Initiatives for the 21st Century

Transcription

1 The Tokio Marine and Fire Insurance Company, Limited Annual Report to Holders of American Depositary Shares For the Year Ended March 31, 2000 Initiatives for the 21st Century

2 Profile The Tokio Marine and Fire Insurance Company, Limited ( Tokio Marine ), established in 1879, is Japan s oldest and largest non-life insurance company. The company has been a leader in commercial and personal underwriting, with a reputation for earning customer confidence that extends around the world. With solid profitability and financial stability, Tokio Marine stands alone among Japan s insurance companies with a AAA rating from Standard & Poor s, and was given the highest rating by A.M. BEST, an A++. Tokio Marine is an innovative company ahead of its time. With a basic philosophy of establishing customer confidence and satisfaction in all aspects of its business, the company continues to develop new products and services as it strives to contribute to the affluence, comfort and economic development of society by providing safety and protection. Note: Ratings mentioned above are as of July 1, 2000.

3 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries Financial Highlights (except for per ADS data) Dollars in thousands (except for per ADS data) Years ended March Property and Casualty: Net Premiums Written... 1,297,984 1,305,138 $12,245,132 Premiums Earned... 1,281,548 1,312,139 12,090,075 Life Premiums ,128 98,817 1,227,623 Net Income from Underwriting... 18,118 72, ,924 Net Investment Income... 78,108 22, ,868 Net Income... 84, , ,462 Net Income per American Depositary Share, each representing 5 shares of common stock Total Assets at year-end... 8,071,465 7,676,782 76,145,896 Stockholders Equity at year-end... 2,661,770 2,447,713 25,111,038 U.S. dollar amounts in this Annual Report have been translated from yen, for convenience only, at the rate of 106=U.S.$1. Reference is made in note 1 (a) of the notes to consolidated financial statements. Net Premiums Written Net Investment Income Net Income Total Assets (Yen in billions) (Yen in billions) (Yen in billions) (Yen in billions) 1, , , ,305.11, , , , , , Contents Financial Highlights... 1 To Our Shareholders... 2 Tokio Marine s Response to Deregulation... 4 Financial Section... 9 Worldwide Network Directors and Corporate Auditors Corporate Data The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 1

4 To Our Shareholders Shunji Kono, Chairman (left) and Koukei Higuchi, President Operating Environment and Activities During the fiscal year ended March 31, 2000, an expansionary fiscal policy and growing overseas demand supported signs of an economic recovery in Japan. However, a self-sustained economic expansion failed to materialize amid continued weakness in private-sector demand. In the financial industry, the pace of reorganization accelerated, represented by mergers and business combinations among banks. The pace of reorganization also accelerated in the non-life insurance sector, with mergers among non-life insurance companies and alliances formed with life insurance companies. At the same time, it was a year marked by intensified competition, particularly in automobile insurance sector. During the fiscal year ended March 31, 2000, The Tokio Marine and Fire Insurance Company, Limited ( Tokio Marine ) initiated a three-year plan, Big Challenge Initiatives for the 21st Century. By realizing opportunities resulting from liberalization and regulatory reform, the plan aims to reinforce Tokio Marine s market position by earning strong customer support through aggressive business expansion centered on its core non-life and life insurance businesses. Measures taken under Big Challenge 2001 in the fiscal year ended March 31, 2000 are discussed below. Product Development Product development activities of Tokio Marine s core product, automobile insurance, focused on revising a number of existing products and launching new policies. Specifically, Tokio Marine responded to customer requests related to its Tokio Automobile Policy (TAP), a major product created amid the current era of deregulation, by revising the product features and premium rates as well as adding indemnity patterns. Tokio Marine developed a new product called Savingstype Automobile Insurance. Savingstype Automobile Insurance meets the financial needs of car owners by allowing withdrawals before maturity so that they can be used for mandatory automobile inspections. To enhance convenience for customers, Tokio Marine began offering new supplemental agreements to existing automobile insurance policies, including Supplemental Coverage for Children, which provides supplemental coverage when offspring of policyholders drive their parents cars, and Grade Protection, which automatically reapplies discount to the policy premiums paid by drivers for their next contract term if only one claim is paid per year. Tokio Marine introduced new products addressing the evolving needs of institutional clients including Weather Protection insurance, which compensates for profit declines and unavoidable expenditures caused by unusual weather, and Biotechnology Insurance, which covers various risks associated with the biotechnology industry. Customer Service System While reinforcing its focus on its customers, Tokio Marine expanded the scale of its customer service system through the integration of sections and branches based on the Division System introduced in July The aim was to improve efficiency and strengthen professional expertise of those personnel in the Divisions. In the area of medical treatment and products for the elderly, Tokio Marine established the Health Care and Services Department to strengthen development capabilities for new products and services in these areas. In accordance with the internal guideline, Claims Service Standards 21 which strives for prompt and high-quality claims services, Tokio Marine launched the 365-Day Anshin Service as part of its claims service network system. By this system, claims regarding automobile accidents reported to The Tokio Marine Safety Dial 110 Co., Ltd. on weekends and holidays are handled in the same manner as they are on weekdays. The introduction of the new claims service system, Anshin 21, has contributed to informationsharing in the processing of automobile accidents greatly among Tokio Marine and its agents, as well as prompt communication with customers. For 2 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

5 overseas travel insurance, the Comprehensive Overseas Support Desk was established in Tokyo to provide 24- hour, 365-day-a-year Japanese language service that can be accessed from any telephone around the world. Information Systems Tokio Marine believes that certain strategic measures in information technology are imperative in enhancing its customer service and fundamentally improving operational efficiency. Measures taken with respect to the Internet included improving the contents and functions of Tokio Marine s web site and initiating services to notices, introduce agents and provide premium estimates for automobile insurance through the Internet. In electronic commerce, the Company began sales of overseas travel insurance through its agents web sites. Tokio Marine expanded its Agent Online system which is an important information base for agent activities in the age of financial liberalization. As a result of the expansion efforts, there were 50,000 on-line terminals at fiscal year end, together with approximately 16,000 terminals installed throughout the company as part of one terminal for each person policy, creating an essential network for customer service. With the implementation of the Agent Online system, Tokio Marine became the first company in the non-life insurance industry to allow direct input by its agents regarding details of the insurance policy. 1.5 million contracts have been input since the service began, raising the accuracy and speed of policy processing significantly. To improve the efficiency of internal administrative systems, Tokio Marine has implemented a new system, which uses image transmission and other technologies, to consolidate the policy processing of sales sections and branches at the main administration division. Tokio Marine also established Tokio Marine Outsourcing Co., Ltd., and is making concerted efforts to improve quality and efficiency of policy processing by ensuring professional expertise and utilizing the latest information technology. New Businesses In new businesses, Charles Schwab Tokio Marine Securities Co., Ltd. was established through a joint venture with The Charles Schwab Corporation to make inroads into the retail securities brokerage. Tokio Marine also established reinsurance subsidiary, Tokio Millennium Re Ltd. in Bermuda to diversify natural disaster risk globally and to improve Tokio Marine s underwriting capabilities through the underwriting of foreign risks. The Tokio Marine Group created the Defined Contribution Pension Plan Promotion Section to prepare for entry into the defined contribution pension plan business. Risk Management Tokio Marine took decisive measures to prevent the Year 2000 problems and minimize associated risks and prepared a contingency plan. These efforts were all guided by the Year 2000 Problem task force. Although no major problems arose during the fiscal year ended March 31, 2000, monitoring will continue in light of the significance of the matter. In the age of deregulation, Tokio Marine believes that ensuring sound business practices based on accountability is crucial. Consequently, Tokio Marine founded the Compliance Committee and made company-wide efforts to clarify and raise awareness of various regulations. From the standpoint of environmental protection, Tokio Marine has introduced policies to reduce resource and energy consumption. In commemoration of its 120th year of operations, Tokio Marine obtained ISO certification for its headquarters and initiated the restoration of mangrove forests in Southeast Asia. Results As a result of endeavoring to improve our business results, as well as carrying out the foregoing measures, our operating income increased by billion from the previous fiscal year to 1,516.2 billion, primarily including premiums earned of 1,281.5 billion, life premiums of billion, net investment income of 78.1 billion and realized gains on investments of 26.4 billion. Operating costs and expenses amounted to 1,393.6 billion, primarily including losses, claims and loss adjustment expenses of billion, policy acquisition costs of billion, other operating expenses of 76.0 billion and policy benefits and losses for life of billion. As a result, income before income tax expense amounted to billion, an increase of 45.2 billion or 58.3% from the previous fiscal year. The main reasons for this were a decrease in the cost of writingoff loans in arrears and an increase in realized gains on investments. Income tax expense increased by billion to 38.6 billion due mainly to the adjustments of deferred tax assets and liabilities in the previous fiscal year caused by a sharp decrease in enacted income tax rates which amounted to negative billion. Net income for the year amounted to 84.1 billion, a decrease of 61.7 billion or 42.3% from previous fiscal year. Outlook The Japanese economy in the fiscal year ending March 31, 2001 is projected to show signs of moderate recovery with increased capital investments in the private sector. In the non-life insurance industry, established companies and new entrants are expected to compete aggressively on products, premium rates and other services to gain the support of customers and the trend toward alliances and industry consolidations is expected to accelerate further. Tokio Marine views these trends as opportunities to broaden management choices and will work to aggressively expand operations centered on non-life and life insurance by achieving steady progress according to its three-year plan. Amid ongoing financial liberalization, Tokio Marine aims to continue operating as a creative company with growth potential and sound profitability and the Tokio Marine Group will devote every resource to the fulfillment of this goal. We ask for the continued support of our shareholders. July 2000 Shunji Kono Chairman Koukei Higuchi President The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 3

6 Tokio Marine s Response to Deregulation Establishing customer confidence and satisfaction is the starting point of our business Koukei Higuchi, President QReorganization in the non-life insurance industry seems to be accelerating. Can you comment on this trend? AFor a long time, the non-life insurance industry in Japan was protected by regulations. For industry players, this meant a stable revenue structure. However, since an agreement on deregulation was reached at the Japan-U.S. Insurance Talks in 1996, industry deregulation has progressed at an extremely rapid pace. For the non-life insurance industry, the result has been intense competition in premium rates, products and services. Deregulation has also allowed foreign-capital insurers and companies from other industries to enter the non-life insurance industry, resulting in a severely competitive earnings environment. We believe these trends have contributed to a sense of alarm in the industry and that, as a result, many companies have begun pursuing mergers or alliances with other non-life insurers or with life insurance companies. 4 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

7 QWill Tokio Marine be considering that kind of a merger? A merger or alliance is one of our options, but we are not interested in pursuing a merger where the sole objective is to be the largest company in the industry in terms of scale or earnings. We believe the most important question we should be asking ourselves is: would a merger or alliance be a plus for Tokio Marine? In other words, would a merger be necessary to realize our core business concept of providing more of the best products and services to the greatest number of customers in our core insurance businesses, both non-life and life insurance? QWhat is Tokio Marine doing to reinforce its market position? AThe most important factor is to continue achieving growth in automobile insurance and increasing our presence in the automobile insurance market. Automobile insurance accounts for approximately 50% of Tokio Marine s non-life insurance premiums, so trends in the automobile insurance business significantly influence our performance. We released our strategic product Tokio Automobile Policy (TAP) in October Although premiums run 20% higher than previous policies, TAP provides Bodily Injury Indemnity Insurance, whereby full settlement is paid directly to the policyholder in the event of injury in a car accident. This comprehensive coverage has earned the product exceptionally strong support in the marketplace. As of June 30, 2000, we sold approximately 1.7 million policies of TAP and earned some 160 billion in premiums during the preceding 12 months. In the fiscal year ended March 31, 2000, we introduced Savings-type Automobile Insurance. This new product offers maturity refunds to the policyholder on completion of the policy term, regardless of whether the policyholder reports a car accident during that time. Policyholders may also choose to receive refunds before maturity to cover costs, such as mandatory automobile inspection expenses if they so wish. We plan to continue to develop at least one new major insurance product per year that responds to our customers ever-changing needs. QSo product development will be the deciding factor for automobile insurance? AThat s correct. However, I also believe that response capability for automobile accidents and by that I mean both qualitative and quantitative measures of excellence in claims services is equally important. Tokio Marine s claims service has achieved industryleading excellence in all areas, including the number of staff and their degree of specialization, the number of service bases and the system of claims handling. In addition, under our three-year business plan, we have made aggressive investments in information technology and worked toward total customer satisfaction in claims services. As an example of these efforts, Tokio Marine began 365-Day Anshin Service, which provides claims services on weekends and holidays in the same manner as that provided on ordinary weekdays. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 5

