##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 Date of event requiring this shell company report
 For the transition period from to
 Commission file number: 333-163336
 MS&AD Inshuaransu Gurupu Horudingusu Kabushiki Kaisha
 (Exact name of registrant as specified in its charter)
 MS&AD Insurance Group Holdings, Inc.
 (Translation of registrants name into English)
 Japan
(Jurisdiction of incorporation or organization)
    
    Yaesu 1-3-7, Chuo-ku, Tokyo, Japan
(Address of principal executive offices)
 Tsuyoshi Hatae, +81-3-6202-5270, t-hatae@ms-ad-hd.com, +81-3-6202-6882, Yaesu 1-3-7, Chuo-ku, Tokyo 103-0028, Japan
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
 Title of Each Class
    
    Name of Each Exchange On Which RegisteredN/A
    
    N/A
 Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
 Common Stock
 (Title of Class)
 
 Indicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the
period covered by the annual report.
 As of March 31, 2010, 414,953,629 shares of Common Stock of the registrant were outstanding.
 On April 1, 2010, the registrant issued shares of its common stock to the then shareholders of Aioi Insurance Company,
Limited (Aioi) in exchange for the shares of Aiois common stock that they held, at the exchange ratio of 0.190 shares of
the registrants common stock for each share of Aiois common stock. As of March 31, 2010, 734,101,352 shares of Aiois
common stock were outstanding, which were equivalent to 139,479,256 shares of the registrants common stock.
 On April 1, 2010, the registrant issued shares of its common stock to the then shareholders of Nissay Dowa General Insurance
Company, Limited (NDGI) in exchange for the shares of NDGIs common stock that they held, at the exchange ratio of 0.191
shares of the registrants common stock for each share of NDGIs common stock. As of March 31, 2010, 379,538,006 shares of
NDGIs common stock were outstanding, which were equivalent to 72,491,759 shares of the registrants common stock.
 Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
 Yes o No þ
 If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
 Yes o No þ
 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
 Yes þ No o
 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,
every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).
 Yes o No þ
 Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):
 Large accelerated filero
    
    Non-accelerated filerþ
    
    Accelerated filero
 Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this
filing:
 U.S. GAAPþ
    
    International Financial Reporting Standards as issued by the
International Accounting Standards Boardo
    
    Othero
 If Other has been checked in response to the previous question, indicate by check mark which financial statement item the
registrant has elected to follow.
 Item 17 o Item 18 o
 If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act).
 Yes o No þ




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##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    Identity of Directors, Senior Management and Advisers
    
    
    1Item 2.
    
    Offer Statistics and Expected Timetable
    
    
    1Item 3.
    
    Key Information
    
    
    1Item 4.
    
    Information on the Company
    
    
    9Item 4A.
    
    Unresolved Staff Comments
    
    
    43Item 5.
    
    Operating and Financial Review and Prospects
    
    
    43Item 6.
    
    Directors, Senior Management and Employees
    
    
    76Item 7.
    
    Major Shareholders and Related Party Transactions
    
    
    80Item 8.
    
    Financial Information
    
    
    81Item 9.
    
    The Offer and Listing
    
    
    81Item 10.
    
    Additional Information
    
    
    83Item 11.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    93Item 12.
    
    Description of Securities Other Than Equity Securities
    
    
    97PART IIItem 13.
    
    Defaults, Dividend Arrearages and Delinquencies
    
    
    97Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    97Item 15T.
    
    Controls and Procedures
    
    
    97Item 16A.
    
    Audit Committee Financial Expert
    
    
    98Item 16B.
    
    Code of Ethics
    
    
    98Item 16C.
    
    Principal Accountant Fees and Services
    
    
    98Item 16D.
    
    Exemption from the Listing Standards for Audit Committees
    
    
    98Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    99Item
16F.
    

Changes
in Registrants Certified Accountant
    
    
    99Item
16G.
    

Corporate
Governance
    
    
    99PART IIIItem 17.
    
    Financial Statements
    
    
    99Item 18.
    
    Financial Statements
    
    
    99Item 19.
    
    Exhibits
    
    
    99Index to Consolidated Financial Statements and Financial Statement Schedule
    
    
    F-1EX-1.1 Articles of Incorporation of the registrant (English translation)EX-1.2 Share Handling Regulations of the registrant (English translation)EX-1.3 Regulations of the board of directors of the registrant (English translation)EX-1.4 Regulations of the board of corporate auditors of the registrant (English translation)EX-8.1 List of subsidiaries of the registrantEX-11.1 MS&AD Insurance Group Basic Compliance Policy (English translation) and MS&AD Insurance Group Basic Policy Regarding Internal Control System (relevant provisions) (English Translation)EX-12.1 Certification of the Chief Executive Officer required by Rule 13a-14(a)EX-12.2 Certification of the Chief Financial Officer required by Rule 13a-14(a)EX-13.1 Certification of the Chief Executive Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States CodeEX-13.2 Certification of the Chief Financial Officer required by Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code
 MS&AD Insurance Group Holdings, Inc. (the Company) was formed on April 1, 2010, by changing
its name from Mitsui Sumitomo Insurance Group Holdings, Inc. and issuing shares of its common stock
to the then shareholders of Aioi Insurance Company, Limited and Nissay Dowa General Insurance
Company, Limited in exchange for the shares of the latter two companies common stock that they
held (the Share Exchange). Financial information of the Company as of or for a period ended a
date prior to April 1, 2010 that is disclosed in this annual report is information of Mitsui
Sumitomo Insurance Group Holdings, Inc. Other information of the Company, unless otherwise
indicated, is information of Mitsui Sumitomo Insurance Group Holdings, Inc., taken together with
Aioi Insurance Company, Limited and Nissay Dowa General Insurance Company, Limited.
 As used in this annual report, references to the Company or MS&AD are to MS&AD Insurance
Group Holdings, Inc. Also, as used in this annual report, references to we, our and us are
to the Company and, except as the context otherwise requires, its subsidiaries. References to
MSI are to Mitsui Sumitomo Insurance Company, Limited, references to MSIG are to Mitsui
Sumitomo Insurance Group Holdings, Inc. (as of any time on or after April 1, 2008) or MSI (as of
any time on or before March 31, 2008), references to Aioi are to Aioi Insurance Company, Limited,
and references to NDGI are to Nissay Dowa General Insurance Company, Limited, in each case on a
consolidated basis except where the context otherwise requires.
 As used in this annual report, U.S. dollar or $ means the lawful currency of the United
States of America, and yen or ¥ means the lawful currency of Japan.
 As used in this annual report, U.S. GAAP means accounting principles generally accepted in
the United States and Japanese GAAP means accounting principles generally accepted in Japan.




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PART I
 
 Item 1.

Identity of Directors, Senior Management and Advisers.  
 Item 2.

Offer Statistics and Expected Timetable.  
 Item 3.

Key Information. A. Selected Financial Data.
 U.S. GAAP Selected Financial Data
   Selected Financial Data Prepared in Accordance with U.S. GAAP
 Year Ended March 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(Yen in millions, except per share data)Selected consolidated statement
of operations data:Net premiums written
    
    ¥
    1,458,507
    
    
    ¥
    1,489,379
    
    
    ¥
    1,537,616
    
    
    ¥
    1,448,273
    
    
    ¥
    1,395,238Net premiums earned
    
    
    1,422,801
    
    
    
    1,469,080
    
    
    
    1,502,685
    
    
    
    1,508,403
    
    
    
    1,396,637Premium income for life insurance
contracts
    
    
    179,430
    
    
    
    193,551
    
    
    
    192,731
    
    
    
    190,113
    
    
    
    188,373Investment income, net of investment
expenses
    
    
    156,102
    
    
    
    179,189
    
    
    
    185,265
    
    
    
    154,012
    
    
    
    127,733Net realized gains (losses) on
investments
    
    
    50,199
    
    
    
    24,315
    
    
    
    (17,370
    )
    
    
    (134,885
    )
    
    
    4,736Total revenues
    
    
    1,808,532
    
    
    
    1,866,135
    
    
    
    1,863,311
    
    
    
    1,717,643
    
    
    
    1,717,479Losses and claims incurred and
provided for
    
    
    881,623
    
    
    
    909,656
    
    
    
    906,257
    
    
    
    960,041
    
    
    
    855,914Total expenses
    
    
    1,627,555
    
    
    
    1,698,696
    
    
    
    1,709,552
    
    
    
    1,799,619
    
    
    
    1,650,063Net income (loss) attributable to MSIG
    
    
    119,890
    
    
    
    113,916
    
    
    
    104,796
    
    
    
    (70,240
    )
    
    
    49,983Selected consolidated balance sheet
data 
(period end):Total investments
    
    ¥
    7,481,988
    
    
    ¥
    7,943,462
    
    
    ¥
    7,293,449
    
    
    ¥
    6,085,854
    
    
    ¥
    6,365,417Total assets
    
    
    9,398,714
    
    
    
    9,877,032
    
    
    
    9,326,325
    
    
    
    8,234,855
    
    
    
    8,444,736
 1




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Year Ended March 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(Yen in millions, except per share data)Total liabilities
    
    
    6,742,777
    
    
    
    6,985,891
    
    
    
    6,898,440
    
    
    
    6,545,339
    
    
    
    6,443,858Common stock
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Accumulated other comprehensive income
    
    
    1,119,324
    
    
    
    1,255,766
    
    
    
    713,667
    
    
    
    79,960
    
    
    
    376,234Total shareholders equity
    
    
    2,652,968
    
    
    
    2,874,460
    
    
    
    2,409,299
    
    
    
    1,676,684
    
    
    
    1,992,480Number of shares outstanding
    
    
    426,186,348
    
    
    
    423,360,631
    
    
    
    421,320,739
    
    
    
    419,300,096
    
    
    
    414,953,629Per share data(1):Earnings (loss) per share  basic
    
    ¥
    280.36
    
    
    ¥
    267.47
    
    
    ¥
    247.59
    
    
    ¥
    (166.82
    )
    
    ¥
    119.30Shareholders equity(2)
    
    
    6,224.90
    
    
    
    6,789.63
    
    
    
    5,718.44
    
    
    
    3,998.77
    
    
    
    4,801.69Cash dividends
    
    
    45.00
    
    
    
    50.00
    
    
    
    50.00
    
    
    
    57.00
    
    
    
    54.00Cash dividends(3)
    
    $
    0.41
    
    
    $
    0.43
    
    
    $
    0.41
    
    
    $
    0.54
    
    
    $
    0.56Key ratios(4):Net loss ratio(5)
    
    
    62.0
    %
    
    
    61.9
    %
    
    
    60.3
    %
    
    
    63.6
    %
    
    
    61.3
    %Combined loss and expense ratio(6)
    
    
    97.6
    %
    
    
    99.1
    %
    
    
    98.7
    %
    
    
    106.1
    %
    
    
    101.1
    %
 
 Notes:(1)
    
    The per share data for the fiscal years March 31, 2006, 2007 and 2008 have been
retrospectively adjusted to reflect the Exchange Transaction described above.(2)
    
    At period end, calculated using the number of shares then outstanding (excluding shares held
by MSIG).(3)
    
    Calculating using the yen-dollar exchange rate at the date of our shareholders meeting at
which the relevant dividend payment was approved.(4)
    
    The key ratios relate to the property and casualty insurance reportable segment.(5)
    
    The ratio of losses incurred to net premiums earned.(6)
    
    Sum of the ratio of losses and loss adjustment expenses incurred to net premiums earned and
the ratio of underwriting and administrative expenses incurred to net premiums written. Exchange Rate Data
   High
    
    
    Low
    
    
    Average(1)
    
    
    Period-endFiscal year ended March 31,2006
    
    ¥
    120.93
    
    
    ¥
    104.41
    
    
    ¥
    113.67
    
    
    ¥
    117.482007
    
    
    121.81
    
    
    
    110.07
    
    
    
    116.55
    
    
    
    117.562008
    
    
    124.09
    
    
    
    96.88
    
    
    
    113.61
    
    
    
    99.852009
    
    
    110.48
    
    
    
    87.80
    
    
    
    100.85
    
    
    
    99.152010
    
    
    100.71
    
    
    
    86.12
    
    
    
    92.49
    
    
    
    93.40Calendar year 2010March
    
    ¥
    93.40
    
    
    ¥
    88.43
    
    
    ¥
    90.72
    
    
    ¥
    93.40April
    
    
    94.51
    
    
    
    92.03
    
    
    
    93.45
    
    
    
    94.24May
    
    
    94.68
    
    
    
    89.89
    
    
    
    91.97
    
    
    
    90.81June
    
    
    92.33
    
    
    
    88.39
    
    
    
    90.81
    
    
    
    88.49July
    
    
    88.59
    
    
    
    87.42
    
    
    
    87.50
    
    
    
    86.43August
    
    
    86.42
    
    
    
    84.10
    
    
    
    85.37
    
    
    
    84.10September
(through September 24)
    
    
    86.77
    
    
    
    83.05
    
    
    
    84.49
    
    
    
    84.24
 
 (1)
    
    Calculated from the average of the exchange rates on the last day of each month during the
period with respect to fiscal years and from the average of daily noon buying rate with
respect to calendar years.  2




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B. Capitalization and Indebtedness.
  C. Reasons for the Offer and Use of Proceeds.
  D. Risk Factors.
  Risks Relating to Our Business
 If economic conditions in Japan remain difficult or deteriorate further, our financial condition
and results of operations may be adversely affected.
     Deregulation, consolidation and the entry of new competitors has intensified competition in the
Japanese insurance industry.
  3




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Japan is prone to natural disasters, which can result in substantial claims on non-life insurance
policies.
  We may be required to augment our reserves in case of unforeseen losses.
        4




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We are subject to risks associated with reinsurance.
  Our investment activities entail risks.
  The determination of the fair value of our financial assets and financial liabilities is highly
subjective and could materially impact our operating results and financial condition.
  Our foreign assets and liabilities are exposed to foreign currency fluctuations.
  5




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Our financial results may be materially adversely affected by unpredictable events.
   We may not succeed in executing our growth strategies outside of Japan.
   
    
    The impact of economic slowdown or currency crises in economies outside Japan;
    
    Unexpected changes in or delays resulting from regulatory requirements;
    
    Exchange controls;
    
    Restrictions on foreign investment or the repatriation of profits or invested
capital;
    
    Changes in the tax systems or rate of taxation;
    
    Social, political and economic risks;
    
    Natural disasters; and
    
    Unexpected spread of contagious diseases.
 Business interruptions, human factors or external events may adversely affect our financial
results.
  System failures may adversely affect our reputation, operations and financial condition.
  Unauthorized disclosure of personal information held by us may adversely affect our business.
  6




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A downgrade in the financial strength ratings of any of our operating subsidiaries could limit its
ability to market products, increase the number of policies being surrendered and hurt its
relationships with customers and trading counterparties.
  Adverse capital and credit market conditions may significantly affect our ability to meet liquidity
needs or our ability to obtain credit on acceptable terms.
  Japanese life insurance and non-life insurance companies have been subject to increasing scrutiny
and regulatory actions in connection with under-payment and non-payment of claims and benefits.
    The business integration of MSIG, Aioi and NDGI may not produce the benefits anticipated.
  7




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Risks Relating to the Shares
 As a holding company, our ability to pay operating and financing expenses and dividends depends on
the financial performance of our principal operating subsidiaries. Our ability to pay dividends
also depends on our own dividend-paying capacity.
   Our shareholders may not receive the dividend they anticipate.
  Investors holding less than a unit of shares will have limited rights as shareholders.
  Rights of shareholders under Japanese law may be more limited than under the laws of other
jurisdictions.
  Because of daily price range limitations under Japanese stock exchange rules, you may not be able
to sell your shares of our common stock at a particular price on any particular trading day, or at
all.
  8




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It may not be possible for investors to effect service of process within the United States upon us
or our directors, executive officers or corporate auditors, or to enforce against us or those
persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the
federal securities laws of the United States.
  
 Item 4.

Information on the Company. A. History and Development of the Company.
    Share Transfer
     Share Exchanges (Business Integration)
   9




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B. Business Overview.
 Overview
 THE JAPANESE NON-LIFE INSURANCE INDUSTRY
 History
     Industry Background
   10




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BUSINESS OF MS&AD
 General
      11




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Lines of Business
  MSIG
 Year Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Voluntary Automobile
    
    ¥
    634,948
    
    
    ¥
    615,451
    
    
    ¥
    615,908Compulsory Automobile Liability(1)
    
    
    165,851
    
    
    
    137,598
    
    
    
    129,284Fire and Allied Lines(2)
    
    
    274,432
    
    
    
    269,613
    
    
    
    269,669Personal Accident
    
    
    146,390
    
    
    
    143,244
    
    
    
    141,857Cargo and Transit
    
    
    108,097
    
    
    
    97,295
    
    
    
    76,134Hull
    
    
    31,799
    
    
    
    31,030
    
    
    
    31,964Other(3)
    
    
    264,215
    
    
    
    243,164
    
    
    
    228,065Total
    
    ¥
    1,625,732
    
    
    ¥
    1,537,395
    
    
    ¥
    1,492,881AioiYear Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Voluntary Automobile
    
    ¥
    482,650
    
    
    ¥
    478,262
    
    
    ¥
    473,049Compulsory Automobile Liability(1)
    
    
    157,533
    
    
    
    132,713
    
    
    
    123,185Fire and Allied Lines(2)
    
    
    117,346
    
    
    
    123,262
    
    
    
    121,882Personal Accident
    
    
    50,779
    
    
    
    49,623
    
    
    
    49,003Marine
    
    
    10,175
    
    
    
    9,776
    
    
    
    7,725Other(3)
    
    
    73,614
    
    
    
    76,059
    
    
    
    68,602Total
    
    ¥
    892,097
    
    
    ¥
    869,695
    
    
    ¥
    843,446NDGIYear Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Voluntary Automobile
    
    ¥
    159,915
    
    
    ¥
    158,842
    
    
    ¥
    160,575Compulsory Automobile Liability(1)
    
    
    34,794
    
    
    
    29,497
    
    
    
    28,044Fire and Allied Lines(2)
    
    
    59,443
    
    
    
    64,292
    
    
    
    69,083Personal Accident
    
    
    30,704
    
    
    
    29,995
    
    
    
    29,324Cargo, Transit and Hull
    
    
    9,913
    
    
    
    9,868
    
    
    
    8,275Other(3)
    
    
    44,509
    
    
    
    53,927
    
    
    
    64,086Total
    
    ¥
    339,278
    
    
    ¥
    346,421
    
    
    ¥
    359,387
 
 (1)
    
    Japanese law requires that all automobiles be covered by compulsory automobile liability
insurance. See Note 2(m) of MSIGs consolidated financial statements.(2)
    
    Includes earthquake insurance.(3)
    
    Major lines of insurance in this category are liability, aviation, workers compensation and
movables comprehensive all risks. 12




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MSIG
 Direct
    
    
    Reinsurance
    
    
    ReinsurancePremiums
    
    
    Premiums
    
    
    Premiums
    
    
    Net Premiums Written(4)Written
    
    
    Assumed
    
    
    Ceded
    
    
    Amount
    
    
    %(Yen in millions, except percentages)Voluntary Automobile
    
    ¥
    615,908
    
    
    ¥
    6,056
    
    
    ¥
    11,007
    
    
    ¥
    610,957
    
    
    
    43.8
    %Compulsory Automobile Liability
    
    
    129,284
    
    
    
    93,982
    
    
    
    88,334
    
    
    
    134,932
    
    
    
    9.7
    %Fire and Allied Lines
    
    
    269,669
    
    
    
    44,744
    
    
    
    96,058
    
    
    
    218,355
    
    
    
    15.6
    %Personal Accidents
    
    
    141,857
    
    
    
    2,561
    
    
    
    8,656
    
    
    
    135,762
    
    
    
    9.7
    %Cargo and Transit
    
    
    76,134
    
    
    
    8,057
    
    
    
    14,858
    
    
    
    69,333
    
    
    
    5.0
    %Hull
    
    
    31,964
    
    
    
    8,075
    
    
    
    18,284
    
    
    
    21,755
    
    
    
    1.6
    %Other
    
    
    228,065
    
    
    
    26,070
    
    
    
    49,991
    
    
    
    204,144
    
    
    
    14.6
    %Total
    
    ¥
    1,492,881
    
    
    ¥
    189,545
    
    
    ¥
    287,188
    
    
    ¥
    1,395,238
    
    
    
    100.0
    %AioiDirect
    
    
    Reinsurance
    
    
    ReinsurancePremiums
    
    
    Premiums
    
    
    Premiums
    
    
    Net Premiums Written(4)Written
    
    
    Assumed
    
    
    Ceded
    
    
    Amount
    
    
    %(Yen in millions, except percentages)Voluntary Automobile
    
    ¥
    473,049
    
    
    ¥
    12,039
    
    
    ¥
    5,696
    
    
    ¥
    479,392
    
    
    
    59.3
    %Compulsory Automobile Liability(1)
    
    
    123,185
    
    
    
    69,619
    
    
    
    83,213
    
    
    
    109,591
    
    
    
    13.6
    %Fire and Allied Lines(2)
    
    
    121,882
    
    
    
    9,001
    
    
    
    31,394
    
    
    
    99,489
    
    
    
    12.3
    %Personal Accident
    
    
    49,003
    
    
    
    305
    
    
    
    3,804
    
    
    
    45,504
    
    
    
    5.6
    %Marine
    
    
    7,725
    
    
    
    896
    
    
    
    1,799
    
    
    
    6,822
    
    
    
    0.8
    %Other(3)
    
    
    68,602
    
    
    
    4,536
    
    
    
    5,334
    
    
    
    67,804
    
    
    
    8.4
    %Total
    
    ¥
    843,446
    
    
    ¥
    96,396
    
    
    ¥
    131,240
    
    
    ¥
    808,602
    
    
    
    100.0
    %NDGIDirect
    
    
    Reinsurance
    
    
    ReinsurancePremiums
    
    
    Premiums
    
    
    Premiums
    
    
    Net Premiums Written(4)Written
    
    
    Assumed
    
    
    Ceded
    
    
    Amount
    
    
    %(Yen in millions, except percentages)Voluntary Automobile
    
    ¥
    160,575
    
    
    ¥
    172
    
    
    ¥
    391
    
    
    ¥
    160,356
    
    
    
    52.0
    %Compulsory Automobile Liability(1)
    
    
    28,044
    
    
    
    19,010
    
    
    
    18,931
    
    
    
    28,123
    
    
    
    9.1
    %Fire and Allied Lines(2)
    
    
    69,083
    
    
    
    2,941
    
    
    
    24,492
    
    
    
    47,532
    
    
    
    15.4
    %Personal Accident
    
    
    29,324
    
    
    
    306
    
    
    
    1,257
    
    
    
    28,373
    
    
    
    9.2
    %Cargo, Transit and Hull
    
    
    8,275
    
    
    
    1,153
    
    
    
    2,865
    
    
    
    6,563
    
    
    
    2.2
    %Other(3)
    
    
    64,086
    
    
    
    7,099
    
    
    
    33,905
    
    
    
    37,280
    
    
    
    12.1
    %Total
    
    ¥
    359,387
    
    
    ¥
    30,681
    
    
    ¥
    81,841
    
    
    ¥
    308,227
    
    
    
    100.0
    %
 
 (1)
    
    Japanese law requires that all automobiles be covered by compulsory automobile liability
insurance. See Note 2(m) to MSIGs consolidated financial statements.(2)
    
    Includes earthquake insurance.(3)
    
    Major lines of insurance in this category are liability, aviation, workers compensation,
movables comprehensive all risks.(4)
    
    Net premiums written = (direct premiums written + reinsurance premiums assumed  reinsurance
premiums ceded). 13




---



##### Table of Contents



Voluntary Automobile
   Bodily Injury Liability
 Property Damage Liability
 Personal Injury
 Protection against Uninsured Automobiles
 Vehicular Damage
    14




---



##### Table of Contents



Compulsory Automobile Liability
      Fire and Allied Lines (Excluding Earthquake)
   15




---



##### Table of Contents



Amount of Claims Paid(Unit: Billion Yen)Major Claims Paid (Disasters)
    
    Fire/NewRanking
    
    Disaster
    
    Region
    
    Date
    
    Products
    
    Automobile
    
    Marine
    
    Total1.
    
    Typhoon No. 19
    
    Nationwide
    
    Sep. 26-28, 1991
    
    
    522.5
    
    
    
    26.9
    
    
    
    18.5
    
    
    
    567.92.
    
    Typhoon No. 18
    
    Nationwide
    
    Sep. 4-8, 2004
    
    
    356.4
    
    
    
    25.9
    
    
    
    5.1
    
    
    
    387.43.
    
    Typhoon No. 18
    
    Kumamoto, Yamaguchi, Fukuoka, etc.
    
    Sep. 21-25, 1999
    
    
    284.7
    
    
    
    21.2
    
    
    
    8.8
    
    
    
    314.74.
    
    Typhoon No. 7
    
    Kinki
    
    Sep. 22,1998
    
    
    151.4
    
    
    
    6.1
    
    
    
    2.4
    
    
    
    160.05.
    
    Typhoon No. 23
    
    Western Part of the Nation
    
    Oct. 20, 2004
    
    
    111.3
    
    
    
    17.9
    
    
    
    8.9
    
    
    
    138.06.
    
    Typhoon No. 13
    
    Fukuoka, Saga, Nagasaki, Miyazaki, etc.
    
    Sep. 15-20, 2006
    
    
    116.1
    
    
    
    14.7
    
    
    
    1.2
    
    
    
    132.07.
    
    Typhoon No. 16
    
    Nationwide
    
    Aug. 30-31, 2004
    
    
    103.7
    
    
    
    13.8
    
    
    
    3.5
    
    
    
    121.08.
    
    Downpour Sep. 2000
    
    Aichi etc.
    
    Sep. 10-12, 2000
    
    
    44.7
    
    
    
    54.5
    
    
    
    3.9
    
    
    
    103.09.
    
    Typhoon No. 13
    
    Kyushu, Shikoku, Chugoku
    
    Sep. 3, 1993
    
    
    93.3
    
    
    
    3.5
    
    
    
    1.0
    
    
    
    97.710.
    
    Hail
    
    Chiba, Ibaraki
    
    May 24, 2000
    
    
    37.2
    
    
    
    30.3
    
    
    
    2.5
    
    
    
    70.0
  Earthquakes
     16




---



##### Table of Contents



Personal Accident
  General Personal Accident
 Income Indemnity
 Overseas Travelers Personal Accident
 Traffic Accident
   Cargo and Transit
    Hull
  17




---



##### Table of Contents



Other
  Savings-Type Insurance Products
      18




---



##### Table of Contents



Premium Rates
    Loss and Expense Ratios
  19




---



##### Table of Contents



MSIG
 Year Ended March 31,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    2010(Yen in millions, dollars in thousands, except percentages)Voluntary Automobile:Net premiums written
    
    ¥
    587,253
    
    
    ¥
    599,663
    
    
    ¥
    624,949
    
    
    ¥
    608,614
    
    
    ¥
    610,957
    
    
    $
    6,569,430Net premiums earned
    
    
    590,052
    
    
    
    600,371
    
    
    
    621,036
    
    
    
    614,199
    
    
    
    608,071
    
    
    
    6,538,398Net loss incurred
    
    
    370,790
    
    
    
    401,429
    
    
    
    405,656
    
    
    
    382,641
    
    
    
    395,221
    
    
    
    4,249,688Net loss ratio
    
    
    62.8
    %
    
    
    66.9
    %
    
    
    65.3
    %
    
    
    62.3
    %
    
    
    65.0
    %Compulsory Automobile Liability:Net premiums written
    
    ¥
    193,402
    
    
    ¥
    192,087
    
    
    ¥
    191,256
    
    
    ¥
    148,502
    
    
    ¥
    134,932
    
    
    $
    1,450,882Net premiums earned
    
    
    193,871
    
    
    
    193,663
    
    
    
    193,572
    
    
    
    217,935
    
    
    
    144,116
    
    
    
    1,549,634Net loss incurred
    
    
    154,440
    
    
    
    137,607
    
    
    
    133,688
    
    
    
    218,219
    
    
    
    125,319
    
    
    
    1,347,516Net loss ratio
    
    
    79.7
    %
    
    
    71.1
    %
    
    
    69.1
    %
    
    
    100.1
    %
    
    
    87.0
    %Fire and Allied Lines:Net premiums written
    
    ¥
    205,214
    
    
    ¥
    208,182
    
    
    ¥
    225,259
    
    
    ¥
    220,188
    
    
    ¥
    218,355
    
    
    $
    2,347,903Net premiums earned
    
    
    180,143
    
    
    
    185,208
    
    
    
    209,396
    
    
    
    208,331
    
    
    
    212,674
    
    
    
    2,286,817Net loss incurred
    
    
    97,810
    
    
    
    93,302
    
    
    
    114,095
    
    
    
    94,169
    
    
    
    90,141
    
    
    
    969,258Net loss ratio
    
    
    54.3
    %
    
    
    50.4
    %
    
    
    54.5
    %
    
    
    45.2
    %
    
    
    42.4
    %Personal Accident:Net premiums written
    
    ¥
    143,190
    
    
    ¥
    139,795
    
    
    ¥
    138,896
    
    
    ¥
    136,596
    
    
    ¥
    135,762
    
    
    $
    1,459,806Net premiums earned
    
    
    133,476
    
    
    
    134,369
    
    
    
    132,171
    
    
    
    131,995
    
    
    
    131,932
    
    
    
    1,418,624Net loss incurred
    
    
    60,089
    
    
    
    69,292
    
    
    
    73,921
    
    
    
    77,302
    
    
    
    78,387
    
    
    
    842,871Net loss ratio
    
    
    45.0
    %
    
    
    51.6
    %
    
    
    55.9
    %
    
    
    58.6
    %
    
    
    59.4
    %Cargo and Transit:Net premiums written
    
    ¥
    83,282
    
    
    ¥
    91,379
    
    
    ¥
    98,846
    
    
    ¥
    88,828
    
    
    ¥
    69,333
    
    
    $
    745,516Net premiums earned
    
    
    79,963
    
    
    
    90,286
    
    
    
    97,696
    
    
    
    92,313
    
    
    
    69,965
    
    
    
    752,312Net loss incurred
    
    
    34,722
    
    
    
    38,802
    
    
    
    35,753
    
    
    
    35,008
    
    
    
    30,341
    
    
    
    326,247Net loss ratio
    
    
    43.4
    %
    
    
    43.0
    %
    
    
    36.6
    %
    
    
    37.9
    %
    
    
    43.4
    %Hull:Net premiums written
    
    ¥
    16,564
    
    
    ¥
    19,602
    
    
    ¥
    21,867
    
    
    ¥
    21,329
    
    
    ¥
    21,755
    
    
    $
    233,925Net premiums earned
    
    
    15,551
    
    
    
    18,496
    
    
    
    21,508
    
    
    
    20,650
    
    
    
    21,586
    
    
    
    232,108Net loss incurred
    
    
    14,508
    
    
    
    16,620
    
    
    
    15,933
    
    
    
    15,996
    
    
    
    15,934
    
    
    
    171,333Net loss ratio
    
    
    93.3
    %
    
    
    89.9
    %
    
    
    74.1
    %
    
    
    77.5
    %
    
    
    73.8
    %Other:Net premiums written
    
    ¥
    229,602
    
    
    ¥
    238,671
    
    
    ¥
    236,543
    
    
    ¥
    224,216
    
    
    ¥
    204,144
    
    
    $
    2,195,097Net premiums earned
    
    
    229,745
    
    
    
    246,687
    
    
    
    227,306
    
    
    
    222,980
    
    
    
    208,293
    
    
    
    2,239,710Net loss incurred
    
    
    149,264
    
    
    
    152,604
    
    
    
    127,211
    
    
    
    136,706
    
    
    
    120,571
    
    
    
    1,296,462Net loss ratio
    
    
    65.0
    %
    
    
    61.9
    %
    
    
    56.0
    %
    
    
    61.3
    %
    
    
    57.9
    %Total:Net premiums written
    
    ¥
    1,458,507
    
    
    ¥
    1,489,379
    
    
    ¥
    1,537,616
    
    
    ¥
    1,448,273
    
    
    ¥
    1,395,238
    
    
    $
    15,002,559Net premiums earned
    
    
    1,422,801
    
    
    
    1,469,080
    
    
    
    1,502,685
    
    
    
    1,508,403
    
    
    
    1,396,637
    
    
    
    15,017,603Net loss incurred
    
    
    881,623
    
    
    
    909,656
    
    
    
    906,257
    
    
    
    960,041
    
    
    
    855,914
    
    
    
    9,203,375Net loss ratio
    
    
    62.0
    %
    
    
    61.9
    %
    
    
    60.3
    %
    
    
    63.6
    %
    
    
    61.3
    %Net loss adjustment expenses incurred 
unallocated
    
    ¥
    68,855
    
    
    ¥
    70,001
    
    
    ¥
    82,370
    
    
    ¥
    90,235
    
    
    ¥
    81,971
    
    
    $
    881,409Ratio of losses and loss adjustment
expenses incurred to net premiums
earned(A)
    
    
    66.8
    %
    
    
    66.7
    %
    
    
    65.8
    %
    
    
    69.6
    %
    
    
    67.2
    %Underwriting and administrative expenses
incurred(1)
    
    ¥
    448,832
    
    
    ¥
    482,592
    
    
    ¥
    505,549
    
    
    ¥
    529,203
    
    
    ¥
    472,452
    
    
    $
    5,072,495Ratio of underwriting and administrative
expenses incurred to net premiums
written(1)(B)
    
    
    30.8
    %
    
    
    32.4
    %
    
    
    32.9
    %
    
    
    36.5
    %
    
    
    33.9
    %Combined loss and expenses ratios(2)
    
    
    97.6
    %
    
    
    99.1
    %
    
    
    98.7
    %
    
    
    106.1
    %
    
    
    101.1
    %Net premiums/direct premiums written ratios
    
    
    95.0
    %
    
    
    94.5
    %
    
    
    94.6
    %
    
    
    94.2
    %
    
    
    93.5
    %
 
 (1)
    
    This data is for MSIGs property and casualty businesses only.(2)
    
    Sum of (A) and (B). 20




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##### Table of Contents



Aioi
 Year Ended March 31,2008
    
    
    2009
    
    
    2010
    
    
    2010(Yen in millions, dollars in thousands, except percentages)Voluntary Automobile:Net premiums written
    
    ¥
    489,371
    
    
    ¥
    483,056
    
    
    ¥
    479,392
    
    
    $
    5,154,753Net premiums earned
    
    
    491,330
    
    
    
    486,856
    
    
    
    479,663
    
    
    
    5,157,667Net loss incurred
    
    
    292,399
    
    
    
    288,362
    
    
    
    294,101
    
    
    
    3,162,376Net loss ratio
    
    
    59.5
    %
    
    
    59.2
    %
    
    
    61.3
    %Compulsory Automobile Liability:Net premiums written
    
    ¥
    149,546
    
    
    ¥
    119,732
    
    
    ¥
    109,591
    
    
    $
    1,178,398Net premiums earned
    
    
    150,016
    
    
    
    143,550
    
    
    
    115,333
    
    
    
    1,240,140Net loss incurred
    
    
    102,817
    
    
    
    103,351
    
    
    
    97,958
    
    
    
    1,053,312Net loss ratio
    
    
    68.5
    %
    
    
    72.0
    %
    
    
    84.9
    %Fire and Allied Lines:Net premiums written
    
    ¥
    99,543
    
    
    ¥
    103,788
    
    
    ¥
    99,489
    
    
    $
    1,069,774Net premiums earned
    
    
    82,845
    
    
    
    85,448
    
    
    
    83,128
    
    
    
    893,849Net loss incurred
    
    
    33,936
    
    
    
    33,082
    
    
    
    38,148
    
    
    
    410,194Net loss ratio
    
    
    41.0
    %
    
    
    38.7
    %
    
    
    45.9
    %Personal Accident:Net premiums written
    
    ¥
    48,074
    
    
    ¥
    46,118
    
    
    ¥
    45,504
    
    
    $
    489,290Net premiums earned
    
    
    45,679
    
    
    
    43,896
    
    
    
    39,879
    
    
    
    428,806Net loss incurred
    
    
    22,241
    
    
    
    23,517
    
    
    
    21,887
    
    
    
    235,344Net loss ratio
    
    
    48.7
    %
    
    
    53.6
    %
    
    
    54.9
    %Marine:Net premiums written
    
    ¥
    9,923
    
    
    ¥
    9,379
    
    
    ¥
    6,822
    
    
    $
    73,355Net premiums earned
    
    
    10,197
    
    
    
    9,636
    
    
    
    7,212
    
    
    
    77,548Net loss incurred
    
    
    3,970
    
    
    
    4,004
    
    
    
    3,060
    
    
    
    32,903Net loss ratio
    
    
    38.9
    %
    
    
    41.6
    %
    
    
    42.4
    %Other:Net premiums written
    
    ¥
    75,131
    
    
    ¥
    75,340
    
    
    ¥
    67,804
    
    
    $
    729,075Net premiums earned
    
    
    70,308
    
    
    
    70,327
    
    
    
    68,595
    
    
    
    737,581Net loss incurred
    
    
    44,326
    
    
    
    46,791
    
    
    
    57,508
    
    
    
    618,366Net loss ratio
    
    
    63.0
    %
    
    
    66.5
    %
    
    
    83.8
    %Total:Net premiums written
    
    ¥
    871,588
    
    
    ¥
    837,413
    
    
    ¥
    808,602
    
    
    $
    8,694,645Net premiums earned
    
    
    850,375
    
    
    
    839,713
    
    
    
    793,810
    
    
    
    8,535,591Net loss incurred
    
    
    499,689
    
    
    
    499,107
    
    
    
    512,662
    
    
    
    5,512,495Net loss ratio
    
    
    58.8
    %
    
    
    59.4
    %
    
    
    64.6
    %Net loss adjustment expenses
incurred  unallocated
    
    ¥
    38,135
    
    
    ¥
    40,055
    
    
    ¥
    39,376
    
    
    $
    423,398Ratio of losses and loss
adjustment expenses incurred to net
premiums earned(A)
    
    
    63.2
    %
    
    
    64.2
    %
    
    
    69.5
    %Underwriting and administrative
expenses incurred(1)
    
    ¥
    296,960
    
    
    ¥
    307,818
    
    
    ¥
    289,668
    
    
    $
    3,114,710Ratio of underwriting and
administrative expenses incurred to
net premiums written(1)(B)
    
    
    34.1
    %
    
    
    36.8
    %
    
    
    35.8
    %Combined loss and expenses ratios(2)
    
    
    97.3
    %
    
    
    101.0
    %
    
    
    105.3
    %Net premiums/direct premiums
written ratios
    
    
    97.7
    %
    
    
    96.3
    %
    
    
    95.9
    %
 
 (1)
    
    This data is for Aiois property and casualty businesses only.(2)
    
    Sum of (A) and (B). 21




---



##### Table of Contents



NDGI
 Year Ended March 31,2008
    
    
    2009
    
    
    2010
    
    
    2010(Yen in millions, dollars in thousands, except percentages)Voluntary Automobile:Net premiums written
    
    ¥
    159,871
    
    
    ¥
    158,728
    
    
    ¥
    160,356
    
    
    $
    1,724,258Net premiums earned
    
    
    160,899
    
    
    
    159,380
    
    
    
    159,977
    
    
    
    1,720,183Net loss incurred
    
    
    114,082
    
    
    
    106,007
    
    
    
    113,037
    
    
    
    1,215,452Net loss ratio
    
    
    70.9
    %
    
    
    66.5
    %
    
    
    70.7
    %Compulsory Automobile Liability:Net premiums written
    
    ¥
    38,598
    
    
    ¥
    30,508
    
    
    ¥
    28,123
    
    
    $
    302,398Net premiums earned
    
    
    39,357
    
    
    
    36,906
    
    
    
    29,463
    
    
    
