##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION



Washington, D.C. 20549



FORM 20-F

(Mark One)

| |  ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------------

OR

| | x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ------------------------------------------------------------------------------------

For the fiscal year ended March 31, 2005

OR

| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------

For the transition period from
 to

OR

| |  ̈ | 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





Commission file number: 0-31376



Kabushiki Kaisha
Millea Holdings

(Exact name of Registrant as specified in its charter)

Millea Holdings, Inc.

(Translation of Registrants name into English)

Japan

(Jurisdiction of
incorporation or organization)

Tokyo Kaijo Nichido Building Shinkan,

2-1, Marunouchi 1-chome,

Chiyoda-ku, Tokyo 100-0005, Japan

(Address of principal executive offices)

Securities
registered or to be registered pursuant to Section 12(b) of the Act:

None

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Common Stock

American Depositary Shares represented by American Depositary Receipts,

each of which represents .005 of one share of our Common Stock

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Common Stock

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.

Common Stock: 1,719,899 shares as of March 31, 2005



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.



x  Yes ̈No



Indicate by check mark which financial statement item the registrant has elected to follow.



 ̈Item 17        x  Item 18



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        x  No



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##### Table of Contents

TABLE OF CONTENTS



|                                                                                      |  |     
|------------------------------------------------------------------------------------- |  | ----
|                                                                                      |  | Page
|Forward-Looking Statements                                                            |  | 3   
|Selected Financial Data                                                               |  | 4   
|Risk Factors                                                                          |  | 6   
|Exchange Rates                                                                        |  | 13  
|Market Price Information                                                              |  | 14  
|Dividend Policy                                                                       |  | 15  
|Major Shareholders                                                                    |  | 15  
|Business                                                                              |  | 17  
|Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 42  
|Directors and Corporate Auditors                                                      |  | 83  
|The Japanese Insurance Industry                                                       |  | 87  
|Regulation                                                                            |  | 89  
|Description of Common Stock                                                           |  | 93  
|Taxation                                                                              |  | 100 
|Controls and Procedures                                                               |  | 104 
|Code of Ethics                                                                        |  | 104 
|Principal Accountant Fees and Services                                                |  | 105 
|Relief from Certain Nasdaq Corporate Governance Rules                                 |  | 106 
|Where You Can Find More Information                                                   |  | 108 
|Index to Financial Statements                                                         |  | F-1 
|List of Exhibits                                                                      |  |     
|Cross Reference Index for Form 20-F                                                   |  |     
|Signatures                                                                            |  |     



We were formed on
April 2, 2002 as the holding company for The Tokio Marine and Fire Insurance Company, Limited and The Nichido Fire and Marine Insurance Company, Limited in a statutory share transfer under Japanese law. In October 2004, we merged the two companies
and named the new combined entity Tokio Marine & Nichido Fire Insurance Co., Ltd. For a more detailed description of the background to our formation and the merger of our property and casualty insurance subsidiaries, please refer to
Business  Group Overview  Formation of Millea Holdings and Business  Recent Developments  Merger of Tokio Marine and Nichido Fire in this annual report.



As used in this annual report, references to:



| |  |  | Millea Holdings, we, us and our are to (1) Millea Holdings, Inc., (2) Millea Holdings, Inc. and its direct and
indirect subsidiaries or (3) Tokio Marine & Nichido Fire Insurance Co., Ltd. and/or other operating subsidiaries of Millea Holdings, Inc., as the context may require;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Tokio Marine & Nichido are to Tokio Marine & Nichido Fire Insurance Co., Ltd. and/or either or both of its predecessors, as the context may require;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Tokio Marine are to The Tokio Marine and Fire Insurance Company, Limited, a predecessor of Tokio Marine & Nichido;
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | Nichido Fire are to The Nichido Fire and Marine Insurance Company, Limited, a predecessor of Tokio Marine & Nichido;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | Tokio Marine & Nichido Life are to Tokio Marine & Nichido Life Insurance Co., Ltd.; and
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | Tokio Marine & Nichido Financial Life are to Tokio Marine & Nichido Financial Life Insurance Co., Ltd.
| | - |  | --------------------------------------------------------------------------------------------------------



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##### Table of Contents

Unless the context otherwise requires, references to the business or financial results of:



| |  |  | Tokio Marine & Nichido are to those of Tokio Marine & Nichido and its consolidated subsidiaries;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | Tokio Marine are to those of Tokio Marine and its consolidated subsidiaries prior to its October 2004 merger with Nichido Fire;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | Nichido Fire are to those of Nichido Fire and its consolidated subsidiaries prior to its October 2004 merger with Tokio Marine;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | Tokio Marine & Nichido Life are to those of Tokio Marine & Nichido Life only; and
| | - |  | -----------------------------------------------------------------------------------



| |  |  | Tokio Marine & Nichido Financial Life are to those of Tokio Marine & Nichido Financial Life only.
| | - |  | ---------------------------------------------------------------------------------------------------



As used in this annual report, yen or ¥ means the
lawful currency of Japan and dollar or $ means the lawful currency of the United States of America.



As used in this annual report, Japanese GAAP means accounting principles generally accepted in Japan and U.S. GAAP means
accounting principles generally accepted in the United States of America.



In tables appearing in this annual report, figures may not add up to totals due to rounding.



FORWARD-LOOKING STATEMENTS



This
annual report contains forward-looking statements that are based on our current expectations, intentions, assumptions, estimates and projections about our businesses, operations, strategies and plans, about the insurance industry, and about capital
markets around the world. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as may, will, expect, anticipate, estimate,
plan, intend or similar words. These statements discuss future expectations, identify strategies, contain projections of results of operations or financial condition, or state other forward-looking information. These
forward-looking statements are subject to various risks and uncertainties. Known and unknown risks, uncertainties and other factors could cause the actual results to differ materially from those contained in any forward-looking statement. We cannot
promise that the expectations expressed in these forward-looking statements will turn out to be correct. Our actual results could be materially different from and worse than our stated expectations. Important risks and factors that could cause
actual results to be materially different from those expectations are set forth in Risk Factors and elsewhere in this annual report.



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##### Table of Contents

SELECTED FINANCIAL DATA



The
following selected consolidated financial data of Millea Holdings and its subsidiaries as of and for each of the five years ended March 31, 2005 are derived from the audited U.S. GAAP consolidated financial statements of Millea Holdings for those
periods. You should read the information below in conjunction with the U.S. GAAP consolidated financial statements of Millea Holdings, including the related notes, included elsewhere in this annual report.



|                                                                              |  |                                                                         |            |   |         |   |            |         |  |   |            |     |  |         |           |   |  |   |           |  
|----------------------------------------------------------------------------- |  | ----------------------------------------------------------------------- | ---------- | - | ------- | - | ---------- | ------- |  | - | ---------- | --- |  | ------- | --------- | - |  | - | --------- | -
|                                                                              |  | As of and for the year ended March 31,                                  |           
|                                                                              |  | 2005(1)                                                                 |            |   | 2004(1) |   |            | 2003(1) |  |   | 2002(1)    |     |  | 2001(1) |          
|                                                                              |  | (yen in millions, except share numbers, per share data and percentages) |           
|Statement of income data:                                                     |  |                                                                         |            |   |         |   |            |         |  |   |            |     |  |         |           |   |  |   |           |  
|Net premiums written                                                          |  | ¥                                                                       | 1,925,407  |   |         | ¥ | 1,945,246  |         |  | ¥ | 1,898,557  |     |  | ¥       | 1,381,483 |   |  | ¥ | 1,323,907 |  
|Premiums earned                                                               |  |                                                                         | 1,895,650  |   |         |   | 1,860,203  |         |  |   | 1,760,968  |     |  |         | 1,342,962 |   |  |   | 1,310,739 |  
|Life premiums(2)                                                              |  |                                                                         | 253,369    |   |         |   | 241,553    |         |  |   | 255,977    |     |  |         | 209,208   |   |  |   | 162,905   |  
|Net investment income                                                         |  |                                                                         | 133,197    |   |         |   | 126,173    |         |  |   | 108,311    |     |  |         | 104,681   |   |  |   | 127,852   |  
|Total operating income(2)                                                     |  |                                                                         | 2,409,097  |   |         |   | 2,207,518  |         |  |   | 2,187,103  |     |  |         | 1,648,512 |   |  |   | 1,657,638 |  
|Total operating costs and expenses(2)                                         |  |                                                                         | 2,302,491  |   |         |   | 2,055,251  |         |  |   | 1,985,795  |     |  |         | 1,539,844 |   |  |   | 1,524,604 |  
|Income before extraordinary items and cumulative effect of accounting changes |  |                                                                         | 77,527     |   |         |   | 102,882    |         |  |   | 129,694    |     |  |         | 75,252    |   |  |   | 88,675    |  
|Extraordinary items(3)                                                        |  |                                                                         | 14,458     |   |         |   |           |         |  |   | 248,323    |     |  |         |          |   |  |   |          |  
|Cumulative effect of accounting changes, net of tax(4)                        |  |                                                                         | (26        | ) |         |   |           |         |  |   |           |     |  |         | 85,465    |   |  |   |          |  
|Net income                                                                    |  |                                                                         | 91,959     |   |         |   | 102,882    |         |  |   | 378,017    |     |  |         | 160,717   |   |  |   | 88,675    |  
|Balance sheet data:                                                           |  |                                                                         |            |   |         |   |            |         |  |   |            |     |  |         |           |   |  |   |           |  
|Total investments                                                             |  | ¥                                                                       | 10,304,749 |   |         | ¥ | 9,393,222  |         |  | ¥ | 8,345,203  |     |  | ¥       | 6,628,825 |   |  | ¥ | 6,817,944 |  
|Total assets                                                                  |  |                                                                         | 12,894,898 |   |         |   | 12,200,373 |         |  |   | 10,893,363 |     |  |         | 8,559,177 |   |  |   | 8,216,741 |  
|Total stockholders equity                                                    |  |                                                                         | 3,432,640  |   |         |   | 3,408,351  |         |  |   | 2,824,316  |     |  |         | 2,509,694 |   |  |   | 2,586,544 |  
|Common stock                                                                  |  |                                                                         | 150,000    |   |         |   | 150,000    |         |  |   | 150,000    |     |  |         | 101,995   |   |  |   | 101,995   |  
|Number of shares issued (in thousands)(5)                                     |  |                                                                         | 1,727.05   |   |         |   | 1,857.05   |         |  |   | 1,857.05   |     |  |         | 1,549,692 |   |  |   | 1,549,692 |  
|Number of shares held as treasury stock (in thousands)                        |  |                                                                         | 7.15       |   |         |   | 68.99      |         |  |   | 7.90       | (6) |  |         |          |   |  |   |          |  
|Per share data(7):                                                            |  |                                                                         |            |   |         |   |            |         |  |   |            |     |  |         |           |   |  |   |           |  
|Net income  basic                                                            |  | ¥                                                                       | 52,531     |   |         | ¥ | 56,457     |         |  | ¥ | 203,558    |     |  | ¥       | 103,709   |   |  | ¥ | 57,221    |  
|Net income  diluted                                                          |  | ¥                                                                       | 51,855     |   |         | ¥ | 56,457     |         |  | ¥ | 203,558    |     |  | ¥       | 103,709   |   |  | ¥ | 57,221    |  
|Cash dividends declared(8)                                                    |  | ¥                                                                       | 11,000     |   |         | ¥ | 11,000     |         |  | ¥ | 10,000     |     |  | ¥       | 8,500     |   |  | ¥ | 8,500     |  
|                                                                              |  | $                                                                       | 99.76      |   |         | $ | 100.52     |         |  | $ | 83.42      |     |  | $       | 70.92     |   |  | $ | 68.15     |  
|Key ratios(9):                                                                |  |                                                                         |            |   |         |   |            |         |  |   |            |     |  |         |           |   |  |   |           |  
|Net loss ratio                                                                |  |                                                                         | 66.6       | % |         |   | 56.4       | %       |  |   | 54.2       | %   |  |         | 54.9      | % |  |   | 59.5      | %
|Combined loss and expense ratios                                              |  |                                                                         | 103.1      | % |         |   | 92.6       | %       |  |   | 91.7       | %   |  |         | 94.3      | % |  |   | 99.8      | %

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|(1) | Our U.S. GAAP consolidated financial statements for the fiscal years ended March 31, 2005, 2004 and 2003, from which some of the data in this table are derived,
reflect the inclusion in those financial statements of the results of operations and financial position of Nichido Fire and its consolidated subsidiaries from and after the date of our formation on April 2, 2002. Consistent with U.S. GAAP and with
Exchange Act requirements regarding the presentation of our financial statements, our U.S. GAAP consolidated financial statements for the fiscal years ended March 31, 2002 and 2001 have not been restated to include the results of operations and
financial position of Nichido Fire and its consolidated subsidiaries
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | for such fiscal years. Accordingly, the amounts shown in this table for the fiscal years ended March 31, 2005, 2004 and 2003 are not directly comparable to
the amounts shown for prior fiscal years. See Managements Discussion and Analysis of Financial Condition and Results of Operations  Business Combination.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Certain amounts in our U.S. GAAP consolidated financial statements for the fiscal years ended March 31, 2004 and 2003 have been reclassified to conform to the new classifications
adopted during the fiscal year ended March 31, 2005. Corresponding amounts in our U.S. GAAP consolidated financial statements for the fiscal years ended March 31, 2002 and 2001 have not been similarly reclassified as they were not significant for
such fiscal years. Accordingly, such reclassified amounts shown in this table for the fiscal years ended March 31, 2005, 2004 and 2003 are not directly comparable to the amounts shown for prior fiscal years.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Extraordinary items for the fiscal year ended March 31, 2003 represent unallocated negative goodwill arising from the business combination with Nichido Fire. See
Managements Discussion and Analysis of Financial Condition and Results of Operations  Business Combination. Extraordinary items for the fiscal year ended March 31, 2005 represent unallocated negative goodwill arising from the
business combination with Nisshin Fire. See Managements Discussion and Analysis of Financial Condition and Results of Operations  Business Alliance.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | In accordance with the adoption of Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, we
recognized Cumulative effect of accounting changes, net of tax for the fiscal year ended March 31, 2002. In accordance with the adoption of Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain
Nontraditional Long-Duration Contracts and for Separate Accounts issued by the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants, we recognized Cumulative effect of accounting changes, net
of tax for the fiscal year ended March 31, 2005.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | In connection with our formation on April 2, 2002, each 1,000 shares of Tokio Marine common stock were exchanged for one share of our common stock. See Business  Group
Overview  Formation of Millea Holdings.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | Includes shares held by our subsidiaries as of March 31, 2003.
|--- | --------------------------------------------------------------

|(7) | To facilitate comparability of the per share data from year to year after the share exchange in connection with our formation, the per share data for the fiscal years ended March
31, 2005, 2004 and 2003 are calculated based on 1.00 of our shares, while the per share data for the fiscal years ended March 31, 2002 and 2001 are calculated based on 1,000 of Tokio Marines shares. The per share data are calculated using the
weighted average number of shares outstanding for the period.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | The U.S. dollar amounts represent translations of the Japanese yen amounts at the noon buying rates for Japanese yen per $1.00 in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of New York in effect on the respective dividend payment dates.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | The key ratios relate to property and casualty insurance only. The net loss ratio is calculated by dividing losses incurred by premiums earned. The combined ratio is the sum of the
ratio of loss and loss adjustment expenses incurred to premiums earned and the ratio of underwriting and administrative expenses incurred to premiums written. A combined ratio under 100% represents an underwriting profit and over 100% represents an
underwriting loss.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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RISK FACTORS



If you own our
securities, you should carefully consider the risks described below. Our business, operating results and financial condition could be materially adversely affected by any of these risks.



In addition, this annual report contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks described below and elsewhere in this annual report.



Risks Relating to Our Business



If economic conditions in Japan do not improve, our financial condition and results of
operations may be adversely affected.



We derive most of
our insurance underwriting revenues from Japan. In addition, a substantial majority of the investments in our investment portfolio are invested in Japanese equity securities, bonds and loans. Accordingly, our financial condition and results of
operations are very dependent on economic conditions in Japan.



The Japanese economy experienced a significant downturn in the early 1990s and the Nikkei Stock Average, which is one of the major benchmarks for equity prices in Japan, reached its lowest level in twenty years in April 2003. While economic
conditions improved in the fiscal years ended March 31, 2004 and 2005 and equity prices have risen since late April 2003, there continues to be uncertainty surrounding the Japanese economic environment.



Despite the Japanese governments announced plans to implement fiscal
recovery programs and other measures aimed at improving the economy, the current economic climate in Japan may not improve significantly in the near future. Any weakness in the Japanese economy, including but not limited to any economic weakness
that may result from current or future high oil prices, could have a significant impact on our financial condition and results of operations.



A decline in the Japanese stock market, and other economic factors, may adversely affect our results of operations and financial condition.



We invest our policyholders premiums in a portfolio of assets,
including Japanese stocks. As of March 31, 2005, equity securities available for sale represented approximately 35.4% of the value of our total investments other than investments in related parties. The market values of these equity securities are
inherently volatile. We intend to hold our equity investments for the long term, but we may incur losses on our equity securities portfolio if the Japanese stock market again experiences declines or if other economic factors cause the value of our
equity securities to decline. A significant decrease in the market value of these equity securities could have a negative impact on our financial condition and results of operations.



Fluctuations in interest rates may adversely affect our results of operations.



We are subject to interest rate risk due to our investments in fixed income
instruments and derivatives as well as deposit-type insurance and long-term insurance liabilities. As of March 31, 2005, fixed income instruments represented approximately 49.6% of the value of our total investments other than investments in related
parties. An increase in interest rates decreases the value of our fixed income portfolio and thereby adversely affects our financial condition. An increase in interest rates also decreases the value of our interest rate derivatives positions and
thereby adversely affects our results of operations.



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However, even though the current value of our fixed income portfolios and derivatives positions would
decrease with an increase in interest rates, such decrease would be expected to be more than offset by a decrease in the value of our deposit-type insurance and long-term insurance liabilities. On the other hand, a decrease in interest rates may
adversely affect our financial position because the amount of increase in the current value of our liabilities would be expected to exceed the amount of increase in the current value of our fixed income portfolio and derivatives positions.



Despite our hedging and other risk management activities to
limit our exposure to changes in interest rates, we still maintain exposure to interest rate risk. See Managements Discussion and Analysis of Financial Condition and Result of Operations  Quantitative and Qualitative Disclosures
about Market Risk.



Defaults in our fixed income and loan portfolios
may adversely affect our results of operations and financial condition.



Issuers of fixed income instruments and loan borrowers have defaulted and may continue to default on principal and interest payments with respect to fixed income instruments and loans we hold. Economic sluggishness, a
decline of equity market prices or real estate prices in Japan, an increase in the number of insolvency procedures in Japan or a combination of these events or other factors may increase defaults by issuers or borrowers. A continuation of, or an
increase in, defaults may require us to record losses on our fixed income and loan portfolios and may adversely affect our results of operations and financial condition.



Our foreign assets and liabilities are exposed to foreign currency fluctuations.



We are holding assets and liabilities denominated in foreign currencies such
as the U.S. dollar, the euro and the pound sterling. A decrease in the fair value of assets or an increase in the fair value of liabilities as a result of foreign currency fluctuations could adversely affect our financial position. Fluctuations in
foreign exchange rates also create foreign currency translation gains or losses.



Japan is prone to natural disasters that can result in substantial claims under non-life insurance policies.



Japan is subject to earthquakes, typhoons, windstorms, volcanic eruptions and other types of natural disasters, the frequency and severity of which are
inherently unpredictable. Over the past several years, changing weather patterns and climatic conditions such as global warming have added to the unpredictability and frequency of natural disasters in certain parts of the world and created
additional uncertainty as to future trends and exposures. During the fiscal year ended March 31, 2005, Japan experienced more severe typhoons in significantly higher number than in previous years. As a result, in the fiscal year ended March 31,
2005, we recorded typhoon and other natural disaster-related insurance claims (including fire and automobile) in the amount of ¥148.0 billion, which was the highest amount of such insurance claims we have recorded since the fiscal year ended
March 31, 1992. These natural disasters can have a serious impact on property and casualty insurers, depending on the frequency, nature and scope of the disaster, the amount of insurance coverage that the insurer has written in respect of the
disaster, the amount of claims for losses, the timing of claims and the extent to which the insurers liability is covered by reinsurance. In order to mitigate the effect of disasters, we set our premium rates at levels which we believe are
adequate to accommodate the effect of disasters and cede certain of the relevant risks to reinsurers under reinsurance policies. However, the occurrence of a natural disaster the severity of which we did not predict, or for which we did not
adequately reinsure, could significantly affect our financial position and results of operations. In addition, as a result of frequent occurrences of typhoons, we may be required to significantly increase our loss reserves relating to natural
disaster-related insurance claims in the future, which could have a material adverse effect on our results of operations and financial condition.



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We may be required to augment our reserves in case of unforeseen losses.



The insurance business is unlike manufacturing and most other businesses in
that, at the time of a sale, when the insurance policy is written and the premium is paid, the cost of sale or the payment of a claim for a loss under the insurance policy is not yet conclusively determined. Losses may occur
whose type or magnitude was not foreseen by the insurance company or the insurance industry generally at the time the insurance policies were written. If this type of deficiency arises with respect to our insurance liability reserves, we would have
to augment our reserves or otherwise incur a charge to earnings, which in turn could have a material adverse effect on our results of operations. Historically, Japanese insurance companies have not experienced these unforeseen losses, unlike
insurance companies in some other countries. For example, the U.S. insurance industry experienced significant losses with respect to unexpected claims resulting from the harmful effects of asbestos use. Our loss reserves could substantially increase
if similar claims are made against our insurance policies for risks which we did not anticipate.



Disasters such as typhoons and earthquakes that affect broad areas could result in an unexpected increase of claims for loss under insurance policies and
increase our demand for liquidity. As a result, we may be forced to raise capital at a higher interest rate or sell assets at a lower price than we otherwise would, which could adversely affect our financial condition.



Our financial results may be materially adversely affected by unpredictable events.



Our business, results of operations and financial
condition may be materially adversely affected by unpredictable events and their continuous effects. Unpredictable events include single or multiple man-made or natural events that, among other things, cause unexpectedly large market price
movements, increases in claims or deterioration of economic conditions of certain countries or regions, such as the terrorist attack on the United States on September 11, 2001 or the outbreak of Severe Acute Respiratory Syndrome, or SARS, in Asia in
2003.



We are subject to risks associated with reinsurance.



Like many other non-life insurance companies, Tokio Marine & Nichido
uses reinsurance to provide greater capacity to write larger policies and to control its exposure to extraordinary losses or catastrophes. Reinsurance is a form of insurance that insurance companies buy for their own protection. An insurance
company, referred to as a reinsured, reduces its possible maximum loss on risks by giving, or ceding, a portion of its liability to another insurance company, referred to as a reinsurer. Reinsurance is subject to prevailing market conditions, both
in terms of price, which could affect our profitability, and in terms of availability, which could affect our ability to offer insurance. In addition, we are subject to credit risk with respect to our ability to recover amounts due from our
reinsurers, as the ceding of reinsurance does not relieve us of our liability as the direct insurer to policyholders.



Deregulation, consolidation and the entry of new competitors has intensified competition in the Japanese insurance industry.



Japans current Insurance Business Law was adopted in May 1995 and
enacted in April 1996. The changes from the old Insurance Business Law include provisions designed to deregulate and increase competition in the life and non-life insurance businesses in Japan, including a provision permitting life insurance
companies and non-life insurance companies to enter each others business through subsidiaries. In January 2001, the entry of life and non-life insurance companies through subsidiaries into the third sector insurance business, such
as personal accident, sickness and nursing-care insurance, was fully allowed. Further deregulation in July 2001 allowed life and non-life insurance companies to enter the third sector insurance business directly. Also, an amendment to
the Law Concerning the Non-Life Insurance Rating Organization in 1998 has intensified competition in the non-life insurance industry in Japan by allowing companies to set their own premium rates. These measures are expected to further increase
competition.



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This liberalization has also resulted in increased consolidation among non-life insurance companies and
the formation of business alliances among non-life and life insurance companies. We compete with such alliances on the basis of products and services. See Business  Competition.



In addition, we face intensified competition in premium rates resulting from
the entry into the Japanese insurance market by foreign insurance companies with global operations and by companies that have traditionally been engaged in non-insurance business activities.



We may not succeed in executing our growth strategies outside of Japan.



To date, we have derived most of our insurance underwriting revenues from
Japan. However, our strategy includes expanding our businesses in markets outside of Japan, in particular by targeting non-Japanese customers in local Asian insurance markets.



Each of the following additional factors, among others, could affect our future international operations:



| |  |  | The impact of economic slowdown or currency crises in economies outside Japan, such as those experienced by many southeast Asian countries in the late 1990s;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 system or rate of taxation;
| | - |  | ----------------------------------------------



| |  |  | Social, political and economic risks; and
| | - |  | -----------------------------------------



| |  |  | Natural disasters.
| | - |  | ------------------



These and other factors could adversely affect our business, financial condition and results of operations.



We may not succeed in executing our growth strategies in other businesses.



As part of our growth strategy, we intend to expand our domestic life
insurance business as one of our core businesses. We also intend to develop other businesses, such as asset management, health care and senior citizen related businesses. We may not succeed in competing in these competitive markets, particularly
against companies with well-established operations. In addition, we may be required to make significant investments, and devote substantial management and other resources, in order to expand these businesses. If we are unable to compete successfully
in these businesses, our results of operations and financial condition may be adversely affected.



A downgrade in the financial strength ratings of our operating subsidiaries could limit our ability to market products, increase the number of policies being surrendered and hurt our relationships with customers
and trading counterparties.



Financial strength ratings,
which are intended to measure an insurers ability to meet policyholder obligations, are an important factor affecting public confidence in most of our products and, as a result, our competitiveness. A downgrade, or potential downgrade, of the
financial strength ratings of our operating subsidiaries, including Tokio Marine & Nichido, Tokio Marine & Nichido Life and Tokio Marine & Nichido Financial Life, may limit our ability to sell our insurance and annuity products,
adversely affect our reinsurance business and adversely affect the terms and conditions of the business we conduct with trading counterparties.



Business interruptions, human factors or external events may adversely affect our financial results.



Operational risk is inherent in our business and can manifest itself in various ways, including business interruptions,
regulatory breaches, human errors, employee misconduct and external fraud. These events can



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potentially result in financial loss or harm to our reputation, or otherwise hinder our operational effectiveness. Our management attempts to control this
risk and keep operational risk at appropriate levels. Notwithstanding these control measures, operational risk is part of the business environment in which we operate and we may incur losses from time to time due to operational risk.



System failures may adversely affect our reputation, operations and financial condition.



System failure risk is inherent in our operations, which
rely heavily on computer and other information systems. System failures due to unexpected events, the wrongful use of these systems due to deficient or defective security measures or failures due to deficient or defective development or operation of
information systems could result in adverse effects on our operations, increased direct or indirect costs due to recovery operations as well as impaired reputation and credibility due to press coverage of such failures. We seek to manage and
minimize our system failure risk and have implemented a contingency plan that would allow us to continue our operations in the event of a system failure. However, if such risk management or contingency plan is deficient or ineffective, our
operations and financial condition could be materially adversely affected.



Unauthorized disclosure of personal information held by us may adversely affect our business.