8 QIs life insurance included in Tokio Marine s core businesses? It is said that many life insurance companies are suffering from negative interest gaps due to lower interest rates. What is your thinking there? Tokio Marine, life insurance occupies a central position alongside non-life insurance as AFor one of its core businesses, a position clearly established by the three-year business plan. Some life insurance companies are suffering from negative interest spreads. However, conditions in our life insurance business are fundamentally different. The Tokio Marine Life Insurance Company, Limited ( Tokio Marine Life ) was established in the lowinterest rate environment of 1996, some time after the bursting of Japan s so-called bubble economy. In addition, we stressed comprehensive asset and liability management from the start. As a result, the recent phenomenon of negative interest spreads has not impacted Tokio Marine Life. We have also established adequate controls to protect against exposure to negative interest spreads arising from a change in the market environment. Tokio Marine s life insurance business continues to be highly profitable. As earnings and revenues expand, we believe life insurance will make substantial contributions to steady earnings growth for the Tokio Marine Group. QHow does Tokio Marine Life intend to expand its business? one phrase, comprehensive, customer-first life insurance. AIn On the product side, we are working to provide innovative products designed from a customer perspective. Tokio Marine Life has already released such products, including Nagawari Mittsu no Anshin, a new type lifetime insurance, which provides comprehensive coverage for hospitalization, nursing care and mortality. These products have won enormous support from customers. On the marketing side, we offer a consultative service to respond to particular needs of each customer. We are also focusing on cross selling of life and non-life insurance products to our customers. As of March 31, 1998, the cross selling rate was 5% for insurance agents solely engaged in agency business. Our goal is to raise this ratio to 15% by March QCan you tell me about Tokio Marine s IT investments? ATokio Marine is making aggressive investments in IT. Advanced information technology will be effective in enhancing convenience to customers and in boosting the efficiency of our internal administrative processes. For example, by increasing the number of agents who input policy data online, greater administrative efficiency is achieved. Tokio Marine accounts for approximately 50% of the total number of agents linked online in the industry. We intend to continue working to increase the number of these agents. 6 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

9 QIs it true that Tokio Marine entered the securities business? AYes, through a joint venture with the world s largest online broker, The Charles Schwab Corporation, we established Charles Schwab Tokio Marine Securities Co., Ltd. The new company provides securities brokerage services to individual investors and is already actively selling U.S. stocks and foreign mutual funds through its website and a call center. Japanese stock trading is scheduled to begin soon, to be followed by a gradual introduction of a variety of Japanese investment trust products. In addition, we are making steady progress with efforts to enter new business fields that we believe will compliment and produce synergies with our core businesses. QWhat is your vision for Tokio Marine in the future? AThe Japanese financial industry is entering a period of intense competition without distinctions between industries and countries. In this new environment where speed is paramount, I believe it essential to have a keen awareness of purpose. For Tokio Marine, this means being committed to our corporate philosophy of establishing customer confidence and satisfaction in every business activity. Tokio Marine is going to hold fast to this basic principle and continue striving to be a creative enterprise that anticipates and promptly responds to the changing times. It is our sincere hope that we will receive the continued support of our shareholders as we undertake these projects. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 7

10 Contributing to the Preservation of the Global Environment Reforestation Volunteers in the Philippines Helping Restore Mangrove Forests in Asia To commemorate the 120th anniversary of its founding, Tokio Marine began a five-year project for large-scale restoration of mangrove forests in Mangrove forests are known as the forests of the sea and are commonly found in coastal areas of tropical and subtropical regions. These forests are important bases for regional inhabitants and essential habitats for a large variety of plants and animals. However, excessive logging, regional development and prawn breeding have led to significant decline in the mangrove forests throughout the world. Tokio Marine s project has the twin aims of conserving the environment and contributing to the region, and will cover reforestation of more than 3,000 hectares in five Southeast Asian countries Indonesia, Myanmar, the Philippines, Thailand and Vietnam. Tokio Marine is joined in the project by Japanese non-governmental organizations (NGOs) with experience in reforestation projects. In addition to supporting the project costs, Tokio Marine has sent teams of reforestation volunteers from among its employees and agents. The first team which included the President of the company, Koukei Higuchi, was sent to Vietnam in July The second team left for the Philippines in February 2000 and the third went to Vietnam in May. Taking part in the reforestation has allowed the team members to gain greater awareness of environment and development issues. ISO Environmental Certification As a result of its efforts to establish an environmental management system, Tokio Marine received ISO certification at its head office in Tokyo in November Covering all aspects of head office activity, the environmental efforts recognized by the Certification are not limited to reduced consumption of paper and energy, but also extended to product development, financial services and other areas of business. ISO certification is an international standard for environmental management systems that aims to improve environmental performance in an organization s day-to-day activities. Continual improvement is a core component for environmental management systems advocated by the International Organization for Standardization, the governing body of ISO Tokio Marine is aiming for excellence in all phases of the process, from planning and implementing to checking, reviewing and continually upgrading its environmental performance. ISO Certificates 8 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

11 Financial Section Net premiums written of property and casualty insurance amounted to 1,298 billion, a decrease of 0.5% from the previous fiscal year mainly due to a decline in premiums underwritten abroad by the appreciation of yen. Net premiums earned amounted to 1,282 billion, a decrease of 2.3% from the previous fiscal year. Life premiums amounted to 130 billion, of which 129 billion was from Tokio Ma rine Life, an increase of 31.7% from the previous fiscal year. The ratio of losses and claims incurred and related adjustment expenses to premiums earned increased by 4.3 percentage points to 62.1% mainly due to the effect of natural disasters and an increase in losses incurred on automobile insurance and other insurance. Due to the Company s effort to reduce expenses, the ratio of underwriting and administrative expenses incurred to premiums written decreased by 0.5 percentage points to 36.7%. As a result, net income from underwriting, including life insurance operations, decreased by 75.1% to 18 billion. Net investment income increased by 251.6% to 78 billion. Net income amounted to 84 billion, a decrease of 42.3% from the previous fiscal year. Per American Depositary Share, net income was 271, compared with 471 the fiscal year before. Investment assets increased by 5.9% to 6,779 billion and total assets increased by 5.1% to 8,071 billion. Stockholders equity increased by 8.7% to 2,662 billion. Stockholders equity as a percentage of total assets increased from 31.9% of the previous fiscal year to 33.0%. Contents Analysis of Insurance Premiums Written Loss and Expense Ratios Investments Consolidated Statements of Income Consolidated Balance Sheets Consolidated Statements of Stockholders Equity Consolidated Statements of Cash Flows Consolidated Statements of Comprehensive Income Notes to Consolidated Financial Statements Independent Auditors Report The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 9

12 Net Premiums Written by Class of Insurance (Yen in billions) Net Premiums Written and Loss Ratios (Yen in billions) Hull Cargo & Transit Fire and Allied Lines 1, , , , ,298.0 Compulsory Automobile Liability Other Personal Accident 14.6 Automobile Fire and Allied Lines Cargo & Transit Hull Loss Ratio (%) Loss Ratio (%) Loss Ratio (%) Automobile Personal Accident Other Compulsory Automobile Liability Loss Ratio (%) Loss Ratio (%) Loss Ratio (%) Loss Ratio (%) Combined Loss and Expense Ratios (%) Net Income per ADS (Yen) Breakdown of Investment Assets (%) Ratio of Expenses to Premiums Written Short-Term Investments 7.1 Other Long-Term Investments 12.4 Policy Loans 0.3 Fixed Maturities Ratio of Loss and Loss Adjustment Expenses 62.1 to Premiums Earned Real Estate 1.5 Equity Securities 46.9 Mortgage Loans on Real Estate The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

13 Analysis of Insurance Premiums Written Property and Casualty Years ended March Hull: Direct premiums written... 17,342 20,042 23,259 27,726 30,429 Reinsurance premiums assumed... 7,673 9,656 15,261 16,329 15,603 Reinsurance premiums ceded... 10,461 12,317 17,726 22,077 25,164 Net premiums written... 14,554 17,381 20,794 21,978 20,868 Ratio to total all lines % 1.33% 1.55% 1.66% 1.63% Cargo & Transit: Direct premiums written... 57,734 65,575 68,514 63,414 57,431 Reinsurance premiums assumed... 3,041 5,256 6,748 9,639 9,425 Reinsurance premiums ceded... 7,885 9,795 11,656 13,182 13,168 Net premiums written... 52,890 61,036 63,606 59,871 53,688 Ratio to total all lines % 4.68% 4.73% 4.50% 4.20% Fire and Allied Lines: Direct premiums written , , , , ,696 Reinsurance premiums assumed... 11,389 12,846 19,209 20,728 19,972 Reinsurance premiums ceded... 38,077 39,403 51,133 38,106 41,690 Net premiums written , , , , ,978 Ratio to total all lines % 12.20% 12.35% 12.35% 11.89% Automobile: Direct premiums written , , , , ,757 Reinsurance premiums assumed... 2,889 3,380 4,472 5,039 4,595 Reinsurance premiums ceded... 10,451 10,402 10,920 11,352 11,222 Net premiums written , , , , ,130 Ratio to total all lines % 50.25% 49.40% 49.05% 49.52% Personal Accident: Direct premiums written , , , , ,595 Reinsurance premiums assumed Reinsurance premiums ceded... 2,760 3,028 2,954 3,059 3,278 Net premiums written , , , , ,199 Ratio to total all lines % 10.18% 10.87% 11.22% 11.75% Other: Direct premiums written , , , , ,159 Reinsurance premiums assumed... 17,525 19,205 24,973 28,169 25,643 Reinsurance premiums ceded... 26,963 25,275 32,201 34,739 34,609 Net premiums written , , , , ,193 Ratio to total all lines % 13.38% 13.22% 13.13% 12.76% Total (excluding compulsory automobile liability): Direct premiums written... 1,244,281 1,250,591 1,292,451 1,263,759 1,226,067 Reinsurance premiums assumed... 42,825 50,659 71,268 80,743 76,120 Reinsurance premiums ceded... 96, , , , ,131 Net premiums written... 1,190,509 1,201,030 1,237,129 1,221,987 1,173,056 Ratio to total all lines % 92.02% 92.12% 91.91% 91.75% Compulsory Automobile Liability: Direct premiums written , , , , ,362 Reinsurance premiums assumed... 54,361 53,035 55,088 55,639 54,753 Reinsurance premiums ceded , , , , ,598 Net premiums written , , , , ,517 Ratio to total all lines % 7.98% 7.88% 8.09% 8.25% Total All Lines: Direct premiums written... 1,431,192 1,429,770 1,470,789 1,457,535 1,414,429 Reinsurance premiums assumed... 97, , , , ,873 Reinsurance premiums ceded , , , , ,729 Net premiums written... 1,297,984 1,305,138 1,342,960 1,329,580 1,278,573 Ratio to total all lines % 100.0% 100.0% 100.0% 100.0% The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 11

14 Loss and Expense Ratios Property and Casualty (1) All Classes Other than Compulsory Automobile Liability: Years ended March Hull: Net premiums written... 14,554 17,381 20,794 21,978 20,868 Premiums earned... 15,260 19,351 20,414 22,474 19,761 Losses incurred... 8,942 9,809 13,406 14,753 11,693 Loss ratio % 50.7% 65.7% 65.6% 59.2% Cargo & Transit: Net premiums written... 52,890 61,036 63,606 59,871 53,688 Premiums earned... 53,455 62,644 64,730 58,689 53,628 Losses incurred... 26,817 31,527 32,136 37,587 31,786 Loss ratio % 50.3% 49.6% 64.0% 59.3% Fire and Allied Lines: Net premiums written , , , , ,978 Premiums earned , , , , ,857 Losses incurred... 86,836 74,253 55,818 54,313 48,251 Loss ratio % 50.0% 37.9% 37.3% 35.3% Automobile: Net premiums written , , , , ,130 Premiums earned , , , , ,544 Losses incurred , , , , ,870 Loss ratio % 57.2% 54.1% 52.8% 53.4% Personal Accident: Net premiums written , , , , ,199 Premiums earned , , , , ,243 Losses incurred... 57,558 57,395 58,338 58,111 58,099 Loss ratio % 41.6% 39.7% 38.3% 38.2% Other: Net premiums written , , , , ,193 Premiums earned , , , , ,735 Losses incurred... 97,693 90, , , ,870 Loss ratio % 51.5% 62.0% 65.5% 68.5% Total: Net premiums written... 1,190,509 1,201,030 1,237,129 1,221,987 1,173,056 Premiums earned... 1,174,576 1,205,352 1,207,866 1,182,350 1,138,768 Losses incurred , , , , ,569 Loss ratio % 53.2% 51.4% 51.5% 51.5% Loss adjustment expenses incurred unallocated... 41,695 42,107 43,060 43,245 37,774 Ratio of losses and loss adjustment expenses incurred to premiums earned % 56.7% 55.0% 55.2% 54.8% Underwriting and administrative expenses incurred , , , , ,842 Ratio of underwriting and administrative expenses incurred to premiums written % 36.8% 35.6% 34.5% 34.1% Combined loss and expense ratio % 93.5% 90.6% 89.7% 88.9% 12 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