    316,806Net loss incurred
    
    
    26,778
    
    
    
    27,744
    
    
    
    26,959
    
    
    
    289,882Net loss ratio
    
    
    68.0
    %
    
    
    75.2
    %
    
    
    91.5
    %Fire and Allied Lines:Net premiums written
    
    ¥
    43,430
    
    
    ¥
    47,436
    
    
    ¥
    47,532
    
    
    $
    511,097Net premiums earned
    
    
    40,088
    
    
    
    41,024
    
    
    
    39,969
    
    
    
    429,774Net loss incurred
    
    
    19,121
    
    
    
    18,167
    
    
    
    17,520
    
    
    
    188,387Net loss ratio
    
    
    47.7
    %
    
    
    44.3
    %
    
    
    43.8
    %Personal Accident:Net premiums written
    
    ¥
    30,020
    
    
    ¥
    29,162
    
    
    ¥
    28,373
    
    
    $
    305,086Net premiums earned
    
    
    30,414
    
    
    
    29,737
    
    
    
    29,206
    
    
    
    314,043Net loss incurred
    
    
    15,765
    
    
    
    16,304
    
    
    
    16,586
    
    
    
    178,344Net loss ratio
    
    
    51.8
    %
    
    
    54.8
    %
    
    
    56.8
    %Cargo, Transit and Hull:Net premiums written
    
    ¥
    7,931
    
    
    ¥
    7,853
    
    
    ¥
    6,563
    
    
    $
    70,570Net premiums earned
    
    
    7,787
    
    
    
    8,047
    
    
    
    6,807
    
    
    
    73,194Net loss incurred
    
    
    4,518
    
    
    
    3,792
    
    
    
    3,302
    
    
    
    35,505Net loss ratio
    
    
    58.0
    %
    
    
    47.1
    %
    
    
    48.5
    %Other:Net premiums written
    
    ¥
    37,744
    
    
    ¥
    37,699
    
    
    ¥
    37,280
    
    
    $
    400,860Net premiums earned
    
    
    37,632
    
    
    
    38,083
    
    
    
    39,255
    
    
    
    422,097Net loss incurred
    
    
    21,118
    
    
    
    22,325
    
    
    
    21,598
    
    
    
    232,237Net loss ratio
    
    
    56.1
    %
    
    
    58.6
    %
    
    
    55.0
    %Total:Net premiums written
    
    ¥
    317,594
    
    
    ¥
    311,386
    
    
    ¥
    308,227
    
    
    $
    3,314,269Net premiums earned
    
    
    316,177
    
    
    
    313,177
    
    
    
    304,677
    
    
    
    3,276,097Net loss incurred
    
    
    201,382
    
    
    
    194,339
    
    
    
    199,002
    
    
    
    2,139,806Net loss ratio
    
    
    63.7
    %
    
    
    62.1
    %
    
    
    65.3
    %Net loss adjustment expenses
incurred  unallocated
    
    ¥
    17,073
    
    
    ¥
    17,683
    
    
    ¥
    18,373
    
    
    $
    197,559Ratio of losses and loss adjustment
expenses incurred to net premiums
earned(A)
    
    
    69.1
    %
    
    
    67.7
    %
    
    
    71.3
    %Underwriting and administrative
expenses incurred(1)
    
    ¥
    115,499
    
    
    ¥
    117,059
    
    
    ¥
    102,831
    
    
    $
    1,105,710Ratio of underwriting and
administrative expenses incurred to
net premiums written(1)(B)
    
    
    36.4
    %
    
    
    37.6
    %
    
    
    33.4
    %Combined loss and expenses ratios(2)
    
    
    105.5
    %
    
    
    105.3
    %
    
    
    104.7
    %Net premiums/direct premiums
written ratios
    
    
    93.6
    %
    
    
    89.9
    %
    
    
    85.8
    %
 
 (1)
    
    This data is for NDGIs property and casualty businesses only.(2)
    
    Sum of (A) and (B). 22




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##### Table of Contents



Reconciliation of Beginning and Ending Liabilities for Losses and Claims
  MSIG
 Year Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Balance at beginning of year
    
    ¥
    1,153,550
    
    
    ¥
    1,197,820
    
    
    ¥
    1,256,522Less reinsurance recoverable
    
    
    237,719
    
    
    
    253,092
    
    
    
    304,228Net balance at beginning of year
    
    
    915,831
    
    
    
    944,728
    
    
    
    952,294Change in estimate of IBNR for
Compulsory Automobile Liability
Insurance
    
    
    
    
    
    
    86,524
    
    
    
    Incurred related to:Current year insured events
    
    
    1,094,832
    
    
    
    1,109,730
    
    
    
    1,077,420Prior year insured events
    
    
    (7,191
    )
    
    
    (21,268
    )
    
    
    (8,655
    )Total incurred
    
    
    1,087,641
    
    
    
    1,088,462
    
    
    
    1,068,765Paid related to:Current year insured events
    
    
    576,463
    
    
    
    610,493
    
    
    
    613,166Prior year insured events
    
    
    483,209
    
    
    
    483,212
    
    
    
    480,213Total paid
    
    
    1,059,672
    
    
    
    1,093,705
    
    
    
    1,093,379Foreign currency translation
adjustments
    
    
    928
    
    
    
    (73,715
    )
    
    
    6,050Net balance at end of year
    
    
    944,728
    
    
    
    952,294
    
    
    
    933,730Plus reinsurance recoverable
    
    
    253,092
    
    
    
    304,228
    
    
    
    293,347Balance at end of year
    
    ¥
    1,197,820
    
    
    ¥
    1,256,522
    
    
    ¥
    1,227,077The following table, prepared on a U.S. GAAP basis, is a summary reconciliation of the
beginning and ending liabilities for losses and claims and claim adjustment expenses related to
property and casualty businesses concerning Aioi for each of the three fiscal years ended March 31,
2010:AioiYear Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Balance at beginning of year
    
    ¥
    580,803
    
    
    ¥
    574,043
    
    
    ¥
    567,765Less reinsurance recoverable
    
    
    144,554
    
    
    
    151,118
    
    
    
    155,263Net balance at beginning of year
    
    
    436,249
    
    
    
    422,925
    
    
    
    412,502Incurred related to:Current year insured events
    
    
    534,036
    
    
    
    530,311
    
    
    
    536,322Prior year insured events
    
    
    3,789
    
    
    
    8,851
    
    
    
    15,717Total Incurred
    
    
    537,825
    
    
    
    539,162
    
    
    
    552,039Paid related to:Current year insured events
    
    
    324,147
    
    
    
    325,036
    
    
    
    329,435Prior year insured events
    
    
    227,002
    
    
    
    224,549
    
    
    
    213,485Total paid
    
    
    551,149
    
    
    
    549,585
    
    
    
    542,920Net balance at end of year
    
    
    422,925
    
    
    
    412,502
    
    
    
    421,621Plus reinsurance recoverable
    
    
    151,118
    
    
    
    155,263
    
    
    
    157,184Balance at end of year
    
    ¥
    574,043
    
    
    ¥
    567,765
    
    
    ¥
    578,805
 23




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##### Table of Contents



Changes in Historical Liabilities for Losses and Claims
     MSIG
 Year Ended March 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(Yen in millions, except percentages)Total liabilities for losses and claims
    
    ¥
    776,977
    
    
    ¥
    857,494
    
    
    ¥
    938,896
    
    
    ¥
    954,877
    
    
    ¥
    954,457
    
    
    ¥
    922,087Cumulative paid as of:One year later
    
    
    390,063
    
    
    
    444,580
    
    
    
    470,479
    
    
    
    466,951
    
    
    
    472,823Two years later
    
    
    562,630
    
    
    
    618,597
    
    
    
    643,076
    
    
    
    650,398Three years later
    
    
    647,320
    
    
    
    705,781
    
    
    
    736,820Four years later
    
    
    692,728
    
    
    
    757,137Five years later
    
    
    720,046Liability re-estimated as of:One year later
    
    
    780,175
    
    
    
    891,092
    
    
    
    938,323
    
    
    
    941,896
    
    
    
    940,706Two years later
    
    
    818,990
    
    
    
    879,224
    
    
    
    900,615
    
    
    
    918,062Three years later
    
    
    796,853
    
    
    
    858,583
    
    
    
    892,610Four years later
    
    
    785,103
    
    
    
    854,881Five years later
    
    
    780,855Cumulative surplus (deficiency)
    
    ¥
    (3,878
    )
    
    ¥
    2,613
    
    
    ¥
    46,286
    
    
    ¥
    36,815
    
    
    ¥
    13,751%
    
    
    (0.5
    )%
    
    
    0.3
    %
    
    
    4.9
    %
    
    
    3.9
    %
    
    
    1.4
    %
 24




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##### Table of Contents



Aioi
 Year Ended March 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(Yen in millions, except percentages)Total liabilities for losses
and claims
    
    ¥
    445,798
    
    
    ¥
    435,061
    
    
    ¥
    428,249
    
    
    ¥
    422,925
    
    
    ¥
    412,502
    
    
    ¥
    421,621Cumulative paid as of:One year later
    
    
    232,199
    
    
    
    230,548
    
    
    
    227,269
    
    
    
    227,813
    
    
    
    215,595Two years later
    
    
    319,904
    
    
    
    313,451
    
    
    
    307,485
    
    
    
    300,903Three years later
    
    
    372,100
    
    
    
    364,126
    
    
    
    351,624Four years later
    
    
    404,657
    
    
    
    393,850Five years later
    
    
    424,500Liability re-estimated as of:One year later
    
    
    444,274
    
    
    
    448,745
    
    
    
    430,427
    
    
    
    427,067
    
    
    
    423,248Two years later
    
    
    465,538
    
    
    
    448,891
    
    
    
    434,102
    
    
    
    444,141Three years later
    
    
    462,573
    
    
    
    451,044
    
    
    
    453,396Four years later
    
    
    464,794
    
    
    
    470,524Five years later
    
    
    483,388Cumulative surplus (deficiency)
    
    ¥
 (37,590
    )
    
    ¥
    (35,463
    )
    
    ¥
    (25,147
    )
    
    ¥
    (21,216
    )
    
    ¥
    (10,746
    )%
    
    
    (8.4
    )%
    
    
    (8.2
    )%
    
    
    (5.9
    )%
    
    
    (5.0
    )%
    
    
    (2.6
    )%
 Operations
 Sales, Marketing and Underwriting
     25




---



##### Table of Contents



Insurance Brokers
  Claims Processing
   Investment Trust Sales and Defined Contribution Pension Plans
    Financial Guarantees
  26




---



##### Table of Contents



Alternative Risk Transfer
   Reinsurance
       Proportional reinsurance
  27




---



##### Table of Contents



Excess-of-loss reinsurance
   
    
    Stabilize profits and maximize middle-term earnings;
    
    Increase return on equity;
    
    Improve each principal operating subsidiarys combined ratio and solvency ratio; and
    
    Achieve cost savings and strengthen our overall competitiveness.
      MSIG
 Year Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions, except percentages)Direct premiums written
    
    ¥
    1,625,732
    
    
    ¥
    1,537,395
    
    
    ¥
    1,492,881Reinsurance premiums assumed
    
    
    264,880
    
    
    
    216,372
    
    
    
    189,545Reinsurance premiums ceded
    
    
    (352,996
    )
    
    
    (305,494
    )
    
    
    (287,188
    )Net premiums written
    
    ¥
    1,537,616
    
    
    ¥
    1,448,273
    
    
    ¥
    1,395,238Retention ratio(1)
    
    
    81.3
    %
    
    
    82.6
    %
    
    
    82.9
    %
 28




---



##### Table of Contents



Aioi
 Year Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions, except percentages)Direct premiums written
    
    ¥
    892,097
    
    
    ¥
    869,695
    
    
    ¥
    843,446Reinsurance premiums assumed
    
    
    144,471
    
    
    
    103,855
    
    
    
    96,396Reinsurance premiums ceded
    
    
    (164,980
    )
    
    
    (136,137
    )
    
    
    (131,240
    )Net premiums written
    
    ¥
    871,588
    
    
    ¥
    837,413
    
    
    ¥
    808,602Retention ratio(1)
    
    
    84.1
    %
    
    
    86.0
    %
    
    
    86.0
    %NDGIYear Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions, except percentages)Direct premiums written
    
    ¥
    339,278
    
    
    ¥
    346,421
    
    
    ¥
    359,387Reinsurance premiums assumed
    
    
    44,752
    
    
    
    34,039
    
    
    
    30,681Reinsurance premiums ceded
    
    
    (66,436
    )
    
    
    (69,074
    )
    
    
    (81,841
    )Net premiums written
    
    ¥
    317,594
    
    
    ¥
    311,386
    
    
    ¥
    308,227Retention ratio(1)
    
    
    82.7
    %
    
    
    81.8
    %
    
    
    79.0
    %
 
 (1)
    
    Retention ratio is calculated by dividing the net premiums written by the aggregate of the
direct premiums written and the reinsurance premiums assumed.       29




---



##### Table of Contents



Overseas Business
      
    
    Asia and Oceania. Thailand Branch and Korea Branch of MSI, Mitsui Sumitomo Insurance
(China) Company Limited, MSIG Insurance (Hong Kong) Limited, Mitsui Sumitomo Insurance
(Singapore) Pte. Ltd, MSIG Insurance (Singapore) Pte. Ltd., MSIG Insurance (Thailand)
Co., Ltd., PT. Asuransi MSIG Indonesia, MSIG Insurance (Malaysia) Bhd., BPI/MS Insurance
Corporation, FLT Prime Insurance Corporation, MSIG Insurance (Vietnam) Co., Ltd., MSIG
Insurance (Lao) Co., Ltd., Asia Insurance (Cambodia) Plc., MSIG Mingtai Insurance Co.,
Ltd., Cholamandalam MS General Insurance Company Limited, Australia Branch of Aioi, Aioi
Insurance Company (China) Limited, Aioi Bangkok Insurance Co., Ltd. and Pt.. Asuransi
Aioi Indonesia.
    
    The Americas. Mitsui Sumitomo Insurance USA Inc., Mitsui Sumitomo Insurance Company
of America, Mitsui Sumitomo Seguros S/A., Aioi Insurance Company of America, DTRIC
Insurance Co., Ltd. and DTRIC Insurance Underwriters, Ltd.
    
    Europe, the Middle East and Africa. Mitsui Sumitomo Insurance Company (Europe),
Ltd., MSI Corporate Capital Ltd., Aioi Motor and General Insurance Company of Europe
Ltd., Aioi Life Insurance of Europe AG and Dowa Insurance Co.(Europe) Ltd.
    
    Reinsurance Business. Mitsui Sumitomo Reinsurance Limited and MS Frontier
Reinsurance Limited
   30




---



##### Table of Contents



Life Insurance Business
       31




---



##### Table of Contents



Direct Marketing Non-Life Insurance
  Financial Services
    Long-Term Care Services
  Alliances with Other Financial Institutions
  
    
    In November 2001, MSIG agreed with Mitsui Life, Sumitomo Life and Sumitomo Mitsui
Banking Corporation to execute a wide-ranging alliance to further strengthen MSIGs
insurance business. The proposed strategies are (i) collaboration of distribution
channels among Mitsui and Sumitomo group insurance companies, (ii) joint-research and
development of hybrid life and non-life insurance and financial products, (iii)
concentration of Mitsui Lifes non-life subsidiarys business in MSIG and (iv)
reorganization of asset management businesses. The agreement in April 2002 for the
merger of MSIGs asset management subsidiaries, described above, is a result of this
alliance. As a further result of this alliance, Mitsui Lifes non-life insurance
subsidiary, Mitsui Seimei General Insurance had transferred its policies to MSIG by
November 2003. Mitsui Life now promotes sales of MS&ADs non-life insurance products.
 32




---



##### Table of Contents




    
    In April 2002, American Appraisal Associates, the worlds largest valuation
consulting firm, and InterRisk Research Institute & Consulting, a general think tank and
consulting firm within MSIG, established a joint venture corporation, American
Appraisal Japan, to begin a full-service professional valuation practice in the Japanese
appraisal market. American Appraisal Japan will provide a wide array of valuation
services including with respect to corporations, machines and equipment, land and
intangible assets. MS&AD, as a group, seeks increased growth and revenues through
marketing appraisal services to its corporate insurance clients.
    
    MSIG entered into a sales alliance with AXA Life Insurance Company, Ltd. in July
2004, with the aim of AXA Lifes introducing MSIGs defined contribution plan (Japanese
401k) products and related consulting services to AXA Lifes customers. Aioi also
entered into a general sales affiliation agreement with AXA Life in July 2004, regarding
the distribution of Aiois property and casualty insurance products. Aioi provides its
property and casualty insurance products through the sales network of AXA Life to
members, officers and employees of chambers of commerce, which are core customers of AXA
Life. MS&AD believes AXA Life has a competitive advantage in the market for small to
medium-sized companies and has a special full-time advisor channel. MS&AD believes the
alliance enables it to promote its defined contribution plans and property and casualty
insurance products through cross-selling to the life insurance customers of AXA. At the
same time, AXA Life can provide higher-quality products and services to their customers
for their convenience.
    
    In May 2004, MSIG and Tokai Tokyo Securities Co., Ltd. (TTS) entered into a
business and capital alliance in order to provide attractive products and services to
meet customer demands. Currently, TTS carries MS&ADs life insurance, non-life
insurance, and variable annuities products, and together, provides support services to
small to medium-sized companies. TTS is the top-ranking distributor of MS&ADs
insurance products and variable annuities. MS&AD plans to continue the alliance with
TTS and build an integrated securities and insurance business model using both
companies business knowledge.
    
    In December 2005, Aioi established a business alliance with The Bank of
Tokyo-Mitsubishi UFJ, Ltd. regarding corporate financing and other agency business.
Aioi focuses on providing services to small and medium sized business customers by
acting as agents and serving as financial intermediaries for them.
    
    In October 2008, Aioi entered into a strategic alliance with Lotte Insurance Co., Ltd
in Korea. At the same time, Aioi acquired a 9.9% interest in the company. Through the
business alliance, the two companies will share information and know-how on risk
management, product development and reinsurance. The business alliance also undertakes
research on Koreas insurance sector and cooperates on reinsurance deals on the
insurance contracts held by the Lotte group.
    
    MSIG and Sumitomo Life Insurance Company (SLIC) have had a business alliance since
February 2000 in the areas of claims support and wholesale marketing of the non-life
insurance business. In September 2008, MSIG and SLIC entered into a basic agreement to
further strengthen the business alliance in order to seek both to enhance their
corporate values and to provide even better services to customers by expanding their
businesses further and making them more efficient. SLIC began to sell MSIGs non-life
insurance products, both personal and commercial lines (including automobile, fire and
personal injury insurance), through its approximately 30,000 salespersons qualified to
offer non-life insurance in October 2009.
    
    Since the merger between Nissay General Insurance Co., Ltd. and The Dowa Fire and
Marine Insurance Co., Ltd. in April, 2001, NDGI has strengthened its wide-ranging
alliance with Nippon Life Insurance Company in various business areas with an aim to
provide its customers with better insurance services through promotion of a
comprehensive insurance strategy. The alliance with NDGI and Nippon Life Insurance
Company includes activities such as (1) exchange of human resources, (2) enhancement of
cross-selling of life insurance and non-life insurance products, and (3) research and
development of new products and services which combines life insurance and non-life
insurance products.
 33




---



##### Table of Contents



Investments
     MSIG
 As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Investments  other than investments in affiliates:Securities available for sale:Fixed maturities, at fair value
    
    ¥
    3,334,185
    
    
    ¥
    2,994,870
    
    
    ¥
    3,012,303Equity securities, at fair value
    
    
    2,547,773
    
    
    
    1,703,433
    
    
    
    1,997,746Securities held to maturity:Fixed maturities, at amortized cost
    
    
    449,474
    
    
    
    475,576
    
    
    
    506,307Mortgage loans on real estate
    
    
    9,859
    
    
    
    9,224
    
    
    
    7,260Investment real estate, at cost less depreciation
    
    
    43,151
    
    
    
    40,992
    
    
    
    36,698Policy loans
    
    
    39,536
    
    
    
    43,254
    
    
    
    44,339Other long-term investments
    
    
    749,385
    
    
    
    711,653
    
    
    
    691,625Short-term investments
    
    
    120,086
    
    
    
    106,852
    
    
    
    69,139Total investments
    
    ¥
    7,293,449
    
    
    ¥
    6,085,854
    
    
    ¥
    6,365,417Cash and cash equivalents
    
    ¥
    368,290
    
    
    ¥
    455,444
    
    
    ¥
    381,939Investments in and indebtedness from affiliates:Investments
    
    ¥
    56,351
    
    
    ¥
    66,523
    
    
    ¥
    75,927Indebtedness
    
    
    2,961
    
    
    
    2,857
    
    
    
    3,128Total investments in and indebtedness from
affiliates
    
    ¥
    59,312
    
    
    ¥
    69,380
    
    
    ¥
    79,055
  34




---



##### Table of Contents



Aioi
 As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Investments  other than investments in affiliates:Securities available for sale:Fixed maturities, at fair value
    
    ¥
    1,273,323
    
    
    ¥
    1,138,073
    
    
    ¥
    1,174,991Equity securities, at fair value
    
    
    566,430
    
    
    
    417,698
    
    
    
    456,993Securities held to maturity:Fixed maturities, at amortized cost
    
    
    349
    
    
    
    119
    
    
    
    23Trading securities:Fixed maturities, at fair value
    
    ¥
    47,471
    
    
    ¥
    37,050
    
    
    ¥
    39,421Equity securities, at fair value
    
    
    164,253
    
    
    
    99,731
    
    
    
    73,704Mortgage loans on real estate
    
    
    47,423
    
    
    
    51,949
    
    
    
    52,543Investment real estate, at cost less depreciation
    
    
    32,262
    
    
    
    33,735
    
    
    
    30,219Policy loans
    
    
    15,462
    
    
    
    17,107
    
    
    
    17,782Other long-term investments
    
    
    277,014
    
    
    
    282,983
    
    
    
    257,304Short-term investments
    
    
    8,674
    
    
    
    17,870
    
    
    
    203,399Total investments
    
    ¥
    2,432,661
    
    
    ¥
    2,096,315
    
    
    ¥
    2,306,379Cash and cash equivalents
    
    ¥
    148,811
    
    
    ¥
    178,873
    
    
    ¥
    29,006Investments in and indebtedness from affiliates:Investments
    
    ¥
    3,084
    
    
    ¥
    2,665
    
    
    ¥
    37,963Indebtedness
    
    
    1,057
    
    
    
    1,481
    
    
    
    366Total investments in and indebtedness from
affiliates
    
    ¥
    4,141
    
    
    ¥
    4,146
    
    
    ¥
    38,329NDGIAs of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Investments  other than investments in affiliates:Securities available for sale:Fixed maturities, at fair value
    
    ¥
    536,341
    
    
    ¥
    510,509
    
    
    ¥
    512,503Equity securities, at fair value
    
    
    424,869
    
    
    
    311,821
    
    
    
    337,275Securities held to maturity:Fixed maturities, at amortized cost
    
    
    123
    
    
    
    43
    
    
    
    9Trading Securities:Fixed maturities, at fair value
    
    
    941
    
    
    
    5,860
    
    
    
    Equity securities, at fair value
    
    
    773
    
    
    
    1,203
    
    
    
    121Mortgage loans on real estate
    
    
    7,807
    
    
    
    7,807
    
    
    
    7,298Investment real estate, at cost less depreciation
    
    
    9,821
    
    
    
    9,406
    
    
    
    9,114Policy loans
    
    
    2,322
    
    
    
    2,118
    
    
    
    2,170Other long-term investments
    
    
    35,539
    
    
    
    30,695
    
    
    
    26,960Short-term investments
    
    
    1,110
    
    
    
    2,143
    
    
    
    1,191Total investments
    
    ¥
    1,019,646
    
    
    ¥
    881,605
    
    
    ¥
    896,640Cash and cash equivalents
    
    ¥
    83,992
    
    
    ¥
    58,448
    
    
    ¥
    48,571Investments in affiliates
    
    ¥
    3,050
    
    
    ¥
    2,900
    
    
    ¥
    2,676
 35




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##### Table of Contents



As of March 31,2008
    
    
    2009
    
    
    2010Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    AverageIncome
    
    
    Amount
    
    
    Rate
    
    
    Income
    
    
    Amount
    
    
    Rate
    
    
    Income
    
    
    Amount
    
    
    Rate(Yen in billions, except percentage)Fixed maturities*
    
    
    89.7
    
    
    
    3,742.8
    
    
    
    2.4
    %
    
    
    75.1
    
    
    
    3,627.1
    
    
    
    2.1
    %
    
    
    68.7
    
    
    
    3,494.5
    
    
    
    2.0
    %Equity securities*
    
    
    69.0
    
    
    
    2,930.2
    
    
    
    2.4
    %
    
    
    53.2
    
    
    
    2,125.6
    
    
    
    2.5
    %
    
    
    40.4
    
    
    
    1,850.6
    
    
    
    2.2
    %Mortgage loans on real estate
    
    
    0.3
    
    
    
    10.7
    
    
    
    2.8
    %
    
    
    0.3
    
    
    
    9.5
    
    
    
    3.2
    %
    
    
    0.2
    
    
    
    8.2
    
    
    
    2.4
    %Investment real estate
    
    
    4.9
    
    
    
    46.2
    
    
    
    10.6
    %
    
    
    5.5
    
    
    
    42.1
    
    
    
    13.1
    %
    
    
    6.1
    
    
    
    38.8
    
    
    
    15.7
    %Policy loans
    
    
    1.4
    
    
    
    39.0
    
    
    
    3.6
    %
    
    
    1.4
    
    
    
    41.1
    
    
    
    3.4
    %
    
    
    1.5
    
    
    
    43.8
    
    
    
    3.4
    %Other-long term investments
    
    
    13.9
    
    
    
    732.7
    
    
    
    1.9
    %
    
    
    14.5
    
    
    
    730.5
    
    
    
    2.0
    %
    
    
    13.3
    
    
    
    701.6
    
    
    
    1.9
    %Short-term investments
    
    
    3.1
    
    
    
    116.9
    
    
    
    2.7
    %
    
    
    3.2
    
    
    
    113.5
    
    
    
    2.8
    %
    
    
    1.9
    
    
    
    88.0
    
    
    
    2.2
    %
 
 *
    
    Average amount is calculated based on market value. Securities available for sale
  As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Japanese bonds
    
    ¥
    2,305,653
    
    
    ¥
    2,240,363
    
    
    ¥
    2,312,745Foreign bonds
    
    
    1,028,532
    
    
    
    754,507
    
    
    
    699,558Total bonds other than affiliates
    
    
    3,334,185
    
    
    
    2,994,870
    
    
    
    3,012,303Japanese equities
    
    
    2,276,543
    
    
    
    1,454,157
    
    
    
    1,778,711Foreign equities
    
    
    271,230
    
    
    
    249,276
    
    
    
    219,035Total equities other than affiliates
    
    
    2,547,773
    
    
    
    1,703,433
    
    
    
    1,997,746Securities available for sale
    
    ¥
    5,881,958
    
    
    ¥
    4,698,303
    
    
    ¥
    5,010,049
 Japanese bonds
 Japanese equities
 Foreign bonds
 36




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##### Table of Contents



Loans
  As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Mortgage loans on real estate
    
    ¥
    9,859
    
    
    ¥
    9,224
    
    
    ¥
    7,260Other long-term investments:Mortgage loans on vessels and facilities
    
    
    277
    
    
    
    119
    
    
    
    37Collateral and guaranteed loans
    
    
    403,488
    
    
    
    396,335
    
    
    
    396,271Unsecured loans
    
    
    345,467
    
    
    
    315,117
    
    
    
    295,297Policy loans
    
    
    39,536
    
    
    
    43,254
    
    
    
    44,339Total
    
    ¥
    798,627
    
    
    ¥
    764,049
    
    
    ¥
    743,204
     As ofMarch 31, 2010(Yen in billions)Due within one year
    
    ¥
    113.2Due after one year through five years
    
    
    304.4Due after five years
    
    
    301.0Total
    
    ¥
    718.6
  As ofMarch 31, 2010(Yen in billions)Predetermined interest rate
    
    ¥
    171.6Floating or adjustable interest rates
    
    
    433.8Total
    
    ¥
    605.4
  37




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##### Table of Contents



Short-Term Investments
  As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Money trust
    
    ¥
    47,832
    
    
    ¥
    13,727
    
    
    ¥
    9,093Invested cash
    
    
    56,948
    
    
    
    79,336
    
    
    
    58,377Other
    
    
    15,306
    
    
    
    13,789
    
    
    
    1,669Total
    
    ¥
    120,086
    
    
    ¥
    106,852
    
    
    ¥
    69,139Cash and Cash EquivalentsWe seek to hold adequate levels of deposits, savings and call loans in cash and cash
equivalents in order to maintain liquidity for indemnity payments which may become due any time
upon occurrence of the risks covered by the policies. Call loans are short-term loans, generally
overnight to three weeks, made to banks, securities companies or money market dealers.Investment ResultsThe following table, prepared on a U.S. GAAP basis, sets forth MSIGs investment results for
each period indicated:As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Interest income, net of investment expenses:Interest on fixed maturities
    
    ¥
    89,704
    
    
    ¥
    75,101
    
    
    ¥
    68,736Dividends from equity securities
    
    
    69,050
    
    
    
    53,196
    
    
    
    40,373Interest on mortgage loans on real estate
    
    
    328
    
    
    
    280
    
    
    
    239Rent from investment real estate
    
    
    4,926
    
    
    
    5,472
    
    
    
    6,123Interest on policy loans
    
    
    1,352
    
    
    
    1,425
    
    
    
    1,474Interest on other long-term investments
    
    
    13,871
    
    
    
    14,560
    
    
    
    13,343Interest on short-term investments
    
    
    3,078
    
    
    
    3,207
    
    
    
    1,851Others
    
    
    12,480
    
    
    
    11,375
    
    
    
    6,183Gross investment income
    
    
    194,789
    
    
    
    164,616
    
    
    
    138,322Less investment expenses
    
    
    9,524
    
    
    
    10,604
    
    
    
    10,589Net investment income
    
    
    185,265
    
    
    
    154,012
    
    
    
    127,733Realized gains (losses) on investments:Fixed maturities
    
    
    6,273
    
    
    
    (39,219
    )
    
    
    (10,403
    )Equity securities
    
    
    10,788
    
    
    
    (80,359
    )
    
    
    3,899Other investments
    
    
    (34,431
    )
    
    
    (15,307
    )
    
    
    11,240Total net investment income and realized gains on investments
    
    ¥
    167,895
    
    
    ¥
    19,127
    
    
    ¥
    132,469
 38




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##### Table of Contents



Competition
     Issues Relating to Non-payment and Under-payment of Insurance Claims
     39




---



##### Table of Contents



Insurance Industry Regulations
      40




---



##### Table of Contents



41




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##### Table of Contents



C. Organizational Structure.
 Subsidiaries and Affiliates
  Equity Held byCountry of
    
    MSIG, Directly orName
    
    Incorporation
    
    Indirectly (%)
    
    Main BusinessMitsui Sumitomo Insurance Company, Limited
    
    Japan
    
    
    100.0
    %
    
    Property and Casualty InsuranceMitsui Sumitomo Kirameki Life Insurance Company, Limited
    
    Japan
    
    
    100.0
    %
    
    Life InsuranceMITSUI SUMITOMO INSURANCE Venture Capital Co., Ltd.
    
    Japan
    
    
    100.0
    %
    
    Venture CapitalMitsui Direct General Insurance Company, Limited
    
    Japan
    
    
    73.4
    %(2)
    
    Property and Casualty InsuranceMSIG Holdings (Americas), Inc.
    
    U.S.A.
    
    
    100.0
    %
    
    Holding CompanyMitsui Sumitomo Insurance USA Inc.
    
    U.S.A.
    
    
    100.0
    %
    
    Property and Casualty InsuranceMitsui Sumitomo Insurance Company of America
    
    U.S.A.
    
    
    100.0
    %
    
    Property and Casualty InsuranceMitsui Sumitomo Seguros S/A.
    
    Brazil
    
    
    99.0
    %
    
    Property and Casualty InsuranceMSIG Holdings (Europe) Limited
    
    U.K.
    
    
    100.0
    %
    
    Holding CompanyMitsui Sumitomo Insurance (London Management) Ltd.
    
    U.K.
    
    
    100.0
    %
    
    Holding CompanyMitsui Sumitomo Insurance Company (Europe), Limited
    
    U.K.
    
    
    100.0
    %
    
    Property and Casualty InsuranceMitsui Sumitomo Insurance (London) Limited
    
    U.K.
    
    
    100.0
    %
    
    Property and Casualty InsuranceMSI Corporate Capital Limited
    
    U.K.
    
    
    100.0
    %
    
    Property and Casualty InsuranceMS Frontier Reinsurance Limited
    
    Bermuda
    
    
    100.0
    %
    
    ReinsuranceMitsui Sumitomo Reinsurance Limited
    
    Ireland
    
    
    100.0
    %
    
    ReinsuranceMSIG Holdings (Asia) Pte. Ltd.
    
    Singapore
    
    
    100.0
    %
    
    Holding CompanyMSIG Insurance (Singapore) Pte. Ltd.
    
    Singapore
    
    
    100.0
    %
    
    Property and Casualty InsuranceMitsui Sumitomo Insurance (Singapore) Pte. Ltd.
    
    Singapore
    
    
    100.0
    %
    
    Property and Casualty InsuranceMSIG Mingtai Insurance Co., Ltd.
    
    Taiwan
    
    
    100.0
    %
    
    Property and Casualty InsuranceMitsui Sumitomo Insurance (China) Company Limited
    
    China
    
    
    100.0
    %
    
    Property and Casualty InsuranceMSIG Insurance (Hong Kong) Limited
    
    China (Hong Kong)
    
    
    100.0
    %
    
    Property and Casualty InsuranceMSIG Insurance (Vietnam) Company Limited
    
    Vietnam
    
    
    100.0
    %
    
    Property and Casualty InsurancePT. Asuransi MSIG Indonesia
    
    Indonesia
    
    
    80.0
    %
    
    Property and Casualty InsuranceMSIG Insurance (Thailand) Co., Ltd.
    
    Thailand
    
    
    80.3
    %
    
    Property and Casualty InsuranceMSIG Insurance (Malaysia) Bhd.
    
    Malaysia
    
    
    93.5
    %
    
    Property and Casualty InsuranceMSIG Insurance (Lao) Co., Ltd.
    
    Laos
    
    
    51.0
    %
    
    Property and Casualty InsuranceMitsui Sumitomo MetLife Insurance Co., Ltd.(1)
    
    Japan
    
    
    50.0
    %(3)
    
    Life insuranceSumitomo Mitsui Asset Management Company Limited(1)
    
    Japan
    
    
    27.5
    %
    
    Asset Management
 
 (1)
    
    This company is accounted for by the equity method.(2)
    
    MSIG holds 69.6% of voting rights of this company.(3)
    
    MSIG holds 51.0% of voting rights of this company. D. Property, Plants and Equipment.
     42




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##### Table of Contents



Floor SpacePrincipal Facilities or
    
    
    
    
    
    (SquareSubsidiary Name
    
    Location
    
    Principal Uses
    
    Meters)Chiba New Town Center
    
    2-2-1, Otsuka, Inzai-city, Chiba
    
    Computer Center
    
    
    78,703.06Surugadai Building
    
    3-9, Kanda-Surugadai, Chiyoda-ku, Tokyo
    
    Sales Office
    
    
    75,500.62Osaka Yodoyabashi Building
    
    4-3-1, Kitahama, Tyuuou-ku, Osaka-city, Osaka
    
    Sales Office
    
    
    45,742.58Hachioji Center
    
    1-41-1, Koyasu-cho, Hachioji-city, Tokyo
    
    Computer Center
    
    
    20,193.34Nagoya Building
    
    1-2-1, Nishiki, Naka-ku, Nagoya-city, Aichi
    
    Sales Office
    
    
    15,260.80Kobe Building
    
    1-1-18, Sakaedori, Tyuuou-ku, Kobe-city, Hyougo
    
    Sales Office
    
    
    11,100.99
  Floor Space(SquarePrincipal Facilities
    
    Location
    
    Principal Uses
    
    Meters)Shinjuku Building
    
    3-25-3, Yoyogi, Shibuya-ku,Tokyo
    
    Sales Office
    
    
    48,155.22Ebisu Building
    
    1-28-1, Ebisu, Shibuya-ku,Tokyo
    
    Head Office
    
    
    33,819.31Sakuragaoka Center
    
    1-7-2, Sekido, Tama-city,Tokyo
    
    Computer Center
    
    
    23,061.11Midosuji Building
    
    3-6-1, Hirano-cho, Chuo-ku,Osaka-city, Osaka
    
    Sales Office
    
    
    18,507.13Nagoya Building
    
    5-7-5, Chiyoda, Naka-ku,Nagoya-city, Aichi
    
    Sales Office
    
    
    11,746.81Sendai Building
    
    1-1-10, Kakyoin, Aoba-ku,Sendai-city, Miyagi
    
    Sales Office
    
    
    11,370.32
  Floor Space(SquarePrincipal Facilities
    
    Location
    
    Principal Uses
    
    Meters)Phoenix Tower
    
    4-15-10, Nishi-tenma, Kita-ku, Osaka-city, Osaka
    
    Osaka Head Office
    
    
    30,369.66Nishinomiya Operation Center
    
    6-140, Okuhata, Nishinomiya-city, Hyogo
    
    Computer Center
    
    
    15,098.71Yokohama Building
    
    5-48, Honchou, Naka-ku, Yokohama-city, Kanagawa
    
    Sales Office
    
    
    12,344.68Nagoya Building
    
    2-22-9, Meieki, Nishi-ku, Nagoya-city, Aichi
    
    Sales Office
    
    
    11,811.20Sendai Building
    
    2-8-10, Ichiban-cho, Aoba-ku, Sendai-city, Miyagi
    
    Sales Office
    
    
    10,350.66Phoenix Training Center
    
    2065-56, Nishizawa, Ishiki-aza, Oyama-cho,
    
    Training Center
    
    
    10,294.72Suntou-Gun, Shizuoka
   
 Item 4A.

Unresolved Staff Comments.  
 Item 5.

