Acquisition of Shares of Box Innovation Group
- Full-fledged Entry into the U.K. Telematics Auto Insurance Market -
December 24, 2014
MS&AD Insurance Group Holdings, Inc.
1. Overview of the BIG acquisition
1
About the Transaction
■Aioi Nissay Dowa Insurance Company of Europe Limited (hereafter, "ADE" *1) will acquire
75.01% of the outstanding shares of Box Innovation Group Limited*2 for 105 million pounds
(approx. 20 billion yen) from existing shareholders.
*1:ADE is a wholly-owned subsidiary of Aioi Nissay Dowa Insurance Co., Ltd. ADE develops and promotes retail
business with Toyota dealers in U.K. and in Europe
*2:Box Innovation Group Limited is the holding company for Insure The Box Group, which deals telematics auto
insurance in U.K.
■Assuming that the transaction is approved by the relevant authorities, we expect to
complete the acquisition sometime after February 2015.
■ADE underwrites insurance products sold by Insure The Box（hereafter, together
with Box Innovation Group Limited “ITB Group”).
MS&AD Insurance Group Holdings, Inc.
2. Objective of Acquisition of Box Innovation Group Limited and Impact on
MS&AD Group Business Results
2
Transaction objectives
■Through this full-fledged entry into the U.K. telematics auto insurance market, we aim to advance
our growth strategy and realize earnings expansion.
■There will be no impact on MS&AD Group business results in FY2014
Impact on MS&AD Group business results
■We aim to expand ADE's business operations in Europe, which center mainly on the Toyota retail
business.
■We aim to diversify our business portfolio by venturing into areas in which the MS&AD Group is
not currently involved.
■Utilizing telematics technology should also help us to achieve our corporate mission.
■The acquisition will be entirely financed from cash on hand (i.e., we will not be raising capital or
borrowing from outside sources).
MS&AD Insurance Group Holdings, Inc.
3. Overview of Telematics Auto Insurance
Information acquired through Telematics
Format of Telematics Auto Insurance
☞ Premiums adjusted according to the driving distance by
the automobile
Implemented by
ADI
☞ Premiums adjusted according to the driver‘s driving
tendencies
✓ Speed ✓ Positional information
✓ Number of instances of sudden acceleration
and sudden braking
✓ Steering stability
✓ Driving time, etc.
✓ Driving distance
① Provision of services (automatic emergency reporting services linked to airbags, tracking services in the event of theft,
delivery of traffic information and weather information in the area where a car is being driven.) using bidirectional
communication systems in cars, etc.
②ADI was the first to practically apply PAYD, “Pay As You Drive”, for acquiring the driving distance through “G-BOOK”
system in 2004. In April 2015, this undergoes a renewal as a product providing “safety, security and savings” in the
form of “Connected Auto Insurance”
* There are examples of overseas auto insurance acquiring various driving tendency data such as speed, driving
distance, driving time, and uses of accelerator and brake from car-mounted equipment, and using this data to adjust
insurance premiums.
There is growing focus on the use of “Telematics” to collect data on driving tendencies such as driving distance, speed, acceleration and
braking operation while driving and on “Telematics Auto Insurance” in which insurance premiums are set based on this.
Because “driving tendencies” is directly reflected in insurance premiums, this increases awareness of “safe driving” ⇒ Fewer accidents
<Reference> Examples of Use in Auto Insurance and Services
Reflection
of driving
tendencies
in
insurance
premiums
Fewer
traffic
accidents
Awareness
of safe
driving
3
MS&AD Insurance Group Holdings, Inc.
4. Insure The Box Group Overview
4
Description of
the company
・As a leader and the most advanced company in the field of telematics insurance in
the U.K., Insure The Box—the main company under the BIG umbrella—is the U.K.'s
biggest telematics insurance company.
・Insure The Box is an MGA which is a comprehensive insurance agent with all the
functions of an insurance company except underwriting (risk-taking).
・The company's insurance risks are underwritten by Catlin (Lloyd's syndicate) and
others.
Business track
record
・All customers have devices installed in their vehicles, and in the five years since the
business was launched, 300,000 have been sold. It currently has about 130,000
policies in force.
・It is estimated to have the top market share in telematics insurance in the U.K.
(22% share of U.K. market in 2012)
Telematics
technology
・As an MGA that develops all of its own telematics technology, it is a world-class
company (biggest in U.K.).
Shareholders ・Catlin, Mr. Brockman and other members of the management team
Organization
・Box Innovation Group Limited, a Gibraltar-based company, and four subsidiaries
including ITB under the BIG umbrella, divided by function.
MS&AD Insurance Group Holdings, Inc.
5. Efforts by Insure The Box
① A proprietary device called a “Black Box” is installed in each insured car and receives driving
data from the vehicle.
② The effect of reduced premiums through the use of Telematics is larger for young people with
higher premiums, and many of the company's policyholders are young people.
③ Annual premiums of the company's new automobile insurance policyholders are reduced by an
average of approximately £620 (approx. ¥120,000).
[Main information collected]
Insure The Box was established in 2009 and is the largest and leading company making
advanced efforts in the area of U.K. Telematics Auto Insurance
Black Box installed in subscribed car
Data center
(Image)
Driving data
Call center
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MS&AD Insurance Group Holdings, Inc.
6. Overview of Insure The Box's Product
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① Speed
② Smooth driving
③ Taking breaks
④ Time of day
⑤ Motorway miles
① “Basic Miles” purchased when signing up
• Select from of 6,000, 8,000 or 10,000 miles annual driving distances (Different premiums depending on the basic
miles)
② Bonus miles acquired through safe driving
• Data on driving distance and driving tendencies is aggregated in the Black Box, and bonus miles are granted to good
drivers.