15 (2) Compulsory Automobile Liability: Years ended March Net premiums written , , , , ,517 Premiums earned , , , , ,149 Losses incurred... 67,257 63,652 62,093 61,532 61,796 Loss ratio % 59.6% 59.4% 59.0% 59.9% Loss adjustment expenses incurred unallocated... 11,067 10,741 10,353 10,549 10,242 Ratio of losses and loss adjustment expenses incurred to premiums earned % 69.7% 69.3% 69.1% 69.8% Underwriting and administrative expenses incurred... 43,705 43,988 40,562 39,227 36,953 Ratio of underwriting and administrative expenses incurred to premiums written % 42.3% 38.3% 36.4% 35.0% Combined loss and expense ratio % 112.0% 107.6% 105.5% 104.8% (3) All Classes: Years ended March Net premiums written... 1,297,984 1,305,138 1,342,960 1,329,580 1,278,573 Premiums earned... 1,281,548 1,312,139 1,312,423 1,286,717 1,241,917 Losses incurred , , , , ,365 Loss ratio % 53.7% 52.1% 52.1% 52.2% Loss adjustment expenses incurred unallocated... 52,762 52,848 53,413 53,794 48,016 Ratio of losses and loss adjustment expenses incurred to premiums earned % 57.8% 56.1% 56.3% 56.1% Underwriting and administrative expenses incurred , , , , ,795 Ratio of underwriting and administrative expenses incurred to premiums written % 37.2% 35.8% 34.6% 34.2% Combined loss and expense ratio % 95.0% 91.9% 90.9% 90.3% These tabulations set forth information with respect to the property and casualty loss and expense ratios of the Company for the last five fiscal years. Loss ratios represent the ratio of losses incurred to premiums earned. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 13

16 Investments % of Total Value Shown % of Total Cost Investments on Balance Sheet Investments March 31, 2000 and Securities available for sale: Fixed maturities: Bonds and notes: Government and government agencies and authorities: United States... 34,243 39, % 0.82% 37,075 41, % 0.65% Other , , , , , , , , States, municipalities and political subdivisions: United States , , Other , , , , , , , , Public utilities... 70,326 96, ,145 97, Convertibles and bonds with warrants attached , , , , All other corporate bonds , , , , Total bonds and notes... 1,888,750 1,661, ,926,558 1,680, Redeemable preferred stock... 50,100 50, ,100 50, Total fixed maturities... 1,938,850 1,711, ,976,658 1,730, Equity securities: Common stocks: Public utilities... 26,797 27, ,019 68, Banks, trust and insurance companies , , , , Industrial, miscellaneous and all other... 1,005, , ,658,332 2,204, Total common stocks... 1,267,440 1,153, ,177,602 2,757, Nonredeemable preferred stocks... 3,863 4, ,701 4, Total equity securities... 1,271,303 1,157, ,181,303 2,762, ,210,153 2,868, ,157,961 4,493, Mortgage loans on real estate , , , , Real estate investment properties ,895 95, ,895 95, Policy loans... 17,454 15, ,454 15, Other long-term investments ,740 1,009, ,740 1,009, Short-term investments , , , , Total investments... 4,831,187 4,775, %100.00% 6,778,995 6,400, %100.00% 14 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

17 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries Consolidated Statements of Income Years ended March 31, 2000, 1999 and 1998, Dollars in thousands, except per share amounts except per share amounts Operating income: Property and casualty: Net premiums written (note 8)... 1,297,984 1,305,138 1,342,960 $12,245,132 Less increase (decrease) in unearned premiums... 16,436 (7,001) 30, ,057 Premiums earned (note 8)... 1,281,548 1,312,139 1,312,423 12,090,075 Life premiums (note 8) ,128 98,817 69,009 1,227,623 Net investment income (note 2)... 78,108 22,215 45, ,868 Realized gains (losses) on investments (note 2)... 26,444 (17,415) 8, ,472 Total operating income... 1,516,228 1,415,756 1,434,854 14,304,038 Operating costs and expenses: Losses, claims and loss adjustment expenses (note 9): Losses and claims incurred and provided for , , ,478 7,009,472 Related adjustment expenses... 52,762 52,848 53, ,754 Total losses, claims and loss adjustment expenses , , ,891 7,507,226 Policy benefits and losses for life ,706 84,046 62,220 1,025,529 Policy acquisition costs , , ,603 3,897,283 Other operating expenses... 75,974 69,503 64, ,736 Total operating costs and expenses... 1,393,558 1,338,282 1,285,586 13,146,774 Income before income tax expense ,670 77, ,268 1,157,264 Income tax expense (note 4): Current... 2,444 63,762 53,133 23,057 Deferred... 36,119 (132,136) (55,298) 340, ,563 (68,374) (2,165) 363,802 Net income... 84, , ,433 $ 793,462 Amounts per American Depositary Share, each representing 5 shares of common stock (note 12): Basic and diluted net income $ Cash dividends declared $ Weighted average and diluted common shares in thousands... 1,549,692 1,549,692 1,549,692 See accompanying notes to consolidated financial statements. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 15

18 See accompanying notes to consolidated financial statements. 16 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries The Tokio Marine and Fire Insurance Company, Limited and subsidiaries Consolidated Balance Sheets March 31, 2000 and 1999 Dollars in thousands Assets Investments other than investments in related parties (note 2): Securities available for sale: Fixed maturities, at market value [amortized cost ,938,850 million ($18,291,037 thousand); ,711,178 million]... 1,976,658 1,730,906 $18,647,717 Equity securities, at market value [cost ,271,303 million ($11,993,422 thousand); ,157,504 million]... 3,181,303 2,762,253 30,012,292 Mortgage loans on real estate , ,231 1,633,189 Investment real estate ,895 95, ,575 Policy loans... 17,454 15, ,660 Other long-term investments ,740 1,009,446 7,931,509 Short-term investments , ,010 4,573,841 Total investments... 6,778,995 6,400,001 63,952,783 Cash and cash equivalents , ,043 1,017,934 Premiums receivable and agents balances , ,206 1,476,028 Reinsurance recoverable on losses (note 8) , ,646 1,720,311 Prepaid reinsurance premiums (note 8) , ,244 1,620,057 Deferred policy acquisition costs , ,410 2,672,217 Property and equipment, net of depreciation (note 3) , ,866 2,123,745 Other assets , ,366 1,562,821 Total assets... 8,071,465 7,676,782 $76,145,896 Liabilities and Stockholders Equity Policy liabilities and accruals: Losses, claims and adjustment expenses (note 9) , ,866 $ 5,862,160 Unearned premiums (note 8)... 1,163,842 1,139,076 10,979,642 Future policy benefits and losses , ,492 2,279,009 Total policy liabilities and accruals... 2,026,806 1,920,434 19,120,811 Investment deposits by policyholders (note 7)... 2,248,045 2,322,169 21,207,972 Income tax liability (note 4) , ,909 6,594,519 Retirement and severance benefits (note 6) , ,847 1,371,519 Ceded reinsurance balances payable... 79,237 78, ,519 Long-term debt (note 5)... 50, ,698 Other liabilities , ,264 1,520,820 Total liabilities... 5,409,695 5,229,069 51,034,858 Stockholders equity: Common stock, 50 par value. Authorized 2,500,000,000 shares; issued and outstanding, 1,549,692,481 shares in 2000 and , , ,217 Other stockholders equity: Additional paid-in capital... 52,917 52, ,217 Retained earnings (notes 11 and 12)... 1,667,928 1,596,993 15,735,170 Accumulated other comprehensive income: Unrealized appreciation of securities , ,685 8,382,321 Foreign currency translation adjustments... (28,311) (12,189) (267,085) Minimum pension liability adjustments (note 6)... (21,285) (25,688) (200,802) Total stockholders equity... 2,661,770 2,447,713 25,111,038 Commitments and contingent liabilities (notes 8 and 10) Total liabilities and stockholders equity... 8,071,465 7,676,782 $76,145,896

19 Dollars in thousands Common stock: Balance at beginning and end of year , , ,995 $ 962,217 Additional paid-in capital: Balance at beginning and end of year... 52,917 52,917 52, ,217 Retained earnings: Legal reserve (note 11): Balance at beginning of year... 30,828 28,163 25, ,830 Transfer from unappropriated retained earnings... 2,665 2,665 2,665 25,142 Balance at end of year... 33,493 30,828 28, ,972 Price fluctuation reserve (note 11): Balance at beginning of year... 7,206 12,619 12,569 67,981 Transfer from (to) unappropriated retained earnings... 12,186 (5,413) ,962 Balance at end of year... 19,392 7,206 12, ,943 Unappropriated retained earnings: Balance at beginning of year... 1,558,959 1,423,535 1,287,988 14,707,160 Net income for year... 84, , , ,462 Dividends paid (note 12)... (13,172) (13,172) (13,171) (124,263) Transfer to legal reserve (note 11)... (2,665) (2,665) (2,665) (25,142) Transfer from (to) price fluctuation reserve (note 11)... (12,186) 5,413 (50) (114,962) Balance at end of year... 1,615,043 1,558,959 1,423,535 15,236,255 Retained earnings at end of year... 1,667,928 1,596,993 1,464,317 15,735,170 Accumulated other comprehensive income: Unrealized appreciation of securities: Balance at beginning of year , , ,559 6,921,557 Change during year ,841 (30,443) (98,431) 1,460,764 Balance at end of year , , ,128 8,382,321 Foreign currency translation adjustments: Balance at beginning of year... (12,189) (5,179) (20,588) (114,991) Change during year... (16,122) (7,010) 15,409 (152,094) Balance at end of year... (28,311) (12,189) (5,179) (267,085) Minimum pension liability adjustments: Balance at beginning of year... (25,688) (16,133) (13,373) (242,340) Change during year... 4,403 (9,555) (2,760) 41,538 Balance at end of year... (21,285) (25,688) (16,133) (200,802) Total stockholders equity... 2,661,770 2,447,713 2,362,045 $25,111,038 See accompanying notes to consolidated financial statements. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries Consolidated Statements of Stockholders Equity Years ended March 31, 2000, 1999 and 1998 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 17

20 Dollars in thousands Cash flows from operating activities: Net income... 84, , ,433 $ 793,462 Adjustments to reconcile net income to net cash provided by operating activities: Increase (decrease) in losses, claims and loss adjustment expense reserve, net of ceded reinsurance... (14,632) (12,387) 33,948 (138,038) Increase in unearned premiums, net of ceded reinsurance... 21,284 5,228 38, ,792 Increase in future policy benefits for life... 95,083 76,492 58, ,009 Increase (decrease) in liability for income taxes... (29,975) 18,440 (14,954) (282,783) Deferred income taxes... 36,119 (132,136) (55,298) 340,745 Provision for retirement and severance benefits... 23,636 21,661 20, ,981 Payments of retirement and severance benefits... (19,222) (12,068) (14,362) (181,340) Decrease (increase) in premiums receivable and agents balances, net of ceded reinsurance... 8,538 (3,866) (16,769) 80,547 Increase in deferred policy acquisition costs... (23,845) (16,809) (20,456) (224,953) Depreciation... 18,259 19,918 18, ,255 Increase (decrease) in other liabilities... 5,126 (54,261) 62,058 48,358 Deferred (gains) losses on hedging activities... (92,556) 92, (873,170) Other net... (125,592) (8,486) 111,542 (1,184,827) Net cash provided by (used in ) operating activities... (13,670) 139, ,643 (128,962) Cash flows from investing activities: Proceeds from investments sold or matured: Fixed maturities sold , ,110 1,035,701 3,327,047 Fixed maturities redeemed , , ,863 2,138,057 Equity securities ,637 68, ,622 2,279,594 Mortgage loans on real estate... 29,389 32,000 32, ,255 Investment real estate... 11,374 2,017 2, ,302 Policy loans... 20,732 18,766 20, ,585 Other long-term investments , , ,241 3,142,472 Cost of investments purchased: Fixed maturities... (811,863) (1,333,726) (1,360,381) (7,659,085) Equity securities... (302,385) (73,831) (278,466) (2,852,689) Mortgage loans on real estate... (17,872) (19,513) (16,759) (168,604) Investment real estate... (2,719) (974) (2,665) (25,651) Policy loans... (22,360) (19,974) (20,793) (210,943) Other long-term investments... (135,077) (143,596) (489,753) (1,274,311) Short-term investments net ,183 (177,433) (60,398) 1,105,500 Securities and indebtedness of related parties... (662) 54,338 (1,807) (6,245) Additions to property and equipment... (11,007) (25,502) (16,890) (103,841) Net cash provided by (used in) investing activities... 28,773 (115,529) (623,286) 271,443 Cash flows from financing activities: Investment deposits funded by policyholders and yields therefrom , , ,191 3,551,414 Withdrawals of investment deposits by policyholders... (450,574) (448,104) (500,564) (4,250,698) Proceeds from issuance of long-term debt... 50, ,698 Dividends to stockholders... (13,172) (13,172) (13,171) (124,263) Net cash provided by (used in) financing activities... (37,296) (28,773) 36,456 (351,849) Effect of exchange rate changes on cash and cash equivalents Net change in cash and cash equivalents... (22,142) (4,544) (213,019) (208,887) Cash and cash equivalents at beginning of year , , ,606 1,226,821 Cash and cash equivalents at end of year , , ,587 $ 1,017,934 Supplemental information of cash flows: Cash paid during the year for: Interest $ 6,689 Income taxes... 32,419 45,322 68,087 $ 305,840 See accompanying notes to consolidated financial statements. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries Consolidated Statements of Cash Flows Years ended March 31, 2000, 1999 and The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