Operating and Financial Review and Prospects. A. Operating Results.
   43




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##### Table of Contents



Overview
     Result of Operations
  Year Ended March 31,2008
    
    
    2009
    
    
    2010
    
    
    2010(Yen in millions, dollar in thousands)Revenues:Net premiums written
    
    ¥
    1,537,616
    
    
    ¥
    1,448,273
    
    
    ¥
    1,395,238
    
    
    $
    15,002,559Less increase(decrease) in unearned premiums
    
    
    34,931
    
    
    
    (60,130
    )
    
    
    (1,399
    )
    
    
    (15,043
    )Net premiums earned
    
    
    1,502,685
    
    
    
    1,508,403
    
    
    
    1,396,637
    
    
    
    15,017,602Premium income for life insurance contracts
    
    
    192,731
    
    
    
    190,113
    
    
    
    188,373
    
    
    
    2,025,516Investment income, net of investment expenses
    
    
    185,265
    
    
    
    154,012
    
    
    
    127,733
    
    
    
    1,373,473Net realized gains (losses) on investmentsTotal other-than-temporary impairment losses on investments
    
    
    
    
    
    
    
    
    
    
    (15,666
    )
    
    
    (168,452
    )Portion of losses recognized in other comprehensive Income
    
    
    
    
    
    
    
    
    
    
    746
    
    
    
    8,022Net other-than-temporary losses recognized in Earnings
    
    
    
    
    
    
    
    
    
    
    (14,920
    )
    
    
    (160,430
    )Other realized gains on investments
    
    
    
    
    
    
    
    
    
    
    19,656
    
    
    
    211,355Net realized gains (losses) on investments
    
    
    (17,370
    )
    
    
    (134,885
    )
    
    
    4,736
    
    
    
    50,925Total revenue
    
    
    1,863,311
    
    
    
    1,717,643
    
    
    
    1,717,479
    
    
    
    18,467,516
 44




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##### Table of Contents



Year Ended March 31,2008
    
    
    2009
    
    
    2010
    
    
    2010(Yen in millions, dollar in thousands)Expenses:Losses, claims and loss adjustment expenses:Losses and claims incurred and provided for
    
    
    906,257
    
    
    
    960,041
    
    
    
    855,914
    
    
    
    9,203,376Related adjustment expenses
    
    
    82,370
    
    
    
    90,235
    
    
    
    81,971
    
    
    
    881,408Policyholder benefits for life insurance contracts
    
    
    156,683
    
    
    
    154,056
    
    
    
    150,346
    
    
    
    1,616,624Amortization of policy acquisition costs
    
    
    372,025
    
    
    
    398,660
    
    
    
    345,204
    
    
    
    3,711,871Investment income credited to investment deposits by
Policyholders
    
    
    48,498
    
    
    
    44,573
    
    
    
    47,304
    
    
    
    508,645Other expenses, net
    
    
    143,719
    
    
    
    152,054
    
    
    
    169,324
    
    
    
    1,820,689Total expenses
    
    
    1,709,552
    
    
    
    1,799,619
    
    
    
    1,650,063
    
    
    
    17,742,613Income (loss) before income taxes
    
    
    153,759
    
    
    
    (81,976
    )
    
    
    67,416
    
    
    
    724,903Income taxes:Current
    
    
    25,368
    
    
    
    29,874
    
    
    
    18,485
    
    
    
    198,764Deferred
    
    
    22,769
    
    
    
    (41,910
    )
    
    
    (1,398
    )
    
    
    (15,033
    )Total income tax (benefit) expense
    
    
    48,137
    
    
    
    (12,036
    )
    
    
    17,087
    
    
    
    183,731Net income(loss)
    
    
    105,622
    
    
    
    (69,940
    )
    
    
    50,329
    
    
    
    541,172Less: Net income attributable to non-controlling interests
    
    
    826
    
    
    
    300
    
    
    
    346
    
    
    
    3,720Net income(loss) attributable to MSIG
    
    ¥
    104,796
    
    
    ¥
    (70,240
    )
    
    ¥
    49,983
    
    
    $
    537,452
 Fiscal Year Ended March 31, 2010 compared with the Fiscal Year Ended March 31, 2009
 Net Premiums Written
       45




---



##### Table of Contents



Premium Income for Life Insurance Contracts
 Investment Income
 Realized Gains (Losses) on Investments
 Losses, Claims and Loss Adjustment Expenses
     46




---



##### Table of Contents



Policyholder Benefits for Life Insurance Contracts
 Policy Acquisition Costs
 Investment Income Credited to Investment Deposits by Policyholders
 Other expenses, net
 Earnings (Loss) Before Income Taxes
 Income Taxes
 Net Income (loss) Attributable to MSIG
 Fiscal Year Ended March 31, 2009 compared with the Fiscal Year Ended March 31, 2008
 Net Premiums Written
 47




---



##### Table of Contents



Premium Income for Life Insurance Contracts
 Investment Income
 Realized Gains (Losses) on Investments
 48




---



##### Table of Contents



Losses, Claims and Loss Adjustment Expenses
        Policyholder Benefits for Life Insurance Contracts
 49




---



##### Table of Contents



Policy Acquisition Costs
 Investment Income Credited to Investment Deposits by Policyholders
 Other expenses
 Income (Loss) Before Income Taxes
 Income Taxes
 Net Income (loss)
 Liabilities for Losses and Claims
  Credit Losses and Non-Performing Loans
   50




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##### Table of Contents



As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Recorded investment in impaired loans:Mortgage loans on real estate
    
    ¥
    1,150
    
    
    ¥
    1,387
    
    
    ¥
    1,251Mortgage loans on vessels and facilities
    
    
    4
    
    
    
    3
    
    
    
    3Collateral and guaranteed loans
    
    
    1,724
    
    
    
    
    
    
    
    Unsecured loans
    
    
    1,575
    
    
    
    2,487
    
    
    
    5,009Total
    
    ¥
    4,453
    
    
    ¥
    3,877
    
    
    ¥
    6,263Valuation allowance:Mortgage loans on real estate
    
    ¥
    254
    
    
    ¥
    271
    
    
    ¥
    256Collateral and guaranteed loans
    
    
    104
    
    
    
    
    
    
    
    1Unsecured loans
    
    
    294
    
    
    
    1,579
    
    
    
    3,562Total
    
    ¥
    652
    
    
    ¥
    1,850
    
    
    ¥
    3,819
 Solvency Margin Ratio
     Mitsui Sumitomo Insurance Company, Limited
 As of March 31,2009
    
    2010
    
    Change(Yen in billions, except percentages)
    
    (Yen in billions)
    
    (Percentage or points)Solvency margin total amount
    
    ¥
    1,857.5
    
    
    ¥
    2,241.5
    
    
    ¥
    384.0
    
    
    
    20.7
    %Risk amount
    
    
    536.2
    
    
    
    534.0
    
    
    
    (2.2
    )
    
    
    (0.4
    )%Solvency margin ratio
    
    
    692.8
    %
    
    
    839.4
    %
    
    
    
    
    
    146.6pointsMitsui Direct General Insurance Co., LimitedAs of March 31,2009
    
    2010
    
    Change(Yen in billions, except percentages)
    
    (Yen in billions)
    
    (Percentage or points)Solvency margin total amount
    
    ¥
    6.5
    
    
    ¥
    10.7
    
    
    ¥
    4.2
    
    
    
    65.9
    %Risk amount
    
    
    2.8
    
    
    
    3.2
    
    
    
    0.4
    
    
    
    15.7
    %Solvency margin ratio
    
    
    467.0
    %
    
    
    669.8
    %
    
    
    
    
    
    202.8points
 51




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##### Table of Contents



Mitsui Sumitomo Kirameki Life Insurance Co., Limited
 As of March 31,2009
    
    2010
    
    Change(Yen in billions, except percentages)
    
    (Yen in billions)
    
    (Percentage or points)Solvency margin total amount
    
    ¥
    114.1
    
    
    ¥
    124.4
    
    
    ¥
    10.3
    
    
    
    9.1
    %Risk amount
    
    
    11.0
    
    
    
    11.7
    
    
    
    0.7
    
    
    
    6.0
    %Solvency margin ratio
    
    
    2,069.1
    %
    
    
    2,129.7
    %
    
    
    
    
    
    60.6pointsMitsui Sumitomo MetLife Insurance Co., Ltd.As of March 31,2009
    
    2010
    
    Change(Yen in billions, except percentages)
    
    (Yen in billions)
    
    (Percentage or points)Solvency margin total amount
    
    ¥
    116.5
    
    
    ¥
    174.3
    
    
    ¥
    57.8
    
    
    
    49.6
    %Risk amount
    
    
    31.9
    
    
    
    32.9
    
    
    
    1.0
    
    
    
    3.2
    %Solvency margin ratio
    
    
    729.6
    %
    
    
    1,058.0
    %
    
    
    
    
    
    328.4points
 Effects of Inflation
  Exposure to Currency Fluctuations
  MS&ADs Credit Rating
   As of April 1, 2010Mitsui Sumitomo Insurance Company, LimitedRating Agency and Category
    
    Rating(1)Standard & Poors Insurer Financial Strength Rating
    
    AA-Counterparty Rating
    
    AA-Long-term Senior Debt Rating
    
    AA-Commercial Paper Rating
    
    A-1+Moodys Investors Service Insurance Financial Strength Rating
    
    Aa3Issuer Rating
    
    Aa3Commercial Paper Rating
    
    P-1
 52




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##### Table of Contents



As of April 1, 2010Aioi Insurance Company, LimitedRating Agency and Category
    
    Rating(1)Standard & Poors Insurer Financial Strength Rating
    
    AA-Counterparty Rating
    
    AA-Moodys Investors Service Insurance Financial Strength Rating
    
    Aa3Nissay Dowa General Insurance Company, LimitedRating Agency and Category
    
    Rating(1)Standard & Poors Insurer Financial Strength Rating
    
    AA-Counterparty Rating
    
    AA-Commercial Paper Rating
    
    A-1+Mitsui Sumitomo Kirameki Life Insurance Co., Ltd.Rating Agency and Category
    
    Rating(1)Standard & Poors Insurer Financial Strength Rating
    
    AA-Mitsui Sumitomo MetLife Insurance Co., Ltd.Rating Agency and Category
    
    Rating(1)Standard & Poors Insurer Financial Strength Rating
    
    AA-
 
 (1)
    
    These ratings are entirely the opinion of the respective rating agencies and are thus not
to be construed as payment guarantees. These ratings are subject to revision by the
respective rating agencies. Critical Accounting Policies
   Insurance Reserves
 Losses, Claims and Loss Adjustment Expenses Liability
   Line of Business
 As of March 31,2009
    
    
    2010(Yen in millions)Property and casualty losses, claims and
loss adjustment expenses liability:Voluntary automobile
    
    ¥
    306,809
    
    
    ¥
    307,171Compulsory automobile liability
    
    
    396,302
    
    
    
    371,889Fire and allied lines
    
    
    103,634
    
    
    
    113,544Personal accident
    
    
    60,630
    
    
    
    62,384Cargo and transit
    
    
    35,302
    
    
    
    31,975Hull
    
    
    35,660
    
    
    
    34,011Other
    
    
    307,209
    
    
    
    294,461Total
    
    ¥
    1,245,546
    
    
    ¥
    1,215,435
 53




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##### Table of Contents



As of March 31,2009
    
    
    2010(Yen in millions)Losses and claims:Losses and claims of MSI Case reserves
    
    ¥
    505,408
    
    
    ¥
    469,914IBNR reserves
    
    
    432,454
    
    
    
    421,239Loss adjustment expenses
    
    
    43,551
    
    
    
    43,592Total losses and claims of MSI
    
    
    981,413
    
    
    
    934,745Losses and claims of non-life insurance
subsidiaries except MSI
    
    
    264,133
    
    
    
    280,690Total losses and claims of non-life insurance
subsidiaries
    
    
    1,245,546
    
    
    
    1,215,435Losses and claims of life insurance subsidiary
    
    
    10,976
    
    
    
    11,642Total losses and claims on consolidated basis
    
    ¥
    1,256,522
    
    
    ¥
    1,227,077
        54




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##### Table of Contents



Short-tailed Property and Casualty
    Long-tailed Bodily Injury Coverage
   Long-tailed run-off contracts
  55




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##### Table of Contents



Year Ended March 31,2008
    
    2009
    
    2010(Yen in millions, except percentages)Claims expenses
recognized in the
current year relating
to prior years, net
of reinsurance
    
    ¥
    (7,191
    )
    
    ¥
    (21,268
    )
    
    ¥
    (8,655
    )Claims expenses
recognized in the
current year relating
to prior years as a
percentage of opening
reserves for losses,
claims and loss
adjustment expenses,
net of reinsurance
    
    
    (0.8
    )%
    
    
    (2.1
    )%
    
    
    (0.9
    )%Claims expenses
recognized in the
current year relating
to prior years as a
percentage of net
incurred losses, net
of reinsurance
    
    
    (0.7
    )%
    
    
    (2.0
    )%
    
    
    (0.8
    )%
  Future Policy Benefits for Life Insurance Contracts
  Amortization of Deferred Policy Acquisition Costs
      56




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##### Table of Contents



Fair Value Measurements
      Financial Assets and Financial Liabilities classified as Level 3
  
    
    Fixed maturity securities: these comprise corporate bonds, municipal bonds and
residential mortgage backed securities RMBS valued using broker quotes, to which
primary inputs are unobservable in the market.Prices from third party pricing services are often unavailable for securities that are
rarely traded or traded only in privately negotiated transactions. As a result,
certain securities are priced via independent broker quotations which utilize inputs
that may be difficult to corroborate with observable market based data.MSIG performs an analysis of the prices and credit spreads received from third parties
to ensure that the prices represent a reasonable estimate of the fair value. This
process involves quantitative and qualitative analysis and is overseen by investment
and accounting professionals. As a result of this analysis, if MSIG determines there
is a more appropriate fair value based upon the available market data, the price
received from the third party is adjusted accordingly.Due to a general lack of transparency in the process that the brokers use to develop
prices, most valuations that are based on brokers prices are classified as Level 3.
 57




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##### Table of Contents




    
    Equity securities: these comprise non-traded equity securities and privately placed
non-traded investment trusts. The valuation of privately placed investment trusts requires significant management
judgment due to the absence of quoted market prices, the inherent lack of liquidity
and the long-term nature of such assets. As such, private equity investments are
valued initially based upon cost. Regularly, valuations are reviewed utilizing
available data including significant management estimates to determine if the carrying
value of these investments should be adjusted. Therefore, privately placed investment
trusts are included in Level 3 of the valuation hierarchy.
    
    Derivatives: Derivative products, typically the newest and most complex products or
products that have become illiquid, require more judgment in the implementation of the
valuation technique applied due to the complexity of the valuation assumptions and the
reduced observability of inputs. Derivatives in Level 3 mainly comprise credit
derivatives valued using internally established valuation models based on discounted
cash flows. Primary inputs to the models include interest rates, foreign exchange and
credit spreads. Credit spreads appropriately reflected factors such as default rates
and recovery rates. For credit derivatives for which credit spreads cannot be observed
in an active trading market (such as ABS- CDOs), MSIG uses quotes obtained from brokers
involved in valuing these instruments. Prior to use of the broker quotes, MSIG examines
if the structure and pricing mechanism of the instruments are reasonable.
    Total Assets and Liabilities Measuredat Fair Values
    
    
    Level 3 Assets and Liabilities2009
    
    
    2010
    
    
    2009
    
    
    2010(Yen in millions)
    
    
    (Yen in millions)Assets on a recurring basis:Securities available for sale:Fixed maturities
    
    ¥
    2,982,919
    
    
    ¥
    3,009,293
    
    
    ¥
    170,596
    
    
    ¥
    135,160Equity securities
    
    
    1,702,254
    
    
    
    1,996,571
    
    
    
    298,453
    
    
    
    283,365Short term-investments
    
    
    13,673
    
    
    
    9,025
    
    
    
    
    
    
    
    Other assets:Derivatives
    
    
    26,086
    
    
    
    14,154
    
    
    
    4,420
    
    
    
    2,034Assets on a nonrecurring basis
    
    
    2,457
    
    
    
    5,452
    
    
    
    2,457
    
    
    
    5,452Total assets in the fair value hierarchy
    
    ¥
    4,727,389
    
    
    ¥
    5,034,495
    
    
    ¥
    475,926
    
    
    ¥
    426,011% of assets in the fair value hierarchy
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    10.1
    %
    
    
    8.5
    %Liabilities on a recurring basis:Other liabilities:Derivatives
    
    ¥
    45,721
    
    
    ¥
    18,791
    
    
    ¥
    36,439
    
    
    ¥
    8,994Total liabilities in the fair value hierarchy
    
    ¥
    45,721
    
    
    ¥
    18,791
    
    
    ¥
    36,439
    
    
    ¥
    8,994% of liabilities in the fair value hierarchy
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    79.7
    %
    
    
    47.9
    %
 58




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##### Table of Contents



Net Realized
    
    
    Change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Changes inand
    
    
    Accumulated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UnrealizedUnrealized
    
    
    Other
    
    
    
    
    
    
    Transfers
    
    
    
    
    
    
    GainsBalance as
    
    
    Losses
    
    
    Comprehensive
    
    
    Purchases,
    
    
    in and/or
    
    
    Balance at
    
    
    (Losses) Heldof April 1,
    
    
    Included in
    
    
    Loss, Gross of
    
    
    Sales, and
    
    
    Out of
    
    
    End of
    
    
    at End ofMarch 31, 2009:
    
    2008
    
    
    Income(1)
    
    
    Tax
    
    
    Settlements
    
    
    Level 3
    
    
    Period
    
    
    Period(2)(Yen in millions)Securities available for sale:Fixed maturities
    
    ¥
    228,483
    
    
    ¥
    (3,352
    )
    
    ¥
    (7,744
    )
    
    ¥
    (46,791
    )
    
    ¥
    
    
    
    ¥
    170,596
    
    
    ¥
    (1,635
    )Equity securities
    
    
    287,550
    
    
    
    (16,404
    )
    
    
    (28,036
    )
    
    
    55,343
    
    
    
    
    
    
    
    298,453
    
    
    
    (16,404
    )Derivatives (net)
    
    
    (39,627
    )
    
    
    (9,266
    )
    
    
    
    
    
    
    16,874
    
    
    
    
    
    
    
    (32,019
    )
    
    
    (6,956
    )
 Net Realizedand
    
    
    Change in
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Changes inUnrealized
    
    
    Accumulated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    UnrealizedGains
    
    
    Other
    
    
    
    
    
    
    Transfers
    
    
    
    
    
    
    GainsBalance as
    
    
    (Losses)
    
    
    Comprehensive
    
    
    Purchases,
    
    
    in and/or
    
    
    Balance at
    
    
    (Losses) Heldof April 1,
    
    
    Included in
    
    
    Income, Gross
    
    
    Sales, and
    
    
    Out of
    
    
    End of
    
    
    at End ofMarch 31, 2010:
    
    2009
    
    
    Income(1)
    
    
    of Tax
    
    
    Settlements
    
    
    Level 3
    
    
    Period
    
    
    Period(2)(Yen in millions)Securities available for sale:Fixed maturities
    
    ¥
    170,596
    
    
    ¥
    (320
    )
    
    ¥
    5,550
    
    
    ¥
    (37,059
    )
    
    ¥
    (3,607
    )
    
    ¥
    135,160
    
    
    ¥
    (415
    )Equity securities
    
    
    298,453
    
    
    
    (3,735
    )
    
    
    12,254
    
    
    
    (30,364
    )
    
    
    6,757
    
    
    
    283,365
    
    
    
    (3,364
    )Derivatives (net)
    
    
    (32,019
    )
    
    
    23,117
    
    
    
    
    
    
    
    1,942
    
    
    
    
    
    
    
    (6,960
    )
    
    
    21,887
 
 (1)
    
    Included in Investment income, net of investment expenses and Net realized gains (losses)
on investments in the accompanying consolidated statement of operations.(2)
    
    Included in Net realized gains (losses) on investments in the accompanying consolidated
statement of operations.  Included in Earnings and Other Comprehensive Income (Loss)
    Purchases, Sales and Settlements
   Asset-Backed Securities and Credit Derivatives
  59




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##### Table of Contents



Carrying Values as of
    
    
    Fair Values as of
    
    
    Unrealized Profit and LossMarch 31,
    
    
    March 31,
    
    
    as of March 31,2009
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2010(Yen in millions)
    
    
    (Yen in millions)
    
    
    (Yen in millions)Structured investment vehicles (SIVs)
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    Collateralized debt obligations (CDOs)
    
    
    13,371
    
    
    
    11,639
    
    
    
    13,053
    
    
    
    11,857
    
    
    
    (318
    )
    
    
    218Commercial mortgage-backed securities
(CMBS)(1)
    
    
    17,251
    
    
    
    14,864
    
    
    
    16,430
    
    
    
    14,073
    
    
    
    (821
    )
    
    
    (791
    )Residential mortgage-backed securities
(RMBS)(1)
    
    
    139,335
    
    
    
    129,258
    
    
    
    138,924
    
    
    
    131,156
    
    
    
    (411
    )
    
    
    1,898Others(1)(2)
    
    
    18,681
    
    
    
    13,814
    
    
    
    18,681
    
    
    
    13,814
    
    
    
    
    
    
    
    Total
    
    ¥
    188,638
    
    
    ¥
    169,575
    
    
    ¥
    187,088
    
    
    ¥
    170,900
    
    
    ¥
    (1,551
    )
    
    ¥
    1,325
 
 (1)
    
    CMBS, RMBS and other ABS do not include sub-prime and Alt-A.(2)
    
    Others include ABCP and LBO loans.  Notional Amount as ofMarch 31,
    
    
    Fair Value as of March 31,2009
    
    
    2010
    
    
    2009
    
    
    2010(Yen in billions)
    
    
    (Yen in billions)Corporate CDSs
    
    ¥
    158.6
    
    
    ¥
    123.4
    
    
    ¥
    (7.7
    )
    
    ¥
    (0.3
    )Corporate CDOs
    
    
    388.4
    
    
    
    367.8
    
    
    
    (24.3
    )
    
    
    (7.2
    )ABS-CDO
    
    
    1.1
    
    
    
    0.8
    
    
    
    (0.0
    )
    
    
    0.1Total
    
    ¥
    548.2
    
    
    ¥
    492.0
    
    
    ¥
    (32.0
    )
    
    ¥
    (7.4
    )
  
    
    MSIG has underwritten the credit risk of 62 domestic and 8 overseas companies.
    
    Exposure to companies of A rating or higher accounts for 98% of the portfolio,
providing a high level of creditworthiness.
  
    
    Exposure to tranches higher or equal to A accounts for 96% of all tranches.
 Sensitivity Analysis
  Sensitivity Analysis (as of March 31, 2010)Change
    
    Notional Amount
    
    Decrease+ 10 bp
    
    ¥492.0 billion
    
    ¥(1.0) billion
 60




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##### Table of Contents



Investment Valuation and Impairments
 Valuation of investments
 Securities Available for Sale
    Fair Value% of TotalSecuritiesFixed Maturity
    
    
    Equity
    
    
    Total
    
    
    Available forSecurities
    
    
    Securities(1)
    
    
    Securities
    
    
    Sale(Yen in millions)Investment grade
    
    ¥
    2,842,123
    
    
    ¥
    1,320,221
    
    
    ¥
    4,162,344
    
    
    
    88.6
    %Non-investment grade
    
    
    6,258
    
    
    
    349
    
    
    
    6,607
    
    
    
    0.1Not rated(2)
    
    
    146,489
    
    
    
    382,863
    
    
    
    529,352
    
    
    
    11.3Total securities available for sale
    
    ¥
    2,994,870
    
    
    ¥
    1,703,433
    
    
    ¥
    4,698,303
    
    
    
    100.0
    %
 
 (1)
    
    MSIG classifies equity securities based upon issuers long-term bond rating.(2)
    
    Balance by internal rating of Total Securities was as follows: (Yen inmillions)BBB or above
    
    ¥
    257,303Below BBB
    
    
    36,790Funds/investment trusts, etc.
    
    
    235,259Total
    
    ¥
    529,352
   As of March 31,2009(Yen in millions)Traditional asset funds:Japanese stocks
    
    ¥
    9,386Foreign stocks
    
    
    32,558Japanese bonds
    
    
    6,733Foreign bonds
    
    
    50,978Sub-total
    
    
    99,655
 61




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##### Table of Contents



As of March 31,2009(Yen in millions)Alternative investment funds:Hedge Funds
    
    
    81,852Venture/Private Equity Funds, etc.
    
    
    53,752Sub-total
    
    
    135,604Total
    
    ¥
    235,259
    Fair Value% of TotalSecuritiesFixed Maturity
    
    
    Equity
    
    
    Total
    
    
    Available forSecurities
    
    
    Securities(1)
    
    
    Securities
    
    
    Sale(Yen in millions)Investment grade
    
    ¥
    2,899,568
    
    
    ¥
    1,635,416
    
    
    ¥
    4,534,984
    
    
    
    90.5
    %Non-investment grade
    
    
    5,639
    
    
    
    567
    
    
    
    6,206
    
    
    
    0.1Not rated(2)
    
    
    107,096
    
    
    
    361,763
    
    
    
    468,859
    
    
    
    9.4Total securities available for sale
    
    ¥
    3,012,303
    
    
    ¥
    1,997,746
    
    
    ¥
    5,010,049
    
    
    
    100.0
    %
 
 (1)
    
    MSIG classifies equity securities based upon issuers long-term bond rating.(2)
    
    Balance by internal rating of Total Securities was as follows: (Yen inmillions)BBB or above
    
    ¥
    237,668Below BBB
    
    
    45,940Funds/investment trusts, etc.
    
    
    185,251Total
    
    ¥
    468,859
   As of March 31,2010(Yen in millions)Traditional asset funds:Japanese stocks
    
    ¥
    10,263Foreign stocks
    
    
    34,435Foreign bonds
    
    
    33,122Sub-total
    
    
    77,820
 62




---



##### Table of Contents



As of March 31,2010(Yen in millions)Alternative investment funds:Hedge Funds
    
    
    63,877Venture/Private Equity Funds, etc.
    
    
    43,554Sub-total
    
    
    107,431Total
    
    ¥
    185,251
    Gross Unrealized Losses% of TotalFixed
    
    
    
    
    
    
    
    
    
    
    SecuritiesMaturity
    
    
    Equity
    
    
    Total
    
    
    Available forSecurities
    
    
    Securities(1)
    
    
    Securities
    
    
    Sale(Yen in millions)Investment grade
    
    ¥
    53,387
    
    
    ¥
    3,430
    
    
    ¥
    56,817
    
    
    
    71.2
    %Non-investment grade
    
    
    135
    
    
    

    

    
    
    
    135
    
    
    
    0.2Not rated
    
    
    2,874
    
    
    
    19,947
    
    
    
    22,821
    
    
    
    28.6Total securities available for sale
    
    ¥
    56,396
    
    
    ¥
    23,377
    
    
    ¥
    79,773
    
    
    
    100.0
    %
 
 (1)
    
    MSIG classifies equity securities based upon issuers long-term bond rating.  Gross Unrealized Losses% of TotalFixed
    
    
    
    
    
    
    
    
    
    
    SecuritiesMaturity
    
    
    Equity
    
    
    Total
    
    
    Available forSecurities
    
    
    Securities(1)
    
    
    Securities
    
    
    Sale(Yen in millions)Investment grade
    
    ¥
    20,720
    
    
    ¥
    1,717
    
    
    ¥
    22,437
    
    
    
    69.4
    %Non-investment grade
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    0.0Not rated
    
    
    2,915
    
    
    
    6,959
    
    
    
    9,874
    
    
    
    30.6Total securities available for sale
    
    ¥
    23,635
    
    
    ¥
    8,677
    
    
    ¥
    32,312
    
    
    
    100.0
    %
 
 (1)
    
    MSIG classifies equity securities based upon issuers long-term bond rating. 63




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##### Table of Contents



Gross Unrealized Gains% of TotalFixed
    
    
    
    
    
    
    
    
    
    
    SecuritiesMaturity
    
    
    Equity
    
    
    Total
    
    
    Available forSecurities
    
    
    Securities(1)
    
    
    Securities
    
    
    Sale(Yen in millions)Investment grade
    
    ¥
    57,775
    
    
    ¥
    533,728
    
    
    ¥
    591,503
    
    
    
    87.8
    %Non-investment grade
    
    
    42
    
    
    
    42
    
    
    
    84
    
    
    
    0.0Not rated
    
    
    2,346
    
    
    
    79,920
    
    
    
    82,266
    
    
    
    12.2Total securities available for sale
    
    ¥
    60,163
    
    
    ¥
    613,690
    
    
    ¥
    673,853
    
    
    
    100.0
    %
 
 (1)
    
    MSIG classifies equity securities based upon issuers long-term bond rating.  Gross Unrealized Gains% of TotalFixed
    
    
    
    
    
    
    
    
    
    
    SecuritiesMaturity
    
    
    Equity
    
    
    Total
    
    
    Available forSecurities
    
    
    Securities(1)
    
    
    Securities
    
    
    Sale(Yen in millions)Investment grade
    
    ¥
    74,646
    
    
    ¥
    865,319
    
    
    ¥
    939,965
    
    
    
    88.9
    %Non-investment grade
    
    
    1,163
    
    
    
    352
    
    
    
    1,515
    
    
    
    0.1Not rated
    
    
    2,376
    
    
    
    113,962
    
    
    
    116,338
    
    
    
    11.0Total securities available for sale
    
    ¥
    78,185
    
    
    ¥
    979,633
    
    
    ¥
    1,057,818
    
    
    
    100.0
    %
 
 (1)
    
    MSIG classifies equity securities based upon issuers long-term bond rating.  Gross Unrealized LossesFixedMaturity
    
    
    Equity
    
    
    TotalSecurities
    
    
    Securities
    
    
    Securities(Yen in millions)Less than one year
    
    ¥
    30,601
    
    
    ¥
    18,341
    
    
    ¥
    48,942Over one year
    
    
    25,795
    
    
    
    5,036
    
    
    
    30,831Total
    
    ¥
    56,396
    
    
    ¥
    23,377
    
    
    ¥
    79,773
  Gross Unrealized LossesFixedMaturity
    
    
    Equity
    
    
    TotalSecurities
    
    
    Securities
    
    
    Securities(Yen in millions)Less than one year
    
    ¥
    3,724
    
    
    ¥
    1,347
    
    
    ¥
    5,071Over one year
    
    
    19,911
    
    
    
    7,330
    
    
    
    27,241Total
    
    ¥
    23,635
    
    
    ¥
    8,677
    
    
    ¥
    32,312
 64




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##### Table of Contents



GrossUnrealizedLosses
    
    
    Fair Value(Yen in millions)Due in one year or less
    
    ¥
    4,842
    
    
    ¥
    112,980Due after one year through five years
    
    
    27,957
    
    
    
    403,202Due after five years through ten years
    
    
    13,084
    
    
    
    168,688Due after ten years
    
    
    9,764
    
    
    
    175,160Subtotal
    
    
    55,647
    
    
    
    860,030Securities held by overseas subsidiaries
    
    
    749
    
    
    
    23,891Total
    
    ¥
    56,396
    
    
    ¥
    883,921
  GrossUnrealizedLosses
    
    
    Fair Value(Yen in millions)Due in one year or less
    
    ¥
    2,054
    
    
    ¥
    65,230Due after one year through five years
    
    
    8,675
    
    
    
    184,430Due after five years through ten years
    
    
    6,857
    
    
    
    102,598Due after ten years
    
    
    5,686
    
    
    
    185,566Subtotal
    
    
    23,272
    
    
    
    537,824Securities held by overseas subsidiaries
    
    
    363
    
    
    
    33,281Total
    
    ¥
    23,635
    
    
    ¥
    571,105
  As of March 31,2009
    
    
    2010(Yen in millions)Equity securities
    
    ¥
    23,377
    
    
    ¥
    8,677Fixed maturity securities
    
    
    56,396
    
    
    
    23,635Total gross unrealized losses
    
    ¥
    79,773
    
    
    ¥
    32,312
  Investment concentration
  65




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##### Table of Contents



Maturity profile
  Unrealized losses of fixed maturity securities
   Investment Impairments
 Securities Available for Sale
      66




---



##### Table of Contents



Valuation Allowances for Loan Losses
  As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Mortgage loans on real estate
    
    ¥
    9,859
    
    
    ¥
    9,224
    
    
    ¥
    7,260Other long-term investments:Mortgage loans on vessels and facilities
    
    
    277
    
    
    
    119
    
    
    
    37Collateral and guaranteed loans
    
    
    403,488
    
    
    
    396,335
    
    
    
    396,271Unsecured loans
    
    
    345,467
    
    
    
    315,117
    
    
    
    295,297Policy loans
    
    
    39,536
    
    
    
    43,254
    
    
    
    44,339Total
    
    ¥
    798,627
    
    
    ¥
    764,049
    
    
    ¥
    743,204
       67




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##### Table of Contents



As of March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Recorded investment in impaired loans:Mortgage loans on real estate
    
    ¥
    1,150
    
    
    ¥
    1,387
    
    
    ¥
    1,251Mortgage loans on vessels and facilities
    
    
    4
    
    
    
    3
    
    
    
    3Collateral and guaranteed loans
    
    
    1,724
    
    
    
    
    
    
    
    Unsecured loans
    
    
    1,575
    
    
    
    2,487
    
    
    
    5,009Total
    
    ¥
    4,453
    
    
    ¥
    3,877
    
    
    ¥
    6,263Valuation allowance:Mortgage loans on real estate
    
    ¥
    254
    
    
    ¥
    271
    
    
    ¥
    256Mortgage loans on vessels and facilities
    
    
    
    
    
    
    
    
    
    
    1Collateral and guaranteed loans
    
    
    104
    
    
    
    
    
    
    
    Unsecured loans
    
    
    294
    
    
    
    1,579
    
    
    
    3,562Total
    
    ¥
    652
    
    
    ¥
    1,850
    
    
    ¥
    3,819
   Accounting for Deposit-Type Insurance Products
    Operating Segment Analysis
  68




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##### Table of Contents



Property and
    
    
    
    
    
    
    Adjustment andCasualty Insurance
    
    
    Life Insurance
    
    
    Elimination
    
    
    Consolidated(Yen in millions)2008Net premiums written
    
    ¥
    1,541,032
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    1,541,032Net claims paid
    
    
    879,725
    
    
    
    
    
    
    
    
    
    
    
    879,725Life insurance premiums
    
    
    
    
    
    
    156,528
    
    
    
    
    
    
    
    156,528Life insurance claims
    
    
    
    
    
    
    31,703
    
    
    
    
    
    
    
    31,703Commission and collection expenses
    
    
    234,640
    
    
    
    14,740
    
    
    
    (395
    )
    
    
    248,985Operating expenses and general and
administrative expenses
    
    
    271,198
    
    
    
    21,560
    
    
    
    (2,416
    )
    
    
    290,342Interest and dividends received, net
    
    
    114,403
    
    
    
    16,232
    
    
    
    (20
    )
    
    
    130,615Ordinary profit (loss)
    
    
    66,591
    
    
    
    (5,724
    )
    
    
    
    
    
    
    60,867Income Taxes
    
    
    15,159
    
    
    
    241
    
    
    
    
    
    
    
    15,400Net income (loss)
    
    
    46,706
    
    
    
    (6,177
    )
    
    
    (501
    )
    
    
    40,028Total assets
    
    ¥
    7,388,669
    
    
    ¥
    1,009,780
    
    
    ¥
    (731
    )
    
    ¥
    8,397,718
 Property and
    
    
    
    
    
    
    Adjustment andCasualty Insurance
    
    
    Life Insurance
    
    
    Elimination
    
    
    Consolidated(Yen in millions)2009Net premiums written
    
    ¥
    1,445,651
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    1,445,651Net claims paid
    
    
    892,711
    
    
    
    
    
    
    
    
    
    
    
    892,711Life insurance premiums
    
    
    
    
    
    
    133,368
    
    
    
    
    
    
    
    133,368Life insurance claims
    
    
    
    
    
    
    36,438
    
    
    
    
    
    
    
    36,438Commission and collection expenses
    
    
    231,359
    
    
    
    14,841
    
    
    
    (504
    )
    
    
    245,696Operating expenses and general and
administrative expenses
    
    
    281,903
    
    
    
    23,040
    
    
    
    (2,593
    )
    
    
    302,350Interest and dividends received, net
    
    
    98,256
    
    
    
    18,396
    
    
    
    (187
    )
    
    
    116,465Ordinary loss
    
    
    (8,574
    )
    
    
    (3,914
    )
    
    
    (557
    )
    
    
    (13,045
    )Income Taxes
    
    
    1,583
    
    
    
    277
    
    
    
    4
    
    
    
    1,864Net income (loss)
    
    
    13,540
    
    
    
    (4,418
    )
    
    
    (930
    )
    
    
    8,192Total assets
    
    ¥
    6,328,170
    
    
    ¥
    1,090,883
    
    
    ¥
    21,657
    
    
    ¥
    7,440,710
 Property and
    
    
    
    
    
    
    Adjustment andCasualty Insurance
    
    
    Life Insurance
    
    
    Elimination
    
    
    Consolidated(Yen in millions)2010Net premiums written
    
    ¥
    1,394,165
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    1,394,165Net claims paid
    
    
    914,692
    
    
    
    
    
    
    
    
    
    
    
    914,692Life insurance premiums
    
    
    
    
    
    
    135,165
    
    
    
    
    
    
    
    135,165Life insurance claims
    
    
    
    
    
    
    41,717
    
    
    
    
    
    
    
    41,717Commission and collection expenses
    
    
    228,591
    
    
    
    15,124
    
    
    
    (578
    )
    
    
    243,137
 69




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##### Table of Contents



Property and
    
    
    
    
    
    
    Adjustment andCasualty Insurance
    
    
    Life Insurance
    
    
    Elimination
    
    
    Consolidated(Yen in millions)Operating expenses and general and
administrative expenses
    
    
    270,787
    
    
    
    25,127
    
    
    
    (953
    )
    
    
    294,961Interest and dividends received, net
    
    
    70,228
    
    
    
    19,821
    
    
    
    (229
    )
    
    
    89,820Ordinary profit
    
    
    48,009
    
    
    
    5,024
    
    
    
    (338
    )
    
    
    52,695Income Taxes
    
    
    11,874
    
    
    
    284
    
    
    
    1
    
    
    
    12,159Net income
    
    
    33,930
    
    
    
    4,499
    
    
    
    (789
    )
    
    
    37,640Total assets
    
    ¥
    6,343,386
    
    
    ¥
    1,168,528
    
    
    ¥
    7,711
    
    
    ¥
    7,519,625
  Direct PremiumsWritten (IncludingDeposit Premiumsfrom Policyholders)
    
    
    Net Premiums Written
    
    
    Net Claims Paid(Yen in millions)2008Fire and Allied Lines
    
    ¥
    317,882
    
    
    ¥
    225,161
    
    
    ¥
    104,817Marine
    
    
    121,969
    
    
    
    104,127
    
    
    
    44,367Personal Accident
    
    
    298,155
    
    
    
    138,217
    
    
    
    70,233Voluntary Automobile
    
    
    634,948
    
    
    
    624,950
    
    
    
    391,878Compulsory Automobile Liability
    
    
    165,851
    
    
    
    191,255
    
    
    
    136,542Other
    
    
    287,460
    
    
    
    257,322
    
    
    
    131,888Total
    
    ¥
    1,826,265
    
    
    ¥
    1,541,032
    
    
    ¥
    879,725
 Direct PremiumsWritten (IncludingDeposit Premiumsfrom Policyholders)
    
    
    Net Premiums Written
    
    
    Net Claims Paid(Yen in millions)2009Fire and Allied Lines
    
    ¥
    314,513
    
    
    ¥
    220,096
    
    
    ¥
    96,270Marine
    
    
    110,566
    
    
    
    93,681
    
    
    
    42,481Personal Accident
    
    
    263,397
    
    
    
    135,937
    
    
    
    71,916Voluntary Automobile
    
    
    615,451
    
    
    
    608,613
    
    
    
    393,312Compulsory Automobile Liability
    
    
    137,598
    
    
    
    148,502
    
    
    
    137,383Other
    
    
    258,713
    
    
    
    238,822
    
    
    
    151,349Total
    
    ¥
    1,700,238
    
    
    ¥
    1,445,651
    
    
    ¥
    892,711
 Direct PremiumsWritten (IncludingDeposit Premiumsfrom policyholders)
    
    
    Net Premiums Written
    
    
    Net Claims Paid(Yen in millions)2010Fire and Allied Lines
    
    ¥
    309,650
    
    
    ¥
    218,268
    
    
    ¥
    96,343Marine
    
    
    91,817
    
    
    
    75,936
    
    
    
    40,443Personal Accident
    
    
    246,694
    
    
    
    135,129
    
    
    
    77,047Voluntary Automobile
    
    
    615,908
    
    
    
    610,956
    
    
    
    395,925Compulsory Automobile Liability
    
    
    129,284
    
    
    
    134,932
    
    
    
    133,723Other
    
    
    243,482
    
    
    
    218,944
    
    
    
    171,211Total
    
    ¥
    1,636,835
    
    
    ¥
    1,394,165
    
    
    ¥
    914,692
 70




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##### Table of Contents



Fiscal Year Ended March 31, 2010 Compared to Fiscal Year Ended March 31, 2009
 Non-Life Insurance
  Fire and Allied Insurance
 Marine Insurance
 Personal Accident Insurance
 Voluntary Automobile Insurance
 Compulsory Automobile Liability
 Other Property and Casualty Insurance
 Life Insurance
  Fiscal Year Ended March 31, 2009 Compared to Fiscal Year Ended March 31, 2008
 Non-Life Insurance
  71




---



##### Table of Contents



Fire and Allied Insurance
 Marine Insurance
 Personal Accident Insurance
 Voluntary Automobile Insurance
 Compulsory Automobile Liability
 Other Property and Casualty Insurance
 Life Insurance
  Recent Accounting Pronouncements Not Yet Adopted
    72




---



##### Table of Contents



B. Liquidity and Capital Resources
 Liquidity
    Capital Resources
    73




---



##### Table of Contents



Cash Flows
 Year Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Net cash provided by operating activities
    
    ¥
    308,007
    
    
    ¥
    157,480
    
    
    ¥
    94,672Net cash provided by (used in) investing activities
    
    
    (197,879
    )
    
    
    84,693
    
    
    
    58,031Net cash used in financing activities
    
    
    (106,473
    )
    
    
    (109,075
    )
    
    
    (234,762
    )Effect of exchange rate changes on cash and cash
equivalents
    
    
    (5,306
    )
    
    
    (45,944
    )
    
    
    8,554Net change in cash and cash equivalents
    
    
    (1,651
    )
    
    
    87,154
    
    
    
    (73,505
    )Cash and cash equivalents at beginning of year
    
    
    369,941
    
    
    
    368,290
    
    
    
    455,444Cash and cash equivalents at end of year
    
    ¥
    368,290
    
    
    ¥
    455,444
    
    
    ¥
    381,939
      Fiscal Year Ended March 31, 2010 compared with the Fiscal Year Ended March 31, 2009
     74




---



##### Table of Contents



Fiscal Year Ended March 31, 2009 compared with the Fiscal Year Ended March 31, 2008
     C. Research and Development, Patents and Licenses, etc.
  D. Trend Information.
  E. Off-Balance Sheet Arrangements.
  F. Contractual Obligations.
  Contractual Obligations
 Payments Due by PeriodContractual Obligations
    
    Total
    
    
    Less Than 1 Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    After 5 Years(Yen in millions)Losses, claims and loss adjustment expenses(1)
    
    ¥
    1,227,077
    
    
    ¥
    679,137
    
    
    ¥
    363,298
    
    
    ¥
    123,874
    
    
    ¥
    60,768Future policy benefits for life insurance contracts(2)
    
    
    2,517,052
    
    
    
    123,556
    
    
    
    260,035
    
    
    
    232,824
    
    
    
    1,900,637Investment deposits by policyholders(3)
    
    
    2,773,686
    
    
    
    346,271
    
    
    
    579,455
    
    
    
    469,231
    
    
    
    1,378,729Long-term debt
    
    
    100,703
    
    
    
    1,524
    
    
    
    33,048
    
    
    
    66,131
    
    
    
    Capital lease obligations
    
    
    1,721
    
    
    
    716
    
    
    
    741
    
    
    
    236
    
    
    
    28Operating leases
    
    
    9,689
    
    
    
    2,798
    
    
    
    3,158
    
    
    
    1,419
    
    
    
    2,314Total(4)
    
    ¥
    6,629,928
    
    
    ¥
    1,154,002
    
    
    ¥
    1,239,735
    
    
    ¥
    893,715
    
    
    ¥
    3,342,476
 
 (1)
    
    MSIG estimates the timing of cash flows with respect to losses, claims and loss adjustment
expenses based on its historical loss development payment patterns.(2)
    
    MSIG estimates the timing of cash flows with respect to future policy benefits for life
insurance contracts based on its historical experience and expectations of future payment
patterns. Uncertainties exist, however, particularly with respect to mortality, morbidity,
expenses, customer lapse and renewal premiums for life policies. Accordingly, MSIGs actual
experience may differ from its estimates. In addition, the amounts set forth in the table
above do not reflect MSIGs estimates of future premiums and reinsurance recoveries.
The total amount of future policy benefit for life insurance contracts set forth in the table
above (¥2,517,052 million) exceeds the amount of corresponding liabilities of ¥1,022,413 million
reflected in MSIGs consolidated balance sheet as of March 31, 2009, as the amounts set forth in
the table above are undiscounted and do not reflect the impact of future premium revenue.(3)
    
    MSIG estimates the timing of cash flows and its expectation of future payment patterns with
respect to investment deposits by policyholders based on its historical experience, taking
into account contractual maturity dates and expected customer lapse and withdrawal activity.
Customer lapse and withdrawal activity, however, are inherently uncertain and outside of
MSIGs control. Accordingly, MSIGs actual experience may differ from the estimates. In
addition, the amounts set forth in the table above do not reflect MSIGs estimates of future
premiums and reinsurance recoveries. The total amount of investment deposits by policyholders
set forth in the table above (¥2,773,686 million) exceeds the amount of corresponding
liabilities of ¥1,956,376 million reflected in MSIGs consolidated balance sheet as of March
31, 2010, as the amounts set forth in the table above are undiscounted and do not reflect the
impact of future premium revenue.(4)
    
    The total amount of expected future pension payments has not been included in this table as
such amount was not determinable as of March 31, 2010. MSIG expects to contribute
approximately ¥12,124 million to its pension plans for the year ending March 31, 2011. See
Note 14 to MSIGs consolidated financial statements. 75




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##### Table of Contents



Item 6.