We keep and manage personal information obtained from customers in relation to our insurance business. In recent years, there have been many cases of
personal information and records in the possession of corporations and institutions being improperly accessed or disclosed. The standards relating to protection of personal information that apply to us have become more stringent under the Law
Concerning Protection of Personal Information and rules, regulations and guidelines relating thereto. The provisions of this law applicable to us became effective on April 1, 2005. Although we exercise care in protecting the confidentiality of
personal information and take steps to ensure security of such information, if any material unauthorized disclosure of personal information does occur, our credibility and brand image may suffer. In addition, we may have to provide compensation for
economic loss arising out of a failure to protect such information, thereby materially adversely affecting our results of operations and financial condition.



Changes in existing, or new, Japanese regulations may materially impact our business, results of operations and financial condition.



Our insurance business is subject to detailed, comprehensive regulation and
supervision in Japan. Changes in existing, or new, insurance laws and regulations are unpredictable and beyond our control and may affect the way we conduct our business and the products we may offer in Japan. These changes in existing or new
insurance laws and regulations may be more restrictive or may result in higher costs than current requirements.



If the actual experience on our products differs from managements estimates, our business, results of operations and financial condition could be materially
adversely affected.



The determination of liabilities and
premiums for our property and casualty insurance, life insurance and annuity businesses is based on models which involve numerous assumptions and subjective judgments. There can be no assurance that ultimate actual experience on these products will
not differ from managements estimates. In particular, experience on automobile insurance which could require large insurance payments, fire insurance that covers losses arising from natural disasters, third-sector insurance with lifetime-long
contractual periods and variable annuities that are affected by fluctuations of stock prices are inherently difficult to estimate. If the actual experience differs from managements estimates, our business, results of operations and financial
condition could be materially adversely affected.



Litigation and regulatory
investigations may adversely affect our financial results.



We face risks of litigation and regulatory investigation and actions in connection with our operations. Lawsuits, including regulatory actions, may seek recovery of very large, indeterminate amounts or limit our



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operations, and their existence and magnitude may remain unknown for substantial periods of time. A substantial legal liability or a significant regulatory
action could have a material adverse effect on our business, results of operations and financial condition.



In May 2005, one of Tokio Marine & Nichidos U.S. subsidiaries received subpoenas from the United States Attorneys Office for the Southern
District of New York and the United States Securities and Exchange Commission, or the SEC, requesting documents relating to certain types of reinsurance transactions, in connection with what we believe are investigations involving a number of
industry participants. We are actively cooperating with the relevant authorities with respect to these matters. At this time we are unable to predict the potential effects, if any, that these investigations may have upon us, the reinsurance markets
and industry business practices. Any of the foregoing could have a material effect on our business, results of operations and financial condition relating to our reinsurance activities.



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.



We are a joint stock corporation organized under the laws of Japan. All of
our directors, executive officers and corporate auditors reside outside of the United States. Many of our and their assets are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to effect
service of process within the United States upon us or these persons or to enforce against us or these persons judgments obtained in the U.S. courts predicated upon the civil liability provisions of the federal securities laws of the United States.
We believe that there is doubt as to the enforceability in Japan, in original actions or in actions to enforce judgments of U.S. courts, of liabilities predicated solely upon the federal securities laws of the United States.



Since we are 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.



As a holding company, our ability to pay operating and financing expenses and dividends depends primarily on the receipt of
sufficient funds from our principal operating subsidiaries. Statutory provisions regulate our operating subsidiaries ability to pay dividends. If our operating subsidiaries are unable to pay dividends to us in a timely manner and in amounts
sufficient to pay our operating and financing expenses to declare and pay dividends and to meet our other obligations, we may not be able to pay dividends or we may need to seek other sources of liquidity.



Under the Commercial Code of Japan, or the Commercial Code, we cannot declare
or pay dividends unless we meet specified financial criteria on a parent-only basis. Generally, we will be permitted to pay dividends only if we have retained earnings on a non-consolidated balance sheet basis as of the end of the
preceding fiscal year (determined in accordance with Japanese GAAP).



Risks Relating to Owning Our American Depositary Shares



Foreign exchange rate fluctuations may affect the U.S. dollar value of our American depositary shares and dividends payable to holders of our American depositary shares.



Market prices for our American depositary shares may fall if the value of the yen declines against the U.S. dollar. In
addition, the U.S. dollar amount of cash dividends and other cash payments made to holders of our American depositary shares would be reduced if the value of the yen declines against the U.S. dollar.



11



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A holder of American depositary shares has fewer rights than a shareholder and must act through the depositary to
exercise those rights.



The rights of shareholders under
Japanese law to take various actions, including voting their shares, receiving dividends and distributions, bringing derivative actions, examining a companys accounting books and records, and exercising dissenters rights, are available
only to holders of record on a companys register of shareholders. Because the depositary, through its custodian agent, is the registered holder of the shares represented by our American depositary shares, only the depositary is able to
exercise those rights in connection with the deposited shares. The depositary will make efforts to vote the shares represented by our American depositary shares as instructed by the holders of those American depositary shares and will pay to those
holders the dividends and distributions collected from us. However, a holder of American depositary shares will not be able directly to bring a derivative action, examine our accounting books and exercise dissenters rights through the
depositary unless the depositary specifically undertakes to exercise those rights and is indemnified to its satisfaction by the holder of American depositary shares for doing so.



There are restrictions on the withdrawal of certificated shares from our depositary receipts facility.



Each of our American depositary shares represents the right to receive .005
of one share of our common stock. Although we maintain a book-entry fractional share register, a holder of American depositary shares must surrender for cancellation depositary receipts evidencing 200 American depositary shares or any integral
multiple thereof in order to withdraw whole shares of our common stock in certificated form. Each depositary receipt evidencing our American depositary shares bears a legend to that effect. In addition, although we have implemented procedures to
permit us to repurchase fractional share interests, holders of American depositary shares receiving fractional shares of our common stock will need to combine those interests in order to trade whole shares of our common stock on the Tokyo Stock
Exchange or the Osaka Securities Exchange.



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EXCHANGE RATES



Fluctuations in
exchange rates between the Japanese yen and the U.S. dollar and other currencies affect the U.S. dollar and other currency equivalents of the yen price of our shares. These fluctuations also affect the U.S. dollar amounts received on conversion of
any cash dividends. The following table shows noon buying rates for Japanese yen per $1.00 in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York for each period
indicated:



|                     |  |            |       
|-------------------- |  | ---------- | ------
|                     |  | Average(1)
|Year ended March 31: |  |            |       
|2001                 |  | ¥          | 111.65
|2002                 |  |            | 125.64
|2003                 |  |            | 121.10
|2004                 |  |            | 112.75
|2005                 |  |            | 107.28



|                                      |  |      |        |     |   |       
|------------------------------------- |  | ---- | ------ | --- | - | ------
|                                      |  | High |        | Low
|Month:                                |  |      |        |     |   |       
|March 2005                            |  | ¥    | 103.87 |     | ¥ | 107.49
|April 2005                            |  |      | 104.64 |     |   | 108.67
|May 2005                              |  |      | 104.41 |     |   | 108.17
|June 2005                             |  |      | 106.64 |     |   | 110.91
|July 2005                             |  |      | 110.47 |     |   | 113.42
|August 2005                           |  |      | 109.37 |     |   | 112.12
|September (through September 15) 2005 |  |      | 109.66 |     |   | 110.85

---

|(1) | Average rate for each fiscal year is calculated by using the average of the exchange rates on the last day of each month during that year.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------



The noon buying rate for Japanese yen on September 15, 2005 was $1.00 =
¥110.48.



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MARKET PRICE INFORMATION



Our
common stock is listed in Japan on the First Section of Tokyo Stock Exchange, Inc., or the Tokyo Stock Exchange, and on the First Section of Osaka Securities Exchange Co., Ltd., or the Osaka Securities Exchange. Trading of our shares on these
exchanges began on April 1, 2002.



American depositary shares,
or ADSs, representing shares of our common stock are currently traded in the United States on the Nasdaq National Market under the symbol MLEA. Trading of our ADSs on the Nasdaq National Market commenced on April 2, 2002. Each ADS
represents .005 of one share of our common stock. As of March 31, 2005, outstanding ADSs represented 5.3% of our outstanding shares.



The following table sets forth, for the periods indicated, the reported high and low sales price per share of our common stock on the First Section of the
Tokyo Stock Exchange, as well as the high and low sales price per ADS quoted on the Nasdaq National Market. The table also includes high and low market price quotations from the Tokyo Stock Exchange, translated in each case into U.S. dollars per ADS
at the Federal Reserve Bank of New Yorks noon buying rate on the relevant date.



|                                      |  |                                             |           |                                        |   |                                            |  |     |       |      |   |       |  |   |       |  |   |      
|------------------------------------- |  | ------------------------------------------- | --------- | -------------------------------------- | - | ------------------------------------------ |  | --- | ----- | ---- | - | ----- |  | - | ----- |  | - | -----
|                                      |  | Price per share on the Tokyo Stock Exchange |           | Translated into U.S.dollars per ADS(1) |   | Price per ADS on theNasdaq National Market
|                                      |  | High                                        |           | Low                                    |   | High                                       |  | Low |       | High |   | Low  
|                                      |  | (yen)                                       |           | (US$)                                  |   | (US$)                                     
|Year ended March 31, 2003             |  | ¥                                           | 1,140,000 |                                        | ¥ | 706,000                                    |  | $   | 45.71 |      | $ | 30.15 |  | $ | 44.50 |  | $ | 29.76
|Year ended March 31, 2004             |  |                                             | 1,710,000 |                                        |   | 725,000                                    |  |     | 81.03 |      |   | 30.66 |  |   | 80.05 |  |   | 30.75
|First fiscal quarter                  |  |                                             | 943,000   |                                        |   | 725,000                                    |  |     | 40.11 |      |   | 30.66 |  |   | 39.93 |  |   | 30.75
|Second fiscal quarter                 |  |                                             | 1,440,000 |                                        |   | 924,000                                    |  |     | 62.07 |      |   | 38.68 |  |   | 62.00 |  |   | 39.60
|Third fiscal quarter                  |  |                                             | 1,490,000 |                                        |   | 1,160,000                                  |  |     | 68.17 |      |   | 53.18 |  |   | 67.40 |  |   | 54.04
|Fourth fiscal quarter                 |  |                                             | 1,710,000 |                                        |   | 1,290,000                                  |  |     | 81.03 |      |   | 61.08 |  |   | 80.05 |  |   | 60.78
|Year ended March 31, 2005             |  |                                             |           |                                        |   |                                            |  |     |       |      |   |       |  |   |       |  |   |      
|First fiscal quarter                  |  |                                             | 1,730,000 |                                        |   | 1,280,000                                  |  |     | 82.74 |      |   | 56.09 |  |   | 83.00 |  |   | 55.81
|Second fiscal quarter                 |  |                                             | 1,690,000 |                                        |   | 1,360,000                                  |  |     | 76.75 |      |   | 61.42 |  |   | 77.01 |  |   | 62.10
|Third fiscal quarter                  |  |                                             | 1,610,000 |                                        |   | 1,320,000                                  |  |     | 76.41 |      |   | 61.91 |  |   | 76.32 |  |   | 63.16
|Fourth fiscal quarter                 |  |                                             | 1,670,000 |                                        |   | 1,430,000                                  |  |     | 79.53 |      |   | 69.05 |  |   | 80.07 |  |   | 68.53
|Year ending March 31, 2006            |  |                                             |           |                                        |   |                                            |  |     |       |      |   |       |  |   |       |  |   |      
|First fiscal quarter                  |  |                                             | 1,650,000 |                                        |   | 1,380,000                                  |  |     | 76.21 |      |   | 63.98 |  |   | 76.32 |  |   | 64.70
|Month                                 |  |                                             |           |                                        |   |                                            |  |     |       |      |   |       |  |   |       |  |   |      
|March 2005                            |  |                                             | 1,670,000 |                                        |   | 1,500,000                                  |  |     | 79.53 |      |   | 71.76 |  |   | 80.07 |  |   | 71.57
|April 2005                            |  |                                             | 1,650,000 |                                        |   | 1,420,000                                  |  |     | 76.21 |      |   | 67.00 |  |   | 76.32 |  |   | 66.88
|May 2005                              |  |                                             | 1,490,000 |                                        |   | 1,410,000                                  |  |     | 71.00 |      |   | 67.10 |  |   | 71.00 |  |   | 66.10
|June 2005                             |  |                                             | 1,520,000 |                                        |   | 1,380,000                                  |  |     | 68.92 |      |   | 63.98 |  |   | 69.09 |  |   | 64.70
|July 2005                             |  |                                             | 1,510,000 |                                        |   | 1,450,000                                  |  |     | 67.60 |      |   | 64.69 |  |   | 67.99 |  |   | 64.41
|August 2005                           |  |                                             | 1,700,000 |                                        |   | 1,470,000                                  |  |     | 77.39 |      |   | 65.55 |  |   | 76.94 |  |   | 65.49
|September (through September 15) 2005 |  |                                             | 1,700,000 |                                        |   | 1,550,000                                  |  |     | 76.68 |      |   | 70.65 |  |   | 77.30 |  |   | 70.92

---

|(1) | U.S. dollar amounts have been translated from yen at the Federal Reserve Bank of New Yorks noon-buying rate as of the relevant high and low quotation date or the last
available date prior thereto.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The closing price
of our shares of common stock on the Tokyo Stock Exchange as of September 15, 2005 was ¥1,690,000.



The above prices for our ADSs are based on inter-dealer prices reported by Nasdaq and do not include retail mark-ups, retail mark-downs or commissions.



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DIVIDEND POLICY



In June 2005, we
declared cash dividends on shares of our common stock in the amount of ¥11,000 per share and paid ¥18,919 million in respect of the fiscal year ended March 31, 2005. In June 2004, we declared cash dividends on shares of our common stock in
the amount of ¥11,000 per share and paid ¥19,668 million in respect of the fiscal year ended March 31, 2004. In June 2003, we declared cash dividends on shares of our common stock in the amount of ¥10,000 per share and paid ¥18,491
million (excluding the amount of dividends for shares held by a subsidiary) in respect of the fiscal year ended March 31, 2003.



As a holding company, our ability to pay dividends in the future will depend primarily on our receipt of sufficient funds from our principal operating
subsidiaries. In addition, under the Commercial Code, we cannot declare or pay dividends unless we meet specified financial criteria on a parent-only basis. Generally, we will be permitted to pay dividends only if we have retained
earnings on a non-consolidated balance sheet basis as of the end of the preceding fiscal year (determined in accordance with Japanese GAAP). See Risk Factors  Risks Relating to Our Business and Description of Common Stock
 Dividends.



When apportioning profits in
respect of any given fiscal year, we expect to pay stable dividends on our common stock, subject to having retained earnings and to providing sufficient capital to meet our business needs.



MAJOR SHAREHOLDERS



Our ten
largest shareholders of record as of March 31, 2005, expressed as a percentage of the total number of our shares then outstanding, were as follows:



|                                                     |  |                           |  |                                         |  
|---------------------------------------------------- |  | ------------------------- |  | --------------------------------------- | -
|Shareholder                                          |  | Number ofwhole sharesheld |  | Percentage oftotal sharesoutstanding(1) |  
|The Master Trust Bank of Japan, Ltd. (Trust Account) |  | 121,436                   |  | 7.1                                     | %
|Japan Trustee Services Bank, Ltd. (Trust Account)    |  | 95,724                    |  | 5.6                                     | %
|Moxley & Co.(2)                                      |  | 91,765                    |  | 5.3                                     | %
|State Street Bank and Trust Company 505103           |  | 48,956                    |  | 2.8                                     | %
|The Bank of Tokyo-Mitsubishi, Ltd.                   |  | 39,239                    |  | 2.3                                     | %
|Meiji Yasuda Life Insurance Company                  |  | 39,187                    |  | 2.3                                     | %
|State Street Bank and Trust Company                  |  | 36,331                    |  | 2.1                                     | %
|The Chase Manhattan Bank N.A. London                 |  | 30,818                    |  | 1.8                                     | %
|Trust & Custody Services Bank, Ltd.(3)               |  | 28,148                    |  | 1.6                                     | %
|Mizuho Corporate Bank, Ltd.                          |  | 27,045                    |  | 1.6                                     | %
|                                                     |  |                           |  |                                         |  
|Total                                                |  | 558,649                   |  | 32.5                                    | %
|                                                     |  |                           |  |                                         |  

---

|(1) | The number of total shares outstanding equals the number of total issued shares minus the number of treasury shares. As of March 31, 2005, there were 1,719,899 shares of our common
stock outstanding.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Moxley & Co. is the corporate nominee holder of common stock deposited for the issuance of ADSs.
|--- | ------------------------------------------------------------------------------------------------

|(3) | As trustee for Mizuho Trust Retirement Benefits Trust Account for Mitsubishi Heavy Industries, Ltd.
|--- | ---------------------------------------------------------------------------------------------------



None of our shareholders listed above has voting rights that are different from voting rights of our other shareholders.



As of March 31, 2005, we had 92,695 shareholders of record, of
which 92,065 were Japanese record holders. As of the same date, 63.3% of our outstanding shares were owned by Japanese record holders.



We are not aware of any arrangements that may result in a change of control of us.



The identities of shareholders in companies listed on a Japanese stock exchange, as well as their shareholdings, must be
publicly reported in Japan under the following circumstances:



| |  |  | Reporting by Shareholders. As explained in Regulation  Reporting of Substantial Shareholdings, any person who becomes a beneficial owner of
more than 5% of the total issued
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

| | shares of a company listed on a Japanese stock exchange must file a public report concerning their shareholdings with the related local finance bureau.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We received copies of reports filed on May 14, 2004 with the Kanto Finance Bureau by Mitsubishi Tokyo Financial Group, Inc. on behalf of The Bank of Tokyo Mitsubishi, Ltd., The
Mitsubishi Trust and Banking Corporation, Mitsubishi Securities Co., Ltd., Tokyo-Mitsubishi International plc, Mitsubishi Trust Asset Management Co., Ltd. and Tokyo-Mitsubishi Asset Management Co., Ltd. indicating that these entities beneficially
owned an aggregate of 110,480 shares as of April 30, 2004, representing 5.95% of the total issued shares. Such shares represented 6.20% of the total shares outstanding as of April 30, 2004.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Subsequently, we received copies of reports filed on February 15, 2005 with
the Kanto Finance Bureau by Mitsubishi Tokyo Financial Group, Inc. on behalf of The Bank of Tokyo Mitsubishi, Ltd., The Mitsubishi Trust and Banking Corporation, Mitsubishi Securities Co., Ltd., Mitsubishi Securities International plc, and
Tokyo-Mitsubishi Asset Management Co., Ltd. indicating that these entities beneficially owned an aggregate of 107,801 shares of common stock as of January 30, 2005, representing 6.03% of the total issued shares. Such shares represented 6.24% of the
total shares outstanding as of January 30, 2005.



We also
received copies of reports filed on May 13, 2005 with the Kanto Finance Bureau by Mitsubishi Tokyo Financial Group, Inc. on behalf of The Bank of Tokyo Mitsubishi, Ltd., The Mitsubishi Trust and Banking Corporation, Mitsubishi Securities Co., Ltd.,
Mitsubishi Securities International plc, and Mitsubishi Asset Management Co., Ltd. indicating that these entities beneficially owned an aggregate of 75,263 shares of common stock as of April 30, 2005, representing 4.36% of the total issued shares.
Such shares represented 4.39% of the total shares outstanding as of April 30, 2005.



| |  |  | We received copies of reports filed on July 15, 2004 with the Kanto Finance Bureau by Barclays Global Investors Japan Trust & Banking Co., Ltd., Barclays Global Investors Japan
Limited, Barclays Global Investors, N.A., Barclays Global Fund Advisors, Barclays Global Investors Limited, Barclays Global Investors Australia Limited, Barclays Life Assurance Company Limited and Barclays Capital Securities Limited indicating that
these entities beneficially owned an aggregate of 107,802 shares as of June 30, 2004, representing 5.81% of the total issued shares. Such shares represented 6.07% of the total shares outstanding as of June 30, 2004.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Subsequently, we received copies of reports filed on September 14, 2005
with the Kanto Finance Bureau by Barclays Global Investors Japan Trust & Banking Co., Ltd., Barclays Global Investors Japan Limited, Barclays Global Investors, N.A., Barclays Global Fund Advisors, Barclays Global Investors Australia Limited,
Barclays Global Investors Limited, Barclays Life Assurance Company Limited, Barclays Capital Securities Limited and Barclays Capital Inc. indicating that these entities beneficially owned an aggregate of 43,273 shares as of June 30, 2005,
representing 2.51% of the total issued shares. Such shares represented 2.54% of the total shares outstanding as of August 31, 2005.



| |  |  | We received a copy of report filed on January 14, 2005 with the Kanto Finance Bureau by Brandes Investment Partners, LLC indicating that it beneficially owned an aggregate of 90,806
shares of common stock as of December 31, 2004, representing 5.08% of the total issued shares. Such shares represented 5.24% of the total shares outstanding as of December 31, 2004.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Subsequently, we received a copy of report filed on July 19, 2005 with the
Kanto Finance Bureau by Brandes Investment Partners, LLC that it beneficially owned an aggregate of 106,093 shares of common stock as of June 30, 2005, representing 6.14% of the total issued shares. Such shares represented 6.19% of the total shares
outstanding as of June 30, 2005.



| |  |  | Reporting by Listed Companies. Under the Japanese Securities and Exchange Law, any company whose shares are listed on a Japanese stock exchange must publicly report
information about its major shareholders. We are required to make this disclosure, which generally includes information about a companys ten largest shareholders of record, as of each March 31 and September 30.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

BUSINESS



Group Overview



We were formed on April 2, 2002 as the holding company, a joint stock
corporation (kabushiki kaisha) organized under the laws of Japan, for Tokio Marine and Nichido Fire. Since being formed, we have reorganized various subsidiaries of Tokio Marine and Nichido Fire, so that those subsidiaries are directly owned
by us. See  Subsidiaries and Affiliates.



In
October 2004, we merged our property and casualty insurance subsidiaries, Tokio Marine and Nichido Fire, and named the new entity Tokio Marine & Nichido. See  Recent Developments  Merger of Tokio Marine and Nichido
Fire.



Tokio Marine & Nichido, as the successor of
Tokio Marine and Nichido Fire, is the oldest and largest, in terms of net premiums written, property and casualty insurance company in Japan. It underwrites the full range of property and casualty insurance coverage available in Japan, including
voluntary automobile, compulsory automobile liability, fire and allied lines, personal accident, cargo and transit, and hull insurance. Tokio Marine & Nichido underwrites some lines of property and casualty insurance coverage overseas. It also
accepts and cedes reinsurance for certain lines of property and casualty insurance coverage.



Formation of Millea Holdings



We were formed as the holding company for Tokio Marine and Nichido Fire through a statutory share transfer that became effective on April 2, 2002. After the statutory share transfer became effective, former Tokio
Marine shareholders held approximately 83% of the outstanding shares of our common stock and former Nichido Fire shareholders held approximately 17%.



Recent Developments



Merger of Tokio Marine and Nichido Fire



On October 1, 2004, we completed the merger of Tokio Marine and Nichido Fire. The English-language name of the new combined entity is Tokio Marine
& Nichido Fire Insurance Co., Ltd. Tokio Marine was the surviving company. The objectives of the merger were to maximize our corporate value by creating synergies, promoting a growth strategy which combines the strengths of both companies
and increasing efficiency through a larger scale of business, and to further reduce costs. The primary business mission of Tokio Marine & Nichido is to provide customers with the highest quality products and services. In order to achieve this
objective, we established three in-house companies that focus on personal, commercial and automobile manufacturer/dealer insurance operations. We aim to enhance the expertise and flexibility in each sales channel and market through the in-house
company system and intend to thereby maximize the strength of each business. Based on this strategy, we intend to further increase customer satisfaction.



We completed the integration of operational procedures and information technology systems shortly after the merger, and Tokio Marine & Nichido has
since been operating as a fully integrated entity.



Tokio
Marine was originally founded in 1879. In 1944, it was consolidated with The Meiji Fire and Marine Insurance Company, Limited and The Mitsubishi Marine and Fire Insurance Company, Limited and was incorporated as a joint stock corporation under the
Commercial Code.



Nichido Fire was founded in 1914. Its
original core focus was to offer insurance coverage to individuals and households located in regional markets throughout Japan, primarily through its own direct marketing channels.



17



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##### Table of Contents

Acquisition of Real Seguros S.A. and investment in Real Vida e Previdencia S.A.



In July 2005, we acquired a 100% interest in Real Seguros S.A., primarily a
property and casualty insurer, and a 50% interest in Real Vida e Previdencia S.A., a life and pension insurer, both located in Brazil, from ABN AMRO Bank N.V. for approximately R$960 million (approximately ¥45.1 billion at the exchange rate on
July 7, 2005). As part of the transaction, Tokio Marine & Nichido expects to be able to market its insurance products through approximately 1,500 branches of Banco ABN AMRO Real S.A. and 6,500 insurance brokers.



Acquisition of Allianz President General Insurance Co., Ltd. and its
merger with Newa Insurance



In September 2004, Millea Asia
Ptd., Ltd., or Millea Asia, our directly held subsidiary, acquired the Taiwanese property and casualty insurance company Allianz President General Insurance Co., Ltd. This company merged with Newa Insurance Co., Ltd., a Taiwanese property and
casualty insurance affiliate of Millea Asia, on April 1, 2005 and the newly merged company operates under the name Tokio Marine Newa Insurance Co., Ltd., in which Millea Asia holds a 49% interest.



Acquisition of Skandia Life Insurance Company (Japan) Limited



On February 2, 2004, we acquired all outstanding shares
of Skandia Life Insurance Company (Japan) Limited, or Skandia Japan, for the aggregate purchase price of ¥20 billion from Skandia Insurance Company Ltd. (publ.). Skandia Japan was subsequently re-named Tokio Marine & Nichido Financial Life
Insurance Co., Ltd., or Tokio Marine & Nichido Financial Life. Tokio Marine & Nichido Financial Life is primarily engaged in the variable insurance businesses, including variable annuities and variable universal life insurance.



Cooperation with The Nisshin Fire and Marine Insurance Company, Limited



Pursuant to an agreement reached in March 2003, we have
entered into a strategic alliance with The Nisshin Fire and Marine Insurance Company, Limited, or Nisshin Fire. This alliance includes cooperation in marketing of Tokio Marine & Nichido Lifes products and joint proposals by Tokio Marine
& Nichido and Nisshin Fire to Nisshin Fires corporate clients and automobile dealer agents. We have acquired approximately 31% of the total outstanding shares of Nisshin Fire as of February 2005, and the two companies expanded their
cooperation to include, among others, sales by Nisshin Fire of Tokio Marine & Nichidos defined contribution pension products.