• Policyholders can check the driving distance, driving tendencies and bonus miles acquired in the portal site.
(Monthly driving distance)
(Driving tendencies)
Bonus miles are granted for safe driving.
③ Additional miles purchased if there is a lack of miles remaining
• Policyholders can check the number of miles remaining and purchase additional miles from the portal site if there
are not enough.
Number of miles remaining during the policy
duration
• Up to 100 miles can be obtained each month
Additional purchase
if there is a lack of
miles
Unused miles can be carried over to the following year
<1 mile ＝ Approx. 1.6km>
“Prepaid distance” automobile insurance with safe driving bonuses promoting safe driving by policyholders
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MS&AD Insurance Group Holdings, Inc.
7. Unique Accident Service of Insure The Box
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[Emergency Service (Accident Alert)]
■ “Emergency Service”: An emergency service responding to data received from the Black Box
■ “Stolen Car Tracking”: Tracking and recovery of a stolen car based on information received from the
Black Box
If a major accident is expected to have occurred based on information from
the Black Box, the call center makes an outbound call to the mobile phone
of the policyholder.
“If the vehicle is stationary after a strong impact”
• Because it is expected that a major accident preventing driving has
occurred, an emergency call is made to the policyholder to check his/her
safety, and support such as the arrangement of transportation is
provided to the policyholder if required.
“If there is no response from the mobile phone”
• If there is no response, it is assumed that an injury has been sustained
in the accident, and support for rescue activities is provided by placing
an emergency call to the police and ambulance service as required
[Stolen Vehicle Tracking Service (Theft Recovery)]
The vehicle is tracked and recovered using positional data from the Black Box based
on a theft report from the insured vehicle.
• The vehicle is recovered by using positional and movement information on the
insured car while working with the police.
(Note: Insure The Box boasts an extremely high recovery rate of stolen vehicles because the Black Box is installed in a place
that cannot be seen from the outside.)
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MS&AD Insurance Group Holdings, Inc.
8. Overview of Managing General Agent(MGA)
8
Customer
acquisition
Insurance
sales
Claims
handling
Customer
service
Product
design
Telematics
system
Underwriting
(terms &
conditions)
Underwriting
(risk-taking)
Claims
adjustments
Claims
payments
Insurance
company
△ ○ ○ ○ ○ △ ○ ○ ○ ○
Agent ○ ○ △ ○ × × ○ × △ ×
MGA(ITB) ○ ○ ○ ○ ○ ○ ○ × ○ △
MGA functions
・An MGA is a comprehensive insurance agent that has all of the functions of an insurance company except underwriting (risk-taking).
・In addition to the typical insurance agency function, MGA provides insurance product design, claims handling, claims adjustments, etc.
which are usually provided by insurance companies.
MGA business scheme
Policyholders
ITB（MGA）
Underwriting
company
Product design, premium
calculation, policy
execution,
certificate issuance
Telematics system
Data collection,
management, & analysis
Box installation
DCM*
communication
function
Underwriting
(risk-taking)
Insurance
claims
payments
Claims payments
Telematics services
Insurance sales
Data collection
Provides capacity
Insurance premiums
Claims handling and
claims adjustments
※Data Communication Module
Insurance
premiums
Claims payments
Claims data
analysis
Data analysis
MS&AD Insurance Group Holdings, Inc.
9. Strategic Significance of the Acquisition
9
■This full-fledged entry into the U.K. telematics auto insurance market will advance our growth
strategy and bring about earnings expansion.
⇒ Increases revenue and profit from MGA business handling telematics auto insurance, an area
where rapid growth is expected.
⇒ Increases ADE's insurance premiums and earnings, as it underwrites insurance through Insure
The Box.
■Advances the foreign growth strategy that was indentified in our reorganization by function.
⇒Strengthens ADE's European Toyota retail business thanks to telematics technology.
⇒Acquires the expertise in Telematics technology held by Insure The Box and utilizes it throughout
the entire MS&AD Insurance Group.
■Diversifies our business portfolio by venturing into areas in which the MS&AD Group is not
currently involved.
⇒Matches the policy of “Actively investing in high growth and profitable areas in Japan and
overseas” mentioned as a capital management policy in the Medium-Term Management Plan.
MS&AD Insurance Group Holdings, Inc.
(For reference) Overview of the market for telematics auto insurance
10
U.S.A.
Italy
U.K.
France
Germany
Other European
Countries
■The market for telematics auto insurance is expected grow rapidly, and by 2020, the size of the global market is
projected to exceed $50 billion.
■ Currently, Italy has the highest level of penetration for telematics auto insurance.
■ Amongst western countries, the U.K. is expected to show the largest growth going forward.
⇒ Telematics auto insurance is projected to account for nearly 40% of automobile insurance by 2020
in U.K.
Telematics auto insurance as a share of automobile insurance (Europe & the U.S.)
Source: MLIT (Ministry of Land, Infrastructure, Transport and Tourism)
This presentation contains statements about future plans, strategies, and earnings forecasts for MS&AD
Insurance Group Holdings and MS&AD Group companies that constitute forward-looking statements.
These statements are based on information currently available to the MS&AD Group. Investors are
advised that actual results may differ substantially from those expressed or implied by forward-looking
statements for various reasons. Actual performance could be adversely affected by (1) economic trends
surrounding our business, (2) fierce competition in the insurance sector, (3) exchange-rate fluctuations,
and (4) changes in tax and other regulatory systems.
Caution About Forward-looking Statements