21 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries Consolidated Statements of Comprehensive Income Years ended March 31, 2000, 1999 and 1998 Dollars in thousands Net income... 84, , ,433 $ 793,462 Other comprehensive income, net of tax: Unrealized appreciation of securities: Unrealized holding gains (losses) ,678 (18,329) (80,861) 2,006,396 Less: reclassification adjustments... (57,837) (12,114) (17,570) (545,632) ,841 (30,443) (98,431) 1,460,764 Foreign currency translation adjustments: Foreign currency translation... (16,122) (6,071) 8,023 (152,094) Less: reclassification adjustments... (939) 7, (16,122) (7,010) 15,409 (152,094) Minimum pension liability adjustments... 4,403 (9,555) (2,760) 41,538 Other comprehensive income ,122 (47,008) (85,782) 1,350,208 Comprehensive income ,229 98,840 65,651 $2,143,670 See accompanying notes to consolidated financial statements. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 19

22 Notes to Consolidated Financial Statements March 31, 2000, 1999 and BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Presentation The Tokio Marine and Fire Insurance Company, Limited ( Tokio Marine ), incorporated in Japan, is a property and casualty insurer which writes marine, fire and casualty, automobile and allied lines of insurance principally covering risks located in Japan and hull and cargo risks for Japanese business. The financial statements presented herein are accordingly expressed in yen and, solely for the convenience of readers, have been translated into United States dollars at the rate of 106=U.S.$1, the approximate exchange rate prevailing on the Tokyo foreign exchange market as of March 31, This translation should not be construed as a representation that all the amounts shown could be converted into U.S. dollars at the rate shown. The consolidated financial statements of Tokio Marine and its subsidiaries (collectively referred to as the Company ) are presented herein in accordance with United States generally accepted accounting principles, which differ in certain respects from Japanese accounting principles. In the financial statements prepared in conformity with Japanese accounting principles, Tokio Marine reported net income of 30,614 million ($288,811 thousand) in 2000, 31,964 million in 1999 and 33,763 million in 1998, and stockholders equity of 815,482 million ($7,693,226 thousand) at March 31, 2000 and 678,823 million at March 31, Certain reclassifications have been made to prior years amounts to conform to the 2000 presentation. (b) Principles of Consolidation The accompanying consolidated financial statements include all significant majority-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Other subsidiaries and affiliates, which are not significant, are accounted for primarily by the equity method. At March 31, 2000 and 1999, investments in related parties which were presented as other assets amounted to 21,118 million ($199,226 thousand) and 20,456 million, respectively. The amounts of statutory net income (loss) for the years ended March 31, 2000, 1999 and 1998 and stockholders equity at March 31, 2000 and 1999 of the consolidated insurance subsidiaries were as follows: Dollars in thousands Statutory net income (loss): Property and casualty... 1,970 3,240 1,615 $ 18,585 Life... (324) (2,150) (1,491) (3,057) Statutory stockholders equity: Property and casualty... 20,128 23, ,887 Life... 26,490 25, ,906 (c) Use of Estimates The management of the Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with generally accepted accounting principles. Actual results could differ from these estimates. (d) Investments-Other than Investments in Related Parties Fixed maturities (principally bonds), which are all available for sale, are stated at market value. When a quoted market value is not available, quoted market values for similar securities are used instead. Equity securities comprise common and nonredeemable preferred stocks. Stocks listed on Japanese or foreign stock exchanges, representing approximately 94% and 97% of the investment in stocks at March 31, 2000 and 1999, respectively, are stated at quoted market values. Unlisted stocks are stated at cost except when a company s financial condition has deteriorated or there is a decline in value that is other than temporary. In those cases, the carrying value of stock of such company is adjusted downward to an estimated fair value on the basis of the latest financial information available to the Company or fair value information for similar companies. The cost of securities sold is determined on the moving-average basis. A loan is considered impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Mortgage loans on real estate and loans which are included in other long-term investments are principally carried at the unpaid balance of the principal amount. For impaired loans, a valuation allowance is established for the difference between the recorded investment in the loan and either the present value of expected future cash flows discounted at the loan s effective interest rate or the fair value of collateral if the loan is collateral dependent. Interest income on impaired loans is recognized as cash is received. 20 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

23 Policy loans are carried at cost. Gains and losses on the sale of investments are included in realized gains and losses in the consolidated statements of income. Unrealized appreciation or depreciation, net of taxes, in the value of securities available for sale is accounted for as other comprehensive income. Derivative financial instruments are used for asset and liability management. Foreign exchange, interest rate and equity index contracts are accounted for in a manner consistent with the accounting treatments appropriate for the assets hedged by such contracts. (e) Investment Real Estate, Property and Equipment Investment real estate, property and equipment are stated at cost less accumulated depreciation on buildings and furniture and fixtures. Depreciation is computed principally by the declining-balance method based on estimated useful lives. The estimated useful lives of buildings and equipment range as follows: Reinforced concrete... Brick and block... Wood... Wood and mortar... Building equipment... Furniture and fixtures to 50 years 41 years 24 years 22 years 3 to 18 years 2 to 15 years Maintenance and repairs are charged against income as incurred. Betterments are capitalized to property and equipment. The cost and accumulated depreciation with respect to assets retired or otherwise disposed of are eliminated from the asset and related accumulated depreciation accounts. Any resulting profit or loss is credited or charged to income. (f) Cash Equivalents Cash equivalents include cash deposited in demand deposits at banks. (g) Accounts with Foreign Agents The amounts included in the consolidated balance sheets at March 31, 2000 and 1999 with respect to foreign agents of the Company represent data as of December 31, 1999 and 1998, respectively. The consolidated statements of income likewise include amounts for the corresponding periods ended on those dates. (h) Premium Revenues Property and casualty insurance premiums are recognized as earned on a pro rata basis over the terms of the policies. Unearned premiums represent the portion of premiums written relating to the unexpired terms of coverage. Life premiums are generally recorded as premium revenues over the premium paying periods of the related policies. For short duration contracts, premiums are recognized over the period to which the premiums relate on a pro rata basis. (i) Policy Acquisition Costs Costs that vary with and are primarily related to the acquisition of insurance policies are capitalized and charged to expense in proportion to premium revenue recognized. Other costs incurred during the period, such as those relating to policy maintenance, are charged to expense as incurred. Details of policy acquisition costs are as follows: Dollars in thousands Property and casualty: Deferred at beginning of year , , ,457 $2,134,330 Incurred during year: Commissions and brokerage , , ,711 2,028,528 Salaries and other compensation , , ,558 1,094,717 Other underwriting costs... 78,993 85,858 86, , , , ,130 3,868, , , ,587 6,002,792 Deferred at end of year , , ,310 2,167,217 Policy acquisition costs , , ,277 $3,835,575 Life: Deferred at beginning of year... 33,171 18,291 5,688 $ 312,934 Incurred during year... 26,900 20,649 14, ,774 Deferred at end of year... 53,530 33,171 18, ,000 Policy acquisition costs... 6,541 5,769 2,326 $ 61,708 Total policy acquisition costs , , ,603 $3,897,283 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 21

24 (j) Losses, Claims and Loss Adjustment Expenses The net liabilities stated for reported and estimated property and casualty losses and claims and for related adjustment expenses are based upon the accumulation of (1) case estimates for losses and related adjustment expenses reported prior to the close of the accounting period on the direct business written by the Company and (2) estimates received from ceding reinsurers. The loss adjustment expenses represent administrative expenses in connection with settling or disposing of claims, which include out-of-pocket expenses as well as allocated personnel cost. Provision has been made for unreported losses and for adjustment expenses not identified with specific claims based upon past experience. The Company believes that the provisions for unpaid losses and adjustment expenses at March 31, 2000 and 1999 are adequate to cover the ultimate net cost of losses and claims incurred to those dates. However, the provisions are necessarily based on estimates and the management makes no representation that the ultimate liability may not exceed or fall short of such estimates. (k) Future Policy Benefits and Losses Future policy benefits and losses include provisions for future policy benefits for life contracts and for unpaid life policy claims. The liabilities for future policy benefits are computed by a net level premium method using estimated future investment yields, withdrawals and recognized morbidity and mortality tables. Unpaid policy claims are the estimated liability for reported and unreported losses on life policies on an undiscounted basis. The Company believes that the estimated provisions for future policy benefits and for losses at March 31, 2000 and 1999 are adequate to cover the life insurance liability. However, the ultimate liability may vary from such estimates. (l) Compulsory Automobile Liability Insurance Japanese law provides that all automobiles are to be covered by specified amounts of liability insurance for personal injury and that insurance companies are to accept such coverage on a non-profit basis. In compliance with this law, which came into effect on April 1, 1966, the Company has not reflected any profit or loss from underwriting such compulsory automobile liability insurance in financial statements prepared for distribution to stockholders under the Japanese Commercial Code. In these consolidated financial statements, which are presented in accordance with United States generally accepted accounting principles, losses, net of income taxes, from underwriting compulsory automobile liability insurance amounting to 9,636 million ($90,906 thousand) in 2000, 7,420 million in 1999 and 4,902million in 1998 have been charged to income. Accumulated losses since April 1, 1966 amount to approximately 49,616 million ($468,075 thousand). (m) Foreign Currency Translation Assets and liabilities of the subsidiaries located outside Japan are translated into Japanese yen at the rates of exchange in effect at the balance sheet date. Income and expense items of the subsidiaries are translated at average exchange rates prevailing during the year. Gains and losses resulting from translation of financial statements are excluded from the consolidated statements of income and are accumulated as foreign currency translation adjustments in stockholders equity. Losses resulting from foreign currency transactions in the amount of 10,549 million ($99,519 thousand) in 2000, 6,412 million in 1999 and 6,067 million in 1998 are included in operating income, costs and expenses. (n) Foreign Exchange Contracts The Company enters into foreign exchange agreements for hedging currency exposures resulting mainly from fixed maturity investments denominated in foreign currencies. These agreements include foreign currency forward contracts, currency swap agreements and currency options agreements. Gains or losses on these agreements are recognized in the same period in which gains or losses from the transaction being hedged are recognized. (o) Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of Long-lived assets and certain identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the amount of impairment to be recognized is the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. 22 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

