FY2007 Results & FY2008 Business Plan May 2008 Millea Holdings, Inc

Transcription

1 FY2007 Results & FY2008 Business Plan May 2008 Millea Holdings, Inc 0

2 Millea Holdings Key statistics FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 projections Ordinary income 2,929.0 bn yen 2,775.7 bn yen 2,899.4 bn yen 3,399.9 bn yen 4,218.5 bn yen 3,710.0 bn yen 4,057.0 bn yen Net income 56.6 bn yen bn yen 67.6 bn yen 89.9 bn yen 93.0 bn yen bn yen bn yen Adjusted earnings * bn yen bn yen 51.8 bn yen bn yen bn yen bn yen bn yen Adjusted ROE *1 3.8% 5.9% 1.6% 3.7% 3.8% 3.5% 4.1% Dividend total * bn yen 19.7 bn yen 18.9 bn yen 25.2 bn yen 29.8 bn yen 38.7 bn yen 38.7 bn yen Dividend per share *3 20 yen 22 yen 22 yen 30 yen 36 yen 48 yen 48 yen Share repurchase * bn yen 92.4 bn yen 70.1 bn yen 85.0 bn yen 90.0 bn yen bn yen T.B.D. Sales of business related equity holdings bn yen bn yen bn yen bn yen 45.0 bn yen 60.0 bn yen 50.0 bn yen Share price *5 1,472 yen 3,240 yen 3,120 yen 4,660 yen 4,360 yen 3,680 yen 4,290 yen Market capitalization *5 1,363.0 bn yen 2,896.6 bn yen 2,683.2 bn yen 3,930.8 bn yen 3,594.9 bn yen 2,960.6 bn yen 3,451.4 bn yen *1 FY2005: excludes the effect of precondition changes in the domestic life insurance business *2 FY2008: figure is calculated on the ground that the number of stocks is unchanged from that of FY2007 *3 All figures are shown as a basis after a share-split implemented in Sep *4 The corresponding fiscal year covers the year starting on the day when the regular shareholders meeting of the following year is convened. On FY2005, 57.8 billion yen of stock exchange with Nisshin Fire has been excluded The figure shown for FY2007 is the share repurchases amount cap for one year *5 Share prices are as of the end of fiscal year and are shown as a basis after a share-split implemented in Sep FY2008: figures are as of May 22, 2008 Business corporations of Millea Group Millea Holdings, Inc (listed holding company) Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Tokio Marine & Nichido Financial Life Tokio Marine Asia Millea Nihon Kosei Tokio Marine & Nichido Anshin consulting Tokio Marine & Nichido Risk consulting Tokio Marine & Nichido Career Service Tokio Marine & Nichido Samuel Tokio Marine & Nichido Facilities Tokio Marine & Nichido Medical Service Millea Mondial Millea Real-estate-risk Management Tokio Marine Bluebell Re Asia General Holdings Singapore Life / Non-life Tokio Marine Newa Taiwan Insurance Co., Ltd Non-life IFFCO-TOKIO General Insurance Co., Ltd. The Tokio Marine and Fire Insurance Company (Singapore) Pte. Ltd. Tokio Marine Insurans (Malaysia) Bhd. Sino Life Insurance Co., Ltd. Tokio Marine Management company Americas in Pan American Area India Non-life Singapore Non-life Malaysia Non-life China Life etc. Brazil Non-life Brazil Life Tokio Marine Seguradoras S.A. Real Vida e Previdencia S.A. 1 Tokio Marine & Nichido Better Life Service International Assistance Tokio Marine & Nichido Adjusting Service Tokio Marine & Nichido Systems Tokio Marine & Nichido Outsourcing Management Tokio Marine Asset Management Tokio Marine Capital Tokio Marine Financial Solutions Tokio Marine Europe Insurance Tokio Marine Brasil Seguradora Tokio Millennium Re Tokio Marine Global Tokio Marine Global Re Tokio Marine Management Kiln Group 1 Elderly related services Emergent assistance services Claims investigations System development & management Insurance office works Investment advisory & trust Private equity investment Derivatives Insurance Insurance Reinsurance Reinsurance Reinsurance Insurance agent Insurance etc.

3 Section 1 FY2007 results and FY2008 projections Tokio Marine & Nichido Profit & Loss statement page Overview Impact of natural disasters Combined ratio Asset management performance Nisshin Fire Profit & Loss statement TMN Life Profit & Loss statement TMN Financial Life Profit & Loss statement Millea HD Consolidated results Profit & Loss statement Comparison with TM&N results Contribution of major group companies Consolidated balance sheet Current status of direct investments in US subprime loans exposed assets Influences from turbulence in the global financial market Investments in CDS and ABS Investments in SIVs Financial guaranty reinsurances FY2008 Projections Tokio Marine & Nichido and Nisshin Fire Tokio Marine & Nichido Life Tokio Marine & Nichido Financial Life Millea group consolidated Millea Group adjusted earnings Return to shareholders Market capitalization ranking Credit ratings & Solvency margin ratios Rating agencies Types of ratings Millea Holdings Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life S & P Insurer financial strength rating AA / stable A+ / stable AA / stable Moody's Insurer financial strength rating Aa2 / stable Fitch Ratings Insurer financial strength rating AA+ / stable A.M.Best Best's rating A++ / stable R & I Senior long-term credit rating AA+ / stable AA / stable JCR (as of May 22, 2008) (as of May 22, 2008) Rank Short Name Market Cap Rank Short Name Market Cap 1 BERKSHIRE HATHAWAY 190,695 1 MITSUBISHI UFJ FG 11,264 2 CHINA LIFE 120,294 2 SUMITOMO MITSUI FG 6,739 3 AIG 100,692 3 MIZUHO FG 6,029 4 ING 86,493 4 NOMURA HD 3,460 5 ALLIANZ 85,764 5 MILLEA HOLDINGS 3,451 6 AXA 73,037 6 RESONA HD 2,063 7 PING AN 60,619 7 MITSUI SUMITOMO M&F HD 1,689 8 GENERALI 58,648 8 ORIX 1,681 9 MANULIFE 58,124 9 T&D HD 1, ZURICH 43, DAIWA SECS GRP 1, METLIFE 42, SUMITOMO TRUST 1, MUNICH RE 38, SOMPO JAPAN 1, MILLEA HOLDINGS 33, BANK OF YOKOHAMA PRUDENTIAL US 32, MIZUHO TRUST PRUDENTIAL UK 32, SHINSEI BANK AFLAC 32, SHIZUOKA BANK AVIVA 31, NIPPONKOA TRAVELERS 29, CHUO MITSUI TRUST HD GREAT WEST 29, CHIBA BANK SWISS RE 28, MITSUBISHI UFJ NICOS 531 (unit: million $) (unit: bn yen) 2 (as of May 20, 2008) Tokio Marine & Nichido Financial Life Insurance claims paying ability AA+ / stable AA+ / stable Long-tern rating AAA / stable AAA / stable Insurance claims paying ability AAA / stable Solvency margin ratio (as of Mar. 31, 2008) 957.8% 899.3% 2,766.7% 1,157.5%

4 Tokio Marine & Nichido Profit & Loss statement (unit : bn yen) FY2006 FY2007 Y on Y Difference Y on Y Ordinary income 2, % 2, % Underwriting income 2, % 2, % Net premiums written 1, % 1, % Deposit premiums from policyholders % % Investment income % % Interest and dividend income % % Transfer of investment income on deposit premiums Other ordinary income % % Ordinary expenses 2, % 2, % Underwriting expenses 1, % 1, % Net premiums paid 1, % 1, % Loss adjustment expenses % % Agency commissions and brokerage % % Maturity refunds to policyholders % % Provision for outstanding claims % % Provision for underwriting reserves % % Investment expenses % % Underwriting and general administrative expenses % % Other ordinary expenses % % Ordinary profit % % Extraordinary gains % % Extraordinary losses % % Income before income taxes % % Income taxes % % Net income % % (unit : bn yen) FY2006 FY2007 Y on Y Difference Y on Y Underwriting profit % % Loss ratio 61.5% 61.6% 0.0% Expense ratio 30.7% 31.5% 0.8% Combined ratio 92.3% 93.1% 0.8% Net investment income % % Solvency margin ratio % 957.8% % Underwriting profit Underwriting profits significantly increased, mainly due to a considerable decline in the incurred losses from natural disasters. Net premiums written decreased by 0.8%, mainly due to a decline in fire insurance, despite efforts to ensure proper business operations. See page 6 for more details of the loss ratio and expense ratio. Ordinary profit Ordinary profits significantly increased, due to an increase in the underwriting profit and brisk interest and dividend incomes. See page 7 for more details of the asset management. Extraordinary gains/losses Extraordinary gains including 26.1 billion yen of gains on the part of transfer of corporate pensions to defined contributions pension (401k). Extraordinary losses including 7.9 billion yen of the provision for reserves for price fluctuations and 7 billion yen of the evaluation losses on investment in Vetra. Net income for the term The net income for the term increased and hit a record high, due to a significant increase in ordinary profits and also increased extraordinary gains. Change in the solvency margin ratio The solvency margin ratio declined by 140.4%, mainly due to a drop in stock prices. 3 3

5 Tokio Marine & Nichido Overview Net premiums written and loss ratios by lines FY2007 NPW YoY FY2007 Loss ratio YoY Fire -2.4% 39.6% -9.3% Marine 4.8% 52.8% -1.8% Personal Accident -2.8% 55.0% 6.7% Auto -0.1% 65.6% 1.3% CALI -0.7% 78.0% 0.0% Others -2.5% 55.9% 1.3% Total -0.8% 61.6% 0.0% Incurred losses due to natural disasters that occurred in the period (unit : bn yen) FY2006 FY2007 Difference Incurred losses Net premiums written Fire Marine P.A Auto CALI Other : Decreased due to drop of numbers of new housing construction starts : Increased due to growth of distribution in overseas and insurance for new ship building : Decreased due to premium rate revision in August 2007 and business suspension order for the third sector products : Decreased despite increased number of automobiles owned, due to unit price drop. : Decreased due to decline in the industry as a whole, caused by sluggish sales of new cars. : Decreased due to backlash of spot contracts in preceding term. Reference: Premium income on a managerial accounting basis by channels in the company ( unit : bn yen ) Premium income Y on Y Difference Personal channels 1, % Commercial channels % 4.0 Dealer channels % Loss ratio Fire Marine P.A Auto CALI Other : Decreased mainly due to backlash of claims paid for natural disasters in preceding fiscal term : Decreased due to decline in large accidents and increased insurance premium. : Increased due to decreased insurance premiums and increased claims paid for overseas travel insurance. : Increased due to unit price rise mainly in bodily injury liability and passengers' accident coverages : Stayed flat, due to fading out effect of abolishment of the state reinsurance scheme : Increased due to large claims paid for liability insurance, despite improved ratio in machinery and construction insurance for backlash of large accident in preceding term. Effect of natural disasters (occurred during the term) Significantly decreased, due to the backlash of a substantial increase in preceding term, caused by Typhoon No

6 Tokio Marine & Nichido Impact of natural disasters Incurred losses due to natural disasters Trend in catastrophe reserves FY2006 FY2007 Difference ( unit : bn yen ) Fire Auto Others Marine Total ( unit : bn yen ) Paid O/S Total FY FY Difference Catastrophe reserves outstandings & ratios by lines 1,050 1, FY04 FY05 FY06 FY07 FY08 As of the end of FY06 ( unit : bn yen ) Fire Auto P.A. Others Marine Total Reserve Reserve ratio * 127.0% 18.9% 77.4% 79.7% 141.4% 56.9% As of the end Reserve of FY07 Reserve ratio * 141.1% 16.9% 77.9% 86.0% 138.9% 58.7% * Reserve ratio = Reserve / NPW (excl. household E/Q, CALI) 100 Incurred losses due to natural disasters FY04 FY05 FY06 FY07 FY08 projection ( unit : bn yen ) 5 Catastrophe reserves In FY2007, the net transfer of catastrophe reserves was 20.9 billion yen, which resulted in reserves of billion yen at the end of March 2008 and a correspondingly higher reserve ratio. In FY2008, the balance is expected to be billion yen at the end of the fiscal year, with a 8 billion yen increase. Underwriting reserves for natural disaster losses Underwriting reserves no additional provision is needed, as in the preceding term. Catastrophe reserves no additional provision is needed and provision ratio is not changed, as in the preceding term. The target provision is likely to be achieved in 3 years, with consideration for possible future reversals. 5

7 Tokio Marine & Nichido Combined ratio 100% 99.0% 94.9% 92.3% 93.1% 92.7% 94.3% 90% 90.9% 85.0% Combined ratio 80% 70% 65.1% 63.4% 61.5% 61.6% 60% 62.8% 60.6% 61.5% 53.5% Loss ratio 50% 40% 33.9% 31.5% 31.4% 30.2% 30.7% 31.5% 30% 31.2% 31.6% Expense ratio 20% FY03 FY04 FY05 FY06 FY07 FY08 Figures for FY2004 and before are the sum of Tokio Marine and Nichido Fire. Figures of loss ratio, expense ratio and combined ratio include the effects from abolishment of the governmental reinsurance scheme of CALI. As for the figures "excluding CALI rate down", the estimated amount of the decrease in premium income from the rate down was included as the denominator for the ratio calculation. Combined ratio Loss ratio Expense ratio Combined ratio excl. BRP, CALI rate down Loss ratio excl. BRP, CALI rate down Expense ratio excl. BRP, CALI rate down 6 Trends in the loss ratio, expense ratio and combined ratio (unit : bn yen ) FY06 FY07 FY08 Y on Y projections Y on Y Corporate expenses % % (ratio) (14.4% ) (15.1% ) (+0.7% ) (16.8% ) (+1.7% ) Agency commissions % % (ratio) (16.3% ) (16.4% ) (+0.1% ) (17.0% ) (+0.6% ) Expenses total % % Expense ratio 30.7% 31.5% +0.8% 33.9% +2.4% Loss ratio 61.5% 61.6% +0.0% 65.1% +3.5% Combined ratio 92.3% 93.1% +0.8% 99.0% +5.9% Expense ratio Corporate expenses + Agency commissionsnet premiums written In FY2007, the ratio increased by 0.8 points. Corporate expense increased 11 billion yen to billion yen from the preceding term. Labor costs decreased a decrease in employees wages, and a decrease in retirement benefits), however, non-personnel expenses increasedincrease in expenses related to proper business operations). Non-personnel expenses related to proper business operations were 20.5 billion yen, such as voluntary survey response and suitability rule response expenses (including 16.4 billion yen of sales expense and general administrative expense for underwriting insurance, and 4.1 billion yen of loss adjusted expenses. Agency commissions decreased 800 million yen from the preceding term to billion yen. In FY2008, the expense ratio is expected to increase by 2.4 points, mainly due to an increase in expenses related to the Business Renovation Project the ratio would grow by 1.2 points, if the effect of the CALI rate down is excluded. Loss ratio In FY2007, the ratio was 61.6%, the same level as in the preceding term, because claims paid for natural disasters decreased while those for auto insurance and P.A. insurance increased. In FY2008, it is expected to increase by 3.5 points to 65.1%, due to decrease in premium income due to the CALI rate down, and increase in natural disasters. the ratio would grow by 1.4points, if the effect of CALI rate down is excluded. 6