Objects and Purposes



Our objects and purposes, as stated in article 2 of our articles of incorporation, are to engage in the following businesses as an insurance holding
company:



| |  |  | Management of non-life insurance companies;
| | - |  | -------------------------------------------



| |  |  | Management of life insurance companies;
| | - |  | ---------------------------------------



| |  |  | Management of specialized securities companies;
| | - |  | -----------------------------------------------



| |  |  | Management of foreign companies engaged in the insurance business;
| | - |  | ------------------------------------------------------------------



| |  |  | Management of any other company which is or may become our subsidiary in accordance with the provisions of the Insurance Business Law of Japan; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Any other business pertaining to the foregoing listed businesses.
| | - |  | -----------------------------------------------------------------



Corporate Philosophy



In November 2003, we adopted as our corporate philosophy the following:



Millea Group Corporate Philosophy



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##### Table of Contents

The Millea Group is committed to the continuous enhancement of corporate value, with customer trust at
the base of all of its activities.



| |  |  | By providing customers with the highest quality products and services, we will spread safety and security to all around us.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------



| |  |  | For fulfilling our responsibility to shareholders, we will pursue global development of sound, growing and profitable businesses.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



| |  |  | For promoting the creativity of each and every employee, we will foster a corporate culture which encourages free and open communications.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | While demonstrating responsible management as a good corporate citizen, we will make a positive contribution to society.
| | - |  | -------------------------------------------------------------------------------------------------------------------------



In addition, our group companies have long dedicated themselves to providing
products and services designed to meet societys need for safety and security, and to corporate social responsibility, or CSR, activities such as environmental conservation and philanthropic activities. In November 2004, we
established the Millea Group CSR Charter as a common guideline for our group companies CSR activities.



Principal Executive Offices



Our principal executive offices are located at Tokyo Kaijo Nichido Building Shinkan, 2-1 Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan, and our telephone number is 81-3-6212-3333.



Business Goals and Strategies



In November 2003, we announced our current medium- and long-term business
strategy. By implementing our strategy for each of our property and casualty insurance, life insurance and other business segments, we aim to create the optimum business portfolio and to maximize our corporate value.



Domestic Property and Casualty Insurance Business



Our principal revenue base is our domestic property and casualty insurance
business. We aim to increase the revenues of this business by strengthening our underwriting operations, increasing sales with a Customer First policy at the base of all business activities and further improving efficiencies by:



| |  |  | Enhancing efficiencies in the business operations and management of our property and casualty insurance business. We merged our property and casualty insurance subsidiaries in
October 2004 and named the new entity Tokio Marine & Nichido.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Restructuring our sales network and seeking to build a more efficient and higher quality sales network by making direct capital investments to upscale the size and capabilities of
our agencies and to increase the number of such upscaled agencies, as well as building a new sales network to recover growth of our sales.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Seeking to increase sales of third sector products, which we believe is a market with significant growth potential, and to increase over-the-counter sales of insurance products
through banks.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Enhancing sales of comprehensive insurance products that cover a variety of risks for individuals and corporate customers, such as Cho Hoken and Cho Business
Insurance. See  Property and Casualty Insurance.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Introducing new voluntary automobile insurance product Total Assist, launched in August 2005. See  Property and Casualty Insurance  Voluntary
Automobile.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Introducing alternative risk solutions and defined contribution pension products which we believe have growth potential.
| | - |  | ------------------------------------------------------------------------------------------------------------------------



19



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##### Table of Contents

| |  |  | Seeking to provide customers with high quality claims services by pursuing an innovative business model guided by the three principles of sincerity,
professionalism and open communication.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Domestic Life Insurance Business



We
plan to expand our domestic life insurance business as one of our core businesses. We aim to strengthen our life insurance subsidiaries, Tokio Marine & Nichido Life and Tokio Marine & Nichido Financial Life, and seek revenue growth in this
business by:



| |  |  | Enhancing efficiencies in the business operations and management of our life insurance business. We aim to make sustainable profit by appropriately managing our assets and
liabilities and by building an efficient sales network through cooperation with our property and casualty insurance business.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Introducing new third sector products, such as Anshin Amulet and Anshin Iryou Plus, which were launched in January 2005. See  Third Sector
Insurance Business.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Introducing new annuity products, such as Anshin Yen Annuity, which was launched in May 2005. See  Life Insurance Business  Tokio Marine & Nichido
Life.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Strengthening our variable annuities business through our new subsidiary, Tokio Marine & Nichido Financial Life, which we acquired from Skandia Insurance Company Ltd. (publ.) in
February 2004.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Introducing new variable annuity products, such as As You Like, which was launched in September 2004, and Best Scenario, which was launched in June 2005. See
 Life Insurance Business Tokio Marine & Nichido Financial Life.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Shifting more of our management resources to the life insurance business and seeking to implement the following growth strategies:
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Strengthen cross-marketing;
| | - |  | ---------------------------



| |  |  | Expand our sales channels dedicated exclusively to the distribution of life insurance; and
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | Promote sales through banks.
| | - |  | ----------------------------



Overseas Insurance Business



To diversify geographically and realize stable revenue growth, we aim to expand our overseas insurance business by focusing on the Asian local insurance market, which we believe has high growth potential and
profitability. In April 2003, we transferred our Asian insurance operations to Millea Asia. Millea Asia is in charge of planning our business growth strategy in the Asian region (excluding Japan), including through mergers, acquisitions and business
tie-ups, such as the acquisition of a 24.9% interest in Sino Life in July 2003 jointly with Tokio Marine & Nichido, and managing our local Asian subsidiaries. We intend to aggressively pursue the expansion of the business with a focus on what we
believe are growing areas, such as China, Taiwan, Thailand, Malaysia and India. We are also focusing on other growing markets such as Brazil, where we acquired a 100% interest in Real Seguros S.A., primarily a property and casualty insurer, and a
50% interest in Real Vida e Previdencia S.A., a life and pension insurer, in July 2005 for approximately R$960 million (approximately ¥45.1 billion at the exchange rate on July 7, 2005).



We also seek to achieve revenue growth and risk diversification through
operations of our overseas reinsurance subsidiaries, such as Tokio Millennium Re Ltd., Tokio Marine Global Limited and Tokio Marine Global Re Limited.



Asset Management and Other Businesses



We intend to expand our asset management business and other businesses, which we believe have significant potential for synergies with our insurance
business.



20



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##### Table of Contents

Asset Management Business



Utilizing the expertise acquired in the investment operations of our
insurance companies, we intend to pursue the following measures to further increase our assets and to increase revenue:



| |  |  | In the retail market, we aim to establish an investment trust/defined contribution business.
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | In the wholesale market, we plan to actively launch new products in alternative investment areas such as private equity to expand our product line-up.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We intend to expand our asset management operations globally through Tokio Marine Asset Management Co., Ltd.
| | - |  | ------------------------------------------------------------------------------------------------------------



Other Businesses



We plan to selectively expand our insurance-related businesses such as
health care and senior citizen-related businesses, the risk consulting business and comprehensive human resource-related services, as well as other existing related businesses, where we believe opportunities for growth exist.



Property and Casualty Insurance



Property and Casualty Insurance Lines



We engage primarily in underwriting voluntary automobile, compulsory
automobile liability, fire and allied lines (including earthquake), personal accident, marine (including cargo and transit and hull) and other lines of property and casualty insurance through Tokio Marine & Nichido, principally in Japan. The
following table, prepared on a U.S. GAAP basis, shows a breakdown of our direct premiums written by our principal lines of insurance for each of the periods indicated:



|                                   |  |                      |           |      |   |           |  |   |          
|---------------------------------- |  | -------------------- | --------- | ---- | - | --------- |  | - | ---------
|                                   |  | Year ended March 31,
|                                   |  | 2005                 |           | 2004 |   | 2003     
|                                   |  | (yen in millions)   
|Voluntary Automobile               |  | ¥                    | 868,393   |      | ¥ | 887,750   |  | ¥ | 909,341  
|Compulsory Automobile Liability(1) |  |                      | 302,955   |      |   | 311,124   |  |   | 308,641  
|Fire and Allied Lines(2)           |  |                      | 302,081   |      |   | 299,481   |  |   | 290,189  
|Personal Accident                  |  |                      | 151,667   |      |   | 153,849   |  |   | 157,434  
|Marine  Cargo and Transit         |  |                      | 81,878    |      |   | 71,678    |  |   | 67,660   
|Marine  Hull                      |  |                      | 18,770    |      |   | 19,599    |  |   | 19,173   
|Other(3)                           |  |                      | 239,806   |      |   | 235,074   |  |   | 235,025  
|                                   |  |                      |           |      |   |           |  |   |          
|Total                              |  | ¥                    | 1,965,550 |      | ¥ | 1,978,555 |  | ¥ | 1,987,463
|                                   |  |                      |           |      |   |           |  |   |          

---

|(1) | Japanese law requires that all automobiles be covered by compulsory automobile liability insurance. See note 1 to our consolidated financial statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes earthquake insurance.
|--- | ------------------------------

|(3) | Major Other lines of insurance are liability, aviation, workers compensation, movables comprehensive, machinery breakdown, contractors all-risk, truck,
credit and guarantee and surety bonds.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

The following table, prepared on a U.S. GAAP basis, shows a breakdown of each key component of our
property and casualty insurance premiums written for the year ended March 31, 2005:



|                                   |  |                       |           |                                       |        |                          |   |                         |         |  |   |           |  |        |  
|---------------------------------- |  | --------------------- | --------- | ------------------------------------- | ------ | ------------------------ | - | ----------------------- | ------- |  | - | --------- |  | ------ | -
|                                   |  | Directpremiumswritten |           | Reinsurancepremiumsassumed            |        | Reinsurancepremiumsceded |   | Net premiums written(1) |        
|                                   |  |                       |           |                                       | Amount |                          | % |                        
|                                   |  |                       |           | (yen in millions, except percentages) |        |                          |  
|Voluntary Automobile               |  | ¥                     | 868,393   |                                       | ¥      | 5,417                    |   | ¥                       | 12,990  |  | ¥ | 860,820   |  | 44.71  | %
|Compulsory Automobile Liability(2) |  |                       | 302,955   |                                       |        | 261,545                  |   |                         | 235,653 |  |   | 328,847   |  | 17.08  | %
|Fire and Allied Lines(3)           |  |                       | 302,081   |                                       |        | 30,334                   |   |                         | 68,714  |  |   | 263,701   |  | 13.70  | %
|Personal Accident                  |  |                       | 151,667   |                                       |        | 3,101                    |   |                         | 3,759   |  |   | 151,009   |  | 7.84   | %
|Marine  Cargo and Transit         |  |                       | 81,878    |                                       |        | 4,175                    |   |                         | 15,047  |  |   | 71,006    |  | 3.69   | %
|Marine  Hull                      |  |                       | 18,770    |                                       |        | 9,490                    |   |                         | 13,786  |  |   | 14,474    |  | 0.75   | %
|Other(4)                           |  |                       | 239,806   |                                       |        | 39,509                   |   |                         | 43,765  |  |   | 235,550   |  | 12.23  | %
|                                   |  |                       |           |                                       |        |                          |   |                         |         |  |   |           |  |        |  
|Total                              |  | ¥                     | 1,965,550 |                                       | ¥      | 353,571                  |   | ¥                       | 393,714 |  | ¥ | 1,925,407 |  | 100.00 | %
|                                   |  |                       |           |                                       |        |                          |   |                         |         |  |   |           |  |        |  

---

|(1) | Net premiums written = direct premiums written + reinsurance premiums assumed  reinsurance premiums ceded.
|--- | -----------------------------------------------------------------------------------------------------------

|(2) | Japanese law requires that all automobiles be covered by compulsory automobile liability insurance. See note 1 to our consolidated financial statements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Includes earthquake insurance.
|--- | ------------------------------

|(4) | Major Other lines of insurance are liability, aviation, workers compensation, movables comprehensive, machinery breakdown, contractors all-risk, truck,
credit and guarantee and surety bonds.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Voluntary
Automobile



Automobile ownership in Japan has grown
over the years and there is currently no other country in the world except the United States where a greater number of automobiles is owned. According to statistics published by the Japanese Automobile Inspection and Registration Association, the
number of automobiles owned in Japan has been slowly but consistently growing in the past several years, and as of March 31, 2005, approximately 78 million automobiles were owned in Japan. In line with high level of automobile ownership, the number
of automobile accidents and the number of persons injured or killed in automobile accidents have remained at high levels despite various social efforts to reduce the number of accidents. To further the public policy of reducing losses from
automobile accidents, the Automobile Liability Security Law provides for owner-operators tort liabilities that are more strict than those under the Japanese Civil Codes general tort theory. Over the years, the average amount of damages
awarded by Japanese courts in liability claim cases stemming from automobile accidents has increased, as has the publics awareness of the risks involved in automobile ownership.



Our voluntary automobile insurance product called the Tokio Automobile Policy, or TAP, was first introduced in
1998 by Tokio Marine. TAP proved to be an extremely successful product, which met a wide range of customer requirements and offered a wider compensation coverage that was not previously available under conventional automobile insurance policies.
TAPs most notable feature was the offering of bodily injury indemnity insurance. If a policyholder was injured in an automobile accident, a full settlement was paid to the injured policyholder regardless of who was at fault. TAP also offered a
broad coverage in connection with any physical damage to automobiles.



In August 2003, we launched a risk-differentiated automobile product to strengthen price-competitiveness and to meet a wide variety of customer needs. This new product, called TAP Navi, offered insurance coverage for a premium
based on characteristics of each customer such as usage of insured automobile, status of the drivers license in the public classification scheme and age.



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##### Table of Contents

In August 2004, we launched a new product called Choki Bunkatsu, a long-term
installment-payment automobile insurance policy, typically for a term of two to three years, which eliminates the necessity for the annual renewal procedure.



In August 2005, we launched our third-generation voluntary automobile insurance product, called Total Assist. This product replaced TAP
Navi and places more emphasis on assistance by offering a variety of support services after an accident, in addition to offering the same wide compensation coverage previously offered by TAP Navi.



Compulsory Automobile Liability



Under the Automobile Liability Security Law, all automobiles operated on
public roads in Japan (with certain minor exceptions) are required to be covered by compulsory automobile liability insurance, or CALI, which covers liability for bodily injuries. This type of insurance coverage is required in order to
register an automobile and for periodic automobile inspections. Generally, if an automobile is not registered, it cannot legally be operated in Japan. Compulsory automobile liability insurance is designed to serve public policy by ensuring that
people injured in automobile accidents receive a minimum payment for their injuries from those who are legally responsible. In light of this public policy, licensed non-life insurance companies in Japan cannot refuse to issue compulsory automobile
liability policies except in limited cases.



Under these
compulsory insurance policies, the maximum amount of coverage for accidents resulting in death is limited to ¥30 million per person, and the maximum amount of coverage for accidents resulting in permanent disability is limited to ¥40 million
per person. The maximum amount of coverage for accidents resulting in other injuries is ¥1.2 million per person. Individuals who wish to purchase coverage beyond these maximum amounts may purchase automobile insurance with a bodily injury
liability coverage on a voluntary basis (as described above). In order to reduce inconveniences caused by being covered by compulsory and voluntary policies, an insured can submit claims for indemnity under both the compulsory and voluntary policies
to the insurance company that wrote the voluntary policy. Prior to April 1, 2002, 60% of all CALI insurance written was required by statute to be reinsured with the government. Since April 1, 2002, all CALI premium portfolios are reinsured with the
CALI Reinsurance Pool in which all insurers operating CALI business participate.



Fire and Allied Lines



Fire and allied
lines insurance is one of the traditional lines of insurance we write. Fire and allied lines insurance (other than earthquake insurance, which is described below) generally covers dwelling houses, shops, offices, factories and warehouses and their
contents against loss or damage caused by fire, flood, storms, lightning, explosion, theft and other risks. In addition, some policies cover personal accident, third-party liability and loss of income caused by these kinds of events. Some of the
products offered under this insurance line are deposit-type insurance.



This type of insurance is written for individual customers to safeguard their personal financial security and for business customers to protect their on-going business operations. This type of insurance also provides mortgage lenders,
whether residential or commercial, with protection against loss or damage to mortgaged properties.



23



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##### Table of Contents

Under fire and allied lines insurance, insurers may be required to make indemnity payments of a huge
aggregate amount in the event of a disastrously large windstorm, flood or other catastrophe. The following table shows information concerning major windstorms and floods in Japan that occurred during the thirty years ended March 31, 2004.

|                                              |  |                |  |                  |  |                 
|--------------------------------------------- |  | -------------- |  | ---------------- |  | ----------------
|Major windstorms and floods                   |  | Date           |  | Buildingsdamaged |  | Buildingsflooded
|Typhoon No. 17 and accompanying weather front |  | September 1976 |  | 11,193           |  | 442,317         
|Typhoon No. 20                                |  | October 1979   |  | 7,523            |  | 37,450          
|Downpour, July 1982                           |  | July 1982      |  | 851              |  | 52,165          
|Typhoon No. 10 and accompanying weather front |  | August 1982    |  | 5,312            |  | 113,902         
|Typhoon No. 8 and accompanying weather front  |  | September 1982 |  | 651              |  | 136,308         
|Downpour, July 1983                           |  | July 1983      |  | 3,669            |  | 17,141          
|Typhoon No. 10                                |  | August 1986    |  | 2,683            |  | 105,072         
|Typhoon No. 19                                |  | September 1991 |  | 170,447          |  | 22,965          
|Downpour, August 1993                         |  | August 1993    |  | 824              |  | 21,987          
|Typhoon No. 18                                |  | September 1999 |  | 47,150           |  | 23,218          
|Hailstorm, May 2000                           |  | May 2000       |  | 24,692           |  | 43              
|Downpour, September 2000                      |  | September 2000 |  | 312              |  | 71,291          

---

Source: Non-Life Insurance in Japan Fact Book
2003-2004, The Marine and Fire Insurance Association of Japan.



We paid insurance claims of ¥123.2 billion under fire and allied lines insurance with respect to Typhoon No. 19, which occurred in September 1991. This is the largest amount we paid during the last thirty years for a single catastrophic
event. Prior to this thirty-year period, particularly when public and non-public measures against disasters were underdeveloped, Japan had experienced typhoons and windstorms that caused heavier damage than those listed in the above table. For
example, the Isewan Typhoon of 1959 resulted in over 800,000 damaged buildings and over 300,000 flooded buildings.



During the fiscal year ended March 31, 2005, Japan experienced a high number of natural disasters such as severe typhoons. As a result, in the fiscal year
ended March 31, 2005, we recorded typhoon and other natural disaster-related insurance claims (including fire and automobile) in the amount of ¥148.0 billion.



Earthquake



Japan is subject to earthquakes. Earthquake risk, however, is not easily underwritten by non-life insurance companies in Japan. This is because the loss
that may result from one earthquake could be disastrously large and because the lack of adequate statistical data makes the actuarial analysis ineffective. In 1966, the Japanese government enacted the Law Concerning Earthquake Insurance, which
implemented a government-sponsored earthquake insurance program for dwellings and their contents. The program incorporates a partial reinsurance arrangement with the government and limits the maximum insured amount.



We write earthquake insurance under the Law Concerning Earthquake Insurance
as an extension of fire insurance coverage for dwellings and their contents. The insured amount for earthquake coverage under these policies is within a range of 30% to 50% of the insured amount for fire insurance coverage and up to a maximum amount
of ¥50 million for the dwelling and ¥10 million for its contents. These maximum amounts are all prescribed by law. For the year ended March 31, 2005, our direct premiums written for earthquake insurance policies under the Law Concerning
Earthquake Insurance amounted to ¥29.8 billion, representing 9.9% of our direct premiums written for fire and allied lines.



Under the Law Concerning Earthquake Insurance, the aggregate amount of indemnity payable by all insurers to all policyholders for any one occurrence is
limited to ¥5,000 billion. The earthquake risks written by direct insurers, including us, are wholly reinsured with the Japan Earthquake Reinsurance Company Limited, or JER, a private reinsurer in Japan owned by major Japanese non-life insurance
companies, including us. This portfolio is protected by (1) an excess of loss reinsurance cover arranged between JER and the Japanese government and (2) another excess of loss reinsurance cover arranged among JER, Toa Reinsurance Company, Limited,
or Toa, which is another private reinsurer in Japan, and the original direct insurers, including us, which



24



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##### Table of Contents

participate in this insurance cover through retrocession agreements with JER. The maximum amount to be paid by JER for any one occurrence, net of the amount
covered by reassurance ceded, is ¥452.0 billion. The maximum amount to be paid by the Japanese government for any one occurrence is ¥4,122.2 billion. The maximum aggregate amount to be paid by the original direct insurers and Toa for any
occurrence according to the share specified under the retrocession agreements is ¥425.8 billion. Our share of that amount is approximately 29.4%. The Law Concerning Earthquake Insurance requires that, if there are special needs, such as
insufficient existing funds for the payment of indemnity under earthquake insurance policies, the Japanese government will make efforts to arrange for, or to facilitate, financings by non-life insurance companies for these payments.



We also write earthquake insurance for buildings and structures other than
dwellings as an extension of fire insurance coverage on a private basis. This earthquake insurance is not entitled to the reinsurance arrangements under the Law Concerning Earthquake Insurance, and a substantial part of the risk associated with
these policies is reinsured by reinsurers. For the year ended March 31, 2005, our direct premiums written for earthquake insurance policies other than those under the Law Concerning Earthquake Insurance represented 6.6% of our direct premiums
written for fire and allied lines.



Personal Accident



We write personal accident insurance for individual customers primarily
through our agents in Japan. Generally, such insurance covers the insureds personal injuries caused by certain types of accidents that are set forth in the policy.



Typically, a fixed amount, regardless of the actual damages sustained, is paid according to a pre-set payment table. We
offer a variety of personal accident insurance products, including:



| |  |  | General Personal Accident  covers the insured against a broad range of accidents resulting in personal injuries. A fixed amount of indemnity is paid according to the
type of injuries (e.g., death, permanent disability or hospitalization).
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Income Indemnity  covers against the loss of income caused by an injury or illness.
| | - |  | ------------------------------------------------------------------------------------



| |  |  | Overseas Travelers Personal Accident  covers against accidents during travel and, if the policyholder has elected a special policy condition, against illness
during travel.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Traffic Accident  covers the insured against collisions with, or accidents occurring on, automobiles, trains, planes, ships and other types of vehicles.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------



Marine Insurance



Cargo and Transit



Cargo insurance covers goods aboard vessels against risks during international transportation or risks during transportation
in coastal seas. The terms of international cargo insurance are generally governed by the Institute Cargo Clauses of the former Institute of London Underwriters, currently the International Underwriting Association. This line of insurance is unique
in that it provides coverage against acts of war. Approximately 80% of insurance premiums of our cargo insurance is from international cargo. Japanese manufacturers and trading companies are our major clients for international cargo insurance.



The cargo insurance business is generally conducted directly
by our personnel and not by insurance agents. Insurance premiums written are affected primarily by levels of Japanese import and export trading activity.



25



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##### Table of Contents

Inland transit insurance is usually purchased by the owners of goods to cover physical damage to those
goods when they are transported by rail, truck or domestic air transport and when the goods are stored on land incidental to transit. Carriers of the goods, on the other hand, purchase inland transit liability insurance to cover their legal and
contractual liabilities that may arise from the handling of the goods.



Hull



Hull insurance is one of our traditional lines of
insurance. Hull insurance covers ocean-going and coastal vessels against loss or damage caused by sinking, stranding, grounding, fire, collision and other maritime accidents. The coverage includes damage to the hull, loss of earnings and liability
to others for damages. Hull war risk insurance covers vessels against loss or damage resulting from acts of war. Hull insurance is available not only to vessels in operation but also to vessels under construction for damages caused during the
construction period.



Our primary customers in this line are
Japanese shipping companies, which operate either Japan flag vessels or flag of convenience vessels, as well as Japanese shipbuilders. The marketing for these customers is generally conducted by our personnel directly and not by
insurance agents or brokers. Our revenues in hull insurance are influenced by the number of vessels that are operated by Japanese shipping companies directly and by foreign shipping companies closely associated with Japanese shipping companies, as
well as by the number of vessels being built by Japanese shipbuilders. These are in turn influenced by overall worldwide economic conditions and a number of global competitive factors affecting the respective industries of our customers.



Approximately 60% of our hull insurance premiums received are denominated
in Japanese yen, while the rest is denominated in currencies other than the Japanese yen, primarily the U.S. dollar.



Because accidents involving vessels can result in large losses, we reinsure these risks with Japanese and overseas reinsurers.



Other Lines



Other types of property and casualty insurance we write include liability insurance, aviation insurance, workers
compensation insurance, movables comprehensive insurance, machinery breakdown insurance, contractors all-risk insurance, e-risk insurance, nuclear insurance, weather insurance, event cancellation and abandonment insurance, truck insurance,
credit and guarantee insurance and surety bonds. Liability insurance is written primarily for business customers and includes product liability insurance, directors and officers liability insurance and umbrella liability insurance.
Movables comprehensive insurance covers damages resulting from loss, theft or destruction of various types of movable property.



Deposit-Type Insurance Products



Deposit-type insurance products combine a long-term insurance policy with a savings feature. We and other non-life insurance companies in Japan are
permitted to attach a savings feature to almost all personal lines of insurance other than the compulsory automobile liability insurance. The premium for the insurance portion is accounted for as premium written, and the premium for the savings
portion is accounted for as policyholders contract deposits. For the year ended March 31, 2005, premiums written arising from deposit-type policies accounted for 1.6% of our direct premiums written for property and casualty
insurance.



These policies, which have terms ranging from 2 to
64 years, provide for repayment at maturity of the savings-related portion of the premiums together with interest calculated on that amount at a specified rate. The policyholder knows of the maturity value of the savings-related portion of the
policy when he or she takes out the policy. Additional payments may also be made depending upon our investment performance during the term of the policy and other factors. Our repayment of the savings-related portion of the premiums and the payment
of



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interest are conditioned on the policy remaining in effect until maturity. Consequently, where a claim for a total loss terminates the policy, we are
released from our obligations to make payments to the policyholder. A total loss occurs in only a small number of cases each year. The policyholder can terminate the deposit-type insurance contract before the maturity date by paying us a
pre-determined commission.



The contractual rate of interest
credited to the policy varies by product and length of policy and is established at the beginning of the policy. We cannot change the committed interest rate during the policy term, unless under extraordinary circumstances where policy terms are
changed pursuant to the Insurance Business Law. Committed interest rates on newly issued policies ranged from 0.06% to 1.53% for the year ended March 31, 2005, 0.06% to 1.60% for the year ended March 31, 2004 and 0.10% to 1.60% for the year ended
March 31, 2003. Committed interest rates on newly issued policies ranged from 0.10% to 2.75% during the five years ended March 31, 2002, and from 2.00% to 3.75% during the two years ended March 31, 1997. The aggregate amount of deposit-type
insurance policies entered into prior to April 1, 1995 that remained in force as of March 31, 2005 is not significant.



The savings-related portion of the premiums received under deposit-type insurance is invested primarily in securities other than equity securities. The
investment return may exceed or fall short of the committed interest depending on, among other factors, the expected rate of interest, the market interest rates of these securities and the extent to which the terms of these securities match the
terms of the deposit-type insurance policies. We adjust from time to time the committed interest offered on new deposit-type insurance policies to reflect changes in the market levels of interest rates.



Cho Hoken and Cho Business Insurance



Tokio Marine and Nichido Fire jointly developed and launched Cho
Hoken, meaning Super Insurance, during the fiscal year ended March 31, 2003. Cho Hoken, which we believe is an innovative product in the Japanese market, integrates property and casualty and life insurance coverage for individual
customers. We intend to offer opportunities for lifetime security to our customers through marketing of this product, which is a new business approach to the Japanese insurance market. For corporate customers, we released Cho Business
Insurance, a comprehensive policy for business activities, which was also jointly developed by Tokio Marine and Nichido Fire, during the fiscal year ended March 31, 2003. Cho Business Insurance offers comprehensive coverage for various risks
faced by small and medium-sized corporations, including fire, business interruption, general liability and personal accident of employees.