25 (p) New Accounting Standards In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No.133, Accounting for Derivative Instruments and Hedging Activities. SFAS No.133 establishes accounting and reporting standards for derivative instruments embedded in other contracts, and for hedging activities. SFAS No.133 requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. Additionally, the fair value adjustments will impact either net income or stockholders equity depending on whether the derivative instrument qualifies as a hedge and the nature of the hedging activity. In June 2000, FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of SFAS No SFAS No. 138 addresses a limited number of issues causing implementation difficulties for numerous entities that apply SFAS No. 133 and amends the accounting and reporting standards of SFAS No. 133 for certain derivative instruments and certain hedging activities. As permitted by SFAS No.137, Deferral of the Effective Date of FASB Statement No.133, issued in June 1999, to defer their effective date to all fiscal years beginning after June 15, 2000, the Company will adopt SFAS No.133 and No.138 for the year ending March 31, The Company has not yet determined the impact that SFAS No. 133 and No. 138 will have on the Company s results of operations and financial position. 2. INVESTMENTS The following summarizes the Company s investments in fixed maturities available for sale at March 31, 2000 and 1999: Gross Gross Amortized unrealized unrealized Estimated cost gains losses market value 2000: Bonds and notes: U.S. government and government agencies and authorities... 34,243 2,938 (106) 37,075 U.S. states, municipalities and political subdivisions Other government and government agencies and authorities ,060 19,555 (1,326) 623,289 Other municipalities and political subdivisions , (14) 335,145 Public utilities... 70, ,145 Convertibles and bonds with warrants attached ,691 12, ,559 Other corporate bonds ,846 2,853 (192) 761,507 Total fixed maturities available for sale... 1,938,850 39,446 (1,638) 1,976,658 Gross Gross Amortized unrealized unrealized Estimated cost gains losses market value 1999: Bonds and notes: U.S. government and government agencies and authorities... 39,349 2,726 (474) 41,601 U.S. states, municipalities and political subdivisions.. 1,461 1,461 Other government and government agencies and authorities ,651 7,365 (3,415) 402,601 Other municipalities and political subdivisions , ,229 Public utilities... 96,395 1,424 (2) 97,817 Convertibles and bonds with warrants attached ,259 11, ,362 Other corporate bonds , (256) 658,835 Total fixed maturities available for sale... 1,711,178 23,875 (4,147) 1,730,906 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 23

26 Dollars in thousands Gross Gross Amortized unrealized unrealized Estimated cost gains losses market value 2000: Bonds and notes: U.S. government and government agencies and authorities... $ 323,047 $ 27,717 $ (1,000) $ 349,764 U.S. states, municipalities and political subdivisions.. 8,849 8,849 Other government and government agencies and authorities... 5,708, ,481 (12,509) 5,880,085 Other municipalities and political subdivisions... 3,157,981 3,896 (132) 3,161,745 Public utilities ,453 7, ,179 Convertibles and bonds with warrants attached... 1,270, ,396 1,392,066 Other corporate bonds... 7,158,924 26,916 (1,811) 7,184,029 Total fixed maturities available for sale... $18,291,037 $372,132 $(15,452) $18,647,717 The following table summarizes investments in fixed maturities available for sale at March 31, 2000, by contractual maturity: Dollars in thousands Amortized Estimated Amortized Estimated cost market value cost market value Due in one year or less , ,449 $ 1,931,434 $ 1,938,198 Due after one year through five years , ,018 7,630,208 7,783,189 Due after five years through 10 years , ,846 4,104,933 4,121,189 Due after 10 years , ,345 4,624,462 4,805, ,938,850 1,976,658 $18,291,037 $18,647,717 Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Proceeds from sales of investments in fixed maturities prior to their scheduled maturity dates were 352,667 million ($3,327,047 thousand), 888,110 million and 1,041,091 million for the years ended March 31, 2000, 1999 and 1998, respectively. Gross gains of 11,560 million ($109,057 thousand) and gross losses of 9,086 million ($85,717 thousand) in 2000, gross gains of 32,025 million and gross losses of 21,565 million in 1999, and gross gains of 25,316million and gross losses of 19,926 million in 1998 were realized on those sales. Bonds carried at 79,399 million ($749,047 thousand) at March 31, 2000 and 81,842 million at March 31, 1999, and stocks carried at 5,824 million ($54,943 thousand) at March 31, 2000 and 5,824 million at March 31, 1999 were deposited primarily with United States and other foreign government authorities as required by law. Bonds carried at 11,716 million at March 31, 1999 and stocks carried at 115,694 million ($1,091,453 thousand) at March 31, 2000 and 96,580 million at March 31, 1999 were deposited with securities brokers primarily as a collateral for futures transactions entered into by the Company. Proceeds from sales of investments in equity securities were 241,637 million ($2,279,594 thousand), 68,502 million and 178,622 million for the years ended March 31, 2000, 1999 and 1998, respectively. Gross gains of 80,489 million ($759,330 thousand) and gross losses of 20,658 million ($194,887 thousand) in 2000, gross gains of 22,818 million and gross losses of 15,914 million in 1999, and gross gains of 84,651 million and gross losses of 44,596 million in 1998 were realized on those sales. Mortgage loans on real estate are primarily mortgage loans on commercial buildings. Accumulated depreciation of investment real estate amounted to 76,102 million ($717,943 thousand) and 67,875 million at March 31, 2000 and 1999, respectively. Policy loans are made to policyholders of long-term insurance with refund at maturity, such as long-term comprehensive insurance and long-term family personal traffic accident insurance, etc. The maximum amount of loans is limited to 90% of return premiums on the policies. Other long-term investments include: Dollars in thousands Mortgage loans on vessels and facilities... 35,041 36,878 $ 330,575 Collateral and bank-guaranteed loans... 41,622 40, ,660 Unsecured loans , ,017 5,471,415 Money trust , ,406 1,736, ,740 1,009,446 $7,931,509 Mortgage loans on vessels and facilities are generally joint loans in which other financial institutions participate. The Company participates in the hull insurance on these vessels. Collateral loans are made to commercial enterprises and are secured principally by listed stocks and/or bonds of Japanese corporations. Certain of these loans are made jointly with other insurance companies. Bank-guaranteed loans are made to commercial enterprises. Unsecured loans within authorized limits are made on a selective basis to corporate borrowers. The loans mature through 2045 and have interest rates varying from 0.1% to 9.0% in 2000 and 0.3% to 9.0% in The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

27 Money trust is a type of portfolio investment in which trust banks are entrusted with investments in securities or other financial instruments. Short-term investments consisted primarily of call loans and other investments maturing within one year. Details of net investment income are as follows: Dollars in thousands Fixed Equity Other Net gains maturities securities investments (losses) 2000: Realized... $ 9,698 $ 141,491 $98,283 $ 249,472 Change in unrealized ,576 2,879,726 3,050,302 Total... $180,274 $3,021,217 $98,283 $3,299,774 Dollars in thousands Fixed maturities... 34,762 37,780 34,671 $327,943 Equity securities... 14,157 13,224 13, ,557 Mortgage loans on real estate... 2,699 2,963 3,000 25,462 Investment real estate... 7,803 7,852 7,484 73,613 Policy loans ,896 Other long-term investments... 13,356 16,043 13, ,000 Short-term investments... 3,010 5,370 5,081 28,396 Call loans Other loans and investments... 18,756 9,725 2, ,944 Total investment income.. 94,957 94,101 80, ,820 Less investment expenses... 16,849 71,886 35, ,952 Securities available for sale are carried in the financial statements at market value. Changes in unrealized gains and losses, net of taxes, on securities available for sale shown above are included as other comprehensive income. The Company s investments in Toyota Motor Corporation amounting to 411,937 million ($3,886,198 thousand) and 262,473 million at March 31, 2000 and 1999, respectively, and those in The Bank of Tokyo-Mitsubishi, Ltd. at March 31, 1999 aggregating 276,190 million exceeded 10% of stockholders equity. The following summarizes the Company s recorded investment in impaired loans, all of which had valuation allowances, and the valuation allowances at March 31, 2000 and 1999: Net investment income... 78,108 22,215 45,014 $736,868 At March 31, 2000 and 1999, accrued investment income, included in other assets, amounted to 14,366 million ($135,528 thousand) and 19,546 million, respectively. With respect to marketable equity securities, gross unrealized gains were 2,015,431 million ($19,013,500 thousand) and gross unrealized losses were 105,431 million ($994,632 thousand) at March 31, 2000, and gross unrealized gains were 1,699,718 million and gross unrealized losses were 94,969 million at March 31, Net realized and change in unrealized gains and losses on fixed maturities, equity securities and other investments for the years ended March 31,2000, 1999 and 1998 were as follows: Dollars in thousands Total Total recorded Valuation recorded Valuation investment allowances investment allowances 2000: Mortgage loans on real estate... 21,571 3,829 $203,500 $ 36,123 Unsecured loans... 50,455 14, , , ,026 17,959 $679,491 $169, : Mortgage loans on real estate... 17,783 4,232 Collateral and bankguaranteed loans... 1,470 1,470 Unsecured loans... 64,055 41, ,308 47,682 Fixed Equity Other Net gains maturities securities investments (losses) 2000: Realized... 1,028 14,998 10,418 26,444 Change in unrealized... 18, , ,332 Total... 19, ,249 10, , : Realized... (12,425) 631 (5,621) (17,415) Change in unrealized... (63,944) (56,528) (120,472) Total... (76,369) (55,897) (5,621) (137,887) 1998: Realized... (434) 16,368 (7,526) 8,408 Change in unrealized... 50,787 (221,251) (170,464) Total... 50,353 (204,883) (7,526) (162,056) The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 25

28 The Company revised review procedures to more comprehensive approaches for determination of impaired loans and valuation allowances at March 31, In this connection, certain modifications, which had no effect on the results of operations, were made to the amounts shown in the previous years financial statements to conform to the manner of presentation applied at March 31, The activity in the valuation allowances for the years ended March 31, 2000, 1999 and 1998 is presented as follows: Dollars in thousands Balance at beginning of year... 47,682 53,748 39,257 $ 449,830 Charges to income... 5,433 (5,187) 15,440 51,255 Principal charge-offs... (35,156) (879) (949) (331,660) Balance at end of year... 17,959 47,682 53,748 $ 169,425 During the years ended March 31, 2000, 1999 and 1998, the average recorded investment in impaired loans amounted to 77,667 million ($732,707 thousand), 85,152 million and 68,139 million, respectively, and interest income recognized and received in cash on those loans amounted to 1,147 million ($10,821 thousand), 963 million and 949 million, respectively. At March 31, 2000 and 1999, the carrying value of loans that were non-income producing during the preceding twelve months amounted to 13,529 million ($127,632 thousand) and 31,801 million, respectively. In addition to the allowances described above, reflecting the sluggish Japanese economy, the Company had allowances for loans amounting to 20,260 million ($191,132 thousand) and 23,385 million at March 31, 2000 and 1999, respectively, because there were certain rates of latent impairment among those loans with no specific loss information based on our experience during the past few years. The costs for these allowances were charged to income as investment expenses for the respective years. 3. PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: Dollars in thousands Land... 99, ,244 $ 936,330 Buildings , ,638 2,234,698 Furniture and equipment... 43,454 42, ,943 Construction in progress... 1,304 1,196 12,302 Total at cost , ,987 3,593,273 Less accumulated depreciation , ,121 1,469,528 Net property and equipment , ,866 $2,123, INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Total income taxes for the years ended March 31, 2000, 1999 and 1998 were allocated as follows: Dollars in thousands Income before taxes... 38,563 (68,374) (2,165) $ 363,802 Other comprehensive income: Stockholders equity, for unrealized appreciation (depreciation) of securities during the year... 87,489 (24,195) (69,225) 825,368 Minimum pension liability adjustments... 2,477 (6,195) (941) 23, ,529 (98,764) (72,331) $1,212,538 The Company is subject to a number of taxes based on income, which in the aggregate resulted in a normal tax rate of approximately 36% in 2000, 42% in 1999 and 45% in 1998, respectively. 26 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

