October 8, 2004 Notice Concerning the Arrest of the Former Employee for Embezzlement at the Subsidiary of Mitsui Sumitomo Insurance Co., Ltd. in U.S.A The alleged incident of embezzlement in excess of ¥100 million by the locally hired former employee at MSI Claims (USA), Inc. (*), a subsidiary of Mitsui Sumitomo Insurance Co., Ltd., was discovered in September and was referred to the U.S. Attorney's Office. We have been notified that the U.S. Federal Bureau of Investigation arrested the former employee on October 7, 2004 (U.S. Eastern Time).   (*) MSI Claims (USA), Inc. is a wholly owned subsidiary of Mitsui Sumitomo Insurance Co., Ltd. to adjust losses of product liability insurance, overseas travelers insurance and cargo insurance.   The locally hired former assistant manager (terminated on September 10, 2004) allegedly embezzled checks issued payable to the company for almost five years. Further investigations revealed that the amount embezzled is about ¥130 million and although no details are disclosed by the local authorities, it is possible that there are other crimes.   The bank accounts he opened are frozen. Civil action against the former employee as well as the recovery of the loss will be advanced.   The ingenious tactics used by the perpetrator delayed the discovery of this incident, however, MSI Claims (USA), Inc. is working on the improvement and reinforcement of the internal control system. The work flow and control system is also being reviewed. We will strengthen the internal controls for the overseas subsidiaries and will work on the prevention of the recurrence of similar incidents.