Mitsui Sumitomo Insurance

April 7, 2006

MS Quarterly News (4th Quarter, 2005)

We, Mitsui Sumitomo Insurance Co., Ltd. ("MSI"), are pleased to issue a quarterly newsletter with a summary of the topics during the fourth quarter ended March 31st, 2006, as set below.

Sales performance

(preliminary for the fourth quarter, from January to March 2006, with long term medical insurance included in Personal Accident and Total accounts)

Due to robust sales in the lines of compulsory automobile liability, fire, personal accident and cargo and transit, aggregate sales grew 3.9 percent on a year-on-year basis for the quarter ended March. Also on a year-to-date basis, sales increased in the all lines, resulting in a large Y-o-Y growth of Y56.6 bn or 4.4 percent in the aggregate.
The automobile line secured annual increase in sales, with a new seller, "First Class." In the fire line, "Home Pika-ichi" and "New Business Pika-ichi," which also cover household damages caused in a natural disaster, including an earthquake, kept their good paces. In addition, the line found demand growing from the corporate accounts as the private capital investment is getting firmer. The personal accident line showed steady performance, mainly thanks to solid increase in "ViV Shushin" whole life insurance and medical and accident group insurance in the medical lineup as well as "Super J Plan" personal accident insurance for corporate clients. The miscellaneous and hull lines celebrated a good year with contribution from new accounts.

	Q4, fiscal 2005 (Jan. to Mar. '06)		Fiscal year to date (Apr. '05 to Mar. '06)
Lines of insurance	Premiums (sales basis) (in million yen)	Growth rate (%)	Premiums (sales basis) (in million yen)	Growth rate (%)
Voluntary Automobile	136,079	0.2	570,427	0.8
CALI*	47,711	11.1	172,954	10.7
Fire	51,341	7.6	206,537	6.4
Personal Accident	33,831	5.9	130,386	8.6
Miscellaneous	35,405	-0.8	166,404	3.1
Cargo and Transit	16,356	11.5	65,085	8.0
Hull	4,594	5.9	23,575	13.1
Total	325,317	3.9	1,335,370	4.4

*CALI: Compulsory Automobile Liability Insurance

Selected News Releases (Jan. to Mar. 2006)

announcement date in parenthesis

(1)

Products and Services

Comprehensive builders risk insurance, "Kenchiku All-in" revised (Feb. 6)

Kenchiku* All-in, which insures a building contractors comprehensively for its construction work, was revised and placed on sale since February 1.
As risks surrounding building contractors are ceaselessly getting more diverse and complex, the scope of its coverage was reviewed to properly meet "risks ranging from construction work to post-delivery," based on customers' suggestions, and broadened to insure contractors comprehensively, including damage to "property under construction," "damage liability during construction work," "post-delivery damage liability" and so on. Now, this revised type offers indemnity on a top tier level.

*kenchiku : construction in Japanese

Internet-only overseas travel insurance, "Net de Hoken@Travel" on sale (Feb. 13)

Net de Hoken*@Travel, a new type of travel insurance available only via the Internet, was developed and launched on April 3.
This new item is very reasonably priced by no-policy issuing, totally paperless processing and other cost savings as well as the terms-and-conditions program enabling applicants to opt more precisely. It also offers attractive benefits and new coverage clause such as "repeater's discount" and "first aid dental expense." We will promote it hard.

*hoken : insurance in Japanese

Appraisal service of assets in M&A (business combination accounting) started (Mar. 20)

In April, American Appraisal Associates Japan Co., Ltd. ("AAJ"), an asset appraiser arm of our group, kicked off its appraising service in accordance with the "business combination accounting" that will be effective in fiscal 2006.
There has been no specific accounting standard for merger and acquisition in Japan, and it has been left discretionary at an acquirer how to recognize gains on assets purchased in such a transaction. But shortly, a neutral and fair appraisal on assets in question by a third party will be financially critical to success of a strategic M&A deal, so this service is expected to play an important role in such a case.