8 Tokio Marine & Nichido Asset management performance Composition Composition of of assets assets under under management management bn yen 12,000 10,000 8,000 6,000 4,000 2, trillion yen cash payable monetary claims bought domestic bonds domestic securities foreign securities loans real estate others other assets 07/3E 08/3E -0.2 trillion yen 10.8 trillion yen Net Net investment investment income income bn yen bn yen 1,74.1 1, FY Details Details of of net net investment investment income income FY07 Capital gains from securities holdings sold Excluding capital gains ( unit : bn yen ) ( unit : bn yen ) FY06 FY07 Difference Interest and dividend income Investment profits for saving type () insurance policy () Net interest and dividend income Net capital gains Gains from security holdings sold Appraisal losses on securities (Gains / losses on derivatives) Net investment income Performance in FY2007 The balance of total assets was 10, billion yen (decreased by billion yen from the end of FY2006). This was mainly due to a decline in the fair value of domestic stocks in accordance with the market downturn. The net investment income was billion yen (1.9 billion yen increase from the preceding term), and these excluding capital gains from securities hold increased by 31 billion yen from the preceding term, which were due to the increased dividend received, backed by brisk corporate profits and the improved payout ratio. The actual figure for FY2007 was 20.6 billion yen more than the projected net investment income at the interim results of billion yen. This was mainly due to the effect of gains on foreign exchange hedging for a higher yen against the US dollar. The main reason for the increase in payable monetary claims bought was the increased commercial papers (*) with a relatively high return, as part of short-term investment. (*) The major source of commercial papers as single credit; the company does not hold foreign ABCP. Composition of the asset by asset class (unit : bn yen) Interest and dividend income 07/3E 08/3E Difference ( unit : bn yen ) FY06 FY07 Difference Cash & cash equivalents Payable monetary claims bought etc. *1 1, , Domestic bonds Domestic bonds 2, , Domestic equities Domestic equities 4, , ,226.8 Foreign securities Foreign securities , Loans Other securities Real estate Loans Others * Real estate Sub-total 10, , Other assets * Others Total assets 11, , Total *1 Payable monetary claims bought + Receivable under resale agreements + Guarantee deposits for bond loan transactions *2 Monetary trust + Other securities *3 Cash + Equipment + Construction in process + Deposits on earthquake insurance + Customer's liabilities for acceptance/guarantees + Bad debt reserves Projection for FY2008 Net investment income is expected to be billion yen by exploiting the sale of securities holdings, while a backlash is expected from the gain on foreign exchange hedging for a higher yen in FY

9 Nisshin Fire Profit & Loss statement ( unit : bn yen ) FY2006 FY2007 Y on Y Difference Y on Y Ordinary income % % Underwriting income % % Net premiums written % % Deposit premiums from policyholders % % Reversal of underwriting reserves % Investment income % % Interest and dividend income % % Transfer of investment income on deposit premiums Other ordinary income % % Ordinary expenses % % Underwriting expenses % % Net claims paid % % Loss adjustment expenses % % Agency commissions and brokerage % % Maturity refunds to policyholders % % Provision for outstanding claims % % Provision for underwriting reserves % Investment expenses % % Underwriting and general administrative expenses % % Other ordinary expenses % % Ordinary profit % % Extraordinary gains % % Extraordinary losses % % Income before income taxes % % Income taxes % Net income % % 8 ( unit : bn yen ) FY2006 FY2007 Y on Y Difference Y on Y Underwriting profit Loss ratio 62.1% 61.4% -0.7% Expense ratio 36.4% 37.1% 0.7% Combined ratio 98.5% 98.5% 0.0% Net investment income % % Solvency margin ratio 1,012.6% 899.3% % Net premiums written The sale of new policies grew at a sluggish pace in all lines as a result of the implementation of voluntary-inspections and instructions to agents for proper business operations. Net claims paid Net claims paid in total decreased mainly in the fire insurance line due to a backlash from the decrease due to the major effects of snow disasters that occurred in FY06. Underwriting profit The underwriting profit improved mainly due to a reactive loss of the provision of claims reserves resulting from the effects of natural disasters represented by Typhoon No. 13 and the introduction of statistical IBNR, both of which occurred in FY06. Investment income The investment income fell mainly due to an increase in the loss on the revaluation of securities affected by the financial market turmoil in spite of gains from securities holdings sold. Loss ratio The loss ratio improved only by 0.7% due to a decrease in the premium income in spite of smaller incurred losses from natural disasters. Expense ratio The expense ratio rose by 0.7 point mainly due to a decrease in the premium income and higher personnel expenses resulting from an increase in the number of employees. Solvency margin ratio The solvency margin ratio declined mainly due to the decrease in unrealized gain of securities upon fall of share prices. Tokio Marine & Nichido + Nisshin Fire Tokio Marine & Nichido Nisshin Fire Total FY06 FY07 Difference Y on Y FY06 FY07 Difference Y on Y 8 ( unit : bn yen ) FY06 FY07 Difference Y on Y Net premiums written 1, , % % 2, , % Underwriting profit % % Investment income % % % Ordinary profit % % % Extraordinary profit Net income % % %

10 Tokio Marine & Nichido Life Profit & Loss statement (unit : bn yen) FY2006 FY2007 YoY Difference YoY Ordinary income % % Income from insurance & reinsurance premiums % % Insurance premiums % % Investment income % % Interest & dividends % % Other ordinary income % % Ordinary expenses % % Insurance claims & other payments % % Death & other claims % % Health & other benefits % % Surrender benefits % % Provision for policy reserves & other reserves % % Provision for policy reserves % % Investment expenses % % Operating expenses % % Other ordinary expenses % % Ordinary profit % % Extraordinary profits Extraordinary loss % % Provision on reserve for dividends to policyholders % % Income before tax % % Income tax % % Net income % % Core operating profit % % Solvency margin ratio % % 9 New policies Sales performance Number of policies Sum insured Annualized premiums (unit : bn yen) (number of policies : 000 omitted) FY2006 FY2007 FY2006 FY2007 YoY Difference YoY YoY Difference YoY Individual insurance % % Individual insurance 2, % 2, % Medical/cancer etc % % Number of Medical/cancer etc % % Individual annuity % % policies Individual annuity % % Total % % Total 2, % 2, % Individual insurance 1, % 2, % Sum Individual insurance 12, % 13, % Individual annuity % % insured Individual annuity % % Individual insurance % % Individual insurance % % Medical/cancer etc % % Annualized Medical/cancer etc % % Individual annuity % % premiums Individual annuity % % Total % % Total % % In-force policies New policies The sum insured in new policies increased, while the number of policies and Annualized premiums decreased mainly due to the sales suspension of the increasing amount payable at death insurance and the effect of self restraint on the sales activities of cross selling agents due to the business suspension of third sector products at Tokio Marine & Nichido. The number of new policies slightly decreased by 1.9% from the preceding term (98.8% of that in FY2006), due to decrease in Anshin Dollar Annuity and medical insurance. The sum insured of new policies as a total of the individual insurance and individual annuity increased 4.2% from the preceding term (104.2% of that in FY2006) due to increased individual insurance, backed by growth of whole life with long term discount insurance and household guarantee term insurance. Annualized premiums, i.e. ANP decreased significantly by 44.3% from the preceding term (55.7% of that in FY2006), hit by the effect of the suspension of sales of an increasing amount payable at death. In-force policies ANP growth was slightly slowed down due to a drop in the sales of new policies, however, the sum insured, the number of policies and ANP all increased. Premium income The premium income increased by 1.1% from the preceding term (101.1% of that in FY2006), due to an increase in the level of the premium from accumulated in-force policies. Core operating profit The core operating profit was 400 million yen, a decrease of 1.3 billion yen from the preceding term due to the additional reserve of 19.8 billion yen (7.1 billion yen up from the preceding term) to achieve the standard underwriting reserve, and the core operating profit before the addition reserve was 20.2 billion yen, an increase by 5.8 billion yen up from the preceding term. Solvency margin ratio 2,7667% (181.1 points up from the preceding term), remaining at a high standard, and showing excellent soundness. 9

11 Tokio Marine & Nichido Financial Life Profit & Loss statement (unit : bn yen) FY2006 FY2007 YoY Difference YoY Ordinary income 1, % % Income from insurance & reinsurance premiums 1, % % Insurance premiums 1, % % Investment income % % Interest & dividends % % Gains from separate accounts, net % % Other ordinary income % % Ordinary expenses 1, % % Insurance claims & other payments % % Death & other claims % % Surrender benefits % % Reinsurance premiums % % Provision for policy reserves & other reserves 1, % % Provision for policy reserves 1, % % Investment expenses % % Losses from separate accounts, net Operating expenses % % Other ordinary expenses % % Ordinary profit/loss Extraordinary profits % % Extraordinary loss % % Income/loss before tax Income tax % % Net income/loss Core operating profit Solvency margin ratio 744.6% % 10 Sales performance New policies In-force policies Number of policies Sum insured Annualized premiums Number of policies Sum insured Annualized premiums (premium unit : bn yen) FY2006 FY2007 YoY Difference YoY Individual insurance % % Individual annuity 184, % 92,789-91, % Total 184, % 93,071-91, % Individual insurance % % Individual annuity 1, % % Individual insurance % % Individual annuity % % Total % % Individual insurance 42, % 41,248-1, % Individual annuity 268, % 354,232 85, % Total 311, % 395,480 84, % Individual insurance % % Individual annuity 1, % 2, % Individual insurance % % Individual annuity % % Total % % Insurance premiums Insurance premium income fell by half to billion yen, due to the launch of competitive products by competitors at the OTC at banks in the 1 st half, and also due to a temporary decrease caused by the enforcement of the Financial Instruments and Exchange Act and the deterioration in the investment environment in the 2 nd half. Net loss Although the net profit was recorded in the 3 rd quarter, net loss of 6.4 billion yen emerged for the term due to the increase in the policy reserve for minimum guarantee caused by the deteriorated investment environment. However, this was a 12.5 billion yen improvement over the preceding term due to an income increase from increased in-force policies as well as a decrease in costs for new policies. Solvency margin ratio The solvency margin ratio improved significantly to 1,157.5%, supported by the decreased minimum guarantee risk along with the utilization of reinsurance, and the capital increase of 10 billion yen at the end of September

12 Millea HD Consolidated results Profit & Loss statement Ordinary income The net premiums written from non-insurance businesses increased by 4.5% due to the consolidation of Nisshin Fire from the beginning of FY07 as well as the favorable results from overseas subsidiaries and the contribution of the newly consolidated AGH group which we acquired in the previous fiscal year. The net premiums written from life insurance businesses fell substantially by 43.2% due to a decrease in the sales of the variable annuity products of TMN Financial Life. Investment income grew mainly due to an increase in interest and dividend income, in particular the dividend income on our equity holdings. Ordinary profit / Net income Although the ordinary income decreased, the ordinary profit increased due to a decrease in natural disasters, a decrease in incurred losses (reserves in foreign currency) due to the sharp appreciation of the yen and a decrease in the provision for underwriting reserves accompanied by a decrease in premium income. The net income increased due to the income resulting from the corporate pension funds transfers to 401k etc. Net income analysis (unit : bn yen) FY2006 FY2007 Y on Y Difference Y on Y Ordinary income 4, % 3, % Underwriting income 3, % 3, % Net premiums written 2, % 2, % Deposit premiums from policyholders % % Life insurance premiums 1, % % Investment income % % Interest and dividend income % % Profit on sales of securities % % Profit on derivative transactions % % Gains from separate account investment % % Other ordinary income % % Ordinary expenses 4, % 3, % Underwriting expenses 3, % 2, % Net claims paid 1, % 1, % Agency commissions and brokerage % % Life insurance claims % % Provision for outstanding claims % % Provision for underwriting reserves 1, % % Investment expenses % % Losses from separate account investment - 0.0% Underwriting and general administrative expenses % % Other ordinary expenses % % Ordinary profit % % Extraordinary gains % % Extraordinary losses % % Income before income taxes % % Income taxes -current % % Income taxes -deferred % % Minority interest % % Net income % % 11 Net income of FY06 Underwriting reserve Net premiums written Interest and dividend Derivatives gain/loss Extraordinary profit/loss Life premium income Separate account Other investment expense Claims paid Administration cost Claims paid for Life Unrealized loss of securities Sales of securities Deposit premiums from policy holders Taxes Others Net income of FY The composition of ordinary profit and ordinary income (composition of ordinary profit and ordinary income for each business segment to external customers) Ordinary income Ordinary profit Non-life insurance 74.8% 97.3% Life insurance 23.9% 2.2% Others 1.3% -0.4% 11

13 Millea HD Consolidated results Comparison with Tokio Marine & Nichido results Comparison between Millea group and Tokio Marine & Nichido (unit : bn yen) FY2006 FY2007 Y on Y Millea TM&N ratio Millea TM&N ratio Millea TM&N Net premiums written 2, , , , % -0.8% Ordinary profit % 17.7% Net income % 27.5% Relation between Millea group and Tokio Marine & Nichido (Net income) Millea consolidated bn yen Tokio Marine & Nichido 1,22.9 bn yen Other consolidated subsidiaries Investment income under equity method Amortization of goodwill Accounting method Intragroup elimination 19.9 bn yen -3.6 bn yen 3.1 bn yen bn yen bn yen Net premiums written The consolidated and non-consolidated ratio increased, due to the contribution from newly consolidated subsidiaries including Nisshin Fire consolidated from 2nd half in FY2006), and the increase of premium income in overseas subsidiaries. Ordinary profit and Net income The profits of Tokio Marine & Nichido increased, due to a decrease in natural disasters, decreased incurred losses due to the sharp appreciation of the yen, decreased underwriting reserves caused by a decline in net premiums written, and increased interest and dividend incomes due to a brisk corporate performance. Consolidated ordinary profits and net income increased, supported by the ordinary profit increase in Tokio Marine & Nichido, a decreased deficit in Tokio Marine & Nichido Financial Life due to an increase in insurance in-force, and contributions from newly consolidated subsidiaries; however, the consolidated and non-consolidated ratio of ordinary profit and net income declined, due to the effect of increased accounting methods caused by the stock market slump. Relation between the Millea consolidation and Tokio Marine & Nichido The consolidated financial results in the Millea group are calculated based on non-consolidated Tokio Marine & Nichido, by adding the financial results of other consolidated subsidiaries and the gain/loss on investment by the equity method, and making adjustments for consolidation (such as the amortization of (negative) goodwill, the subtracting accounting method, tax effects on retained earnings, and intragroup elimination). 12 Accounting Method=Differences between the purchase method and the pooling of interests method in the business integration. In 2002, Tokio Marine completed its business integration with Nichido Fire by creating a holding company, Millea HD. The integration was accounted for by the purchase method in the manner that Tokio Marine had acquired Nichido Fire. Assets that used to be owned by Nichido Fire were recorded at fair value on the merger date, generally higher than their "costs", in Millea's consolidated accounting. On the other hand, when Tokio Marine and Nichido Fire were merged in 2004, the historical costs of both companies' assets were succeeded to the "new" Tokio Marine & Nichido. Accordingly, because of the difference of the booked value of the former Nichido Fire assets, Millea's capital gains in the assets which used to be assets of Nichido Fire should be smaller than those of Tokio Marine & Nichido when selling such assets. This is the same in the case of Tokio Marine & Nichido's business integration with Nisshin Fire. Amortization of Goodwill An accounting item of a consolidated balance sheet representing the difference resulting from offsetting the amount of the parent company s investments with that of a subsidiary s net assets (so called "Goodwill"). Goodwill should be accounted in the debit column in cases where the parent company s investments are larger than the subsidiary s net assets and negative goodwill should be accounted in the credit column in cases where the parent company s investments are smaller than the subsidiary s net assets. As goodwill is required to be amortized within 20 years under the current legislative measures and amortization of goodwill is posted in a consolidated profit & loss statement. For FY07, Millea HD posted 3.1 bn yen of profit (net of amortization of goodwill and that of negative goodwill) as amortization of goodwill, of which the major contents were as follows: -The difference between the consolidated net asset value of Nichido Fire at the time of Millea HD s inauguration and Nichido Fire's market capitalization calculated by stock price quoted on the market on the business day just before the announcement of the stock conversion ratio for business integration. -The difference between the consolidated net asset value of Nisshin Fire at the time of the management integration and Nisshin Fire's market capitalization calculated by stock price quoted on the market on the business day just before the announcement of the stock exchange ratio for business integration. -The difference between the purchase price and net assets when acquiring TMN Financial Life. -The difference between the purchase price and net assets when acquiring Real Seguros SA. The investment gain/loss under the equity method also includes the amortization of goodwill relevant to our equity method subsidiaries. 12