Premium Rates



A premium under an insurance policy corresponds to the sales price of that insurance product. There are two components of a premium: the
pure premium, which represents the cost of claims payment, and the loading, which represents the agent commissions and certain other costs to the insurer. The pure premium is determined by multiplying the amount insured by
the applicable premium rate, which represents the probability that the loss covered by the insurance policy will occur. The premium rate is calculated by a formula which, on the basis of the law of large numbers, purports to reflect the
statistical likelihood that the loss will occur. The law of large numbers is a mathematical premise that states that the greater the number of exposures, (1) the more accurate the prediction, (2) the less the deviation of the actual
losses from the expected losses and (3) the greater the credibility of the prediction. Out of a large group of policyholders, an insurance company can fairly accurately predict the number of policyholders who will suffer a loss. The Law Concerning
Non-Life Insurance Rating Organizations requires that premium rates be reasonable and appropriate in accordance with the mathematical principles of insurance, and that they not be unfairly discriminatory.



Prior to July 1, 1998, premium rates for certain lines of non-life insurance
were established by the rating organization that dealt with that particular line of insurance, such as the Automobile Insurance Rating Organization and the Property and Casualty Insurance Rating Organization. Almost all non-life insurance



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companies, including us, participate in the activities of these rating organizations, although we are not required to do so. As discussed in
Regulation, the 1998 amendment to the Law Concerning Non-Life Insurance Rating Organizations abolished this arrangement. Since July 1998, the rating organizations have served in an advisory capacity to the non-life insurance companies.
They calculate advisory or reference risk premium rates, prepare standard forms of insurance contracts and collect a wide range of insurance-related data. As a result of this liberalization, non-life insurance companies may set their own
premium rates for their products. This has had the effect of intensifying competition in the industry. For some lines of insurance, however, such as earthquake insurance and compulsory automobile liability insurance, non-life insurance companies are
obligated to use standardized rates.



Reinsurance



In order to reduce our maximum potential net loss and to maximize the return
on our retained risk portfolio, we cede and hedge a portion of our insurance risks to other insurers, reinsurers and investors by way of reinsurance and risk financing tools.



We cede and assume risks under reinsurance and other similar arrangements to and from other insurance companies principally
in order to better diversify our risks and enhance our underwriting capacity. Our proportional reinsurance, as discussed below, helps us limit the loss amount on an individual-risk basis by spreading the risk proportionally with other insurers. We
also actively seek to utilize reinsurance to limit potential losses arising from specific extraordinary or catastrophic loss risks, including earthquake and typhoon risks. As a general matter, by ceding reinsurance we also seek to enhance
stabilization of profits  by reducing fluctuations of loss ratios arising from large or multiple claims  and procure greater capacities to write larger risks. As a general matter, by assuming reinsurance, we seek to further diversify our
risk portfolio while gaining additional potential sources of income.



We cede to reinsurers a portion of the risks we underwrite for property and casualty insurance. We pay reinsurance premiums to the reinsurers based upon the risks that are subject to reinsurance. Although a reinsurer is liable to us to the
extent of the risks assumed, we remain liable as the direct insurer to policyholders on all of these risks.



We cede reinsurance to various reinsurers around the world. These reinsurers are selected primarily for their financial security. We believe that no
material amounts are uncollectible from our current reinsurers.



We utilize a variety of reinsurance arrangements, which are classified into two basic types: proportional reinsurance and excess-of-loss reinsurance.



| |  |  | Proportional reinsurance. This type of reinsurance involves reinsurers sharing a proportional part of the original premiums and losses under the reinsurance cession assumed.
This type of reinsurance is used as a means to limit a loss amount on an individual-risk basis. In proportional reinsurance, the reinsurer customarily pays the ceding company a ceding commission, which is generally based upon the ceding
companys cost of acquiring the business ceded and may also include the ceding companys margin. In most cases, this type of reinsurance is arranged in the form of a reinsurance treaty, where the ceding company is automatically authorized
to cede any business under a set of terms and conditions previously agreed upon without obtaining a separate prior consent to each cession from the reinsurers. If the underwriting capacity provided by such a treaty is not sufficient, the ceding
company would have to arrange for facultative reinsurance, whereby a separate prior consent would have to be obtained from each reinsurer.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Excess-of-loss reinsurance. This type of reinsurance indemnifies the ceding company against a specified level of loss on underlying insurance policies in
excess of a specified agreed amount. Excess-of-loss reinsurance is usually arranged in layers to secure greater capacity with more competitive pricing by offering various levels of risk exposure with different terms for reinsurers with different
preferences.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | This type of reinsurance is commonly used as a means to protect against the occurrence of catastrophes, such as earthquakes and windstorms, by capping the
total accumulated amount of losses from the retention on each individual risk after recovery of losses from proportional reinsurance.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We manage our insurance risk portfolio in a manner similar to the concept of Value at Risk used in managing risks in the financial markets. We
take a mathematical approach in calculating the optimal retention for most lines of risks. Under this approach, potential fluctuations of underwriting results are estimated in terms of risks and returns. The actual amount of risk retained is
determined by taking the amount of internal reserves into consideration, together with the outcome of the risk and return analysis. Based on these methods, we believe it adequately controls our exposure per risk and per occurrence.



We assume reinsurance from direct insurers and professional reinsurers as an
additional source of income. The premiums we assumed from foreign insurers and reinsurers are generally in foreign currencies, in particular U.S. dollars.



In November 1997, Tokio Marine obtained a ten-year coverage from the capital markets for up to $90 million of specified Tokyo-area earthquake risks
through a bond offering by Parametric Re Ltd., a special purpose reinsurance company in the Cayman Islands. The Parametric Re transaction represented the first participation in a catastrophe bond by a Japanese insurance company, and was
intended to provide us with a long-term, stable and fully collateralized supplemental source of catastrophe coverage through the capital markets.



One of the most important targets of our global risk management through reinsurance is to increase our capital efficiency. We have been purchasing
traditional reinsurance to reduce our exposure to natural catastrophe risk in Japan, where most of our natural catastrophe risk is concentrated.



Additionally, Tokio Marine developed a new risk management method by establishing a natural catastrophe risk exchange with other premier insurers and
reinsurers including State Farm Automobile Mutual and Swiss Re. This exchange allows its participants to diversify their respective risk portfolios and thereby to improve their capital efficiency. We cede domestic risk and assume overseas risk
through this exchange. We execute these transactions (other than transactions with State Farm Automobile Mutual) through Tokio Millennium Agency Ltd., which was launched in May 2003 as a wholly owned subsidiary of Tokio Millennium Re Ltd.



In addition to the natural catastrophe exchange, Tokio
Millennium Re Ltd., Tokio Marine Global Limited and Tokio Marine Global Re Limited assume reinsurance to further diversify our risk portfolio. Tokio Millennium Re specializes in natural catastrophe reinsurance and structured products, while Tokio
Marine Global specializes in facultative reinsurance and specialty line reinsurance. Tokio Marine Global Re assumes traditional treaty reinsurance mainly in South East Asia.



The following table, prepared on a U.S. GAAP basis, shows our reinsurance premiums assumed and ceded, and retention ratio,
for each of the periods indicated:



|                             |  |                                       |           |   |      |   |           |      |  |   |           |  
|---------------------------- |  | ------------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                             |  | Year ended March 31,                  |          
|                             |  | 2005                                  |           |   | 2004 |   |           | 2003 | 
|                             |  | (yen in millions, except percentages) |          
|Direct premiums written      |  | ¥                                     | 1,965,550 |   |      | ¥ | 1,978,555 |      |  | ¥ | 1,987,463 |  
|Reinsurance premiums assumed |  |                                       | 353,571   |   |      |   | 374,219   |      |  |   | 325,347   |  
|Reinsurance premiums ceded   |  |                                       | (393,714  | ) |      |   | (407,528  | )    |  |   | (414,253  | )
|                             |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written         |  | ¥                                     | 1,925,407 |   |      | ¥ | 1,945,246 |      |  | ¥ | 1,898,577 |  
|                             |  |                                       |           |   |      |   |           |      |  |   |           |  
|Retention ratio(1)           |  |                                       | 83.0      | % |      |   | 82.7      | %    |  |   | 82.1      | %

---

|(1) | The retention ratio is calculated by dividing net premiums written by total of direct premiums written and reinsurance premiums assumed.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



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Property and Casualty Losses and Reserves



Loss and Expense Ratios



The following table, prepared on a U.S. GAAP basis, shows information with respect to loss and expense ratios for our principal lines of property and
casualty insurance for each of the periods indicated:



|                                                                                     |  |                                       |           |   |      |   |           |      |  |   |           |  
|------------------------------------------------------------------------------------ |  | ------------------------------------- | --------- | - | ---- | - | --------- | ---- |  | - | --------- | -
|                                                                                     |  | Year ended March 31,                  |          
|                                                                                     |  | 2005                                  |           |   | 2004 |   |           | 2003 | 
|                                                                                     |  | (yen in millions, except percentages) |          
|Marine  Hull:                                                                       |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written                                                                 |  | ¥                                     | 14,474    |   |      | ¥ | 14,484    |      |  | ¥ | 14,200    |  
|Premiums earned                                                                      |  |                                       | 14,152    |   |      |   | 14,309    |      |  |   | 14,477    |  
|Losses incurred                                                                      |  |                                       | 15,659    |   |      |   | 9,932     |      |  |   | 13,050    |  
|Loss ratio(1)                                                                        |  |                                       | 110.6     | % |      |   | 69.4      | %    |  |   | 90.1      | %
|Marine  Cargo and Transit:                                                          |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written                                                                 |  | ¥                                     | 71,006    |   |      | ¥ | 65,998    |      |  | ¥ | 62,373    |  
|Premiums earned                                                                      |  |                                       | 70,735    |   |      |   | 65,869    |      |  |   | 62,017    |  
|Losses incurred                                                                      |  |                                       | 31,093    |   |      |   | 30,877    |      |  |   | 28,939    |  
|Loss ratio(1)                                                                        |  |                                       | 44.0      | % |      |   | 46.9      | %    |  |   | 46.7      | %
|Fire and Allied Lines:                                                               |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written                                                                 |  | ¥                                     | 263,701   |   |      | ¥ | 270,495   |      |  | ¥ | 258,981   |  
|Premiums earned                                                                      |  |                                       | 254,128   |   |      |   | 244,777   |      |  |   | 239,318   |  
|Losses incurred                                                                      |  |                                       | 220,002   |   |      |   | 85,335    |      |  |   | 84,363    |  
|Loss ratio(1)                                                                        |  |                                       | 86.6      | % |      |   | 34.9      | %    |  |   | 35.3      | %
|Voluntary Automobile:                                                                |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written                                                                 |  | ¥                                     | 860,820   |   |      | ¥ | 878,499   |      |  | ¥ | 898,119   |  
|Premiums earned                                                                      |  |                                       | 863,426   |   |      |   | 884,201   |      |  |   | 902,491   |  
|Losses incurred                                                                      |  |                                       | 537,133   |   |      |   | 509,682   |      |  |   | 510,457   |  
|Loss ratio(1)                                                                        |  |                                       | 62.2      | % |      |   | 57.6      | %    |  |   | 56.6      | %
|Personal Accident:                                                                   |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written                                                                 |  | ¥                                     | 151,009   |   |      | ¥ | 152,062   |      |  | ¥ | 155,077   |  
|Premiums earned                                                                      |  |                                       | 151,435   |   |      |   | 151,954   |      |  |   | 155,603   |  
|Losses incurred                                                                      |  |                                       | 64,688    |   |      |   | 61,290    |      |  |   | 66,604    |  
|Loss ratio(1)                                                                        |  |                                       | 42.7      | % |      |   | 40.3      | %    |  |   | 42.8      | %
|Compulsory Automobile Liability:                                                     |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written                                                                 |  | ¥                                     | 328,847   |   |      | ¥ | 333,640   |      |  | ¥ | 280,883   |  
|Premiums earned                                                                      |  |                                       | 316,333   |   |      |   | 262,082   |      |  |   | 174,074   |  
|Losses incurred                                                                      |  |                                       | 250,104   |   |      |   | 207,483   |      |  |   | 129,482   |  
|Loss ratio(1)                                                                        |  |                                       | 79.1      | % |      |   | 79.2      | %    |  |   | 74.4      | %
|Other:                                                                               |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written                                                                 |  | ¥                                     | 235,550   |   |      | ¥ | 230,068   |      |  | ¥ | 228,924   |  
|Premiums earned                                                                      |  |                                       | 225,441   |   |      |   | 237,011   |      |  |   | 212,988   |  
|Losses incurred                                                                      |  |                                       | 143,754   |   |      |   | 143,919   |      |  |   | 120,786   |  
|Loss ratio(1)                                                                        |  |                                       | 63.8      | % |      |   | 60.7      | %    |  |   | 56.7      | %
|Total:                                                                               |  |                                       |           |   |      |   |           |      |  |   |           |  
|Net premiums written                                                                 |  | ¥                                     | 1,925,407 |   |      | ¥ | 1,945,246 |      |  | ¥ | 1,898,557 |  
|Premiums earned                                                                      |  |                                       | 1,895,650 |   |      |   | 1,860,203 |      |  |   | 1,760,968 |  
|Losses incurred                                                                      |  |                                       | 1,262,433 |   |      |   | 1,048,518 |      |  |   | 953,681   |  
|Loss ratio(1)                                                                        |  |                                       | 66.6      | % |      |   | 56.4      | %    |  |   | 54.2      | %
|Loss adjustment expenses incurred  unallocated                                      |  | ¥                                     | 68,886    |   |      | ¥ | 77,389    |      |  | ¥ | 76,412    |  
|Ratio of losses and loss adjustment expenses incurred to premiums earned(A)          |  |                                       | 70.2      | % |      |   | 60.5      | %    |  |   | 58.5      | %
|Underwriting and administrative expenses incurred                                    |  | ¥                                     | 634,078   |   |      | ¥ | 623,819   |      |  | ¥ | 630,005   |  
|Ratio of underwriting and administrative expenses incurred to premiums written(2)(B) |  |                                       | 32.9      | % |      |   | 32.1      | %    |  |   | 33.2      | %
|Combined loss and expense ratios(3)                                                  |  |                                       | 103.1     | % |      |   | 92.6      | %    |  |   | 91.7      | %
|Net premiums/direct premiums written ratios                                          |  |                                       | 98.0      | % |      |   | 98.3      | %    |  |   | 95.5      | %

---

|(1) | Ratio of net loss incurred to net premiums earned.
|--- | --------------------------------------------------

|(2) | These data are for our property and casualty business only.
|--- | -----------------------------------------------------------

|(3) | Sum of (A) and (B).
|--- | -------------------



See note 18 to our consolidated financial statements for comparable information prepared on a Japanese GAAP basis.



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Property and Casualty Reserves



When claims are made by or against a policyholder, any amounts that we pay or expect to pay to the policyholder are referred
to as losses, and the costs of investigating, resolving and processing those claims are referred to as loss adjustment expenses. We establish reserves for losses and loss adjustment expenses for claims under property and casualty insurance policies
and reinsurance policies. We establish these reserves each year for each principal line of property and casualty insurance. In accordance with U.S. GAAP, we do not establish specific loss or loss adjustment expense reserves until an event that
causes a loss has occurred.



Loss and loss adjustment expenses
fall into two categories:



| |  |  | Reserves for reported claims. These reserves are based on our estimates of future payments that will be made in respect of claims, including expenses related to those claims.
These estimates are made on a case-by-case basis and are based on the facts and circumstances available at the time the reserves are established. These estimates reflect the informed judgment of the claims personnel based on general insurance
reserving practices and knowledge of the nature and value of a specific type of claim. These reserves are periodically adjusted in the ordinary course of settlement and represent the estimated ultimate costs necessary to bring all the pending
reported claims to final settlement. Consideration is given to historic trends and disposition patterns of loss payments, pending levels of unpaid claims and types of coverage.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reserves for incurred but not reported claims. These reserves are established to recognize the estimated cost of losses that have occurred but as to which we do not yet have
notice. These reserves, like reserves for reported claims, are established to recognize the estimated costs, including expenses, necessary to bring claims arising out of losses to final settlement. Since nothing is known about the occurrence of the
losses, we rely on our past experience to estimate our liability in respect of incurred but not reported claims. These reserves are estimates that involve actuarial and statistical projections of the expected cost of the ultimate settlement and
administration of claims. The analyses are based on facts and circumstances known at the time, predictions of future events, estimates of future inflation and other demographic and economic factors. Late reported claim trends, claim severity,
exposure growth and future inflation are some of the factors used in projecting reserve requirements for incurred but not reported claims. These reserves are reviewed and revised periodically as additional information becomes available and actual
claims are reported.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We factor in the following
loss development information, among others, when establishing reserves for incurred but not reported losses:



| |  |  | For fire and allied lines insurance, substantially all losses are paid or recognized within one year from the casualty date and substantially all underwriting risk is assumed in
Japan.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For liability and workers compensation insurance, approximately 90% of losses are recognized within two years from the casualty date while the remaining losses are paid or
recognized after two or more years. For underwriting risk assumed outside Japan, we make reserves based on reports from actuaries in the relevant countries.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For automobile, personal accident, marine (including cargo and transit and hull) and all other insurance, substantially all of the underwriting risk is assumed in Japan. For these
insurance policies, except for bodily injury claims under automobile insurance, substantially all losses are paid or recognized within two years from the casualty date. For bodily injury claims under automobile insurance, approximately 90% of the
losses are paid or recognized within one year while the remaining losses are paid or recognized after one or more years.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The ultimate cost of losses and loss adjustment expenses is subject to a number of highly variable circumstances. From when a claim is reported to when it
is finally settled, a change in circumstances may require established reserves to be adjusted either upwards or downwards. Items such as changes in the legal environment, results of litigation, changes in medical costs, costs of automobile and home
repair materials and labor rates can



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substantially impact claim costs. These factors can cause actual developments to vary from expectations, and in some cases materially. Claim reserve
adjustments are periodically reviewed and updated, using the most current information available to management, and any adjustments resulting from changes in reserve estimates are reflected in current results of operations.



We believe, based on information currently available to us, that our property
and casualty reserves are adequate. However, the establishment of loss reserves is an inherently uncertain process. Accordingly, ultimate losses may differ from our initial estimates.



Reconciliation of Beginning and Ending Reserves



The following table, prepared on a U.S. GAAP basis, is a summary reconciliation of our beginning and ending reserves for
property and casualty insurance, including the effect of reinsurance ceded, for each of the periods indicated:



|                                              |  |                      |           |      |   |           |      |  |   |           |  
|--------------------------------------------- |  | -------------------- | --------- | ---- | - | --------- | ---- |  | - | --------- | -
|                                              |  | Year ended March 31, |          
|                                              |  | 2005                 |           | 2004 |   |           | 2003 | 
|                                              |  | (yen in millions)    |          
|Balance at beginning of year                  |  | ¥                    | 1,221,146 |      | ¥ | 1,131,884 |      |  | ¥ | 875,463   |  
|Less reinsurance recoverables                 |  |                      | 342,217   |      |   | 342,132   |      |  |   | 247,861   |  
|                                              |  |                      |           |      |   |           |      |  |   |           |  
|Net balance at beginning of year              |  |                      | 878,929   |      |   | 789,752   |      |  |   | 627,602   |  
|                                              |  |                      |           |      |   |           |      |  |   |           |  
|Adjustment in connection with the acquisition |  |                      |          |      |   |          |      |  |   | 141,940   |  
|Incurred related to:                          |  |                      |           |      |   |           |      |  |   |           |  
|Current year insured events                   |  |                      | 1,326,179 |      |   | 1,116,582 |      |  |   | 1,029,655 |  
|Prior years insured events                    |  |                      | 5,140     |      |   | 9,325     |      |  |   | 438       |  
|                                              |  |                      |           |      |   |           |      |  |   |           |  
|Total incurred                                |  |                      | 1,331,319 |      |   | 1,125,907 |      |  |   | 1,030,093 |  
|                                              |  |                      |           |      |   |           |      |  |   |           |  
|Paid related to:                              |  |                      |           |      |   |           |      |  |   |           |  
|Current year insured events                   |  |                      | 722,166   |      |   | 588,432   |      |  |   | 590,791   |  
|Prior years insured events                    |  |                      | 495,793   |      |   | 446,825   |      |  |   | 417,105   |  
|                                              |  |                      |           |      |   |           |      |  |   |           |  
|Total paid                                    |  |                      | 1,217,959 |      |   | 1,035,257 |      |  |   | 1,007,896 |  
|                                              |  |                      |           |      |   |           |      |  |   |           |  
|Foreign currency translation adjustments      |  |                      | 970       |      |   | (1,473    | )    |  |   | (1,987    | )
|Net balance at end of year                    |  |                      | 993,259   |      |   | 878,929   |      |  |   | 789,752   |  
|Plus reinsurance recoverable                  |  |                      | 351,937   |      |   | 342,217   |      |  |   | 342,132   |  
|                                              |  |                      |           |      |   |           |      |  |   |           |  
|Balance at end of year                        |  | ¥                    | 1,345,196 |      | ¥ | 1,221,146 |      |  | ¥ | 1,131,884 |  
|                                              |  |                      |           |      |   |           |      |  |   |           |  



Prior year claims and
expenses incurred, as reflected in the preceding table, resulted principally from re-estimating and settling claims established in earlier accident years in amounts that differed from expectations.



Operations



Sales and Marketing



In addition to our head offices, which are located in Tokyo, Tokio Marine & Nichido had 68 branches and 374 sub-branches located throughout Japan as
of March 31, 2005. Branches and sub-branches carry out ordinary insurance activities, such as loss adjustment and claim settlement, in specified geographical areas or for certain categories of industries, all at their own discretion within
authorized limits. Certain activities in the branches are under the control of Tokio Marine & Nichidos head office in Tokyo, including all reinsurance business and transactions involving amounts which exceed the branches authorized
limits.



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Non-life insurance in Japan is sold primarily through a network of full- and part-time insurance agents.
As of March 31, 2005, Tokio Marine & Nichido had 64,669 insurance agents apart from 1,054 employees of its direct sales staff throughout Japan. These agents include corporations and individuals. In addition to the traditional agency system used
to sell insurance products, since April 2001, as a result of insurance industry deregulation, Japanese commercial banks have been permitted to sell certain insurance products of their affiliated insurance companies at their branch offices. We
utilize commercial banks, with their national and regional networks of branches, as a distribution channel for our products. Agents have historically been compensated on a commission basis, with rates varying according to the type of insurance and
the qualifications of the agents. In April 2001, we introduced a new compensation system that uses individual performance criteria to a greater extent in determining compensation for agents. Insurance agents in Japan are required to be registered
with the Financial Services Agency, or the FSA.



Our agents in
Japan are authorized to write substantially all lines of insurance. Approximately 94% of our total direct premiums written (including deposits received) in the year ended March 31, 2005 originated through our agents. Through our underwriting agents,
subsidiaries and affiliates, we sell insurance in 38 countries and territories overseas, including the United States where we sell insurance in all 50 states. Approximately 4% of our direct premiums written for the year ended March 31, 2005
originated from policies written outside of Japan.



Tokio
Marine and Nichido Fire adopted an on-line agency system in 1991 and continuously expanded this system, which allows for greater efficiency in the contract process by allowing agents to directly input and access contract data. As of March 31, 2005,
this on-line system maintained by Tokio Marine & Nichido was available for approximately 265,000 users. The number of contracts whose terms were directly input by Tokio Marine & Nichidos agents using this system was approximately 14
million in the year ended March 31, 2005.



We have made efforts
in developing the on-line systems for agents to increase work efficiency and strengthen sales capabilities at both insurance companies and agents. During the fiscal year ended March 31, 2003, Tokio Marine and Nichido Fire began to develop
Millea Partners Net, a new on-line system for agents utilizing broadband communications. As of March 31, 2005, Millea Partners Net was used by approximately 39,000 agents of Tokio Marine & Nichido with an aggregate of
128,000 users.



Claims Processing



Claims of policyholders are accepted for processing either by insurance
agents or directly by us at our branch offices. There is great customer demand for quick claims processing at a nearby office. In view of the intensifying competition among various sectors in the insurance and other financial markets in Japan, we
have focused on expediting claims processing in order to satisfy customer needs. We handle calls from our policyholders involved in accidents throughout Japan from our toll-free line 24 hours a day. In August 2003, we launched a new service which
includes giving advice immediately after an accident, making initial contact to hospitals and repair yards and offering expert assistance with car troubles and health problems. By offering such services over the telephone, we aim to mitigate our
customers anxiety at the outset of an accident. For policyholders of our overseas travel accident insurance, we have facilities to respond to phone calls from policyholders traveling anywhere in the world and provide appropriate services to
these customers. As of July 1, 2005, there were 246 claims handling offices for Tokio Marine & Nichido throughout Japan, including its branch offices, that engage in claims processing work.



Nichido Fire Operational Reform Order



On August 20, 2004, Nichido Fire received an operational reform order from
the FSA in connection with inappropriate conduct involving one of Nichido Fires direct sales staff. In response to the reform order, Nichido Fire submitted an operational reform plan to the FSA, and Tokio Marine & Nichido is continuing the
efforts to address the issues presented in the FSA operational reform order based on the plan.



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Life Insurance Business



We conduct our life insurance business primarily through our subsidiaries Tokio Marine & Nichido Life and Tokio Marine & Nichido Financial
Life.



Tokio Marine & Nichido Life



Following an amendment to the Insurance Business Law, which permitted
non-life and life insurance companies to enter one anothers markets through subsidiaries, Tokio Marine established The Tokio Marine Life Insurance Company, Limited, or Tokio Marine Life, in August 1996 to carry out its life insurance business.
In addition, Nichido Fire established The Nichido Life Insurance Co., Ltd., or Nichido Life, in August 1996. Since these two subsidiaries were established, our life insurance business has experienced rapid growth. The number of existing policies
exceeded one million during the year ended March 31, 2003. In April 2003, we made Tokio Marine Life and Nichido Life our direct subsidiaries and merged the two subsidiaries on October 1, 2003. The surviving entity was named Tokio Marine &
Nichido Life Insurance Co., Ltd., or Tokio Marine & Nichido Life.



We are focusing our sales efforts on lapse-supported type life insurance products, such as Nagawari, which is described below. We seek to position these products to compete with existing life insurance companies by offering
competitive premium rates. Currently, our main products include comprehensive lifetime insurance, fixed term insurance and pension insurance.



We see product innovation as a core element of our strategy and work to develop new products that will satisfy our customers needs. For example,
Tokio Marine Lifes Nagawari is a lapse-supported whole-life insurance product which allows us to offer lower premiums by making use of a high surrender charge. In 1998, Tokio Marine Life launched Mittsu-no-Anshin, or
Triple Coverage, a type of comprehensive whole-life insurance combining coverage for hospitalization, nursing care and death benefits, which won an innovative-product award in February 1998 from the Nihon Keizai Shimbun, the Japanese
daily business journal. In 1999, Tokio Marine Life launched Nagawari Mittsu-no-Anshin, a product which combines the characteristics of the two previously released products. In 2002, Tokio Marine Life revised its Household Income
Coverage insurance, a fixed term insurance product which covers household income by monthly payment of insurance money for a reasonable premium. In January 2004, we launched Anshin Dollar Annuity, a U.S. dollar denominated annuity,
in the Japanese market through Tokio Marine & Nichido Life. In May 2005, we launched Anshin Yen Annuity, a Japanese yen denominated annuity, through Tokio Marine & Nichido Life.