Directors, Senior Management and Employees. A. Directors and Senior Management.
  Director or
    
    Number of sharesCorporate Auditor
    
    owned as ofName
    
    Position
    
    Date of Birth
    
    Current Term Expires
    
    Since
    
    April 1, 2010Directors:Toshiaki Egashira
    
    President and Director
    
    November 30, 1948
    
    June, 2011
    
    April 1, 2008
    
    
    12,400Ichiro Tateyama
    
    Director
    
    June 8, 1943
    
    June, 2011
    
    April 1, 2010
    
    
    16,127Tadashi Kodama
    
    Director
    
    November 11, 1947
    
    June, 2011
    
    April 1, 2010
    
    
    17,480Yasuyoshi Karasawa
    
    Director
    
    October 27, 1950
    
    June, 2011
    
    April 1, 2008
    
    
    8,200Susumu Fujimoto
    
    Director
    
    December 5, 1948
    
    June, 2011
    
    April 1, 2008
    
    
    8,600Shuhei Horimoto
    
    Director
    
    August 19, 1954
    
    June, 2011
    
    June 25, 2009
    
    
    4,754Hisahito Suzuki
    
    Director
    
    September 15, 1950
    
    June, 2011
    
    April 1, 2010
    
    
    11,970Masanori Yoneda
    
    Director
    
    July 24, 1950
    
    June, 2011
    
    April 1, 2010
    
    
    8,746Katsuaki Ikeda
    
    Director
    
    September 8, 1951
    
    June, 2011
    
    April 1, 2008
    
    
    11,200Toshihiko Seki
    
    Director
    
    February 28, 1941
    
    June, 2011
    
    April 1, 2008
    
    
    1,900Akira Watanabe
    
    Director
    
    February 16, 1947
    
    June, 2011
    
    April 1, 2010
    
    
    Mitsuhiro Umezu
    
    Director
    
    May 18, 1957
    
    June, 2011
    
    April 1, 2010
    
    
    Daiken Tsunoda
    
    Director
    
    January 29, 1967
    
    June, 2011
    
    April 1, 2010
    
    
    Corporate Auditors:Takashi Yamashita
    
    Corporate Auditor
    
    July 7, 1946
    
    June, 2012
    
    April 1, 2008
    
    
    9,600Masahiko Oji
    
    Corporate Auditor
    
    March 9, 1946
    
    June, 2013
    
    April 1, 2010
    
    
    10,260Sosuke Yasuda
    
    Corporate Auditor
    
    December 15, 1943
    
    June, 2012
    
    April 1, 2008
    
    
    Kuniaki Nomura
    
    Corporate Auditor
    
    June 13, 1945
    
    June, 2013
    
    April 1, 2010
    
    
    Hiroyuki Tezuka
    
    Corporate Auditor
    
    May 8, 1961
    
    June, 2013
    
    April 1, 2010
    
    
    
  Toshiaki Egashira
    
    President, Director and CEO since April 1, 2009(November 30, 1948)
    
    (Chairman and Director, Chairman Executive Officer of MSI since 2010)2001 Executive Officer of MSI2003 Managing Executive Officer of MSI2006 President, Director and CEO of MSI2008 President and Director of MSIG (currently, MS&AD)Ichiro Tateyama
    
    Director and Executive Officer since April 1, 2010(June 8, 1943)
    
    (President and Director of NDGI since 2006)1995 Director of The Dowa Fire & Marine Insurance Co., Ltd. (currently, NDGI)1997 Managing Director of The Dowa Fire & Marine Insurance Co., Ltd.2001 Senior Managing Director of NDGI2005 Director and Executive Vice President of NDGITadashi Kodama
    
    Director and Executive Officer since April 1, 2010(November 11, 1947)
    
    (Director and Vice Chairman of Aioi since 2010)2000 Executive Officer of Dai-Tokyo Fire and Marine Insurance Co., Ltd.
(currently, Aioi)2001 Director of Aioi2002 Managing Director of Aioi2003 Senior Managing Director of Aioi2004 President and Director of Aioi
 76




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##### Table of Contents



Yasuyoshi Karasawa
    
    Director and Executive Officer since April 1, 2010(October 27, 1950)
    
    (President, Director and CEO of MSI since 2010)2004 Executive Officer of MSI2005 Director and Executive Officer of MSI2006 Director and Managing Executive Officer of MSI2008 Director of MSIG (currently, MS&AD)2008 Director and Senior Executive Officer of MSI2009 Director and Senior Executive Officer of MSIGSusumu Fujimoto
    
    Director and Senior Executive Officer since April 1, 2009(December 5, 1948)
    
    1998 Director-General of Yokohama Customs, Ministry of Finance (the MOF)1999 Deputy Director-General, Customs and Tariff Bureau, MOF2002 Executive Director, European Bank for Reconstruction and Development2005 Advisor of MSI2007 Director of MSI2008 Director of MSIG (currently, MS&AD)Director and Managing Executive Officer of MSI2009 Director and Senior Managing Executive Officer of MSIShuhei Horimoto
    
    Director and Managing Executive Officer since June 25, 2009(August 19, 1954)
    
    2006 Executive Officer of MSI2009 Managing Executive Officer of MSIG (currently, MS&AD)2009 Director and Managing Executive Officer of MSIHisahito Suzuki
    
    Director and Executive Officer since April 1, 2010(September 15, 1950)
    
    (Director and President of Aioi since 2010)2000 Executive Officer of Dai-Tokyo Fire and Marine Insurance Co., Ltd.
(currently, Aioi)2002 Managing Executive Officer of Aioi2002 Managing Director of Aioi2003 Senior Managing Executive Officer of Aioi Life Insurance Company, Limited2003 Director and Vice President of Aioi Life Insurance Company, Limited2004 Senior Managing Executive Officer of Aioi2004 Senior Managing Director of Aioi2008 Director and Senior Managing Executive Officer of AioiMasanori Yoneda
    
    Director and Executive Officer since April 1, 2010(July 24, 1950)
    
    (Director and Vice President Executive Officer of NDGI since 2010)2003 Director of NDGI2006 Director and Managing Executive Officer of NDGI2009 Director and Senior Managing Executive Officer of NDGIKatsuaki Ikeda
    
    Director and Executive Officer since April 1, 2010(September 8, 1951)
    
    (Director and Senior Executive Officer of MSI since 2010)2003 Director and Executive Officer of MSI2005 Director and Managing Executive Officer of MSI2008 Director of MSIG (currently, MS&AD)2009 Director and Managing Executive Officer of MSIGToshihiko Seki
    
    Director since April 1, 2008(February 28, 1941)
    
    1977 Associate Professor, School of Law, Tohoku University1984 Professor, School of Law, Tohoku University2000 Professor, Tohoku University Law School2004 Professor Emeritus, Tohoku UniversityProfessor, Hosei University Law School2004 Registered as Attorney-at-Law2007 Director of MSI
 77




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##### Table of Contents



Akira Watanabe
    
    Director since April 1, 2010(February 16, 1947)
    
    1973 Registered as Attorney-at-Law1989 Attorney-at-Law, Seiwa Kyodo Law Office (currently, Seiwa Meitetsu Law
Office)Mitsuhiro Umezu
    
    Director since April 1, 2010(May 18, 1957)
    
    2005 Associate Professor, Faculty of Business and Commerce, Keio University2007 Director of NDGI2009 Associate Professor, Faculty of Business and Commerce, Keio University
and Deputy Director, International Center, Keio UniversityDaiken Tsunoda
    
    Director since April 1, 2010(January 29, 1967)
    
    1994 Registered as Attorney-at-Law2003 Attorney-at-Law, Nakamura & Tsunoda (currently, Nakamura, Tsunoda &
Matsumoto)2008 Corporate Auditor of MSIG (currently, MS&AD)Takashi Yamashita
    
    Corporate Auditor since April 1, 2008(July 7, 1946)
    
    2000 Executive Officer of Mitsui Marine and Fire Insurance Co., Ltd.
(currently, MSI)2001 Director of MSI2002 Managing Director of MSI2004 Senior Managing Director of MSI2005 Director and Vice President Executive Officer of MSI2007 Corporate Auditor of MSIMasahiko Oji
    
    Corporate Auditor since April 1, 2010(March 9, 1946)
    
    2000 Executive Officer of Dai-Tokyo Fire and Marine Insurance Co., Ltd.
(currently, Aioi)2002 Managing Executive Officer of Aioi2004 Senior Managing Director of Aioi2007 Director and Vice President of Aioi2008 Director and Vice President Executive Officer of Aioi2009 Director and Executive Officer of Aioi2009 Corporate Auditor of AioiSosuke Yasuda
    
    Corporate Auditor since April 1, 2008(December 15, 1943)
    
    1979 Registered as Certified Public Accountants1980 Representative, Sosuke Yasuda Tax Accountant Office1983 Representative, Tokyo Akasaka CPA Joint Office1993 Senior Partner, Tokyo Akasaka & Co.1999 Managing Partner, Tokyo Hokuto & Co. (currently, Gyosei & Co.)2001 Supervising Officer, Japan Prime Realty Investment Corporation2005 Corporate Auditor of MSI2008 Representative Partner, Gyosei & Co.2009 Senior Adviser, Gyosei & Co.Managing Partner, Gyosei Public Tax & Accountants Co.Kuniaki Nomura
    
    Corporate Auditor since April 1, 2010(June 13, 1945)
    
    1970 Registered as Attorney-at-Law2006 Corporate Auditor of MSI2009 Attorney-at-Law, Nomura Law OfficesHiroyuki Tezuka
    
    Corporate Auditor since April 1, 2010(May 8, 1961)
    
    1986 Registered as Attorney-at-LawAttorney-at-Law, Nishimura & Sanada (currently, Nishimura & Asahi)2007 Corporate Auditor of NDGI
   78




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##### Table of Contents



shikko-yaku
   B. Compensation.
  C. Board Practices.
  D. Employees.
    79




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##### Table of Contents



E. Share Ownership.
  
 Item 7.

Major Shareholders and Related Party Transactions. A. Major Shareholders.
   Number of shares owned
    
    Percentage of sharesName
    
    as of April 1, 2010
    
    owned as of April 1, 2010Toyota Motor Corporation
    
    
    52,610,933
    
    
    
    8.39Nippon Life Insurance Company
    
    
    36,325,258
    
    
    
    5.79
      B. Related Party Transactions.
  C. Interests of Experts and Counsel.
  80




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##### Table of Contents



Item 8.

Financial Information. A. Consolidated Statements and Other Financial Information.
 Financial Statements
  Legal or Arbitration Proceedings
   Dividend Policy
   B. Significant Changes.
  
 Item 9.

The Offer and Listing. A. Offer and Listing Details.
   81




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##### Table of Contents



Price per Share of
    
    
    Average DailyCommon Stock on Tokyo
    
    
    Trading Volume of
    
    
    
    
    
    
    
    
    
    
    Closing Nikkei StockStock Exchange
    
    
    Common Stock
    
    
    Closing TOPIX
    
    
    AverageHigh
    
    
    Low
    
    
    
    
    
    
    High
    
    
    Low
    
    
    High
    
    
    LowFiscal Year Ended/Ending March 31,Annual highs and lows2006
    
    
    5,420
    
    
    
    3,060
    
    
    
    1,549,768
    
    
    
    1,728.16
    
    
    
    1,109.19
    
    
    
    17,059.66
    
    
    
    10,825.392007
    
    
    5,647
    
    
    
    4,087
    
    
    
    1,669,600
    
    
    
    1,816.97
    
    
    
    1,458.30
    
    
    
    18,215.35
    
    
    
    14,218.602008(1)
    
    
    5,760
    
    
    
    3,070
    
    
    
    1,887,336
    
    
    
    1,792.23
    
    
    
    1,149.65
    
    
    
    18,261.98
    
    
    
    11,787.512009
    
    
    4,500
    
    
    
    1,635
    
    
    
    1,797,048
    
    
    
    1,430.47
    
    
    
    700.93
    
    
    
    14,489.44
    
    
    
    7,054.982010
    
    
    3,060
    
    
    
    1,986
    
    
    
    1,507,242
    
    
    
    979.58
    
    
    
    793.82
    
    
    
    11,097.14
    
    
    
    8,351.91Quarterly highs and lows2009:First quarter
    
    
    4,500
    
    
    
    3,400
    
    
    
    1,564,300
    
    
    
    1,430.47
    
    
    
    1,230.49
    
    
    
    14,489.44
    
    
    
    12,656.42Second quarter
    
    
    3,890
    
    
    
    2,975
    
    
    
    1,532,510
    
    
    
    1,332.57
    
    
    
    1087.41
    
    
    
    13,603.31
    
    
    
    11,259.86Third quarter
    
    
    3,800
    
    
    
    1,635
    
    
    
    2,178,318
    
    
    
    1,101.13
    
    
    
    746.46
    
    
    
    11,368.26
    
    
    
    7,162.90Fourth quarter
    
    
    2,845
    
    
    
    1,765
    
    
    
    1,929,910
    
    
    
    888.25
    
    
    
    700.93
    
    
    
    9,239.24
    
    
    
    7,054.982010:First quarter
    
    
    3,060
    
    
    
    2,295
    
    
    
    1,673,308
    
    
    
    950.54
    
    
    
    793.82
    
    
    
    10,135.82
    
    
    
    8,351.91Second quarter
    
    
    2,745
    
    
    
    2,285
    
    
    
    1,331,402
    
    
    
    975.59
    
    
    
    852.42
    
    
    
    10,639.71
    
    
    
    9,050.33Third quarter
    
    
    2,515
    
    
    
    1,986
    
    
    
    1,673,884
    
    
    
    915.87
    
    
    
    811.01
    
    
    
    10,638.06
    
    
    
    9,081.52Fourth quarter
    
    
    2,608
    
    
    
    2,151
    
    
    
    1,350,690
    
    
    
    979.58
    
    
    
    881.57
    
    
    
    11,097.14
    
    
    
    9,932.902011:First quarter
    
    
    2,832
    
    
    
    1,893
    
    
    
    1,725,623
    
    
    
    998.90
    
    
    
    841.42
    
    
    
    11,339.30
    
    
    
    9,382.64Second
quarter (through September 27)
    
    
    2,092
    
    
    
    1,766
    
    
    
    2,009,517
    
    
    
    870.73
    
    
    
    804.67
    
    
    
    9,795.24
    
    
    
    8,824.06Calendar Period2010:March
    
    
    2,608
    
    
    
    2,251
    
    
    
    1,391,386
    
    
    
    979.58
    
    
    
    897.64
    
    
    
    11,097.14
    
    
    
    10,145.72April
    
    
    2,832
    
    
    
    2,533
    
    
    
    1,751,700
    
    
    
    998.90
    
    
    
    970.84
    
    
    
    11,339.30
    
    
    
    10,900.68May
    
    
    2,609
    
    
    
    2,136
    
    
    
    2,028,378
    
    
    
    956.72
    
    
    
    859.00
    
    
    
    10,695.69
    
    
    
    9,459.89June
    
    
    2,283
    
    
    
    1,893
    
    
    
    1,453,023
    
    
    
    902.49
    
    
    
    841.42
    
    
    
    10,238.01
    
    
    
    9.382.64July
    
    
    1,969
    
    
    
    1,766
    
    
    
    2,006,233
    
    
    
    870.73
    
    
    
    825.48
    
    
    
    9,795.24
    
    
    
    9,191.60August
    
    
    2,083
    
    
    
    1,870
    
    
    
    1,975,000
    
    
    
    861.17
    
    
    
    804.67
    
    
    
    9,694.01
    
    
    
    8,824.06September
(through September 27)
    
    
    2,092
    
    
    
    1,889
    
    
    
    2,058,241
    
    
    
    852.09
    
    
    
    811.40
    
    
    
    9,626.09
    
    
    
    8,927.02
 
 (1)
    
    Excludes March 26, 27, 28 and 31, 2008.  B. Plan of Distribution.
  C. Markets.
  D. Selling Shareholders.
  E. Dilution.
  82




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##### Table of Contents



F. Expenses of the Issue.
  
 Item 10.

Additional Information. A. Share Capital.
  B. Memorandum and Articles of Association.
  General
     Dividends
 General
  83




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##### Table of Contents



Restriction on Distribution of Surplus
             84




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##### Table of Contents



Stock Splits
   Unit Share System
     
    
    to receive distributions of dividends,
    
    to receive cash or other assets in case of consolidation or split of shares, exchange
or transfer of shares or corporate merger,
    
    to be allotted rights to subscribe for free for new shares and stock acquisition
rights when such rights are granted to shareholders, and
    
    to participate in any distribution of surplus assets upon liquidation.
 85




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##### Table of Contents



Voting Rights
   
    
    any purchase of MS&ADs own shares from a particular shareholder other than its
subsidiary;
    
    a consolidation of shares;
    
    any issuance or transfer of new shares or existing shares held by MS&AD as treasury
stock at an especially favorable price or any issuance of stock acquisition rights at
an especially favorable condition to any persons other than shareholders;
    
    a reduction of the liability of a director, a corporate auditor or an independent
auditor caused by his or her failure to perform an obligation without intent or gross
negligence, subject to certain exceptions;
    
    a reduction of stated capital, subject to certain exceptions;
    
    a distribution of dividends in kind without granting shareholders the right to
request payment in cash instead;
    
    any amendment to the Articles of Incorporation, subject to certain exceptions;
    
    the transfer of the whole or an important part of the business, subject to certain
exceptions;
    
    the taking over of the whole of the business of any other corporation, subject to
certain exceptions;
    
    a dissolution, merger or consolidation, subject to certain exceptions;
    
    a corporate split, subject to a certain exception; or
    
    a share exchange or Share Exchange for the purpose of establishing a 100%
parent-subsidiary relationship, subject to a certain exception.
  General Meeting of Shareholders
  86




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##### Table of Contents



Liquidation Rights
  Issue of Additional Shares of Common Stock and Pre-emptive Rights
  Stock Acquisition Rights
  Report to Shareholders
  Record Date
   87




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##### Table of Contents



Repurchase by MS&AD of Shares
         Daily Price Fluctuation Limits under Japanese Stock Exchange Rules
   Selected Daily Price Limits
 Maximum Daily PricePrevious Days Closing Price or Special Quote
    
    MovementOver
    
    ¥
    1,000
    
    
    Less than
    
    ¥
    1,500
    
    
    ¥
    300Over
    
    
    1,500
    
    
    Less than
    
    
    2,000
    
    
    
    400Over
    
    
    2,000
    
    
    Less than
    
    
    3,000
    
    
    
    500
  C. Material Contracts.
  88




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##### Table of Contents



D. Exchange Controls.
  Japanese Foreign Exchange Controls
   
    
    individuals who are not resident in Japan; or
    
    corporations whose principal offices are located outside Japan. Generally, branches
and other offices of non-resident corporations located within Japan are regarded as
residents of Japan, and branches and other offices of Japanese corporations located
outside Japan are regarded as non-residents of Japan.
  
    
    individuals who are non-residents;
    
    corporations organized under the laws of foreign countries or whose principal offices
are located outside Japan; or
    
    corporations, not less than 50% of the voting rights of which are held, directly or
indirectly, by individuals and/or corporations falling within the definition of foreign
investors above or a majority of the directors or other officers (or directors or other
officers having the power of representation) of which are individuals who are
non-residents.
 Acquisition of Equity Securities
  
    
    the consideration for the transfer is ¥100 million or less; or
    
    the transfer is made through a bank, securities company or financial business
operator as licensed under relevant Japanese laws.
  Distributions and Proceeds of Sale
  89




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##### Table of Contents



Reporting of Substantial Shareholdings
   E. Taxation.
 United States Federal Income Taxation
  
    
    a dealer in securities,
    
    a trader in securities that elects to use a mark-to-market method of accounting for
securities holdings,
    
    a tax-exempt organization,
    
    a life insurance company,
    
    a person liable for alternative minimum tax,
    
    a person that actually or constructively owns 10% or more of our voting stock,
    
    a person that holds shares as part of a straddle or a hedging or conversion
transaction, or
    
    a person whose functional currency is not the U.S. dollar.
    
    
    a citizen or resident of the United States,
    
    a domestic corporation,
 90




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##### Table of Contents




    
    an estate whose income is subject to United States federal income tax regardless of
its source, or
    
    a trust if a United States court can exercise primary supervision over the trusts
administration and one or more United States persons are authorized to control all
substantial decisions of the trust.
  You should consult your own tax advisor regarding the United States federal,
state and local and the Japanese and other tax consequences of owning and
disposing of shares in your particular circumstances.
 Taxation of Dividends.
   Taxation of Capital Gains.
 PFIC Rules.
  
    
    75% or more of its income constitutes passive income; or
    
    50% or more of its assets produce, or are held for the production of, passive income.
 91




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##### Table of Contents



Related Person Insurance Income Rules.
   
    
    a U.S. holders tax basis in its shares would be increased by the amount of any RPII that
such U.S. holder includes in income;
    
    the U.S. holder could exclude from income the amount of any distribution to the extent of
the RPII included in such U.S. holders income for the year in which the distribution was paid
or for any prior year (which excluded amount would be applied to reduce the U.S. holders tax
basis in its shares); and
    
    each U.S. holder who is a direct or indirect shareholder on the last day of our taxable
year would be required to attach IRS Form 5471 to its U.S. federal income tax or information
return. Failure to file Form 5471 may result in penalties.
    Japanese Taxation
  
    
    the overall tax consequences of the acquisition, ownership and disposition of shares,
including specifically the tax consequences under Japanese law;
    
    the laws of the jurisdiction of which they are resident; and
    
    any tax treaty between Japan and their country of residence.
    92




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##### Table of Contents



F. Dividends and Paying Agents.
  G. Statement by Experts.
  H. Documents on Display.
  I. Subsidiary Information.
  
 Item 11.

Quantitative and Qualitative Disclosures About Market Risk  Market Risk Management
     93




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##### Table of Contents



Investment Objectives
  
    
    Maintain high-grade investment assets in order to strengthen our ability to meet
insurance payment obligations;
    
    Maintain sufficient liquidity in our investment assets to meet insurance payment
obligations, repayment of savings-type products upon maturity and payment of dividends
on those products on a timely basis; and
    
    Achieve the highest possible returns on our investment assets while meeting the two
objectives above.
 Allocation of Investments
   Risk Management Functions
  Market Risk Measurement
    94




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##### Table of Contents




    
    Equity price risk: common shares;
    
    Interest rate risk: bonds, loans and liabilities; and
    
    Foreign exchange rate risk: non-yen denominated equities and bonds.
   Risk Exposure Estimates
      Sensitivity Analysis and Risk Category (As of March 31, 2010)
 Equity risk
    
    10% decline
    
    (236) billion yenInterest rate risk
    
    50bp move
    
    (42) billion yenForeign exchange risk
    
    10% decline
    
    (103) billion yen
 95




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##### Table of Contents



Data Verification and Model Accuracy Confirmation
 Other Risks Management
 Insurance Underwriting and Pricing
   Insurance Claims and Reserves
  Credit Risk
 96




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##### Table of Contents



Real Estate Investment Risk
 Legal Risk
 Operational Risk
 Administrative Risk
 Information and System Risk
 Liquidity Risk
 
 Item 12.

Description of Securities Other Than Equity Securities  
 PART II
 
 Item 13.

Defaults, Dividend Arrearages and Delinquencies.  
 Item 14.

Material Modifications to the Rights of Security Holders and Use of Proceeds.  
 Item 15T.

Controls and Procedures.  97




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##### Table of Contents



Item 16A.

Audit Committee Financial Expert.  
 Item 16B.

Code of Ethics.  
 Item 16C.

Principal Accountant Fees and Services. Fees Paid to the Independent Auditor
  Year Ended March 31,2008
    
    
    2009
    
    
    2010(Yen in millions)Audit fees (1)
    
    ¥
    251
    
    
    ¥
    278
    
    
    ¥
    356Audit-related fees
    
    
    20
    
    
    
    54
    
    
    
    116Tax fees (2)
    
    
    44
    
    
    
    24
    
    
    
    44All other fees (3)
    
    
    
    
    
    
    1
    
    
    
    Total
    
    ¥
    315
    
    
    ¥
    357
    
    
    ¥
    516
 
 (1)
    
    These are fees for professional services for the audit of our annual financial statements
and services that are normally provided in connection with statutory and regulatory filings.(2)
    
    These are fees for professional tax services performed including tax compliance, tax advice
and tax planning.(3)
    
    These are fees for all other services except those separately defined above. Pre-Approval of Services Provided by KPMG
   
 Item 16D.

Exemption from the Listing Standards for Audit Committees.  98




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##### Table of Contents



Item 16E.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers.  
 Item 16F.

Changes in Registrants Certified Accountant.  
 Item 16G.

Corporate Governance.  
 PART III
 
 Item 17.

Financial Statements.  
 Item 18.

Financial Statements.  
 Item 19.

Exhibits. Exhibit Number
    
    
    
    Description1.1
    
    
    
    Articles of Incorporation of the registrant (English translation)1.2
    
    
    
    Share Handling Regulations of the registrant (English translation)1.3
    
    
    
    Regulations of the board of directors of the registrant (English translation)1.4
    
    
    
    Regulations of the board of corporate auditors of the registrant (English translation)8.1
    
    
    
    List of subsidiaries of the registrant11.1
    
    
    
    MS&AD Insurance Group Basic
Compliance Policy (English translation) and MS&AD Insurance
Group Basic Policy Regarding Internal Control System (relevant
provisions) (English translation)12.1
    
    
    
    Certification of the Chief Executive Officer required by Rule 13a-14(a)12.2
    
    
    
    Certification of the Chief Financial Officer required by Rule 13a-14(a)13.1
    
    
    
    Certification of the Chief Executive Officer required by Rule 13a-14(b) and Section
1350 of Chapter 63 of Title 18 of the United States Code13.2
    
    
    
    Certification of the Chief Financial Officer required by Rule 13a-14(b) and Section
1350 of Chapter 63 of Title 18 of the United States Code
  99




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##### Table of Contents



SIGNATURES
   MS&AD Insurance Group Holdings, Inc.By:
    /s/
 Takayoshi UmemuraName:
    Takayoshi UmemuraTitle:
    Managing Executive Officer  100




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##### Table of Contents



MITSUI SUMITOMO INSURANCE GROUP HOLDINGS, INC. AND SUBSIDIARIES
 
 INDEX TO FINANCIAL STATEMENTS
 PageConsolidated Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets as of March 31, 2009 and 2010
    
    
    F-3Consolidated Statements of Operations for the years ended
March 31, 2008, 2009 and 2010
    
    
    F-5Consolidated Statements of Comprehensive Income (Loss) for the
years ended March 31, 2008, 2009 and 2010
    
    
    F-6Consolidated Statements of Changes in Equity for the
years ended March 31, 2008, 2009 and 2010
    
    
    F-7Consolidated Statements of Cash Flows for the years
ended March 31, 2008, 2009 and 2010
    
    
    F-8Notes to Consolidated Financial Statements
    
    
    F-10
 INDEX TO FINANCIAL STATEMENT SCHEDULES
 PageFinancial Statement Schedules:Schedule I: Summary of Investment  Other than Investments
in Related Parties as of March 31, 2009 and 2010
    
    
    F-80Schedule III: Supplementary Insurance Information for the
years ended March 31, 2008, 2009 and 2010
    
    
    F-82Schedule IV: Reinsurance for the years ended
March 31, 2008, 2009 and 2010
    
    
    F-84Schedule V: Valuation and Qualifying Accounts for the years
ended March 31, 2009 and 2010
    
    
    F-85
 F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
       
 F-2




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##### Table of Contents



2009
    
    
    2010(Yen in millions)ASSETSInvestments  other than investments in affiliates (Notes 4 and 16):Securities available for sale:Fixed maturities, at fair value
    
    ¥
    2,994,870
    
    
    
    3,012,303Equity securities, at fair value
    
    
    1,703,433
    
    
    
    1,997,746Securities held to maturity:Fixed maturities, at amortized cost
    
    
    475,576
    
    
    
    506,307Mortgage loans on real estate
    
    
    9,224
    
    
    
    7,260Investment real estate, at cost less accumulated depreciation
of ¥48,570 million in 2009; ¥50,992 million in 2010
    
    
    40,992
    
    
    
    36,698Policy loans
    
    
    43,254
    
    
    
    44,339Other long-term investments
    
    
    711,653
    
    
    
    691,625Short-term investments
    
    
    106,852
    
    
    
    69,139Total investments
    
    
    6,085,854
    
    
    
    6,365,417Cash and cash equivalents
    
    
    455,444
    
    
    
    381,939Investments in and indebtedness from affiliates:Investments
    
    
    66,523
    
    
    
    75,927Indebtedness (Note 16)
    
    
    2,857
    
    
    
    3,128Total investments in and indebtedness from affiliates
    
    
    69,380
    
    
    
    79,055Accrued investment income
    
    
    20,228
    
    
    
    16,857Premiums receivable and agents balances
    
    
    144,005
    
    
    
    152,030Prepaid reinsurance premiums
    
    
    203,477
    
    
    
    195,626Funds held by or deposited with ceding reinsurers
    
    
    78,756
    
    
    
    83,690Reinsurance recoverable on paid losses
    
    
    58,149
    
    
    
    63,410Reinsurance recoverable on unpaid losses
    
    
    304,228
    
    
    
    293,347Property and equipment, net of accumulated depreciation (Note 5)
    
    
    232,047
    
    
    
    224,880Deferred policy acquisition costs (Note 1(h))
    
    
    325,539
    
    
    
    345,731Goodwill (Note 7)
    
    
    63,254
    
    
    
    66,250Other assets (Note 12)
    
    
    194,494
    
    
    
    176,504Total assets
    
    ¥
    8,234,855
    
    
    
    8,444,736
  F-3




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##### Table of Contents



2009
    
    
    2010(Yen in millions, except share data)LIABILITIES AND EQUITYLiabilities:Losses and claims (Note 8):Reported and estimated losses and claims
    
    ¥
    1,196,144
    
    
    
    1,166,016Adjustment expenses
    
    
    60,378
    
    
    
    61,061Total losses and claims
    
    
    1,256,522
    
    
    
    1,227,077Unearned premiums
    
    
    1,385,290
    
    
    
    1,381,524Future policy benefits for life insurance contracts
    
    
    970,217
    
    
    
    1,022,413Investment deposits by policyholders (Notes 9 and 16)
    
    
    2,043,991
    
    
    
    1,956,376Indebtedness to affiliates
    
    
    1,616
    
    
    
    4,686Income tax payable (Note 12)
    
    
    9,401
    
    
    
    10,331Deferred tax liabilities (Note 12)
    
    
    238,083
    
    
    
    397,585Retirement and severance benefits (Note 14)
    
    
    126,538
    
    
    
    120,334Ceded reinsurance balances payable
    
    
    74,000
    
    
    
    75,697Short-term debt (Note 10 and 16)
    
    
    70,000
    
    
    
    Long-term debt (Notes 10 and 16)
    
    
    94,961
    
    
    
    94,969Other liabilities
    
    
    274,720
    
    
    
    152,866Total liabilities
    
    
    6,545,339
    
    
    
    6,443,858Shareholders equity:Common stock:Authorized 900,000,000 shares;
issued  421,320,739 shares (Note 13(a))
    
    
    100,000
    
    
    
    100,000Other shareholders equity:Additional paid-in capital (Note 13(a))
    
    
    123,969
    
    
    
    123,970Retained earnings (Note 13(b))
    
    
    1,377,400
    
    
    
    1,406,964Accumulated other comprehensive income (Note 13(c))
    
    
    79,960
    
    
    
    376,234Treasury stock, 2,020,643 shares in 2009 and
6,367,110 shares in 2010, at cost
    
    
    (4,645
    )
    
    
    (14,688
    )Total MSIG shareholders equity
    
    
    1,676,684
    
    
    
    1,992,480Noncontrolling interests
    
    
    12,832
    
    
    
    8,398Total equity
    
    
    1,689,516
    
    
    
    2,000,878Commitments and contingent liabilities (Note 19)Total liabilities and equity
    
    ¥
    8,234,855
    
    
    
    8,444,736
  F-4




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##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions, except per share data)Revenues:Net premiums written
    
    ¥
    1,537,616
    
    
    
    1,448,273
    
    
    
    1,395,238Less increase (decrease) in unearned premiums
    
    
    34,931
    
    
    
    (60,130
    )
    
    
    (1,399
    )Net premiums earned (Note 11)
    
    
    1,502,685
    
    
    
    1,508,403
    
    
    
    1,396,637Premium income for life insurance contracts (Note 11)
    
    
    192,731
    
    
    
    190,113
    
    
    
    188,373Investment income, net of investment expenses (Note 4)
    
    
    185,265
    
    
    
    154,012
    
    
    
    127,733Net realized gains (losses) on investments (Note 4 and 6):Total other-than-temporary impairment losses on investments
    
    
    
    
    
    
    
    
    
    
    (15,666
    )Portion of losses recognized in other comprehensive income
    
    
    
    
    
    
    
    
    
    
    746Net other-than-temporary losses recognized in earnings
    
    
    
    
    
    
    
    
    
    
    (14,920
    )Other realized gains on investments
    
    
    
    
    
    
    
    
    
    
    19,656Net realized gains (losses) on investments
    
    
    (17,370
    )
    
    
    (134,885
    )
    
    
    4,736Total revenues
    
    
    1,863,311
    
    
    
    1,717,643
    
    
    
    1,717,479Expenses:Losses, claims and loss adjustment expenses (Note 11):Losses and claims incurred and provided for
    
    
    906,257
    
    
    
    960,041
    
    
    
    855,914Related adjustment expenses
    
    
    82,370
    
    
    
    90,235
    
    
    
    81,971Policyholder benefits for life insurance contracts (Note 11)
    
    
    156,683
    
    
    
    154,056
    
    
    
    150,346Amortization of policy acquisition costs
    
    
    372,025
    
    
    
    398,660
    
    
    
    345,204Investment income credited to investment deposits
by policyholders (Note 9)
    
    
    48,498
    
    
    
    44,573
    
    
    
    47,304Other expenses, net (Note 6)
    
    
    143,719
    
    
    
    152,054
    
    
    
    169,324Total expenses
    
    
    1,709,552
    
    
    
    1,799,619
    
    
    
    1,650,063Earnings (loss) before income taxes
    
    
    153,759
    
    
    
    (81,976
    )
    
    
    67,416Income taxes (Note 12):Current
    
    
    25,368
    
    
    
    29,874
    
    
    
    18,485Deferred
    
    
    22,769
    
    
    
    (41,910
    )
    
    
    (1,398
    )Total income tax (benefit) expense
    
    
    48,137
    
    
    
    (12,036
    )
    
    
    17,087Net income (loss)
    
    
    105,622
    
    
    