14 Millea HD Consolidated results Contribution of major group companies (unit : bn yen) Ordinary profit Net income Net income after amortization of goodwill Tokio Marine & Nichido Nisshin Fire Tokio Marine & Nichido Life Tokio Marine & Nichido Financial Life Overseas insurance subsidiaries Financial business subsidiaries General business subsidiaries * 'Net income after amortization of goodwill' is the sum of the net income of each subsidiary added &/or subtracted by the 'accounting method', 'amortization of goodwill' and 'tax effect of undistributed earning'. 13 Net income after amortization of goodwill Tokio Marine & Nichido The net income after the amortization of goodwill exceeded the non-consolidated net income, despite the elimination of dividends from overseas subsidiaries or the accounting method, supported by the amortization of negative goodwill, which was initially recorded at the time of management integration of the former Tokio Marine and former Nichido Fire Insurance (i.e., foundation of Millea HD), and elimination of the evaluation loss for investments in consolidated companies. Nisshin Fire The net income after the amortization of goodwill fell below the non-consolidated net income, despite the amortization of negative goodwill which was initially recorded at the time of management integration, due to a significant decrease due to the accounting method. Profits were recorded in the non-consolidated results, but deficits emerged after consolidation adjustments) Tokio Marine & Nichido Financial Life The net income after the amortization of goodwill fell below the non-consolidated net income due to the amortization of goodwill which was initially recorded at the time of acquisition. Overseas insurance companies The net income after the amortization of goodwill fell below the aggregate net income before consolidation adjustments due to the tax effect on retained earnings in Tokio Millenium Re and impairment losses on goodwill, which was initially recorded at the time of the acquisition of Real Seguros S.A. (Brazil). 13

15 Millea HD Consolidated results Consolidated balance sheet (unit : bn yen) item FY2007 Difference from the end of FY06 item FY2007 Difference from the end of FY06 Cash, deposits and savings Underwriting funds 11, Monetary receivables bought 1, Corporate bonds Securities 12, Payables under securities lending transactions 1, Loans Reserve for retirement benefits Tangible fixed assets Deferred tax liabilities Intangible fixed assets Negative goodwill (good will) Others 1, Deferred tax assets Total liabilities 14, Others 1, Stockholders' equity 1, Valuation and transaction adjustments 1, Others Net assets 2, Total assets 17, Total liabilities and Net assets 17, Total Assets In spite of the increase in assets accompanied by the increase in in-force policies of two domestic life insurers and new consolidation of the Kiln group, total assets increased only by 56.2 bn yen to 17,283.2 bn yen from the end of FY06 due to the significant decrease in the amount of security holdings accompanied by the decline in Japan's stock prices. Assets Monetary receivables bought Increased mainly due to an increase in the short-term investment in commercial papers managed by Tokio Marine & Nichido and TMN Life. Securities The amount of security holdings significantly decreased due to the decline in Japan's stock prices. Liabilities Underwriting funds Policy reserves increased due to the increase in in-force policies of two domestic life insurers and the recent consolidation of the Kiln group. Payables under securities lending transactions These increased due to the rise in repurchase transactions for company-owned securities with a view to increasing the investment income of Tokio Marine & Nichido. Deferred tax liabilities These decreased accompanied by a decrease in stock prices which impacted on "unrealized gains/losses on the available for sale securities." Net Assets Valuation and transaction adjustments Decreased due to the decline in the stock market which impacted on "unrealized gains/losses on available for sale securities." 14

16 Current status of direct investments in US subprime loans exposed assets The influence from direct investments in U.S. subprime loans ("SPL") have been limited. (Note 1) (Note 2) (unit : bn yen) Risk exposures Losses charged to P/L Categories 12E 3E Difference 12E 3E Difference CDSs in CDOs (Note 3) Investments Hedge Funds Subtotal Financial Guaranty Reinsurances Reinsurance from FSA Total (Note1) The figures were sum of Tokio Marine & Nichido, Nisshin Fire, Tokio Marine & Nichido Life and Tokio Marine & Nichido Financial Life (hereinafter referred as "4 subsidiaries basis"). Tokio Marine & Nichido Life and Tokio Marine & Nichido Financial Life have no such losses. (Note2) To be consistent with figures in the financial report, the amounts were indicated in billion yen, being rounded down to one decimal place. The ratios were round to the whole number. (The same in the next and subsequent pages) (Note3) CDO (Collateralized Debt Obligation) is a type of asset-backed security where the underlying assets are bonds and loans. CDS is an abbreviated name for "Credit Default Swap". Outline The risk exposure to SPL was 28.4 bn yen as of the end of March 2008, which decreased by 0.7 bn yen from the end of December The risk exposure related to financial guaranty reinsurances decreased due to the appreciation of yen (it slightly increased excluding the foreign exchange factor), while the risk exposure related to hedge funds investments increased due to the decrease in short (sell) positions. The loss charged to P/L was 2.1 bn yen as of the end of March 2008, which increased by 0.5 bn yen from the end of December 2007, due to the decline in fair value of CDSs in CDOs affected by the sharp increase in credit spread in the entire credit risk markets. For direct investments in SPL, we do not expect any losses that may materially give impact to our business operations. CDSs in CDOs The risk exposure related to CDSs in CDOs is defined as the amount in excess of credit enhancement of CDO assuming 100% loss on SPL related assets. There were two contracts of which the notional amount was 83.9 bn yen in total as of the end of March Details of two contracts are as follows: Investment in super senior tranche (subordination ratio of this tranche surpasses the ratio which rating agencies require as being AAA) of a CDO backed by a ABS portfolio (total number of ABSs was 43, 94% are rated AAA) that includes some SPL related securities. Its notional amount was 80.3 bn yen and subordination ratio was 17%. As for the vintage (the year of issuance) distribution of SPL, 25% was 2006 and the rest was 2005 or before. Investment in super senior tranche of a CDO backed by a diversified ABS portfolio (its average rating was BB) of which about a half is SPL related securities. Its notional amount was 3.6 bn yen and subordination ratio was 46%. It was guaranteed by MBIA. As for the vintages distribution to SPL, 62% was 2005 or before, 17% was 2006 and 21% was 2007 and after. The risk exposure related to CDSs in CDOs as of the end of December 2007 was revised upward to 8.0 bn yen from 7.3 bn yen which was disclosed in February 2008, due to the revisions on a measurement of SPL ratio made by its trustee with respect to the above. Hedge Fund The risk exposure related to hedge funds investments was set to be the net of the long position and the short position. The loss charged to P/L was 1.1 bn yen. Also, the total unrealized gain was 0.7 bn yen resulted from 2.0 bn yen of unrealized loss on long positions and 2.7 bn yen of unrealized gain on short positions (no change from that of the end of December 2007). Financial Guaranty Reinsurances Although the risk exposure related to financial guaranty reinsurances decreased due to the appreciation of yen, that on USD basis increased to 185 million dollar as of the end of March 2008 from 171 million dollar as of the end of December Such increase was a result of Financial Security Assurance ("FSA"), which cedes reinsurances to Tokio Marine & Nichido, to underwrite new contracts with higher subordination (all were rated AAA) as well as with higher insurance premiums. 92% thereof was rated AAA. As for the vintage distribution of SPL, 41% (7.6 bn yen) was 2005 or before, 2% (0.4 bn yen) was 2006 and 56% (10.4 bn yen) was 2007 and after

17 Influences from turbulence in the global financial market Credit investments with no direct exposure to SPL as shown in the table below are indirectly affected by SPL due to the turbulence in the global financial markets. (Note 1) (Note 2) (Note 3) Categories As of the end of December 2007 As of the end of March 2008 Difference Gains/Losses charged to P/L Unrealized gains/losses Total Gains/Losses charged to P/L Unrealized gains/losses Total Gains/Losses charged to P/L Unrealized gains/losses (unit : bn yen) Total CDSs (excl. SPL related) ABS SIV Vetra Others Total Financial Guaranty Reinsurances the figure was the amount of incurred losses the balance of the financial guaranty reinsurance was a net loss of 0.5 bn yen. (Note1) The figures are "4 subsidiaries basis". Tokio Marine & Nichido Life and Tokio Marine & Nichido Financial Life have no such losses. (Note2) Hedge fund investment is set out of scope of this matter because it is largely affected by other factors (equity market, foreign exchange rate etc.) than credit risk (Note3) The figures are including the effect from the hedging for foreign currencies (not including in the previous disclosures). Outline The loss charged to P/L as of the end of March 2008 was 22.0 bn yen, an increase of 11.3 bn yen from the end of December This was mainly because of the sharp increase in credit spread in the entire credit risk markets in the midst of financial instabilities on a world wide basis. A part of loss from investments in SIVs, whose amount was 6.3 bn yen (2.0 bn yen for Vetra and 4.3 bn yen for others), is not expected to be recovered. For the rest of loss from investments in SIV and losses from other investments, however, are expected to be recovered as a result of the full redemption until maturity. CDSs The loss charged to P/L on CDSs increased due to the increase in AAA credit spread by 0.24% from the end of December 2007 to the end of March 2008 (as of the end of December 2007, 0.1% increase in AAA credit spread would increase the amount of loss by 2.4 bn yen) and the downgraded of FGIC, one of the monoline insurers. However, no default has occurred. ABS The total loss from investments in ABSs was 17.1 bn yen as of the end of March 2008 due to the increase in credit spread, of which 1.7 bn yen was charged to P/L. However, no default has occurred. The investments in CDSs and ABSs related to monoline insurers are included in the investments in CDS and ABS as shown in page 17. SIV Structured Investment Vehicle The loss charged to P/L on SIVs was 11.3 bn yen as of the end of March 2008 due to the decline in their fair values. The loss from investments in Vetra was 7.0 bn yen as of the end of March 2008, but the accumulated loss is expected to be reduced to approx. 2.0 bn yen as a result of the full redemption until maturity of ABSs purchased by Tokio Marine & Nichido. Financial Guaranty Reinsurances The amount of incurred losses on financial guaranty reinsurances as of the end of March 2008 increased by 3.8 bn yen from the end of December 2007 mainly due to the increase in provision of claim reserves for the U.S. residential mortgages excluding SPL. The balance of financial guaranty reinsurances including earned premium income was a net loss of 0.5 bn yen. 16 Footnotes Investments in Domestic CMBSs (commercial mortgage-backed securities), being regarded as the real estate investment risk, were not included in the ABSs. The amount of such CMBS investments was 5.5 bn yen (decreased by minus 0 bn yen from the end of December 2007) and 96% thereof were rated AAA. On the other hand, investments in international CMBSs, because all of which had been purchased from Vetra, were included in the ABS. The amount of such CMBS investments was 35.8 bn yen (decreased by 0.7 bn yen from the end of December 2007) and the all were rated AAA. Investments in leveraged loans, which are not included in the above table, were all domestic and all classified as performing loans with outstanding amount of 8.9 bn yen as of end of March 2008 (increased by 0.4 bn yen from the end of December 2007). 16

18 Influences from turbulence in the global financial market Investments in CDS and ABS Investments in CDSs Investments in ABSs Note: 4 subsidiaries basis. (Nisshin Fire, TMN Life and TMN Financial Life have no such investments) Note: 4 subsidiaries basis. (TMN Life and TMN Financial Life have no such investments) International and domestic corporates 68% CDS related to SPL 10% Net notional amount 845 bn yen Non- U.S.RMBS excl. Japan 1% JGB 8% International public infrastructure finance 13% Domestic lease receivable etc. 30% International and domestic corporates 13% SPL 0% Investment amount 412 bn yen U.S.RMBS etc. 16% Non- U.S.RMBS excl. Japan 14% Domestic RMBS 10% Internatinal and domestic infrastrutures finance 17% 17 Investments in CDSs The net notional amount was approx 845 bn yen as of the end of March 2008, which decreased by 55 bn yen from the end of December Notional amount of CDSs related to SPL was stated on page 15. More than 98% were rated AAA. There was no CDS on U.S.RMBS other than those related to SPL, and non-u.s. RMBS excluding Japan accounted for only 1%. International and domestic corporates consisted of approx. 1,400 corporates (proportion of international: 98%) with the credit enhancement of approx. 21% on average. Assuming 0.1 % increase in AAA credit spread, the amount of evaluation losses will increase by approx. 2.3 bn yen. Investments in ABSs (*1) The investment amount was approx. 412 bn yen, which decreased by 18 bn yen from the end of December The ABS portfolio was well-diversified and more than 95% were rated AAA. The vintage distribution of U.S RMBS was; 2005 or before 2, %, 2007 or after 84% None of U.S. RMBS are related to SPL, and the amount of U.S.Alt-A RMBSs was approx. 38 bn yen (accounting for 9% of the total amount of investments in ABSs) 48% were domestic and 52% were international. ABSs purchased from Vetra of approx. 148 bn yen in total were included in U.S. RMBS, non-u.s.rmbs excluding Japan and international and domestic corporates. (*1) There were no investments in cash in CDOs. All exposure to CDOs was in CDSs. Footnotes: Investments in CDSs and ABSs related to monoline insurers The total amount of investments in CDSs/ABSs guaranteed by monoline insurers was approx. 198 bn yen as of the end of March 2008, which decreased by 12 bn yen from the end of December Among them, the amount of investments in CDSs was approx. 135 bn yen, which decreased by 15 bn yen from the end of December (*2) (*3) (*4) 86% were backed by the assets and cash flows on public infrastructures (airports, toll roads, etc.) and their underlying assets without taking guarantees by monoline insurers into account were all classified in investment grade. The purpose of utilizing the monoline insurer is to enhance the robustness of credits, and there has been no exposure to monoline insurers originally rated below AAA. Assuming that all of the monoline insurers currently rated AAA are downgraded to AA, the amount of evaluation losses related to CDSs will be approx. 5 bn yen. However, even if the monoline insurers go into bankruptcy, no realized losses will occur unless the underlying assets are also in default. There is only one SPL related CDSs/ABS guaranteed by monoline insurers of which amount was 3.6 bn yen as of the end of March 2008, as stated on page 15. (*2) In addition to the above exposure, Tokio Marine Financial Solutions, a subsidiary of Tokio Marine & Nichido, had the exposure to monoline insurers through guarantee contracts on monoline wrapped bonds backed by loans to international corporates with underlying tranche rating of AA and credit enhancement of approx. 28% on average. Their amount was 66 bn yen as of the end of March 2008, which decreased by 26 bn yen from the end of December (*3) It includes CDS which was not guaranteed by monoline insurers but directly referred to a monoline holding company (3 bn yen) (0.4% of total amount of investments in CDSs). (*4) No derivative transaction was executed with monoline insurers for hedging purpose. 17

