November 9, 2001 Revision of Forecast Business Results (Interim Period of Fiscal Year Ending March 2002) and Report on Loss from Evaluation of Securities (End of Interim Period of Fiscal Year Ending March 2002) Company name: Mitsui Sumitomo Insurance Company, Limited Representative: Hiroyuki Uemura, President and Director (Code No. 8752 First Section of TSE) Head office address: 27-2, Shinkawa 2-chome, Chuo-ku, Tokyo, Japan 1. Revision of Forecast Business Results Based on recent business developments, we are revising forecast business results for the interim period of the fiscal year ending March 2002 that were publicized on May 18, 2001 (on a non-consolidated basis) and on May 30, 2001 (on a consolidated basis). (1)Revision of Forecast Business Results for Interim Period of Fiscal Year Ending March 2002 (Non-consolidated) This revision was made because the net income for the interim period of the former Mitsui Marine and Fire Insurance Co., Ltd. (hereafter "Mitsui Marine") is expected to exceed the amount originally forecast. (Reason for Revision) 1) Former Mitsui Marine *While losses paid and transfer to case reserves due to natural disasters were less than expected, and interest and dividends received are also expected to be more than forecast, ordinary profits will be about 10% lower than originally forecast due to loss on the evaluation of securities held (10 billion yen). *Note that the reversal of reserve for bad debts (totaling 3.4 billion yen), which mainly consists of a general reserve for bad debts (reserved for normal credits etc.) due to a reduction in loans and actual loan losses will be reflected in extraordinary income. Net income for the interim period are expected to exceed the forecast. 2) Former Sumitomo Marine *While losses incurred due to natural disasters were less than expected, and interest and dividend received are expected to be higher than forecast, ordinary profits are expected to fall below the amount originally forecast, due to loss on the evaluation of securities held (11.2 billion yen). *Although 5.9 billion yen derived from the transfer of assets and liabilities to the U.S. subsidiary (upon transformation of the U.S. branch office of the head office in Japan) accounted for extraordinary income, the acturial differential (e.g., shortage of investment profit concerning the funded pension plan due to decline in stock markets) of 5.5 billion yen under the accounting standard for retirement benefits was written off as extraordinary losses. Net income for the interim period are expected to be lower than originally forecast. (2) Revision of Forecast Business Result for Interim Period of Fiscal Year Ending March 2002 (Consolidated) (Reason for Revision) The former Mitsui Marine and former Sumitomo Marine both revised their forecast business results on a consolidated basis due to the aforementioned revision of business result forecasts above on a non-consolidated basis. The profits (5.9 billion yen) resulting from transformation of its branch into the U.S. subsidiary with Sumitomo Marine (on a non-consolidated basis) are offset as unrealized profits on a consolidated basis. (3) The forecast business results for the fiscal year ending March 2002 on both a consolidated and non-consolidated basis are under review and will be publicized at publication of the interim business results. 2. Loss on Evaluation of Securities Held at the End of Interim Period of Fiscal Year Ending March 2002 The loss on the evaluation of securities held at the end of the interim period of the fiscal year ending March 2002 is as follows: The former Mitsui Marine and former Sumitomo Marine both evaluate securities (other than trading securities) and money trusts (other than for investment purposes) at fair value, at cost, or at amortized cost. Impairment losses are accounted for in cases of a significant loss in fair value (not considered temporary) or a significant loss in real value. Considering also the method employed in the United States, impairment loss is actually accounted for as follows: *All securities whose market values are at least 50% (inclusive) below book value at the end of the period are subject to accounting as impairment loss. *All securities whose market values are at least 30% (inclusive) to 50% below book value at the end of the period are subject to accounting as impairment loss. This does not include securities whose market values recorded a higher fair value than book value during the past six months, provided that issuers of such securities are classified as normal credit under self-assessment criteria. Securities classified as other than normal credit are subject to accounting for impairment even though they have recorded higher values than book value during the past six months. The total amount of loss on evaluation would increase by 6.4 billion yen if all securities whose market values at the end of the period are at least 30% below book value were accounted for as impairment. The differences in the evaluation of securities, etc. (difference between market value and acquisition cost) are as follows: