Mitsui Sumitomo Insurance Co., Ltd. (MSI) (Japan) has transferred USD 120 million of Japan Typhoon risk to the capital markets by sponsoring a securitization program held by special purpose vehicle (SPV) AKIBARE Ltd. in order to enhance its financial stabilization by diversifying the method of transferring its insurance risk.

While the stability of traditional reinsurance market is threatened by the several recent hurricanes in US and other major natural disasters, MSI uses risk swaps and this securitization program in addition to traditional reinsurance so as to mitigate its exposure to domestic catastrophe risks efficiently. On the other hand, through assuming overseas catastrophe risks by its reinsurance subsidiary, it rebalances the global catastrophe risks portfolio. All these measures represent that MSI promotes comprehensive reinsurance strategy in MSI group (MSIG).

1.Summary of the Transaction MSI is entering into a reinsurance contract with Swiss Re, which is simultaneously transferring the risk to AKIBARE Ltd. via a financial contract. AKIBARE is issuing bonds in two classes of notes to institutional investors in capital markets to hedge its obligation to Swiss Re under the financial contract.     The loss trigger of the notes is based on a parametric index, by which the principal amount of the notes will be reduced when a certain large typhoon events occur during the bond period resulting in a parametric index value in excess of a predefined threshold. The parametric index is based on wind speed measurements recorded from the AMeDAS network. In the event of a principal reduction, AKIBARE will pay such amount to Swiss Re under the financial contract, and Swiss Re will pay such amount to MSI under the reinsurance contract. The Risk Analysis conducted by RMS calculates that a principal reduction to the Class A Notes is expected to be triggered approximately once in 100 years. In addition, the program includes the Class B Notes with a trigger point that drops down to approximately once in 50 year probability in the next year after a typhoon with an index value in excess of a predefined dropdown activation index level. The program is structured as a note program, which allows MSI to access the capital markets on an ongoing basis through future issuance of notes by AKIBARE up to a total of USD 500 million. This structure provides MSI with the flexibility to sponsor additional issuances of notes in the future when additional transfer of typhoon risk is necessary. Swiss Re Capital Markets is the Sole Structuring Agent and Sole Manager of the AKIBARE Ltd. transaction, and Risk Management Solution and affiliate RMS Japan conducted the risk analysis.   <Summary of Program> Issuer AKIBARE Ltd Principal Amount $120,000,000 Redemption Date May 22, 2012 (5 years) Interest Spread Class A: LIBOR + 295bps, Class B: LIBOR + 315bps (with dropdown) Ratings BB+ (Standard & Poor’s ) for Class A and B

MSI is providing its clients with insurance coverage for catastrophe risks in various lines of business. MSI mitigates its retention of catastrophe risks by mainly using traditional reinsurance in order to provide continuous and stable insurance coverage to its clients. In the meantime, traditional reinsurance market implies volatility in terms of capacity and cost, therefore too much reliance on traditional reinsurance produces instability to the company’s financial status. European and US major insurance/reinsurance companies have also been facing the same problem, and securitization has become more common to mitigate such volatility. In recent years, several large natural disasters, as exemplified in Hurricane Katrina in 2005, have occurred to make the traditional reinsurance market unstable, consequently, more insurance/reinsurance companies have utilized securitization to obtain the coverage. The securitization market experienced record growth in 2006, and significant issuance is also expected in 2007. The majority of issuance continues to be in natural catastrophe risks that represent the peak exposures to the insurance and reinsurance industry. As a result, investors must manage the accumulation of such risks in their portfolios, and value risks that provide greater diversification, such as Japan typhoon risk. MSI successfully took advantage of the opportunity to obtain the Japan typhoon coverage from capital markets on favorable terms. MSI executed its first securitization as a substitute and supplement for traditional reinsurance, but its subsidiary, MS Frontier Reinsurance Limited (Bermuda), which specializes in assuming catastrophe risk, invests in such bonds to diversify its risk taking capabilities. MSIG is improving its comprehensive group risk structure by reducing MSI’s Japan catastrophe risk exposure while assuming overseas catastrophe risk through its subsidiary. Securitization plays an important role in MSI’s strategy to diversify its sources of reinsurance protection as well as its sources for assuming catastrophe risk.