19 Influences from turbulence in the global financial market Investments in SIVs Investments in SIVs Note: 4 subsidiaries basis. (TMN Life and TMN Financial Life have no such investments) Vetra B/S (before the purchase by TMN) The original investment amount in SIVs was 22.7 bn yen / 6 SIVs. (In Vetra, a consolidated subsidiary: 17.4 bn yen) The current investment amount as of the end of March was 9.6 bn yen mainly due to the impairment losses (In Vetra: 9.0 bn yen) Cash 73.9 bn yen ABCP etc bn yen Decline in fair value of subordinated notes -8.4 bn yen Foreign currency exchange +1.3 bn yen total -7.0 bn yen ABS bn yen Losses on sales -5.0 bn yen Unrealized losses -2.0 bn yen Vetra B/S (as of the end of Mar.2008) Subordinated notes 17.4 bn yen Cash 34.0 bn yen ABS 10.0 bn yen ABCP etc bn yen Sub notes 9.0 bn yen 18 Background of Investments in Vetra As an initiative to expand the investments in ABSs with AAA rating, "investing in subordinated notes issued by a bespoke SIV" was an effective way to enhance the investment efficiency while maintaining the credit quality. As Vetra was a bespoke SIV for Tokio Marine & Nichido, Tokio Marine & Nichido was informed about the entire assets owned by Vetra. Vetra did not have SPL related exposure from its inception. (Tokio Marine & Nichido has neither provided credit support nor liquidity support to Vetra.) Current Status of Vetra Since last summer, SIVs have been facing financing difficulties on a worldwide basis due to the tightening of short term funding markets in the wake of SPL, and Vetra had sold the ABSs it invested for the sake of its funding, and Tokio Marine & Nichido had purchased a part of such ABSs sold by Vetra after a thorough examination. As a result of selling ABSs to Tokio Marine & Nichido and to the markets, the amount of Vetra's ABS portfolio was reduced to 10 bn yen as of end of March It consisted of U.S RMBS not related to SPL and U.K RMBS. These were all rated AAA and their average remaining life was approx. 4 years. Vetra completed the sale of all remaining ABSs by the end of April ABSs bought by Tokio Marine & Nichido from Vetra (approx. 148 bn yen as of the end of March 2008 as stated on page 17) included U.S. RMBS, but none of them were SPL related. These were all rated AAA with credit enhancement of 33% in average, and are expected to be fully redeemed by maturity. The accumulated loss from investments in Vetra is expected to be approx. 2 bn yen as a result of the full redemption until maturity of the ABSs purchased by Tokio Marine & Nichido. The impairment loss of Tokio Marine & Nichido related to the investment in Vetra (approx. 7.0 bn yen) was eliminated in the consolidation adjustments because both companies are consolidated subsidiaries of Millea Holdings. Meanwhile, the losses arising from Vetra's investments in ABSs which were recorded in Vetra's non-consolidated financial statements were reflected in the consolidated P/L (1.4 bn yen) and in the consolidated B/S (4.7 bn yen). Footnote The Millea Group has never organized any special-purpose vehicles such as SIV for the purpose of letting them purchase the assets (ABS) sold by Vetra. 18

20 Influences from turbulence in the global financial market Financial guaranty reinsurances Financial guaranty reinsurances Note: Only Tokio Marine & Nichido has such reinsurances ref. 1 Credit ratings of Monoline insurers SPL 0.6% U.S.RMBS excl. SPL 3% CDO on global corporates 12% FSA Ambac MBIA ( as of May 15, 2008) S&P Moody's Fitch AAA Aaa AAA Stable Stable Stable AAA Aaa AA Negative Negative Negative AAA Aaa AA Negative Negative Negative Public finance etc. 81% Amount insured 3.3 trillion yen Others 4% FGIC ref. 2 Outstanding of RMBS exposure of Monoline insurers Current Par Outstanding of U.S.RMBS Exposure CDO Net Par Insured with RMBS Exposure BB Baa3 BBB Negative Possible downgrade Negative (unit : million U.S. dollars) FSA Ambac FGIC MBIA 18,636 34,728 28,977 29, ,194 10,934 30,403 Note: Figures are as of the end of September Source: Standard & Poor's "Detailed Results Of Subprime Stress Test Of Financial Guarantors" dated Dec.19, Outline Financial Security Assurance ("FSA") is the only monoline insurer from which Tokio Marine & Nichido accepts financial guaranty reinsurances. As described in ref.1, FSA is the sole insurer among the top-tier monoline insurers who has maintained AAA rating with stable outlook by all three rating agencies (as of May 15, 2008) mainly because the ABS-CDO exposure, for which other monoline insurers have had trouble, was extremely low. The financial guaranty reinsurance with FSA is on a proportional basis, and the quality of reinsurance portfolio is as good as insurance portfolio of FSA reflecting the highly conservative underwriting standards maintained by FSA. Total amount of ceded par was approx. 3.3 trillion yen as of the end of March % of the reinsurance portfolio were classified as public finance including general obligations of U.S. municipals. FSA as the primary insurer has sufficient rights and remedies such as step-in rights on the insured issuers. 12% were CDOs on global corporates etc. (approx. 88% were rated AAA and only 0.16% were rated BB or below) 4% were classified as "others", which were auto loan receivables, PPP/PFI etc.(approx. 30% were rated AAA and only 0.21% were rated BB or below) The portion of U.S.RMBS were only 3% (the exposure to SPL was 0.6%; details are shown in page 15), however, FSA was obliged to pay claims for some contracts guaranteeing U.S. RMBS due to the deterioration of U.S. housing markets, and FSA also reported loss reserves based on a forecast of such claims to be paid until maturity of the contracts. As a ceded company, Tokio Marine & Nichido recognized paid losses and loss reserves accordingly and the amount of incurred losses for fiscal year 2007 was 4.3 bn yen. As a result, the balance of fiscal year 2007 financial guaranty reinsurance in total including earned premium income was a net loss of 0.5 bn yen and the life-time loss ratio of treaty reinsurances with FSA, which started in 1990, stayed as low level as approx. 25%. 19

21 FY2008 Projections Tokio Marine & Nichido and Nisshin Fire ( unit : bn yen ) Tokio Marine & Nichido Nisshin Fire Total Difference Y on Y Difference Y on Y Difference Y on Y Net premiums written 1, % % 2, % Underwriting profit % % Investment income % % % Ordinary profit % % % Extraordinary profit % Net income % % % Loss ratio 65.1% 3.5% 63.3% 1.9% 65.0% 3.4% Expense ratio 33.9% 2.4% 37.9% 0.8% 34.2% 2.3% Combined ratio 99.0% 5.9% 101.2% 2.7% 99.1% 5.7% 20 Tokio Marine & Nichido Net premiums written is expected to decrease by 1.5%, due to the effect of CALI rate down. (Net premiums written would increase by 1.7%, excluding the effect of the premium rate revision of CALI) The underwriting profit is expected to decrease, due to an increase in the incurred losses due to natural disasters and the increase in expenses related to the Business Renovation Project. Ordinary profits are expected to decrease, due to a drop in underwriting profit, although a profit increase in net investment income was backed by an increase in profit from the sale of securities holdings. Extraordinary profit/loss improved, but net income for the term edged down. Nisshin Fire Although the premium income from auto insurance is expected to increase, the net premiums written are expected to decrease by 1.9% mainly due to the effect of the CALI rate down. (If the effect of the CALI rate down is excluded, net premiums written are expected to increase by 1.6%.) Underwriting losses are expected to be improved due to a decrease in corporate expenses, in particular, operating costs. Net investment income is expected to stay unchanged because of a decline in losses from security holdings sold in spite of a decrease in losses on the revaluation of securities. Net income is expected to improve accompanied by an increase in ordinary profits. Net premiums written: Tokio Marine & Nichido + Nisshin Fire ( unit : bn yen ) Tokio Marine & Nichido Nisshin Fire Total FY07 FY08 projections FY07 FY08 projections FY07 FY08 projections Y on Y Y on Y Y on Y Fire % % % Marine % % % P.A % % % Auto % % % CALI % % % Others % % % Total 1, , % % 2, , % 20

22 FY2008 Projections Tokio Marine & Nichido Life Of the numerous indicators available to represent the state of the life-insurance business performance, we use the increase in EV as one management indicator. Annualized premiums of new policies Embedded Value (unit : bn yen) Individual insurance Individual annuity (unit : bn yen) FY04 FY05 FY06 FY07 FY08 projection 0 FY04 FY05 FY06 FY07 FY08 projection 21 Business performance projections ( unit : bn yen ) FY04 FY05 FY06 FY07 FY08 projections EV at the end of FY Increase in EV excl. capital injection Increase in EV * ANP of new policies * excluding effects of the changes in the interest rates, the preconditions and the capital injections The EV at the end of the fiscal year is expected to increase by 26.8 billion yen from billion yen to billion yen. ANP i.e. Annualized Premiums of new policies are expected to increase by 49.4% from the preceding term to 54.7 billion yen, due to the increase in sales in single premium lifetime nursing care insurance. The net income is expected to be recorded after the achievement of standard underwriting reserves because the company is currently increasing the standard underwriting reserves in view of the characteristics of the insurance business whose initial costs regarding new policies are high. <Reference> Other earnings projections for FY2008 Ordinary income: bn yen Premium income: bn yen Ordinary profit: 4.2 bn yen (13.3 bn yen) Core operation profit: 1.3 bn yen (10.4 bn yen) Net income: 0 bn yen ( 5.8 bn yen) ( ) : before statutory reserves EV = Embedded Value A valuation and performance evaluation method used by life insurance companies around the world. It is computed as the sum of net asset value and the value of in-force policies. Net asset value is calculated as the sum of net assets (under the Shareholders Equity Section of the balance sheet), and reserves for contingency and price fluctuations (both after tax), which are considered appropriate to be added to the net assets. The value of in-force policies is calculated as the discounted present value of stockholders income available for dividends, which is the expected future Current Income (after tax) less the necessary amount required as retained earnings to maintain a certain solvency margin ratio. 21

23 FY2008 Projections Tokio Marine & Nichido Financial Life Single-payment premiums for variable annuities increased by 56% to 800 bn yen from the previous fiscal year. The projected EV at the end of the 2008 fiscal year is bn yen, an increase of 10.8 bn yen from the 2007 fiscal year. Single premium of variable annuities Embedded value (unit : bn yen) 1,200 1,000 <Business size> 1,097.6 (unit : bn yen) <Profit> Capital injections FY04 FY05 FY06 FY07 FY08 projection 0 FY04 FY05 FY06 FY07 FY08 projection 22 Earnings projections In FY2007, EV (excluding capital increase) decreased by 14.4 billion yen, due to the decrease in the calculated future revenue caused by the deteriorated investment environment. In FY2008, the EV is expected to increase by 10.8 billion yen, in view of a stable investment environment, an increase in new policies and expansion of in-force policies. The EV at the end of FY2008 is expected to be over 100 billion yen. (unit : bn yen) FY2004 FY2005 FY2006 FY2007 FY2008 projections EV at the end of FY Increase in EV excluding capital injections Increase/decrease in EV * * excluding the differences between the actual and the assumed investment performance, changes in the preconditions and the capital injections <Reference> Other earnings projections for FY2008 Ordinary income: Premium income: Ordinary profit: Core operation profit: Net income: bn yen bn yen 10.1 bn yen 10.1 bn yen 12.8 bn yen Rank of Tokio Marine & Nichido Financial Life in terms of over-the-counter sales of variable annuity at banks Source: article in Hoken Mainichi Shimbun FY2005 5th FY2006 1st 1 st half in FY2007 3rd NoteFigures in full FY2007 is not published, but the company is expected to be in high rank. 22

24 FY2008 Projections Millea group consolidated FY06 results FY07 results FY08 projections (unit : bn yen) YoY YoY Difference YoY to from FY07 FY07 results results Ordinary income 4, % 3, % 4, % Ordinary profit % % % Net income % % % Dividends per share FY06 FY07 FY08 projections interim year end interim year end interim year end 36 yen 15 yen 21 yen 48 yen 18 yen 30 yen 48 yen 24 yen 24 yen 23 The difference between the FY 07 results and FY08 projections Ordinary income In spite of the CALI sales decline as a consequence of the reduction in the base premiums of Tokio Marine & Nichido and Nisshin Fire, the ordinary income is expected to increase by 9.4% because of an increase in sales by TMN Financial Life and the addition of the Kiln group's premium income in the consolidation. Ordinary profit / Net income Tokio Marine & Nichido's ordinary profit / net income are expected to decrease mainly due to an increase in incurred losses from natural disasters and growing business expenses due to drastic renovation. However, consolidated ordinary profit / net income are expected to increase by 20.1% and 37.9% respectively due to TMN Financial Life's moving into the "black", the addition of the Kiln group in the consolidation and a decrease in appraisal losses on securities in FY08. Definition of adjusted earnings The Millea group uses adjusted earnings, as defined below, as an indicator for business planning and return to shareholders. Adjusted earnings is an indicator that makes pure profits or losses for the period clear by eliminating the effects of various reserves exclusive to the Japanese non-life insurance business as well as deducting factors such as realized gains/losses and unrealized losses of assets, the sources of which are not necessarily attributable to the current period alone. For income the recognition of which is delayed on an accounting basis, such as that in the life insurance business, the results of investment and other efforts are recognized by considering the increase in embedded value (EV) for the period to represent income for the period. Adjusting for the unique characteristics of Japanese insurance accounting makes it easier to to compare performance with that of overseas insurers by enabling recognition of profits more closely resembling that conducted under U.S.GAAP and other international accounting standards. (1) Non-life insurance business Adjusted earnings P ro visio n fo r Net = + catastrophe + in c o m e reserves etc. *2 Provision for price flu ctu atio n reserves *2 - Gains/losses fro m assets under ALM *3 G a ins/lo sses - from stocks and properties - etc. Other extraordinary item s (2) Life insurance business *4 < Illustration> Increase in EV Adjusted earnings C a p ital in jectio n s etc. Adjusted earnings Increase in EV - *5 Capital injections etc. EV at the end of the previous fiscal year EV at the end of the fiscal year (3) O ther businesses --- N et incom e show n in financial statem ents *1 Adjusted earnings are after tax basis *2 Negative figures in case of reversal of catastrophe reserves or price fluctuation reserves *3 ALM (Asset Liability Management): Realized and unrealized gains/losses arising from debt securities and interest rate swap transactions utilized in ALM *4 Some life insurance business, such as that in Brazil, is based on the scheme of (3) general businesses *5 EV (Embedded Value):Indicator computed as the sum of net asset value and the value of in-force calculated as the discounted present value 23