We utilize our property and casualty insurance businesss nationwide
network of insurance agents to sell life insurance products. We rely largely on our property and casualty insurance business agents for marketing and sales. We plan to further strengthen cross-selling of life and non-life insurance products. To
achieve this, in 2002, we started utilizing promoters, who are sales support personnel, to assist insurance agents in marketing life insurance products. We also increased the number of Life Partners, our direct sales staff
for life insurance. We also aim to further strengthen other distribution channels such as agents specializing in life products and sales through banks.



Tokio Marine & Nichido Lifes total insurance-in-force as of March 31, 2005 was ¥14.7 trillion, compared to ¥13.5 trillion as of March
31, 2004.



Tokio Marine & Nichido Financial Life



We offer variable insurance products through our
subsidiary, Tokio Marine & Nichido Financial Life, including variable annuity and variable universal life insurance products. We entered this business through our acquisition of Skandia Japan in February 2004, which was primarily engaged in the
variable insurance and variable annuity businesses. Skandia Japan was subsequently renamed Tokio Marine & Nichido Financial Life. We are continuing our efforts to further strengthen our variable annuity business by leveraging the expertise and
existing infrastructure of Skandia Japan and implementing synergies with our other businesses.



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Typically, for our variable annuity policies, initial purchase payments are made in lump sums and the
payments are invested in investment trusts as designated by individual policyholders over the course of the accumulation period, usually a minimum of 10 years. Upon expiration of the accumulation period, annuity payments are paid out of the
accumulated principal over the course of the payout period. Alternatively, a policyholder may choose to receive a lump-sum payment at expiration of the accumulation period. In the event of the insureds death during the accumulation period,
there is generally a guaranteed death benefit in an amount at least equal to the amount of the initial purchase payment. The death benefit is payable to beneficiaries in a lump sum or in periodic payments.



In September 2004, Tokio Marine & Nichido Financial Life entered into a
business alliance with Mitsubishi Tokyo Financial Group, Inc. and its subsidiary, The Bank of Tokyo-Mitsubishi, Ltd., and together launched As You Like, a new variable annuity product. The special feature of the As You Like
product is that it provides policyholders with three choices of plans at the time of contract and permits switching of plans during the accumulation period. The three plans offer different guarantee levels on accumulated principal, allowing
policyholders to choose a plan based on risk preferences at various stages of their lives. The Plan Change feature represented an innovation in the Japanese market for variable annuities.



Tokio Marine & Nichido Financial Life also currently offers a range of
other variable annuity products with different kinds and levels of guarantees. Under Best Scenario, launched in June 2005, the amount of accumulated principal is transferred to a deferred fixed annuity account when it reaches a certain
target after three years. Nenkin Shin-Sedai, launched in October 2004, is similar to As You Like in that it permits switching of plans during the accumulation period and offers different guarantee levels on accumulated
principal. Good Stage, launched in November 2001, offers Japans first quarterly ratchet program, which steps up the amount of minimum death benefit to the level of the accumulated principal at each quarter end based on
certain conditions.



Tokio Marine & Nichido Financial Life
also currently offers a variable universal life insurance product called Prime Life, which allows policyholders to initially set and later modify during the accumulation period the amount of premium payments as well as the amount of
benefits in accordance with differing needs and preferences at various stages of their lives.



For marketing and sales of its products, Tokio Marine & Nichido Financial Life relies on agencies with specialized knowledge of variable insurance products, including those of financial institutions and other
professional agencies which exclusively market and sell insurance products. For example, Tokio Marine & Nichido Financial Lifes products As You Like and Best Scenario are being distributed in Japan
through branch offices of national and regional banks.



Tokio
Marine & Nichido Financial Lifes total life insurance-in-force as of March 31, 2005 was ¥0.5 trillion, compared to ¥0.2 trillion as of March 31, 2004.



Third Sector Insurance Business



In the Japanese insurance industry, the third sector refers to insurance products and services that do not fall within the traditional life
and non-life insurance areas, such as personal accident, medical and cancer insurance and insurance covering expenses for nursing care. Since the deregulation in 2001, we have been offering cancer and medical insurance products through our life
insurance as well as property and casualty insurance subsidiaries. In 2003, Tokio Marine Life released Medical Mini, a medical insurance product featuring simplified terms and conditions at an affordable price, thereby continuing to
expand its business in this area. In the field of medical insurance, Tokio Marine & Nichido launched Long Life Mini, a new product similar to Medical Mini, in October 2004, and Tokio Marine & Nichido Life released new
products in January 2005, including Anshin Amulet, a form of medical insurance exclusively for women, and Anshin Iryou Plus, a product offering enhanced coverage for cancers, strokes and heart attacks.



35



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Overseas Operations



Our overseas business dates back to 1880, when Tokio Marine started offering insurance products in the United Kingdom, France and the United States. As of
March 31, 2005, we maintained branch offices in the United States and China and overseas offices in 30 other countries, territories and jurisdictions.



The following are our principal overseas subsidiaries and affiliates:



| |  |  | Asia and Oceania  The Tokio Marine and Fire Insurance Company (Hong Kong) Limited, The Tokio Marine and Fire Insurance Company (Singapore) Pte. Limited and Tokio Marine
Management (Australasia) Pty. Ltd.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The Americas  Tokio Marine Management, Inc., First Insurance Company of Hawaii, Ltd., Tokio Marine Compañia de Seguros, S.A. de C.V., Tokio Marine Brasil
Seguradora S.A. and Tokio Millennium Re Ltd.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Europe, the Middle East and Africa  Tokio Marine Europe Insurance Limited, Tokio Marine Global Re Limited and Tokio Marine Global Limited.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------



We issue insurance policies in 38 countries and territories outside of Japan.
One of our objectives is to expand the profitability and size of our international operations simultaneously on a coordinated basis, with particular emphasis on Asia.



In December 2002, we launched Millea Asia as an intermediate holding company in Singapore to facilitate the growth of our
Asian insurance business. We transferred the Asian insurance management operations of Tokio Marine to the new company in April 2003. Millea Asia is in charge of planning our business growth strategy, pursuing business tie-ups and merger and
acquisitions opportunities, and managing our local subsidiaries in the Asian region (excluding Japan). In December 2002, Millea Asia invested in Newa Insurance Co., Ltd., a property and casualty insurance company in Taiwan. In July 2003, Millea
Asia, together with Tokio Marine, acquired a 24.9% interest in Sino Life Insurance Co., Ltd., a life insurer in China, which commenced its life insurance operations in Shanghai in November 2003 and now operates primarily in major cities such as
Beijing, Nanjing and Hangzhou. In September 2004, Millea Asia acquired the Taiwanese property and casualty insurance company Allianz President General Insurance Co., Ltd. This company merged with Newa Insurance on April 1, 2005, and the newly merged
company now operates under the name Tokio Marine Newa Insurance Co., Ltd., in which Millea Asia holds a 49% interest.



In January 2005, Tokio Marine Global Limited, a new wholly owned subsidiary of Tokio Marine & Nichido, started operations as an reinsurance company
based in London.



Investments



We invest in a portfolio of assets using funds which represent either (1)
our general funds, including that portion of net premiums written that have not been disbursed as claims payments or (2) that portion of deposit premiums by policyholders under deposit-type insurance that are not due for refund to the policyholders.



Our principal investment objectives are (1) to maintain the
high quality of our investment assets in order to strengthen our claim payment capabilities; (2) to maintain sufficient liquidity to timely meet the requirements of indemnity payments and payments of maturity refunds and dividends; and (3) subject
to satisfying the first two objectives, to obtain the highest possible return on our investments. We also seek to maintain and enhance our business relationships with major corporate customers in Japan by investing in the equity securities of those
customers on a long-term basis.



We engage in asset-liability
management with respect to long-term assets and liabilities, seeking a stable present net asset value by controlling interest rate risk. We also seek to increase profit by investing flexibly in various assets that we believe will produce profits
commensurate with the associated risks.



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The Japanese governments regulations concerning non-life insurance companies specify the types of
assets in which they can invest and also set upper limits on various kinds of investments based on a percentage of the book value of total assets. For example, investment in domestic stocks is limited to 30% of the book value of total assets, real
estate to 20% and assets in foreign currency to 30%. Under special circumstances, the FSA may approve investments in excess of these limits.



Our investment portfolio consists primarily of Japanese and foreign equity securities, Japanese and foreign bonds and loans to Japanese companies. The
following table, prepared on a U.S. GAAP basis, shows our investments as of each date indicated:



|                                                         |  |                   |            |      |   |           |  |   |          
|-------------------------------------------------------- |  | ----------------- | ---------- | ---- | - | --------- |  | - | ---------
|                                                         |  | As of March 31,  
|                                                         |  | 2005              |            | 2004 |   | 2003     
|                                                         |  | (yen in millions)
|Investments  other than investments in related parties: |  |                   |            |      |   |           |  |   |          
|Securities held to maturity, at amortized cost           |  | ¥                 | 1,109,715  |      | ¥ | 1,109,861 |  | ¥ | 883,336  
|Securities available for sale:                           |  |                   |            |      |   |           |  |   |          
|Fixed maturities, at fair value                          |  |                   | 3,962,641  |      |   | 3,209,582 |  |   | 3,421,624
|Equity securities, at fair value                         |  |                   | 3,645,779  |      |   | 3,457,374 |  |   | 2,534,221
|Trading securities, at fair value                        |  |                   | 241,878    |      |   | 48,513    |  |   | 25,936   
|Mortgage loans on real estate                            |  |                   | 71,033     |      |   | 129,076   |  |   | 148,655  
|Investment real estate                                   |  |                   | 134,180    |      |   | 104,110   |  |   | 82,886   
|Policy loans                                             |  |                   | 38,567     |      |   | 33,610    |  |   | 29,171   
|Other long-term investments                              |  |                   | 409,187    |      |   | 419,199   |  |   | 559,004  
|Short-term investments                                   |  |                   | 691,769    |      |   | 881,897   |  |   | 660,370  
|                                                         |  |                   |            |      |   |           |  |   |          
|Total investments                                        |  | ¥                 | 10,304,749 |      | ¥ | 9,393,222 |  | ¥ | 8,345,203
|                                                         |  |                   |            |      |   |           |  |   |          



Securities Available for Sale



The following table, prepared on a U.S. GAAP basis,
shows our investments in securities available for sale by type (other than in related parties) as of each date indicated:



|                                    |  |                   |           |      |   |           |  |   |          
|----------------------------------- |  | ----------------- | --------- | ---- | - | --------- |  | - | ---------
|                                    |  | As of March 31,  
|                                    |  | 2005              |           | 2004 |   | 2003     
|                                    |  | (yen in millions)
|Japanese fixed maturities           |  | ¥                 | 3,271,634 |      | ¥ | 2,747,031 |  | ¥ | 2,865,672
|Foreign fixed maturities            |  |                   | 691,007   |      |   | 462,551   |  |   | 555,952  
|                                    |  |                   |           |      |   |           |  |   |          
|Total fixed maturities              |  |                   | 3,962,641 |      |   | 3,209,582 |  |   | 3,421,624
|                                    |  |                   |           |      |   |           |  |   |          
|Japanese equity securities          |  |                   | 3,428,374 |      |   | 3,301,699 |  |   | 2,343,710
|Foreign equity securities           |  |                   | 217,405   |      |   | 155,675   |  |   | 190,511  
|                                    |  |                   |           |      |   |           |  |   |          
|Total equity securities             |  |                   | 3,645,779 |      |   | 3,457,374 |  |   | 2,534,221
|                                    |  |                   |           |      |   |           |  |   |          
|Total securities available for sale |  | ¥                 | 7,608,420 |      | ¥ | 6,666,956 |  | ¥ | 5,955,845
|                                    |  |                   |           |      |   |           |  |   |          



Japanesebonds. We invest in Japanese government bonds, local government bonds and corporate bonds, which generally yield higher returns on investment, yet are nearly as liquid, when compared with deposits and savings or call loans. We purchase Japanese
bonds primarily to meet future obligations arising from insurance and investment contracts.



Foreignbonds. We invest in government and corporate bonds of foreign issuers with a view toward generating interest income which is generally higher as compared with investments in Japanese bonds under
recent market conditions. We also invest with a view toward maintaining a certain degree of liquidity in our



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assets in the event of a major natural disaster in Japan that temporarily incapacitates the Japanese financial and monetary system and necessitates indemnity
payments under our policies. We manage and control foreign exchange exposures within certain parameters, primarily by using forward exchange contracts and currency options.



Japaneseequities. As part of our investment activities, we invest in equity securities of Japanese companies,
primarily in equity securities listed on the Tokyo Stock Exchange, consistent with our overall investment objectives. We also seek to maintain and enhance our business relationships with major corporate customers in Japan by investing in the equity
securities of those customers on a long-term basis.



Loans



The following table, prepared on a U.S. GAAP basis,
shows our investments in loans (other than those to related parties) as of each date indicated:



|                                            |  |                   |         |      |   |         |  |   |        
|------------------------------------------- |  | ----------------- | ------- | ---- | - | ------- |  | - | -------
|                                            |  | As of March 31,  
|                                            |  | 2005              |         | 2004 |   | 2003   
|                                            |  | (yen in millions)
|Mortgage loans on real estate               |  | ¥                 | 71,033  |      | ¥ | 129,076 |  | ¥ | 148,655
|Mortgage loans on vessels and facilities(1) |  |                   | 10,979  |      |   | 20,356  |  |   | 22,125 
|Collateral and bank-guaranteed loans(1)     |  |                   | 11,250  |      |   | 18,542  |  |   | 22,096 
|Unsecured loans(1)                          |  |                   | 359,696 |      |   | 357,504 |  |   | 440,997
|Policy loans                                |  |                   | 38,567  |      |   | 33,610  |  |   | 29,171 
|                                            |  |                   |         |      |   |         |  |   |        
|Total                                       |  | ¥                 | 491,525 |      | ¥ | 559,088 |  | ¥ | 663,044
|                                            |  |                   |         |      |   |         |  |   |        

---

|(1) | Included in other long-term investments in our balance sheet prepared in accordance with U.S. GAAP.
|--- | -----------------------------------------------------------------------------------------------------



Most of our loans are to corporate borrowers in Japan. Since the financial
needs of major corporate borrowers are at a low level under present economic conditions, and because these borrowers tend to look more to capital markets in raising funds, the aggregate amount of our loans outstanding has declined over the last few
years. In addition, we liquidated a portion of our loans in order to improve our risk/return profile.



Short-Term Investments



The following table, prepared on a U.S. GAAP basis, shows our short-term investments by type as of each date indicated:



|                                 |  |                   |         |      |   |         |  |   |        
|-------------------------------- |  | ----------------- | ------- | ---- | - | ------- |  | - | -------
|                                 |  | As of March 31,  
|                                 |  | 2005              |         | 2004 |   | 2003   
|                                 |  | (yen in millions)
|Call loans                       |  | ¥                 | 203,322 |      | ¥ | 587,092 |  | ¥ | 440,093
|Commercial paper                 |  |                   | 328,779 |      |   | 21,599  |  |   | 599    
|Deposits and other invested cash |  |                   | 159,668 |      |   | 273,206 |  |   | 219,678
|                                 |  |                   |         |      |   |         |  |   |        
|Total                            |  | ¥                 | 691,769 |      | ¥ | 881,897 |  | ¥ | 660,370
|                                 |  |                   |         |      |   |         |  |   |        



Call loans are
short-term loans, with maturities generally ranging from overnight to three weeks, that are made to banks, securities companies and money market dealers. We invest in call loans in order to maintain necessary liquidity in our investment portfolio
while seeking to generate returns based on interest rates that reflect current market conditions.



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Investment Results



The following table, prepared on a U.S. GAAP basis, shows our investment results for each of the periods indicated:



|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  
|--------------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                                                              |  | Year ended March 31, |        
|                                                                                              |  | 2005                 |         |   | 2004 |   |         | 2003 | 
|                                                                                              |  | (yen in millions)    |        
|Investment income:                                                                            |  |                      |         |   |      |   |         |      |  |   |         |  
|Interest on fixed maturities                                                                  |  | ¥                    | 73,677  |   |      | ¥ | 73,683  |      |  | ¥ | 65,762  |  
|Dividends from equity securities                                                              |  |                      | 47,216  |   |      |   | 36,692  |      |  |   | 32,785  |  
|Interest on mortgage loans on real estate                                                     |  |                      | 2,414   |   |      |   | 3,286   |      |  |   | 3,715   |  
|Rent from investment real estate                                                              |  |                      | 16,592  |   |      |   | 12,501  |      |  |   | 12,817  |  
|Interest on policy loans                                                                      |  |                      | 1,396   |   |      |   | 1,280   |      |  |   | 1,156   |  
|Interest on other long-term investments                                                       |  |                      | 6,585   |   |      |   | 9,339   |      |  |   | 11,475  |  
|Interest on short-term investments(1)                                                         |  |                      | 4,415   |   |      |   | 1,536   |      |  |   | 2,687   |  
|Others                                                                                        |  |                      | 1,423   |   |      |   | 1,850   |      |  |   | 1,715   |  
|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  
|Gross investment income(1)                                                                    |  |                      | 153,718 |   |      |   | 140,167 |      |  |   | 132,112 |  
|Less investment expenses                                                                      |  |                      | 20,521  |   |      |   | 13,994  |      |  |   | 23,801  |  
|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  
|Net investment income                                                                         |  |                      | 133,197 |   |      |   | 126,173 |      |  |   | 108,311 |  
|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  
|Realized gains (losses) on investments:                                                       |  |                      |         |   |      |   |         |      |  |   |         |  
|Fixed maturities                                                                              |  |                      | 3,432   |   |      |   | (8,399  | )    |  |   | 11,553  |  
|Equity securities                                                                             |  |                      | 64,672  |   |      |   | 4,645   |      |  |   | (37,957 | )
|Other investments                                                                             |  |                      | 18,646  |   |      |   | (101    | )    |  |   | (3,471  | )
|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  
|Realized gains (losses) on investments                                                        |  |                      | 86,750  |   |      |   | (3,855  | )    |  |   | (29,875 | )
|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  
|Gains (losses) on derivatives:                                                                |  |                      |         |   |      |   |         |      |  |   |         |  
|Interest rate swaps                                                                           |  |                      | 19,404  |   |      |   | (45,775 | )    |  |   | 68,011  |  
|Foreign exchange contracts                                                                    |  |                      | (12,752 | ) |      |   | 7,458   |      |  |   | 11,688  |  
|Credit default swaps                                                                          |  |                      | 2,871   |   |      |   | 6,797   |      |  |   | (3,996  | )
|Other                                                                                         |  |                      | (1,227  | ) |      |   | (5,235  | )    |  |   | 861     |  
|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  
|Gains (losses) on derivatives                                                                 |  |                      | 8,296   |   |      |   | (36,755 | )    |  |   | 76,564  |  
|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  
|Total net investment income, realized losses on investments and gains (losses) on derivatives |  | ¥                    | 228,243 |   |      | ¥ | 85,563  |      |  | ¥ | 155,000 |  
|                                                                                              |  |                      |         |   |      |   |         |      |  |   |         |  

---

|(1) | Certain amounts in our U.S. GAAP consolidated financial statements for the fiscal year ended March 31, 2004 and 2003 have been reclassified to conform to the new classifications
adopted during the fiscal year ended March 31, 2005. Accordingly, such reclassified amounts shown in this table for the fiscal years ended March 31, 2005, 2004 and 2003 are not directly comparable to the amounts for prior fiscal years.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Subsidiaries and Affiliates



Significant Subsidiaries



The following were our significant subsidiaries as of March 31, 2005, all of
which were wholly owned and incorporated in Japan, except as otherwise noted: Tokio Marine & Nichido Fire Insurance Co., Ltd., Tokio Marine & Nichido Life Insurance Co., Ltd., Tokio Marine & Nichido Financial Life Insurance Co., Ltd.
(formerly known as Skandia Life Insurance Company (Japan) Limited), Tokio Marine & Nichido Career Service Co., Ltd., Tokio Marine Europe Insurance Limited (incorporated in the United Kingdom), The Tokio Marine and Fire Insurance Company (Hong
Kong) Limited (incorporated in Hong Kong, China), Trans Pacific Insurance Company (incorporated in New York, U.S.A.), Tokio Millennium Re Ltd. (incorporated in Bermuda), Tokio Marine Global Re Limited (incorporated in Ireland), Tokio Marine Asset
Management Company, Limited (97.5% owned), Millea Asia Pte. Ltd. (incorporated in Singapore), The Tokio Marine and Fire Insurance Company (Singapore) Pte. Limited (incorporated in Singapore), Tokio Marine Brasil Seguradora S.A. (91.3% owned)
(incorporated in Brazil) and Tokio Marine Financial Solutions Ltd. (incorporated in the Cayman Islands).



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Relationships with the Mitsubishi Group



Tokio Marine & Nichido is a member of the Mitsubishi Group, which has evolved over a period of more than 100 years. The
Mitsubishi Group relationship, which is similar to that of other major Japanese corporate groups, is one of cooperation in areas of common interest within a group of companies, each operating independently under its own separate management.
Currently there are about 30 Mitsubishi Group companies engaged in a broad range of activities, including manufacturing, trading, natural resources, transportation, real estate, banking, securities and life and non-life insurance. We believe that we
write a substantial majority of the non-life insurance purchased by Mitsubishi Group companies.



Competition



There is
strong competition in the Japanese non-life insurance industry. We expect that, as deregulation of the insurance business continues, competition will intensify at all levels.



Competition within the non-life insurance industry involves, among other things, expansion of an agency network through the
training of new insurance agents, investment in information technology systems and the development and marketing of new insurance products and related services. We expect competition in premium rates and commissions to increase for our property and
casualty lines of business as a result of the continuing deregulation of the non-life insurance industry. We believe that it is important to continue to compete on the basis of the quality of services associated with our insurance products, such as
the giving of advice on risk management matters to business customers and extended-hour services for automobile insurance claims processing, rather than on premium rates being reduced.



Recent consolidation and alliances among non-life and life insurance companies in Japan have increased competition within
the industry. We represent one of the five major non-life insurer groupings that have emerged in the Japanese insurance industry. The others are: the Sompo Japan insurance group (formed by Yasuda Fire and Marine Insurance and others); the Mitsui
Sumitomo insurance group (formed by Mitsui Marine and Fire Insurance and Sumitomo Marine and Fire Insurance); the Aioi insurance group (formed by Chiyoda Fire and Marine Insurance and Daitokyo Fire and Marine Insurance); and the Nipponkoa insurance
group (formed by Nippon Fire and Marine Insurance and Koa Fire and Marine Insurance and others). There have also been alliances between non-life and life insurers, such as Sompo Japan with Dai-Ichi Mutual Life and Nipponkoa Insurance with Meiji
Yasuda Life and Taiyo Life.



Major insurance companies with
global operations have already entered the Japanese insurance market. We believe that the current strategy of these global insurance companies focuses on marketing methods and products that are not yet popular in Japan, such as direct marketing to
individual customers and risk-segmented automobile insurance. It is probable that over time some foreign insurers will succeed in increasing their sales of products in more popular lines of business such as voluntary automobile insurance. However,
the foreign companies market share is currently fairly limited. Some of the foreign insurers have already exited from the Japanese insurance market. We do not feel these companies pose a threat to our market position but we are closely
monitoring the situation and will respond if necessary.



Many
of Japans life insurance companies have established non-life insurance subsidiaries as permitted under the 1995 amendments to the Insurance Business Law. Although these non-life insurance subsidiaries have yet to make significant inroads into
the non-life insurance market, we continue to monitor the activities of these subsidiaries and their parent companies closely.



Life insurance providers in Japan can be classified into three categories: traditional life insurers; new entrants, such as the foreign life insurers and
subsidiaries of Japanese non-life insurers, including Tokio Marine & Nichido Life; and the postal life insurance system. The traditional life insurers continue to underwrite the large majority of privately underwritten life insurance in Japan.
As discussed in The Japanese Insurance Industry  Life Insurance Industry, life insurance subsidiaries of non-life companies were established in 1996



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and thereafter as a result of the deregulation of insurance businesses in Japan. The postal life insurance system, a public insurance system managed by Japan
Post, is a distinctive element of the Japanese life insurance market. Postal life insurance products are offered through the network of post offices located throughout Japan. Recently, there have been movements toward privatization of the postal
life insurance system as part of the plan for privatization of Japan Post initiated by the Japanese government.



Properties



We lease real property in Tokyo for use in our operations at the holding company level. We have moved our office location in July 2005 and the floor space
for our new office is approximately 13,400 square feet.



Tokio
Marine & Nichido owns and leases real property for use in its operations. Approximately 87% of the 8,040,278 square feet of real property that Tokio Marine & Nichido uses in its Japanese operations is owned. Tokio Marine & Nichido owns
two large buildings (25 stories and 15 stories) in Marunouchi, Tokyos central business district. Approximately 73% of the total space in these two buildings (1,241,280 square feet) is used by Tokio Marine & Nichido and its subsidiaries;
the rest is held for lease to tenants.



Tokio Marine &
Nichido also owns and utilizes approximately 670,000 square feet of floor space for its data center located in a suburb of Tokyo. In this center, Tokio Marine & Nichido utilizes five sets of leased computers with a total capacity of 4,153
million instructions per second, or MIPS. In addition, Tokio Marine & Nichido has a data center located in a suburb of Chiba prefecture. This center has total floor space of approximately 163,000 square feet and is equipped with three sets of
leased computers with a total capacity of 573 MIPS. The Chiba center serves as a backup center in case of a disaster in the Tokyo area. The Chiba center operates in conjunction with the Tokyo center to share the data processing load of Tokio Marine
& Nichido.



Employees



As of March 31, 2005, we had 18,910 employees on a consolidated basis, of
whom 17,024 were in the property and casualty insurance business, 1,474 were in the life insurance business and 412 were in other businesses, compared with 19,779 employees on a consolidated basis as of March 31, 2004, of whom 18,125 were in the
property and casualty insurance business, 1,237 were in the life insurance business and 417 were in other businesses. As of March 31, 2003, we had 20,221 employees on a consolidated basis, of whom 19,151 were in the property and casualty insurance
business, 944 were in the life insurance business and 126 were in other businesses. A majority of Tokio Marine & Nichido and Tokio Marine & Nichido Life employees are members of their respective labor unions, which negotiate with the
respective companies concerning remuneration and working conditions. We consider our labor relations to be good.



Legal Proceedings



Neither we nor any of our operating subsidiaries is a party to any material pending legal proceedings other than routine litigation incidental to our
business. In addition, we are not aware of any litigation that is reasonably likely to have a material adverse effect on our financial position or results of operations.



In May 2005, one of Tokio Marine & Nichidos U.S. subsidiaries received subpoenas from the United States
Attorneys Office for the Southern District of New York and the SEC, requesting documents relating to certain types of reinsurance transactions, in connection with what we believe are investigations involving a number of industry participants.
We are actively cooperating with the relevant authorities with respect to these matters.



In June 2005, the Australian office of Tokio Marine & Nichido received a request from the Australian Prudential Regulation Authority, or APRA, to produce documents relating to certain reinsurance transactions with
a particular reinsurance company. We have responded to APRAs request. We do not expect our operations or financial position to be affected by this regulatory document request.



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MANAGEMENTS DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS



You should read the following discussion and analysis in conjunction with our
U.S. GAAP consolidated financial statements included in this annual report, together with the related notes. The following discussion is based on those U.S. GAAP consolidated financial statements, except as otherwise noted. Our fiscal year end is
March 31.



Overview



We are principally engaged in the insurance business in Japan and in
overseas markets. We offer property and casualty insurance products as well as life insurance products.