29 Due to the changes in Japanese income tax regulations, the normal income tax rate was reduced in fiscal 1998 from approximately 45% to approximately 42% effective on April 1, 1998 and was further reduced in fiscal 1999 to approximately 36% effective on April 1, The effective tax rates of the Company for the years ended March 31, 2000, 1999 and 1998 differ from the Japanese normal income tax rates for the following reasons: Japanese normal income tax rate % 42.0% 45.0% Tax credit for dividends received... (4.6) (8.7) (5.3) Expenses not deductible for tax purposes Adjustments to deferred tax assets and liabilities for enacted changes in laws and rates... (132.1) (38.3) Change in normal income tax rate attributable to deferred gains on hedging Other... (1.4) 1.4 (4.5) Effective tax rate % (88.3)% (1.5)% The effect of adjustments of deferred tax assets and liabilities in response to the above-mentioned change in enacted income tax rates in 1999 and 1998 amounted to 102,258 million and 57,221 million, respectively. Most of them resulted from remeasurement of deferred income taxes applicable to unrealized appreciation of securities at beginning of year and those in 1999 and 1998 amounted to 101,365 million and 57,461 million, respectively. The significant components of deferred income tax expense (benefit) for the years ended March 31, 2000, 1999 and 1998 are as follows: Dollars in thousands Deferred tax expense (benefit) (exclusive of the effects of other components below)... 36,119 (29,878) 1,923 $340,745 Adjustments to deferred tax assets and liabilities for enacted changes in laws and rates... (102,258) (57,221)... 36,119 (132,136) (55,298) $340,745 The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at March 31, 2000 and 1999 are presented below: Dollars in thousands Deferred tax assets: Unpaid and unreported losses... 62,282 65,355 $ 587,566 Retirement and severance benefit... 25,870 23, ,057 Reserve for compulsory automobile liability insurance... 17,457 12, ,689 Minimum pension liability adjustments... 13,280 15, ,283 Other... 45,704 77, ,169 Total deferred tax assets , ,751 1,552,764 Deferred tax liabilities: Tax deductible reserves... (7,296) (12,799) (68,830) Deferred policy acquisition costs... (101,980) (92,810) (962,075) Other... (54,578) (49,632) (514,887) Total deferred tax liabilities... (163,854) (155,241) (1,545,792) Net deferred tax assets before deferred taxes on unrealized appreciation of securities ,510 6,972 Deferred taxes on unrealized appreciation of securities... (697,026) (609,712) (6,575,717) Net deferred tax liabilities... (696,287) (570,202) (6,568,745) Income taxes currently payable... (2,732) (32,707) (25,774) Income tax liability... (699,019) (602,909) $(6,594,519) At March 31, 2000, the Company had income taxes refundable in the amount of 33,694 million, which were included in other assets. The Company has not provided a valuation allowance for the deferred tax assets at March 31, 2000 and The management believes that it is more likely than not that the Company will realize the benefit of the deferred tax assets. While there are no assurances that this benefit will be realized, the Company expects sufficient taxable income in the future based on its historical record and expected annual taxable savings related to expense reductions. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 27

30 5. LONG-TERM DEBT In December 1999, the Company issued a 1.96% fixed rate straight bond of 50,000 million ($471,698 thousand) due on December 2, 2009, the proceeds of which were used for general corporate purposes. 6. RETIREMENT AND SEVERANCE BENEFITS Employees of Tokio Marine and certain of its subsidiaries are covered by the defined retirement and severance benefit plans described below. These companies have an unfunded lump-sum payment retirement plan covering substantially all employees. Under the plan, employees are entitled to lump-sum payments based on current rate of pay, length of service and certain other factors upon retirement or termination of employment for reasons other than dismissal for cause. Directors and statutory auditors are covered by a separate plan. It is not the policy of management to fund the retirement and severance benefits described above. Tokio Marine has a funded pension plan covering substantially all employees who meet age and service requirements. The plan covers a portion of the welfare pension plan administered by the Japanese government. In accordance with SFAS No. 87, Employers Accounting for Pensions, the net periodic benefit costs of the funded pension plan in 2000, 1999 and 1998 were calculated using the unit credit actuarial cost method. Reconciliations of beginning and ending balances of the benefit obligations and the fair value of the plan assets are as follows: Dollars in thousands Change in benefit obligation: Benefit obligation at beginning of year , ,645 $ 2,761,491 Service cost... 14,380 13, ,660 Interest cost... 8,635 8,999 81,462 Plan participants contributions... 2,060 2,049 19,434 Actuarial loss... 1,815 19,780 17,123 Benefits paid... (9,234) (9,331) (87,113) Benefit obligation at end of year , ,718 $ 2,928,057 Change in plan assets: Fair value of plan assets at beginning of year , ,411 $ 1,047,585 Actual return on plan assets... 7,000 3,847 66,038 Employer contributions... 13,293 5, ,406 Plan participants contributions... 2,060 2,049 19,434 Benefits paid... (3,305) (3,158) (31,179) Fair value of plan assets at end of year , ,044 $ 1,227,284 Funded status... (180,282) (181,674) $(1,700,774) Unrecognized actuarial loss... 75,525 81, ,500 Unrecognized prior service cost... (3,736) (3,799) (35,245) Net amount recognized... (108,493) (104,080) $(1,023,519) Amounts recognized in the statement of financial position consist of: Accrued benefit liability... (145,381) (147,847) $(1,371,519) Accumulated other comprehensive income... 36,888 43, ,000 Net amount recognized... (108,493) (104,080) $(1,023,519) Significant actuarial assumptions: Discount rate % 3.0% Rate of salary increase % 1.5% Expected long-term return on plan assets % 3.7% The components of net periodic benefit cost for the years ended March 31, 2000, 1999 and 1998 are as follows: Dollars in thousands Components of net periodic benefit cost: Service cost... 14,380 13,576 12,143 $135,660 Interest cost... 8,635 8,999 9,344 81,462 Expected return on plan assets... (3,091) (3,814) (3,789) (29,160) Amortization of prior service cost... (62) (62) 879 (585) Recognized actuarial loss. 3,774 2,962 2,149 35,604 Net periodic benefit cost... 23,636 21,661 20,726 $222, The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

31 7. INVESTMENT DEPOSITS BY POLICYHOLDERS Under the long-term insurance coverage offered by the Company, such as long-term comprehensive insurance and long-term family personal traffic accident insurance, etc., specified amounts must be returned to the policyholders upon expiration of the policy period unless there has been a substantial settlement under the policy. Policies are issued for periods of three to sixty four years. The Company has provided for such refundable amounts by classifying a portion of the net premiums written on these policies, together with investment income therefrom, as investment deposits by policyholders. 8. REINSURANCE In the ordinary course of business, the Company cedes risks to other insurers and reinsurers. Reinsurance enables the Company to reduce its exposure to large losses in all aspects of its insurance business, although it does not relieve the Company of its obligations as direct insurer of the risks reinsured. Prepaid reinsurance premiums represent the portion of premiums ceded to reinsurers applicable to the unexpired terms of the reinsurance contracts in force. Reinsurance recoverable on losses represents estimates of amount that will be recovered from reinsurers on reported and unreported losses and claims and loss adjustment expenses. The Company is exposed to contingent liability with respect to reinsurance which would become an actual liability to the extent that any reinsurer failed to meet its obligations to the Company. Because of the large amount of funds held by the Company under reinsurance treaties and the Company s favorable historical results with the reinsurers involved, no material amounts are considered uncollectible and no provision has been made for this remote contingency. The effect of ceded reinsurance on the consolidated statements of income for the years ended March 31, 2000, 1999 and 1998 is as follows: Dollars in thousands Property and casualty: Premiums written: Direct... 1,431,192 1,429,770 1,470,789 $13,501,811 Assumed... 97, , , ,850 Ceded... (230,394) (228,326) (254,185) (2,173,529) Net premiums written... 1,297,984 1,305,138 1,342,960 $12,245,132 Premiums earned: Direct... 1,413,126 1,462,145 1,427,344 $13,331,377 Assumed... 95, , , ,566 Ceded... (227,356) (256,117) (237,518) (2,144,868) Premiums earned... 1,281,548 1,312,139 1,312,423 $12,090,075 Losses, claims incurred: Direct , , ,924 $ 8,006,264 Assumed... 97, , , ,934 Ceded... (202,855) (208,060) (195,487) (1,913,726) Losses, claims incurred , , ,478 $ 7,009,472 Life: Premiums earned: Direct ,182 98,870 69,019 $ 1,228,132 Assumed... 2 Ceded... (54) (55) (10) (509) Premiums earned ,128 98,817 69,009 $ 1,227,623 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 29

32 9. LIABILITY FOR UNPAID LOSSES AND CLAIMS AND LOSS ADJUSTMENT EXPENSES Activity in the liability for unpaid losses and claims and loss adjustment expenses for the years ended March 31, 2000, 1999 and 1998 is summarized as follows: Dollars in thousands Balance at beginning of year , , ,850 $5,989,302 Less reinsurance recoverables... 97,572 97,837 97, ,491 Net balance at beginning of year , , ,733 5,068,811 Incurred related to: Current year , , ,836 7,057,424 Prior years... 47,679 46,141 31, ,802 Total incurred , , ,891 7,507,226 Paid related to: Current year , , ,449 4,783,877 Prior years , , ,494 2,861,387 Total paid , , ,943 7,645,264 Net balance at end of year , , ,681 4,930,773 Plus reinsurance recoverables... 98,727 97,572 97, ,387 Balance at end of year , , ,518 $5,862, APPROPRIATED RETAINED EARNINGS (a) Legal Reserve The Insurance Business Law stipulates that an amount equal to at least 20% of appropriations of retained earnings paid in cash be appropriated as a legal reserve until such reserve equals stated capital. This reserve is not available for dividends but may be used to reduce a deficit or may be transferred to stated capital. (b) Price Fluctuation Reserve In accordance with the provisions of the Insurance Business Law, the Company shall provide price fluctuation reserve, which is determined based on the balances of certain categories of assets, primarily fixed maturities and equity securities, at each year end and the reserve rates according to asset category. This reserve is not available for dividends but may be used to offset the realized and unrealized losses arising from the assets subject to this reserve in excess of the realized gains arising from such assets or may be reversed subject to the approval of the Financial Reconstruction Commission. Besides the amounts referred to above, reinsurance recoverables included invoiced recoveries from reinsurers in the amount of 83,626 million ($788,925 thousand) and 78,074 million at March 31, 2000 and 1999, respectively. 10. COMMITMENTS AND CONTINGENT LIABILITIES At March 31, 2000, commitments outstanding for the purchase of property and equipment approximated 5,331 million ($50,292 thousand). The Company occupies certain offices and other facilities and uses certain equipment under cancelable lease arrangements. Rental expenses for the years ended March 31, 2000, 1999 and 1998, aggregated 18,682 million ($176,245 thousand), 18,905 million and 18,040 million, respectively. With having experienced no claims, the Company had guarantees outstanding relating to the financial transactions including asset backed securities amounted to 126,568 million ($1,194,038 thousand) and 33,299 million at March 31, 2000 and 1999, respectively. 30 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

33 12. UNAPPROPRIATED RETAINED EARNINGS, DIVIDENDS AND EARNINGS PER SHARE Pursuant to the provisions of the Japanese Commercial Code, unappropriated retained earnings at March 31, 2000, which were unrestricted as to payment of dividends, amounted to 641,213 million ($6,049,179 thousand). Of this amount, 263,770 million ($2,488,396 thousand) has been restricted by action of the stockholders to provide principally for extraordinary losses. Cash dividends charged to unappropriated retained earnings represent dividends paid. Provision has not been made in the accompanying consolidated balance sheet as of March 31, 2000 for dividends subsequently proposed to stockholders by the Board of Directors in the aggregate amount of 13,172 million ($124,264 thousand). 13. RISK MANAGEMENT ACTIVITIES AND DERIVATIVE FINANCIAL INSTRUMENTS The Company utilizes derivative financial instruments with off-balance-sheet risk in the normal course of business to reduce its exposure to fluctuations in foreign exchange rates, interest rates and market values in its equity portfolio. Those instruments involve, in varying degrees, elements of credit, exchange rate, interest rate and equity fluctuation risk. The Company has limited involvement with derivative financial instruments and does not use them for trading purposes. Amounts to be received or paid attributable to foreign exchange, interest rate and equity index contracts are included in the measurement of the carrying amount of underlying assets and are credited or charged to operations as the related gains and losses on underlying assets realize. Foreign exchange contracts are agreements to exchange different currencies at a specific future date. The total amount of the foreign exchange contracts outstanding at March 31, 2000 were 16,771 million ($158,217 thousand) to purchase and 240,854 million ($2,272,208 thousand) to sell foreign currencies, and at March 31, 1999 were 74,204 million to purchase and 375,652 million to sell foreign currencies. For foreign exchange forwards and futures, currency swaps and currency options contracts, the gross aggregate unrealized gains based on current market values were 9,456 million ($89,208 thousand) at March 31, 2000 and the gross aggregate unrealized losses were 325 million ($3,066 thousand) at March 31, 2000 and 9,510 million at March 31, The Company has entered into interest rate swap agreements to manage interest rate exposure. Interest rate swap agreements generally involve the exchange of fixed and floating rate interest exposures without the exchange of the underlying principal. At March 31, 2000 and 1999, the Company had outstanding interest rate swap agreements having an aggregate notional amount of 3,523,100 million ($33,236,792 thousand) and 2,901,100 million, respectively. Under those interest rate swap agreements, floating rate exposure was converted into fixed rate exposure in weighted average fixed rates of approximately 0.6% both at March 31, 2000 and 1999, and floating rate exposure in various interest rates and fixed rate exposure, with weighted average fixed rates of approximately 1.2% and 1.8% at March 31, 2000 and 1999, respectively, were converted into floating rate exposure that was generally based on the three-month or six-month LIBOR (London Interbank Offered Rate), or the long-term prime rate. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 31

