R&D on Prospective M&A for Acquisition and Target Firms

1. Acquisition of The Delphi Financial Group, Inc.
by Tokio Marine Holdings, Inc.
In Partial Fulfillment Course Title & Number: Mergers &
to Meet the Requirements for the Acquisitions, FI 317 SF1
Master of Business Administration Course Term: Spring 2012
Degree in Finance Instructor: Professor Scott Buchanan
at the Edward Ageno School of
Business, MBA Candidate: M. Scott Green
Golden Gate University Mid-Term Project : February 29, 2012

2. General Overview of Acquisition Proposal and Formal Prospectus
Continued Expansion of International Operations by Tokio Marine: Complimentary Addition
to Existing U.S. Operations
 Principals Involved:
α Tokio Marine Holdings, Inc:
 Financial Advisor: Macquerie Capital
 External Legal Counsel: Sullivan & Cromwell LLP
β Delphi Financial Group, Inc:
 Financial Advisor – Special Committee of IDBoDs: Lazard
 External Legal Counsel – Special Committee: Cravath, Swaine, & Moore, LLP
 External Legal Counsel - Delphi: Morris, Nichols, Arsht, & Tunnell LLP
 Formal Announcement Date: December 21, 2011
 Definitive Agreement Offer Amount: $2.7 Billion
 Expected Official Closing Date: Second Quarter of 2012

3. Brief Historical Perspectives
Brief Historical Perspectives: Tokio Marine Holdings, Inc. (Acquirer) and
Delphi Financial Group, Inc. (Target)
 Holding Company Name: Tokio Marine  Holding Company Name: Delphi Financial
Holding, Inc. Group, Inc.
 Main Operating Holding Company: Tokio  Major Subsidiary (s) Name:
Marine Group  Reliance Standard Life Insurance
 Major Subsidiary (s) Name: Company (US) – Employee Benefits
 Safety National Casualty Corporation
 Tokio Marine & Nichido Fire (JP)
(US) – Workers’ Compensation
 Philadelphia Consolidated (US)
 Matrix Absence Management, Inc.
 Kiln Group at Lloyd’s (UK) (US) – Auxiliary for Employee Benefits
 Founding/Incorporation: Founded in 1879  Founding/Incorporation: Incorporated in
as Tokio Marine & Nichido Fire; Incorporated November1987, United States
in April 2002, Japan  NAICS Description: Direct Life Insurance
 NAICS Description: Direct Property Casualty Carriers; specialty involves employee
and Insurance Carriers benefits

4. Brief Historical Perspectives Continued…
 Tokio Marine Organization’s President:  Delphi Financial Organization’s Chairman
Shuzo Sumi & CEO: Robert Rosenkranz
 # of Employees: 29,758  # of Employees: 1,885
 Global Reach: approximately 40 countries  Global Reach: Exclusively in U.S.
 Stock Exchange & Trade Symbol: TSE and  Stock Exchange & Trade Symbol: NYSE;
OSE; TMHD
DFG
 Recent Closing Price & Beta: $25.89; 0.9659
 Recent Closing Price & Beta: $44.56; 1.94
 # of Shareholders: 95,509
 # of Shareholders: 2,600
 # of Major institutional Holders: 10
 # of Major Institutional Holders: 25
General Overview: Industry Standards and Market Performance Analysis
(as of December 2011)
 Industry Type (US – IBIS World IR  Competitive Landscape - Industry
#52412): Property, Casualty, and Direct Leaders (per market share):
Insurance 1. State Farm Insurance (11.4%)
 Similar Industries: 2. Liberty Mutual Group (5.6%)
 Life Insurance & Annuities 3. The Travelers Companies (5.2%)
 Reinsurance Carriers 4. Allstate Insurance Companies
(5.2%)
 Workers’ Compensation and Other
5. AIG (4.0%)
Insurance Funds

5. General Overview: Industry Standards and Market Performance Analysis
Continued…
(as of December 2011)
 Supply Chain:  Market Segmentation:
A. Key Buying Industries:  Personal: 51.5%
 Mining  Commercial: 40.5%
 Wholesale Trade  Top 5 Business Locations (US):
 Information Industry Establishments versus
 Education Services Population Trends (% ranking):
 Consumers 1. Southeast
B. Key Selling Industries: 2. West
 Reinsurance Carriers
3. Great Lakes
 Insurance Brokers & Agencies
4. Mid-Atlantic
 TPAs & Insurance Claims
5. Southwest
Adjusters
Barriers to Entry Checklist: Level
 Product and Services Segmentation:
Competition High
 P & C Ins (personal): 39.9% Concentration Low
 P & C Ins (Commercial): 37.6% Life Cycle Stage Mature
 Reinsurance: 8% Capital Intensity Cost Ratio (0.13:1 cap to labor) Medium
Technology (over 87% online auto ins since ‘04) High
 Workers’ Compensation Ins: 5%
Regulation & Policy Heavy
Industry Assistance None