(2)

Life Insurance Operations

New type variable individual annuity insurance released (Jan. 11)

Mitsui Sumitomo MetLife Insurance Co., Ltd. ("MS MetLife") developed a very new type of variable individual annuity insurance called "Lifetime Guarantee (LG) type" and launched its sale on January 31.
As the catch phrase of the LG type says, "Variable annuity not long to receive and lifelong to receive," it is designed to start installments a year after the signing and continue over the life of an annuitant. This type of variable individual annuity insurance is the first in Japan. In addition, it reviews an installment amount every five years, and steps up the amount in line with increased return on investment on its segregate account. Therefore by this function, an annuitant can cope with inflation even after installments started. The LG type was developed based on the expertise introduced by MetLife Inc. of the U.S., and the first new product from MS MetLife since its name change.

Broad income protection insurance with no cash surrender value on sale (Mar. 31)

Mitsui Sumitomo Kirameki Life Insurance Company, Limited ("MS Kirameki") developed a broad income protection insurance with no cash surrender value and started its offering on April 2.
This is a modification of the conventional income protection insurance with no cash surrender value with a range of coverage widened in response to customers' preference to be insured for such cases in addition to death as income disruption or decrease of an insured because he/she is heavily injured to become handicapped or falls seriously ill to need medical care.

(3)

Overseas Operations

MSI participated in Asian ESCO fund (January 12)

MSI is Japan's first insurer that participates in so-called an Asian ESCO fund, which invests ESCOs1 and renewable energy2 businesses in the Asian region, and ready to invest US$5 mn (equivalent to about Y600 mn) as signed in December 2005. We intend to contribute the investment to infrastructure enhancement and anti-global-warming projects in the region as well as aim at return appropriate to the involved risks as part of the financial services.

*1:	Energy Service Company. The ESCOs provide a wide variety of services to improve energy efficiency, including technical, facilities, human resources, financial and other supports. The ESCOs are unique in the way that they finance energy saving investment by curtailing energy costs, and guarantee amount to be saved.

*2:	Collectively, a type of energy generated from sustainably available resources, such as solar, hydraulic, geothermal heat powers, or biomass power using vegetation wastes and livestock excretions.

Overseas businesses reorganized under regional holding companies (February 28)

Subject to respective authorities' approval, the overseas businesses of the group will be placed one after another under three regional holding companies from April onwards, which will cover Asia, Europe and the Americas, respectively. Basically, two holding companies for the Asian and European operations will newly be set up in Singapore and London, respectively, and the existing one in New York as MSI's subsidiary will act as one for the Americas. Under these three, the overseas subsidiaries and affiliates will geographically be realigned. The holding companies will be empowered de-centrally to a great extent and responsible accordingly so that they are expected to agilely make decisions and execute operations.

(4)

Environmental and Social Contributory Activities

3rd lecture of Citizens' Environmental Course held (January 20)

The third lecture of the Citizens' Environmental Course which deals issues in environmental and community contribution initiatives was given open to public, particularly residents in the neighborhood of the MSI Surugadai Building and people interested in urban greenery activities. The guest speaker, Professor Akira Hoyano of Tokyo Institute of Technology, gave a speech titled "urban amenity through well-designed greenery and heating," in which he stressed on necessity of urban designing of less load on the environment and explained effective greenery programs to this end.

MSI Culture Foundation selected co-sponsors and subsidy recipients (February 20)

Mitsui Sumitomo Insurance Cultural Foundation selected 31 municipal co-sponsors that will hold "Concerts for Local Community" at their own halls and 13 amateur bodies as "recipients of subsidy for cross-national cultural activity."
The foundation subsidizes cultural activities in the areas such as music and folklore performing arts to help local communities promote their cultural activities and cross-national communications, and thereby intends to contribute itself to cultural evolution and prosperity in Japan.

(5)

Other Business-related Topics

Information leaked through sub-contractor by virus-infected computer (January 17)

It was revealed that personal information of 590 customers leaked through a virus-infected computer owned by an employee of MCS Co., Ltd., a sub-contractor, which received an order from Chuo Computer System Co., Ltd., an immediate contractor of our system development order. The sub-contractor quickly cut of the personal computer in question from the Internet and collected it. Illegal use of the leaked information has not been recognized so far. MSI would like to deeply apologize to the affected customers and others for the caused troubles and concerns, bearing the lesson from it in mind.

