January 11, 2007 MS Quarterly News (3nd Quarter, 2006) Mitsui Sumitomo Insurance Co., Ltd. (“MSI”) hereby issues a quarterly newsletter containing a summary of the topics for the third quarter, fiscal 2006, from October to December 2006 as set forth below. Sales performance (preliminary for the quarter from October to December 2006, with long-term medical insurance included in Personal Accident and Total accounts) Total premium revenues were continuously slow for the third quarter, about Y9 bn or 2.7 percent less than the comparable period a year earlier basis due to lingering aftereffects of the administrative dispositions, though they became weaker than in the second quarter. As a result, total premium revenues declined by Y14.2 bn or 1.4 percent on a year-on-year basis for the fiscal year through December. (premiums in million yen) Lines of insurance Q3 (Oct to Dec) Fiscal year to date (Apr to Dec) Premiums Growth rate (%) Premiums Growth rate (%) Voluntary Automobile 144,066 -1.9 424,193 -2.1 CALI* 41,712 2.2 124,935 -0.2 Fire 53,265 -1.7 151,724 -1.7 Personal Accident 28,775 -10.9 91,419 -4.4 Miscellaneous 39,769 -7.6 128,473 -1.3 Cargo and Transit 18,125 5.6 50,967 4.7 Hull 4,799 -6.0 20,381 7.4 Total 330,512 -2.7 992,093 -1.4 *CALI:Compulsory Automobile Liability Insurance Selected News Releases (October – December 2006) announcement date in parenthesis (1)  Business Improvement Plan   *  Status of ongoing Business Improvement Plan reported (Oct 20)     MSI submitted the third report on the progress of the Business Improvement Plan ("BIP") to the Financial Services Agency ("FSA") of Japan. The report dealt with the ongoing Meet-the-Management campaign, which intends to not only increase communication between the senior management and front-liners at each workplace but reflect their views in a "new group vision" under development. The report also conveyed that the Long-term Medical Service Center and the Medical Support Office would be newly established with staff being reinforced for claims handling services thereat and all claims handling services of the whole-life medical line being transferred for centralization thereto as part of the improvements of the claims payment administration system.   *  Status of ongoing BIP reported (Nov 21)     MSI submitted the fourth report on the progress of the BIP to the FSA. It was reported that a survey started, being implemented in the way of sending a return sheet enclosed together with his/her policy sent to each policyholder. The sheet set questions about how easily he/she understands the texts in the application form and policy as well as asked for any suggestion related to the application procedures. The report also referred to whole-life medical insurance to the effect that a reminder of particulars of his/her policy and a notice regarding how to correct any deficiency in his/her health representation were being sent to each policyholder.   *  Status of ongoing BIP reported (Dec 21)     MSI submitted the fifth report on the progress of the BIP to the FSA. The report covered the Salespersonship Qualification System of Whole-life Medical Insurance to be internally instituted and other efforts. These efforts include an evaluation project regarding the administration system for the overseas network completed by an external consulting firm, the Meet-the-Management campaign finished by having duly held a meeting at each and every department and branch within Japan since its start late August.   *  Review on third-sector claim denials and payment system improvement (Oct 31)     MSI submitted a report regarding the findings in the review of the third-sector claim denials to the FSA in accordance with the order dated July 14, 2006 therefrom. MSI had filed a report dated June 21 to the effect that there had been 927 claims found inappropriately denied during the four years spanning from April 2002 to March 2006. As a result of an additional investigation made for the five-year period further back from July 2001 up to June 2006, the number of claims determined as an inappropriate denial increased by 213 claims to 1,140 claims from 927 claims as reported previously.   *  Termination of investigation regarding extraordinary expense claims (Dec 8)     In accordance with the FSA’s order dated November 17, 2006 to report certain matters thereto, MSI internally coordinated schedule and related matters for termination of the investigation regarding failures to properly pay claims for extraordinary and other incidental expenses under Extraordinary Expenses Coverage and duly submit a report. It reported to the effect 1) that the internal documentary review should be finished by December 31, 2006 and 2) that each unestablished claim should, after confirmation of its fact with the relevant claimant, be established by February 15, 2006 as to whether or not it is eligible and, if so, how much it is payable. (2)  Products and Services   *  IRR released low-cost and time-efficient "Quick BCP" service (Oct 16)     Inter-Risk Research Institute & Consulting Inc. ("IRR"), a member of the MSI group, started offering a service named Quick BCP last October, which facilitates preparation of a brief business continuity plan ("BCP") with low cost in a short period. It is said less than ten percent of Japanese companies have introduced business continuity management ("BCM"). This service will enable those companies which have not yet introduced BCM to very easily prepare and adopt a BCP, and will therefore help BCM spread among such companies.   *  Japan’s first lightning derivative instrument developed (Oct 17)     MSI developed lightning derivative product, a king of weather derivative instrument, for companies which like to hedge risks of losses to lightning strikes. This instrument is Japan’s first one of this kind, and on sale since October 17. The lightning derivative is an option product under which a holder company is entitled to receive a settlement amount based on the number of lightning strikes, as index, reported within a certain observation area specified by latitude and longitude.   *  IRR started offering "ERM consulting" service (Oct 23)     IRR, a risk management consulting arm of the MSI group, launched a new consulting service to assist a company in building evolving internal control and risk management systems. ERM, short for enterprise risk management, is management methodology that intends to collectively manage any kind of incidents that might bring difficulties or force changes in such aspects as frameworks, means and processes of the corporate business and thus optimize corporate value of a company as well as keep performing its duties to all stakeholders in such event.   *  IRR and IDG Japan jointly held Japan’s first BCM expo (Nov 7)     IRR, a MSI group member, and IDG Japan, Inc. jointly held the Business Continuity Management 2006 on November 21 and 22. This comprehensive BCM conference was the first BCM expo held in Japan.   *  IRR made BCM survey on Japanese public companies (Nov 9)     IRR, a MSI group member, conducted a survey to all of 3,864 public companies in Japan as to whether they have adopted BCM and what actions they have taken in the BCM, and made a summary of the returns.   *  Emergency road service by GPS on mobile phone available (Dec 12)     MSI, in cooperation with NTT DoCoMo, Inc., developed an emergency road service that uses a global positioning system ("GPS") loaded on a mobile phone and is to be included in automobile insurance coverage. Two types of its application series, named "O-kuruma QQ-tai" (auto rescue team in Japanese) and "MOST First Class QQ-tai," respectively, were launched on December 20. Location data can be transmitted simultaneously with verbal communication by the GPS of a handy phone and immediately identified, and for the first time in Japan, this function is applied to emergency road service of car insurance. This service gives assurance to a driver that he/she can be more certain of a service person coming quicker even if he/she is in a car trouble in his/her unfamiliar area, and thus increases customer convenience of the MSI brand car insurance. (3)  Life Insurance   *  MS Kirameki Life released new medical insurance (Nov 9)     Mitsui Sumitomo Kirameki Insurance Co., Ltd., which celebrated its tenth anniversary October 2006, developed a new medical insurance as a commemorative product and started offering it on November 27, 2006. This new insurance has product features of broad coverage and adequate functions to meet better customers’ needs diversified in the midst of changing social environment such as evolving medical technology and public medical insurance program under revision. For example, its hospitalization coverage ranges from so-called "one-day-return" to long term.   *  MS MetLife increased in-force amount above Y2 trillion (Dec 1)     At Mitsui Sumitomo MetLife Insurance Co., Ltd. ("MS MetLife"), amount in force exceeded Y2 bn as of November 30, taking only a year and four months since it had reached Y1 bn as of July 31, 2005. As a unit specialized in individual annuity insurance, MS MetLife had started its operation in October 2002, and since then, it has forged ahead in promoting sales as well as building up its agent network. It continues to seek more banks as over-the-counter sales partners and improve its promotion assistance function to them so that it should keep devoting its energy to meeting diverse customers’ needs. (4)  Overseas Business   *  Capital injection into MS Frontier Re for more o'seas reinsurance deals (Nov 10)     MS Frontier Reinsurance Limited, a British Bermuda-based reinsurance subsidiary specialized in overseas natural disaster risks, increased its capital $100 mn for further business expansion in the overseas reinsurance. Following the capital injections in 2002 and 2004, this one intended to facilitate more flexible and agile inward reinsurance business at the subsidiary. The reinsurance market condition has been favorable for inward reinsurers by the subsequent course of the recent years' large-scale natural disasters, including Hurricane Katrina that hit the U.S. 2005[whose damages were spilled over into the reinsurance market last year]. Viewing business opportunities for excellent risks likely to continuously come out on the market, the reinsurance subsidiary has got ready with its high credit standing to take such opportunities based on its thus strengthened capital base.   *  MoU signed with Vietnamese authorities regarding high-tech zone (Nov 16)     MSI, jointly with Mitsui & Co., Ltd. and Mitsui Sumitomo Banking Corporation, determined to involve itself in inducing direct investment of high-tech companies to Vietnam, and signed a memorandum of understanding ("MoU") with the Ministry of Science, Technology and Environment of Vietnam regarding the Hoa Lac Hi-tech Park in the country. Unlike many Japanese entrants in Vietnam in recent years, mainly plants in the labor-intensive industries, in this particular undertaking, we three Japanese companies focus on inviting high-tech companies for contribution to fostering high-tech industries in line with the policy of the Vietnamese government.   *  Hong Kong subsidiary rated A/Stable by S&P (Dec 20)     Mitsui Sumitomo Insurance Company (Hong Kong), Limited ("MSI Hong Kong") (President: Kumagai Masaki) obtained an A/Stable rating of financial strength from Standard & Poor's Rating Services on December 18. This rating was given for MSI Hong Kong alone, unguaranteed by MSI, and MSI Hong Kong is the only one among the Japanese non-life insurers' subsidiaries based in Hong Kong that has earned a rating. (5)  Environmental and Social Contribution Activities   *  Season's card charity campaign for children in ex-Yugo and Pakistan[Croatia and Sri Lanka] (Nov 1)     Smile Heart Club, a social contribution body of MSI's employees, and Kids Earth Fund, a non-profit organization, cooperatively undertake a charity program on a catchword of "Kids Helping Kids" every year. Raised money is used partly for the art workshop of the program, which gives children in certain areas devastated by warfare or a natural disaster a sort of psychological therapy of allowing them to draw pictures and then prints some of them as winter greeting cards for sale next year. This winter, five pictures were selected for Christmas cards out of pictures drawn by Croatian children and three for other picture cards out of those by children in Sri Lanka which the Sumatran Tsunami had hit badly, and these cards were sold for charity.   *  MSI issued "CSR Report 2006" (Nov 6)     MSI issues its CSR report annually since fiscal 2004, stating its actual CSR performance, related issues and future vision in it. It describes MSI's CSR activity by citing several examples of its actual practices, hoping readers to feel close to it. Particularly in this latest issue, it handles the administrative dispositions imposed not only with description of the particulars and analysis of the causes and the background but also MSI's basic idea of the remedies and the efforts in an orderly arranged summary.   *  MSI foundation selected subsidy recipients and welfare prize winners (Nov. 16)     Mitsui Sumitomo Insurance Welfare Foundation selected 38 research plans to subsidize for fiscal 2006 and honored the beneficiaries at the award ceremony on November 20. Also on this day, Mitsui Sumitomo Insurance Welfare Foundation Prize was awarded to three winners as authors of an excellent literary work or treatise. For the selection of research plan for the year, Mr. Masaki Koshi, Professor Emeritus to the University of Tokyo and Mr. Hisao Itoh, Professor Emeritus to the Tokyo Medical University had been invited to chair the Traffic Safety- and the Elderly Care-category committees, respectively. The Traffic Safety committee selected 14 plans out of 55 applicants and the Elderly Care one determined 24 researchers out of 95 candidates, totaling 38 cases for the aggregate subsidy of Y34 mn. (6)  Other Topics   *  Child care assistance programmed for employees' work/life balance (Dec. 1)     MSI is going to take steps in helping employees to improve work/life balance in perspective of a society where women can more positively work. As the first step, an assistance program was instituted to make external child care facilities available at a discount rate for parent employees. All those employees of the MSI group living in Japan, whether man or woman, who have any pre-school child are eligible for it, including part-timers. Amateur Sports     *  Women's Judo     2006 Kodokan Cup All Japan Judo Championship (at Chiba Port Arena on Nov 18) Emi Yamagishi (48kg class) won this championship for the first time. Yosie Ueno (63kg class) won her third consecutive victory while Rie Iwafuji (57 kg class) and Chiaki Shimizu (70kg class) won bronze medals. 15th Asian Games, Judo (in Doha, Qatar, Dec 2 and 4) Masae Ueno (70kg class) and Yuki Yokosawa (52kg class), representing Japan, earned gold and bronze, respectively.     *  Women's Marathon and Track     Eastern Japan Corporate Team Ekiden Relay Championship (in Saitama, Nov 3) The MSI team was made of Miki Ohira for the Leg 1, Ikuyo Yamshita for the Leg 2, Yoko Shibui for the Leg 3, Chiaki Iwamoto for the Leg 4, Reiko Tosa for the Leg 5 and Chiaki Ohsaki for the Leg 6. The team achieved the seventh straight victory for the first time ever in this ekiden race history with a time of 2h 13m 58s. Tokyo International Women's Marathon (in Tokyo, Nov 19) Reiko Tosa won the race for the first time with a time of 2h 26m 15s in spite of unfavorable conditions at a temperature of less than 10 degree Celsius in the rain. This is her third full marathon victory.