Sompo : Establishment of a New Subsidiary, a Corporate Split between it and Another Subsidiary and Divestment from the New Subsidiary thereafter

(English Translation)

May 24, 2022

To whom it may concern:

Company Name: Sompo Holdings, Inc.

Representative: Kengo Sakurada, Group CEO, Director, Chairman and

Representative Executive Officer

(Stock Code 8630: Tokyo Stock Exchange Prime Market)

Contact: Shu Nakamura, Manager

Corporate Communications Department

Phone: [phone]

Establishment of a New Subsidiary, a Corporate Split between it and Another

Subsidiary and Divestment from the New Subsidiary thereafter

Sompo Holding, Inc. ("SOMPO") announced today that Sompo Seguros S.A ("SSeguros"), a subsidiary of SOMPO in Brazil, has entered into a definitive agreement to spin off its consumer business into a new insurance subsidiary ("NewCo") and sell the shares of NewCo to HDI Seguros S.A. ("HDI"), a subsidiary of Talanx AG, a major European insurance company.

With the sale of the consumer business, SSeguros will reposition itself to seek significant growth and profitability opportunities in Brazil by becoming an insurance company specializing in commercial business. With this transition, Sompo International Holdings Ltd. ("SI") will for the first time primarily focus on commercial business operations in an emerging market.

１． Rationale of the Business Restructuring (divestment of the consumer business in Brazil)

SSeguros was formed in 2014 through the merger of Yasuda Seguros S.A. and Maritima Seguros S.A. (Yasuda Maritima Seguros S.A. was renamed SSeguros in 2016). Since then, SSeguros has developed its business in both commercial and consumer platforms. Meanwhile, the consumer sector in Brazil has become increasingly competitive, and business scalability has become extremely important to build competitive advantage. Based on a comprehensive reexamination of the business strategy under the current environment, management has concluded that further growth and profit enhancement for SSeguros and SI will be achieved by concentrating resources and focusing on the commercial business. SSeguros' new growth strategy will leverage the strong market presence it already has in Brazil as it seeks promising growth potential for the business. The sale of the consumer business to HDI is aligned with this new strategic direction.

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SSeguros already has a stable business foundation in its commercial business, including having the No. 1 market share in marine insurance. SSeguros aims to expand its footprint in unexplored markets by utilizing SI's globally recognized commercial and specialty insurance expertise in product development, underwriting, reinsurance, and DX using AI.

２． Transaction Structure

NewCo will be incorporated as a wholly-owned subsidiary of SSeguros, which will then transfer all assets and liabilities related to the consumer business to NewCo via an absorption-type company split. SSeguros will complete the sales of its consumer business via a divestment of a 100% stake in NewCo to HDI.

３． Overview of SSeguros

（１）	Company name	Sompo Seguros S.A.
（２）	Location		Rua Cubatão,320, Paraíso São Paulo-SPCEP04013-001-
			Brasil
（３）	Name and	title of	Alfredo Lalia Neto, Chief Executive Officer
	representative
（４）	Nature of business	Insurance company
（５）	Capital		BRL 1,872 million (JPY 48.5 billion) *1
（６）	Date	of	October 8, 1943
	establishment
（７）	Major shareholders	Sompo International Holdings Brasil Ltda. (99.9%)
	and investment rate
（８）	SOMPO's		Capital		Sompo International Holdings Brasil Ltda., a
	relationship	with	relationship	subsidiary of SOMPO, owns 99.9% of its shares
	the company
		Human		One of SOMPO's executives is also serving as
			relationship		a board member.
			Business		Reinsurance transactions	exist between
			relationship	SOMPO's affiliates and SSeguros.
（９）	Financial results of the past three years *2, 3
	Fiscal year	December 2019		December 2020		December 2021
Net Assets			1,283		1,266		973
Total Assets			5,088		5,501		5,421
Net Assets per share		11.8		10.4		4.6
Gross Premium			3,350		3,076		3,282
Profit Before Tax			80		▲227		▲750
				2

Net income	70	▲160	▲915
Net income per share	0.6	▲1.3	▲4.3
Dividends per share	0	0	0
Combined ratio	100.8％	108.9％	129.2％

1. The exchange rate of 1 BRL = JPY 25.93 (as of April 28, 2022) is applied.
2. BRL amounts are in millions (amounts for the net income per share and dividends per share are in BRL).
3. Based on the financial statements submitted to the insurance authority in Brazil on a non-consolidated basis.