25 Millea Group adjusted earnings ( unit : bn yen ) Business domains FY2006 results FY2007 projections FY2007 results FY2008 targets of Mid-term strategy FY2008 projections Domestic non-life insurance Tokio Marine & Nichido Nisshin Fire Others 0.6 Domestic life insurance TMN Life TMN Financial Life Others Overseas insurance Asia North & Middle America Europe, Africa & Middle East South America Kiln 6.9 Others Reinsurance Financial & General businesses Group total Adjusted ROE 3.8% 3.6% 3.5% 4.0% 4.1% 24 Results in FY2007 Comparison with projections for FY2007 Adjusted earnings of the entire group fell below the projections for FY2007 by 20.9 billion yen to billion yen. This was due to an earnings drop in domestic life insurance mainly caused by Tokio Marine & Nichido Financial Life affected by the deteriorated investment environment while increase in earnings of Tokio Marine & Nichido Life and earnings drop in domestic non-life insurance business caused by increase in reserves for outstanding claims of auto and fire insurances; on the other hand, earnings of overseas insurance business increased, due to reinsurance earnings rise caused by less large scale natural disasters. Projections for FY2008 Comparison with result in FY2007 Adjusted earnings of group total is expected to be billion yen, 3.2 billion yen increase from the sum of below. Domestic non-life insurance business Adjusted earnings are expected to decrease by 23.6 billion yen to 75.7 billion yen due to expenses related to the Business Renovation Project will be anticipated in Tokio Marine & Nichido Domestic life insurance business Adjusted earnings are expected to increase by 22.5 billion yen to 37.7 billion yen, mainly due to the recovery of variable annuity business. Overseas insurance business Adjusted earnings are expected to increase by 2.0 billion yen to 31.7 billion yen, with the effect of the acquisition of Kiln Ltd. Finance and general businesses Adjusted earnings are expected to increase by 2.3 billion yen to 1.2 billion yen, mainly due to a backlash from changes in the financial market. Comparison with mid-term corporate strategy in FY2008 Mid-term strategy for FY2008 was adjusted in November 2007) Adjusted earnings are likely to fall below the mid-term strategy by 23.5 billion yen to billion yen, because an earnings drop is expected in Tokio Marine & Nichido due to an increase in claims paid for auto and P.A.insurances despite earnings growth in the overseas insurance business mainly due to the acquisition of Kiln Ltd. 24

26 Return to shareholders Dividends Stable profit-sharing with shareholders FY07 dividends Share repurchases Flexible profit-sharing with shareholders July March 2008 Interim dividends per share 18 yen (14.8 bn yen in total) Dividends at FY end 30 yen (23.8 bn yen in total) FY07 dividends Basic concept 48 yen (38.7 bn yen in total) Aim to increase the pay-out ratio (dividends total/average of adjusted earnings) by up to 30% Executed returns to shareholders based on the average level of earnings, taking the latest results, trends in stock prices and status of net assets into consideration. Total amount repurchased 90.0 bn yen (21.07 million shares) July June 2009 Annual limit to repurchase bn yen 13.7% of 928,524,375 shares, the issued shares as of Apr.2002 when Millea HD was established, have been repurchased for the purpose of returns to shareholders and most of them have been cancelled. Continue top-level returns to shareholders among listed companies in Japan 25 Returns to shareholders (unit : bn yen) Adjusted earnings Total amount Dividends to shareholders Share repurchases * Figures for 2001 are the sum of Tokio Marine and Nichido Fire * The corresponding fiscal year covers a year starting the day when the AGM(June) of the following year is convened. As for share repurchases in 2007, 100 bn yen is an annual limit for the term from June 2007 to June Pay-out ratio to the average of adjusted earnings Dividends 40% 30% 20% 10% Trend in the pay-out ratio 30% 28% 25% 23% 19% FY02 FY03 FY04 FY05 FY06 FY07 Per share *1 (yen) Total amount (bn yen) Average of adjusted earnings (bn yen) Pay-out ratio *2 19% 20% 19% 23% 25% 28% *1 Figures are shown on a basis after a share-split implemented in Sep.2006 *2 Based on average of adjusted earnings 20% 19% Share repurchase ranking in FY07 ( bn yen) Rank Name Amount 1 Mizuho FG Toyota Motor Canon NTT DoCoMo Mitsubishi Corporation Mitsubishi UFJ FG JFE HD Takeda Sumitomo Corporation Niippon Steel, Panasonic Millea HD 90.0 Source: NOMURA SECURITIES Financial & Economics Research Center 25

27 Section 2 FY2008 business plan Millea group FY2008 business plan page Establishment of mid- to long-term growth foundation by Business Renovation Project Brand Strategy: Name change to Tokio Marine Holdings Domestic non-life insurance business Revision of TM&N's auto insurance products TM&N's growth strategy of commercial market Enhancement of TM&N's existing sales base Life and non-life new sales channels Responses to over-the-counter sales at banks Responses to postal privatization Domestic life insurance business TMN Life "The Second Inauguration Project" TMN Financial Life Strategies and Risk Management Overseas insurance business FY2007 results FY2008 projections Reinsurance business Business expansion with Kiln Asset Management TM&N Overview TM&N Basic policy of absolute return investment Financial and general business General business Financial business Capital management strategy Improvement of capital efficiency Expansion of revenues and M&A strategy Management of capital level and return to shareholders Attachment Topics FY2007 results Mid-term Corporate Strategy : FY FY2008 Stage expansion for strategy General business Non-life insurance Life insurance Financial business Stage expansion of products & services Domestic market Temporary personnel services Risk consulting Health care for senior citizens Diabetesdedicated casualty insurance Facility management Assistance B.P.O. -platform for all strategies - Business renovation project Super insurance Investment advisory Investment trust Derivatives Structured finance Thirdsector market Total Assist Private equity Real estate investment advisory 401(k) Variable annuity Group -wide marketing Bancassurance Multi channel strategy Stage expansion of sales networks Reinsurance business Direct business Overseas market Growth strategy based on strengthening the existing subsidiaries: Tokio Millennium Re Tokio Marine Global Re Tokio Marine Global Development strategy combined with organic growth and strategic options (M&A, capital investment/cooperation) Current targets: Maintain and enhance these markets Southeast Asia Taiwan, Malaysia, Thailand BRICs Brazil, Russia, India, China New targets: Europe & USA Entry into local markets Stage expansion of regions Concentration of group's comprehensive strength Improvement of capital efficiency Utilizing the holding company Millea Holdings function for the distribution of management resources to the fullest extent, to build the optimal business portfolio with high levels of profitability, growth potential, and capital efficiency Strengthening the structure for promoting cross-functional groupware business strategies, to respond to customers' needs optimally by providing a wide range of products and services via diverse channels Through integrated risk management conducted on a quantitative and systematic basis, quantitatively ascertaining the risks affecting businesses and managing these to keep the volume of risks within the scope of the capital. To ensure capital in excess of that needed to cover risks, focusing on strategic business fields and new businesses with high profitability and growth potential and on increasing capital efficiency by enhancing measures for return to the shareholders. 26

28 Millea group FY2008 business plan Launching "Business Renovation Project" as a base point Major initiatives of FY2008 Products & services Stage expansion for strategy Sales networks Regions Concentration of group's comprehensive strength Improvement of capital efficiency Change of the holding company and group name Revision of auto insurance products Agent compass, diversified ways to access the Millea group Group-wide domestic retail strategies Mid-to long-term reform of the infrastructure for the growth of life insurance business Clarification of functions and responsibilities of overseas business subsidiaries M&A strategy of overseas business 27 Long-term strategy FY2015 Millea group aims to to become a globally top-tier insurance group Domestic non-life insurance Offering new products and services beyond concepts of traditional insurance Domestic life insurance Responding to the expansion of endowment insurance and annuity markets due to low birthrate and longevity Overseas insurance Actively expanding life and non-life insurance business (incl M&A) in Asia, BRICs, Europe, and US Financial & general businesses Achieving a synergy effect with insurance business by expanding peripheral business FY2005 ROE3.7% By FY2015 ROE over 8% 6% 4% Adjusted Adjusted earnings earnings TRIPLED Adjusted Adjusted ROE ROE 6% 4% 25% 65% DOUBLED Well-balanced Business portfolio 10% 20%25% 20%25% 40%50% Domestic Non-life Overseas Domestic Life Financial & General 27

29 Establishment of mid- to long-term growth foundation by Business Renovation Project Outline Significant improvement of service quality and increase of business efficiency Reform of the agent system and innovation of the business process to enable business operations to be conducted in a cashless manner Significantly simplifying contractual conditions and supplementary contracts Reform and simplification of the core IT system Launched in May 2008 Effects of business curtailments at the company and agents are 10% to 30% Product lineup halved as a result of unification 30% improvement in system development efficiency FY08 plan Achieve the improvement of business quality and operation efficiency by establishing a new business process Steady development of the project Policies booked at agents 91.1% 98.3% Cashless premium payments 42.1% 85.8% Early rollover of policies * 29.4% 55.8% Improvements since April 2005 examples of auto insurance Making policies promptly and correctly Level peaks of workload of booking policies Spare time for employees and agents Improve the efficiency of existing administrative tasks Improve the ratio of keeping renewal policies Spare time for consulting sales * early rollover of policiescomplete renewal procedures of policy by four weeks before its renewal date 28 Outline of Business Renovation Project as growth strategy Fully adopting IT systems for business operations (accounting operation, premium estimates, application forms and others) at agents based on efficient business support using agent system, and sparing the task of collecting premiums and administrative work by making business operations fully cashless through the promotion of credit card payments and the full-scale introduction of payment systems at convenient stores. Making product lineup easy to understand and simplifying clerical work by curtailing, unifying and simplifying the product lineup and supplementary contracts. Downsizing main-frame systems in order to significantly improve system development efficiency in the future. Maintaining sustainable growth potential by establishing a mid-to long-term growth foundation Infrastructure to conduct proper business operations and efficient administrative work Analyzing problems that have been reported in each business process, from the time of insurance contracts to the time of claim payments, and consider incorporating a mechanism for preventing such problems into the project. Making business operations transparent in view of the need to ensure information security, protect personal information, respect SOXrelated law and observe compliance by implementing the Business Renovation Project and improving service quality at the Company and agents. Starting with auto insurance business, our core product line, through the core IT system on May 7, 2008 ( unit : bn yen ) FY06 FY07 FY08 FY09 FY10 after FY11 Total results results projections projections projections projections projections Actions for proper business operations ( Initial cost ) Business Renovation Project Initial cost Reduction of operation cost some some some

30 Brand Strategy: Name change to Tokio Marine Holdings Our company name is scheduled to change to "Tokio Marine Holdings Inc." on July 1st, 2008 subject to the approval of the corresponding amendment of the company's articles of incorporation at our ordinary general meeting of shareholders for late June As the trend of globalization continues to accelerate, the name "Tokio Marine" that is believed to have world-wide recognition and reputation among customers and shareholders throughout the world is adopted as the name both of the holding company and the group, which will lead to further advancement and enhancement of our growth strategies in order to increase the corporate value. 29 Toward a new phase of brand strategy Brand strategy for the construction of the new business group Focusing on easy rally of participating companies Brand strategy to create corporate value that is right for the global business group High appraisal and awareness in overseas, which were fostered by long-term overseas development High appraisal and awareness as a domestic leading company of over 100 years since its foundation Increase in stable shareholding Enhance aggregate power as a group Increase in cross-stakeholders 29

31 Domestic non-life insurance business Revision of Tokio Marine & Nichido's auto insurance products Revision of auto insurance products in July 2008 Rate increase Corresponds to 1.5% up on the average Consider further rate-up while looking carefully at the development of the loss ratio 68% 66% 64% 62% L/R of Auto Continue to add new value Launch "Road-assist of your choice" Integrate into Total Assist for individual customers Ratio of Total Assist No.of Total Assist policies / No.of policies which can be Total Assist 100% 90% 80% 60% 58% 56% The end of FY The end of FY06 70% 60% 50% 2006/ / / / / / / /01 As the first phase of "Business Renovation Project on products, administration and system" starting in May 2008, the product revision is implemented of auto insurance contracts which commences on and after July With this revision, products, administration and system are re-designed from scratch in customers perspective through extensive investment in the system, and both "simplification" and "high value-added" of the products are achieved for real understandability by the customers, with the concept of "relief in contracting in auto insurance", as well as "relief providing in case of an accident" Auto insurance that can be further trusted by and can secure customers will be achieved by this revision, and will receive extensive support from customers. Simplification of products Adding high value to productslaunch of "Road assist of your choice" Renewing important notice and pamphlet Creating "summary of terms and conditions" Opening of "information desk of automobile insurance on website" Offering environment-conscious auto insurance The end of FY07 Relief in contracting in automobile insurance, as well as relief providing in case of an accident More understandability for sophisticated auto insurance For more accurate understanding and familiarity of automobile insurance Accident response for customers satisfaction Improvement in FY07 Improvement of rollover ratio since FY05 Early rollover of policies * 32.0% 42.2% 50.6% +8.4% 1.1 point Cashless premium payments 54.4% 67.8% 78.6% +10.8% * Percentage of policies that completed their renewal procedure by 4 weeks prior to their maturity date points improvement corresponds to approx.10 bn yen premium increase in Auto insurance Notice of the receipt of an accident report Revision of the letter of announcement for a claim payment Notice of non-payment of claims 30