In the year ended March 31, 2005, our property and casualty insurance business generated 87.3% of our operating income and 80.7% of our net income. The
remainder was generated primarily by our life insurance business.



Our operating income consists of premiums from our property and casualty insurance policies, life premiums, net investment income, realized gains (losses) on investments, gains (losses) on derivatives and other income. We earn most of our
premiums from our operations in Japan. Our operating costs and expenses consist primarily of losses and claims under our property and casualty insurance policies, policy benefits and losses under our life insurance policies and policy acquisition
costs.



We believe that our results of operations and financial
condition over the past three fiscal years have been influenced by the following major trends:



| |  |  | Relatively stable value of Japanese equities in the year ended March 31, 2005, or fiscal 2005, and a significant increase in Japanese equity prices in the year ended March 31, 2004,
or fiscal 2004, following a significant decrease in Japanese equity prices in the year ended March 31, 2003, or fiscal 2003, which have resulted in fluctuations in our realized and unrealized gains (losses) on investments;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fluctuations in long-term interest rates in Japan, in particular a slight decrease in fiscal 2005, subsequent to a significant increase in fiscal 2004 and a significant decrease in
fiscal 2003. An increase in long-term interest rates has had the effect of increased losses on derivatives and decreased unrealized gains on investments and the value of our policyholders contract deposits, while a decrease in long-term
interest rates has had the opposite effect;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Increased competition in the property and casualty insurance business, including price competition which has required us to offer competitive products at competitive rates;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Slowing demographic growth and an aging population in Japan, which have limited the overall growth potential of the individual insurance market in Japan while providing growth
opportunities for insurance products that respond to the needs of the elderly, such as third sector insurance;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Limited growth in the number of automobiles in Japan, which has affected the growth potential for automobile insurance in Japan; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Improving economic activity in Japan, as Japans real gross domestic product grew by 1.9% in fiscal 2005 and by 2.0% in fiscal 2004, after limited growth of 0.8% in fiscal
2003.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following is a discussion of our
results of operations in fiscal 2005 compared to fiscal 2004. For a detailed discussion of changes in our results of operations, see Results of Operations.



| |  |  | Total operating income increased in fiscal 2005 by ¥201,579 million, or 9.1%, to ¥2,409,097 million, reflecting primarily an increase in realized gains on investments and
gains on derivatives.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Total operating cost and expenses increased in fiscal 2005 by ¥247,240 million, or 12.0%, to ¥2,302,491 million, reflecting primarily an increase in losses, claims and loss
adjustment expenses in our property and casualty insurance business.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | As a result, income before extraordinary items and cumulative effect of accounting changes decreased by ¥25,355 million, or 24.6%, to ¥77,527 million. The main reason for
this decrease was an increase in losses, claims and loss adjustment expenses in our property and casualty insurance business, partially offset by an increase in realized gains (losses) on investments.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Net income decreased in fiscal 2005 by ¥10,923 million, or 10.6%, to ¥91,959 million. In fiscal 2005, net income included an extraordinary item amounting to ¥14,458
million, which was unallocated negative goodwill arising from the business combination with Nisshin Fire.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following is a discussion of our results of operations in fiscal 2004 compared to fiscal 2003. For a detailed discussion of changes in our results of
operations, see  Results of Operations.



| |  |  | Total operating income increased in fiscal 2004 by ¥20,415 million, or 0.9%, to ¥2,207,518 million, reflecting primarily an increase in net premiums written for property and
casualty insurance and a decrease in realized losses on investments that was partially offset by a decrease in life premiums and an increase in losses on derivatives.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Total operating cost and expenses increased in fiscal 2004 by ¥69,456 million, or 3.5%, to ¥2,055,251 million, reflecting primarily an increase in losses, claims and loss
adjustment expenses in our property and casualty insurance business, partially offset by a decrease in policy benefits and losses for life and policy acquisition costs.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | As a result, income before extraordinary items and cumulative effect of accounting changes decreased by ¥26,812 million, or 20.7%, to ¥102,882 million. The main reason for
this decrease was an increase in losses on derivatives that are primarily utilized in our economical hedging activities for asset liability management, partially offset by improvement in underwriting results.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Net income decreased in fiscal 2004 by ¥275,135 million, or 72.8%, to ¥102,882 million. In fiscal 2003, net income included an extraordinary item amounting to ¥248,323
million, which was unallocated negative goodwill arising from the business combination with Nichido Fire.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



We completed the merger of our property and casualty insurance subsidiaries, Tokio Marine and Nichido Fire, on October 1, 2004. The objectives of the
merger were to maximize our corporate value by creating synergies, promoting a growth strategy which combines the strengths of both companies and increases efficiency through a larger scale of business, and to further reduce costs. See
Business  Recent Developments  Merger of Tokio Marine and Nichido Fire.



Economic Conditions



Our financial condition and results of operations are generally affected by economic conditions in Japan and, to a lesser extent, other parts of the world in which we conduct business.



While the Japanese economy faced a number of volatile and challenging
economic trends and conditions over the last decade, it has been experiencing some signs of recovery in recent years, and such trend continued during the year ended March 31, 2005. Japans economic condition has been characterized by:



| |  |  | Improving economic activity, as Japanese real gross domestic product grew by 0.8% in the year ended March 31, 2003, 2.0% in the year ended March 31, 2004 and 1.9% in the year ended
March 31, 2005;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A slight decline in total levels of outstanding Japanese government debt in the year ended March 31, 2005 to 41.8% of the governments total revenue, from a historical high at
44.6% in the year ended March 31, 2004. Ratings of Japanese government bonds by major rating agencies remained stable, and one international ratings agency changed the outlook for Japanese government debt from negative to stable subsequent to March
31, 2005;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Continuing significant levels of corporate bankruptcy filings, despite a decrease of 15.9% from 15,790 cases filed in the previous year to 13,276 cases filed in the year ended March
31, 2005. Total liabilities of these insolvent companies for the year ended March 31, 2005 totaled ¥7,043 billion, a decrease of 34.1% from ¥10,688 billion in the previous year;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | A very low interest rate environment, with the Bank of Japan maintaining a policy of near zero interest rates since March 2001;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------



| |  |  | Continuing decline in real estate values, with government-appraised land prices declining an average of 4.6% for residential areas and 5.6% for commercial areas in calendar year
2004, which represented the fourteenth straight year of decline;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Improving equity markets, with the Nikkei Stock Average, which is an average of 225 stocks listed on the Tokyo Stock Exchange, remaining stable at 11,668.95 during the year ended
March 31, 2005 after increasing 46.9% to 11,715.39 during the year ended March 31, 2004, following the decline of 27.6% to 7,972.71 during the year ended March 31, 2003. Subsequent to March 31, 2005, the Nikkei Stock Average increased to 12,986.78
on September 15, 2005; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Significant exchange rate movements, as the value of the yen against the U.S. dollar fluctuated from a high of ¥102.26 to a low of ¥114.30 in the year ended March 31, 2005,
from a high of ¥104.18 to a low of ¥120.55 in the year ended March 31, 2004, and from a high of ¥115.71 to a low of ¥133.40 in the year ended March 31, 2003. As of September 15, 2005, the U.S. dollar exchange rate was ¥110.48.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The U.S. economy was able to continue its
positive growth during the year ended March 31, 2005. The U.S. Federal Reserve has been increasing interest rates in the past few years, bringing the federal fund rates from 1.00% as of June 25, 2003 to 3.75% as of September 20, 2005. U.S. equity
indices such as the Nasdaq Composite Index and the Dow Jones Industrial Average generally remained stable in the year ended March 31, 2005. Subsequent to March 31, 2005, the Nasdaq Composite Index increased from 1,999.23 on March 31, 2005 to
2,146.15 on September 15, 2005 and the Dow Jones Industrial Average increased from 10,507.76 on March 31, 2005 to 10,558.75 on September 15, 2005.



The European economy remained weak throughout the year ended March 31, 2005 and experienced little growth.



In the year ended March 31, 2005, non-Japan Asia generally experienced strong
growth.



Business Combination



We were formed as the holding company for Tokio Marine and Nichido Fire on
April 2, 2002. See Business  Formation of Millea Holdings.



For U.S. GAAP consolidated financial statement reporting purposes, our formation was treated as a business combination of Tokio Marine and Nichido Fire. We accounted for this business combination using the purchase
method of accounting, pursuant to which Tokio Marine was treated as having acquired Nichido Fire.



Under the purchase method of accounting, we generated ¥317.8 billion of negative goodwill in connection with the business combination, representing
the amount by which the net assets of Nichido Fire acquired by Tokio Marine exceeded the deemed purchase price for those net assets. For U.S. GAAP financial reporting purposes, we were required to allocate a portion of that negative goodwill to
various long-term assets acquired from Nichido Fire. We were also required to recognize as an extraordinary gain the unallocated portion of that negative goodwill. This extraordinary gain, which amounted to ¥248.3 billion, is reflected in our
net income for the year ended March 31, 2003.



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Business Alliance



Pursuant to an agreement reached in March 2003, we have entered into a strategic alliance with Nisshin Fire and acquired approximately 31% of the total
outstanding shares of Nisshin Fire as of February 2005. For U.S. GAAP financial reporting purposes, unallocated negative goodwill arising from the transaction in the amount of ¥14,458 million was recognized as extraordinary gain, which is
reflected in our net income for the year ended March 31, 2005.



Critical
Accounting Policies



The accounting policies that we
follow when preparing U.S. GAAP consolidated financial statements are fundamental to understanding our financial condition and results of operations. Many of these accounting policies require management to make difficult, complex or subjective
judgments regarding the valuation of assets and liabilities.



Our significant accounting policies are summarized in the notes to our U.S. GAAP consolidated financial statements included in this annual report. The following is a summary of our critical accounting policies.



Impairment of Securities Available for Sale



Under U.S. GAAP, we are required to recognize an impairment loss for
other than temporary declines in the fair value of equity and fixed maturity securities available for sale. Determinations of whether a decline is other than temporary often involve estimating the outcome of future events. Management
judgment is required in determining whether existing factors indicate that an impairment loss should be recognized at any balance sheet date. These judgments are based on subjective as well as objective factors.



When it is determined that a decline in value is other than temporary, the
carrying value of the security is reduced to its fair value, with a corresponding charge to earnings. This corresponding charge is referred to as an impairment and is reflected in Realized losses on investments in the consolidated income
statement. See  Results of Operations for a discussion of the effects of impairments on our operating results for the years ended March 31, 2005, 2004 and 2003.



Among the factors that management considers when determining whether declines in the value of equity securities below their
costs are other than temporary is the likelihood that those declines will be reversed. For marketable equity securities, management evaluates each of the securities and considers a variety of facts, including (i) whether the value of the securities
continued to be below cost for more than 12 months, (ii) whether the value of the securities continued to be more than 20% below cost during any six-month period and (iii) whether there has been a decline in value to below 30% of cost as measured at
the end of any fiscal year. For non-marketable equity securities and fixed maturity securities, management considers whether sharp declines in value over a short period of time reflect fundamental valuation issues such as the deterioration of the
issuers financial position and credit rating.



When
evaluating whether declines in the value of investments are other than temporary, management considers the current and expected economic conditions. Managements general expectation at March 31, 2005 was that economic conditions in Japan would
improve from the economic conditions that prevailed during the year ended March 31, 2005, when Japans real GDP grew at a 1.9% annual rate. Managements general expectation at March 31, 2004 was also that economic conditions in Japan would
improve from the economic conditions that prevailed during the year ended March 31, 2004, when Japans real GDP grew at a 2.0% annual rate. The level of impairment losses can be expected to increase when economic conditions deteriorate and to
decrease when economic conditions improve. If the economy performs differently from managements expectations, actual impairment losses could be different from the estimates.



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After considering these and other factors, we write down individual securities holdings to fair value
when management determines that a decline in fair value below the acquisition cost of the securities is other than temporary. See also  Results of Operations  Year Ended March 31, 2005 Compared to Year Ended March 31, 2004
and  Results of Operations  Year Ended March 31, 2004 Compared to Year Ended March 31, 2003.



See note 3 to our consolidated financial statements for more information on the amortized cost and fair value of fixed maturity securities available for
sale by contractual maturity and for the fair value of equity securities available for sale.



Valuation Allowances for Loan Losses



The valuation allowances for loan losses represent managements estimate of probable losses in our loan portfolios. The evaluation process involves a number of estimates and judgments. Our allowances for loan
losses consist of specific allowances for specifically identified impaired borrowers and general allowances for homogeneous pools of commercial and consumer loans, and other loans which are not specifically identified as impaired.



We use a credit rating system to determine the credit quality of our
borrowers. Borrowers are graded using information believed to reflect their ability to fulfill their obligations. These factors are based on our evaluation of current and historical information as well as subjective assessments and interpretations.
Emphasizing one factor over another or considering additional factors that may be relevant in determining the credit rating of a particular borrower, but which are not an explicit part of our methodology, could impact the credit rating we assign to
that borrower.



The allowance is based on two principles of
accounting:



SFAS No. 114, Accounting
by Creditors for Impairment of a Loan, and SFAS No. 118, Accounting by Creditors for Impairment of a Loan  Income Recognition and Disclosures, which require that losses be accrued based on the difference between the loan
balance and the present value of future cash flows or values that are observable in the secondary market; and



SFAS No. 5, Accounting for Contingencies, which requires that losses be accrued when they are probable of occurring and
quantitatively estimable.



We record specific allowances for
loan losses when we determine that an individual borrower is not able to keep current with payments on its loans. Large groups of smaller balance homogeneous loans and other loans which are not specifically identified as impaired are collectively
evaluated for impairment. For large groups of smaller balance homogeneous loans, we record unallocated valuation allowances, or general allowances, for loan losses to reflect loss contingencies underlying individual loan portfolios.
Based on our past experience, it is probable that a certain percentage of our loans are impaired at any balance sheet date even if there is no specific loss information for individual loans. We calculate the amount of the general allowance for any
period by taking aggregate loans, which excludes loans covered by specific allowances, for each credit category and multiplying the amount by the average of each categorys overall loan loss ratio in the past three years. This estimated
allowance is then adjusted for qualitative factors in accordance with the current macroeconomic conditions prevailing at each period and current lending policies and practices. Since these qualitative factors reflect factors not present in the
quantitative analysis, they are highly subjective. The amount of the general allowance has varied from year to year due in part due to fluctuations in the historical loan loss ratios.



Determination of the adequacy of allowances for loan losses requires an exercise of considerable judgment and the use of
estimates, such as those discussed above. To the extent that actual losses exceed managements estimates, additional allowance for loan losses may be required that could have a materially adverse impact on our operating results and financial
condition in future periods.



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During the years ended March 31, 2005, 2004 and 2003, loan losses of ¥5,961 million, ¥8,312
million and ¥ 6,240 million, respectively, were recorded, which represented 1.13%, 1.36% and 0.97%, respectively, of the average loan portfolio during the period. As of March 31, 2005 and 2004, the allowance for loan losses was ¥10,198
million and ¥ 19,732 million, respectively, which represented 2.07% and 3.53%, respectively, of the outstanding loan portfolio.



Our loan asset portfolio consists mainly of loans to individuals and corporations resident in Japan. Therefore, the level of impairment losses can
generally be expected to increase when economic conditions in Japan deteriorate and decrease when economic conditions in Japan improve. If the Japanese economy performs differently from managements expectations, actual impairment losses could
be different from the estimates.



Furthermore, as of March 31,
2005, we had mortgage loans on real estate mainly located in Japan. While impairments on these mortgage loans are influenced by a number of factors, the level of impairment losses can be expected to increase when conditions of the real estate market
in Japan deteriorate and decrease when conditions of the real estate market in Japan improve. If conditions of the real estate market in Japan differ from managements expectations, actual impairment losses might be different from the
estimates.



Valuation of Financial Instruments with No Available Market
Prices



Certain assets and liabilities, including
fixed maturity securities available for sale and financial derivatives, are reflected at their estimated fair values in our U.S. GAAP consolidated financial statements. As of March 31, 2005, 12.6% of the equity securities available for sale,
virtually all financial derivatives and a small portion of the fixed maturity securities available for sale that we held in our investment portfolio were not listed or quoted, meaning there were no available market prices for these financial
instruments.



For financial instruments with no available
market prices, we determine fair values for the substantial majority of our portfolios based upon externally verifiable model inputs and quoted prices, such as exchange-traded prices and broker-dealer quotations of other comparable instruments, and
use market interest rates in determining discount factors. All financial models, which are used solely for pricing each financial instrument, must be validated and periodically reviewed by qualified personnel independent of the division that created
the model.



We determine fair values of equity securities with
no available market price based on various valuation techniques. These techniques generally commence with obtaining the investees financial statements and calculating an adjusted net asset value. Additional valuation techniques are then
applied as appropriate and may include comparisons with similar companies which are listed and thus have available fair value information and/or the use of internal and external valuation experts. All internal valuations are prepared and then
reviewed by two separate departments to ensure that the valuations are our best estimate of the investments fair value.



The fair value of derivatives is determined based upon liquid market prices evidenced by exchange-traded prices, broker-dealer quotations or prices of
other transactions with similarly-rated counterparties. If available, quoted market prices provide the best indication of fair value. If quoted market prices are not available for derivatives, we discount expected cash flows using market interest
rates commensurate with the credit quality and maturity of the investment. Alternatively, we may use model pricing to determine an appropriate fair value (for example, option pricing models). In determining fair values, we consider various factors,
including time value, volatility factors and the values of underlying options, warrants and derivatives.



Fair value estimates are made at a specific point in time, based upon relevant market information and information about the financial instruments. These
estimates are subjective in nature and involve uncertainties and matters of significant judgment, and changes in assumptions made could significantly affect these estimates. See Quantitative and Qualitative Disclosure About Market
Risk.



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Amortization of Deferred Policy Acquisition Costs



We defer certain costs incurred in acquiring new business to the extent such
costs are deemed recoverable from future profits. These costs are principally external sales agents commissions, in-house sales agents salaries, other compensation and other underwriting costs. For property and casualty insurance
products, we defer and amortize (i.e., expense) these costs over the period in which the related premiums written are earned. For traditional life insurance products, we generally defer and amortize these costs over the premium paying period of the
policy. For investment contracts, we defer and amortize these costs with interest, in relation to the incidence of estimated gross profits to be realized over the estimated lives of the contracts. We review our deferred policy acquisition costs
periodically to determine if they are likely to be offset by future premium revenue recognition. If any of these deferred policy acquisition costs are not considered recoverable, we write off those costs in the current year. For the years ended
March 31, 2005, 2004 and 2003, we did not have any material writeoffs of deferred policy acquisition costs reflected in our income statements.



Estimates of future gross profits are made at a specific point in time based upon relevant available information. These estimates are subjective in nature
and involve uncertainties and matters of significant judgment, and changes in assumptions made could significantly affect these estimates.



Insurance Reserves



Loss, Claim and Loss Adjustment Expense Liability



Our loss, claim and loss adjustment expense liability represents estimates of future payments that we will make in respect of property and casualty
insurance claims, including expenses relating to those claims for insured events that have already occurred as of the balance sheet date.



As of March 31, 2005, our loss, claim and loss adjustment expense liability accrued by line of business was as follows:



|                                       |  |                                                                        |          
|-------------------------------------- |  | ---------------------------------------------------------------------- | ---------
|Line of Business                       |  | Loss, claim and loss adjustment expense liability as of March 31,
2005
|                                       |  | (yen in millions)                                                     
|Property and casualty business:        |  |                                                                        |          
|Voluntary automobile                   |  | ¥                                                                      | 314,452  
|CALI                                   |  |                                                                        | 504,559  
|Fire & allied                          |  |                                                                        | 118,292  
|Personal accident                      |  |                                                                        | 38,894   
|Marine  Cargo & transit               |  |                                                                        | 19,593   
|Marine  Hull                          |  |                                                                        | 25,740   
|Other                                  |  |                                                                        | 281,674  
|Loss adjustment expenses  unallocated |  |                                                                        | 41,992   
|                                       |  |                                                                        |          
|Total                                  |  | ¥                                                                      | 1,345,196
|                                       |  |                                                                        |          



The establishment of
our loss, claim and loss adjustment expense liability is an inherently uncertain process, involving assumptions as to factors such as court decisions, changes in laws, social, economic and demographic trends, inflation and other factors affecting
claim costs.



We estimate loss, claim and loss adjustment
expense liability for reported claims on a case-by-case basis, based on the facts known to us at the time reserves are established. We periodically adjust these estimates to recognize the estimated ultimate cost of a claim. In addition, we establish
reserves in our property and casualty business to recognize the estimated cost of losses that have occurred but about which we have not yet been notified. When actual claims experience differs from our previous estimate, the resulting difference
will be



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reflected in our reported results for the period of the change in the estimate. See Business  Property and Casualty Insurance  Property and
Casualty Losses and Reserves  Property and Casualty Reserves.



As claims are reported over time, not all claims incurred during a fiscal period will be reported to us by the balance sheet date. Accordingly, we estimate incurred but not yet reported amounts using actuarial
methods. We apply actuarial methods appropriate for each line of business. The majority of the loss, claim and loss adjustment expense liability is determined utilizing an incurred loss triangle method. Under the incurred loss triangle method,
reported losses (i.e., paid claims plus case reserves) and loss ratios are tracked by accident year for each line of business to determine loss development factors. These historical loss development factors, along with any known or anticipated
trends in claims development, are considered by management in determining the loss development factor to be utilized in calculating the appropriate level of reserve for the current fiscal year.



Changes in reported losses may affect our historical loss development
factors, which in turn may affect our estimate of the amount of losses, claims and loss adjustment expense liability. For example, we estimate that a 1% increase in paid claims during the fiscal year ended March 31, 2005, together with a 1% increase
in case reserves as of March 31, 2005, would have increased our aggregate losses, claims and loss adjustment expense liability as of March 31, 2005 by approximately 1.26%.



In developing our property and casualty reserves, we review our actual experience against our expectations and adjust the
reserves as appropriate. Given the subjectivity associated with bodily injuries, we consider the trend of severity and frequency information available to us carefully in determining the amount of reserves for bodily-injury claims. During the year
ended March 31, 2005, we noted an upward trend in the claims costs with respect to bodily-injury claims in our voluntary automobile business. This trend contributed to an approximately ¥6 billion increase of losses, claims and loss adjustment
expense and the corresponding liability on the balance sheet as of March 31, 2005. We currently expect this trend to continue in the year ending March 31, 2006 and thereafter.



We consider property and casualty reserves expected to be paid after five years to be of a longer-tailed nature. Our
longer-tailed balances consist primarily of bodily-injury claims. Settlement of claims involving longer-tailed reserves is inherently more risky and uncertain as claims cost may escalate as time progresses. We estimate that approximately 5.4% of our
property and casualty reserves as of March 31, 2005 relate to claims that will be paid after five or more years.



Claims for non-bodily injuries are generally relatively short-tailed, as they are generally expected to be paid within one to two years. Our actual
experience under such claims generally does not differ significantly from our expectations, which helps to reduce the sensitivity of our overall property and casualty loss reserves to future developments and trends.



For the years ended March 31, 2005, 2004 and 2003, our adverse development
for claims expenses for all lines of business related to prior years (net of reinsurance) was as follows:



|                                                                                                                                                                               |  |                                       |       |   |      |   |       |      |  |   |      |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------------------------- | ----- | - | ---- | - | ----- | ---- |  | - | ---- | -
|                                                                                                                                                                               |  | Year ended March 31,                  |      
|                                                                                                                                                                               |  | 2005                                  |       |   | 2004 |   |       | 2003 | 
|                                                                                                                                                                               |  | (yen in millions, except percentages) |      
|Claims expenses recognized in the current year relating to prior years, net of reinsurance                                                                                     |  | ¥                                     | 5,140 |   |      | ¥ | 9,325 |      |  | ¥ | 438  |  
|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 |  |                                       | 0.58  | % |      |   | 1.18  | %    |  |   | 0.07 | %
|Claims expenses recognized in the current year relating to prior years as a percentage of net incurred losses, net of
reinsurance                                              |  |                                       | 0.39  | % |      |   | 0.83  | %    |  |   | 0.04 | %



As set forth in the
above table, subsequent development on prior years claims represented an immaterial portion of the current years claims expense for the periods presented.



49



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##### Table of Contents

Policy Benefits and Losses



We estimate policy benefits and losses using long-term actuarial assumptions of future investment yields, mortality,
morbidity, policy terminations and expenses. These assumptions include provisions for adverse deviations and generally vary by characteristics such as type of coverage, year of issue and policy duration. Future investment yield assumptions are
determined at the time the policy is issued based upon prevailing investment yields as well as estimated reinvestment yields. Mortality, morbidity and policy termination assumptions are based on our experience and on industry experience prevailing
at the time the policies are issued. Expense assumptions are based on our general experience and include expenses to be incurred beyond the premium-paying period.



Earthquake Insurance



We treat our contractual right to the funds held by JER as a deposit asset. The funds held by JER to which we have a contractual right but have not been
required to fund earthquake losses remain a deposit asset on our balance sheet. As of March 31, 2005, we had a contractual right to ¥106,271 million of the funds held by JER, and since such amount had not been required to fund any significant
earthquake losses, it remained a deposit asset on our balance sheet.



The premiums earned (net of reinsurance), claims incurred (net of reinsurance) and the resulting profit for JER-related policies for the years ended March 31, 2005, 2004 and 2003 are as follows:



|                                    |  |                      |       |      |   |       |  |   |      
|----------------------------------- |  | -------------------- | ----- | ---- | - | ----- |  | - | -----
|                                    |  | Year ended March 31,
|                                    |  | 2005                 |       | 2004 |   | 2003 
|                                    |  | (yen in millions)   
|Premiums earned, net of reinsurance |  | ¥                    | 5,284 |      | ¥ | 4,930 |  | ¥ | 4,550
|Losses incurred, net of reinsurance |  |                      |      |      |   |      |  |   |     
|                                    |  |                      |       |      |   |       |  |   |      
|Profit as per above                 |  | ¥                    | 5,284 |      | ¥ | 4,930 |  | ¥ | 4,550
|                                    |  |                      |       |      |   |       |  |   |      



During the years ended
March 31, 2005, 2004 and 2003, there were no significant earthquake events covered by our JER policies and we did not record any losses related to these policies. In the event that in future periods earthquake events covered by our JER policies
occur, we may experience significant losses related to our JER policies.



Accounting for Deposit-Type Insurance Products



We allocate premiums for the indemnity and investment portions of deposit-type insurance products at the inception of the policy. The premium for the indemnity portion is calculated the same way that the premium for a traditional indemnity
policy with no savings portion is calculated. The premium for the savings portion represents the present value of the lump-sum or annuity refund, discounted using the committed interest rate and the total loss termination rate. Total
loss termination occurs when a full payout is made for the indemnity portion of the contract, in which case the policy terminates without any maturity refund being paid to the policyholder. The weighted average annual frequency of our total loss
terminations for the three-year period ended March 31, 2005 was approximately 0.05%.



Premiums for the savings portion of the contract are accounted for as an increase to the liability for refunds captioned Policyholders contact deposits. At the end of each fiscal year, the present
value of future payments of maturity refunds of contracts in force, net of the present value of the savings portion of future premiums, is accounted for as Policyholders contact deposits. The present value of future cash flows is
calculated using the committed interest rate and the total loss termination rate, which are both set at the inception of the contracts.



Policy acquisition costs are not charged to the savings portion of the contracts. Costs associated with policy acquisition of deposit-type products are
charged to the insurance portion and amortized over the contract period. This is based on the observation that there is no substantial difference in the level of policy acquisition costs depending on whether the savings feature is incorporated.