6. General Overview: Industry Standards and Market Performance Analysis
Continued…
(as of December 2011)
 KPIs: Financials: Revenue Volatility -  Homeownership Rate
Medium  Natural Disaster Index
 Revenue: $515.6 billion  Yield on 10-Year Treasury Bond
 Profit: $51.6 billion  Regulation: NAIC, UCAA, IRS, FASB, SAP
 Annual GR (2006-2011): - 1.4%; (more conservative than GAAP), TRIA of
However, improved to 9.6% in 2011 2002,
 Projected YGR (2011-2016): - 2.4%  S & P 500 (17% of investment income;
 Key External Drivers: Revenue Volatility: 8.5% of industry
 # of Motor Vehicle Registrations revenue by premium investment)
Health and Medical Insurance Industry: Geographic Breakdown of Life Insurance and Annuities Industry: Geographic spread of premiums
Uninsured Rate Life Disability/LT Deposit-
Population Uninsured insurance Annuities C insurance type funds
Region (billion) (billion) Uninsured (%) Region (%) (%) (%) (%)
USA 298.575 45.419 15.1 West 15 14 14 4
West 50.799 8.650 17.0
Rocky Mountains 10.530 1.769 16.8
Rocky Mountains 3 3 4 3
Plains 19.794 2.156 10.9
Plains 8 7 9 13
Southwest 35.732 8.052 22.5
Southeast 75.012 12.756 17.0 Southwest 10 9 13 2
Great Lakes 45.682 5.462 12.0 Southeast 24 22 25 6
Mid-Atlantic 46.939 5.215 11.1 Great Lakes 15 16 17 6
New England 14.083 1.021 7.2 Mid-Atlantic 20 22 13 55
*Data based on 2008 (latest data available) US Census Health Insurance New England 5 7 5 11
Coverage Working Paper on personal healthcare expenditures SOURCE: NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS

7. Financial Comparative Analysis: Stock Performance

8. Pre-Merger Deal Structuring & Partial Due Diligence Comparative Analysis
Tokio Marine Delphi Financial
Tokio Marine vs.
Stock Price and Stock Price and
Delphi Financial
Valuation (Data as of Valuation (Data as of
(Performance
02/03/2012) 02/03/2012)
Assessment)
Market Cap(mil) 20,065 9 Market Cap(mil) 2,177
Share Outstanding(000's) 775,000 16 Share Outstanding(000's) 48,845
Dividend Per Share(TTM) 0.6294 34% Dividend Per Share(TTM) 0.47
Last Closing Price 25.89 -42% Last Closing Price 44.56
Management Management
Effectiveness Effectiveness
Revenue per Employee 110,692 8 Revenue per Employee 921,617
Net Income per Employee 2,417 38 Net Income per Employee 91,855
ROA % (Net) 0.43 -82% ROA % (Net) 2.36
ROE % (Net) 3.55 -70% ROE % (Net) 11.72
Profitability Ratios Profitability Ratios
Calculated Tax Rate % 32.48 42% Calculated Tax Rate % 22.92
Yield on Investment 1.71 -70% Yield on Investment 5.71
Profit Margin (TTM) 2.18 -78% Profit Margin (TTM) 9.97
Valuation Ratios Valuation Ratios
Price/Earnings (TTM) 23.98 3 Price/Earnings (TTM) 9.21
Price/Book (TTM) 0.89 1 Price/Book (TTM) 0.98
Price/Cash Flow(TTM) 11.95 3 Price/Cash Flow(TTM) 4.4
Asset Management Asset Management
Total Asset Turnover 0.19 1.3 Total Asset Turnover 0.24
Cash & Equivalents Turnover 7.09 3.5 Cash & Equivalents Turnover 25.13
Debt Management Debt Management
Total Debt/Equity 0.07 -82% Total Debt/Equity 0.38
Liquidity Indicators Liquidity Indicators
Free Cash Flow per Share 166.70 25 Free Cash Flow per Share 6.56
Revenue to Assets 0.20 -9% Revenue to Assets 0.22