32 Domestic non-life insurance business Tokio Marine & Nichido's growth strategy of commercial market Advantageous position in the commercial market Business with with large large corporations * (As (As of of March March 31, 31, 2008) 2008) * * Listed Listed companies companies or or companies companies with with employees employees of of 1,000 1,000 or or more more Ratio Ratio 70.9% 70.9% (2,763/3,895 companies) (70.3% (70.3% in in previous year) year) Premium income income bn bn yen yen (YoY (YoY98.8%) Offering solutions in line with enhancement of risk management needs of corporate customers Recognition of new risks Risk management/risk hedging to the increase in incidents and changes of legislation and social environment decline in domestic work force / Aged society with a fewer number of children Increase in overseas expansion and global M&As Taking advantages of the integrated capability of the group Food safety consulting Consumer product safety law consulting Infection/Pandemic influenza consulting Business continuity management consulting Internal control consulting Environment risk consulting Disaster recovery service tied up with BELFOR Enhancement and establishment of various solutions Enhancement of human resource development as a base 31 Showing strength in traditional areas, which responding to active global logistics Offering a high quality total risk solution, accident response with a global base, and damage reduction service for logistics (unit: bn yen) Cargo Hull FY04 FY05 FY06 FY07 Cargo Hull Total Y on Y % 110.4% 105.5% No.1 market share (cumulative total M/S in FY07: 34.1%) in marine insurance (such as hull, cargo and transport), as well as top-level underwriting performance in the global market. International trade, logistics and marine transportation are rapidly expanding globally in accordance with recent multiple development of world economy. Marine insurance, which targets risks related global logistics and marine transportation, is achieving sustainable growth. Enhancing underwriting system and property and casualty insurance, in response to the globalization of companies and logistics. Offering advanced and high quality "damage reduction service for logistics" Offering comprehensive risk solutions for trade logistics and marine transportation, by achieving a one-stop service for hull and cargo insurances, export transaction credit insurance, and ship owner s protect and indemnity insurance (P&I insurance) 31 Offering defined contribution pension service, in response to corporate pension system change Issues on retirement benefit and pension of SMEs Abolishment of approved retirement annuity planending in March 2012 Increased deficiency in approved retirement annuity plan Increased payment of retirement benefit for baby boomers Abolishment of the reserve for the retirement allowance (reversal of existing reserves) 401 is an effective solution for retirement benefit and pension problems of SMEs Characteristics of 401 All contributions are recognized as expenses Existing fund of approved retirement annuity can be transferred free of tax No deficiency in pension reserve Assets under management of defined-contribution pension plan: Approx. 4 trillion yen as of March 31, 2008 (As of March 31, 2007, Assets managed by 1500 Tokio Marine & Nichido: approx bn yen) 1000 The U.S in 2005: approx. $2,800 bn Achieved leading results in increased assets under management Corporate type Number of contracts 1,451/10,334 companies 14% No. of Corporate type contracts ,451 companies

33 Domestic non-life insurance business Enhancement of Tokio Marine & Nichido's existing sales base Enhancement of agents' responses to customers "Safety quality standard" 1 Aiming at thorough implementation of the standard through dialog with the agents Thorough implementation of "Common education" to all solicitors Introduction of new qualification system Promotion of "common education" matched to the responsibilities of each solicitor If satisfaction is not achieved Cooperation with core agents Utilization of sales assist (outsourcing of part of the solicitation procedures) Restriction on handling product lines, etc Starting services based on the "Business Renovation Project" in May 2008 Full implementation of new business operations from the customers' perspective Agent compass (2 Analysis of business process and management (visualization) specific measures, menus Diversified ways to access (3 Increase of contact points such as call centers and online access Realize sustainable growth with high quality 32 (1) (2) (3) Safety quality standard: Quality standards relating to products and services to be provided to customers The Millea group is proceeding with efforts to ensure safety quality "at all our offices at all times, by all our employees" by setting the safety quality standards for each business process such as "solicitation", "claims payment" and "product management". Agent compass: A management support model which helps agents objectively analyze their strong/weak points in their management and sales online and provides them with specific solutions, aiming to increase their earnings based on increased customer satisfaction. Diversified ways to access: The Millea group will respond to the diversified methods of access from customers to us (through website, cellular phone, etc) by establishing the system of call center and website. In addition, it will implement the improvement of solicitation quality. Number of agents FY04 FY05 FY06 FY07 Tokio Marine & Nichido 64,669 63,413 61,641 56,177 Industry total 286, , ,810 TBA Numbers of IP newly hired and agents newly set up < Personal sales division> FY04 FY05 FY06 FY07 Numbers of IP hired Numbers of agents set up 1,788 2,448 2,302 1,253 Numbers of agents passing min. mark * minimum mark: general lines premiun income 2 million yen or more life & third sector premium income 10 million yen or more Numbers of agents & premium income weighted by categories (as of the end of March 2008) Categories of agent channels Numbers of agents % of premium income Full-time / professional agents 11, % Insurance Partners % Business organizations 6, % Financial institutions 1, % Car dealers / Manufacturers 2, % Used car dealers / maintenance shops 17, % Others 16, % Total 56, % Partners agents (premium income : million yen) FY04 FY05 FY06 FY07 Numbers of newly set up (aggregate) * 373 Premium income total 12,579 16,118 18,689 23,109 Percentage of full-time agents total 2.6% 3.1% 3.5% 4.4% Average premium income * 3 mergers implemented: = Partners agents: Among core agents who are certified by us as agents offering the best quality customer service, partner agents are agents whose president is one of our employees (including previous employees) and is funded by our group company.

34 Life and non-life new sales channels Responses to over-the-counter sales at banks Full liberalization of over-the-counter sales at banks (December 2007) Increased convenience for customers Efforts to conduct proper business operations Strengthen fundamental relations with financial institutions Response to diversifying needs Establish support tools, etc Exercise group's comprehensive strength Introduce competitive products Strengthen support for administrative work and systems Enhance sales support system Maintain high profitability and growth potential 33 Situation after the full liberalization of over-the-counter sales of insurance products at banks Full liberalization of over-the-counter sales of insurance products at banks was implemented in December 2007, as scheduled, and to date, Millea group products such as "Cancer Treatment Support Insurance" from Tokio Marine & Nichido Life have been adopted by about 80 banks Major reasons for success include; Good fundamental relationships have been developed with financial institutions by Tokio Marine & Nichido Millea group s comprehensive efforts through cooperation with Tokio Marine & Nichido, Tokio Marine & Nichido Life, and Tokio Marine & Nichido Financial Life have been effective. Excellent insurance products Backyard (i.e. Millea Business Center) has been carefully responding in medical processing and administration of life insurance. Strategy in the future Recognize that efforts for appropriate business operation is the origin of all businesses, and as the Millea group, address quickly and appropriately the environmental changes surrounding financial institutions. Core of the strategy is to show total power through coordination among "product", "sales support", "administration and system support" and "support tool", based on a strong basic relationship with financial institutions. Secure growth potential and profitability of entire Millea group through above efforts, in the environment where each financial institution will make full-scale efforts to respond to the liberalization and also the market will further expand. 33

35 Life and non-life new sales channels Responses to postal privatization Sales of auto insurance at post office In October 2007 Start of selling of auto insurance products at 23 post offices in Tokyo metropolitan area (the first new financial business as postal service after privatization: TM&N assigned as the leading underwriting insurer) In July 2008 Revision of auto insurance products Realize the offering of easy-tounderstand products with a higher sense of security and trust through collaboration between Tokio Marine & Nichido and post offices In FY2008 and after Increase in the number of post offices that sell our products (under investigation) life and non-life insurance products) businessesthe sole insurer who provides post offices with both Expand distribution channels in both life and non-life Sales of TMN Life's products by Japan Post Insurance Co. In June 2008 Start of selling of term insurance policies and policies with increasing amounts payable at death of TMN Life at all of 81 Japan Post Insurance offices They sell life insurance policies of 8 insurers including TMN Life.) Top-class sales support among life insurers Provide sales support by 51 branch offices of TMN Life across Japan and by life insurance promoters from 9 Sales support division. Provide support by the support desk exclusively for the Japan Post Group 34 Sales of auto insurance at post offices Auto insurance sales in 23 offices in Tokyo metropolitan area of Post Office Company started in October 2007 at the time of privatization. Sales of auto insurance at post offices is the first business of the new financial business after privatization. In this memorable new business, Tokio Marine & Nichido, as a leading underwriting company, directly support solicitors at post offices who are mainly liaison personnel of the post offices, for smooth start up. We are confident that the understandability of the products, which will be achieved by revision of auto insurance starting in July 2008, will get support from many customers of post offices, along with the "sense of security" and "sense of reliability" of the post offices. We are considering expanding post offices handling auto insurance starting from FY2008. Sales of Tokio Marine & Nichido Life products at Japan Post Insurance Japan Post Insurance will start selling term insurance and increasing amounts payable at death insurance of Tokio Marine & Nichido Life at all 81 branches as agents in June Tokio Marine & Nichido Life plans to offer comprehensive face-to-face support through life insurance promoters nationwide who belong to 51 life insurance branches and 9 Sales Support Department of the company. In addition, a support desk exclusively for Japan Post will be established in the headquarter to offer timely and detailed support over the phone to achieve top-class support system in the industry for Japan Post Insurance. Millea group is currently the only insurance group that provides direct support to the agents of new financial business in the Japan Post Group, for both life insurance and non-life insurance. 34

36 Domestic life insurance business Tokio Marine & Nichido Life "The Second Inauguration Project" Seeking to be the "insurer most trusted by customers and agents in Japan" Renovation of sales channel strategy Make non-life insurance agents larger and reinforcing channels with high growth potential Cross-selling: Cooperate with non-life insurers, aiming at larger size of non-life insurance agents Life Partner : Increase the number of life partners as well as enhancing their consulting capabilities. Life Professional: Strengthen support to Life Professionals OTC sales at banks and Japan Post: Increase group-wide efforts to provide products and establish infrastructure and support systems Renovation of business model Ensure safety quality and promoting the strategic policy maintenance Renovate claim payment system (Implemented in December 2007) Increase convenience by allowing customers to pay premiums by a credit card. This method was first adopted by TMN Life among insurers. etc. Stage expansion of products and services Aim to support everything that customers may worry about Promote "campaign for protecting customers from cancer" "Cancer cure-support insurance" has been showing favorable growth since TMN life started its sales in September We concluded an agreement on collaborative research with the Shizuoka Cancer Center Reinforce the function to offer consultation and information regarding cancer Promotional strategies To become a company to which customers feel closer, TMN Life created a new character named "" that represents its attitude of "customer-first" and "always with sincerity". 35 Major effort in reform channel strategy Non-life insurance agent channel (cross-selling): thorough implementation of fostering each agent, to promote grow in size of agents, and recover growth potential. Life Partner LPEnhance cooperation with dealers and commercial divisions, by utilizing customer base of the Group. Life ProfessionalsContinue to maintain high growth potential, and become a major channel. Over-the-counter sales at banks"cancer Treatment Support Insurance" has been adopted by about 80 financial institutions (as of March 2008). Japan Post: Japan Post Insurance has decided to adopt business insurance, and will start selling during FY2008. Premium income composition by sales channels (on a managerial accounting basis) Categories FY06 FY07 Cross-selling 67.3% 61.6% Life professionals 21.7% 27.5% Life partners 7.6% 9.0% Over the counter 2.0% 1.7% Others 1.4% 0.2% Total 100.0% 100.0% Efforts to ensure the reform of the business model Priority is put on development on securing a safety quality (claims payment system was renewed in December 2007) Various improvement of convenience for customers including; All types of products are compatible with credit card payments (August 2007), introduction of real-time settlement system for cell phones (October 2007), and availability of switching to credit card payment for existing contracts (February 2008) Major efforts of the Stage expansion of insurance "Campaign to protect customers from cancer", whose objectives are having sufficient knowledge of cancer, conveying the information to customers, and offering comprehensive support, is carried out company-wide. Joint research with Shizuoka Cancer Center joint development of information providing tools regarding cancer, and enlightenment activities cancer problems home-visiting consulting service started in limited area, on a trial basis Medical assist: "Consultation Service for Cancer" is established Major efforts in promotion strategy Improve support rate and appoint rate from customers, through higher public recognition Carry out projects for the local media, jointly with the agent Development of nationwide TVCM and advertisements in newspapers scheduled for the 2008 summer 35

37 Domestic life insurance business Tokio Marine & Nichido Financial Life Strategies and Risk Management Short-term market environment Mid-to long term market environment Competition environment Recognition of the external environment Prolonged financial market turmoil is likely to influence sales and risk control. Influence is expected to become smaller by establishing sales approaches complying with J- SOX. Continuing growth is expected because of the growing pension market accompanied due to the aging population and falling birthrate, higher longevity and anxiety over the public pension system. Newcomers in/outside Japan might make competitive conditions more severe. Reinforce our business in the pension market with high growth potential, although competitive conditions might become more severe. Channel strategies Sales strategies Product strategies Risk controls Strengthen partnerships with financial institutions Strengthen the sales capabilities through such efforts as an increase in the number of solicitors Expand sales base Plan to develop new products and revise the existing products following to the revision of products conducted in November Control risks in accordance with product characteristics based on the quantitative measurement of the amount of retained risk. Transfer minimum guarantee risks to external companies in principle. 36 Channel strategy Establishment of sales base has reached a certain standard, e.g. number of affiliated financial institutions as of the end of March 2008 was 110. In FY2008, the focus is on increasing staff in wholesales and the development of the training system, to enhance quality and quantity of the sales force. Develop new branches in Sendai, Hiroshima and Fukuoka, to promote community-based sales support. Product strategy Name of products Features Variable Individual Annuities GF (type II) with guaranteed minimum income benefit (GMIB) (type II) "BEST SCENARIO" The principal amount of annuity receivables will be 100% guaranteed in terms of GMIB, even if it loses value at the maturity of an annuity contract. Equity weighting of separate account : 55% with guaranteed minimum accumulation benefit (GMAB) (type II) "GOOD NEWS II" "TODOKUNDESU" Reaching the initial target set up at the time of an annuity, investment results will automatically be retained. GMAB, the principal amount will be guaranteed in lump sum terms even if it loses value at the maturity of an annuity contract. Equity weighting of separate account : 35% Multi -functional Variable Individual Annuities GF "AS YOU LIKE" "NENKIN-SHINSEDAI" Freely selectable from among the basic plan, a principal guaranteed plan and a principal accumulation plan, with change over from on a plan to another plan also being possible. In the principal guaranteed plan, the principal amount will be 100% guaranteed in lump sum terms, even if it loses value at the maturity of an annuity contract. Basic sum insured 2 million yen million yen 2 million yen million yen 2 million yen million yen Acceptable age 0-75 years old 0-75 years old (principal guaranteed plan) Started sales of Good News II in Nov.2007, and Best Scenario and Todokundesu Plus in Dec Implements product development and product revisions that can combine attractiveness for customers, manageability for sales companies and balanced profitability and risk of the product. Risk control From the viewpoint of ensuring risk transfer, minimum guarantee risk is transferred to the outside in principle, with reinsurance being as core. Implements risk control that matches product characteristics, by utilizing reinsurance subsidiaries, Tokio Marine Bluebell Re and external reinsurance companies. Appropriately controls risks by measuring holding risks quantitatively. *Quantitatively measures minimum guarantee risk (i.e., GMABGMIBGMDB risks) as major control target risks, with a decreased amount in holding value when the managing fund value drops being as risk volume, on 99 short-fall basis. *Also, risks other than minimum guarantee risks are also managed, by quantitatively measuring the decrease in holding value. *Risk control of minimum guarantee risks by reinsurance contributes to reducing the effect of increased policy reserves regarding the minimum guarantee on financial accounting, which arises as the managing fund value drops. *On the other hand, EV is affected by not only a minimum guarantee but also by a future revenue decrease calculated based on the managing fund value, which caused slower EV growth in FY