50



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##### Table of Contents

Securities Available for Sale



At March 31, 2005 and 2004, the fair value of our fixed maturity securities available for sale was ¥3,963 billion and
¥3,210 billion, respectively, and the fair value of our equity securities available for sale was ¥3,646 billion and ¥3,457 billion, respectively. Changes in the fair value of our securities available for sale can have a significant
impact on our results of operations, as we are required to recognize losses for declines in fair value below cost that we determine to be other than temporary in nature. See  Critical Accounting Policies  Impairment of
Securities Available for Sale.



For fixed maturity
securities available for sale, we use quoted market values to determine fair value. If quoted market values are not available, we instead use quoted market values for similar securities. For equity securities available for sale, which include common
stock and non-redeemable preferred stock, we primarily use quoted market prices to determine fair value. As of March 31, 2005 and 2004, approximately 83% and 87%, respectively, of our equity securities available for sale were listed on Japanese or
foreign stock exchanges.



The following table shows the fair
value of our securities available for sale, broken down by security rating, as of March 31, 2005:



|                                    |  |                          |           |                     |   |                  |  |                                        |           |  |       |  
|----------------------------------- |  | ------------------------ | --------- | ------------------- | - | ---------------- |  | -------------------------------------- | --------- |  | ----- | -
|                                    |  | Fair value               |          
|                                    |  | Fixed maturitysecurities |           | Equitysecurities(1) |   | Total securities |  | % of Totalsecuritiesavailable for sale |          
|                                    |  | (yen in millions)        |          
|Investment grade                    |  | ¥                        | 3,880,861 |                     | ¥ | 2,865,643        |  | ¥                                      | 6,746,504 |  | 88.7  | %
|Non-investment grade                |  |                          | 2,704     |                     |   | 52,575           |  |                                        | 55,279    |  | 0.7   |  
|Not rated                           |  |                          | 79,076    |                     |   | 727,561          |  |                                        | 806,637   |  | 10.6  |  
|                                    |  |                          |           |                     |   |                  |  |                                        |           |  |       |  
|Total securities available for sale |  | ¥                        | 3,962,641 |                     | ¥ | 3,645,779        |  | ¥                                      | 7,608,420 |  | 100.0 | %
|                                    |  |                          |           |                     |   |                  |  |                                        |           |  |       |  

---

|(1) | We classify equity securities based upon the issuers long-term bond rating.
|--- | ----------------------------------------------------------------------------



The following table shows the fair value of our securities available for sale, broken down by security rating, as of March
31, 2004:



|                                    |  |                          |           |                      |   |                  |  |                                         |           |  |       |  
|----------------------------------- |  | ------------------------ | --------- | -------------------- | - | ---------------- |  | --------------------------------------- | --------- |  | ----- | -
|                                    |  | Fair value               |          
|                                    |  | Fixed maturitysecurities |           | Equity securities(1) |   | Total securities |  | % of Total securitiesavailable for sale |          
|                                    |  | (yen in millions)        |          
|Investment grade                    |  | ¥                        | 3,052,685 |                      | ¥ | 2,621,362        |  | ¥                                       | 5,674,047 |  | 85.1  | %
|Non-investment grade                |  |                          | 5,798     |                      |   | 111,301          |  |                                         | 117,099   |  | 1.8   |  
|Not rated                           |  |                          | 151,099   |                      |   | 724,711          |  |                                         | 875,810   |  | 13.1  |  
|                                    |  |                          |           |                      |   |                  |  |                                         |           |  |       |  
|Total securities available for sale |  | ¥                        | 3,209,582 |                      | ¥ | 3,457,374        |  | ¥                                       | 6,666,956 |  | 100.0 | %
|                                    |  |                          |           |                      |   |                  |  |                                         |           |  |       |  

---

|(1) | We classify equity securities based upon the issuers long-term bond rating.
|--- | ----------------------------------------------------------------------------



The following table shows gross unrealized losses on our securities available for sale, broken down by security rating, as
of March 31, 2005:



|                                    |  |                          |         |   |                     |   |        |                 |  |   |                                          |   |  |       |  
|----------------------------------- |  | ------------------------ | ------- | - | ------------------- | - | ------ | --------------- |  | - | ---------------------------------------- | - |  | ----- | -
|                                    |  | Gross unrealized losses  |        
|                                    |  | Fixed maturitysecurities |         |   | Equitysecurities(1) |   |        | Totalsecurities |  |   | % of Total securities available for sale |  
|                                    |  | (yen in millions)        |        
|Investment grade                    |  | ¥                        | (41,209 | ) |                     | ¥ | (1,035 | )               |  | ¥ | (42,244                                  | ) |  | 84.1  | %
|Non-investment grade                |  |                          |        |   |                     |   | (127   | )               |  |   | (127                                     | ) |  | 0.3   |  
|Not rated                           |  |                          | (17     | ) |                     |   | (7,802 | )               |  |   | (7,819                                   | ) |  | 15.6  |  
|                                    |  |                          |         |   |                     |   |        |                 |  |   |                                          |   |  |       |  
|Total securities available for sale |  | ¥                        | (41,226 | ) |                     | ¥ | (8,964 | )               |  | ¥ | (50,190                                  | ) |  | 100.0 | %
|                                    |  |                          |         |   |                     |   |        |                 |  |   |                                          |   |  |       |  

---

|(1) | We classify equity securities based upon the issuers long-term bond rating.
|--- | ----------------------------------------------------------------------------



51



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##### Table of Contents

The following table shows gross unrealized losses on our securities available for sale, broken down by
security rating, as of March 31, 2004:



|                                    |  |                          |         |   |                     |   |         |                  |  |   |                                        |   |  |       |  
|----------------------------------- |  | ------------------------ | ------- | - | ------------------- | - | ------- | ---------------- |  | - | -------------------------------------- | - |  | ----- | -
|                                    |  | Gross unrealized losses  |        
|                                    |  | Fixed maturitysecurities |         |   | Equitysecurities(1) |   |         | Total securities |  |   | % of Totalsecuritiesavailable for sale |  
|                                    |  | (yen in millions)        |        
|Investment grade                    |  | ¥                        | (42,852 | ) |                     | ¥ | (340    | )                |  | ¥ | (43,192                                | ) |  | 80.9  | %
|Non-investment grade                |  |                          |        |   |                     |   | (122    | )                |  |   | (122                                   | ) |  | 0.2   |  
|Not rated                           |  |                          | (134    | ) |                     |   | (9,963  | )                |  |   | (10,097                                | ) |  | 18.9  |  
|                                    |  |                          |         |   |                     |   |         |                  |  |   |                                        |   |  |       |  
|Total securities available for sale |  | ¥                        | (42,986 | ) |                     | ¥ | (10,425 | )                |  | ¥ | (53,411                                | ) |  | 100.0 | %
|                                    |  |                          |         |   |                     |   |         |                  |  |   |                                        |   |  |       |  

---

|(1) | We classify equity securities based upon the issuers long-term bond rating.
|--- | ----------------------------------------------------------------------------



The following table shows gross unrealized gains on our securities available for sale, broken down by security rating, as of
March 31, 2005:



|                                    |  |                          |        |                     |   |                 |  |                                        |           |  |       |  
|----------------------------------- |  | ------------------------ | ------ | ------------------- | - | --------------- |  | -------------------------------------- | --------- |  | ----- | -
|                                    |  | Gross unrealized gains   |       
|                                    |  | Fixed maturitysecurities |        | Equitysecurities(1) |   | Totalsecurities |  | % of Totalsecuritiesavailable for sale |          
|                                    |  | (yen in millions)        |       
|Investment grade                    |  | ¥                        | 52,608 |                     | ¥ | 1,604,191       |  | ¥                                      | 1,656,799 |  | 86.5  | %
|Non-investment grade                |  |                          | 14     |                     |   | 20,161          |  |                                        | 20,175    |  | 1.1   |  
|Not rated                           |  |                          | 2,801  |                     |   | 234,355         |  |                                        | 237,156   |  | 12.4  |  
|                                    |  |                          |        |                     |   |                 |  |                                        |           |  |       |  
|Total securities available for sale |  | ¥                        | 55,423 |                     | ¥ | 1,858,707       |  | ¥                                      | 1,914,130 |  | 100.0 | %
|                                    |  |                          |        |                     |   |                 |  |                                        |           |  |       |  

---

|(1) | We classify equity securities based upon the issuers long-term bond rating.
|--- | ----------------------------------------------------------------------------



The following table shows gross unrealized gains on our securities available for sale, broken down by security rating, as of
March 31, 2004:



|                                    |  |                          |        |                     |   |                 |  |                                        |           |  |       |  
|----------------------------------- |  | ------------------------ | ------ | ------------------- | - | --------------- |  | -------------------------------------- | --------- |  | ----- | -
|                                    |  | Gross unrealized gains   |       
|                                    |  | Fixed maturitysecurities |        | Equitysecurities(1) |   | Totalsecurities |  | % of Totalsecuritiesavailable for sale |          
|                                    |  | (yen in millions)        |       
|Investment grade                    |  | ¥                        | 50,638 |                     | ¥ | 1,451,819       |  | ¥                                      | 1,502,457 |  | 82.1  | %
|Non-investment grade                |  |                          | 5      |                     |   | 49,342          |  |                                        | 49,347    |  | 2.7   |  
|Not rated                           |  |                          | 4,143  |                     |   | 274,181         |  |                                        | 278,324   |  | 15.2  |  
|                                    |  |                          |        |                     |   |                 |  |                                        |           |  |       |  
|Total securities available for sale |  | ¥                        | 54,786 |                     | ¥ | 1,775,342       |  | ¥                                      | 1,830,128 |  | 100.0 | %
|                                    |  |                          |        |                     |   |                 |  |                                        |           |  |       |  

---

|(1) | We classify equity securities based upon the issuers long-term bond rating.
|--- | ----------------------------------------------------------------------------



The following table shows the amounts and the periods of time for which securities available for sale have been in an
unrealized loss position as of March 31, 2005:



|                           |  |                          |         |   |                   |   |        |                  |  |   |         |  
|-------------------------- |  | ------------------------ | ------- | - | ----------------- | - | ------ | ---------------- |  | - | ------- | -
|                           |  | Gross unrealized losses  |        
|                           |  | Fixed maturitysecurities |         |   | Equity securities |   |        | Total securities | 
|                           |  | (yen in millions)        |        
|Three months or less       |  | ¥                        | (3,343  | ) |                   | ¥ | (852   | )                |  | ¥ | (4,195  | )
|Three months to six months |  |                          | (4,718  | ) |                   |   | (650   | )                |  |   | (5,368  | )
|Six months to nine months  |  |                          | (61     | ) |                   |   | (598   | )                |  |   | (659    | )
|Nine months to one year    |  |                          | (320    | ) |                   |   | (2,824 | )                |  |   | (3,144  | )
|Over one year              |  |                          | (32,784 | ) |                   |   | (4,040 | )                |  |   | (36,824 | )
|                           |  |                          |         |   |                   |   |        |                  |  |   |         |  
|Total                      |  | ¥                        | (41,226 | ) |                   | ¥ | (8,964 | )                |  | ¥ | (50,190 | )
|                           |  |                          |         |   |                   |   |        |                  |  |   |         |  



52



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##### Table of Contents

The following table shows the amounts and the periods of time for which securities available for sale
have been in an unrealized loss position as of March 31, 2004:



|                           |  |                           |         |   |                  |   |         |                  |  |   |         |  
|-------------------------- |  | ------------------------- | ------- | - | ---------------- | - | ------- | ---------------- |  | - | ------- | -
|                           |  | Gross unrealized losses   |        
|                           |  | Fixed maturity securities |         |   | Equitysecurities |   |         | Total securities | 
|                           |  | (yen in millions)         |        
|Three months or less       |  | ¥                         | (2,413  | ) |                  | ¥ | (4,318  | )                |  | ¥ | (6,731  | )
|Three months to six months |  |                           | (1,947  | ) |                  |   | (1,637  | )                |  |   | (3,584  | )
|Six months to nine months  |  |                           | (15,183 | ) |                  |   | (812    | )                |  |   | (15,995 | )
|Nine months to one year    |  |                           | (20,799 | ) |                  |   | (1,915  | )                |  |   | (22,714 | )
|Over one year              |  |                           | (2,644  | ) |                  |   | (1,743  | )                |  |   | (4,387  | )
|                           |  |                           |         |   |                  |   |         |                  |  |   |         |  
|Total                      |  | ¥                         | (42,986 | ) |                  | ¥ | (10,425 | )                |  | ¥ | (53,411 | )
|                           |  |                           |         |   |                  |   |         |                  |  |   |         |  



The following table
shows the amounts and the periods of time for which fixed maturity securities available for sale have been in an unrealized loss position as of March 31, 2005 broken down by security rating, as of that date:



|                           |  |                         |         |   |                     |   |           |  |   |                                |   |  |   |         |  
|-------------------------- |  | ----------------------- | ------- | - | ------------------- | - | --------- |  | - | ------------------------------ | - |  | - | ------- | -
|                           |  | Gross unrealized losses |        
|                           |  | Investment grade        |         |   | Non-investmentgrade |   | Not rated |  |   | Total fixed maturitysecurities |  
|                           |  | (yen in millions)       |        
|Three months or less       |  | ¥                       | (3,343  | ) |                     | ¥ |          |  | ¥ |                               |   |  | ¥ | (3,343  | )
|Three months to six months |  |                         | (4,717  | ) |                     |   |          |  |   | (1                             | ) |  |   | (4,718  | )
|Six months to nine months  |  |                         | (61     | ) |                     |   |          |  |   |                               |   |  |   | (61     | )
|Nine months to one year    |  |                         | (320    | ) |                     |   |          |  |   |                               |   |  |   | (320    | )
|Over one year              |  |                         | (32,768 | ) |                     |   |          |  |   | (16                            | ) |  |   | (32,784 | )
|                           |  |                         |         |   |                     |   |           |  |   |                                |   |  |   |         |  
|Total                      |  | ¥                       | (41,209 | ) |                     | ¥ |          |  | ¥ | (17                            | ) |  | ¥ | (41,226 | )
|                           |  |                         |         |   |                     |   |           |  |   |                                |   |  |   |         |  



The following table
shows the amounts and the periods of time for which fixed maturity securities available for sale have been in an unrealized loss position as of March 31, 2004 broken down by security rating, as of that date:



|                           |  |                         |         |   |                     |   |           |  |   |                                |   |  |   |         |  
|-------------------------- |  | ----------------------- | ------- | - | ------------------- | - | --------- |  | - | ------------------------------ | - |  | - | ------- | -
|                           |  | Gross unrealized losses |        
|                           |  | Investmentgrade         |         |   | Non-investmentgrade |   | Not rated |  |   | Total fixed maturitysecurities |  
|                           |  | (yen in millions)       |        
|Three months or less       |  | ¥                       | (2,363  | ) |                     | ¥ |          |  | ¥ | (50                            | ) |  | ¥ | (2,413  | )
|Three months to six months |  |                         | (1,944  | ) |                     |   |          |  |   | (3                             | ) |  |   | (1,947  | )
|Six months to nine months  |  |                         | (15,148 | ) |                     |   |          |  |   | (35                            | ) |  |   | (15,183 | )
|Nine months to one year    |  |                         | (20,754 | ) |                     |   |          |  |   | (45                            | ) |  |   | (20,799 | )
|Over one year              |  |                         | (2,643  | ) |                     |   |          |  |   | (1                             | ) |  |   | (2,644  | )
|                           |  |                         |         |   |                     |   |           |  |   |                                |   |  |   |         |  
|Total                      |  | ¥                       | (42,852 | ) |                     | ¥ |          |  | ¥ | (134                           | ) |  | ¥ | (42,986 | )
|                           |  |                         |         |   |                     |   |           |  |   |                                |   |  |   |         |  



The following table
shows gross unrealized losses on and the fair value of fixed maturity securities available for sale that were in an unrealized loss position as of March 31, 2005 by contractual maturities at that date:



|                                       |  |                         |         |   |            |   |          
|-------------------------------------- |  | ----------------------- | ------- | - | ---------- | - | ---------
|                                       |  | Gross unrealized losses |         |   | Fair value
|                                       |  | (yen in millions)      
|Due in one year or less                |  | ¥                       | (3,007  | ) |            | ¥ | 1,090,848
|Due after one year through five years  |  |                         | (6,404  | ) |            |   | 172,921  
|Due after five years through ten years |  |                         | (4,910  | ) |            |   | 235,144  
|Due after ten years                    |  |                         | (26,905 | ) |            |   | 343,324  
|                                       |  |                         |         |   |            |   |          
|Total                                  |  | ¥                       | (41,226 | ) |            | ¥ | 1,842,237
|                                       |  |                         |         |   |            |   |          



53



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##### Table of Contents

The following table shows gross unrealized losses on and the fair value of fixed maturity securities
available for sale that were in an unrealized loss position as of March 31, 2004 by contractual maturities at that date:



|                                       |  |                         |         |   |            |   |          
|-------------------------------------- |  | ----------------------- | ------- | - | ---------- | - | ---------
|                                       |  | Gross unrealized losses |         |   | Fair value
|                                       |  | (yen in millions)      
|Due in one year or less                |  | ¥                       | (66     | ) |            | ¥ | 106,107  
|Due after one year through five years  |  |                         | (6,101  | ) |            |   | 600,570  
|Due after five years through ten years |  |                         | (6,258  | ) |            |   | 186,876  
|Due after ten years                    |  |                         | (30,561 | ) |            |   | 387,687  
|                                       |  |                         |         |   |            |   |          
|Total                                  |  | ¥                       | (42,986 | ) |            | ¥ | 1,281,240
|                                       |  |                         |         |   |            |   |          



The following table
shows gross unrealized losses on our securities available for sale as of each of the dates indicated:



|                              |  |                   |         |   |      |   |         |  
|----------------------------- |  | ----------------- | ------- | - | ---- | - | ------- | -
|                              |  | As of March 31,   |        
|                              |  | 2005              |         |   | 2004 |  
|                              |  | (yen in millions) |        
|Equity securities             |  | ¥                 | (8,964  | ) |      | ¥ | (10,425 | )
|Fixed maturity securities     |  |                   | (41,226 | ) |      |   | (42,986 | )
|                              |  |                   |         |   |      |   |         |  
|Total gross unrealized losses |  | ¥                 | (50,190 | ) |      | ¥ | (53,411 | )
|                              |  |                   |         |   |      |   |         |  



Set forth below is
certain other information relating to our portfolio of securities available for sale as of March 31, 2005 and 2004:



| |  |  | Investment concentration. As of March 31, 2005, we held investments, mainly equity securities, in Toyota Motor Corporation and its affiliates that were valued at ¥401.2
billion, representing approximately 12% of our consolidated stockholders equity as of that date. No other investment in a single company including its affiliates exceeded 10% of our consolidated stockholders equity as of that date. As of
March 31, 2004, we held investments, mainly equity securities, in Toyota Motor Corporation and its affiliates that were valued at ¥443.4 billion, representing approximately 13% of our consolidated stockholders equity as of that date. No
other investment in a single company including its affiliates exceeded 10% of our consolidated stockholders equity as of that date.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Concentration of gross unrealized losses. As of March 31, 2005, Japanese government bonds accounted for 53.2% of our total gross unrealized losses on securities available for
sale as of that date. The unrealized losses on these investments amounted to ¥26,721 million as compared to a cost basis of ¥1,439,244 million. As of March 31, 2005, two of our investments in equity securities of Japanese issuers accounted
for 6.2% of our total gross unrealized losses on securities available for sale as of that date. The unrealized losses on these investments amounted to ¥2,492 million and ¥598 million, respectively, as compared to a cost basis of ¥16,000
million and ¥16,795 million, respectively. Based on our evaluation in accordance with our critical accounting policy Impairment of Securities Available for Sale, including the evaluation of the period of time during which the
securities described above were in a continuous loss position, we recorded an impairment loss for such securities in the amount of ¥12,226 million for the year ended March 31, 2005. As of March 31, 2004, Japanese government bonds accounted for
61.6% of our total gross unrealized losses on securities available for sale as of that date. The unrealized losses on these investments amounted to ¥32,904 million as compared to a cost basis of ¥973,615 million. As of March 31, 2004, two of
our investments in equity securities of Japanese issuers accounted for 3.5% of our total gross unrealized losses on securities available for sale as of that date. The unrealized losses on these investments amounted to ¥1,248 million and ¥603
million, respectively, as compared to a cost basis of ¥16,000 million and ¥2,650 million, respectively. Based on our evaluation in accordance with our critical accounting policy Impairment of Securities Available for Sale,
including the evaluation of the period of time during which the securities described above were in a continuous loss position, we recorded an impairment loss for such securities in the amount of ¥33,930 million for the year ended March 31, 2004.
However, we determined that there were no such securities that were in a continuous loss position for a period over twelve months.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



54



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##### Table of Contents

| |  |  | Maturity profile. As of March 31, 2005, we held ¥902.4 billion of fixed maturity securities available for sale (measured at fair value) with an original term to maturity
of ten years or longer and ¥3,060.2 billion of fixed maturity securities available for sale (measured at fair value) with an original term to maturity of less than ten years. As of March 31, 2004, we held ¥875.9 billion of fixed maturity
securities available for sale (measured at fair value) with an original term to maturity of ten years or longer and ¥2,333.7 billion of fixed maturity securities available for sale (measured at fair value) with an original term to maturity of
less than ten years. Fixed maturity securities with longer maturities are more sensitive to interest rate fluctuations than securities with shorter maturities.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Non-traded securities. As of March 31, 2005, we held ¥500.8 billion of non-traded fixed maturity and equity securities. As of March 31, 2004, we held ¥336.4 billion
of non-traded fixed maturity and equity securities. We monitor various information relating to the fair value of non-traded securities, including the net asset values and the credit rating of each issuer.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Unrealized losses of fixed maturity securities. As of March 31, 2005, our unrealized losses of fixed maturity securities amounted to ¥41,226 million. As of March 31,
2004, our unrealized losses of fixed maturity securities amounted to ¥42,986 million. Such losses primarily resulted from changes in interest rates, and consistent with our critical accounting policy Impairment of Fixed Maturity Securities
Available for Sale, we do not consider these securities to be other than temporarily impaired.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, based on our determinations in accordance with our critical accounting policy Impairment of Securities Available for Sale, during
the years ended March 31, 2005 and 2004, we did not record any material loss in connection with sales of securities that were in an unrealized loss position at March 31, 2004 and 2003, respectively. See Results of Operations for
the analyses of unrealized losses.



Hedging for Deposit-Type Insurance and
Life Insurance Policies



We enter into interest rate swaps
principally as a means of managing our interest rate risk under deposit-type insurance policies and life insurance policies. In managing this interest rate risk, we periodically measure the fair value of substantially all of our related assets and
liabilities, including those in respect of these derivative positions.



Since these derivative positions do not qualify for hedge accounting treatment under Statement of Financial Accounting Standard No. 133, or SFAS No. 133, we must recognize as gains or losses in our statement of income any changes in the
fair value of these derivative positions. We may not, on the other hand, recognize gains or losses for any change in the fair value of our other related assets and liabilities. Accordingly, the gains or losses that we recognize in respect of these
derivative positions in our statement of income, and the fair value of these derivative positions as reflected in our balance sheet and related notes to our financial statements, do not provide a comprehensive view of our financial exposure with
respect to deposit-type insurance policies and life insurance policies.



As of March 31, 2005, our net unrealized losses in respect of policyholders contract deposits totaled ¥206 billion. Of this amount, ¥227 billion of unrealized losses were derived from deposit-type insurance policies issued by
Tokio Marine & Nichido. As of the same date, we had unrealized gains of approximately ¥18 billion on fixed maturity securities held for purposes of managing Tokio Marine & Nichidos interest rate risk in respect of deposit-type
insurance policies. If low market interest rates continue in Japan, we expect that these unrealized gains (or some portion of them) will be available to offset future losses in respect of policyholders contract deposits; however, our results
of operations in future fiscal years could be adversely affected by our net financial exposure in respect of deposit-type insurance policies.



55



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##### Table of Contents

Results of Operations



The following table, prepared on a U.S. GAAP basis, shows selected statement of income information for us for each of the periods indicated:



|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|------------------------------------------------------------------------------------------------- |  | -------------------- | --------- | - | ------- | - | --------- | ------- |  | - | --------- | -
|                                                                                                  |  | Year ended March 31, |          
|                                                                                                  |  | 2005                 |           |   | 2004(1) |   |           | 2003(1) | 
|                                                                                                  |  | (yen in millions)    |          
|Operating income:                                                                                 |  |                      |           |   |         |   |           |         |  |   |           |  
|Property and casualty:                                                                            |  |                      |           |   |         |   |           |         |  |   |           |  
|Net premiums written                                                                              |  | ¥                    | 1,925,407 |   |         | ¥ | 1,945,246 |         |  | ¥ | 1,898,557 |  
|Less increase in unearned premiums                                                                |  |                      | 29,757    |   |         |   | 85,043    |         |  |   | 137,589   |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Premiums earned                                                                                   |  |                      | 1,895,650 |   |         |   | 1,860,203 |         |  |   | 1,760,968 |  
|Life premiums                                                                                     |  |                      | 253,369   |   |         |   | 241,553   |         |  |   | 255,977   |  
|Net investment income                                                                             |  |                      | 133,197   |   |         |   | 126,173   |         |  |   | 108,311   |  
|Realized gains (losses) on investments                                                            |  |                      | 86,750    |   |         |   | (3,855    | )       |  |   | (29,875   | )
|Gains (losses) on derivatives                                                                     |  |                      | 8,296     |   |         |   | (36,755   | )       |  |   | 76,564    |  
|Other income                                                                                      |  |                      | 31,835    |   |         |   | 20,199    |         |  |   | 15,158    |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Total operating income                                                                            |  |                      | 2,409,097 |   |         |   | 2,207,518 |         |  |   | 2,187,103 |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Operating costs and expenses:                                                                     |  |                      |           |   |         |   |           |         |  |   |           |  
|Losses, claims and loss adjustment expenses:                                                      |  |                      |           |   |         |   |           |         |  |   |           |  
|Losses and claims incurred and provided for                                                       |  |                      | 1,262,433 |   |         |   | 1,048,518 |         |  |   | 953,681   |  
|Related adjustment expenses                                                                       |  |                      | 68,886    |   |         |   | 77,389    |         |  |   | 76,412    |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Total losses, claims and loss adjustment expenses                                                 |  |                      | 1,331,319 |   |         |   | 1,125,907 |         |  |   | 1,030,093 |  
|Policy benefits and losses for life                                                               |  |                      | 210,536   |   |         |   | 195,659   |         |  |   | 219,250   |  
|Interest credited to policyholders contract deposits                                             |  |                      | 58,148    |   |         |   | 58,414    |         |  |   | 56,011    |  
|Policy acquisition costs                                                                          |  |                      | 564,544   |   |         |   | 558,978   |         |  |   | 571,058   |  
|Other operating expenses                                                                          |  |                      | 137,944   |   |         |   | 116,293   |         |  |   | 109,383   |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Total operating costs and expenses                                                                |  |                      | 2,302,491 |   |         |   | 2,055,251 |         |  |   | 1,985,795 |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Income before income tax expense, extraordinary items and cumulative effect of accounting changes |  |                      | 106,606   |   |         |   | 152,267   |         |  |   | 201,308   |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Income tax expense (benefit):                                                                     |  |                      |           |   |         |   |           |         |  |   |           |  
|Current                                                                                           |  |                      | 48,654    |   |         |   | 50,015    |         |  |   | 92,935    |  
|Deferred                                                                                          |  |                      | (20,223   | ) |         |   | (630      | )       |  |   | (21,321   | )
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Total income tax expense (benefit)                                                                |  |                      | 28,431    |   |         |   | 49,385    |         |  |   | 71,614    |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Minority interests(2)                                                                             |  |                      | 648       |   |         |   |          |         |  |   |          |  
|Income before extraordinary items and cumulative effect of accounting changes                     |  |                      | 77,527    |   |         |   | 102,882   |         |  |   | 129,694   |  
|Extraordinary items                                                                               |  |                      | 14,458    |   |         |   |          |         |  |   | 248,323   |  
|Cumulative effect of accounting changes, net of tax(3)                                            |  |                      | (26       | ) |         |   |          |         |  |   |          |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  
|Net income                                                                                        |  | ¥                    | 91,959    |   |         | ¥ | 102,882   |         |  | ¥ | 378,017   |  
|                                                                                                  |  |                      |           |   |         |   |           |         |  |   |           |  

---

|(1) | Certain amounts in our U.S. GAAP consolidated financial statements for the fiscal years ended March 31, 2004 and 2003 have been reclassified to conform to the new classifications
adopted during the fiscal year ended March 31, 2005. Accordingly, such reclassified amounts shown in this table for the fiscal years ended March 31, 2005, 2004 and 2003 are not directly comparable to the amounts for prior fiscal years.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Minority interests for the fiscal year ended March 31, 2005 are primarily related to the consolidation of Variable Interest Entities in the adoption of the revision to FASB
Interpretation No. 46. See Recent Accounting Pronouncements.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | The amount for the fiscal year ended March 31, 2005 is related to the adoption of a new accounting standard Statement of Position 03-1, Accounting and Reporting by Insurance
Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts. See Recent Accounting Pronouncements.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

Year Ended March 31, 2005 Compared to Year Ended March 31, 2004



Our direct premiums written for property and casualty insurance for the
fiscal year ended March 31, 2005, or fiscal 2005, were ¥1,965,550 million, a decrease of 0.7% from ¥1,978,555 million in the fiscal year ended March 31, 2004, or fiscal 2004. Net premiums written for property and casualty insurance, which
represent direct premiums written plus assumed reinsurance premiums minus ceded reinsurance premiums, were ¥1,925,407 million in fiscal 2005, a decrease of 1.0% from ¥1,945,246 million in fiscal 2004. The decrease was primarily a result of a
decrease in voluntary automobile liability insurance premiums due to discounts in premium rates granted upon renewal of policies.