34 In addition to interest rate swap agreements, the Company entered into interest rate swaption agreements to further strengthen the asset and liability management. The Company had outstanding interest rate swaption agreements having an aggregate notional amount of 26,000 million ($245,283 thousand) and 112,000 million at March 31, 2000 and 1999, respectively. The Company has terminated interest rate swap agreements only in situations in which it has disposed of the financial instruments to which the swaps were matched. In these instances, the Company has recognized gain or loss on the termination of the swap agreements concurrently with the recognition of loss or gain on the disposition of the financial instruments to which they were matched. The Company has entered into equity index futures contracts to manage market risk of its equity portfolio principally comprising domestic listed stocks. The total amount of the equity index futures contracts outstanding at March 31, 2000 were 10,391 million ($98,028 thousand) to purchase, and 530,997 million ($5,009,406 thousand) to sell equity index futures, and at March 31, 1999 were 399,107 million to sell equity index futures. The Company entered into bond futures contracts to manage market risk of its bond portfolio. At March 31, 2000 and 1999, the Company had outstanding notional amount of 34,781 million ($328,123 thousand) to sell and 21,931 million to purchase bond futures, respectively. The Company manages its investments to limit credit risks by diversifying its portfolio among various investment types and industry sectors. The credit risk of financial instruments is controlled through credit approvals, limits and monitoring procedures. The management believes that significant concentrations of credit risk do not exist. 14. FAIR VALUES OF FINANCIAL INSTRUMENTS SFAS No.107, Disclosures about Fair Value of Financial Instruments, requires disclosure of estimated fair value for all financial instruments. The following methods and assumptions were used by the Company in estimating the fair values of its financial instruments: Cash and cash equivalents, accrued investment income (included in other assets), premiums receivable and agents balances, reinsurance recoverable on losses and ceded reinsurance balances payable The carrying amounts approximate fair values due to the short maturity of these instruments. Fixed maturities and equity securities The carrying amounts and fair values (market values) of the fixed maturities and equity securities are disclosed in note 2. Policy loans The carrying amounts of floating-rate policy loans approximate their fair values as the interest rates charged on those instruments are designed so that they periodically adjust to reflect changes in overall market interest rates. Mortgage loans on real estate, other long-term investments and short-term investments The fair values for these financial instruments are estimated based on the quoted market prices for these or similar instruments. For financial instruments on which quoted market prices are not available, fair values are estimated using discounted cash flow analysis and interest rates currently being offered for similar loans to borrowers with similar credit ratings or for similar deposits. Long-term debt The fair values for long-term debt are estimated using their market prices. For long-term debt on which quoted market prices are not available, the fair values are estimated using discounted cash flow analysis, based on the Company s current borrowing rate for similar types of borrowings. Foreign exchange contracts The fair values of foreign exchange contracts including forward and futures, swaps and options are estimated by obtaining current market quotes from banks. 32 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

35 Interest rate contracts The fair values of interest rate swap agreements are based on the estimated present value amounts the Company would receive or pay to terminate agreements, taking into consideration current interest rates and the current creditworthiness of the counterparties. The fair values of interest rate swaption agreements are estimated by obtaining current market quotes from banks. Equity index contracts and bond futures contracts The fair values of futures contracts are based on the official market quotes. The carrying amounts and fair values of the Company s financial instruments at March 31, 2000 and 1999 are as follows: Dollars in thousands Carrying Fair Carrying Fair value value value value 2000: Policy loans... 17,454 17,454 $ 164,660 $ 164,660 Mortgage loans on real estate , ,025 1,633,189 1,660,613 Mortgage loans on vessels and facilities... 35,041 35, , ,887 Collateral and bankguaranteed loans... 41,622 41, , ,925 Unsecured loans , ,692 5,471,415 5,515,962 Money trust , ,083 1,736,859 1,812,104 Short-term investments , ,827 4,573,840 4,573,840 Long-term debt... 50,000 50, , ,774 Foreign exchange contracts: Swaps in a net receivable position... 6,617 62,425 Interest rate contracts: Swaps in a net receivable position... 75, ,698 Swaption in a net receivable position , Futures agreements: Bond futures in a net payable position... (66) (623) Carrying Fair value value 1999: Policy loans... 15,826 15,826 Mortgage loans on real estate , ,578 Mortgage loans on vessels and facilities... 36,878 37,001 Collateral and bankguaranteed loans... 40,145 40,273 Unsecured loans , ,330 Money trust , ,475 Short-term investments , ,010 Foreign exchange contracts: Swaps in a net payable position... (9,460) Interest rate contracts: Swaps in a net receivable position... 78,179 Swaption in a net receivable position ,370 Futures aggreements: Bond futures in a net receivable position Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 33

36 Independent Auditors Report To the Board of Directors The Tokio Marine and Fire Insurance Company, Limited: We have audited the accompanying consolidated balance sheets of The Tokio Marine and Fire Insurance Company, Limited and subsidiaries as of March 31, 2000 and 1999, and the related consolidated statements of income, stockholders equity, cash flows and comprehensive income for each of the years in the three-year period ended March 31, 2000, all expressed in yen. These consolidated financial statements are the responsibility of the Company s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with United States generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of The Tokio Marine and Fire Insurance Company, Limited and subsidiaries at March 31, 2000 and 1999, and the results of their operations and their cash flows for each of the years in the three-year period ended March 31, 2000 in conformity with United States generally accepted accounting principles. The accompanying consolidated financial statements expressed in United States dollars have been translated into United States dollars solely for the convenience of the reader. We have reviewed the translation and, in our opinion, the consolidated financial statements expressed in yen have been translated into United States dollars on the basis set forth in note 1(a) of the notes to the consolidated financial statements. Tokyo, Japan June 26, The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

37 Worldwide Network BRANCHES REPRESENTATIVE AND LIAISON OFFICES UNDERWRITING AGENTS SUBSIDIARIES AND AFFILIATES NORTH AMERICA UNITED STATES NEW YORK 101 Park Avenue, New York, NY NEW YORK Tokio Marine Management, Inc. 101 Park Avenue, New York, NY NEW YORK Tokio Re Corporation 101 Park Avenue, New York, NY NEW YORK Trans Pacific Insurance Company 101 Park Avenue, New York, NY NEW YORK Tokio Marine Realty Co., Ltd. 101 Park Avenue, New York, NY NEW YORK TM Claims Service, Inc. 101 Park Avenue, New York, NY NEW YORK AXIA Services, Inc. 101 Park Avenue, New York, NY NEW YORK Tokio Marine Asset Management New York Co., Ltd. 101 Park Avenue, New York, NY NEW YORK Morita & Co., Inc. 600 Third Avenue, 18th Fl., New York, NY NEW YORK TM Specialty Insurance Company 101 Park Avenue, New York, NY NEW YORK TM Casualty Insurance Company 101 Park Avenue, New York, NY NEW YORK Ergonomics Technologies Corporation 6851 Jericho Turnpike, Suite 200 Syosset, NY LOS ANGELES Tokio Marine Management, Inc., Western Regional Office 800 East Colorado Blvd., Pasadena, CA LOS ANGELES TM Claims Service, Inc., L.A. Office 800 East Colorado Blvd., Pasadena, CA SAN FRANCISCO Tokio Marine Management, Inc., San Francisco Office 100 Pine Street, Suite 2225, San Francisco, CA CHICAGO Tokio Marine Management, Inc., Chicago Office Suite 2980, 444 North Michigan Avenue, Chicago, IL HOUSTON Suite 740, Three Post Oak Central, 1990 Post Oak Blvd., Houston, TX ATLANTA Tokio Marine Management, Inc., Atlanta Office One Ravinia Drive, Suite 1130, Atlanta, GA DELAWARE Tokio Marine Delaware Corporation 32 Loockerman Square, Suite L-100, Dover, DE HONOLULU First Insurance Company of Hawaii, Ltd., Tokio Marine Unit 1100 Ward Avenue, Honolulu, HI HONOLULU TM Claims Service, Inc., Honolulu Branch 1100 Ward Avenue, Suite 710, Honolulu, HI GUAM Nanbo Guam, Ltd. P.O. Box 2980, Agana, Guam CANADA TORONTO c/o Lombard Canada Ltd. 105 Adelaide Street West 3rd Floor, Toronto, Ontario M5H 1P9 VANCOUVER c/o Lombard Canada Ltd. Suite 505, Two Bentall Centre, 555 Burrard Street, Vancouver, British Columbia V7X 1M8 CENTRAL & SOUTH AMERICA BERMUDA HAMILTON Tokio Millennium Re Ltd. The Waterfront, 96 Pitts Bay Road, P.O. Box HM1296, Hamilton HMFX, Bermuda CAYMAN ISLANDS GRAND CAYMAN First Chicago Tokio Marine Financial Products Ltd. P.O. Box 309, South Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies GRAND CAYMAN Tokio Marine Asset Management (Cayman) Ltd. W.S. Walker & Company, P.O. Box 265, G.T., Mary Street, Caledonian House, George Town, Grand Cayman, Cayman Islands, British West Indies MEXICO MEXICO CITY Tokio Marine Compañia de Seguros, S.A. de C.V. Félix Parra 39, Col. San José, Insurgentes, C.P México, D.F. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 35

38 MEXICO CITY Tokio Marine Internacional, Sociedad Anónima Félix Parra No. 39, 1er Piso, Col. San José Insurgentes, Deleg. Benito Juarez, México, D.F. TIJUANA Tokio Marine Compañia de Seguros, S.A. de C.V. Blvd. Agua Caliente 4558, Desp. 204 Colonia Aviacion Tijuana, B.C. AGUASCALIENTES Tokio Marine Compañia de Seguros, S.A. de C.V. Sierra Morena 512, Desp. 103 Fraccionamiento Bosques del Prado, la Secc , Aguascalientes, AGS. VENEZUELA CARACAS Tokio Marine de Venezuela, C.A. Edificio Centro Seguros Sud America Piso 2, Ofc. 2-B, Av. Francisco de Miranda, El Rosal, Caracas COLOMBIA BOGOTA Calle 100, No Oficina 603 Edificio Centro Empresarial 100, Bogota BRAZIL SÃO PAULO América Latina Companhia de Seguros Rua 13 de Maio, 1529, CEP: , São Paulo RIO DE JANEIRO América Latina Companhia de Seguros Av. Rio Branco, Andar-cj Rio de Janeiro, CEP: MANAUS América Latina Companhia de Seguros Rua 24 de Maio, Andar-cj. 912 Manaus, CEP: SALVADOR América Latina Companhia de Seguros Av. Antonio Carlos Magalhâes, Andar-cj Salvador, CEP: BELO HORIZONTE América Latina Companhia de Seguros Av. Cristovao Colombo, 400-2º Andar, CEP: CURITIBA América Latina Companhia de Seguros Rua Marechal Deodoro, Andar-cj. 501 Curitiba, CEP: BLUMENAU América Latina Companhia de Seguros Rua Ingo Hering, 20-Sala 6, Blumenau, CEP: PÔRTO ALEGRE América Latina Companhia de Seguros Rua dos Andradas, 955-4º Andar-cj. 401, Pôrto Alegre, CEP: RIBEIRÃO PRÊTO América Latina Companhia de Seguros Rua Cerqueira Cesar, 481-5º Andar-cj. 500 Ribeirão Prêto, CEP: ARGENTINA BUENOS AIRES c/o La Buenos Aires Compañia Argentina de Seguros S.A. Avenida de Mayo 701, Buenos Aires PARAGUAY ASUNCIÓN La Rural del Paraguay S.A. Paraguaya de Seguros Avenida Mcal López 1082 N esq Mayor Bullo, Asunción ENCARNACIÓN La Rural del Paraguay S.A. Paraguaya de Seguros Monseñor Wiesen 389, 1 Piso, o/m cal Estigarribia, Encarnación EUROPE UNITED KINGDOM LONDON The Tokio Marine & Fire Insurance Company (UK) Limited 150 Leadenhall Street, London EC3V 4TE LONDON The Tokio Marine Capital Research Limited 150 Leadenhall Street, London EC3V 4TE LONDON Tokio Marine Property Limited 150 Leadenhall Street, London EC3V 4TE LONDON TM Management Services Limited 150 Leadenhall Street, London EC3V 4TE LONDON Tokio Marine Asset Management (London) Limited 150 Leadenhall Street, London EC3V 4TE FRANCE PARIS The Tokio Marine & Fire Insurance Company (UK) Limited, France Branch 21, boulevard de la Madeleine Paris, Cedex 01 PARIS TM Management Services Limited, Paris Branch 21, boulevard de la Madeleine Paris, Cedex 01 BELGIUM BRUXELLES The Tokio Marine & Fire Insurance Company (UK) Limited, Belgium Branch c/o Fortis Corporate Insurance N.V. Manhattan Center 13th Floor, Avenue du Boulevard/Bolwerklaan 21, B-1210 Bruxelles ANTWERPEN The Tokio Marine & Fire Insurance Company (UK) Limited c/o Fortis Corporate Insurance Marine Antwerp Tower, De Keyserlei 5 box 6, B-2018 Antwerpen GERMANY HAMBURG The Tokio Marine & Fire Insurance Company (UK) Limited c/o Burmester, Duncker & Joly, Trostbrücke 1, D Hamburg DÜSSELDORF The Tokio Marine & Fire Insurance Company (UK) Limited, German Branch Immermannstrasse 45, D Düsseldorf NETHERLANDS AMSTERDAM The Tokio Marine & Fire Insurance Company (UK) Limited, Netherlands Branch Prof. J.H. Bavincklaan 5, 1183 AT Amstelveen 36 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