38 Overseas insurance business FY2007 results ( unit : bn yen ) Premium income Adjusted earnings FY06 FY07 Y on Y FY06 FY07 Y on Y Asia % % Non-life % % Life % Europe, Africa & Middle-east North & Central America South America Others Non-life total Life total Direct total Reinsurance Grand total % % % % % % Non-life % % Life % % % % % % % % % % % % % ROE % 8.09% - 37 Factors in the changes in FY2007 Non-life insurance in Asia: Premium income increased due to addition of AGH-affiliated non-life insurance company in Singapore, which was acquired in 2007, and the growth of local business mainly in Malaysia. On the other hand, adjusted earnings decreased due to the significant profits deterioration in Tianan Insurance. Life insurance in Asia: Premium income significantly increased due to the addition of AGH-affiliated life insurance companies in Malaysia and Singapore. Adjusted earnings also substantially advanced due to investment income brought about by the brisk investment environment, as well as contributions from the above 2 companies. Europe, Africa and Middle-east: Adjusted earnings decreased, due to a number of large-scale natural disasters in Europe, and deteriorated loss ratios of local business. Non-life insurance in South America: Adjusted earnings decreased, due to the intensified rate competition mainly for auto insurance and increased reserve for outstanding claims, based on a re-investigation of lawsuit before acquisition. Life insurance in South America: Premium income and adjusted earnings increased, because the sales channel increase strategy of Real Bank, a partner of this joint venture, showed results, while life insurance and pension markets in Brazil are expanding. Reinsurance: See page 39 Topics in FY2007 Started in July 2007 implementing organizational reform, in which the functions of strategy development and business administration in overseas insurance business regarding both direct and reinsurance are integrated in the International Business Development Department in Millea HD, for the purpose of the further enhancement of an integrated response to the overseas insurance business strategy. Founded as a regional umbrella company in the U.S., the Tokio Marine Americas Corporation, to establish a structure where more agile strategy implementation is possible in the future, by improving the control function of three important areas in the world, in addition to Europe (Tokio Marine Europe Limited) and Asia (Tokio Marine Asia Pte. Ltd.), under the International Business Development Department in Millea HD. Established Tokio Marine Middle East Limited in Dubai International Financial Center in UAE, which is intended to offer technical support for group companies in the Middle East. The company will be engaged in product development such as Islamic insurance (Takaful), which is expected to show explosive growth, and promote the enhancement of the sales structure in the Middle East through service provision to group companies in the area. In March 2008, acquired Kiln Ltd., who is developing global insurance business mainly in Lloyd s in the U.K. Millea HD plans to address further overseas insurance business development by utilizing Kiln s business base, as well as Lloyd s market, including discussing strategy together for new business development, and exercise the effect of the acquisition to the fullest extent. 37

39 Overseas insurance business FY2008 projections 700 Premium income Adjusted earnings (unit : bn yen) FY04 FY05 FY06 FY07 FY Plans for FY2008 Premium income Adjusted earnings ( unit : bn yen ) FY08 FY08 FY07 Y on Y FY07 projections projections Y on Y Asia % % Non-life % % Life % % Europe, Africa & Middle-east % % North & Central America % % South America % Others Non-life total Life total Direct total Reinsurance Kiln Group Grand total Non-life % % Life % % % % % % % % % % % % % % Non-life insurance in Asia: Adjusted earnings are expected to increase due to the backlash in Tianam in China, whose performance deteriorated in FY2007. Life insurance in Asia: Adjusted earnings are expected to decrease, due to the deterioration of the overall investment environment, as opposed to the brisk investment environment in FY2007. North and Central America: Adjusted earnings are expected to decrease, due to the backlash of the reversal of the reserve for outstanding claims in FY2007. Non-life insurance in South America: Adjusted earnings are expected to increase, due to the full-scale introduction of new rate model (in 2nd half in FY2007), refusal or rate increase of accepting contract with high loss ratio, stable performance of underwriting auto insurance caused by lower repair cost effort and backlash of increased reserve for outstanding claims based on reinvestigation of lawsuit before acquisition in FY2007. Reinsurance: Adjusted earnings increased in FY2007, due to few large accidents in major areas, however, in FY2008, adjusted earnings are expected to decrease from the preceding term, because the occurrence of accidents with a certain scale are factored in. Enhancement of focus areas by the establishment of a special group in the headquarter: Established a special group in July 2008, which is intended to improvement of the quality of overseas insurance business by utilizing expertise in Japan and overseas bases. In FY2008, life insurance business, auto insurance business, and enhancement of the support structure mainly in the IT infrastructure built-up. 38

40 Overseas insurance business Reinsurance business Business development policy: Reinsurance business has high volatility. It is our policy to focus more on profit-oriented underwriting with our state-of-the-art risk management skills. FY07 results Net premiums written Despite the soft market condition, net premiums written increased by 8% mainly due to the fact that we successfully assumed new business which meet our underwriting principle. Adjusted earnings Adjusted earnings increased by 34% mainly due to the facts that we wrote good quality business and that there were no major losses in our major business area. FY08 business plan Net premiums written Expect increase by expanding business which meets our underwriting principle. Adjusted earnings Expect profit by focusing on profit-oriented underwriting. (FY2008 projected "Adjusted earnings" is lower than that of FY2007 as the former figures include some expected losses.) Net premiums written 68.2 Adjusted earnings Stable Stable and and steady steady growth growth FY06 FY07 FY08 projections 39 Latest reinsurance market condition (1) Natural catastrophe reinsurance in U.S.: As a result of good performances in 2006 and 2007, soft market is expected to continue for (2) London reinsurance and specialty insurance market: The fact of no major accidents in recent years will lead to continued soft market. (3) Asia: Soft market condition is expected to continue. Millea's reinsurance entities Millea group currently conducts its reinsurance business through the following three subsidiaries: Tokio Millennium Re Bermuda Tokio Marine Global London Established: March 2000 Operation started: January 2005 Premium income: US$ 246 miilion Premium income: 94 million Net asset: US$ 906 million Net asset: 150 million Main business: Catastrophe reinsurance disaster risk (Mainly reinsurance natural Main Business: Mainly Reinsurance property, mainly engineering property, and catastrophe mainly natural risks, disasters such US such Hurricane as US specialty engineering reinsurance and specialty and hurricanes, Europe Wind Europe Storm) wind storms Tokio Marine Global Re Dublin Established: December 1996 Base: Head office in Dublin & Labuan branch Malaysia Premium income: US$ 73 million Net asset: US$ 80 million Main business: Treaty reinsurance in in Asian and region retention and center retention for group's base for reinsurance group's reinsurance 39

41 Overseas insurance business Business expansion with Kiln Strategic Objectives Develop a leading position in in the the Lloyd's market, one of of the the most prominent insurance markets in in the the world Expand scale of of business and enhance profits globally Establish a global commercial insurance platform Projections of Kiln in FY2008 Net Premium income: 79.0 bn yen Adjusted earnings: 6.9 bn yen Strength of Kiln Excellent Excellent Underwriting Underwriting capability capability Underwriting Discipline Brand Underwriting Underwriting platform platform in in Lloyd's Lloyd's market market Strategic position Strength of Millea High High credit credit ratings ratings Solid Solid financial base base Underwriting capacity capacity Global Global network network Synergy in growth strategy - Enhancing business base utilizing the strengths of both groups - Taking prompt and proper action to the new business opportunities, such as market cycle up-turn. (Cycle management) - Business expansion in US Conducting joint marketing strategies fully utilizing advanced underwriting skills and firm customer bases.cross-selling - Business expansion mainly in Europe & Asia 40 Kiln at a glance Features - One of the most prestigious brands in Lloyd's - Excellent insurance products backed up by disciplined underwriting principle Foundation 1962 by Mr. R. J.Kiln Lines of Business - Property, reinsurance, marine and aviation etc. Relationship with TMNF - Reinsurance partnership for over 40 years since the foundation of Kiln in 1962 Major facilities Kiln Ltd Holding company Bermuda) R J Kiln & Co Limited Lloyd's managing agency for 4 syndicates International Hong-Kong, Singapore, Belgium and South-Africa Key stats for FY2007 in million JPY in billion Gross written premium Net premiums written Post-tax profit Total assets 1, Net assets ROE 21% * Kiln was consolidated into Millea group's B/S for FY2007 (as of the end of Mar.2008) but will contribute to its PL for FY2008 (as of the end of Mar.2009). 40

42 Asset Management Tokio Marine & Nichido Overview Secure stable return for each fiscal year and increase the value of of net assets in in the mid- to to long- term Basic Policy Steadily increase surplus value (asset value minus liability value) on a marked-to-market value basis Improve ROE RORAC Strategic investments to augment relations with the insurance customers. Continue to reduce the exposure to improve the overall capital efficiency Sustain the relevant liquidity position to firmly service insurance obligations while improving profitability * Other assets Stocks of subsidiaries, real-estates, non-investment assets etc. B/S of Tokio Marine & Nichido as of the end of Mar.2008 Asset for ALM Absolute return investment 7% Business related equities 38% 30% Short term funds 8% Other assets 17% 100% Asset total 10,889.5 bn yen Deposit type insurance Liability General account Net assets Effect Effect of of exchange risks risks Maintain our portfolio as a whole is constructed to accommodate foreign exchange fluctuations In principle, hedge against currency risks on ALM and alternative investment as mid- to long-term assets Foreign currency denominated loss reserves, etc. at branches outside Japan are managed by the financial planning division at the head office (these risks are hedged in principle) Aim to secure profits in short-term funds investments to some extent Effect Effect of of interest interest rate rate risks risks Surplus management style ALM Rise in interest rates Decline in asset values (bond prices) invested assets Insurance liabilities Rise in interest rates Decline in values of insurance liabilities A rise in interest rates has a positive impact on the return on interest & dividend income 41 ALM Utilize interest rate swaps and other measures for deposit-type insurance premiums: in principle we hold surplus value into the neutral positions against a rise in interest rates in the market, which is called "surplus management style ALM". We have built and held strong positions against a rise in interest rates in some areas of long-term liability, however, in FY07, we managed to lower interest-rate sensitivity against the situation of market destabilization due to SPL woes. <Reference> Interest rate sensitivity of the ALM surplus value as of the end of FY06 & FY07 Fluctuation in the ALM surplus value on the condition that interest rates rise by 1% ( unit : bn yen ) 07/3E 08/3E Tokio Marine & Nichido General account Deposit-type insurance account Tokio Marine & Nichido Life * * On the basis of taking a dynamic lapse into consideration Business related equity holdings Unrealized gains were approx. 2.3 trillion yen and the break-even TOPIX level that would offset the unrealized gains is approx. 360 points. The possibility of massive losses due to a market price decrease is remote. In the mid to long-term we will reduce the portion of business related equity holdings from the current level of approx. 30% of total assets, and during FY06-FY08 we plan to sell approx. 150 bn yen. We sold approx. 105 bn yen as of March 31, We will proceed with the sale of the remaining amount in FY08. Effect of exchange risk Gains/losses resulting from hedge operations to minimize the effect of foreign exchange fluctuations are recorded on P/L statement. (The gains/losses are reflected in the figures on B/S.) 41

43 Asset Management Tokio Marine & Nichido Basic policy of absolute return investment Three Three diversifications of of absolute return return investment )Diversification of asset classeslower highermaintain mid-to long-term investment policy utilizing solid and sound financial base without being deluded by short-term market fluctuations Liquidity (Marketability) Structured products, etc. Hedge funds, etc. lower risks higher Keys of investment diversification Correlation with the overall market fluctuation Liquidity (Marketability) Diversification of styles In-house :46% Outsourcing :54% Private equities etc. Mid-to long-term investments in global bonds/equities Control risks while receiving the benefits of long-term investments and enjoying liquidity premium Diversification of investment timing Avoid risk concentration and correspond deliberately to overheated markets. Whilst the Nikkei average for FY07 dropped substantially by 28% shocked by the severe investment environment affected by turbulence in the global market, TMNF's RORAC was minus 5% for FY07 due to diversified investments Aim to obtain the fruits of recovery in the future by maintaining our portfolio utilizing our analyse capability which protected us in this crises of the global financial market Overview of of FY2007 Trend of RORAC Net RoE single year basis Net RoE 5 year moving average * excluding risk-free interest rate, cost and tax 42 Basic policy of absolute return investment In general, the first principle of insurers is to conduct appropriate cash-flow management to maintain the claims paying ability, so their asset holdings mainly consist of short-term funds and risk-free assets. However, we have various advantages such as a robust financial strength and well-established risk management system, which allows us to further take risks in our investments. Therefore, we are conducting absolute return investment, aiming to further enhance returns. Aim to RORAC by implementing three diversifications and enhance net asset value in the mid-to long-term. Return on Risk Adjusted Capital: Return on Risk Adjusted Capital as the average total return on a market-tomarket basis, excluding risk-free interest rate, cost and tax (investment profit + realized capital gain/loss + increase or decrease of unrealized gains/losses) risk based capital State of FY07 absolute return investment In the midst of the harsh investment environment caused by the market turmoil on a worldwide basis, although Japan's Nikkei stock average as of March 31, 2008 fell by 28% from the end of March 2007, RORAC for FY07 decreased only by 5% from the previous year because of our diversification investment. Although unrealised losses of credit derivatives and other securitized products increased due to the effects of the turmoil in global financial markets, no underlying assets were in default and these losses are expected to be recovered as a result of full redemption until maturity. The accumulated RORAC on average during the past 5 years maintained approx. 9%. 42