    (69,940
    )
    
    
    50,329Less: Net income attributable to noncontrolling interests
    
    
    826
    
    
    
    300
    
    
    
    346Net income (loss) attributable to MSIG
    
    ¥
    104,796
    
    
    
    (70,240
    )
    
    
    49,983Earnings (loss) per share (Notes 2(p) and 13(b)):Basic and diluted
    
    ¥
    247.59
    
    
    
    (166.82
    )
    
    
    119.30
  F-5




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##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions)Net income (loss)
    
    ¥
    105,622
    
    
    
    (69,940
    )
    
    
    50,329Other comprehensive income (loss), net of tax (Note 13(c)):Foreign currency translation adjustments
    
    
    (2,278
    )
    
    
    (66,853
    )
    
    
    11,132Unrealized losses on fixed maturity securities on which other-than-temporary credit impairment losses were recognized in net income
    
    
    
    
    
    
    
    
    
    
    (484
    )Unrealized gains (losses) on all other securities
    
    
    (525,733
    )
    
    
    (563,812
    )
    
    
    285,886Net losses on derivative instruments
    
    
    (24
    )
    
    
    
    
    
    
    Pension liability adjustments
    
    
    (11,922
    )
    
    
    (6,919
    )
    
    
    2,095Other comprehensive income (loss)
    
    
    (539,957
    )
    
    
    (637,584
    )
    
    
    298,629Comprehensive income (loss)
    
    
    (434,335
    )
    
    
    (707,525
    )
    
    
    348,958Comprehensive income (loss) attributable to noncontrolling interests
    
    
    2,968
    
    
    
    (3,578
    )
    
    
    477Comprehensive income (loss) attributable to MSIG
    
    ¥
    (437,303
    )
    
    
    (703,947
    )
    
    
    348,481
  F-6




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##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions, except per share data)Common stock:Balance at beginning and end of year
    
    ¥
    100,000
    
    
    
    100,000
    
    
    
    100,000Additional paid-in capital:Balance at beginning of year
    
    
    124,014
    
    
    
    123,981
    
    
    
    123,969Gain on sales of treasury stock
    
    
    18
    
    
    
    1
    
    
    
    Retirement of treasury stock
    
    
    (51
    )
    
    
    (13
    )
    
    
    1Balance at end of year
    
    
    123,981
    
    
    
    123,969
    
    
    
    123,970Retained earnings:Balance at beginning of year
    
    
    1,485,823
    
    
    
    1,471,651
    
    
    
    1,377,400Cumulative effect of change in accounting principle, net of tax (Note 2(t))
    
    
    
    
    
    
    
    
    
    
    2,224Net income (loss) attributable to MSIG
    
    
    104,796
    
    
    
    (70,240
    )
    
    
    49,983Dividends paid (Note 13(b))
    
    
    (21,166
    )
    
    
    (24,011
    )
    
    
    (22,643
    )Retirement of treasury stock
    
    
    (98,657
    )
    
    
    
    
    
    
    Other
    
    
    855
    
    
    
    
    
    
    
    Balance at end of year (Note 13(b))
    
    
    1,471,651
    
    
    
    1,377,400
    
    
    
    1,406,964Accumulated other comprehensive income (Note 13(c)):Balance at beginning of year
    
    
    1,255,766
    
    
    
    713,667
    
    
    
    79,960Cumulative effect of change in accounting principle, net of tax (Note 2(t))
    
    
    
    
    
    
    
    
    
    
    (2,224
    )Other comprehensive income (loss) attributable to MSIG, net of tax
    
    
    (542,099
    )
    
    
    (633,707
    )
    
    
    298,498Balance at end of year
    
    
    713,667
    
    
    
    79,960
    
    
    
    376,234Treasury stock:Balance at beginning of year
    
    
    (91,143
    )
    
    
    
    
    
    
    (4,645
    )Purchase of common shares
    
    
    (7,629
    )
    
    
    (4,725
    )
    
    
    (10,048
    )Sale of common shares
    
    
    64
    
    
    
    80
    
    
    
    5Retirement of treasury stock
    
    
    98,708
    
    
    
    
    
    
    
    Balance at end of year
    
    
    
    
    
    
    (4,645
    )
    
    
    (14,688
    )Noncontrolling interests:Balance at beginning of year
    
    
    16,681
    
    
    
    18,585
    
    
    
    12,832Transactions between MSIG and noncontrolling interests
    
    
    (10
    )
    
    
    (1,009
    )
    
    
    (4,000
    )Net income attributable to noncontrolling interests
    
    
    826
    
    
    
    300
    
    
    
    346Other comprehensive income (loss) foreign currency translation adjustments
    
    
    1,737
    
    
    
    (4,914
    )
    
    
    1,614Other comprehensive income (loss)  unrealized gains (losses) on securities
    
    
    405
    
    
    
    1,107
    
    
    
    (1,483
    )Dividends paid to noncontrolling interests
    
    
    (701
    )
    
    
    (1,235
    )
    
    
    (911
    )Other
    
    
    (353
    )
    
    
    (2
    )
    
    
    0Balance at end of year
    
    
    18,585
    
    
    
    12,832
    
    
    
    8,398Total equity
    
    ¥
    2,427,885
    
    
    
    1,689,516
    
    
    
    2,000,878Cash dividends per share (Note 13(b))
    
    ¥
    50.00
    
    
    
    57.00
    
    
    
    54.00
  F-7




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##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions)Net cash provided by operating activities (Note 20)
    
    ¥
    308,007
    
    
    
    157,480
    
    
    
    94,672Cash flows from investing activities:Proceeds from:Securities available for sale:Fixed maturities
    
    
    412,764
    
    
    
    475,425
    
    
    
    247,594Equity securities
    
    
    87,796
    
    
    
    181,957
    
    
    
    179,709Fixed maturities available for sale matured
    
    
    228,766
    
    
    
    295,677
    
    
    
    353,216Fixed maturities held to maturity matured
    
    
    9,345
    
    
    
    4,044
    
    
    
    2,068Investment real estate
    
    
    8,560
    
    
    
    32
    
    
    
    745Property and equipment
    
    
    14,351
    
    
    
    2,744
    
    
    
    5,295Collection of:Mortgage loans on real estate
    
    
    2,445
    
    
    
    1,785
    
    
    
    2,950Policy loans
    
    
    41,974
    
    
    
    45,194
    
    
    
    33,648Other long-term investments
    
    
    180,235
    
    
    
    193,644
    
    
    
    178,084Purchases of:Securities available for sale:Fixed maturities
    
    
    (667,878
    )
    
    
    (572,987
    )
    
    
    (559,572
    )Equity securities
    
    
    (107,609
    )
    
    
    (274,390
    )
    
    
    (95,931
    )Securities held to maturity:Fixed maturities
    
    
    (73,191
    )
    
    
    (38,518
    )
    
    
    (37,413
    )Investments in:Mortgage loans on real estate
    
    
    (789
    )
    
    
    (1,185
    )
    
    
    (970
    )Investment real estate
    
    
    (8,631
    )
    
    
    (1,448
    )
    
    
    (1,368
    )Policy loans
    
    
    (42,987
    )
    
    
    (33,899
    )
    
    
    (49,746
    )Other long-term investments
    
    
    (214,654
    )
    
    
    (172,408
    )
    
    
    (145,810
    )Property and equipment
    
    
    (41,883
    )
    
    
    (16,125
    )
    
    
    (16,686
    )Increase (decrease) in cash received under securities
lending transactions
    
    
    6,766
    
    
    
    24,466
    
    
    
    (60,509
    )Decrease (increase) in short-term investments, net
    
    
    (13,361
    )
    
    
    (11,382
    )
    
    
    31,628Decrease (increase) in investments in and
indebtedness from affiliates
    
    
    (9,188
    )
    
    
    (4,250
    )
    
    
    1,700Business acquired, net of cash acquired
    
    
    
    
    
    
    
    
    
    
    (1,317
    )Other, net
    
    
    (10,710
    )
    
    
    (13,683
    )
    
    
    (9,284
    )Net cash (used in) provided by investing activities
    
    
    (197,879
    )
    
    
    84,693
    
    
    
    58,031
  F-8




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##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions)Cash flows from financing activities:Investment deposits funded by policyholders
    
    ¥
    290,741
    
    
    
    256,301
    
    
    
    232,849Withdrawals of investment deposits by policyholders
    
    
    (396,597
    )
    
    
    (361,941
    )
    
    
    (363,290
    )Increase (decrease) in commercial paper, net
    
    
    29,688
    
    
    
    (37,670
    )
    
    
    Proceeds from long-term debt
    
    
    29,991
    
    
    
    64,968
    
    
    
    Repayment of short-term debt
    
    
    (30,000
    )
    
    
    
    
    
    
    (70,000
    )Acquisition of treasury stock
    
    
    (7,629
    )
    
    
    (4,725
    )
    
    
    (10,048
    )Dividends paid to shareholders
    
    
    (21,867
    )
    
    
    (25,223
    )
    
    
    (23,521
    )Other, net
    
    
    (800
    )
    
    
    (785
    )
    
    
    (752
    )Net cash used in financing activities
    
    
    (106,473
    )
    
    
    (109,075
    )
    
    
    (234,762
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (5,306
    )
    
    
    (45,944
    )
    
    
    8,554Net change in cash and cash equivalents
    
    
    (1,651
    )
    
    
    87,154
    
    
    
    (73,505
    )Cash and cash equivalents at beginning of year
    
    
    369,941
    
    
    
    368,290
    
    
    
    455,444Cash and cash equivalents at end of year
    
    ¥
    368,290
    
    
    
    455,444
    
    
    
    381,939
  F-9




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##### Table of Contents



(1)
    
    Basis of Presentation
 (a)
    
    Nature of OperationsOn October 1, 2001, Mitsui Sumitomo Insurance Company, Limited (MSI) was formed
through the merger of Mitsui Marine and Fire Insurance Company, Limited (Mitsui) and
The Sumitomo Marine & Fire Insurance Company, Limited (Sumitomo).On April 1, 2008, MSI established a holding company, Mitsui Sumitomo Insurance Group
Holdings, Inc. (MSIGH), through a share transfer and became its wholly owned
subsidiary. The share transfer is considered a transaction between entities that have
a high degree of common ownership (the Exchange Transaction). The only net assets of
MSIGH immediately after the Exchange Transaction are those of MSI and its subsidiaries
immediately prior to the Exchange Transaction, and the shareholders (and their
respective relative ownership percentages) of MSIGH immediately after the Exchange
Transaction are identical to the shareholders of MSI immediately prior to the Exchange
Transaction. Therefore, the assets and liabilities of MSI and its subsidiaries, as
well as their previously reported results of operations and cash flows have been
included in MSIGHs consolidated financial statements at their historical amounts
because the Exchange Transaction is deemed to lack substance. Further, the
consolidated financial statements present MSIGHs financial condition and results of
operations as if MSIGH had been in existence, and the Exchange Transaction had
occurred, as of the beginning of the earliest period presented. Earnings per share for
prior periods have also been retrospectively adjusted to reflect the Exchange
Transaction as of the earliest period presented.MSIGH and its subsidiaries (collectively referred to as MSIG or the Company)
operate mainly in the Japanese domestic insurance industry and sell a wide range of
property and casualty insurance products. Also, the Company sells life insurance
products through a wholly owned subsidiary and a joint venture company. Overseas
operations are conducted mostly in Southeast Asia, Europe and the United States of
America through overseas branches and subsidiaries.On April 1, 2010, MSIGH, Aioi Insurance Company, Limited (AIOI), and Nissay Dowa
General Insurance Company, Limited (NDGI) were integrated by using a holding company
structure. MSIGH is the holding company of the new integrated group. MSIGH conducted
share exchanges with AIOI and NDGI, and changed its corporate name into MS&AD
Insurance Group Holdings, Inc. AIOI and NDGI became MS&ADs wholly owned
subsidiaries.
 F-10




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##### Table of Contents



(b)
    
    Basis of Financial StatementsMSIGH and its domestic subsidiaries maintain their books of account in accordance with
accounting principles generally accepted in Japan (Japanese GAAP), and its foreign
subsidiaries generally maintain their books of account in accordance with those of the
countries of their domicile.Certain adjustments and reclassifications have been made in the accompanying
consolidated financial statements to conform with U.S. generally accepted accounting
principles (U.S. GAAP).The accompanying consolidated financial statements are expressed in yen.
 (c)
    
    Use of EstimatesThe preparation of the consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America requires management of
the Company to make estimates and assumptions relating to the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the
date of the consolidated financial statements and the reported amounts of revenues and
expenses during the period. Actual results could differ from those estimates.
Significant items subject to such estimates and assumptions include the carrying
amount of: securities, property and equipment, investment real estate, intangibles and
goodwill; valuation allowances for receivables and deferred income tax assets;
valuation of derivative instruments; insurance-related liabilities; assets and
obligations related to employee benefits, income tax uncertainties and other
contingencies. The current economic environment has increased the degree of
uncertainty inherent in those estimates and assumptions.
 F-11




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##### Table of Contents



(2)
    
    Summary of Significant Accounting Policies
 (a)
    
    Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of MSIGH and
its majority-owned subsidiaries. In accordance with the Variable Interest Entity
Subsections of the Financial Accounting Standards Board (FASB) Subtopic 810-10
Consolidation  Overall (FASB Interpretation No. 46 (R), Consolidation of Variable
Interest Entities), the Company also consolidates any variable interest entities
(VIEs) of which it is the primary beneficiary, as defined.All material intercompany balances and transactions have been eliminated in
consolidation.Investments in affiliates over which the Company has the ability to exercise
significant influence, but not control, are accounted for by the equity method. The
nature of the noncontrolling interest rights is considered in determining whether the
Companys control for majority owned affiliates exists, and consolidation would be
precluded to the extent that the noncontrolling interest holds substantive
participating rights. Under the equity method of accounting, investments are stated
at their underlying net equity value after elimination of intercompany profits. The
cost method is used for non-marketable equity securities when the Company does not
have the ability to exercise significant influence or control the investee.The excess of investments in affiliates over the Companys share of their net assets
at the acquisition date, included in the equity investment balance, is recognized as
investor level goodwill. Such goodwill is not amortized and is included in the
overall carrying value of the investment, which is tested for impairment if there are
indications that the decline in value below carrying value of the investment is other
than temporary. The cost of investments in affiliates as of March 31, 2009 and 2010
amounted to ¥66,523 million and ¥ 75,927 million, respectively. There were no
differences between the cost of these investments and the amount of underlying equity
in net assets of the investees.The proportionate share of the affiliates income which were included in other
expenses, net for the years ended March 31, 2008, 2009 and 2010 were gains of ¥12,312
million, ¥8,658 million and losses of ¥8,205 million, respectively.The affiliates include Mitsui Sumitomo MetLife Insurance Co., Ltd. (MS MetLife),
which offers variable annuity life insurance products to individuals. MS MetLife is a
51%-owned affiliate of the Company and is accounted for under the equity method based
on an evaluation of the rights held by the noncontrolling shareholders pursuant to the
joint venture agreement, which overcome the presumption that the subsidiary should be
consolidated.
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##### Table of Contents



Summarized information from the balance sheets and statements of income of MS MetLife
as of and for the years ended March 31, 2008, 2009 and 2010 are as follows:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Investments
    
    ¥
    196,770
    
    
    
    321,309
    
    
    
    502,902Separate account assets
    
    
    2,288,002
    
    
    
    2,095,067
    
    
    
    2,582,172Deferred acquisition costs
    
    
    135,094
    
    
    
    152,487
    
    
    
    154,762Other assets
    
    
    10,443
    
    
    
    10,391
    
    
    
    16,313Total assets
    
    ¥
    2,630,309
    
    
    
    2,579,254
    
    
    
    3,256,149Policy benefits and reserves
    
    ¥
    223,934
    
    
    
    347,900
    
    
    
    520,972Separate account liabilities
    
    
    2,288,002
    
    
    
    2,095,067
    
    
    
    2,582,172Other liabilities
    
    
    44,304
    
    
    
    43,979
    
    
    
    44,176Equity
    
    
    74,069
    
    
    
    92,308
    
    
    
    108,829Total liabilities and equity
    
    ¥
    2,630,309
    
    
    
    2,579,254
    
    
    
    3,256,149Revenue
    
    ¥
    83,699
    
    
    
    89,915
    
    
    
    44,760Expenses
    
    
    49,093
    
    
    
    63,289
    
    
    
    71,732Income taxes
    
    
    11,895
    
    
    
    9,760
    
    
    
    (9,727
    )Net income (loss)
    
    ¥
    22,711
    
    
    
    16,866
    
    
    
    (17,245
    )
 (b)
    
    Cash EquivalentsThe Company considers all highly liquid debt instruments with an original maturity of
three months or less to be cash equivalents.(c)
    
    Investments in Equity and Fixed Maturity SecuritiesTrading securities are recorded at fair value with unrealized gains and losses
included in income. Securities available for sale are recorded at fair value with net
unrealized gains and losses reported, net of tax, in other comprehensive income
(loss). Securities held to maturity, which the Company has positive intent and
ability to hold to maturity, are recorded at amortized cost.For investments that have experienced a decline in value below their respective cost
that is considered to be other than temporary, the declines are recorded as realized
losses on investments in the consolidated statements of operations. Gains and losses
on the sale of investments are included in realized gains and losses in the
consolidated statements of operations based on the trade date. The cost of
investments sold is determined on a moving-average basis.(d)
    
    Investments in LoansThe Company grants mortgage, commercial and consumer loans primarily to customers
throughout Japan. As a result of this geographic concentration of outstanding loans,
the ability of the Companys debtors to honor their contracts is much more dependent
upon the general economic conditions in Japan than those competitors with a greater
geographic dispersion of borrowing.
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##### Table of Contents



Loans that management has the intent and ability to hold for the foreseeable future or
until maturity or pay-off generally are reported at their outstanding unpaid principal
balances adjusted for charge-offs and an allowance for credit losses.Loans are placed on a cash (non-accrual) basis when it is deemed that the payment of
interest or principal is doubtful of collection, or when interest or principal is past
due for 90 days or more.All interest accrued but not collected for loans placed on non-accrual status or
charged off is reversed against interest income. The interest on these loans is
accounted for on a cash basis until qualifying for return to accrual status. Loans
are returned to accrual status when all the principal and interest amounts
contractually due are brought current and future payments are reasonably assured.Allowance for Credit LossesThe allowance for credit losses is established as losses are estimated to have
occurred through a provision for credit losses charged to earnings. Credit losses are
charged against the allowance when management believes the uncollectibility of a loan
balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.The allowance for credit losses is evaluated on a regular basis by management and is
based upon managements periodic review of the collectibility of the loans in light of
historical experience, the nature and volume of the loan portfolio, adverse situations
that may affect the borrowers ability to repay, estimated value of any underlying
collateral and prevailing economic conditions. This evaluation is inherently
subjective as it requires estimates that are susceptible to significant revision as
more information becomes available.The allowance consists of specific and general components. The specific allowance is
established for loans that are classified as impaired when the discounted cash flows
or collateral value of the impaired loan is lower than the carrying value of the loan.
The general allowance covers other-than-impaired loans and is established based on
historical loss experience adjusted for qualitative factors.A loan is considered impaired when, based on current information and events, it is
probable that the Company will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement. Factors considered by management in determining impairment include payment
status, collateral value, and the probability of collecting scheduled principal and
interest payments when due. Loans that experience insignificant payment delays and
payment shortfalls generally are not classified as impaired. Management determines the
significance of payment delays and payment shortfalls on a case-by-case basis, taking
into consideration all of the circumstances surrounding the loan and the borrower,
including the length of the delay, the reasons for the delay, the borrowers prior
payment record, and the amount of the shortfalls in relation to the principal and
interest owed. Impairment is measured on a loan-by-loan basis for mortgage and
commercial loans by either the present value of expected future cash flows discounted
at the loans effective interest rate, the loans obtainable market price, or the fair
value of the collateral if the loan is collateral-dependent. Large groups of smaller-balance
homogeneous loans are collectively evaluated for impairment.
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##### Table of Contents



(e)
    
    Accounts with Foreign Branches and AgentsThe amounts included in the consolidated balance sheets at March 31, 2009 and 2010
with respect to foreign branches and agents of the Company represent data within three
months before March 31, 2009 and 2010, respectively. The consolidated statements of
operations likewise include amounts for the corresponding periods ended on those
dates.(f)
    
    Property and EquipmentProperty and equipment, including property classified as investment real estate, are
stated principally at cost less accumulated depreciation on buildings and furniture
and equipment. Depreciation is computed by the declining-balance method based on the
estimated useful lives of the assets. The estimated useful lives for buildings,
furniture and equipment are primarily 6 to 60 years, 2 to 20 years, respectively.The cost and accumulated depreciation with respect to assets retired or otherwise
disposed of are eliminated from the respective assets and related accumulated
depreciation accounts. Any resulting profit or loss is credited or charged to income.
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##### Table of Contents



(g)
    
    Impairment or Disposal of Long-Lived AssetsLong-lived assets, such as property, plant and equipment and purchased intangibles
subject to amortization 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 estimated undiscounted future cash flows expected to be
generated by the asset. If the carrying amount of an asset exceeds its estimated
future cash flows, an impairment charge is recognized in the amount by which the
carrying amount of the asset exceeds the fair value of the asset. Assets to be
disposed of are stated at the lower of the carrying amount or fair value less costs to
sell, and are no longer depreciated. The fair values of the assets are determined
based on either quoted market prices or independent third party appraisals.(h)
    
    Policy Acquisition CostsPolicy acquisition costs are deferred and amortized over the periods in which the
related premiums are earned or in relation to estimated gross profits with respect to
certain interest-sensitive life and annuity products. Acquisition costs include agent
commissions and certain other costs which vary with and are directly related to the
acquisition of business. Such deferred costs are limited to the excess of the
unearned premiums over the sum of expected claim costs, claim adjustment expenses and
policy maintenance expenses.Details of policy acquisition costs for the years ended March 31, 2008, 2009 and 2010
are as follows:Property and casualty insurance:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Deferred at beginning of year
    
    ¥
    302,677
    
    
    
    287,966
    
    
    
    249,422Capitalized during year:Commissions and brokerage
    
    
    230,377
    
    
    
    221,255
    
    
    
    222,911Salaries and other compensation
    
    
    62,841
    
    
    
    63,019
    
    
    
    67,568Other underwriting costs
    
    
    57,937
    
    
    
    60,261
    
    
    
    55,142351,155
    
    
    
    344,535
    
    
    
    345,621Amortized during year
    
    
    (365,866
    )
    
    
    (383,079
    )
    
    
    (332,099
    )Deferred at end of year
    
    ¥
    287,966
    
    
    
    249,422
    
    
    
    262,944
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Life insurance:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Deferred at beginning of year
    
    ¥
    59,583
    
    
    
    72,186
    
    
    
    76,117Capitalized during year
    
    
    19,341
    
    
    
    20,097
    
    
    
    19,934Change in shadow adjustment
    
    
    (579
    )
    
    
    (585
    )
    
    
    (159
    )Amortized during year
    
    
    (6,159
    )
    
    
    (15,581
    )
    
    
    (13,105
    )Deferred at end of year
    
    ¥
    72,186
    
    
    
    76,117
    
    
    
    82,787
 Other underwriting costs include certain policy issuance costs supporting
underwriting functions. These costs are related to the acquisition of new business
and renewals and include technology costs to process policies, policy forms and
travel.Shadow accounting adjustments to deferred policy acquisition costs, present value of
future profit and certain insurance liabilities, is recognized in equity, together
with the unrealized gains or losses.(i)
    
    Losses, Claims, Loss Adjustment Expenses and Policyholder BenefitsLiabilities for reported and estimated losses and claims and for related adjustment
expenses for property and casualty insurance contracts are based upon the accumulation
of case estimates for losses and related adjustment expenses reported prior to the
close of the accounting period on direct and assumed business. Provision has also
been made based upon past experience for unreported losses and for adjustment expenses
not identified with specific claims. The Company believes that the liabilities for
unpaid losses and adjustment expenses at March 31, 2009 and 2010 are adequate to cover
the ultimate cost of losses and claims incurred to those dates, but the provisions are
necessarily based on estimates and no representation is made that the ultimate
liability may not exceed or fall short of such estimates.For life insurance contracts, reserves for future policy benefits are determined
principally by the net level premium method. Assumed interest rates range from 1.10%
to 3.10%. Anticipated rates of mortality are based on the recent experience of its
life insurance subsidiary.(j)
    
    Insurance Revenue RecognitionProperty and casualty insurance premiums are earned ratably over the terms of the
related insurance contracts. Unearned premiums are recognized to cover the unexpired
portion of premiums written. Life insurance premiums of long-duration contracts are
recognized as revenue when due from policyholders.(k)
    
    ReinsuranceAssets and liabilities relating to reinsurance contracts are reported on a gross
basis. If risk is transferred, the conditions for reinsurance accounting are met. If
risk is not transferred, the contract is accounted for as a deposit. All of the Companys reinsurance contracts
meet the risk transfer criteria and are accounted for as reinsurance.
 F-17




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##### Table of Contents



(l)
    
    Income TaxesDeferred tax assets and liabilities are recognized for the estimated future tax
consequences of 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.In June 2006, FASB interpretation (FIN) 48, Accounting for Uncertainty in Income
Taxes, an interpretation of FASB Statement (SFAS) No. 109, which is now included in
Accounting Standards Codification (ASC) 740, was issued. FIN48 clarifies the
accounting for uncertainty in income taxes by prescribing the recognition threshold a
tax position is required to meet before being recognized in the financial statements.
It also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosure, and transition. The Companys accounting
policy is to accrue interest and penalties related to unrecognized tax benefits as a
component of income tax expense in the consolidated statements of operations. The
initial adoption of FIN48 on April 1, 2007 had no effect on the Companys consolidated
financial statements.(m)
    
    Compulsory Automobile Liability InsuranceJapanese law requires that all automobiles be covered by liability insurance for
personal injury and that insurance companies may not refuse to issue such policies.
The law provides that the regulatory authorities should not approve any application
for upward premium rate adjustments if, in the opinion of the regulatory authorities,
such adjustments would generate underwriting profits, for the program as a whole, or
if it is deemed that the rate adjustments would compensate the insurers for excessive
underwriting costs attributable to a lack of effective cost control on the part of the
insurers. The law further stipulates that whenever premium rates are such that, in
the opinion of the regulatory authorities, such premium revenues generate income which
exceeds costs that are effectively controlled by insurers, for the program as a whole,
the regulatory authorities may order a downward revision of premium rates.The Company is not permitted to reflect any profit or loss from underwriting
Compulsory Automobile Liability Insurance in the statutory financial statements
prepared for distribution to shareholders, unless permission has been obtained from
the Financial Services Agency of Japan. Rather, all such accumulated profits are
recorded as a liability in the statutory financial statements prepared on the Japanese
GAAP basis.In contrast, in the accompanying consolidated financial statements prepared on the
U.S. GAAP basis, Compulsory Automobile Liability Insurance is accounted for similarly
with other lines of property and casualty insurance written by the Company, in the
absence of a legal or contractual obligation to refund premium amounts in excess of
cost to policyholders. Thereby, premiums are earned over the terms of the policies
and the unexpired portion of premiums written relating to the unexpired terms of coverage are accounted for as unearned premiums. Earned premiums from
underwriting Compulsory Automobile Liability Insurance were ¥193,572 million, ¥217,935
million, and ¥144,166 million for the years ended March 31, 2008, 2009 and 2010,
respectively. Likewise, liabilities for reported and estimated losses and claims and
for related adjustment expenses are recorded based on the accumulation of case
estimates for losses and related adjustment expenses reported prior to the close of
the accounting period and on past experience for unreported losses and for adjustment
expenses not identified with specific claims. Gross liabilities for losses, claims
and related adjustment expenses for Compulsory Automobile Liability Insurance were
¥396,302 million and ¥371,889 million at March 31, 2009 and 2010, respectively.
 F-18




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##### Table of Contents



During the year ended March 31, 2009, the Company revised its method for estimating
the IBNR and unearned premiums for Compulsory Automobile Liability Insurance due to
the improvement in the availability of relevant premiums, and losses and claims data.
Reserving method of IBNR was revised from a loss ratio method with limited inputs to a
more scientific method involving loss development based on historical loss trend. The
calculation of unearned premiums was also revised to apply proration at more frequent
intervals. The effect of these revisions also resulted in adjustments to the
calculation of deferred policy acquisition costs, reinsurance recoverable on unpaid
losses, loss adjustment expenses and related deferred tax assets and liabilities.These changes in estimate resulted in an increase of ¥35,573 million in net loss and
an increase of ¥84.49 in the basic and diluted loss per share for the year ended March
31, 2009.(n)
    
    Foreign Currency Translation and TransactionsAssets and liabilities of subsidiaries and affiliates located outside Japan are
translated into Japanese yen at the rates of exchange in effect at the balance sheet
date. Income and expense items are translated at the average exchange rates
prevailing during the year. Gains and losses resulting from the translation of
foreign currency financial statements are excluded from the consolidated statements of
operations and are accumulated in Foreign currency translation adjustments, within
accumulated other comprehensive income.Gains or losses resulting from foreign currency transactions have been included in
other expenses in the accompanying consolidated statements of operations as losses of
¥10,191 million, losses of ¥7,452 million and losses of ¥450 million for the years
ended March 31, 2008, 2009 and 2010, respectively.(o)
    
    DerivativesAll derivatives are recognized on the balance sheet at their fair value.Changes in the fair values of a derivative instrument are recorded in earnings or
equity, depending on its designation and qualification as (1) fair value hedge (a
hedge of subsequent changes in the fair value of a recognized asset or liability), (2)
cash flow hedge (a hedge of the variability of cash flows to be received or paid
related to a recognized asset or liability) or (3) foreign currency hedge (fair
value and cash flow hedges may involve foreign-currency risk). In order to qualify as
a hedge, the derivative instrument must be: (1) designated as hedge of a specific
financial asset or liability at the inception of the contract, (2) effective at
reducing the risk associated with the exposure to be hedged, and (3) highly correlated with respect to changes in its fair value or in the
related cash flows in relation to the fair value of or cash flows related to the item
to be hedged both at inception and over the life of the contract. Through the year
ended March 31, 2007, the Company applied hedge accounting to some of its derivatives.
The Company reconsidered the cost-effectiveness of that accounting treatment and, as a
result, the Company discontinued hedge accounting for those derivatives in the year
ended March 31, 2008. Ceasing hedge accounting did not have a material effect on the
Companys reported financial position or cash flows.
 F-19




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##### Table of Contents



(p)
    
    Earnings per ShareBasic EPS is computed based on the average number of shares of common stock
outstanding during each period. Diluted EPS assumes the dilution that could occur if
securities or other contracts to issue common stock were exercised or converted into
common stock or resulted in the issuance of common stock.(q)
    
    ReclassificationCertain immaterial reclassifications have been made to the amounts as of and for the
years ended March 31, 2008 and 2009 in the accompanying consolidated financial
statements to conform with the March 31, 2010 presentation.(r)
    
    GoodwillGoodwill represents the excess of the cost of an acquired entity over the net of the
amounts assigned to assets acquired and liabilities assumed. Goodwill is tested for
impairment at least annually, or more often if events or circumstances indicate there
may be impairment. The impairment test is a two-step process. The first step is to
identify any potential impairment using a multiple-of-earnings approach to estimate
the fair value of the reporting units. The fair values of the reporting units are then
compared to their carrying value, including goodwill. If the carrying amounts of the
reporting units exceed their fair value, a second step is performed to measure the
amount of impairment, if any.(s)
    
    Fair Value MeasurementsThe Company adopted the provisions of SFAS No. 157, Fair Value Measurements, which
is now included in ASC 820, Fair Value Measurements and Disclosures, for fair value
measurements of financial assets and financial liabilities and for fair value
measurements of nonfinancial items that are recognized or disclosed at fair value in
the financial statements on a recurring basis. The statement defines fair value as
the price that would be received to sell an asset or paid to transfer a liability in
an orderly transaction between market participants at the measurement date. The
statement also establishes a framework for measuring fair value and expands
disclosures about fair value measurements. The required disclosures are reflected in
Note 16 and 17.
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##### Table of Contents



(t)
    
    New Accounting Standards AdoptedEffective April 1, 2009, the Company adopted the provisions of SFAS No. 141 Revised,
Business Combinations, included in FASB ASC Topic 805. This ASC establishes principles
and requirements of how an acquirer recognizes and measures in its financial
statements the identifiable assets acquired, liabilities assumed, any noncontrolling
interest in the acquire and the goodwill acquired in a business combination. This ASC
requires disclosures to enable evaluation of the nature and financial effects of the
business combination. The adoption of this ASC did not have a material impact on the
results of operations or the financial position of the Company during the year ended
March 31, 2010.Effective April 1, 2009, the Company adopted the provisions of SFAS No. 160,
Noncontrolling Interests in Consolidated Financial Statements, included in ASC Topic
810. This ASC establishes new accounting and reporting standards for noncontrolling
interests (previously referred to as minority interests) in consolidated financial
statements. This ASC establishes new accounting and reporting for ownership interests
in subsidiaries held by parties other than the parent, the amount of consolidated net
income attributable to the parent and to the noncontrolling interest, changes in
parents ownership interest, and the valuation of retained noncontrolling equity
investments when a subsidiary is deconsolidated. This ASC requires disclosure that
clearly identifies and distinguishes the interests of the parent and the interest of
the noncontrolling owners. Upon adoption of this ASC, noncontrolling interests, which
were previously referred to as minority interests and classified between total
liabilities and stockholders equity on the consolidated balance sheets, are now
included as a separate component of total equity. Also, consolidated net income (loss)
on the consolidated statements of operations now includes the net income (loss)
attributable to noncontrolling interests. These financial statement presentation
requirements have been adopted retrospectively and prior year amounts have been
classified to conform with this ASC.Effective April 1, 2009, the Company adopted the provisions of FASB FSP No.FAS115-2
and FAS124-2, Recognition and Presentation of Other-Than-Temporary Impairments,
which is now included in ASC 320, Investments-Debt and Equity Securities, and amends
the other-than-temporary impairment model for debt securities. The pronouncement
requires an entity to recognize the credit component of an other-than-temporary
impairment of a debt security in earnings and the noncredit component in other
comprehensive income when the entity does not intend to sell the security and it is
more likely than not that the entity will not be required to sell the security prior
to recovery. In addition, the pronouncement expands existing disclosures and requires
new disclosures about other-than-temporary impairments. The initial adoption of these
provision on April 1, 2009 resulted in an increase in the beginning balance of
retained earnings of ¥2,224 million, net of tax with an offsetting reduction to
accumulated other comprehensive income. See Note 4,Effective April 1, 2009, the Company adopted SFAS No. 163, Accounting for Financial
Guarantee Insurance Contracts, an interpretation of FASB Statement No. 60, which is
now included in ASC 944, Financial Services-Insurance that clarifies how financial
guarantee insurance (and reinsurance) is accounted for, including the recognition and
measurement of premium revenue and claim liabilities. The statement also requires
expanded disclosures about financial guarantee insurance contracts. The adoption of
the statement did not have a material impact on the Companys consolidated results of
operations or financial condition.
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##### Table of Contents



(3)
    
    Business DevelopmentsOn July 1, 2008, MSI transferred all of the holding shares of its subsidiaries, Mitsui
Sumitomo Kirameki Life Insurance Company (MS Kirameki), Limited and Mitsui Direct
General Insurance Company, Limited (MDGI), and an affiliate, MS MetLife to MSIGH as
dividends in-kind. This transaction was accounted for as a combination under common
control by MSIGH. No gains or losses were recognized by this transaction.On January 23, 2009, MSIGH announced, together with AIOI, NDGI and MSI, that they reached
an agreement for a combination and business alliance with the goal of forming a new
insurance and financial group, subject to shareholder and regulatory approvals. The
business combination of AIOI, NDGI and MSIGH was completed on April 2010, by way of a
holding company structure, whereby MSIGH was utilized as a holding company of the newly
formed insurance group. To implement the business reorganization, AIOI and NDGI have each
conducted a statutory share exchange with the holding company, and became its wholly owned
subsidiaries. AIOI and NDGI are scheduled to merge with each other on October 1, 2010. See
Note 23 for more details on the business reorganization.
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##### Table of Contents



(4)
    
    InvestmentsThe amortized cost of fixed maturity securities or cost of equity securities and money
trusts and related fair values at March 31, 2009 and 2010 were as follows:Securities held to maturity:
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Yen in millions)March 31, 2009:Fixed maturity securities:Governments and government agencies
and authorities other than U.S.
    
    ¥
    363,613
    
    
    
    13,385
    
    
    
    (902
    )
    
    
    376,096Other municipalities and political
subdivisions
    
    
    1,112
    
    
    
    
    
    
    
    
    
    
    
    1,112Other corporate bonds
    
    
    110,851
    
    
    
    3,792
    
    
    
    (7
    )
    
    
    114,636Total securities held to maturity
    
    ¥
    475,576
    
    
    
    17,177
    
    
    
    (909
    )
    
    
    491,844
 Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Yen in millions)March 31, 2010:Fixed maturity securities:Governments and government agencies
and authorities other than U.S.
    