４． Overview of NewCo

（１）	Company name	NewCo (tentative)
（２）	Location	TBD
（３）	Name and title of	TBD
	representative
（４）	Nature of business	Insurance company
（５）	Capital	BRL 383 million (JPY 9.9 billion) *1, 2
（６）	Date of	In or after August 2022 (planned)
	establishment
（７）	Major shareholders	To be incorporated as a wholly-owned subsidiary by
	and investment rate	SSeguros (planned)
（８）	SOMPO's	Capital	To be incorporated as a wholly-owned
	relationship with	relationship	subsidiary of SSeguros (planned)
	the company
	Human	TBD
		relationship
		Business	TBD
		relationship

[Overview of NewCo]

1. Nature of Business
   Insurance company specializes in the consumer business
2. Operating Result (As of the end of Dec. 2021)
   Gross Premium BRL 1,762 million (JPY 45.7 billion)
3. Book Values of Assets and Liabilities (As of the end of Dec. 2021)
   Total Assets BRL 2,177 million (JPY 56.4 billion) Total Liabilities BRL 1,794 million (JPY 46.5 billion) Total Equity BRL 383 million (JPY 9.9 billion)
   1. The exchange rate of 1 BRL = JPY 25.93 (as of April 28, 2022) is applied.

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2. Capital amount and financials of NewCo to be fixed after the completion of the sales of

NewCo's shares to HDI. The capital amount is estimated based on the financials of

SSeguros as of 31 December 2021, assuming that the total equity related to the retail business is succeeded to NewCo via a corporate split and recorded as the capital amount.

５． Overview of HDI

（１）	Company name	HDI Seguros S.A.
（２）	Location	Av das Nações Unidas 14261, Brooklin Paulista, São
		Paulo-SPCEP:0478-00- Brasil
（３）	Name and title of	Eduardo Dal Ri, Chief Executive Officer
	representative
（４）	Nature of business	Insurance company
（５）	Capital	BRL 755 million (JPY 19.6 billion）*1
（６）	Date of	March 03, 1980
	establishment
（７）	Major shareholders	HDI International AG (100%)
	and investment
	rate
（８）	SOMPO's	Capital relationship		None
	relationship with
	Human relationship		None
	the company
	Business relationship	None
		Status as a Related Party	None
（９）	Financial results of the past three years *2, 3
	Fiscal year	December 2019		December 2020		December 2021
Net Assets	1,181			1,205		1,046
Total Assets	4,275			4,415		4,673
Net Assets per share	18,402			18,775		16,301
Gross Premium	3,559			3,621		3,726
Profit Before Tax	183			89		▲141
Net income	131			70		▲69
Net income per share	2,043			1,098		▲1,072
Dividends per share	1,025			817		0

1. The exchange rate of 1 BRL = JPY 25.93 (as of April 28, 2022) is applied.
2. BRL amounts are in millions (amounts for the net income per share and dividends per share are in BRL).
3. Based on the financial statements submitted to the insurance authority in Brazil on a non-consolidated basis.

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６． Number of Shares to be Transferred, Transfer Price, and Number of Shares Held Before and After the Transfer

（１）	Number of shares	[TBD] (Voting rights: 100.0%)
	held before the
	transfer
（２）	Number of shares to	All shares held prior to the transfer
	be transferred
（３）	Transfer price	BRL 1,230 million (JPY 31.9 billion) *
		*The initial payment is subject to certain closing account
		and other adjustments and expected to amount to
		approximately BRL 1,050 million. Part of the Transfer
		Price that may be adjusted up or down based on certain
		performance based criteria post closing will be retained
		and be subject to deferred and contingent release to
		SSeguros.
（４）	Number of shares to	0 (Voting rights: 0.0%)
	be held after the
	transfer

*The exchange rate of 1 BRL = JPY 25.93 (as of April 28, 2022) is applied.

７． Timetable

（１）	Determination date	May 24,2022
（２）	Signing date of share	May 24,2022
	transfer agreement
（３）	Scheduled date of	In or after August 2022 (planned)
	NewCo's
	incorporation
（４）	Scheduled date of	In or after October 2022 (planned)
	company split
（５）	Scheduled date of	In or after January 2023 (planned)
	share transfer

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