44 Financial and general business General business We will develop our general business areas aggressively with the focus on creating new added value related to 'Safety and Security' before and after incidents to meet various customers' needs. These are beyond the framework of conventional insurance products. Assistance Business Process Outsourcing Millea Mondial General human resources services Tokio Marine & Nichido Career Services Health care for senior people Tokio Marine & Nichido Samuel Insurance business Facility management Tokio Marine & Nichido Facilities Medical services Risk consulting Tokio Marine & Nichido Medical Service Tokio Marine & Nichido Risk Consulting 43 Major efforts are as follows; Tokio Marine & Nichido Career Service comprehensive human resources service Introduced a communication system between staff and companies using a cell-phone website, and started a new advertisement strategy for image improvement, in the midst of stiffer competition, such as enhanced staff retention by leading companies, and carried out new hiring or offering of permanent positions. Tokio Marine & Nichido Facilities, (facility management Offering best quality facility services by effectively mixing services in various areas such as building maintenance and property management, to maximize the customer s facility value. Tokio Marine & Nichido Samuel elderly service Offering Abundant life for the elderly with Hirudemoa, the assisted-living elderly housing as a model. As of April 1, 2008, providing 12 facilities (516 rooms in total) in Tokyo, Kanagawa, Kyoto and Nagano. Tokio Marine & Nichido Medical Service healthcare Carrying out consultations and trials for specific health check/health guidance for health insurance. Sales are expected to increase in accordance with full-scale implementation from 08. Also, EAP service for companies and order receipts for medical call centers for companies or local governments are growing steadily. Millea Mondial assistancebpo Under the company s policy of We are here to cater to the confidence of the customer, Millea Mondial is contributing to maximizing customer satisfaction and offering relief and safety to the customer by providing assistance services including road assistance. Tokio Marine & Nichido Risk Consulting risk consulting Acquired in October Plans full-scale development in the future as a group of experts who appropriately resolve the company s risks, in the midst of the further diversification of risks surrounding companies, including J-SOX readiness, BCP Business Continuity Plan and entire risk management, etc. FY07 results FY08 projections Earnings 74.9 bn yen 86.8 bn yen Profits after tax 0.9 bn yen 0.3 bn yen Although profits are expected to decrease, due to increased costs for internal infrastructure developments in Tokio Marine & Nichido Career Service, and increased labor costs in Tokio Marine & Nichido Medical Service due to active hiring, revenues are expected to go well in general. 43

45 Financial and general business Financial business Total assets under management in the financial group reached 5.4 trillion yen, an increase of 0.5 trillion yen y/y (trillion yen) Trend of assets under management /3E 05/3E 06/3E 07/3E 08/3E Expansion of of investment trust trust In retail, promote investment trust sales through over-the-counter sales at banks or through the alliance with Shinko Securities. Expand assets, by introducing new products specializing in "environment, water & food, health & medical" and increasing private placement investment trusts for the Variable annuities of Tokio Marine & Nichido Financial Life. Increase in in assets assets in in the the investment advisory Asset balance of the investment advisory managed by Tokio Marine Asset Management increased 200 bn yen from the end of the previous fiscal year to 4,100 bn yen at the end of Mar The 4th largest discretionary account balance of pension investment in Japan as of the end of Dec The balance is steadily increasing, especially for products specializing in foreign bonds managed by Tokio Marine Rogge Asset Management in the severe investment environment.* * Joint venture with Rogge, the British asset management company 44 Profiles and activities of major financial business group companies Tokio Marine Asset Management Established in Started as an investment advisory company, and expanded into the investment trust business in Provides a wide variety of investment products such as alternative, private equity, commodity-related funds, in addition to traditional assets (stocks and bonds in domestic and overseas markets). The end balance has been steadily increasing in both annuities and investment trusts through the alliance with Shinko Securities. Tokio Marine Capital Established in Operates private equity fund business that invests in venture capitals and buyouts. Aggregate amount of funds under management (on the basis of commitment amount): 72.0 bn yen (5 funds) Tokio Marine Financial Solutions Established in After dissolution of the joint venture with Bank One in 2002, it became our wholly owned subsidiary. Provides financial solutions to customers by using derivative instruments. It has diversified its product line-ups to PFI-related arrangement businesses and securitization-related arrangement businesses. Millea Real-Estate-Risk Management Established in Engaged in the support of the origination of real estate investment funds for institutional investors and the execution of commissioned business. The total trust balance is approximately bn yen on a value basis. In addition to the conventional Fixed type real estate funds, a Blind pool investment fund was launched to allow flexible rotation of target real estate. AIFAM Inc. Tokio Marine & Nichido acquired 31% of the common stock of AIFAM in August AIFAM is an asset management consulting company established in 2001, and its principal businesses are to provide consulting services related to alternative investments and funds of hedge funds for institutional investors. Tokio Marine Rogge Asset Management Established in October A 50/50 joint venture founded by Tokio Marine Asset Management and Rogge Global Partners (UK) based in UK and providing high quality investment services in Japan as Rogge, which has achievements and experience in global bond investments. 44

46 Capital management strategy Through Through integrated integrated risk risk management management conducted conducted on on a a quantitative quantitative and and systematic systematic basis, basis, the the Millea Millea group group quantitatively quantitatively ascertains ascertains the the risks risks affecting affecting its its businesses businesses and and manages manages these these to to keep keep the the volume volume of of risks risks within within the the scope scope of of the the capital. capital. To To ensure ensure capital capital in in excess excess of of that that needed needed to to cover cover risks, risks, the the Millea Millea group group is is focusing focusing on on strategic strategic business business fields fields and and new new businesses businesses with with high high profitability profitability and and growth growth potential potential and and on on increasing increasing its its capital capital efficiency efficiency by by enhancing enhancing measures measures for for the the return return to to the the shareholders. shareholders. ROE improving strategy, from both numerator and denominator Earnings Shareholders' equity Total amount of adjusted earnings for each segment Increase business revenue Manage capital level Total net asset in B/S Price-fluctuation reserves Catastrophe reserves Embedded value Total net asset in B/S Average capital at the beginning and end of the fiscal year and after tax basis Non-life insurance Life insurance Other business 45 Basic strategy of capital management Flow Earnings Excess capital Allocate normalized earnings to distribute to shareholders Invest in businesses with good profitability and growth prospects Stock (adjusted shareholders' equity) Minimum capital requirement Risk capital Required capital Amount of capital required to continue business after risks materialize Quantitative measurement of risk exposures such as underwriting and asset management risks applying with the 99% shortfall method Intend to improve our model of the required capital as part of the enhancement of Enterprise Risk Management (ERM) or risk-based management and to build a business portfolio with higher profitability and growth potential for coping with the new business circumstances such as the introduction of IFRS into Japan. Enterprise Risk Management: A method of enterprise-wide risk management. We define ERM as risk-based management in which every strategy is decided referring to risk indices beyond the conventional concept of risk management and continue to prepare and reinforce the necessary internal infrastructure and organizations. 45

47 Improvement of capital efficiency Expansion of revenues and M&A strategy Track of business investment (unit : bn yen) (unit : bn yen) FY02 FY03 FY04 FY05 FY06 FY07 Total Business investment Domestic non-life Domestic life Overseas Financial General Major overseas business investment since FY FY02 FY03 FY04 FY05 FY06 FY07 Total FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 India Non-life Thailand Life Malaysia Non-life, Taiwan Non-life China Life Retakaful (Singapore), Tokio Marine Global (UK) Brazil Non-life & Annuity, China Tianan, China Broker Hong Leong Takaful (Malaysia), AGH (Singapore & Malaysia) Kiln (UK), Takaful (Egypt) Domestic non-life Domestic life Overseas Financial General 46 Key points for implementing merger and acquisition activities: (i) Clarification of objectives (profit, scale, sales network, customer base, etc.) (ii) Holding fast to disciplined corporate-value calculation and entry and exit rules (iii) Formulation of post-m&a plans and swift implementation of harmonized policies (iv) Securing management resources for M&A In particular, when implementing M&A activities in emerging markets, the possibility of additional post-m&a investment is a significant factor affecting growth potential and profitability FY02 FY03 FY04 FY05 FY06 FY07 Cumulative Total FY08 projections Ordinary income 2, , , , , , , ,057.0 Net income Adjusted earnings * Dividend total * Dividend per share *3 20 yen 22 yen 22 yen 30 yen 36 yen 48 yen 48 yen Share repurchase * T.B.D. Amount of return to shareholders * T.B.D. Ratio of shareholder returns *6 209% 101% 132% 123% 129% 128% 131% Average of adjusted earnings * T.B.D. Pay-out ratio *8 19% 20% 19% 23% 25% 28% 23% *1 FY05: excludes the effect of precondition changes in the domestic life insurance business *2 The figure for FY08 (projection) is based on the assumption that the number of stocks would be same as that of FY07. *3 All dividends above are shown on the basis of calculation after the stock split (into 500 shares) conducted in September, *4 The corresponding fiscal year covers the year starting on the day when the regular shareholders meeting of the following year is convened. On FY05, 57.8 billion yen of stock exchange with Nisshin Fire has been excluded. The figure shown for FY07 is the share repurchases amount cap for one year. *5 Amount of return to shareholders means the total amount of all dividends based on the previous financial settlement + share repurchases amount for the year. *6 The ratio of shareholder returns means the percentage divided by the net income of the same fiscal year. *7 Average of adjusted earnings are to be determined after the amount of the shareholders return for each year was actually adjusted, considering the following rates/values of the past 3 to 5 years: "Average of adjusted earnings" and "separation of adjusted earnings for each year"; Actual shareholders equity base varied by the share price fluctuations," "Percentage of increased EV of life insurance accounting for average of adjusted earnings," "Proportion of solvency margin ratio of non-life insurance" and "Funding schedule of the fiscal year" etc. *8 Proportion of the dividend total of the fiscal year to the average of adjusted earnings for the corresponding year. 46

48 Improvement of capital efficiency Management of capital level and return to shareholders Total amount of the return to the shareholders (unit : bn yen) Share repurchases Dividends Consolidated net income Adjusted earnings (unit: bn yen, %) FY04 FY05 FY06 FY07 Average of adjusted earnings Return to shareholders Dividends Share repurchases Consolidated net income Ratio of total return to shareholders 132% 123% 129% 128% Adjusted earnings Ratio of total return to shareholders 172% 79% 71% 97% The corresponding fiscal year covers a year starting the day when the AGM(June) of the following year is convened. As for share repurchases in FY07, 100 bn yen is an annual limit for the term from June 2007 to June Cancellation of repurchased shares Date Shares cancelled Amount cancelled (million yen) 2004/7/9 35,000,000 91, /3/14 30,000,000 88, /3/28 20,000,000 70, /3/19 19,000,000 80, /3/31 20,000,000 85,410 Total 124,000, , % 250% 200% 150% Millea HD TOPIX Relative price performance starting from April 2002 when Millea HD was incorporated Share repurchase total for return to the shareholders as of March ,457, % as of May 22,2008 Cancel ratio 97.3% 50% Major indicators of Millea HD 2003/3E 2004/3E 2005/3E 2006/3E 2007/3E 2008/3E Adjusted number of issued and outstanding 000 omitted 924, , , , , ,231 Share price yen 1,472 3,240 3,120 4,660 4,360 3,680 Percentage change 120.1% -3.7% 49.4% -6.4% -15.6% (reference) TOPIX , , , , , Percentage change 49.6% 0.3% 46.2% -0.8% -29.2% BPS on an adjusted basis yen 2,830 3,590 3,740 5,040 5,570 4,490 PBR on an adjusted basis BPS on an financial statement basis yen 1,952 2,585 2,681 3,820 4,128 3,195 PBR on an financial statement basis

49 Topics - FY2007 results Tokio Marine & Nichido = factors of increased consolidated profits = factors of decreased consolidated profits Net premiums written decreased by 0.8% (19,812.1 bn yen) 3 Premium income from auto insurance decreased by 0.7% due to a 1.2% decline in the unit price of auto insurance. 4 Premium income from fire insurance decreased due to a decrease in the number of new home constructed. 4 Loss ratio stayed unchanged. (FY % FY07 unchanged) 4 Loss ratio of fire insurance decreased by 9.3 points to 39.6% due to a decrease in the losses incurred from natural disasters. 4 Loss ratios of auto insurance and P.A. insurance increased by 1.3 points to 65.6% and by 6.7 points to 55.0% respectively. 4 Expense ratio increased by 0.8 points to 31.5% due to an increase in expenses resulting from the efforts for proper business operations. 6 Underwriting profit increased by 31.4 bn yen to 39.3 bn yen. 3 Net investment income (the difference between investment income and investment expenses) increased by 1.9 bn yen to bn yen. 7 Interest and dividend income increased by 36.2 bn yen due to an increase in dividends receipts backed by the recovery of the business performance. 7 Gains from security holdings sold decreased by 29 bn yen due to the backlash of the capital gains from Aozora Bank stocks sold in FY06. 7 For derivative products, the net profit was 13 bn yen resulting from unrealized losses caused by the effect of U.S. SPL woes and unrealized gains from the appreciation of yen. 7 Consolidated ordinary profit increased by 27.6 bn yen to bn yen. 3 Extraordinary gains brought from part of the corporate pension fund being transformed to 401k 3 Extraordinary losses resulting from demolition expenses, etc 3 Net income increased by 26.5 bn yen to bn yen. 3 Net income of consolidated subsidiaries other than Tokio Marine & Nichido increased by 5.9 bn yen to 19.9 bn yen. 13 Nisshin Fire: Although underwriting loss was 0.6 bn yen, ordinary profit increased by 1.9 bn yen to 2.6 bn yen due to the fact that investment income and net income rose by 1.5 bn yen to 1.9 bn yen. Nisshin Fire was equity 8 method affiliated in FY 06 1H and was consolidated in FY06 2H. Tokio Marine & Nichido Life: Although income from insurance & reinsurance premiums increased by 0.4% resulting from the fact that the amount of the decrease in single-payment premiums exceeded the amount of the increase in level-premiums, net income was 0 yen because of the additional contribution of 19.8 bn yen to reach 9 the amount of standard underwriting reserves. Tokio Marine & Nichido Financial Life: Although income from insurance & reinsurance premiums fell by 55.4% due to the intensified competitive conditions, increased income from in-force policies decreased losses. Net loss 10 was 6.4 bn yen due to the increase in the provision for underwriting reserves related to minimum guarantee risks. Overseas subsidiaries: Net income increased by 4.1 bn yen resulting from the effect of the new consolidation of Asia General Holdings Group and the contribution of reinsurers because of the small number of natural disasters. 13 Investment income under equity method decreased by 3.7 bn yen to minus 3.6 bn yen. 12 Amortization of goodwill (the difference between the purchase price and net assets of the purchased company when acquiring it) increased by 0.7 bn yen to 3.1 bn yen. 12 The difference between the accounting methodsthe difference in capital gains between non-consolidated and consolidated accountings, which is generated by recording the merged company's assets (recorded at the booked value on the non-consolidated accounting) on the consolidated accounting at the fair value on the merger date.increased by bn yen to minus 21 bn yen accompanied by the decline of stock prices. The intragroup elimination (offsetting of intragroup transactions among consolidated subsidiaries) was minus 12.6 bn yen. 12 Millea consolidated results 11 Consolidated ordinary income decreased by bn yen to 3,710 bn yen. 11 Consolidated ordinary profit increased by 11 bn yen to 179 bn yen. 11 Consolidated net income increased by 15.7 bn yen to bn yen. 11 Relevant page 48

50 Disclaimer These information materials are prepared based on the information currently available to us and described subject to our predictions and forecasts carried out at the time of preparation. It must be noted that what is described here does not guarantee our future business performance and carries a certain risk of misjudgment or uncertainty. Accordingly, you are kindly requested to bear in mind that there may be the possibility of a sizable divergence between the actual business performance in the future and that of the predictions or forecasts described here. For further information... Investor Relations Group, Corporate Planning Dept. Millea Holdings, Inc. toshihiko.aizawa@millea.co.jp Tel : , 3408 & 3415 Web-site :