily constituted of outside directors, will examine his/her independence. Following the final determination by the Board of Directors, the proposal for appointment will be submitted to the General Meeting of Stockholders of the Company and the Company will submit notification of such outside director as an independent director as prescribed by each financial instruments exchange. (1) Personal Relationships 1) The candidate is or was an executive director (Note 1), an executive officer, an executive officer(shikkouyakuin) or an employee of the Company or its subsidiary at present or in the past 10 years (in 10 years prior to his/her appointment if the candidate was an executive director or audit & supervisory board member). 2) The candidate is a relative (Note 3) of a person who is or was an executive director, an executive officer, an executive officer(shikkouyakuin) or an important employee (Note 2) of the Company or its subsidiary at present or in the past 5 years. 3) The candidate is a director, an audit & supervisory board member, an accounting advisor, an executive officer, an executive officer (shikkouyakuin) of (i) a company that accepts director(s) (full-time or independent) from the Company or its subsidiary, (ii) its parent company or (iii) its subsidiary. (2) Capital Relationships 1) The candidate is a director, an audit & supervisory board member, an accounting advisor, an executive officer, an executive officer (shikkouyakuin) or an employee of a company in which the Company owns 10% or more of the voting rights. – 18 – 2) The candidate is a relative of a person who is a director, an audit & supervisory board member, an accounting advisor, an executive officer, an executive officer(shikkouyakuin) of a company in which the Company owns 10% or more of the voting rights. 3) The candidate owns or owned 10% or more of the voting rights of the Company at present or in the past five years (if the shareholder is a corporation, the candidate is or was a director, an audit & supervisory board member, an accounting advisor, an executive officer, a board member, an executive officer (shikkouyakuin) or an employee of the subject company, its parent company or a significant subsidiary (Note 4) of the subject company). 4) The candidate is a relative of a person who owns or owned 10% or more of the voting rights of the Company at present or in the past five years (if the shareholder is a corporation, the candidate is a relative of the person who is or was a director, an audit & supervisory board member, an accounting advisor, an executive officer, a board member or an executive officer (shikkouyakuin) of the subject company). (3) Business Relationships 1) The candidate is a person who makes or made payments of 2% or more of the Company’s consolidated gross annual sales (based on the current fiscal year or the average of the past three fiscal years) to the Company or its subsidiary (if the payer is a corporation, the candidate is or was an executive director, an executive officer, an executive officer(shikkouyakuin) or an employee of the subject company, its parent company or a significant subsidiary) , or a relative of the person. 2) The candidate is a person who receives or received payments of 2% or more of the candidate’s consolidated gross annual sales (based on the current fiscal year or the average of the past three fiscal years) from the Company or its subsidiary (if the recipient is a corporation, the candidate is or was an executive director, an executive officer, an executive officer(shikkouyakuin) or an employee of the subject company, its parent company or a significant subsidiary) , or a relative of the person. 3) The candidate is a board member (should be limited to a person who executes business) or other member or his/her relative, who executes business of a public interest incorporated foundation, a public interest incorporated association, or a non-profit corporation, etc. who receives donations or grants exceeding 10 million yen per year based on the average of the past three fiscal years from the Company or its subsidiaries. 4) The candidate is a director, an audit & supervisory board member, an accounting advisor, an executive officer, an