39 AMSTERDAM TM Management Services Limited, Netherlands Branch Prof. J.H. Bavincklaan 5, 1183 AT Amstelveen IRELAND DUBLIN Tokio Marine Global Re Limited International House, International Financial Services Centre, Dublin 1 DENMARK COPENHAGEN The Tokio Marine & Fire Insurance Company (UK) Limited c/o Hansen & Klein Insurance Management Limited A/S. Dronningens Tvaergade 9, 2 sal 1302, Copenhagen K NORWAY OSLO The Tokio Marine & Fire Insurance Company (UK) Limited c/o Citius Insurance AS Skøyen Atrium Drammensveien 145b, P.O. Box 170, Skøyen N-0212 Oslo GREECE ATHENS The Tokio Marine & Fire Insurance Company (UK) Limited c/o Willis Corroon Kendriki S.A. 44 Ermou Street, Athens ITALY MILANO The Tokio Marine & Fire Insurance Company (UK) Limited, Italy Branch c/o Allianz Subalpina S.p.A. Via Turati 4, Milano SPAIN BARCELONA The Tokio Marine & Fire Insurance Company (UK) Limited, Spain Branch c/o Commercial Union Assurance Company plc (Spain Branch) Via Augusta, , 08017, Barcelona MIDDLE AND NEAR EAST UNITED ARAB EMIRATES DUBAI c/o Al-Futtaim (Private) Limited, Agents, The Tokio Marine and Fire Insurance Co., Ltd. 3rd Floor, Deira City Center Office Building, P.O. Box 152, Deira, Dubai IRAN TEHRAN c/o Rahavard Insurance Consultants Company Tavanir Ave., Nezami Ghanjavi Ave., No. 20, Pannah St., Post Code 14348, Tehran SAUDI ARABIA JEDDAH c/o Hussein Aoueini & Co., Ltd. Apartment Ibrahim Shaker Building, South of Caravan Shopping Center, Ibrahim Shaker Street, (P.O. Box 25), Jeddah RIYADH c/o Hussein Aoueini & Co., Ltd. No th Floor, Al-Mousa Residential & Commercial Center, Olayia Road, (P.O. Box 643), Riyadh AL KHOBAR c/o Hussein Aoueini & Co., Ltd. Room No. 203, Fluor Arabia Building, King Abdul Aziz Boulevard Road, 1 KM North of Al Khobar, (P.O. Box 290), Al Khobar BAHRAIN MANAMA The Arab-Eastern Insurance Company Limited E.C. 2nd Floor, AFS Tower Building 155, Road 2004, Manama 320 KUWAIT KUWAIT c/o Kuwait Insurance Company S.A.K. P.O. Box 769 Safat, 13008, Kuwait TURKEY ISTANBUL Koc Allianz Sigorta A.S. Baglarbasi, Kisikli Caddesi No. 11, Altunizade-Istanbul ISTANBUL Koc Allianz Hayat Sigorta A.S. Baglarbasi, Kisikli Caddesi No. 11, Altunizade-Istanbul OCEANIA AUSTRALIA SYDNEY Tokio Marine Management (Australasia) Pty. Ltd. Level 33, The Chifley Tower, 2 Chifley Square, Sydney, N.S.W (G.P.O. Box 4616, Sydney N.S.W. 1044) MELBOURNE Tokio Marine Management (Australasia) Pty. Ltd. Victoria Branch, Level 17, 90 Collins Street, Melbourne, Victoria 3000 ADELAIDE Tokio Marine Management (Australasia) Pty. Ltd. South Australia Branch, 7th Floor, 45 King William Street, Adelaide, South Australia 5000 NEW ZEALAND AUCKLAND c/o New Zealand Insurance Limited 3rd Floor NZI House, 3-13, Shortland Street, Auckland 1 (P.O. Box 1609), Auckland Industrial Branch COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS SAIPAN c/o Pacifica Insurance Underwriters, Inc. P.O. Box 168, Saipan, C.N.M.I REPUBLIC OF PALAU PALAU c/o Neco Insurance Underwriters, Ltd. P.O. Box 129, Koror, Palau, W.C.I ASIA PEOPLE S REPUBLIC OF CHINA SHANGHAI 38F Shanghai Senmao International Building, 101 Yin Cheng Dong Lu, Pudong New Area, Shanghai The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 37

40 BEIJING 7th Floor, Changfugong Office Building, No. JIA26, Jianguomenwai Dajie, Chaoyang-Qu, Beijing TIANJIN Room No. 2309, Tianjin International Bldg., 75 Nanjing Road, Tianjin DALIAN Dalian Senmao Building 5F, No. 147 Zhong Shan Road, Xi Gang Qu, Dalian NANJING Room 16C1, Nanjing World Trade Center, 2 Hanzhong Road, Nanjing CHENGDU Room No. 361, Jin Jiang Hotel, No. 80 Section 2 Ren Min Ave., Chengdu GUANGZHOU Room , Garden Office Tower, 368 Huanshi Dong Lu, Guangzhou SHENZHEN Room 713, 7F, Office Tower Shun Hing Square, Di Wang Commercial Centre, 5002 Shen Nan Dong Road, Shenzhen HONG KONG The Tokio Marine and Fire Insurance Company (Hong Kong) Limited 27th Floor, United Centre, 95 Queensway, Hong Kong HONG KONG Tokio Marine Investment Services, Limited 27th Floor, United Centre, 95 Queensway, Hong Kong TAIWAN TAIPEI 14th Floor, No. 111, Sungchiang Road, Taipei KOREA SEOUL Room No. 1202, Marine Center Building, 118, 2-Ka, Namdaemoon-Ro, Chung-ku, Seoul PHILIPPINES MANILA Tokio Marine Malayan Insurance Co., Inc. 6th and 7th Floors, Y Tower II, Alfaro Cor. Gallardo Streets, Salcedo Village, Makati, Metro Manila THAILAND BANGKOK The Sri Muang Insurance Co., Ltd. 9th 11th Floors, Kamolsukosol Building, 317 Silom Road, Bangkok BANGKOK Tokio Marine South-East Servicing Company Limited 10th Floor, Kamolsukosol Building, 317 Silom Road, Bangkok BANGKOK Tokio Management Services (Thailand) Co., Ltd. 9th Floor, Kamolsukosol Building, 317 Silom Road, Bangkok MALAYSIA KUALA LUMPUR Tokio Marine Insurans (Malaysia) Bhd. 29th & 30th Floor, Menara Dion 27 Jalan Sultan Ismail, Kuala Lumpur IPOH Tokio Marine Insurans (Malaysia) Bhd. No. 17, 1st Floor, Medan Istana 7, Bandar Ipoh Raya Ipoh, Perak Darul Ridzuan MELAKA Tokio Marine Insurans (Malaysia) Bhd. No. 5A, Jalan Melaka Raya 13, Taman Melaka Raya Melaka LABUAN Tokio Marine Global Re Limited, Labuan Branch c/o MNI Offshore Insurance (L) Ltd., Level 11 (E), Main Office Tower, Financial Park Labuan, Jalan Merdeka, F.T. Labuan SINGAPORE SINGAPORE The Tokio Marine and Fire Insurance Company (Singapore) Pte. Limited 6 Shenton Way #23-08, DBS Building, Tower Two, Singapore SINGAPORE Tokio Management Services (Asia) Pte. Ltd. 6 Shenton Way #23-08, DBS Building, Tower Two, Singapore SINGAPORE Tokio Marine Asset Management International Pte. Ltd. 6 Shenton Way #23-08, DBS Building Tower Two, Singapore BRUNEI BANDER SERI BEGAWAN The Tokio Marine and Fire Insurance Company (Singapore) Pte. Limited 6 Shenton Way #23-08, DBS Building Tower Two, Singapore INDONESIA JAKARTA P.T. Asuransi Tokio Marine Indonesia Wisma Kyoei Prince, 9th & 10th Floors, Jl. Jend Sudirman Kav. 3-4, Jakarta SURABAYA P.T. Asuransi Tokio Marine Indonesia, Surabaya Branch Office Medan Pemuda Building 8th Floor, Jalan Pemuda, Surabaya VIETNAM HANOI Vietnam International Assurance Company, Hanoi Branch 6th Floor, Sun Red River, 23 Phan Chu Trinh Street, Hoan Kiem District, Hanoi HO CHI MINH CITY Vietnam International Assurance Company 8th Floor, The Landmark, 5B Ton Duc Thang Street, District 1, Ho Chi Minh City MYANMAR YANGON FMI Centre, Room No. 908, 9th Floor, No. 380, Bogyoke Aung San Street, Pabedan Township, Yangon INDIA NEW DELHI B-459, New Friends Colony, New Delhi (As of July 31, 2000) 38 The Tokio Marine and Fire Insurance Company, Limited and subsidiaries

41 Directors and Corporate Auditors Corporate Data (As of July 1, 2000) Chairman Shunji Kono President Koukei Higuchi Senior Managing Directors Takehisa Kikuchi Hirotada Seyama Yukio Hayama Shoji Ueno Akihiko Mori Makoto Akutsu Toshikazu Kakudai Kunio Ishihara Managing Directors Shinsaku Nomura Josuke Shindo Katsuo Handa Yoichiro Iwama Haruo Marumo Masaharu Nakamura Hiroshi Kanasugi Tomohisa Yamada Tsutomu Okubo Tomochika Iwashita Sachio Sakiya Hiroyoshi Wada Kazuya Hamaguchi Directors Minoru Makihara Hidetsugu Nakayama Katsuhiko Katayama Hiroyuki Kato Minoru Suzuki Morio Ishii Kenji Omori Teruyuki Shirakawa Shuzo Sumi Toru Komiya Yasuo Yaoita Masayuki Hashimoto Standing Corporate Auditors Hiroshi Oshio Akira Kakihara Kuniyuki Suda Corporate Auditors Yusuke Yoshinaga Shigemitsu Miki Head Office: 2-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo , Japan Cable Address: TOKIOMARINE TOKYO Telex: STILWA J Phone: (03) Facsimile: (03) Independent Auditors: KPMG Stock Exchange Listings and Quotations: The Common Stock is listed on all Japanese stock exchanges including the Tokyo Stock Exchange. American Depositary Receipts for common stock are quoted on NASDAQ/NMS in the United States. Depositary for American Depositary Receipts: Citibank, N.A. Shareholder enquires should be directed to: Citicorp Shareholder Services P.O. Box 2502, Jersey City, New Jersey , U.S.A. Phone: 877-CITI-ADR ( ) Facsimile: E-mai: citibank@em.fcnbd.com Transfer Agent for Common Stock: The Mitsubishi Trust and Banking Corporation 11-1, Nagatacho 2-chome, Chiyoda-ku, Tokyo , Japan Annual Meeting of Stockholders: The annual meeting of stockholders of the Company is normally held in June in Tokyo, Japan. Number of Shares of Common Stock Issued: 1,549,692,481 shares Investor Relations: Corporate Legal Department The Tokio Marine and Fire Insurance Co., Ltd. 2-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo , Japan Phone: (03) Facsimile: (03) Tokio Marine on the Internet: Financial results, news and information about Tokio Marine can be found on Tokio Marine s Home Page on the Internet at This report was printed on recycled paper. The Tokio Marine and Fire Insurance Company, Limited and subsidiaries 39

42 THE TOKIO MARINE AND FIRE INSURANCE COMPANY, LIMITED 2-1, Marunouchi 1-chome, Chiyoda-ku, Tokyo , Japan Phone: Tokyo (03) E (8) 00.7 p i j PRINTED IN JAPAN