    ¥
    388,433
    
    
    
    8,796
    
    
    
    (1,133
    )
    
    
    396,096Other corporate bonds
    
    
    117,874
    
    
    
    4,980
    
    
    
    (20
    )
    
    
    122,834Total securities held to maturity
    
    ¥
    506,307
    
    
    
    13,776
    
    
    
    (1,153
    )
    
    
    518,930
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##### Table of Contents



Securities available for sale:
 Cost or
    
    
    Gross
    
    
    Gross
    
    
    CarryingAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Amount/Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Yen in millions)March 31, 2009:Fixed maturity securities:U.S. government and government
agencies and authorities
    
    ¥
    96,199
    
    
    
    9,831
    
    
    
    (1,028
    )
    
    
    105,002U.S. municipalities and political
subdivisions
    
    
    100
    
    
    
    
    
    
    
    (13
    )
    
    
    87Other governments and government
agencies and authorities
    
    
    723,315
    
    
    
    24,027
    
    
    
    (4,492
    )
    
    
    742,850Other municipalities and political
subdivisions
    
    
    591,108
    
    
    
    10,541
    
    
    
    (14,209
    )
    
    
    587,440Other corporate bonds
    
    
    1,580,381
    
    
    
    15,764
    
    
    
    (36,654
    )
    
    
    1,559,491Total fixed maturity securities
    
    
    2,991,103
    
    
    
    60,163
    
    
    
    (56,396
    )
    
    
    2,994,870Equity securities
    
    
    1,113,120
    
    
    
    613,690
    
    
    
    (23,377
    )
    
    
    1,703,433Total securities available for sale
    
    ¥
    4,104,223
    
    
    
    673,853
    
    
    
    (79,773
    )
    
    
    4,698,303
 Cost or
    
    
    Gross
    
    
    Gross
    
    
    CarryingAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Amount/Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Yen in millions)March 31, 2010:Fixed maturity securities:U.S. government and government
agencies and authorities
    
    ¥
    89,349
    
    
    
    7,661
    
    
    
    (3,483
    )
    
    
    93,527U.S. municipalities and political
subdivisions
    
    
    101
    
    
    
    
    
    
    
    (7
    )
    
    
    94Other governments and government
agencies and authorities
    
    
    871,458
    
    
    
    20,489
    
    
    
    (3,856
    )
    
    
    888,091Other municipalities and political
subdivisions
    
    
    516,015
    
    
    
    11,934
    
    
    
    (4,886
    )
    
    
    523,063Other corporate bonds
    
    
    1,480,830
    
    
    
    38,101
    
    
    
    (11,403
    )
    
    
    1,507,528Total fixed maturity securities
    
    
    2,957,753
    
    
    
    78,185
    
    
    
    (23,635
    )
    
    
    3,012,303Equity securities
    
    
    1,026,790
    
    
    
    979,633
    
    
    
    (8,677
    )
    
    
    1,997,746Total securities available for sale
    
    ¥
    3,984,543
    
    
    
    1,057,818
    
    
    
    (32,312
    )
    
    
    5,010,049
 F-24




---



##### Table of Contents



Trading securities:
 Gross
    
    
    GrossUnrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Yen in millions)March 31, 2009:Money trusts included in short-term investments
    
    ¥
    15,227
    
    
    
    188
    
    
    
    (1,688
    )
    
    
    13,727
 Gross
    
    
    GrossUnrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(Yen in millions)March 31, 2010:Money trusts included in short-term investments
    
    ¥
    9,187
    
    
    
    75
    
    
    
    (169
    )
    
    
    9,093
 The changes in net unrealized gains and losses on trading securities have been
included in the accompanying consolidated statements of operations as losses of ¥2,060
million, gains of ¥789 and gains of ¥1,406 million for the years ended March 31, 2008,
2009 and 2010, respectively.The amortized cost and fair values of investments in fixed maturity securities held to
maturity and available for sale at March 31, 2010 by contractual maturity were as follows:
 AmortizedSecurities held to maturity:
    
    Cost
    
    
    Fair Value(Yen in millions)Due within one year
    
    ¥
    246
    
    
    
    246Due after one year through five years
    
    
    156,098
    
    
    
    162,116Due after five years through ten years
    
    
    83,571
    
    
    
    87,089Due after ten years
    
    
    266,392
    
    
    
    269,479¥
    506,307
    
    
    
    518,930
 AmortizedSecurities available for sale:
    
    Cost
    
    
    Fair Value(Yen in millions)Due within one year
    
    ¥
    356,001
    
    
    
    357,502Due after one year through five years
    
    
    1,128,340
    
    
    
    1,146,568Due after five years through ten years
    
    
    623,238
    
    
    
    644,226Due after ten years
    
    
    850,174
    
    
    
    864,007¥
    2,957,753
    
    
    
    3,012,303
 Actual maturities may differ from contractual maturities because some issuers have
the right to call or prepay obligations with or without call or prepayment penalties.
 F-25




---



##### Table of Contents



The methods of determining the fair value of the Companys fixed maturity and equity
securities are described in Note 17.Gross unrealized losses on investment securities and the fair value of the related
securities, aggregated by investment category and length of time that individual
securities have been in a continuous unrealized loss position, at March 31, 2009 and 2010,
were as follows:Securities held to maturity:
 Less than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedMarch 31, 2009:
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(Yen in millions)Fixed maturities
    
    ¥
    11,609
    
    
    
    (107
    )
    
    
    13,572
    
    
    
    (802
    )
    
    
    25,181
    
    
    
    (909
    )
 Less than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedMarch 31, 2010:
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(Yen in millions)Fixed maturities
    
    ¥
    37,686
    
    
    
    (242
    )
    
    
    19,038
    
    
    
    (911
    )
    
    
    56,724
    
    
    
    (1,153
    )
 Securities available for sale:
 Less than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedMarch 31, 2009:
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(Yen in millions)Fixed maturities
    
    ¥
    560,524
    
    
    
    (30,601
    )
    
    
    323,397
    
    
    
    (25,795
    )
    
    
    883,921
    
    
    
    (56,396
    )Equity securities
    
    
    99,417
    
    
    
    (18,341
    )
    
    
    23,856
    
    
    
    (5,036
    )
    
    
    123,273
    
    
    
    (23,377
    )Total securities
    
    ¥
    659,941
    
    
    
    (48,942
    )
    
    
    347,253
    
    
    
    (30,831
    )
    
    
    1,007,194
    
    
    
    (79,773
    )
 Less than 12 months
    
    
    12 months or more
    
    
    TotalUnrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedMarch 31, 2010:
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses(Yen in millions)Fixed maturities
    
    ¥
    252,182
    
    
    
    (3,724
    )
    
    
    318,923
    
    
    
    (19,911
    )
    
    
    571,105
    
    
    
    (23,635
    )Equity securities
    
    
    13,259
    
    
    
    (1,347
    )
    
    
    50,920
    
    
    
    (7,330
    )
    
    
    64,179
    
    
    
    (8,677
    )Total securities
    
    ¥
    265,441
    
    
    
    (5,071
    )
    
    
    369,843
    
    
    
    (27,241
    )
    
    
    635,284
    
    
    
    (32,312
    )
 Unrealized losses of fixed maturities were mainly caused by changes in interest rate.
The majority of fixed securities have received high credit ratings, and the Company has
the positive ability and intent to hold these securities until a market price recovery.
 F-26




---



##### Table of Contents



In evaluating the factors for securities available for sale, the Company considers the
length of time and the extent to which fair value has been below cost, the severity of the
impairment, the cause of the impairment and the financial condition and near-term
prospects of the issuer and activity in the market of the issuer which may indicate
adverse credit conditions.During the year ended March 31, 2010, the Company adopted the new accounting standards
related to Other-than-Temporary Impairment (OTTI) that provide guidance in determining
whether impairments in debt securities are other-than-temporary and require additional
disclosures relating to OTTI and unrealized losses on investments; the new standards did
not change the impairment model for equity securities.ASC 320 requires that, during the initial period of adoption, the Company records a
cumulative effect of change in accounting principle to reclassify the non-credit component
of a previously recognized OTTI from retained earnings to other comprehensive income.
Based on the Companys review of OTTI losses on securities held at March 31, 2009, the
Company reclassified ¥2,224 million (or ¥3,478 million on a pretax basis) from retained
earnings to accumulated other comprehensive income (loss) at beginning of the year ended
March 31, 2010.A rollforward of the amount related to credit losses on debt securities recognized in
earnings for the year ended March 31, 2010 is presented in the following table:
 (Yen in millions)Balance at March 31, 2009
    
    ¥
    26,252Additional credit loss on securities not previously impaired
    
    
    2,591Additional credit loss on securities that have been previously impaired
    
    
    295Reductions for securities sold or matured during the period
    
    
    (5,688
    )Balance at March 31, 2010
    
    ¥
    23,450
 Gross realized and change in unrealized gains and losses from investments for the
years ended March 31, 2008, 2009 and 2010 were as follows:
 Fixed
    
    
    Equity
    
    
    OtherMaturities
    
    
    Securities
    
    
    Investments
    
    
    Total Losses(Yen in millions)2008:Net realized gains (losses)
    
    ¥
    6,273
    
    
    
    10,788
    
    
    
    (34,431
    )
    
    
    (17,370
    )Change in unrealized gains (losses)
    
    
    (15,839
    )
    
    
    (800,325
    )
    
    
    436
    
    
    
    (815,728
    )Combined realized and unrealized
losses
    
    ¥
    (9,566
    )
    
    
    (789,537
    )
    
    
    (33,995
    )
    
    
    (833,098
    )
 F-27




---



##### Table of Contents



Fixed
    
    
    Equity
    
    
    OtherMaturities
    
    
    Securities
    
    
    Investments
    
    
    Total Losses(Yen in millions)2009:Net realized losses
    
    ¥
    (39,219
    )
    
    
    (80,359
    )
    
    
    (15,307
    )
    
    
    (134,885
    )Change in unrealized losses
    
    
    (54,322
    )
    
    
    (816,412
    )
    
    
    (879
    )
    
    
    (871,613
    )Combined realized and unrealized
losses
    
    ¥
    (93,541
    )
    
    
    (896,771
    )
    
    
    (16,186
    )
    
    
    (1,006,498
    )
 Fixed
    
    
    Equity
    
    
    OtherMaturities
    
    
    Securities
    
    
    Investments
    
    
    Total Gains(Yen in millions)2010:Net realized gains (losses)
    
    ¥
    (10,403
    )
    
    
    3,899
    
    
    
    11,240
    
    
    
    4,736Change in unrealized gains (losses)
    
    
    50,051
    
    
    
    380,643
    
    
    
    (152
    )
    
    
    430,542Combined realized and unrealized
gains
    
    ¥
    39,648
    
    
    
    384,542
    
    
    
    11,088
    
    
    
    435,278
 The net effect on accumulated other comprehensive income of unrealized gains and
losses on available-for-sale securities at March 31, 2009 and 2010 was as follows:
 Fixed
    
    
    Equity
    
    
    OtherMaturities
    
    
    Securities
    
    
    Investments
    
    
    Total Gains(Yen in millions)March 31, 2009:Unrealized gains (losses), net
    
    ¥
    3,767
    
    
    
    590,313
    
    
    
    (40
    )
    
    
    594,040Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (418,809
    )¥
    175,231
 Fixed
    
    
    Equity
    
    
    OtherMaturities
    
    
    Securities
    
    
    Investments
    
    
    Total Gains(Yen in millions)March 31, 2010:Unrealized gains (losses), net
    
    ¥
    50,342
    
    
    
    970,956
    
    
    
    (193
    )
    
    
    1,021,105Deferred income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (571,907
    )¥
    449,198
 F-28




---



##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions)Fixed maturity securities:Gross realized gains
    
    ¥
    10,251
    
    
    
    9,175
    
    
    
    3,681Gross realized losses
    
    
    (2,074
    )
    
    
    (14,148
    )
    
    
    (12,449
    )Net realized gains(losses)
    
    ¥
    8,177
    
    
    
    (4,973
    )
    
    
    (8,768
    )Proceeds from fixed maturity securities
    
    ¥
    412,764
    
    
    
    475,425
    
    
    
    247,594
 2008
    
    
    2009
    
    
    2010(Yen in millions)Equity securities:Gross realized gains
    
    ¥
    29,436
    
    
    
    72,580
    
    
    
    19,586Gross realized losses
    
    
    (1,735
    )
    
    
    (4,846
    )
    
    
    (3,157
    )Net realized gains
    
    ¥
    27,701
    
    
    
    67,734
    
    
    
    16,429Proceeds from equity securities
    
    ¥
    87,796
    
    
    
    181,957
    
    
    
    179,709
     F-29




---



##### Table of Contents



2009
    
    
    2010(Yen in millions)Mortgage loans on vessels and facilities
    
    ¥
    119
    
    
    
    37Collateral and guaranteed loans
    
    
    396,335
    
    
    
    396,271Unsecured loans
    
    
    315,117
    
    
    
    295,297Other investments
    
    
    82
    
    
    
    20¥
    711,653
    
    
    
    691,625
       2009
    
    
    2010(Yen in millions)Money trusts
    
    ¥
    13,727
    
    
    
    9,093Invested cash
    
    
    79,336
    
    
    
    58,377Other
    
    
    13,789
    
    
    
    1,669¥
    106,852
    
    
    
    69,139
  F-30




---



##### Table of Contents



2009
    
    
    2010(Yen in millions)Recorded investment in impaired loans:Mortgage loans on real estate
    
    ¥
    1,387
    
    
    
    1,251Mortgage loans on vessels and facilities
    
    
    3
    
    
    
    3Unsecured loans
    
    
    2,487
    
    
    
    5,009¥
    3,877
    
    
    
    6,263Valuation allowance:Mortgage loans on real estate
    
    ¥
    271
    
    
    
    256Mortgage loans on vessels and facilities
    
    
    
    
    
    
    1Unsecured loans
    
    
    1,579
    
    
    
    3,562¥
    1,850
    
    
    
    3,819
   2008
    
    
    2009
    
    
    2010(Yen in millions)Balance at beginning of year
    
    ¥
    1,650
    
    
    
    1,098
    
    
    
    2,660Charges (credit) to income
    
    
    (428
    )
    
    
    1,687
    
    
    
    2,094Principal charge-offs
    
    
    (124
    )
    
    
    (125
    )
    
    
    (74
    )Balance at end of year
    
    ¥
    1,098
    
    
    
    2,660
    
    
    
    4,680
    F-31




---



##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions)Interest on fixed maturities
    
    ¥
    89,704
    
    
    
    75,101
    
    
    
    68,736Dividends from equity securities
    
    
    69,050
    
    
    
    53,196
    
    
    
    40,373Interest on mortgage loans on real estate
    
    
    328
    
    
    
    280
    
    
    
    239Rent from investment real estate
    
    
    4,926
    
    
    
    5,472
    
    
    
    6,123Interest on policy loans
    
    
    1,352
    
    
    
    1,425
    
    
    
    1,474Interest on other long-term investments
    
    
    13,871
    
    
    
    14,560
    
    
    
    13,343Interest on short-term investments
    
    
    3,078
    
    
    
    3,207
    
    
    
    1,851Other
    
    
    12,480
    
    
    
    11,375
    
    
    
    6,183Gross investment income
    
    
    194,789
    
    
    
    164,616
    
    
    
    138,322Less investment expenses
    
    
    9,524
    
    
    
    10,604
    
    
    
    10,589Net investment income
    
    ¥
    185,265
    
    
    
    154,012
    
    
    
    127,733
  2009
    
    
    2010(Yen in millions)Japanese government
    
    ¥
    1,301,843
    
    
    
    1,468,445Toyota Motor Corporation and its affiliates
    
    
    295,134
    
    
    
    375,949
 (5)
    
    Property and Equipment
  2009
    
    
    2010(Yen in millions)Land
    
    ¥
    97,228
    
    
    
    94,883Buildings
    
    
    299,985
    
    
    
    302,016Furniture and equipment
    
    
    73,181
    
    
    
    73,571Construction in progress
    
    
    1,429
    
    
    
    4,428471,823
    
    
    
    474,898Less accumulated depreciation
    
    
    (239,776
    )
    
    
    (250,018
    )¥
    232,047
    
    
    
    224,880
 F-32




---



##### Table of Contents



(6)
    
    Impairment Losses of Long-Lived Assets
   (7)
    
    Goodwill
  2008
    
    
    2009
    
    
    2010(Yen in millions)Balance at beginning of year
    
    ¥
    70,012
    
    
    
    69,248
    
    
    
    63,254Acquisition
    
    
    
    
    
    
    
    
    
    
    2,498Change in foreign currency exchange rates
    
    
    (764
    )
    
    
    (5,994
    )
    
    
    498Balance at end of year
    
    ¥
    69,248
    
    
    
    63,254
    
    
    
    66,250
   F-33




---



##### Table of Contents



(8)
    
    Liabilities for Losses and Claims
  2008
    
    
    2009
    
    
    2010(Yen in millions)Balance at beginning of year
    
    ¥
    1,153,550
    
    
    
    1,197,820
    
    
    
    1,256,522Less: reinsurance recoverable
    
    
    237,719
    
    
    
    253,092
    
    
    
    304,228Net balance at beginning of year
    
    
    915,831
    
    
    
    944,728
    
    
    
    952,294Change in estimate of IBNR for
Compulsory Automobile Liability
Insurance
    
    
    
    
    
    
    86,524
    
    
    
    Incurred related to:Current year insured events
    
    
    1,094,832
    
    
    
    1,109,730
    
    
    
    1,077,420Prior year insured events
    
    
    (7,191
    )
    
    
    (21,268
    )
    
    
    (8,655
    )Total incurred
    
    
    1,087,641
    
    
    
    1,088,462
    
    
    
    1,068,765Paid related to:Current year insured events
    
    
    576,463
    
    
    
    610,493
    
    
    
    613,166Prior year insured events
    
    
    483,209
    
    
    
    483,212
    
    
    
    480,213Total paid
    
    
    1,059,672
    
    
    
    1,093,705
    
    
    
    1,093,379Foreign currency
Translation adjustments
    
    
    928
    
    
    
    (73,715
    )
    
    
    6,050Net balance at end of year
    
    
    944,728
    
    
    
    952,294
    
    
    
    933,730Plus reinsurance recoverable
    
    
    253,092
    
    
    
    304,228
    
    
    
    293,347Balance at end of year
    
    ¥
    1,197,820
    
    
    
    1,256,522
    
    
    
    1,227,077
  (9)
    
    Investment Deposits by Policyholders
  F-34




---



##### Table of Contents



F-35




---



##### Table of Contents



(10)
    
    Short-term Debt and Long-term Debt
  2009
    
    
    2010(Yen in millions)0.80% Japanese yen debentures, due 2009
    
    ¥
    70,000
    
    
    
    1.31% Japanese yen debentures, due 2012
    
    
    30,000
    
    
    
    30,0001.74% Japanese yen debentures, due 2014
    
    
    65,000
    
    
    
    65,000165,000
    
    
    
    95,000Less current portion classified as short-term debt
    
    
    (70,000
    )
    
    
    Less unamortized discount
    
    
    (39
    )
    
    
    (31
    )Total long-term debt
    
    ¥
    94,961
    
    
    
    94,969
  F-36




---



##### Table of Contents



(11)
    
    Reinsurance
    Property and casualty insurance:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Premiums written:Direct
    
    ¥
    1,625,732
    
    
    
    1,537,395
    
    
    
    1,492,881Assumed
    
    
    264,880
    
    
    
    216,372
    
    
    
    189,545Ceded
    
    
    (352,996
    )
    
    
    (305,494
    )
    
    
    (287,188
    )Net premiums written
    
    ¥
    1,537,616
    
    
    
    1,448,273
    
    
    
    1,395,238
 2008
    
    
    2009
    
    
    2010(Yen in millions)Premiums earned:Direct
    
    ¥
    1,597,352
    
    
    
    1,532,750
    
    
    
    1,488,589Assumed
    
    
    266,471
    
    
    
    282,642
    
    
    
    203,212Ceded
    
    
    (361,138
    )
    
    
    (306,989
    )
    
    
    (295,164
    )Net premiums earned
    
    ¥
    1,502,685
    
    
    
    1,508,403
    
    
    
    1,396,637
 F-37




---



##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions)Losses and claims incurred:Direct
    
    ¥
    947,824
    
    
    
    947,167
    
    
    
    860,107Assumed
    
    
    181,236
    
    
    
    304,207
    
    
    
    172,164Ceded
    
    
    (222,803
    )
    
    
    (291,333
    )
    
    
    (176,357
    )Net losses and claims incurred
    
    ¥
    906,257
    
    
    
    960,041
    
    
    
    855,914
 Life insurance:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Premiums earned:Direct
    
    ¥
    193,392
    
    
    
    190,748
    
    
    
    188,939Ceded
    
    
    (661
    )
    
    
    (635
    )
    
    
    (566
    )Net premiums earned
    
    ¥
    192,731
    
    
    
    190,113
    
    
    
    188,373
 2008
    
    
    2009
    
    
    2010(Yen in millions)Policyholder benefits:Direct
    
    ¥
    156,714
    
    
    
    154,582
    
    
    
    150,476Ceded
    
    
    (31
    )
    
    
    (526
    )
    
    
    (130
    )Net policyholder benefits
    
    ¥
    156,683
    
    
    
    154,056
    
    
    
    150,346
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(12)
    
    Income Taxes
 Total income taxes for the years ended March 31, 2008, 2009 and 2010 were allocated as
follows:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Taxes on income
    
    ¥
    48,137
    
    
    
    (12,036
    )
    
    
    17,087Taxes on other comprehensive income (loss):Net unrealized gains (losses) on investments
    
    
    (296,550
    )
    
    
    (316,773
    )
    
    
    160,349Net losses on derivative instruments
    
    
    (14
    )
    
    
    
    
    
    
    Pension liability adjustments
    
    
    (6,572
    )
    
    
    (3,742
    )
    
    
    911Total income taxes
    
    ¥
    (254,999
    )
    
    
    (332,551
    )
    
    
    178,347
 The components of earnings (loss) before income taxes and noncontrolling interests
and income tax expense (benefit) for the years ended March 31, 2008, 2009 and 2010 were as
follows:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Earnings (loss) before income taxes and noncontrolling interests:Domestic
    
    ¥
    147,619
    
    
    
    (71,268
    )
    
    
    42,715Foreign
    
    
    6,140
    
    
    
    (10,708
    )
    
    
    24,701Total
    
    ¥
    153,759
    
    
    
    (81,976
    )
    
    
    67,416Income tax expense (benefit):Current:Domestic
    
    ¥
    16,575
    
    
    
    25,447
    
    
    
    14,813Foreign
    
    
    8,793
    
    
    
    4,427
    
    
    
    3,672Total current income tax expense
    
    
    25,368
    
    
    
    29,874
    
    
    
    18,485Deferred:Domestic
    
    
    32,623
    
    
    
    (40,820
    )
    
    
    (1,788
    )Foreign
    
    
    (9,854
    )
    
    
    (1,090
    )
    
    
    390Total deferred income tax expense (benefit)
    
    
    22,769
    
    
    
    (41,910
    )
    
    
    (1,398
    )Total income tax expense (benefit)
    
    ¥
    48,137
    
    
    
    (12,036
    )
    
    
    17,087
 MSIGH and its domestic subsidiaries are subject to a number of taxes based on income,
which in the aggregate resulted in a statutory tax rate of approximately 36%.
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The effective tax rates of the Company for the years ended March 31, 2008, 2009 and 2010
differed from the Japanese statutory income tax rates for the following reasons:
 2008
    
    
    2009
    
    
    2010Japanese statutory income tax rate
    
    
    36.0
    %
    
    
    (36.0
    )%
    
    
    36.0
    %Tax credit for dividends received
    
    
    (5.1
    )
    
    
    (10.0
    )
    
    
    (7.4
    )Lower tax rates applicable to income of subsidiaries
    
    
    (2.7
    )
    
    
    (1.5
    )
    
    
    (6.3
    )Dividends received from subsidiaries
    
    
    1.2
    
    
    
    2.4
    
    
    
    4.3Expenses not deductible for tax purposes
    
    
    0.7
    
    
    
    1.5
    
    
    
    1.4Tax expense for reorganization
    
    
    
    
    
    
    19.0
    
    
    
    Effects of valuation allowances on deferred tax assets
    
    
    0.9
    
    
    
    7.3
    
    
    
    (0.4
    )Other
    
    
    0.3
    
    
    
    2.6
    
    
    
    (2.2
    )Effective tax rate
    
    
    31.3
    %
    
    
    (14.7
    )%
    
    
    25.4
    %
 The tax effects of temporary differences that gave rise to significant portions of
deferred tax assets and deferred tax liabilities at March 31, 2009 and 2010 were as
follows:
 2009
    
    
    2010(Yen in millions)Deferred tax assets:Reported and estimated losses and claims
    
    ¥
    74,431
    
    
    
    74,109Adjustment expenses
    
    
    16,465
    
    
    
    16,650Retirement and severance benefits
    
    
    45,362
    
    
    
    43,034Computer software development costs
    
    
    12,838
    
    
    
    14,228Impairment of investments
    
    
    60,636
    
    
    
    57,440Cost adjustments to investments recognized in income
    
    
    47,219
    
    
    
    40,284Other
    
    
    22,508
    
    
    
    23,673Total gross deferred tax assets
    
    
    279,459
    
    
    
    269,418Less valuation allowance
    
    
    (12,666
    )
    
    
    (11,956
    )Total net deferred tax assets
    
    
    266,793
    
    
    
    257,462Deferred tax liabilities:Unearned premiums
    
    
    140,757
    
    
    
    133,990Deferred policy acquisition costs
    
    
    112,101
    
    
    
    118,407Property and equipment
    
    
    6,166
    
    
    
    6,147Cost adjustments to investments recognized in income
    
    
    11,107
    
    
    
    9,594Unrealized appreciation of investments and derivatives
    
    
    209,007
    
    
    
    368,224Other
    
    
    18,244
    
    
    
    12,337Total gross deferred tax liabilities
    
    
    497,382
    
    
    
    648,699Total net deferred tax liabilities
    
    ¥
    230,589
    
    
    
    391,237
 At March 31, 2009 and 2010, other assets included deferred tax assets in the amount
of ¥7,494 million and ¥6,348 million, respectively.
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The net change in total valuation allowance for the years ended March 31, 2008, 2009 and
2010 was an increase of ¥1,434 million, ¥5,661 million and a decrease of ¥710 million,
respectively. The valuation allowance primarily relates to deferred tax assets associated
with net operating loss carryforwards at subsidiaries.Subsequent recognition of tax benefits related to the valuation allowance for deferred tax
assets will be recorded in the consolidated statements of operations.At March 31, 2010, the Company had operating loss carryforwards for tax purposes of
¥31,985 million, which expire as follows:
 (Yen in millions)Years ending March 31:2011
    
    ¥
    1,7942012
    
    
    2,0122013
    
    
    1,2322014
    
    
    1,1572015
    
    
    2,371Later years
    
    
    3,233Indefinite
    
    
    20,186Total
    
    ¥
    31,985
 The Company intends to reinvest certain undistributed earnings of foreign
subsidiaries for an indefinite period of time. As of March 31, 2010, a deferred tax
liability was not recognized for ¥87,719 million of undistributed earnings of these
subsidiaries where the Company intends to reinvest indefinitely. Determining the tax
liability that would arise if these earnings were remitted is not practicable.In assessing the realizability of deferred tax assets, management considers whether it is
more likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible and tax-planning strategies relating to the future reversal
of temporary differences.Management considers the scheduled reversal of deferred tax liabilities, projected future
taxable income and tax planning strategies in making this assessment. Based upon the
level of historical taxable income and projections for future taxable income over the
periods in which the deferred tax assets are deductible, management believes it is more
likely than not that the Company will realize the benefits of these deductible
differences, net of the recorded valuation allowances, at March 31, 2010.The unrecognized tax benefits as of and for the years ended March 31, 2008, 2009 and 2010
were not material. The Company does not expect that the total amounts of unrecognized tax
benefits will significantly increase or decrease within the next 12 months.The total amounts of penalties and interest expense related to unrecognized tax benefits
in the consolidated balance sheets as of March 31, 2008, 2009 and 2010, and in the
consolidated statements of operations for the years ended March 31, 2008, 2009 and 2010
were not material.
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The Company files tax returns in Japan and certain foreign tax jurisdictions, and they are
periodically audited by Japanese and foreign taxing authorities. MSI has been audited by
the Japanese tax authorities through the tax year ended March 31, 2009.
 (13)
    
    Stockholders Equity
 (a)
    
    Common StockThe amounts of statutory capital and surplus of MSIGH at March 31, 2009 and 2010, on a
non-consolidated basis, are presented as follows:
 2009
    
    
    2010(Yen in millions)Common stock
    
    ¥
    100,000
    
    
    
    100,000Additional paid-in capital
    
    
    646,402
    
    
    
    646,402Retained earnings
    
    
    23,318
    
    
    
    37,702Treasury stock
    
    
    (4,645
    )
    
    
    (14,688
    )Total statutory equity
    
    ¥
    765,075
    
    
    
    769,416
 MSIs statutory net income for the years ended March 31, 2008 was ¥38,366
million. MSIGHs statutory net income for the year ended March 31, 2009 and 2010 was
¥34,689 million and ¥37,026, respectively.The minimum capital requirement of the Insurance Business Law of Japan for a Japanese
insurance company is ¥1,000 million on a statutory basis.The domestic insurance subsidiaries of MSIGH are required to maintain solvency margin
ratios of 200% or higher in accordance with the solvency margin regulations stipulated
by the Japanese regulatory authorities. The solvency margin regulations are based on
factors mainly for underwriting risks, investment risks and large catastrophe risks.
The solvency margin must be supported by equity and other resources, including
unrealized gains and losses on certain investments and catastrophe reserves based on
the financial accounting standards of Japan. At March 31, 2010, the solvency margin
ratios of the domestic non-life insurance subsidiaries, MSI and MDGI, were 839.4% and
669.8%, and that of its domestic life insurance subsidiary was
2,129.7%, respectively.
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The statutory net income for the years ended March 31, 2008, 2009 and 2010 and
shareholders equity at March 31, 2009 and 2010 of the consolidated insurance
subsidiaries were as follows:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Statutory net income :Property and casualty
    
    ¥
    11,453
    
    
    
    20,225
    
    
    
    45,507Life
    
    
    55
    
    
    
    45
    
    
    
    38Statutory shareholders equity:Property and casualty
    
    ¥
    257,372
    
    
    
    1,213,122
    
    
    
    1,515,281Life
    
    
    57,486
    
    
    
    56,064
    
    
    
    57,738
 
 *
    
    MSI is included in the consolidated insurance subsidiaries for 2009 and 2010,
while for 2008 it was then a parent company and not included. On August 12, 2010, the board of directors of MSIGH resolved to repurchase common
stocks as follows:
 Number of
    
    
    Total amount ofshares repurchased
    
    
    repurchase(Maximum)
    
    
    (Maximum)
    
    
    Period of repurchase(Shares)
    
    
    (Yen in millions)Common stock
    
    
    7,000,000
    
    
    
    10,000
    
    
    From: August 13, 2010To: September 22, 2010
 The amounts of undistributed retained earnings of affiliates which were accounted
for by the equity method were ¥15,380 million and ¥23,936 million at March 31, 2009
and 2010, respectively.
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##### Table of Contents



(b)
    
    Retained Earnings
 The Japanese Corporate Law requires a company to set aside an amount equal to 10% of
retained earnings distributed, such as cash dividends, as a capital surplus or a legal
reserve until the aggregate amount of capital surplus and legal reserve reaches 25% of
the amount of common stock. Capital surplus and legal reserve is not available for
dividends, but legal reserve may be used to reduce a deficit or may be transferred to
other retained earnings.The amount available for dividends is based on MSIGHs non-consolidated financial
statements in accordance with the Japanese Corporate Law and was ¥490,225 million as
of March 31, 2010. The adjustments included in the accompanying consolidated
financial statements to have them conform with U.S. GAAP, but not recorded in the
books of account, have no effect on the determination of the amount available for
dividends under the Japanese Corporate Law.Cash dividends charged to unappropriated retained earnings for the years ended March
31, 2008, 2009 and 2010 represent dividends paid out during those years. Provision
has neither been made in the accompanying consolidated financial statements for the
dividends of ¥27.00 per share totaling ¥11,204 million, subsequently proposed by the
Board of Directors and, on June 29, 2010, approved by the shareholders, nor for the
related appropriation to the legal reserve.The reconciliation of the basic and diluted earnings (loss) per share is not reported
because there are no diluted shares.The components of the basic earnings (loss) per share are as follows:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Net income (loss) available to common shareholders of MSIG
    
    ¥
    104,796
    
    
    
    (70,240
    )
    
    
    49,983
 2008
    
    
    2009
    
    
    2010(Number of shares in thousands)Weighted average common shares outstanding
    
    
    423,259
    
    
    
    421,052
    
    
    
    418,961
 2008
    
    
    2009
    
    
    2010(Yen)Earnings (loss) per share  basic
    
    ¥
    247.59
    
    
    
    (166.82
    )
    
    
    119.30
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##### Table of Contents



(c)
    
    Accumulated Other Comprehensive IncomeChanges in accumulated other comprehensive income for the years ended March 31, 2009
and 2010 were as follows:
 2009
    
    
    2010(Yen in millions)Foreign currency translation adjustments:Balance at beginning of period
    
    ¥
    6,330
    
    
    
    (55,540
    )Current-period change
    
    
    (61,870
    )
    
    
    9,519Balance at end of period
    
    
    (55,540
    )
    
    
    (46,021
    )Unrealized gains on securities, net of tax:Balance at beginning of period
    
    
    729,966
    
    
    
    165,048Cumulative effect of change in accounting
principle, net of tax
    
    
    
    
    
    
    (2,224
    )Current-period change
    
    
    (564,918
    )
    
    
    286,884Balance at end of period
    
    
    165,048
    
    
    
    449,708Pension liability adjustments, net of tax:Balance at beginning of period
    
    
    (22,629
    )
    
    
    (29,548
    )Current-period change
    
    
    (6,919
    )
    
    
    2,095Balance at end of period
    
    
    (29,548
    )
    
    
    (27,453
    )Total accumulated other comprehensive income, net of tax:Balance at beginning of period
    
    
    713,667
    
    
    
    79,960Cumulative effect of change in accounting
principle, net of tax
    
    
    
    
    
    
    (2,224
    )Current-period change
    
    
    (633,707
    )
    
    
    298,498Balance at end of period
    
    ¥
    79,960
    
    
    
    376,234
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The tax effect allocated to each component of change in accumulated other
comprehensive income and the reclassification adjustments for the years ended March
31, 2009 and 2010 were as follows:
 BeforeTax
    
    
    Tax Benefit
    
    
    Net-of-TaxAmount
    
    
    (Expense)
    
    
    Amount(Yen in millions)2009:Foreign currency translation adjustments
    
    ¥
    (61,870
    )
    
    
    
    
    
    
    (61,870
    )Unrealized losses on securities:Unrealized holding gains arising during period
    
    
    (661,999
    )
    
    
    237,731
    
    
    
    (424,268
    )Less: reclassification adjustment for gains
realized in net income
    
    
    (219,692
    )
    
    
    79,042
    
    
    
    (140,650
    )Net unrealized losses on securities
    
    
    (881,691
    )
    
    
    316,773
    
    
    
    (564,918
    )Pension liability adjustments:Pension liability adjustments arising during period
    
    
    (9,262
    )
    
    
    3,251
    
    
    
    (6,011
    )Less: reclassification adjustment for gains
realized in net income
    
    
    (1,399
    )
    
    
    491
    
    
    
    (908
    )Pension liability adjustments
    
    
    (10,661
    )
    
    
    3,742
    
    
    
    (6,919
    )Net change in accumulated other comprehensive income
    
    ¥
    (954,222
    )
    
    
    320,515
    
    
    
    (633,707
    )2010:Foreign currency translation adjustments
    
    ¥
    9,519
    
    
    
    
    
    
    
    9,519Unrealized gains on securities:Unrealized holding gains arising during period
    
    
    445,315
    
    
    
    (159,787
    )
    
    
    285,528Less: reclassification adjustment for gains
realized in net income
    
    
    1,918
    
    
    
    (562
    )
    
    
    1,356Net unrealized gains on securities
    
    
    447,233
    
    
    
    (160,349
    )
    
    
    286,884Pension liability adjustments:Pension liability adjustments arising during period
    
    
    3,162
    
    
    
    (958
    )
    
    
    2,204Less: reclassification adjustment for gains
realized in net income
    
    
    (156
    )
    
    
    47
    
    
    
    (109
    )Pension liability adjustments
    
    
    3,006
    
    
    
    (911
    )
    
    
    2,095Net change in accumulated other comprehensive income
    
    ¥
    459,758
    
    
    
    (161,260
    )
    
    
    298,498
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##### Table of Contents



(14)
    
    Retirement and Severance Benefits
 MSI has defined benefit plans and a defined contribution plan. Defined benefit plans
consist of an unfunded lump-sum payment benefit plan and funded non-contributory pension
plans covering substantially all employees. Under the plans, employees are entitled to
lump-sum or annuity payments based on the current rate of pay and length of service at
retirement or termination of employment for reasons other than dismissal for cause.
Directors and statutory auditors are not covered by the above plans and their benefits are
accrued as earned.
 The components of net periodic benefit cost for the years ended March 31, 2008, 2009 and
2010 were as follows:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Components of net periodic benefit cost:Service cost
    
    ¥
    11,340
    
    
    
    11,607
    
    
    
    11,466Interest cost
    
    
    5,372
    
    
    
    5,465
    
    
    
    6,104Expected return on plan assets
    
    
    (5,002
    )
    
    
    (4,667
    )
    
    
    (4,153
    )Amortization of prior service cost
    
    
    (2,509
    )
    
    
    (2,509
    )
    
    
    (2,172
    )Recognized actuarial loss
    
    
    205
    
    
    
    1,109
    
    
    
    2,016Net periodic benefit cost
    
    ¥
    9,406
    
    
    
    11,005
    
    
    
    13,261
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##### Table of Contents



Reconciliations of beginning and ending balances of the benefit obligations and the
fair value of the plan assets for the years ended March 31, 2008, 2009 and 2010 were as
follows:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Change in benefit obligations:Benefit obligations at beginning of year
    
    ¥
    265,063
    
    
    
    271,865
    
    
    
    265,213Service cost
    
    
    11,340
    
    
    
    11,607
    
    
    
    11,466Interest cost
    
    
    5,372
    
    
    
    5,465
    
    
    
    6,104Plan participants contributions
    
    
    4
    
    
    
    33
    
    
    
    37Actuarial loss (gain)
    
    
    1,688
    
    
    
    (10,681
    )
    
    
    3,709Benefits paid
    
    
    (11,602
    )
    
    
    (13,076
    )
    
    
    (12,541
    )Benefit obligations at end of year
    
    ¥
    271,865
    
    
    
    265,213
    
    
    
    273,988Change in plan assets:Fair value of plan assets at beginning of year
    
    ¥
    166,616
    
    
    
    155,578
    
    
    
    138,675Actual return on plan assets
    
    
    (9,719
    )
    
    
    (15,851
    )
    
    
    11,381Employer contributions
    
    
    3,624
    
    
    
    4,359
    
    
    
    9,176Plan participants contributions
    
    
    4
    
    
    
    33
    
    
    
    37Benefits paid
    
    
    (4,947
    )
    
    
    (5,444
    )
    
    
    (5,615
    )Fair value of plan assets at end of year
    
    ¥
    155,578
    
    
    
    138,675
    
    
    
    153,654Funded status
    
    ¥
    (116,287
    )
    
    
    (126,538
    )
    
    
    (120,334
    )Amounts recognized in the balance sheets
    
    ¥
    (116,287
    )
    
    
    (126,538
    )
    
    
    (120,334
    )Pension plans with an accumulated benefit obligation
in excess of plan assets:Projected benefit obligation
    
    ¥
    271,865
    
    
    
    265,213
    
    
    
    273,988Accumulated benefit obligation
    
    
    241,189
    
    
    
    236,442
    
    
    
    243,672Fair value of plan assets
    
    
    155,578
    
    
    
    138,675
    
    
    
    153,654
 The Company uses a measurement date of March 31 for all of its pension and severance
plans.
 Amounts recognized in accumulated other comprehensive income, pre-tax at March 31, 2009
and 2010 were as follows:
 2009
    
    
    2010(Yen in millions)Net actuarial loss
    
    ¥
    49,006
    
    
    
    43,827Net prior service cost
    
    
    (3,213
    )
    
    
    (1,039
    )
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##### Table of Contents



Amounts in accumulated other comprehensive income, pre-tax expected to be recognized
as components of net periodic benefit cost over the next fiscal year are as follows:
 2011(Yen in millions)Net actuarial loss
    
    ¥
    1,451Net prior service cost
    
    
    (406
    )
 The accumulated benefit obligation for the pension plan was ¥236,442 million and
¥243,672 million at March 31, 2009 and 2010, respectively.
 Major weighted-average assumptions used to determine benefit obligations at March 31,
2008, 2009 and 2010 were as follows:
 2008
    
    
    2009
    
    
    2010Discount rate
    
    
    2.00
    %
    
    
    2.30
    %
    
    
    2.20
    %Rate of increase in future compensation
    
    4.10% to 4.60%
    
    4.10% to 4.60%
    
    4.10% to 4.60%
 Major weighted-average assumptions used to determine net cost for the years ended
March 31, 2008, 2009 and 2010 were as follows:
 2008
    
    
    2009
    
    
    2010Discount rate
    
    
    2.00
    %
    
    
    2.00
    %
    
    
    2.30
    %Expected long-term return on plan assets
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %Rate of increase in future compensation
    
    4.10% to 4.60%
    
    4.10% to 4.60%
    
    4.10% to 4.60%
 The discount rate is mainly determined by reference to Japanese government bond at
the measurement date, March 31, 2008, 2009 and 2010, based on the expected terms of
benefit obligations.
 The Company determines its expected long-term rate of return based on the expected
long-term return of various asset categories in which it invests in consideration of the
current expectations for future returns and the historical returns of each plan asset
category.
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##### Table of Contents



Plan assets by major categories and the fair value hierarchy are as follows:
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(Yen in millions)March 31, 2010:Cash and cash equivalents
    
    ¥
    4,668
    
    
    
    874
    
    
    
    
    
    
    
    5,542Fixed maturities:Japanese fixed income securities
    
    
    3,905
    
    
    
    82,736
    
    
    
    
    
    
    
    86,641Government and government
agencies and authorities
    
    
    3,905
    
    
    
