January 7, 2005 MS Quarterly News (3rd Quarter, 2004) We, Mitsui Sumitomo Insurance Co., Ltd. ("MSI"), are pleased to issue the quarterly newsletter with a summary of the topics during the third quarter ended December 31st, 2004, as set out below. Performance on a preliminary basis for the third quarter of fiscal 2004, from October to December 2004   Q3, fiscal 2004 (Oct. to Dec.) Fiscal year to date (Apr. to Dec.) Lines of insurance Premiums (sales basis) (in million yen) Growth rate (%)* Premiums (sales basis) (in million yen) Growth rate (%)* Voluntary Automobile 145,560 -2.2 431,515 -1.6 CALI** 37,501 2.0 113,428 2.2 Fire 54,998 12.3 147,247 6.6 Personal Accident 30,255 7.4 89,223 8.3 Miscellaneous 39,972 4.3 126,690 6.4 Cargo and Transit 15,553 5.7 45,612 8.3 Hull 3,910 -9.3 16,504 -1.6 Total 327,758 2.4 970,219 2.3 *The "growth rate" represents an incremental rate in comparison to the same period in fiscal 2003. **CALI: Compulsory Automobile Liability Insurance < Comments > The lines of CALI, fire, personal accident, miscellaneous and cargo and transit fared well enough to make up with a fall in the voluntary automobile line. Overall, premiums increased 2.4% for the third quarter and 2.3% year to date over a year ago. Specifically, Home Pika-ichi fire insurance, which covers natural disaster risks as well, and earthquake insurance contributed to the increase. Miscellaneous and cargo and transit met firm demands from corporate clients. In the personal insurance line, ViV Shushin whole life and overseas travel insurances account considerably for the increase. Selected News Releases (Oct - Dec 2004) release date in parenthesis (1)  New Products and Services   *  Medical insurance "ViV Shushin Cancer Focus Plan" launched (Oct. 14)     This plan, available since December, is a modification of ViV Shushin which provides compensation for expenses such as those for diagnosis, hospitalization, and additionally forced everyday life of an insured patient in case of cancer in addition to the popular features of "broad medical coverage," "non-accident mileage," and "reasonable premium." The compensation ranges widely from radiotherapy received by visiting hospital to expenses particular to women's cancer such as reconstructive mammaplasty.   *  Website "e-Customer Center" for individual customers upgraded (Oct. 19)     In October, "e-Customer Center" opening within our website for individual policyholders, was upgraded. Now the renewed center extends its service, working around the clock, and a newly mounted function is a page where a policyholder of MSI and/or Mitsui Sumitomo Kirameki Life Insurance ("MS Kirameki") can browse an overview and the details of his/her own insurances. Other improvements include online procedures such as those for an automobile policyholder to report a new address if he/she has moved and to request to reissue Certificate of deductions for insurance premiums if he/she lost the original.   *  New Comprehensive Inland Transit, "Business One," on sale (Oct. 19)     On November 11th "Business One," new Comprehensive Inland Transit Insurance was launched, targeting medium- and small-size companies. This product is specifically designed for those companies who are below five billion yen in terms of annual sales as a packaged insurance which covers the risks of inventories throughout from supply on transportation, in storage and under processing to goods on store shelves. By using MSI's underwriting know-how, coverage to a higher degree can be offered at a reasonable price set lower by 20% than the conventional insurance.   *  "BCM Diagnosis Service" available for corporate clients (Oct. 28)     MSI and Inter-Risk Research Institute & Consulting ("Inter-Risk"), MSI's risk management consultation arm, jointly developed Japan's first checkup service on business continuity management (BCM) for corporate clients, actions made by a company in preparation to continue its business in case of a disaster or accident. This service is available free of charge. An applicant for the service fills a questionnaire consisting of five areas of "preparation," "discontinuation risk," "continuation plan," "education and drills" and "cooperation with external institutions," returns the questionnaire to get it analyzed and evaluated, and finally receives a "diagnosis" report. To the diagnosis report is attached a proposal of business interruption insurances which will support corporate clients to continue their business, too.   *  Mobile terminals deployed for totally digitalized application entry (Nov. 11)     This pair of terminals is the first device in the industry that digitally processes all entries from insurance application to premium collection. During an agent meets an applying customer, the application registry completes paperless and with no family seal by the terminal set in front of them. And it is also cashless, because, simultaneously, the settlement procedures can be entered online to the applicant's bank to transfer premiums from his/her account to MSI's. "Mobile MS1," the terminal set, is going to be deployed to the agents as requisite and standard tool, which will increase customer satisfaction and business process efficiency.   *  Advanced system introduced to Customer Desk in Customer Center (Nov. 25)     An advanced customer service system was installed and started its operation in November for the Customer Desk in the Customer Center where customers' inquiries on terms and conditions and procedures related to the policy are handled. The new system processes the incoming inquiries by phone, e-mail or whatsoever into database so that the data should be used to train the staff prepared for quick response, compile frequently asked questions into an FAQ booklet, as well as analyze the inquiries for better quality product and service designing.   *  Environmental Risk" free-of-charge checkup started (Dec. 1)     MSI and Inter-Risk developed "Environmental Risk" checkup, and this free-of-charge service started for medium- and small-size companies in December. The service provides questionnaire associated with mitigation of environmental risks to examine to what extent a company gets prepared for its environmental risks. Based on the results, a report is submitted, including recommended actions for better protection. For a company, it can be a great step towards the risk management to learn the current situation of environmental risks by this service.   *  Risk Management System Software" for corporate use on sale (Dec. 9)     Inter-Risk developed a software for corporate clients who like to build an in-house risk management system for themselves. It has been on sale for corporate use since December. (2)  Life Insurance, New Businesses, Alliances and Overseas Operations   *  Tieup with appraiser of residential house quality in housing loan (Oct. 21)     MSI and Houseplus Corporation, Inc. ("Houseplus"), an appraiser of residential house quality designated by the Minister of Land, Infrastructure and Transport of Japan, entered into an agreement on arrangement and sale of mortgage loans eligible to securitization by the Government Housing Loan Corporation ("GHLC") . Under the agreement, a home buyer who has determined to purchase a house based on Houseplus's appraisal, he/she can apply MSI through Houseplus for a GHLC purchase type mortgage loan so that he/she can enjoy a preferential interest rate up to 0.5% points lower than MSI's standard rate. Although MSI had started offering GHLC purchase type loans by way of alliance with major house builders since October 2003, Houseplus is the MSI's first partner as an appraiser in this sort of collaboration.   *  Comprehensive alliance with China Pacific Insurance (Oct. 26)     MSI and China Pacific Insurance, one of leading insurance groups in China, agreed on building up a comprehensive alliance. The alliance aims at mutual supplement with advantages brought from the both sides in such areas as underwriting, product development, accident and claim handling in quickly growing Chinese insurance market. By including a broad ranging collaboration like joint market cultivation, it will enable MSI to offer high quality services across that country.   *  MSIVC trusted Y 300 mn for university-derived ventures by national agency (Nov. 12)     An independent administrative agency, The Organization for Small & Medium Enterprises and Regional Innovation, JAPAN (SMRJ) selected, as an investee, one of investment limited partnerships managed by Mitsui Sumitomo Insurance Venture Capital ("MSIVC"), MSI's venture capital unit. SMRJ is an independent administrative agency which manages the venture funds on behalf of the Government. This is the second time SMRJ has invested in MSIVC's investment fund. MSIVC is the only venture capital that have accepted funds from SMRJ among insurance - company affiliated venture capitals in Japan.   *  Boosting capitalization of two reinsurance units (Nov. 18)     MSI's two overseas reinsurance subsidiaries, MS Frontier Reinsurance and Mitsui Sumitomo Reinsurance will increase their capitals significantly to expand their overseas reinsurance operations, possibly by the end of the year. Against the backdrop of the upturn in the reinsurance market after the 9.11 terrorism, they both received a capital injection in 2002. Their operational bases have constantly expanded since then. Because a spate of the great natural disasters occurred in the U.S. and Japan, it is deemed that the current favorable market will continue for the time being, and, especially not to miss this opportunity to make good use of their advantageous high credit standing, the capital increase aims to enable them ready to move quickly in the market.   *  MS Kirameki Life reported record-stretching first half results (Nov. 22)     MS Kirameki announced that its amount of new policies written comprised of individual insurance and individual annuity insurance increased to 900 billion yen for the first half ended September 2004, setting its new record with a big 39.7% jump over the previous one marked for the first half, 2003. Amount in-force on a same item basis also marked a double digit increase of 18.1% over the same period in 2003, totaling to 6,359.3 billion yen.   *  50th anniversary of Asian market entry celebrated (Nov. 26)     To celebrate the 50th anniversary of its Asian business, together with the 40th anniversary of Thailand Branch, MSI held a memorial party in Bangkok, Thailand, inviting major clients, officials of the royal authorities, and other market participants to express its gratitude to them. Fifty years have passed since its operation started there in Thailand, and it has rooted firmly and expanded to mark 4.7 billion yen in gross premiums written and 800 million yen in net income fiscal 2003.   *  Chairman and CEO Inokuchi made speech at 22nd East Asia Insurance Congress (Nov. 26)     Takeo Inokuchi, Chairman and CEO, made a keynote speech, "Towards New Development of Asia Insurance Market," containing various proposals, before so many as 300 participants mainly those from insurers, re-insurers and brokers at the 22nd East Asia Insurance Congress held in November. He was the first Japanese that has been appointed to make a keynote speech at that congress which had been held annually since 1962. (3)  Environmental and Social Contribution Activities   *  MSI given welfare minister's best volunteer activist prize (Oct. 22)     MSI was awarded an honor by the Minister of Health, Labor and Welfare to the meritorious people in volunteer activities. This prize is awarded to a person or an entity who "has played more than ten years and is still playing a leading role in conducting or supporting a volunteer service and whose merit is preeminently worthy." At MSI, a social contribution body "Smile Heart Club" and other employees' volunteer groups have continued the activities in the areas of welfare, international cooperation, environment protection and relief to disaster victims. MSI is the first non-life insurer that has been awarded since the creation of the prize in 1994.   *  Surugadai Office awarded environment minister's prize for rooftop gardening (Oct. 22)     MSI Surugadai Building was selected for Rooftop Greenery Prize of the Minister of Environment at The Third Greenery Technology Competition for Rooftop, Wall and Special Space sponsored by a foundation, Organization for Landscape and Urban Greenery Technology Development. This award is given to an enterprise or facilities that proactively promotes greenery on an idle space of its own buildings and premises like a rooftop. The MSI Surugadai building is the first case that the prize has been awarded to facilities more than twenty years old. Six companies engaged in maintenance and management of the building, including MSI, were also honored with the prize on this occasion.   *  Donations made by MSI employees, group companies, agents (Nov. 10)     A program named "Matching Gift Program to the Employees' Donation for sufferers of Disasters" has been created for the purpose of corporate social responsibility ("CSR") so that MSI group companies will jointly donate additional fund as much as donation made by their employees' social contribution activities in principle. As part of its social contribution activities, the MSA, a nationwide franchise body of MSI's major agents, has also determined to invite the members to donation subscription for sufferers in the typhoons and the Chuetsu Earthquake in Niigata Prefecture.   *  MS Welfare selected researches in traffic safety, elderly care to subsidize (Nov. 19)     Mitsui Sumitomo Insurance Welfare Foundation picked up 37 researches to subsidize in fiscal 2004. To give some decent support in increasing traffic safety and elderly welfare, the foundation has subsidized 1,318 researches of the total amount of over 1,773 million yen, inclusive of fiscal 2004, since its establishment in 1975.   *  "Charity Winter Holidays' Cards" of Croatian children's drawings designed (Nov. 29)     In cooperation with non-profit organization KIDS EARTH FUND MSI's employees' social contribution body, Smile Heart Club, designed five pieces of charity winter greeting card specimen to support children in the former Yugoslavian territories. In this annual activity, twelve out of those pictures are nominated which are drawn by children as part of the art therapy treated for their mental care, and then five are elected out of them by vote. Revenues from the cards are re-circulated to support the children in that region.   *  100 Brailled children's book donated as Christmas gift (Dec. 16)     While, taking the occasion of its third merger anniversary, MSI has extended its social contribution activities to a nationwide level, the Kansai Bloc struggled to Braille children's books. Those employees who shared the willingness, totaling 1,031, joined in the activity and Brailled 99 copies of three children's books, 33 copies each, for one and half months from late October to mid December. They were presented as Christmas gifts to the municipal Braille libraries and entities who lend Brailled books free of charge in the Kansai Bloc region. (4)  Others   *  Mitsui Sumitomo Insurance Group Charter on Professional Conduct formulated (Oct. 1)     Upon the occasion of the third establishment anniversary, MSI instituted "Mitsui Sumitomo Insurance Group Charter on Professional Conduct" as MSI's CSR principles. The charter prescribes typical behavior models for employees to conduct in respect of major types of stakeholders. The epilogue concludes the charter with five basic disciplines of "our behavior (as MSI people);" basic idea of behavior, awareness in daily work, close communication, strict legal compliance and criteria in case of wondering whether right or not with giving some examples of "conduct criteria" and "readiness."   *  "Corporate Social Responsibility Section" created (Oct. 7)     Corporate Social Responsibility Section was established in the Corporate Planning Department. The seven-member cross-divisional office is comprised of the head and six interlocking staff who come from each key division in order to promote smoothly and flexibly CSR activities on a company-wide basis. MSI pledges to extend efforts in the CSR activities orchestratedly under the guidance of the CSR Promotion Office.   *  MSI introducing Japanese 401k plan for its own employees (Dec. 28)     MSI has amended its corporate pension scheme and will adopt a defined contribution corporate pension program named "Mitsui Sumitomo Insurance DC Plan" for its own employees, starting in April 2005. At the same time, an option of lump sum contribution prepayment will also be formulated to offer employees an alternative way of receiving retirement pay and annuity. In respect of corporate management, this amendment will stabilize benefit obligations and reduce its impact on MSI's financial conditions. Amateur Sports     *  Women's Judo     2004 Kodokan Cup All Japan Judo Championship at Chiba Port Arena on Nov. 20 The 63kg class final game was fought between the colleagues, Yoshie Ueno and Hitomi Tokuhisa, and Ueno defeated Tokuhisa by the skill of Ohsotogari, leaving only nine seconds to go. This is Ueno's second championship at this competition after a three-year interval. Rie Iwafuji in the 57kg class game made a great challenge and gained the bronze medal, too. The 22nd Fukuoka International Women's Judo Championship at the Fukuoka International Center on Dec. 11 to 12 Hitomi Tokuhisa achieved her first victory in the 63kg class, Yuki Yokosawa won her second championship in the 52kg class after a three-year interval, Rie Iwafuji gained the silver medal in the 57kg class while Norie Ueno finished fifth in the 63kg class. They all did their best there.     *  Women's Marathon and Track     The 15th East Japan Industrial Women's Ekiden Championship in Saitama Prefecture on Nov. 3 MSI formed team was made as follows; Ishiyama ran the Leg 1, Hashimoto won the leg prize of the Leg 2, Ohyama was also the prize winner of Leg 3, Ohira achieved the new record for the prize of the Leg4, Tosa also won the prize of the Leg 5 and Shibui Leg 6, another leg prize winner. The team achieved the fifth straight victory by altogether setting a new record of 2h 12m 57s. The 24th National Industrial Women's Ekiden Championship in Gifu Prefecture on Dec. 12 This time, MSI team members were as follows; Ohira ran the Leg 1, Ishiyama won the prize of the Leg 2, marking a new record of the leg, Shibui the Leg 3, Iwamoto also gained the Leg 4's prize, Tosa ran the Leg 5 and Ohyama finished first the Leg 6 with a new record. MSI team achieved the second consecutive and the fourth championship with the time of 2h 13m 17s.     *  Yachting Club     The 50th All Japan Sea Horse Yachting Championship off the coast of Hayama, Kanagawa Prefecture on Oct. 9-11 In this one of the major championships, 42 corporate teams who had survived the preliminary games fought six races for the championship by the total score. All MSI teams made their best efforts so that one of them won the silver medal and others finished fourth, fifth and seventh.     *  Other topic     Masae Ueno, judo wrestler, given Autumn Medal with Purple Ribbon (Nov. 3) Ms Masae Ueno, one of MSI's judo athletes in the 70kg class, was awarded an Autumn Medal with Purple Ribbon. The medals are awarded to persons of preeminent fame in the areas of academy, fine art and sports of the year. MSI honored with JOC Top Athletes Support Award (Nov. 22) The Japanese Olympic Committee ("JOC") founded a new prize 2004, which is awarded to some elected out of Japanese delegate athletes and those organizations, including companies and universities, which made a great contribution to train and support such athletes. This was the first time that MSI has been honored with the prize because its sports clubs include Masae Ueno, the gold medalist in 70kg class judo, Yuki Yokozawa, the silver medalist in 52kg class judo and Reiko Tosa, the fifth finisher in marathon at the Athens Olympic Games as well as Yoko Shibui, the setter of the new Japanese record marked at the Berlin Marathon in September 2004.