Apologies and internal proceeding for short reimbursements (February 3)

As an action pertaining to the short reimbursements, a set of measures was taken to make clear responsibilities of the top management. The chief executive officers of chairman and president and those who have once been executives responsible for claim handlings, product development, computer system, legal compliance and operational auditing since October 2001 repaid certain portion of their retainer fees, and other responsible staff were internally penalized. MSI would like to express again its sincere apologies and give utmost priority to preventing such negligence from recurring in future among management issues. By fulfilling our duties as an insurer, we will strive to restore customers' trust.

Nationwide survey on service continuity management at municipals (February 16)

A joint survey, "Direction in Service Continuity Management at Municipals," was conducted with Associate Professor Kenji Watanabe of Nagaoka University of Technology. This is the first nationwide survey in Japan that deals the issue of municipal service continuity. The survey revealed that business continuity management (BCM) has been hardly introduced at municipalities, as low as three percent of them. In comparison with a similar research made on private companies last year by Inter-Risk Research Institute & Consulting Inc., our group member, municipalities are behind the private sector in adopting BCM. That survey is informative for not only municipalities but other officers responsible for administration reform, risk management and so on.

MSI won "2005 Underwriting Team of the Year" in Insurance Day Awards (February 16)

MSI was honored for its marine freight business group with "2005 Underwriting Team of The Year" in the sixth Insurance Day Awards held in the U.K., as the most remarkable underwriting team in 2005. It is because of the selector's global recognition, including MSI's leading position retained in the domestic marine business since its establishment in 2001, particularly its high growth rate and stable profitability, and its high quality customer services offered across the world. MSI is the first winner among the non-life insurers in Japan.

MSI awarded "Best Trading Company in Asia" for 2nd consecutive year (February 16)

MSI was selected to "Best Trading Company in Asia" as "the most excellent player in the weather derivatives" for the second consecutive year by a British monthly magazine, "Environmental Finance." Since MSI commercially introduced weather derivatives for the first time in Japan in 1999, it has been the leader in the domestic market since then as well as one of the most actively globalizing players from the Asia-Pacific region. The selection is based on the organizer's general judgment, taking these achievements into consideration.

CEOs changing in April (February 28)

It was resolved at the regular meeting of the Board of Directors on February 28th, 2006 that the CEOs shall be changed effective April 1, 2006 as follows:

Takeo Inokuchi	Chairman and Representative Director, Executive Officer (Currently Chairman and Representative Director, Chief Executive Officer)

Hiroyuki Uemura	President and Representative Director, Executive Officer (Currently President and Representative Director, Chief Executive Officer)

Yoshiaki Shin	Representative Director, Chief Executive Officer (Currently Representative Director and Vice President Executive Officer)

Toshiaki Egashira	Chief Executive Officer (Currently Managing Executive Officer, General Manager, Kanagawa & Shizuoka Division)

The current positions will be effective until March 31st, 2006.

Lack of explicit explanation in offer documents of savings-type insurance (March 14)

It was found that some of the offer documents of savings-type insurance items printed in the past lack of a certain cautionary note which should have referred to installment of payout. The said cases are now under internal investigation, and actions will be discussed based on the findings.

Condo mortgage securitization program established (March 17)

In corporation with Deutsche Securities, Inc, a program was newly set up to securitize and sell off a portfolio of loans to rental condo owners with guarantee of JACCS Co., Ltd., and its first deal was completed. Under the program, all beneficiary interests inclusive of subordinated ones can be sold off, and therefore now MSI has another instrument for a full off-balance-sheet financing transaction to use funds effectively.

Amateur Sports

	*	Women's Judo
		Paris Ile-de-France International Tournament, Paris, France, February 11-12 Yoshie Ueno (63kg-class) was the silver medalist, honored with "Fair Play Prize," too. Hungarian Open, Budapest, Hungary, February 18-19 Hitomi Tokuhisa (63kg-class) finished fifth. Polish Open, Warsaw, Poland, March 4-5 Emi Yamagishi (48kg-class) won the championship.
	*	Women's Marathon and Track
		Nagoya International Women's Marathon ,Nagoya, Japan, March 12 Yoko Shibui won the silver medal with a record of 2h23m58s Matsue Ladies' Half Marathon, Matsue, Japan, March 19 Miki Oyama was the bronze winner.