    
    
    
    
    
    
    
    
    3,905Municipalities and
political subdivisions
    
    
    
    
    
    
    495
    
    
    
    
    
    
    
    495Corporate
    
    
    
    
    
    
    1,279
    
    
    
    
    
    
    
    1,279Pooled funds(1)
    
    
    
    
    
    
    80,962
    
    
    
    
    
    
    
    80,962Foreign fixed income
    
    
    3,557
    
    
    
    11,215
    
    
    
    
    
    
    
    14,772Government and government
agencies and authorities
    
    
    3,557
    
    
    
    
    
    
    
    
    
    
    
    3,557Pooled funds(1)
    
    
    
    
    
    
    11,215
    
    
    
    
    
    
    
    11,215Subtotal
    
    
    7,462
    
    
    
    93,951
    
    
    
    
    
    
    
    101,413Equity securities:Japanese companies
    
    
    9,211
    
    
    
    13,425
    
    
    
    
    
    
    
    22,636Foreign companies
    
    
    
    
    
    
    16,281
    
    
    
    
    
    
    
    16,281Subtotal
    
    
    9,211
    
    
    
    29,706
    
    
    
    
    
    
    
    38,917Other investment types:Hedge funds
    
    
    
    
    
    
    
    
    
    
    7,354
    
    
    
    7,354Life insurance contracts
    
    
    
    
    
    
    332
    
    
    
    
    
    
    
    332Other
    
    
    
    
    
    
    
    
    
    
    96
    
    
    
    96Subtotal
    
    
    
    
    
    
    332
    
    
    
    7,450
    
    
    
    7,782Total plan assets
    
    ¥
    21,341
    
    
    
    124,863
    
    
    
    7,450
    
    
    
    153,654
 
 (1)
    
    Consists primarily of pension investment fund trusts, collectively managed by trust banks. The inputs and methodology used in determining the fair value of the plan assets are
consistent with those used by the Company to measure its assets as disclosed in Note 17.
 The reconciliations of the beginning and ending balances during the period for Level 3
assets are as follows:
 Balance as of
    
    
    Actual return on
    
    
    Purchases, sales,
    
    
    Transfers in and /
    
    
    Balance at end ofApril 1, 2009
    
    
    assets
    
    
    and settlements
    
    
    or out of Level 3
    
    
    period(Yen in millions)March 31, 2010:Other investment types:Hedge funds
    
    ¥
    6,504
    
    
    
    850
    
    
    
    
    
    
    
    
    
    
    
    7,354Other
    
    
    88
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    96Total
    
    ¥
    6,592
    
    
    
    858
    
    
    
    
    
    
    
    
    
    
    
    7,450
 F-50




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The Companys pension plan assets are managed in accordance with investment policies
approved by the Pension Representative Assembly. The purpose of the investment policies is
to ensure the plans long-term ability to meet all required benefit obligations by
prudently investing plan assets and Company contributions.
 Investment risk is measured and monitored on an ongoing basis through periodic portfolio
reviews and liability studies. Risk management factors include but not limited to,
volatility relative to the benefit obligations, diversification and concentration, and the
risk/reward profile indigenous to each asset class.
 The target allocation percentages of the plan assets as at March 31, 2010 are as follows:
 Japanese Fixed Income Securities
    
    
    60
    %Japanese Equities
    
    
    15
    %Foreign Fixed Income Securities
    
    
    10
    %Foreign Equities
    
    
    10
    %Alternative Investments
    
    
    5
    %
 Allocations may change as a result of changing market conditions and investment
opportunities.
 The plan assets are diversified so that there is no significant concentrations of risk.
 The amounts contributed to defined contribution plans approximated ¥1,475 million, ¥2,459
million and ¥2,425 million for the years ended March 31, 2008, 2009 and 2010,
respectively.
 The Company forecasts to contribute ¥12,124 million to the defined benefit pension plans
in the year ending March 31, 2011.
 Expected future benefit payments for the defined benefit pension plan are as follows:
 (Yen in millions)Years ending March 31:2011
    
    ¥
    11,6162012
    
    
    12,2192013
    
    
    12,8252014
    
    
    13,0752015
    
    
    13,1262016-2020
    
    
    69,625
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(15)
    
    Derivative Financial Instruments
 The Company utilizes derivative financial instruments (a) to manage interest rate risk and
foreign exchange risk arising from its fixed maturities portfolio and (b) to generate
trading revenues and fee income.
 All derivatives are recognized on the consolidated balance sheets at fair value as other
assets or other liabilities. The fair value amounts of derivatives, by type of contract,
as of March 31, 2010 are presented in Note 16.
 All gains and losses on the derivatives are recorded in net realized gains (losses) on
investments on the consolidated statements of operations. The amounts of the gains and
losses on derivatives, by type of contract, for the year ended March 31, 2010 are
presented in the table below.
 2010(Yen in millions)Foreign exchange contracts
    
    ¥
    1,077Interest rate contracts
    
    
    (7,871
    )Bond and equity index contracts
    
    
    (572
    )Credit derivatives
    
    
    22,669Commodity contracts
    
    
    13Net gains on derivatives
    
    ¥
    15,316
 All derivative transactions are controlled in accordance with the Companys risk
management rules. Under these rules, the purpose of derivative financial instruments is
predetermined in writing, the balance of trading derivatives is limited to the extent
permitted by the internal guidelines and derivative instruments entered into for hedging
purposes require an advance approval of management. The Companys portfolio is broadly
diversified to ensure that there is no significant concentration of credit risk with any
individual counterparty or group of counterparties. The Companys policies prescribe
monitoring of creditworthiness and exposure on a counterparty-by-counterparty basis.
Back-office functions, such as settlements or monitoring, are designed independently from
the function responsible for dealings.
 No derivative instruments contain credit-risk-related contingent features, such as
provisions that would require the Company to post additional collateral or allow the
counterparties to terminate the derivative contract in the event of a downgrade of the
credit rating of the Company.Derivatives used for interest rate risk and foreign exchange risk management
 The Company uses interest rate swaps, currency swaps and foreign exchange forward
contracts to hedge the exposure to variability in expected future cash flows arising
from fixed maturity securities available for sale. The Company discontinued hedge
accounting in the year ended March 31, 2008. Ceasing hedge accounting did not have a
material effect on the Companys reported financial position or cash flows.
 F-52




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Derivatives trading revenues
 The Company uses a variety of derivative instruments, such as interest rate futures,
forwards and options, interest rate and currency swaps, bond futures and options,
foreign exchange forwards and options and credit derivatives, and non-derivative
instruments, such as weather derivatives, to generate trading revenues and fee income.
 Credit derivatives
 Under the majority of the credit derivative contracts, the Company underwrites
single-name credit default swaps and other credit-risk related portfolio products,
which require the Company as a seller of protection to make a payment to a buyer upon
the occurrence of credit events. Typical credit events include bankruptcy, failure to
pay and restructuring.
 Most contracts which the Company enters into have a five-year term, with other
provisions in accordance with definition in the 2003 ISDA Credit Derivative
Definition. There are no contracts involving provision of collateral, and thus no
situations in which collateral must be provided. For most written credit derivatives,
the nominal amount represents the maximum potential amount payable by the Company. The
Company controls the underwriting to be diversified across industry sectors, and as a
result, there is no concentration in any one particular industry.
 The components of written credit derivatives by underlying asset type as of March 31,
2009 and 2010 were as follows:
 2009
    
    
    2010Nominal
    
    
    Estimated
    
    
    Nominal
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(Yen in millions)Corporate CDSs(1)
    
    ¥
    158,618
    
    
    
    (7,671
    )
    
    
    123,443
    
    
    
    (266
    )ABS-CDO(2)
    
    
    1,150
    
    
    
    (65
    )
    
    
    769
    
    
    
    54CDO(3)
    
    
    388,473
    
    
    
    (24,324
    )
    
    
    367,792
    
    
    
    (7,186
    )Total outstanding written credit derivatives
    
    ¥
    548,241
    
    
    
    (32,060
    )
    
    
    492,004
    
    
    
    (7,398
    )
 
 (1)
    
    Corporate CDS: single-name credit default swaps(2)
    
    ABS-CDO: credit-risk related portfolio products in which referenced
assets include structured finance.(3)
    
    CDO: credit-risk related portfolio products in which referenced
corporate obligations, not including structured finance. F-53




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##### Table of Contents



The components of written credit derivatives by par amount of corporate CDSs as of
March 31, 2009 and 2010 were as follows:
 2009
    
    
    2010Nominal
    
    
    Estimated
    
    
    Nominal
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(Yen in millions)Less than ¥3.0 billion
    
    ¥
    155,618
    
    
    
    (7,546
    )
    
    
    120,443
    
    
    
    (254
    )Between ¥3.0 billion to ¥5.0 billion
    
    
    3,000
    
    
    
    (125
    )
    
    
    3,000
    
    
    
    (12
    )Total outstanding written credit derivatives
    
    ¥
    158,618
    
    
    
    (7,671
    )
    
    
    123,443
    
    
    
    (266
    )
 The components of written credit derivatives by vintage as of March 31, 2009 were
as follows:
 Nominal
    
    
    EstimatedAmount
    
    
    Fair Value(Yen in millions)2001
    
    ¥
    1,150
    
    
    
    (65
    )2002
    
    
    
    
    
    
    2003
    
    
    982
    
    
    
    (3
    )2004
    
    
    42,576
    
    
    
    (938
    )2005
    
    
    156,028
    
    
    
    (3,555
    )2006
    
    
    72,076
    
    
    
    (7,282
    )2007
    
    
    245,429
    
    
    
    (20,184
    )2008
    
    
    30,000
    
    
    
    (33
    )Total outstanding written credit derivatives
    
    ¥
    548,241
    
    
    
    (32,060
    )
 F-54




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The components of written credit derivatives by vintage as of March 31, 2010 were
as follows:
 Nominal
    
    
    EstimatedAmount
    
    
    Fair Value(Yen in millions)2001
    
    ¥
    769
    
    
    
    542002
    
    
    
    
    
    
    2003
    
    
    
    
    
    
    2004
    
    
    1,861
    
    
    
    (47
    )2005
    
    
    151,355
    
    
    
    (62
    )2006
    
    
    69,182
    
    
    
    (3,258
    )2007
    
    
    237,907
    
    
    
    (4,091
    )2008
    
    
    30,000
    
    
    
    202009
    
    
    930
    
    
    
    (14
    )Total outstanding written credit derivatives
    
    ¥
    492,004
    
    
    
    (7,398
    )
 The components of written credit derivatives by credit rating as of March 31,
2009 and 2010 were as follows:
 2009
    
    
    2010Nominal
    
    
    Estimated
    
    
    Nominal
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(Yen in millions)AAA
    
    ¥
    357,993
    
    
    
    (10,156
    )
    
    
    340,066
    
    
    
    (762
    )AA
    
    
    108,402
    
    
    
    (6,646
    )
    
    
    69,901
    
    
    
    (720
    )A
    
    
    63,147
    
    
    
    (4,963
    )
    
    
    65,220
    
    
    
    (874
    )BBB
    
    
    13,788
    
    
    
    (5,384
    )
    
    
    7,513
    
    
    
    (967
    )BB and the lower
    
    
    4,911
    
    
    
    (4,911
    )
    
    
    9,304
    
    
    
    (4,075
    )Total outstanding written credit derivatives
    
    ¥
    548,241
    
    
    
    (32,060
    )
    
    
    492,004
    
    
    
    (7,398
    )
 Subordinated discounts for all CDO deals (weighted average of guarantee amounts)
were 18% and 17% as of March 31, 2009 and 2010, respectively.
 F-55




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##### Table of Contents



(16)
    
    Fair Value of Financial Instruments
 The estimated fair values of the financial instruments at March 31, 2009 and
2010 were as follows:
 2009
    
    
    2010Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(Yen in millions)Financial assets:Fixed maturities
    
    ¥
    3,470,446
    
    
    
    3,486,714
    
    
    
    3,518,610
    
    
    
    3,531,233Equity securities
    
    
    1,703,433
    
    
    
    1,703,433
    
    
    
    1,997,746
    
    
    
    1,997,746Mortgage loans on real estate
    
    
    9,224
    
    
    
    9,052
    
    
    
    7,260
    
    
    
    7,305Policy loans
    
    
    43,254
    
    
    
    43,254
    
    
    
    44,339
    
    
    
    44,339Other long-term investments
    
    
    711,653
    
    
    
    698,739
    
    
    
    691,625
    
    
    
    695,775Short-term investments
    
    
    106,852
    
    
    
    106,852
    
    
    
    69,139
    
    
    
    69,139Cash and cash equivalents
    
    
    455,444
    
    
    
    455,444
    
    
    
    381,939
    
    
    
    381,939Indebtedness from affiliates
    
    
    2,857
    
    
    
    2,747
    
    
    
    3,128
    
    
    
    3,088Accrued investment income
    
    
    20,228
    
    
    
    20,228
    
    
    
    16,857
    
    
    
    16,857Premiums receivable and
agents balances
    
    
    144,005
    
    
    
    144,005
    
    
    
    152,030
    
    
    
    152,030Other assets:Weather derivatives
    
    
    236
    
    
    
    236
    
    
    
    564
    
    
    
    564Derivative assets:Foreign exchange contracts
    
    
    1,957
    
    
    
    1,957
    
    
    
    882
    
    
    
    882Interest rate contracts
    
    
    19,670
    
    
    
    19,670
    
    
    
    11,238
    
    
    
    11,238Bond and equity index contracts
    
    
    39
    
    
    
    39
    
    
    
    
    
    
    
    Credit derivatives
    
    
    
    
    
    
    
    
    
    
    144
    
    
    
    144Commodity contracts
    
    
    4,184
    
    
    
    4,184
    
    
    
    1,326
    
    
    
    1,326Financial liabilities:Investment deposits by
policyholders
    
    ¥
    (2,043,991
    )
    
    
    (2,282,047
    )
    
    
    (1,956,376
    )
    
    
    (2,181,453
    )Indebtedness to affiliates
    
    
    (1,616
    )
    
    
    (1,616
    )
    
    
    (4,686
    )
    
    
    (4,686
    )Short-term debt
    
    
    (70,000
    )
    
    
    (70,000
    )
    
    
    
    
    
    
    Long-term debt
    
    
    (94,961
    )
    
    
    (94,643
    )
    
    
    (94,969
    )
    
    
    (98,159
    )Other liabilities:Weather derivatives
    
    
    (195
    )
    
    
    (195
    )
    
    
    (126
    )
    
    
    (126
    )Derivative liabilities:Foreign exchange contracts
    
    
    (4,330
    )
    
    
    (4,330
    )
    
    
    (2,600
    )
    
    
    (2,600
    )Interest rate contracts
    
    
    (4,889
    )
    
    
    (4,889
    )
    
    
    (7,197
    )
    
    
    (7,197
    )Bond and equity index contracts
    
    
    (63
    )
    
    
    (63
    )
    
    
    
    
    
    
    Credit derivatives
    
    
    (32,060
    )
    
    
    (32,060
    )
    
    
    (7,542
    )
    
    
    (7,542
    )Commodity contracts
    
    
    (4,184
    )
    
    
    (4,184
    )
    
    
    (1,326
    )
    
    
    (1,326
    )
 The fair values of the financial instruments shown in the above table as of March 31,
2010 represent managements best estimates of the amounts that would be received to sell those
assets or that would be paid to transfer those liabilities in an orderly transaction between
market participants at that date. Those fair value measurements maximize the use of observable
inputs. However, in situations where there is little, if any, market activity for the asset or
liability at the measurement date, the fair value measurement reflects the Companys own
judgments about the assumptions that market participants would use in pricing the asset or
liability. Those judgments are developed by the Company based on the best information
available in the circumstances.
 F-56




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##### Table of Contents



The methodologies and assumptions used to estimate the fair values of financial instruments
are as follows:The carrying amounts of cash and cash equivalents, policy loans, accrued investment income,
premiums receivable and agents balances and short-term debt approximate their fair values due
to the short-term maturities of these instruments.The methodologies to estimate fair values of fixed maturity securities, equity securities,
short-term investments, and derivative financial instruments are described in Note 17.
 (a)
    
    Investments in Mortgage Loans and Other Long-term InvestmentsThe fair values of loans and other long-term investments with fixed interest rates are
estimated by discounting future cash flows using estimates of market rates for
securities with similar characteristics.The carrying amounts of investments with floating interest rates approximate their
fair values. The fair value of consumer loans, which are included in other long-term
investments, in the amount of ¥376,325 million and ¥379,550 million at March 31, 2009
and 2010, respectively, approximates the carrying amount. The floating and fixed
rates on consumer loans in the years ended March 31, 2008, 2009 and 2010 range from
approximately 1.0% to 9.0%, and the remaining loan periods are from approximately six
months to 35 years.(b)
    
    Indebtedness from AffiliatesThe fair values of loans to affiliates with fixed interest rates are estimated by
discounting future cash flows using the long-term prime rate at the end of the year.(c)
    
    Investment Deposits by PolicyholdersThe fair values of investment deposits by policyholders are estimated by discounting
future cash flows using the interest rates currently being offered for similar
contracts.(d)
    
    Indebtedness to affiliates and Long-term DebtThe fair values of these financial instruments are estimated using quoted market
prices for these or similar characteristic instruments.
 F-57




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##### Table of Contents



(17)
    
    Fair Value Hierarchy
 The Company adopted SFAS No. 157, which is now included in ASC 820, Fair Value
Measurements and Disclosure, on April 1, 2008 for fair value measurements of financial
assets and financial liabilities and for fair value measurements of nonfinancial items
that are recognized or disclosed at fair value in the financial statements on a recurring
basis. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1
measurements) and the lowest priority to measurements involving significant unobservable
inputs (Level 3 measurements). The three levels of the fair value hierarchy are as
follows:Level 1Quoted prices for identical instruments in active markets; fair value is based on
unadjusted quoted prices in active markets that are accessible to the Company for
identical assets or liabilities. This category generally includes equity securities that
are traded in active exchange markets.Level 2Quoted prices for similar instruments in active markets; quoted prices for identical or
similar instruments in markets that are not active and model derived valuations in which
all significant inputs and significant value drivers are observable in active markets.
This category generally includes most government, government agency, and corporate bonds.Level 3Valuations derived from valuation techniques in which one or more significant inputs or
significant value drivers are unobservable. Fair value is based on significant
unobservable inputs for the asset or liability.In accordance with ASC 820, the Company has established a methodological framework in
order to measure fair value of financial instruments on a recurring basis. The fair value
of financial instruments, including exchange traded securities and derivatives is based on
quoted market prices, including market indices, broker or dealer quotations or an
estimation by management of the amounts expected to be realized upon settlement under
current market conditions. For financial instruments which have quoted market prices in
active markets, the Company uses quoted market prices in the determination of fair value.
Certain financial instruments, such as cash and over-the-counter (OTC) contracts, have
bid and ask prices that are observable in the market. These are measured at the point
within the bid-ask range which best represents the Companys estimate of fair value. Where
quoted market prices or broker or dealer quotations are not available, the Company uses
prices for similar instruments or valuation pricing models in the determination of fair
value.As for security pricing, publicly available prices are first sought from third party
pricing services, the remaining unpriced securities are submitted to independent brokers
for prices where applicable. Typical inputs used by the brokers include, but are not
limited to, reported trades, benchmark yields, issuer spreads, bids, offers, and/or
estimated cash flows.
 F-58




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##### Table of Contents



A categorization within the valuation hierarchy is based upon the lowest level of input
that is significant to the fair value measurement.Management judgment is required to determine whether a market is active or inactive in
determining the fair value hierarchy. Key criteria used to determine whether a market is
active or inactive include the number of transactions, the frequency pricing is updated by
other market participants, the variability of prices quotations amongst other market
participants, and the amount of publicly available information.Summary of significant valuation techniques for financial assets and financial liabilities
measured at fair value on a recurring basis is as follows:Level 1
 
    
    Fixed maturity securities: Japanese government bonds, U.S. treasuries and bonds
issued by governments of several European nations are categorized in Level 1. Since
their valuations are based on quoted prices that are readily and regularly available
in active markets, valuation adjustments are not applied. Accordingly, these are
categorized in Level 1 of the fair value hierarchy.
    
    Equity securities: Comprise actively traded, exchange-listed Japanese and other
equity securities. Valuation is based on unadjusted quoted prices for identical
assets in active markets that the Company can access. Accordingly, these are
categorized in Level 1 of the fair value hierarchy.
    
    Short-term investments: Comprise actively traded money trusts that have net asset
values determined by daily quoted prices of respective entrusted assets that the
Company can access. Accordingly, these are categorized in Level 1 of the fair value
hierarchy.
    
    Derivatives: Comprise actively traded, exchange-listed financial derivatives.
Listed derivatives that are actively traded are valued based on quoted prices from
the exchange and whereby are categorized in Level 1 of the fair value hierarchy.
 Level 2
 
    
    Fixed maturity securities: Comprise government and municipal bonds traded in
markets that are not active, corporate bonds valued based on inputs including quoted
prices for identical or similar assets in markets that are not active, and privately
placed securities valued based on market-observable inputs.
    
    Equity securities: Comprise equity securities valued based on inputs including
quoted prices for identical or similar assets in markets that are not active.
    
    Derivatives: Comprise OTC financial derivatives, valued based on
market-observable inputs obtained from third party pricing services. Also, listed
derivatives that are not actively traded are valued using the same approaches as
those applied to OTC derivatives, which are generally categorized in Level 2 of the
fair value hierarchy.
 F-59




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##### Table of Contents



Level 3The Company values its assets and liabilities classified as Level 3 using judgment and
valuation models or other pricing techniques that require a variety of inputs including
contractual terms, market prices and rates, yield curves, credit curves, measures of
volatility, prepayment rates and correlations of such inputs, some of which may be
unobservable.
 
    
    Fixed maturity securities: Comprise corporate bonds, municipal bonds and
residential mortgage backed securities RMBS valued using broker quotes, to which
primary inputs are unobservable in the market.Prices from third party pricing services are often unavailable for securities that are
rarely traded or traded only in privately negotiated transactions. As a result,
certain securities are priced via independent broker quotations which utilize inputs
that may be difficult to corroborate with observable market based data.The Company performs an analysis of the prices and credit spreads received from third
parties to ensure that the prices represent a reasonable estimate of the fair value.
This process involves quantitative and qualitative analysis and is overseen by
investment and accounting professionals. As a result of this analysis, if the Company
determines there is a more appropriate fair value based upon the available market
data, the price received from the third party is adjusted accordingly.Due to a general lack of transparency in the process that the brokers use to develop
prices, most valuations that are based on brokers prices are classified as Level 3.
    
    Equity securities: Comprise non-traded equity securities and privately placed
non-traded investment trusts.The valuation of privately placed investment trusts requires significant management
judgment due to the absence of quoted market prices, the inherent lack of liquidity
and the long-term nature of such assets. As such, private equity investments are
valued initially based upon cost. Regularly, valuations are reviewed utilizing
available data including significant management estimates to determine if the carrying
value of these investments should be adjusted. Therefore, privately placed investment
trusts are included in Level 3 of the valuation hierarchy.
    
    Derivatives: Derivative products, typically the newest and most complex products
or products that have become illiquid, require more judgment in the implementation of
the valuation technique applied due to the complexity of the valuation assumptions
and the reduced observability of inputs. Derivatives in Level 3 mainly comprise
credit derivatives valued using the discounted cash flow model which is widely
accepted by the financial services industry and do not necessitate significant
judgment. Primary inputs to the model include interest rates, foreign exchange and
credit spreads. Interest rates and foreign exchange are observable in the active
market, therefore they are not adjusted. Credit spreads data, which appropriately
reflect factors such as default rates and recovery rates, are obtained from widely
known financial information service companies. For credit derivatives for which
credit spreads cannot be observed in an active trading market (such as ABS-CDOs),
the Company uses one quote obtained from brokers involved in valuing these
instruments. Prior to use of the broker quotes, the Company examines whether third
parties supplying derivatives have determined the market price based on either the
standard price, the discounted price, or the pricing model. Of these, many traders
use either the discount price or the pricing model in computing market value, and the
Company analyzes price movements of prices for making valuation judgments and
determinations. The Company understands that the traders pricing models incorporate
observable inputs such as market interest rates where appropriate but their practices
may vary. The Company did not make adjustments to the prices of derivatives obtained
from financial institutions.
 F-60




---



##### Table of Contents



(a)
    
    Assets and Liabilities Measured at Fair Value on a Recurring Basis
 The Companys assets and liabilities measured at fair value on a recurring basis as of
March 31, 2009 and 2010 were as follows:
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(Yen in millions)March 31, 2009:AssetsSecurities available for sale:Fixed maturities
    
    ¥
    847,866
    
    
    
    1,964,457
    
    
    
    170,596
    
    
    
    2,982,919Equity securities
    
    
    1,294,795
    
    
    
    109,006
    
    
    
    298,453
    
    
    
    1,702,254Short term-investments
    
    
    6,865
    
    
    
    6,808
    
    
    
    
    
    
    
    13,673Other assets:Derivatives
    
    
    39
    
    
    
    21,627
    
    
    
    4,420
    
    
    
    26,086LiabilitiesOther liabilities:Derivatives
    
    ¥
    63
    
    
    
    9,219
    
    
    
    36,439
    
    
    
    45,721
 Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    Total(Yen in millions)March 31, 2010:AssetsSecurities available for sale:Fixed maturities
    
    ¥
    991,766
    
    
    
    1,882,367
    
    
    
    135,160
    
    
    
    3,009,293Equity securities
    
    
    1,636,310
    
    
    
    76,896
    
    
    
    283,365
    
    
    
    1,996,571Short term-investments
    
    
    7,279
    
    
    
    1,746
    
    
    
    
    
    
    
    9,025Other assets:Derivatives
    
    
    
    
    
    
    12,120
    
    
    
    2,034
    
    
    
    14,154LiabilitiesOther liabilities:Derivatives
    
    ¥
    
    
    
    
    9,797
    
    
    
    8,994
    
    
    
    18,791
 F-61




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##### Table of Contents



The reconciliation of assets and liabilities measured at fair value on a
recurring basis using significant unobservable inputs (Level 3) for the period from
April 1, 2008 to March 31, 2009, and from April 1, 2009 to March 31, 2010 were as
follows:
 Change inBalance
    
    
    Net realized and
    
    
    accumulated other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Changes inas of
    
    
    unrealized losses
    
    
    comprehensive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    unrealized gainsApril 1,
    
    
    included
    
    
    loss, gross
    
    
    Purchases, sales,
    
    
    Transfers in and /
    
    
    Balance at end of
    
    
    (losses) held at2008
    
    
    in income (1)
    
    
    of tax
    
    
    and settlements
    
    
    or out of Level 3
    
    
    period
    
    
    end of period (2)(Yen in millions)March 31, 2009:Securities available for saleFixed maturities
    
    ¥
    228,483
    
    
    
    (3,352
    )
    
    
    (7,744
    )
    
    
    (46,791
    )
    
    
    
    
    
    
    170,596
    
    
    
    (1,635
    )Equity securities
    
    
    287,550
    
    
    
    (16,404
    )
    
    
    (28,036
    )
    
    
    55,343
    
    
    
    
    
    
    
    298,453
    
    
    
    (16,404
    )Derivatives (net)
    
    
    (39,627
    )
    
    
    (9,266
    )
    
    
    
    
    
    
    16,874
    
    
    
    
    
    
    
    (32,019
    )
    
    
    (6,956
    )
 
 (1)
    
    Included in Investment income, net of investment expensesand Net realized gains (losses) on investmentsin the accompanying consolidated statement of operations.(2)
    
    Included in Net realized gains (losses) on investmentsin the accompanying consolidated statement of operations. Change inBalance
    
    
    Net realized and
    
    
    accumulated other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Changes inas of
    
    
    unrealized gains
    
    
    comprehensive
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    unrealized gainsApril 1,
    
    
    (losses) included
    
    
    income, gross
    
    
    Purchases, sales,
    
    
    Transfers in and /
    
    
    Balance at end of
    
    
    (losses) held at2009
    
    
    in income (1)
    
    
    of tax
    
    
    and settlements
    
    
    or out of Level 3
    
    
    period
    
    
    end of period (2)(Yen in millions)March 31, 2010:Securities available for saleFixed maturities
    
    ¥
    170,596
    
    
    
    (320
    )
    
    
    5,550
    
    
    
    (37,059
    )
    
    
    (3,607
    )
    
    
    135,160
    
    
    
    (415
    )Equity securities
    
    
    298,453
    
    
    
    (3,735
    )
    
    
    12,254
    
    
    
    (30,364
    )
    
    
    6,757
    
    
    
    283,365
    
    
    
    (3,364
    )Derivatives (net)
    
    
    (32,019
    )
    
    
    23,117
    
    
    
    
    
    
    
    1,942
    
    
    
    
    
    
    
    (6,960
    )
    
    
    21,887
 
 (1)
    
    Included in Investment income, net of investment expensesand Net realized gains (losses) on investmentsin the accompanying consolidated statement of operations.(2)
    
    Included in Net realized gains (losses) on investmentsin the accompanying consolidated statement of operations. The major Level 3 assets and liabilities were as follows:
 Fixed maturities classified as Level 3 primarily consist of corporate bonds and RMBS,
of which the fair values were ¥52,507 million and ¥73,352 million, respectively, at
March 31, 2010. These assets are valued using broker quotes, to which primary inputs
would be unobservable in the market. Due to a general lack of transparency in the
process that the brokers use to develop prices, these brokers prices are classified
as Level 3.
 F-62




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##### Table of Contents



Equity securities classified as Level 3 primarily consist of non-traded equity
securities and privately placed investment trusts, of which the fair values are
¥172,858 million and ¥71,952 million, respectively, at March 31, 2010.
 The Level 3 liabilities primarily consist of credit derivatives, of which the fair
value (net) was ¥7,541 million at March 31, 2010.
 (b)
    
    Assets Measured at Fair Value on a Non-Recurring Basis
 Certain assets written-down to fair value in connection with recognizing
other-than-temporary impairments are valued based on unobservable inputs and, as such,
included in the fair value hierarchy in Level 3. The Companys assets measured at
fair value on a non-recurring basis as of March 31, 2009 and 2010 were as follows:
 2009
    
    
    2010(Yen in millions)Mortgage loans on real estate
    
    ¥
    1,116
    
    
    
    995Investment real estate
    
    
    186
    
    
    
    2,745Other long-term investments
    
    
    911
    
    
    
    1,449Property and equipment
    
    
    244
    
    
    
    263
 (18)
    
    Variable Interest Entities
 The Company has entered into transactions with various types of VIEs which are described
as follows:
 The Company holds the subordinated notes issued by VIEs formed for the purpose of
guaranteeing the obligation of the Company under the reinsurance agreements (reinsurance
guarantee VIEs). These VIEs hold U.S. government securities to collateralize the
guarantee. The Company consolidates reinsurance guarantee VIEs as it absorbs a majority of
the VIEs expected losses and receives a majority of the VIEs expected residual returns.
 The Company engages in certain structured transactions, mainly securitization of
independent third parties assets through a VIE. The Company provides guarantee insurance
for the VIE which is involved in the asset-backed securities business where it helps meet
customers financing needs by providing access to the commercial paper markets (commercial
paper conduit VIE). The Company guarantees the redemption of commercial paper issued by
the VIE. In addition, the Company holds commercial paper issued by the VIE which found
difficulty in issuing commercial paper due to the market disruption. The Company
consolidates this commercial paper conduit VIE as it absorbs a majority of the VIEs
expected losses.
 F-63




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##### Table of Contents



The assets and liabilities for the VIEs that are consolidated by the Company (net of
intercompany balances that have been eliminated in consolidation) at March 31, 2010 were
as follows:Consolidated VIEs
 Assets
    
    
    Liabilities(Yen in millions)March 31, 2010:Reinsurance guarantee VIEs
    
    ¥
    2,791
    
    
    
    106Commercial paper conduit VIE
    
    
    1,673
    
    
    
    1Total
    
    ¥
    4,464
    
    
    
    107
 For Reinsurance guarantee VIEs, assets are primarily included in Securities available
for sale: Fixed maturities, at fair value, and liabilities are included in Other
liabilities. For Commercial paper conduit VIE, on the other hand, assets are primarily
included in Short-term investments, and liabilities are included in Other liabilities.
 A consolidated subsidiary of the Company holds significant variable interests in the VIEs
which were structured by other parties for the purpose of project financing (project
financing VIEs). As a means of ensuring timely repayment of the loan, the consolidated
subsidiary provides limited credit enhancement for the VIEs through the guarantee
insurance contracts. The consolidated subsidiary does not retain a first-risk-of-loss
position and does not absorb a majority of these VIEs expected losses and the VIEs were
accordingly not consolidated in the accompanying consolidated financial statements.
 The carrying amount of the liabilities in the Companys consolidated balance sheet that
relate to those VIEs and maximum exposure to loss for those VIEs at March 31, 2010 were as
follows:
 On-balance
    
    
    MaximumLiabilities
    
    
    Exposure to Loss(Yen in millions)March 31, 2010:Project financing VIEs
    
    ¥
    1,616
    
    
    
    34,998
 For project financing VIEs, the maximum exposure to loss represents a total insured
amount of the guarantee insurance contracts, whereas the on-balance liabilities represent
Unearned premiums calculated in accordance with ASC 944-20, Financial ServicesInsurance,
Insurance Activities (formerly SFAS No. 60).
 (19)
    
    Commitments and Contingencies
 The Company is involved in various legal proceedings in the normal course of business
including litigation regarding insurance claims. In the opinion of management, the
aggregate liability, if any, with respect to these matters will not materially adversely
affect the Companys consolidated financial position, results of operations or cash flows.
 At March 31, 2009 and 2010, commitments outstanding for the purchase of property and
equipment amounted to approximately ¥39,680 million and ¥35,514 million, respectively. At
March 31, 2009 and 2010, commitments outstanding for the purchase of investment real
estate amounted to approximately ¥2,547 and ¥2,546 million, respectively.
 F-64




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##### Table of Contents



At March 31, 2010, the Company had a ¥3,419 million investment in a limited partnership
with overseas partners. A condition of the support agreement is that additional
investment shall be made by the limited partners, based on the pro rata share in the
partnership, should there be a shortage of funds in the partnership. Considering the
latest financial information of the partnership available to the Company as of March 31,
2010, its most recent balance sheet date, management believes the likelihood of an
additional capital requirement is remote. In addition to the above commitment, the
Company had a contract that would have provided a financial guarantee to the limited
partnership; however, the amount of potential payment based on the contract was zero as of
March 31, 2010. The obligation of the Company under the guarantee was fully
collateralized with securities, and no net exposure existed as of March 31, 2010.
 The Company had loan commitment agreements amounting to ¥3,164 million and ¥1,857 million
as of March 31, 2009 and 2010, respectively. The Companys policy to provide loan
commitment agreements is basically the same as that of guarantee contracts.
 The Company occupies certain offices and other facilities under lease arrangements. The
following is a schedule by years of future minimum rental payments required under
non-cancelable operating leases that have initial or remaining lease terms in excess of
one year as of March 31, 2010:
 (Yen in millions)Years ending March 31:2011
    
    ¥
    2,7982012
    
    
    1,8742013
    
    
    1,2842014
    
    
    7642015
    
    
    655Later years
    
    
    2,314Total future minimum rental payments
    
    ¥
    9,689
 Rental expenses for the years ended March 31, 2008, 2009 and 2010 were ¥15,422
million, ¥16,288 million and ¥16,148 million, respectively.
 F-65




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##### Table of Contents



The Company leases assets related to investment property to the third parties under
operating leases. The following is a schedule by years of future minimum lease receivables
under non-cancelable operating leasing that have initial or remaining lease terms in
excess of one year as of March 31, 2010:
 (Yen in millions)Years ending March 31:2011
    
    ¥
    1,3952012
    
    
    1,1562013
    
    
    5702014
    
    
    2942015
    
    
    257Later years
    
    
    1,867Total future minimum lease receivables
    
    ¥
    5,539
 F-66




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##### Table of Contents



(20)
    
    Reconciliation of Net Income (Loss) to Net Cash Provided by Operating Activities
 2008
    
    
    2009
    
    
    2010(Yen in millions)Net income (loss)
    
    ¥
    105,622
    
    
    
    (69,940
    )
    
    
    50,329Adjustments to reconcile net income (loss) to
net cash provided by operating activities:Valuation allowance for credit losses
    
    
    (1,967
    )
    
    
    1,798
    
    
    
    3,257Impairment losses of long-lived assets
    
    
    4,244
    
    
    
    817
    
    
    
    6,198Realized losses(gains) from sales or revaluation of investments
    
    
    (24,616
    )
    
    
    117,897
    
    
    
    9,492Amortization of fixed maturity securities
    
    
    2,456
    
    
    
    116
    
    
    
    3,615Depreciation
    
    
    19,879
    
    
    
    27,413
    
    
    
    29,001Provision for retirement and severance benefits
    
    
    2,332
    
    
    
    (155
    )
    
    
    (2,952
    )Deferred income taxes
    
    
    22,769
    
    
    
    (41,910
    )
    
    
    (1,398
    )Decrease (increase) in assets:Net insurance related assets
    
    
    (32,631
    )
    
    
    (26,300
    )
    
    
    (11,124
    )Deferred policy acquisition costs
    
    
    2,457
    
    
    
    27,261
    
    
    
    (19,394
    )Accrued investment income
    
    
    (940
    )
    
    
    3,188
    
    
    
    3,354Derivative assets
    
    
    (10,028
    )
    
    
    (9,348
    )
    
    
    12,250Other assets
    
    
    2,793
    
    
    
    705
    
    
    
    (8,580
    )Increase (decrease) in liabilities:Losses and claims
    
    
    37,243
    
    
    
    93,444
    
    
    
    (30,498
    )Unearned premiums
    
    
    35,276
    
    
    
    (55,961
    )
    
    
    (1,216
    )Future policy benefits
    
    
    63,921
    
    
    
    41,845
    
    
    
    44,736Income taxes
    
    
    (13,782
    )
    
    
    (17,521
    )
    
    
    16,027Derivative liabilities
    
    
    43,318
    
    
    
    (10,337
    )
    
    
    (26,861
    )Other liabilities
    
    
    4,831
    
    
    
    17,476
    
    
    
    (37,067
    )Interest credited to policyholders contract deposits
    
    
    48,498
    
    
    
    44,573
    
    
    
    47,304Other, net
    
    
    (3,668
    )
    
    
    12,419
    
    
    
    8,199Net cash provided by operating activities
    
    ¥
    308,007
    
    
    
    157,480
    
    
    
    94,672
 (21)
    
    Supplementary Cash Flow Information
 2008
    
    
    2009
    
    
    2010(Yen in millions)Cash paid during the year for:Interest
    
    ¥
    947
    
    
    
    1,653
    
    
    
    2,331Income taxes
    
    
    44,476
    
    
    
    39,277
    
    
    
    24,519Noncash transaction:Capital lease obligations incurred
    
    
    924
    
    
    
    703
    
    
    
    1,059
 F-67




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##### Table of Contents



(22)
    
    Segment Information
 The Company identifies operating segments in accordance with the nature of the products
and services. The property and casualty insurance segment offers automobile, fire,
personal accident, liability and other forms of property and casualty insurance products.
The Companys financial services business, including financial guarantees and derivatives
are also operated within the property and casualty insurance segment. Life insurance
operations are conducted by the Companys wholly owned subsidiary, MS Kirameki, which
offers a wide range of traditional life insurance products such as term-life, whole-life
and annuity insurance, and a joint venture company, MS MetLife, which offers variable
annuity plans that combine the appeal of fund management, insurance, and annuity products,
and fixed annuities denominated in foreign currencies.The chief operating decision maker of the Company assesses segment profit and loss based
on net income and segment assets based on total assets of the segment, all determined in
accordance with Japanese GAAP. Accordingly, the operating segment information is based on
internal financial information presented to the chief operating decision maker of the
Company on a Japanese GAAP basis with certain limited presentation differences from that
utilized in the Companys external Japanese GAAP financial reporting. Additionally, the
format and information presented in the internal management reporting are not consistent
with the consolidated financial statements prepared on a U.S. GAAP basis.Financial information with respect to the operating segments and reconciling items to the
Companys external Japanese GAAP financial statements as of and for the years ended March
31, 2008, 2009 and 2010 is as follows:
 Propertyand
    