9. Acquisition Initiative, Purpose, and Expectations
(Summary of Pre-Acquisition Initiative: Primary Advantage of Consolidation/Merger)
Tokio Marine Holdings Delphi Financial Group
Fortifies existing U.S. property and casualty Improved financial robustness and expand
market presence niche or focus market base to Hybrid form
Effectuates as a product and service More comprehensive international market
enhancer acumen
Accelerates entrance into U.S. life insurance Create competitive advantage for Tokio
market Marine U.S. operations through leveraged
partnership alliance
• Incentivize and empower Delphi Financial to Facilitate expansion and diversification of
seek future acquisition opportunities and revenue streams and market serviceability
enlarge acquisition transaction portfolio for Tokio Marine
Acquisition Initiative, Purpose, and Expectations Continued…
Deal Structuring Process
 Preliminary Analysis (February 2012 financial performance data where indicated):
 Historical Event: First significant U.S. acquisition since 2008
 Pro Forma Basis Ascription: TMHD’s 2011 fiscal total adjusted earnings would increase
from 37% to 46%, due to international insurance business from DFG
 New Business Operation Model Directive: Merger value exceeds ‘Stand-Alone’ value
 Corporate Culture: Mutual respect and encouraged autonomy

10. Payment Mechanism, Communication, & Contingency Plans
Transaction Process and PR Transaction Terms - Form of Payment: Cash &
 Approval Process for TMHD: Borrowings
 Unanimous approval by BoDs of TMHD  Total Purchase Price/Enterprise Value:
and Special Committee of IDs of DFG  TMHD acquires 100% of DFG’s
 SC determine transaction fair and in outstanding Class A shares @ $43.875
best interest of Class A shareholders and Class B shares @ $52.875
 Approval Process for DFG:
 Post-closing special one-time cash
 Approved by DoDs of DFG dividend payment to Delphi shareholders
 Subject to approval by Delphi of $1.00 per share
shareholders, plus majority of Class A’s
 Delphi shareholders continue receiving
 Subject to approval by Mr. Rosenkranz
regular quarterly dividend up to closing
(49.9% of Delphi votes), Delphi’s BoDs
and their affiliates  Forward-Looking Statements
Target Company (DFG) Debt Highlights:
 Various regulatory authorities in U.S.
and Japan  $250,000,000 corporate debt - 7.875% senior notes,
maturing Jan. 31, 2020 (pari passu, or equal step or footing)
 Deal Announcement - Press Conferences:  $175,000,000 junior subordinated debentures, bearing
 TMHD press conference separately in interest at a fixed rate of 7.376%, payable until May 15,
2017
Japan
 After which the $175,000,000 junior subordinated
 DFG teleconference for investment debentures, bearing interest at a variable rate equal to
community with webcast feeds LIBOR for three-month U.S. dollar deposits plus 3.19%, due
on May 15, 2037

11. Q & A Session and References
Business Wire, Inc. (2012). Newswire.com: Tokio Marine Holdings to Acquire Delphi Financial Group in
$2.7 Billion Transaction. Retrieved on January 14, 2012 from
(http://www.businesswire.com/news/home/20111220006644/en/Tokio-Marine-Holdings-Acquire-Delphi-Financial-Group)
MSPmentor.com (2012). The Ultimate Guide to Managed Services. Retrieved on February 6, 2012 From
http://www.mspmentor.net/2011/12/21/mergers-and-acquisitions-two-east-coast-msps-in-discussions/
Cutcaster.com (2007-2011). Images: Vector of Businessman Holding United States and Japan. Retrieved
on February 6, 2012 From
http://cutcaster.com/vector/100684413-Businessman-Holding-United-States-and-Japan-Internet-Flag
Bell, B (2012). SynEARTH.network: Images. Retrieved February 6, 2012 From
http://synearth.net/2009/02/20/what-is-the-synergic-mode-of-thinking-2
5thrirtyone (2007 – 2011). Vectorise Logo: My Vector Hub: Tokio Marine. Retrieved on February 6, 2012
From http://vectorise.net/logo/2010/06/17/tokio-marine
Here Is The City (HITC).com (2012). Business: People & Firms: Delphi Financial Group, Inc. Retrieved on
February 6, 2012 from http://hereisthecity.com/2011/06/22/
Yahoo!, Inc. (2012). Yahoo Finance.com: Quotes Delphi Financial Group, Inc. Retrieved on February 6,
2012 from http://finance.yahoo.com/q?s=DFG&ql=1
The Financial Times, Ltd. (2011). Financial Times.com:/Marketsdata: Tokio Marine Holdings, Inc. Retrieved
on February 6, 2012 from http://markets.ft.com/Research/Markets/Tearsheets/Business-
profile?s=8766:TYO