    
    
    
    
    
    Total
    
    
    AdjustmentsCasualty
    
    
    Life
    
    
    Operating
    
    
    andInsurance
    
    
    Insurance
    
    
    Segments
    
    
    Eliminations
    
    
    Consolidated(Yen in millions)2008:Net premiums written
    
    ¥
    1,541,032
    
    
    
    
    
    
    
    1,541,032
    
    
    
    
    
    
    
    1,541,032Net claims paid
    
    
    879,725
    
    
    
    
    
    
    
    879,725
    
    
    
    
    
    
    
    879,725Life insurance premiums
    
    
    
    
    
    
    156,528
    
    
    
    156,528
    
    
    
    
    
    
    
    156,528Life insurance claims
    
    
    
    
    
    
    31,703
    
    
    
    31,703
    
    
    
    
    
    
    
    31,703Commission and collection expenses
    
    
    234,640
    
    
    
    14,740
    
    
    
    249,380
    
    
    
    (395
    )
    
    
    248,985Operating expenses and general and
administrative expenses (1)
    
    
    271,198
    
    
    
    21,560
    
    
    
    292,758
    
    
    
    (2,416
    )
    
    
    290,342Interest and dividends received, net (2)
    
    
    114,403
    
    
    
    16,232
    
    
    
    130,635
    
    
    
    (20
    )
    
    
    130,615Ordinary profit (loss) (3)
    
    
    66,591
    
    
    
    (5,724
    )
    
    
    60,867
    
    
    
    
    
    
    
    60,867Income taxes
    
    
    15,159
    
    
    
    241
    
    
    
    15,400
    
    
    
    
    
    
    
    15,400Net income (loss)
    
    
    46,706
    
    
    
    (6,177
    )
    
    
    40,529
    
    
    
    (501
    )
    
    
    40,028Total assets (4)
    
    
    7,388,669
    
    
    
    1,009,780
    
    
    
    8,398,449
    
    
    
    (731
    )
    
    
    8,397,718Significant non-cash items (5)
    
    
    19,128
    
    
    
    
    
    
    
    19,128
    
    
    
    
    
    
    
    19,128Total expenditure for additions to
long-lived assets
    
    
    44,693
    
    
    
    381
    
    
    
    45,074
    
    
    
    
    
    
    
    45,074
 
 (1)
    
    includes depreciation and amortization of ¥19,237 million in P&C insurance
and ¥204 million in life insurance.(2)
    
    includes interest expense of ¥1,073 million in P&C insurance and ¥10 million in
life insurance.(3)
    
    includes equity in earnings (losses) of equity method investees of ¥959 million
in P&C insurance and ¥(6,232) million in life insurance.(4)
    
    includes investment in equity method investees of ¥4,971 million in P&C
insurance and ¥7,508 million in life insurance.(5)
    
    primarily comprised of impairment losses on investments and long-lived assets. F-68




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##### Table of Contents



Propertyand
    
    
    
    
    
    
    Total
    
    
    AdjustmentsCasualty
    
    
    Life
    
    
    operating
    
    
    andInsurance
    
    
    Insurance
    
    
    segments
    
    
    Eliminations
    
    
    Consolidated(Yen in millions)2009:Net premiums written
    
    ¥
    1,445,651
    
    
    
    
    
    
    
    1,445,651
    
    
    
    
    
    
    
    1,445,651Net claims paid
    
    
    892,711
    
    
    
    
    
    
    
    892,711
    
    
    
    
    
    
    
    892,711Life insurance premiums
    
    
    
    
    
    
    133,368
    
    
    
    133,368
    
    
    
    
    
    
    
    133,368Life insurance claims
    
    
    
    
    
    
    36,438
    
    
    
    36,438
    
    
    
    
    
    
    
    36,438Commission and collection expenses
    
    
    231,359
    
    
    
    14,841
    
    
    
    246,200
    
    
    
    (504
    )
    
    
    245,696Operating expenses and general and
administrative expenses (1)
    
    
    281,903
    
    
    
    23,040
    
    
    
    304,943
    
    
    
    (2,593
    )
    
    
    302,350Interest and dividends received, net (2)
    
    
    98,256
    
    
    
    18,396
    
    
    
    116,652
    
    
    
    (187
    )
    
    
    116,465Ordinary loss (3)
    
    
    (8,574
    )
    
    
    (3,914
    )
    
    
    (12,488
    )
    
    
    (557
    )
    
    
    (13,045
    )Income taxes
    
    
    1,583
    
    
    
    277
    
    
    
    1,860
    
    
    
    4
    
    
    
    1,864Net income (loss)
    
    
    13,540
    
    
    
    (4,418
    )
    
    
    9,122
    
    
    
    (930
    )
    
    
    8,192Total assets (4)
    
    
    6,328,170
    
    
    
    1,090,883
    
    
    
    7,419,053
    
    
    
    21,657
    
    
    
    7,440,710Significant non-cash items (5)
    
    
    119,167
    
    
    
    
    
    
    
    119,167
    
    
    
    
    
    
    
    119,167Total expenditure for additions to
long-lived assets
    
    
    21,837
    
    
    
    379
    
    
    
    22,216
    
    
    
    
    
    
    
    22,216
 
 (1)
    
    includes depreciation and amortization of ¥21,893 million in P&C insurance
and ¥264 million in life insurance.(2)
    
    includes interest expense of ¥1,631 million in P&C insurance and ¥3 million in
life insurance.(3)
    
    includes equity in earnings (losses) of equity method investees of ¥220 million
in P&C insurance and ¥(4,463) million in life insurance.(4)
    
    includes investment in equity method investees of ¥4,685 million in P&C
insurance and ¥13,248 million in life insurance.(5)
    
    primarily comprised of impairment losses on investments and long-lived assets. F-69




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##### Table of Contents



Propertyand
    
    
    
    
    
    
    Total
    
    
    AdjustmentsCasualty
    
    
    Life
    
    
    operating
    
    
    andInsurance
    
    
    Insurance
    
    
    segments
    
    
    Eliminations
    
    
    Consolidated(Yen in millions)2010:Net premiums written
    
    ¥
    1,394,165
    
    
    
    
    
    
    
    1,394,165
    
    
    
    
    
    
    
    1,394,165Net claims paid
    
    
    914,692
    
    
    
    
    
    
    
    914,692
    
    
    
    
    
    
    
    914,692Life insurance premiums
    
    
    
    
    
    
    135,165
    
    
    
    135,165
    
    
    
    
    
    
    
    135,165Life insurance claims
    
    
    
    
    
    
    41,717
    
    
    
    41,717
    
    
    
    
    
    
    
    41,717Commission and collection expenses
    
    
    228,591
    
    
    
    15,124
    
    
    
    243,715
    
    
    
    (578
    )
    
    
    243,137Operating expenses and general and
administrative expenses (1)
    
    
    270,787
    
    
    
    25,127
    
    
    
    295,914
    
    
    
    (953
    )
    
    
    294,961Interest and dividends received, net (2)
    
    
    70,228
    
    
    
    19,821
    
    
    
    90,049
    
    
    
    (229
    )
    
    
    89,820Ordinary profit (3)
    
    
    48,009
    
    
    
    5,024
    
    
    
    53,033
    
    
    
    (338
    )
    
    
    52,695Income taxes
    
    
    11,874
    
    
    
    284
    
    
    
    12,158
    
    
    
    1
    
    
    
    12,159Net income
    
    
    33,930
    
    
    
    4,499
    
    
    
    38,429
    
    
    
    (789
    )
    
    
    37,640Total assets (4)
    
    
    6,343,386
    
    
    
    1,168,528
    
    
    
    7,511,914
    
    
    
    7,711
    
    
    
    7,519,625Significant non-cash items (5)
    
    
    9,497
    
    
    
    
    
    
    
    9,497
    
    
    
    
    
    
    
    9,497Total expenditure for additions to
long-lived assets
    
    
    24,144
    
    
    
    2,728
    
    
    
    26,872
    
    
    
    173
    
    
    
    27,045
 
 (1)
    
    includes depreciation and amortization of ¥22,337 million in P&C insurance
and ¥557million in life insurance.(2)
    
    includes interest expense of ¥2,245million in P&C insurance and ¥14million in
life insurance.(3)
    
    includes equity in earnings of equity method investees of ¥417million in P&C
insurance and ¥4,461 million in life insurance.(4)
    
    includes investment in equity method investees of ¥9,661million in P&C
insurance and ¥17,696million in life insurance.(5)
    
    primarily comprised of impairment losses on investments and long-lived assets. Reconciling items under the caption Adjustments and Eliminations primarily consist of
elimination of intersegment administration costs charged and adjustments for unallocated
corporate assets.
 F-70




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##### Table of Contents



Information on major lines of Property and Casualty insurance on the U.S. GAAP basis is as
follows:
 Net
    
    
    NetPremiums
    
    
    PremiumsWritten
    
    
    Earned(Yen in millions)2008:Voluntary automobile
    
    ¥
    624,949
    
    
    
    621,036Compulsory automobile liability
    
    
    191,256
    
    
    
    193,572Fire and allied lines
    
    
    225,259
    
    
    
    209,396Personal accident
    
    
    138,896
    
    
    
    132,171Cargo and transit
    
    
    98,846
    
    
    
    97,696Hull
    
    
    21,867
    
    
    
    21,508Other
    
    
    236,543
    
    
    
    227,306Total
    
    ¥
    1,537,616
    
    
    
    1,502,685
 Net
    
    
    NetPremiums
    
    
    PremiumsWritten
    
    
    Earned(Yen in millions)2009:Voluntary automobile
    
    ¥
    608,614
    
    
    
    614,199Compulsory automobile liability
    
    
    148,502
    
    
    
    217,935Fire and allied lines
    
    
    220,188
    
    
    
    208,331Personal accident
    
    
    136,596
    
    
    
    131,995Cargo and transit
    
    
    88,828
    
    
    
    92,313Hull
    
    
    21,329
    
    
    
    20,650Other
    
    
    224,216
    
    
    
    222,980Total
    
    ¥
    1,448,273
    
    
    
    1,508,403
 Net
    
    
    NetPremiums
    
    
    PremiumsWritten
    
    
    Earned(Yen in millions)2010:Voluntary automobile
    
    ¥
    610,957
    
    
    
    608,071Compulsory automobile liability
    
    
    134,932
    
    
    
    144,116Fire and allied lines
    
    
    218,355
    
    
    
    212,674Personal accident
    
    
    135,762
    
    
    
    131,932Cargo and transit
    
    
    69,333
    
    
    
    69,965Hull
    
    
    21,755
    
    
    
    21,586Other
    
    
    204,144
    
    
    
    208,293Total
    
    ¥
    1,395,238
    
    
    
    1,396,637
 For the years ended March 31, 2008, 2009 and 2010, all the premium revenues were from
external customers and no revenue was derived from transactions with a single external
customer exceeding 10% of the Companys revenues.
 F-71




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##### Table of Contents



For the years ended March 31, 2008, 2009 and 2010 net property and casualty premiums
written in the amount of ¥1,289,911 million, ¥1,218,796 million, and ¥1,196,607 million,
respectively, were from external customers in Japan, and those in the amount of ¥247,705
million, ¥229,477 million, and ¥198,630 million, respectively, were from external
customers in foreign countries. Life insurance premiums were from external customers in
Japan for the years ended March 31, 2008, 2009 and 2010. There were no countries other
than Japan to which more than 10% of the Companys consolidated revenues were attributed
for the periods presented.At March 31, 2008, 2009 and 2010, long-lived assets located in Japan amounted to ¥267,291
million, ¥258,973 million and ¥247,625 million, respectively, and those located in
countries other than Japan amounted to ¥21,382 million, ¥14,067 million and ¥13,953
million, respectively.Reconciliation of segment information to the U.S. GAAP consolidated financial statementsAs described above, the bases for measuring and reporting segment net income (loss) and
segment total assets is determined in accordance with Japanese GAAP, which are different
from the amounts reported in the Companys consolidated financial statements presented in
accordance with U.S. GAAP.Following is a reconciliation of the Companys total segment premiums and total segment
net income to the Companys consolidated premiums earned and consolidated net income
(loss), respectively, for the years ended March 31, 2008, 2009, and 2010:
 2008
    
    
    2009
    
    
    2010(Yen in millions)Property and casualty insurance net premiums written
    
    ¥
    1,541,032
    
    
    
    1,445,651
    
    
    
    1,394,165Life insurance premiums
    
    
    156,528
    
    
    
    133,368
    
    
    
    135,165Segment total premiums
    
    
    1,697,560
    
    
    
    1,579,019
    
    
    
    1,529,330Reconciling items:Increase (decrease) in unearned premiums in Japanese GAAP
    
    
    40,410
    
    
    
    (5,607
    )
    
    
    3,975Adjustment for difference in the measurement basis
between Japanese GAAP and U.S. GAAP for unearned
premiums
    
    
    (75,341
    )
    
    
    65,737
    
    
    
    (5,374
    )Reclassification of investment contracts or
universal-life contracts of life insurance
    
    
    (28,809
    )
    
    
    (29,581
    )
    
    
    (34,584
    )Return premium for cancellation of life contracts
    
    
    65,012
    
    
    
    86,326
    
    
    
    87,792Other adjustments
    
    
    (3,416
    )
    
    
    2,622
    
    
    
    3,871Consolidated premiums earned
    
    ¥
    1,695,416
    
    
    
    1,698,516
    
    
    
    1,585,010Consolidated premiums earned consists of:Property and casualty insurance premiums
    
    ¥
    1,502,685
    
    
    
    1,508,403
    
    
    
    1,396,637Life insurance premiums
    
    
    192,731
    
    
    
    190,113
    
    
    
    188,373Premiums earned (U.S.GAAP)
    
    ¥
    1,695,416
    
    
    
    1,698,516
    
    
    
    1,585,010
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##### Table of Contents



2008
    
    
    2009
    
    
    2010(Yen in millions)Total segment net income
    
    ¥
    40,529
    
    
    
    9,122
    
    
    
    38,429Reconciling items:Catastrophic loss reserve
    
    
    25,160
    
    
    
    (9,813
    )
    
    
    15,688Other underwriting reserves
    
    
    47,923
    
    
    
    (6,761
    )
    
    
    (5,831
    )Reserve for price fluctuation
    
    
    3,254
    
    
    
    (25,722
    )
    
    
    62Policy acquisition costs
    
    
    (4,559
    )
    
    
    (29,337
    )
    
    
    19,913Revaluation of investments in securities and
related investment income (loss)
    
    
    (1,315
    )
    
    
    (52,040
    )
    
    
    8,906Derivative transactions
    
    
    (7,824
    )
    
    
    (7,038
    )
    
    
    (8,571
    )Retirement and severance benefits
    
    
    1,403
    
    
    
    3,322
    
    
    
    4,373Gains (losses) from equity method investments
    
    
    22,858
    
    
    
    12,902
    
    
    
    (13,084
    )Deferred income taxes
    
    
    (32,737
    )
    
    
    13,900
    
    
    
    (4,219
    )Other
    
    
    10,104
    
    
    
    21,225
    
    
    
    (5,683
    )Consolidated net income (loss)
    
    ¥
    104,796
    
    
    
    (70,240
    )
    
    
    49,983
 Reconciling items consist of certain accounting differences between Japanese GAAP and
U.S. GAAP and the adjustments and eliminations from total amounts of operating segments to
the consolidated financial statements prepared on a Japanese GAAP.The accounting differences primarily consist of differences in insurance reserving
methodologies and differences in the assessment of other than temporary impairment of
investments in securities.Following is a reconciliation of the Companys total segment assets to consolidated total
assets at March 31, 2009 and 2010:
 2009
    
    
    2010(Yen in millions)Segment total assets
    
    ¥
    7,419,053
    
    
    
    7,511,914Reconciling items:Japanese GAAP adjustment and elimination
    
    
    21,657
    
    
    
    7,711Revaluation of investment in securities
    
    
    30,887
    
    
    
    24,329Deferred policy acquisition costs
    
    
    325,539
    
    
    
    345,731Prepaid reinsurance premiums on a gross basis
    
    
    203,477
    
    
    
    195,626Reinsurance recoverable on losses on a gross basis
    
    
    304,228
    
    
    
    293,347Deferred tax assets
    
    
    (134,337
    )
    
    
    (64
    )The difference in consolidation scope
    
    
    20,442
    
    
    
    22,681Other
    
    
    43,909
    
    
    
    43,461Consolidated total assets
    
    ¥
    8,234,855
    
    
    
    8,444,736
 Reconciling items consist of certain accounting differences between Japanese GAAP and
U.S. GAAP and the adjustments and eliminations from total amounts of operating segments to
the consolidated financial statements prepared on a Japanese GAAP.The accounting differences primarily consist of the recognition of deferred acquisition
costs under U.S. GAAP which are charged to income as incurred under Japanese GAAP and
adjustments to present reinsurance related accounts on a gross basis under U.S. GAAP.
 F-73




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##### Table of Contents



(23)
    
    Subsequent EventsEstablishment of MS&AD Insurance GroupOn April 1, 2010, the Company acquired AIOI and NDGI through a statutory share exchange
and was renamed MS&AD Insurance Group Holdings, Inc. in order to form a new insurance and
financial services group, MS&AD Insurance Group. Under the share exchange, each
shareholder of AIOI and NDGI registered as of the moment immediately preceding the share
exchange received 0.190 and 0.191 shares of the Companys common stock for each share of
AIOIs and NDGIs common stock that such shareholder holds. As a result of the share
exchange, the Company issued 139,479,256 and 72,491,759 common stocks to shareholders of
AIOI and NDGI, respectively, and acquired 100% of voting equity interests of AIOI and
NDGI. The purpose of the business combination is to achieve sustainable growth and to
enhance enterprise value through the creation of a globally operating and world-leading
insurance and financial services group by rapidly and significantly improving the quality
and expanding the quality of operational bases and corporate resources.The share exchange is being accounted for under the acquisition method in accordance with
ASC 805, Business Combinations (formerly SFAS No. 141R). Under the acquisition method,
the consideration transferred was preliminary allocated to the assets acquired and
liabilities assumed based on the estimated fair values at the acquisition date. The
allocation of the consideration transferred will be finalized upon completion of the
analysis of the fair values of assets and liabilities of AIOI and NDGI.Consideration transferred is summarized as follows:
 AIOI
    
    
    NDGINumber of shares of common stock outstanding as of
April 1, 2010 (in thousands)
    
    
    734,101
    
    
    
    379,538Share exchange ratio
    
    
    0.190
    
    
    
    0.191The Companys common stock issued (in thousands)
    
    
    139,479
    
    
    
    72,492Purchase price per share of the Companys common stock
    
    ¥
    2,595
    
    
    ¥
    2,595Consideration transferred (in millions)
    
    ¥
    361,949
    
    
    ¥
    188,116
 The unaudited preliminary allocation of the consideration transferred to the assets
acquired and liabilities assumed is as follows:
 (Yen in millions)April 1, 2010AIOI
    
    
    NDGIFair value of total consideration transferred
    
    ¥
    361,949
    
    
    ¥
    188,116Fair values of identifiable assets acquiredInvestments  other than investments in affiliates
    
    ¥
    2,349,910
    
    
    ¥
    895,336Cash and cash equivalents
    
    
    29,006
    
    
    
    48,571Investments in and indebtedness from affiliates
    
    
    38,329
    
    
    
    2,676Accrued investment income
    
    
    7,295
    
    
    
    3,632Premiums receivable and agents balances
    
    
    37,528
    
    
    
    19,086Reinsurance recoverable on paid losses
    
    
    48,273
    
    
    
    14,378Property and equipment, net of accumulated depreciation
    
    
    96,232
    
    
    
    75,777Other assets
    
    
    553,265
    
    
    
    178,382Total assets acquired
    
    ¥
    3,159,838
    
    
    ¥
    1,237,838
 F-74




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##### Table of Contents



(Yen in millions)April 1, 2010AIOI
    
    
    NDGIFair values of identifiable liabilities assumedPolicy liabilities and accruals
    
    ¥
    2,398,174
    
    
    ¥
    867,851Other liabilities
    
    
    153,412
    
    
    
    54,027Total liabilities assumed
    
    ¥
    2,551,586
    
    
    ¥
    921,878Noncontrolling interests
    
    
    2,130
    
    
    
    17Fair value of net assets acquired
    
    
    606,122
    
    
    
    315,943Preliminary gain from a bargain purchase
    
    ¥
    244,173
    
    
    ¥
    127,827
 As indicated in the preliminary purchase price allocation above, the Company expects to
recognize a gain from a bargain purchase in the year ended March 31, 2011 as the sum of the
fair value of the net assets acquired and the fair values of the noncontrolling interests is
expected to exceed the fair value of the purchase consideration.The following unaudited pro forma consolidated income statement information assumes these
business combinations had been completed on April 1, 2008 or 2009:
 2009
    
    
    2010(Yen in millions)Pro forma total revenue
    
    ¥
    2,686,103
    
    
    ¥
    2,996,890Pro forma
net income (loss)
    
    
    (211,458
    )
    
    
    106,874
 The expected gain from a bargain purchase has been excluded from the unaudited pro forma
income statement information as it is considered to be directly attributed to the share
exchange. The unaudited pro forma income statement information does not include any
anticipated financial benefits from such items as cost savings and revenue synergies arising
from the share exchange nor does the unaudited pro forma income statement information include
the portion of restructuring and integration costs to be incurred by the Company.The unaudited pro forma income statement information is not intended to reflect the results
of operations that would have resulted had the share exchange been effected on the dates
indicated or the results that may be obtained by the Consolidated company in the future.Merger of MS Kirameki and Aioi Life InsuranceIt has decided at the meeting of MSIGHs Board of Directors held on May 20, 2010, to approve
merger of its life insurance subsidiaries, MS Kirameki and Aioi Life Insurance Co., Ltd.
(hereinafter, the merged company.)Purpose of the mergerThe merged company is intended to enhance the Companys operational bases in domestic life
insurance
business, a growing business area in the five business domains under the Groups medium-term
management plan MS&AD New Frontier 2013, and thus accelerate growth of the group.
 F-75




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##### Table of Contents



Effective date of the mergerOctober 1, 2011( The merger is contemplated to be conditional on obtaining permissions and other approvals
from relevant authorities. )MSI sets to enter Life Insurance Business in Malaysia as well as Expand its Current Non-Life
Insurance BusinessMSI has reached a basic agreement to form a strategic alliance involving the non-life and
life insurance business with Hong Leong Financial Group (hereafter HLFG), a well
established local conglomerate. This agreement followed approval that MSI has received from
the regulatory authorities in Malaysia.Purpose of the allianceTo proactively invest in non-life and life insurance business overseas is one of MSIs
driving strategies towards achieving sustainable growth. The alliance with HLFG will allow
MSI to simultaneously achieve expansion of its current non-life business and entering the
life insurance market, in Malaysia which is one of the most strategically important countries
in Asia.MSI intends to take this opportunity to further accelerate its ongoing effort in establishing
a stable business base in the Asian market.Overview of the Alliance
 
    
    Non-Life Insurance BusinessThe non-life insurance business portfolio of Hong Leong Assurance Berhad (hereafter
HLA), a subsidiary of HLFG, will be merged with that of MSIG Insurance (Malaysia)
Bhd. (hereafter MSIGM), a subsidiary of MSI. As a result, shareholders equity of the
enlarged MSIGM will be 70%* owned by MSI and 30% owned by HLFG, creating the second
largest non life insurance company in Malaysia by premium income.
 *
    
    MSIs share includes approximately 5% of shares held by minority shareholders.
    
    Life Insurance BusinessMSI will purchase 30% of outstanding shares in HLA for the price of RM 940
million, approximately ¥25.4 billion, thereby entering the life insurance market in
Malaysia holding a stake in a well established life insurance company ranking No.6 by
premium income in the market. MSI will second officers and employees, transferring
technical know-how on life insurance with more innovative products and underwriting
support with the objective of supporting HLA to become a top rank life insurer in
Malaysia at an early stage.Conversion Rate: 1 Malaysian Ringgit= ¥27 in this letter including its appendix
    
    Specific actions/ Objectives of the Alliance
 F-76




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##### Table of Contents



(i)
    
    Expanding Insurance Sales through BancassuranceMSI will expand MSIs sales force of both the non-life and life insurance business
through bancassurance at HLFGs bank subsidiary.(ii)
    
    MSI will supply distinguished non-life and life insurance products through the
synergy effect of MSI and HLFG which will bring together the respective brand
strengths, business bases and insurance business know-how, simultaneously MSI aims to
further enhance the corporate value of the Company.
 Effective date of the AllianceIt is planed to launch the alliance in this autumn.
 F-77




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##### Table of Contents



Schedule I
 MITSUI SUMITOMO INSURANCE GROUP HOLDINGS, INC.
AND SUBSIDIARIES
Summary of Investments  Other than Investments in Related Parties
March 31, 2010 and 2009
 Amount at whichshown in theType of investment
    
    Cost
    
    
    Value
    
    
    balance sheet(Yen in millions)March 31, 2010:Securities held to maturity:Fixed maturities:Bonds and notes:Government and government
Agencies and authorities:United States
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    Other
    
    
    388,433
    
    
    
    396,096
    
    
    
    388,433388,433
    
    
    
    396,096
    
    
    
    388,433All other corporate bonds
    
    
    117,874
    
    
    
    122,834
    
    
    
    117,874Total fixed maturities
    
    
    506,307
    
    
    
    518,930
    
    
    
    506,307Securities available for sale:Fixed maturities:Bonds and notes:Government and government
Agencies and authorities:United States
    
    
    89,349
    
    
    
    93,527
    
    
    
    93,527Other
    
    
    871,458
    
    
    
    888,091
    
    
    
    888,091960,807
    
    
    
    981,618
    
    
    
    981,618States, municipalities and
Political subdivisions:United States
    
    
    101
    
    
    
    94
    
    
    
    94Other
    
    
    516,015
    
    
    
    523,063
    
    
    
    523,063516,116
    
    
    
    523,157
    
    
    
    523,157Public utilities
    
    
    135,349
    
    
    
    141,759
    
    
    
    141,759All other corporate bonds
    
    
    1,345,481
    
    
    
    1,365,769
    
    
    
    1,365,769Total fixed maturities
    
    
    2,957,753
    
    
    
    3,012,303
    
    
    
    3,012,303Equity securities:Common stocks:Public utilities
    
    
    10,234
    
    
    
    27,490
    
    
    
    27,490Banks, trust and insurance
companies
    
    
    93,764
    
    
    
    135,089
    
    
    
    135,089Industrial, miscellaneous and all
Other
    
    
    830,386
    
    
    
    1,740,872
    
    
    
    1,740,872934,384
    
    
    
    1,903,451
    
    
    
    1,903,451Nonredeemable preferred stocks
    
    
    92,406
    
    
    
    94,295
    
    
    
    94,295Total equity securities
    
    
    1,026,790
    
    
    
    1,997,746
    
    
    
    1,997,746Total securities
    
    
    4,490,850
    
    
    ¥
    5,528,979
    
    
    
    5,516,356Mortgage loans on real estate
    
    
    7,260
    
    
    
    
    
    
    
    7,260Real estate  investment properties
    
    
    36,698
    
    
    
    
    
    
    
    36,698Policy loans
    
    
    44,339
    
    
    
    
    
    
    
    44,339Other long-term investments
    
    
    691,625
    
    
    
    
    
    
    
    691,625Short-term investments
    
    
    69,139
    
    
    
    
    
    
    
    69,139Total investments
    
    ¥
    5,339,911
    
    
    
    
    
    
    ¥
    6,365,417
 F-78




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##### Table of Contents



Schedule I
 MITSUI SUMITOMO INSURANCE GROUP HOLDINGS, INC.
AND SUBSIDIARIES
Summary of Investments  Other than Investments in Related Parties
March 31, 2010 and 2009
 Amount at whichshown in theType of investment
    
    Cost
    
    
    Value
    
    
    balance sheet(Yen in millions)March 31, 2009:Securities held to maturity:Fixed maturities:Bonds and notes:Government and government
Agencies and authorities:United States
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    Other
    
    
    363,613
    
    
    
    376,096
    
    
    
    363,613363,613
    
    
    
    376,096
    
    
    
    363,613States, municipalities and
Political subdivisions:Other
    
    
    1,112
    
    
    
    1,112
    
    
    
    1,1121,112
    
    
    
    1,112
    
    
    
    1,112All other corporate bonds
    
    
    110,851
    
    
    
    114,636
    
    
    
    110,851Total fixed maturities
    
    
    475,576
    
    
    
    491,844
    
    
    
    475,576Securities available for sale:Fixed maturities:Bonds and notes:Government and government
Agencies and authorities:United States
    
    
    96,199
    
    
    
    105,002
    
    
    
    105,002Other
    
    
    723,315
    
    
    
    742,850
    
    
    
    742,850819,514
    
    
    
    847,852
    
    
    
    847,852States, municipalities and
Political subdivisions:United States
    
    
    100
    
    
    
    87
    
    
    
    87Other
    
    
    591,108
    
    
    
    587,440
    
    
    
    587,440591,208
    
    
    
    587,527
    
    
    
    587,527Public utilities
    
    
    142,700
    
    
    
    147,551
    
    
    
    147,551All other corporate bonds
    
    
    1,437,681
    
    
    
    1,411,940
    
    
    
    1,411,940Total fixed maturities
    
    
    2,991,103
    
    
    
    2,994,870
    
    
    
    2,994,870Equity securities:Common stocks:Public utilities
    
    
    10,870
    
    
    
    29,795
    
    
    
    29,795Banks, trust and insurance
companies
    
    
    103,484
    
    
    
    143,718
    
    
    
    143,718Industrial, miscellaneous and all
Other
    
    
    896,548
    
    
    
    1,427,541
    
    
    
    1,427,5411,010,902
    
    
    
    1,601,054
    
    
    
    1,601,054Nonredeemable preferred stocks
    
    
    102,218
    
    
    
    102,379
    
    
    
    102,379Total equity securities
    
    
    1,113,120
    
    
    
    1,703,433
    
    
    
    1,703,433Total securities
    
    
    4,579,799
    
    
    ¥
    5,190,147
    
    
    
    5,173,879Mortgage loans on real estate
    
    
    9,224
    
    
    
    
    
    
    
    9,224Real estate  investment properties
    
    
    40,992
    
    
    
    
    
    
    
    40,992Policy loans
    
    
    43,254
    
    
    
    
    
    
    
    43,254Other long-term investments
    
    
    711,653
    
    
    
    
    
    
    
    711,653Short-term investments
    
    
    106,852
    
    
    
    
    
    
    
    106,852Total investments
    
    ¥
    5,491,774
    
    
    
    
    
    
    ¥
    6,085,854
 F-79




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##### Table of Contents



Schedule III
 MITSUI SUMITOMO INSURANCE GROUP HOLDINGS, INC.
AND SUBSIDIARIES
Supplementary Insurance Information
Years ended March 31, 2010, 2009 and 2008
 LossesNet
    
    
    and claims
    
    
    NetTotal losses
    
    
    Unearned
    
    
    premiums
    
    
    incurred and
    
    
    premiumsLine of Business
    
    and claims
    
    
    premiums
    
    
    earned
    
    
    provided for
    
    
    written(Yen in millions)Property and casualty:Year ended March 31, 2010:Voluntary automobile
    
    ¥
    307,171
    
    
    ¥
    224,687
    
    
    ¥
    608,071
    
    
    ¥
    395,221
    
    
    ¥
    610,957Compulsory automobile
liability
    
    
    371,889
    
    
    
    198,750
    
    
    
    144,116
    
    
    
    125,319
    
    
    
    134,932Fire and allied lines
    
    
    113,544
    
    
    
    573,380
    
    
    
    212,674
    
    
    
    90,141
    
    
    
    218,355Personal accident
    
    
    62,384
    
    
    
    107,602
    
    
    
    131,932
    
    
    
    78,387
    
    
    
    135,762Cargo and transit
    
    
    31,975
    
    
    
    27,917
    
    
    
    69,965
    
    
    
    30,341
    
    
    
    69,333Hull
    
    
    34,011
    
    
    
    12,848
    
    
    
    21,586
    
    
    
    15,934
    
    
    
    21,755Other
    
    
    294,461
    
    
    
    236,340
    
    
    
    208,293
    
    
    
    120,571
    
    
    
    204,144Total
    
    ¥
    1,215,435
    
    
    ¥
    1,381,524
    
    
    ¥
    1,396,637
    
    
    ¥
    855,914
    
    
    ¥
    1,395,238Year ended March 31, 2009:Voluntary automobile
    
    ¥
    306,809
    
    
    ¥
    219,629
    
    
    ¥
    614,199
    
    
    ¥
    382,642
    
    
    ¥
    608,614Compulsory automobile
liability
    
    
    396,302
    
    
    
    218,289
    
    
    
    217,935
    
    
    
    218,219
    
    
    
    148,502Fire and allied lines
    
    
    103,634
    
    
    
    559,285
    
    
    
    208,331
    
    
    
    94,168
    
    
    
    220,188Personal accident
    
    
    60,630
    
    
    
    103,977
    
    
    
    131,995
    
    
    
    77,302
    
    
    
    136,596Cargo and transit
    
    
    35,302
    
    
    
    28,674
    
    
    
    92,313
    
    
    
    35,008
    
    
    
    88,828Hull
    
    
    35,660
    
    
    
    12,937
    
    
    
    20,650
    
    
    
    15,996
    
    
    
    21,329Other
    
    
    307,209
    
    
    
    242,499
    
    
    
    222,980
    
    
    
    136,706
    
    
    
    224,216Total
    
    ¥
    1,245,546
    
    
    ¥
    1,385,290
    
    
    ¥
    1,508,403
    
    
    ¥
    960,041
    
    
    ¥
    1,448,273Year ended March 31, 2008:Voluntary automobile
    
    ¥
    325,606
    
    
    ¥
    237,252
    
    
    ¥
    621,036
    
    
    ¥
    405,656
    
    
    ¥
    624,949Compulsory automobile
liability
    
    
    211,553
    
    
    
    313,405
    
    
    
    193,572
    
    
    
    133,688
    
    
    
    191,256Fire and allied lines
    
    
    134,890
    
    
    
    535,143
    
    
    
    209,396
    
    
    
    114,095
    
    
    
    225,259Personal accident
    
    
    56,466
    
    
    
    100,502
    
    
    
    132,171
    
    
    
    73,921
    
    
    
    138,896Cargo and transit
    
    
    43,669
    
    
    
    39,094
    
    
    
    97,696
    
    
    
    35,753
    
    
    
    98,846Hull
    
    
    33,795
    
    
    
    14,152
    
    
    
    21,508
    
    
    
    15,933
    
    
    
    21,867Other
    
    
    381,615
    
    
    
    250,408
    
    
    
    227,306
    
    
    
    127,211
    
    
    
    236,543Total
    
    ¥
    1,187,594
    
    
    ¥
    1,489,956
    
    
    ¥
    1,502,685
    
    
    ¥
    906,257
    
    
    ¥
    1,537,616
 F-80




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##### Table of Contents



Schedule III
 MITSUI SUMITOMO INSURANCE GROUP HOLDINGS, INC.
AND SUBSIDIARIES
Supplementary Insurance Information
Years ended March 31, 2010, 2009 and 2008
 PolicyholderLiability for
    
    
    
    
    
    benefits forTotal losses
    
    future policy
    
    Premium
    
    life insuranceand claims
    
    benefits
    
    income
    
    contracts(Yen in millions)Life:Year ended:March 31, 2010
    
    ¥
    11,642
    
    
    ¥
    1,022,413
    
    
    ¥
    188,373
    
    
    ¥
    150,346March 31, 2009
    
    
    10,976
    
    
    
    970,217
    
    
    
    190,113
    
    
    
    154,056March 31, 2008
    
    
    10,226
    
    
    
    911,165
    
    
    
    192,731
    
    
    
    156,683
 F-81




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##### Table of Contents



Schedule IV
 MITSUI SUMITOMO INSURANCE GROUP HOLDINGS, INC.
AND SUBSIDIARIES
Reinsurance
Years ended March 31, 2010, 2009 and 2008
 Assumed
    
    
    
    
    
    PercentageCeded
    
    from
    
    
    
    
    
    of amountGross
    
    to other
    
    other
    
    Net
    
    assumedamount
    
    companies
    
    companies
    
    Amount
    
    to net(Yen in millions)Property and casualty insurance
premiums:Year ended:March 31, 2010
    
    ¥
    1,488,589
    
    
    ¥
    295,164
    
    
    ¥
    203,212
    
    
    ¥
    1,396,637
    
    
    
    14.6
    %March 31, 2009
    
    
    1,532,750
    
    
    
    306,989
    
    
    
    282,642
    
    
    
    1,508,403
    
    
    
    18.7
    %March 31, 2008
    
    
    1,597,352
    
    
    
    361,138
    
    
    
    266,471
    
    
    
    1,502,685
    
    
    
    17.7
    %Life insurance premiums:Year ended:March 31, 2010
    
    ¥
    188,939
    
    
    ¥
    566
    
    
    ¥
    
    
    
    ¥
    188,373
    
    
    
    March 31, 2009
    
    
    190,748
    
    
    
    635
    
    
    
    
    
    
    
    190,113
    
    
    
    March 31, 2008
    
    
    193,392
    
    
    
    661
    
    
    
    
    
    
    
    192,731
    
    
    
    
 F-82




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##### Table of Contents



Schedule V
 MITSUI SUMITOMO INSURANCE GROUP HOLDINGS, INC.
AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years ended March 31, 2010 and 2009
 AdditionsChargedBalance at
    
    
    to costs
    
    
    Charged
    
    
    
    
    
    
    Balance atbeginning
    
    
    and
    
    
    to other
    
    
    
    
    
    
    end ofDescription
    
    of year
    
    
    expenses
    
    
    accounts
    
    
    Deductions
    
    
    year(Yen in millions)Year ended March 31, 2010:Applied against asset accounts:Accumulated depreciation  real estate investments
    
    ¥
    48,570
    
    
    ¥
    2,422
    
    
    ¥
    
    
    
    ¥
    
    
    
    ¥
    50,992Valuation allowance  loans:Specific allowance
    
    
    1,850
    
    
    
    2,043
    
    
    
    
    
    
    
    (74
    )
    
    
    3,819General reserve
    
    
    810
    
    
    
    51
    
    
    
    
    
    
    
    
    
    
    
    861Allowance for doubtful accounts
    
    
    3,250
    
    
    
    653
    
    
    
    
    
    
    
    
    
    
    
    3,903Accumulated depreciation  property and equipment
    
    
    239,776
    
    
    
    26,579
    
    
    
    
    
    
    
    (16,337
    )
    
    
    250,018Year ended March 31, 2009:Applied against asset accounts:Accumulated depreciation  real estate investments
    
    ¥
    50,327
    
    
    ¥
    2,310
    
    
    ¥
    
    
    
    ¥
    (4,067
    )
    
    ¥
    48,570Valuation allowance  loans:Specific allowance
    
    
    652
    
    
    
    1,323
    
    
    
    
    
    
    
    (125
    )
    
    
    1,850General reserve
    
    
    446
    
    
    
    364
    
    
    
    
    
    
    
    
    
    
    
    810Allowance for doubtful accounts
    
    
    3,469
    
    
    
    (219
    )
    
    
    
    
    
    
    
    
    
    
    3,250Accumulated depreciation  property and equipment
    
    
    233,451
    
    
    
    25,103
    
    
    
    
    
    
    
    (18,778
    )
    
    
    239,776
 F-83