Property and casualty insurance premiums are recognized as earned on a pro rata basis over the terms of the policies. Unearned premiums represent the
portion of premiums written which relate to the unexpired terms of coverage. After deducting the increase in unearned premiums of ¥29,757 million for fiscal 2005, premiums earned in fiscal 2005 were ¥1,895,650 million, an increase of 1.9%
from fiscal 2004. The increase was mainly due to continuing effects of contracts entered into in prior years.



Life premiums, which represent direct premiums earned plus assumed reinsurance premiums minus ceded reinsurance premiums, were ¥253,369 million in
fiscal 2005, an increase of 4.9% from fiscal 2004. The increase primarily reflected a steady expansion of our life insurance business.



Losses and claims incurred and provided for, or net loss incurred, for all property and casualty insurance in fiscal 2005 amounted to ¥1,262,433
million, an increase of ¥213,915 million, or 20.4%, from fiscal 2004. The ratio of the total amount of net loss incurred to net premiums earned  the net loss ratio  was 66.6% in fiscal 2005, an increase from 56.4% in fiscal 2004.
This increase was due primarily to an increase in the loss ratio of fire and allied lines insurance and voluntary automobile insurance resulting from major natural disasters in Japan as well as increased severity and frequency of losses paid.



Total operating costs and expenses, which represents the sum
of losses, claims and loss adjustment expenses, policy benefits and losses for life, interest credited policyholders contract deposits, policy acquisition costs and other operating expenses, amounted to ¥2,302,491 million in fiscal 2005,
an increase of 12.0% from fiscal 2004. This increase was primarily attributable to increases in losses and claims incurred and provided for and policy benefits and losses for life.



Loss adjustment expenses in fiscal 2005 were ¥68,886 million, a decrease of 11.0% from fiscal 2004. The ratio of losses,
claims and loss adjustment expenses incurred to net premiums earned for all classes of property and casualty insurance was 70.2% in fiscal 2005, an increase from 60.5% in fiscal 2004.



Policy benefits and losses for life increased by 7.6% in fiscal 2005 to ¥210,536 million. This increase primarily
reflected an increase in life premiums.



Future policy benefits
and losses include provisions for future policy benefits for life contracts and for unpaid life policy claims. The liabilities for future policy benefits are computed by a net level premium method using estimated future investment yields,
withdrawals and recognized morbidity and mortality tables. For limited-payment contracts, which provide insurance coverage over a contract period that extends beyond the period in which premiums are collected, gross premiums in excess of the net
premiums are deferred and recognized in income during the periods when the insurance is in force or when future benefit payments are expected to become due. Unpaid policy claims represent the estimated liability for reported and unreported losses on
life policies on an undiscounted basis. We believe that our estimated provisions for future policy benefits and for losses at March 31, 2005 are adequate to cover our life insurance liability. However, our ultimate liability may vary from these
estimates.



Interest credited to policyholders contract
deposits decreased by 0.5% in fiscal 2005 to ¥58,148 million. This decrease was primarily attributable to decreased sales of deposit-type insurance and the maturity of policies sold in previous years with relatively high interest rates.



We incurred policy acquisition costs in fiscal 2005 of
¥564,544 million, an increase of 1.0% from fiscal 2004. This increase was primarily attributable to increased expenses due to the merger of Tokio Marine and Nichido.



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Other operating expenses increased by 18.6% in fiscal 2005 to ¥137,944 million. This increase was
primarily due to an increase in expenses relating to the merger of Tokio Marine and Nichido Fire, which occurred on October 1, 2004.



Net investment income in fiscal 2005 was ¥133,197 million, an increase of ¥7,024 million, or 5.6%, from fiscal 2004. This increase primarily
reflected an increase in dividends received, reflecting improving equity market conditions.



Realized gains on investments increased to ¥86,750 million in fiscal 2005 from losses of ¥3,855 million in fiscal 2004. This increase primarily reflected an increase in realized gains on sales of equity
securities.



The following table sets forth our gross
unrealized losses on available-for-sale securities as of the dates indicated:



|                                                               |  |                                              |        |   |                                              |   |        |  
|-------------------------------------------------------------- |  | -------------------------------------------- | ------ | - | -------------------------------------------- | - | ------ | -
|                                                               |  | Available-for-sale securities                |       
|                                                               |  | Gross unrealized losses as of March 31, 2005 |        |   | Gross unrealized losses as of March 31, 2004 |  
|                                                               |  | (yen in millions except percentages)         |       
|Fixed maturity securities                                      |  | ¥                                            | 41,226 |   |                                              | ¥ | 42,986 |  
|Equity securities                                              |  |                                              | 8,964  |   |                                              |   | 10,425 |  
|                                                               |  |                                              |        |   |                                              |   |        |  
|Total                                                          |  | ¥                                            | 50,190 |   |                                              | ¥ | 53,411 |  
|                                                               |  |                                              |        |   |                                              |   |        |  
|Gross unrealized loss as a percentage of total carrying amount |  |                                              | 0.7    | % |                                              |   | 0.8    | %



During the year ended
March 31, 2005, some of the available-for-sale securities with unrealized losses at the beginning of the fiscal year were sold. These sales transactions resulted in a net realized loss of ¥4,948 million. At the beginning of the 2005 fiscal year,
the corresponding gross unrealized losses for these securities was ¥4,087 million.



Furthermore, during the year ended March 31, 2005, management determined that with respect to available-for-sale securities with ¥62,416 million in unrealized losses as of March 31, 2005, an other-than-temporary
impairment existed, amounting to ¥12,226 million. Management determined that this other-than-temporary impairment occurred during the year ended March 31, 2005 and the impairments have been charged accordingly to the income statement.



Gains on derivatives in fiscal 2005 were ¥8,296 million,
as compared to losses of ¥36,755 million in fiscal 2004. These gains primarily reflected gains of ¥19,404 million on interest swap agreements, partially offset by gains from foreign exchange contracts in the amount of ¥12,752 million. We
utilize interest rate swaps in our economical hedging activities for our asset liability management and foreign exchange contracts to economically hedge our foreign currency exposure.



Other income amounted to ¥31,835 million in fiscal 2005, an increase of 57.6% from fiscal 2004. The increase was mainly
due to the expansion of our temporary staff agency business.



Income before income tax expense, extraordinary items and cumulative effect of accounting changes decreased to ¥106,606 million in fiscal 2005 from ¥152,267 million in fiscal 2004, a decrease of 30.0%.



Income tax expense for fiscal 2005 was ¥28,431 million, a decrease of
42.4% compared to fiscal 2004. The effective tax rate decreased to 26.7% in fiscal 2005 from 32.4% in fiscal 2004. This decrease in the effective tax rate reflected an increase in tax credits for dividends received.



Income before extraordinary items and cumulative effect of accounting changes
decreased to ¥77,527 million in fiscal 2005 from ¥102,882 million in fiscal 2004, a decrease of 24.6%.



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We recognized extraordinary items of ¥14,458 million in fiscal 2005. This was due to the recognition
of unallocated negative goodwill arising from the acquisition of Nisshin Fire. See  Overview  Business Alliance. We did not recognize any extraordinary items in fiscal 2004.



As a result of the foregoing, our net income decreased to ¥91,959 million
in fiscal 2005 from ¥102,882 million in fiscal 2004, a decrease of 10.6%.



Year Ended March 31, 2004 Compared to Year Ended March 31, 2003



Our direct premiums written for property and casualty insurance for the fiscal year ended March 31, 2004, or fiscal 2004, were ¥1,978,555 million, a decrease of 0.4% from ¥1,987,463 million in the fiscal year
ended March 31, 2003, or fiscal 2003. Net premiums written for property and casualty insurance, which represent direct premiums written plus assumed reinsurance premiums minus ceded reinsurance premiums, were ¥1,945,246 million in fiscal 2004,
an increase of 2.5% from ¥1,898,557 million in fiscal 2003. The increase was mainly due to an increase in compulsory automobile liability insurance premiums, reflecting the abolition of the government reinsurance scheme in fiscal 2003. See
Business  Property and Casualty Insurance  Compulsory Automobile Liability.



Property and casualty insurance premiums are recognized as earned on a pro rata basis over the terms of the policies. Unearned premiums represent the
portion of premiums written which relate to the unexpired terms of coverage. After deducting the increase in unearned premiums of ¥85,043 million for fiscal 2004, premiums earned in fiscal 2004 were ¥1,860,203 million, an increase of 5.6%
from fiscal 2003. The increase was mainly due to an increase in compulsory automobile liability insurance premiums, reflecting the abolition of the government reinsurance scheme in fiscal 2003.



Life premiums, which represent direct premiums earned plus assumed
reinsurance premiums minus ceded reinsurance premiums, were ¥241,553 million in fiscal 2004, a decrease of 5.6% from fiscal 2003. The decrease primarily reflected a decrease in the number of single premium contracts written. Under a single
premium contract, the policyholder pays the entire premium due under the contract in a single bullet payment at the time the contract is entered into.



Losses and claims incurred and provided for, or net loss incurred, for all property and casualty insurance in fiscal 2004 amounted to ¥1,048,518
million, an increase of ¥94,837 million, or 9.9%, from fiscal 2003. The ratio of the total amount of net loss incurred to net premiums earned  the net loss ratio  was 56.4% in fiscal 2004, an increase from 54.2% in fiscal 2003. This
increase was due primarily to an increase in the loss ratio of voluntary automobile insurance, compulsory automobile insurance and other insurance.



Total operating costs and expenses, which represents the sum of losses, claims and loss adjustment expenses, policy benefits and losses for life, interest
credited to policyholders contract deposits, policy acquisition costs and other operating expenses, amounted to ¥2,055,251 million in fiscal 2004, an increase of 3.5% from fiscal 2003. This increase was primarily attributable to increases
in losses and claims incurred and provided for, partially offset by a decrease in policy benefits and losses for life and policy acquisition costs.



Loss adjustment expenses in fiscal 2004 were ¥77,389 million, an increase of 1.3% from fiscal 2003. The ratio of losses, claims and loss adjustment
expenses incurred to net premiums earned for all classes of property and casualty insurance was 60.5% in fiscal 2004, an increase from 58.5% in fiscal 2003.



Policy benefits and losses for life decreased by 10.8% in fiscal 2004 to ¥195,659 million. This decrease primarily reflected an improvement in
underwriting results and a decrease in life premiums.



Future
policy benefits and losses include provisions for future policy benefits for life contracts and for unpaid life policy claims. The liabilities for future policy benefits are computed by a net level premium method



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##### Table of Contents

using estimated future investment yields, withdrawals and recognized morbidity and mortality tables. For limited-payment contracts, which provide insurance
coverage over a contract period that extends beyond the period in which premiums are collected, gross premiums in excess of the net premiums are deferred and recognized in income during the periods when the insurance is in force or when future
benefit payments are expected to become due. Unpaid policy claims represent the estimated liability for reported and unreported losses on life policies on an undiscounted basis. We believe that our estimated provisions for future policy benefits and
for losses at March 31, 2004 are adequate to cover our life insurance liability. However, our ultimate liability may vary from these estimates.



Interest credited to policyholders contract deposits increased by 4.3% in fiscal 2004 to ¥58,414 million. This increase was primarily due to the
expansion of the life annuity business.



We incurred policy
acquisition costs in fiscal 2004 of ¥558,978 million, a decrease of 2.1% from fiscal 2003. This decrease primarily reflected our efforts to reduce expenses.



Other operating expenses increased by 6.3% in fiscal 2004 to ¥116,293 million. This increase was primarily due to an increase in expenses relating
to the planned merger of Tokio Marine and Nichido Fire.



Net
investment income in fiscal 2004 was ¥126,173 million, an increase of ¥17,862 million, or 16.5%, from fiscal 2003. This increase primarily reflected an increase in interest earned on fixed maturities and a decrease in impairments on loans.



Realized losses on investments decreased to ¥3,855 million
in fiscal 2004 from ¥29,875 million in fiscal 2003. The decrease in losses primarily reflected a decrease in impairments of equity securities reflecting the recovery of the Japanese equity market, partly offset by the decrease in realized gains
on sales of equity securities.



The following table sets forth
our gross unrealized losses on available-for-sale securities as of the dates indicated:



|                                                               |  |                                              |        |   |                                              |   |         |  
|-------------------------------------------------------------- |  | -------------------------------------------- | ------ | - | -------------------------------------------- | - | ------- | -
|                                                               |  | Available-for-Sale Securities                |       
|                                                               |  | Gross unrealized losses as of March 31, 2004 |        |   | Gross unrealized losses as of March 31, 2003 |  
|                                                               |  | (yen in millions except percentages)         |       
|Fixed maturity securities                                      |  | ¥                                            | 42,986 |   |                                              | ¥ | 6,107   |  
|Equity securities                                              |  |                                              | 10,425 |   |                                              |   | 109,929 |  
|                                                               |  |                                              |        |   |                                              |   |         |  
|Total                                                          |  | ¥                                            | 53,411 |   |                                              | ¥ | 116,036 |  
|                                                               |  |                                              |        |   |                                              |   |         |  
|Gross unrealized loss as a percentage of total carrying amount |  |                                              | 0.8    | % |                                              |   | 1.9     | %



During the year ended
March 31, 2004, some of the available-for-sale securities with unrealized losses at the beginning of the fiscal year were sold. These sales transactions resulted in a net realized loss of ¥5,934 million. At the beginning of the 2004 fiscal year,
the corresponding gross unrealized losses for these securities was ¥3,449 million.



Furthermore, during the year ended March 31, 2004, management determined that with respect to available-for-sale securities with ¥87,341 million in unrealized losses as of March 31, 2004, an other-than-temporary
impairment existed, amounting to ¥33,930 million. Management determined that this other-than-temporary impairment occurred during the year ended March 31, 2004 and the impairments have been charged accordingly to the income statement.



Losses on derivatives in fiscal 2004 were ¥36,755 million,
as compared to gains of ¥76,564 million in fiscal 2003. These losses primarily reflected losses of ¥45,775 million on interest swap agreements, partially offset by



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##### Table of Contents

gains from foreign exchange contracts in the amount of ¥7,458 million and gains on credit default swaps in the amount of ¥6,797 million. We utilize
interest rate swaps in our economical hedging activities for our asset liability management and foreign exchange contracts to economically hedge our foreign currency exposure.



Other income amounted to ¥20,199 million in fiscal 2004, an increase of 33.3% from fiscal 2003. The increase was mainly
due to the expansion of our temporary staff agency business.



Income before income tax expense, extraordinary items and cumulative effect of accounting changes decreased to ¥152,267 million in fiscal 2004 from ¥201,308 million in fiscal 2003, a decrease of 24.4%.



Income tax expense for fiscal 2004 was ¥49,385 million, a decrease of
31.0% compared to fiscal 2003. The effective tax rate decreased to 32.4% in fiscal 2004 from 35.6% in fiscal 2003. This decrease in the effective tax rate reflected an increase in income earned in low income tax rate countries.



Income before extraordinary items and cumulative effect of accounting changes
decreased to ¥102,882 million in fiscal 2004 from ¥129,694 million in fiscal 2003, a decrease of 20.7%.



We did not recognize any extraordinary items in fiscal 2004. We recognized extraordinary items of ¥248,323 million in fiscal 2003 with respect to
unallocated negative goodwill arising from the business combination with Nichido Fire.



There were no accounting changes that resulted in any cumulative effect of accounting changes in fiscal 2004 and 2003.



As a result of the foregoing, our net income decreased to ¥102,882 million in fiscal 2004 from ¥378,017 million in fiscal 2003, a decrease of
72.8%. This decrease was mainly due to the decrease of income from extraordinary items. In fiscal 2003, we recognized income from extraordinary items, unallocated negative goodwill arising from the business combination of Tokio Marine and Nichido
Fire, in the amount of ¥248,323 million. The remaining decrease was due to a decrease in income before extraordinary items and cumulative effect of accounting changes.



Business Segment Analysis



We derive our business segment information based on our internal management reporting utilized to measure the performance of our business segments. The
business segments are Property and Casualty, Life and Other.



Property and Casualty. We write insurance policies in the following internal reporting units: Marine, Fire and Allied, Voluntary Automobile, Personal Accident, CALI and Other. The risks underwritten in these reporting units are
principally located in Japan. We evaluate the results of this segment based upon Japanese GAAP premium income and loss ratio.



Life. This segment primarily assumes whole-life insurance and medical insurance. We evaluate the results of this segment based upon Japanese GAAP
income before income tax expense.



Other. We engage in
certain other businesses, including investment management business and foreign operations. Such other businesses are not significant on a segmental level.



In accordance with Statement of Financial Accounting Standards No. 131, our segment measures differ from our consolidated operating profits as defined
under U.S. GAAP. As a result, our consolidated income statement and consolidated balance sheet have been prepared on a U.S. GAAP basis while our segmental analysis is measured on a Japanese GAAP basis.



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##### Table of Contents

The following table sets forth our segment information for the fiscal years ended March 31, 2005, 2004
and 2003:



|                                                    |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|--------------------------------------------------- |  | ------------------------------------ | ---------- | - | ---- | --------- | - | ----- | ------- | - | ------------------------- | ---------- | - | --------------------------- | -------- | - | ------------ | ---------- | -
|                                                    |  | Propertyand casualty                 |            |   | Life |           |   | Other |         |   | Total reportable segments |            |   | Elimination and adjustments |          |   | Consolidated |           
|                                                    |  | (yen in millions except percentages) |           
|2005:                                               |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|P&C premiums written(1)                             |  | ¥                                    | 1,883,332  |   |      |          |   |       | 41,783  |   |                           | 1,925,115  |   |                             | (34      | ) |              | 1,925,081  |  
|P&C losses paid(2)                                  |  |                                      | (1,122,847 | ) |      |          |   |       | (21,263 | ) |                           | (1,144,110 | ) |                             | 96       |   |              | (1,144,014 | )
|P&C loss adjustment expenses paid(2)                |  |                                      | (71,290    | ) |      |          |   |       | (2,547  | ) |                           | (73,837    | ) |                             | 1,804    |   |              | (72,033    | )
|Life premiums(3)                                    |  |                                      |           |   |      | 491,442   |   |       | 415     |   |                           | 491,857    |   |                             | (60,306  | ) |              | 431,551    |  
|Policy benefits and losses paid for life(3)         |  |                                      |           |   |      | (94,681   | ) |       | (258    | ) |                           | (94,939    | ) |                             | 60,671   |   |              | (34,268    | )
|Underwriting expenses(3)                            |  |                                      | (592,222   | ) |      | (70,378   | ) |       | (24,728 | ) |                           | (687,328   | ) |                             | (29,307  | ) |              | (716,635   | )
|P&C underwriting profit                             |  |                                      | 96,973     |   |      |          |   |       | (6,755  | ) |                           |           |   |                             |         |   |              |           |  
|P&C loss ratio(4)                                   |  |                                      | 63.4       | % |      |          |   |       |        |   |                           |           |   |                             |         |   |              |           |  
|Investment income & realized gains on investment(3) |  |                                      | 168,409    |   |      | 40,792    |   |       | 8,980   |   |                           | 218,181    |   |                             | (31,070  | ) |              | 187,111    |  
|Other income (expenses)  net(3)(5)                 |  |                                      | (130,169   | ) |      | (372,524  | ) |       | 6,652   |   |                           | (496,041   | ) |                             | 11,427   |   |              | (484,614   | )
|                                                    |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|Japanese GAAP income before income tax expense      |  | ¥                                    | 135,213    |   |      | (5,349    | ) |       | 9,034   |   |                           | 138,898    |   |                             | (46,719  | ) |              | 92,179     |  
|                                                    |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|Total assets(3)                                     |  | ¥                                    | 9,306,281  |   |      | 2,055,024 |   |       | 357,908 |   |                           | 11,719,213 |   |                             | (94,717  | ) |              | 11,624,496 |  
|                                                    |  |                                      |            |   |      |          
|2004:                                               |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|P&C premiums written(1)                             |  | ¥                                    | 1,904,225  |   |      |          |   |       | 39,405  |   |                           | 1,943,630  |   |                             | (21      | ) |              | 1,943,609  |  
|P&C losses paid(2)                                  |  |                                      | (943,640   | ) |      |          |   |       | (13,409 | ) |                           | (957,049   | ) |                             | 97       |   |              | (956,952   | )
|P&C loss adjustment expenses paid(2)                |  |                                      | (75,630    | ) |      |          |   |       | (2,259  | ) |                           | (77,889    | ) |                             | 1,629    |   |              | (76,260    | )
|Life premiums(3)                                    |  |                                      |           |   |      | 358,140   |   |       | 607     |   |                           | 358,747    |   |                             | (47,855  | ) |              | 310,892    |  
|Policy benefits and losses paid for life(3)         |  |                                      |           |   |      | (75,349   | ) |       | (477    | ) |                           | (75,826    | ) |                             | 47,731   |   |              | (28,095    | )
|Underwriting expenses(3)                            |  |                                      | (599,860   | ) |      | (57,866   | ) |       | (19,557 | ) |                           | (677,283   | ) |                             | (23,802  | ) |              | (701,085   | )
|P&C underwriting profit                             |  |                                      | 285,095    |   |      |          |   |       | 4,180   |   |                           |           |   |                             |         |   |              |           |  
|P&C loss ratio(4)                                   |  |                                      | 53.5       | % |      |          |   |       |        |   |                           |           |   |                             |         |   |              |           |  
|Investment income & realized gains on investment(3) |  |                                      | 101,079    |   |      | 33,107    |   |       | 9,765   |   |                           | 143,951    |   |                             | (22,834  | ) |              | 121,117    |  
|Other income (expenses)  net(3)(5)                 |  |                                      | (210,213   | ) |      | (257,829  | ) |       | (3,016  | ) |                           | (471,058   | ) |                             | 22,050   |   |              | (449,008   | )
|                                                    |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|Japanese GAAP income before income tax expense      |  | ¥                                    | 175,961    |   |      | 203       |   |       | 11,059  |   |                           | 187,223    |   |                             | (23,005  | ) |              | 164,218    |  
|                                                    |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|Total assets(3)                                     |  | ¥                                    | 9,077,139  |   |      | 1,680,809 |   |       | 320,338 |   |                           | 11,078,286 |   |                             | (72,030  | ) |              | 11,006,256 |  
|                                                    |  |                                      |            |   |      |          
|2003:                                               |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|P&C premiums written(1)                             |  | ¥                                    | 1,866,079  |   |      |          |   |       | 30,594  |   |                           | 1,896,673  |   |                             | (34      | ) |              | 1,896,639  |  
|P&C losses paid(2)                                  |  |                                      | (908,883   | ) |      |          |   |       | (18,565 | ) |                           | (927,448   | ) |                             | 107      |   |              | (927,341   | )
|P&C loss adjustment expenses paid(2)                |  |                                      | (74,051    | ) |      |          |   |       | (2,143  | ) |                           | (76,194    | ) |                             | 1,426    |   |              | (74,768    | )
|Life premiums(3)                                    |  |                                      |           |   |      | 443,236   |   |       | 819     |   |                           | 444,055    |   |                             | (39,405  | ) |              | 404,650    |  
|Policy benefits and losses paid for life(3)         |  |                                      |           |   |      | (65,095   | ) |       | (430    | ) |                           | (65,525    | ) |                             | 39,385   |   |              | (26,140    | )
|Underwriting expenses(3)                            |  |                                      | (609,316   | ) |      | (53,472   | ) |       | (18,865 | ) |                           | (681,653   | ) |                             | (25,669  | ) |              | (707,322   | )
|P&C underwriting profit                             |  |                                      | 273,829    |   |      |          |   |       | (8,979  | ) |                           |           |   |                             |         |   |              |           |  
|P&C loss ratio (4)                                  |  |                                      | 52.7       | % |      |          |   |       |        |   |                           |           |   |                             |         |   |              |           |  
|Investment income & realized gains on investment(3) |  |                                      | 131,611    |   |      | 46,047    |   |       | 9,915   |   |                           | 187,573    |   |                             | (80,940  | ) |              | 106,633    |  
|Other income (expenses)  net(3)(5)                 |  |                                      | (243,130   | ) |      | (371,975  | ) |       | 3,573   |   |                           | (611,532   | ) |                             | 18,692   |   |              | (592,840   | )
|                                                    |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|Japanese GAAP income before income tax expense      |  | ¥                                    | 162,310    |   |      | (1,259    | ) |       | 4,898   |   |                           | 165,949    |   |                             | (86,438  | ) |              | 79,511     |  
|                                                    |  |                                      |            |   |      |           |   |       |         |   |                           |            |   |                             |          |   |              |            |  
|Total assets(3)                                     |  | ¥                                    | 8,622,237  |   |      | 1,291,375 |   |       | 299,242 |   |                           | 10,212,854 |   |                             | (267,045 | ) |              | 9,945,809  |  

---

|(1) | P&C premiums written represents P&C premiums written in accordance with Japanese GAAP, except that it excludes premiums related to savings contracts.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | P&C losses paid and P&C loss adjustment expenses paid represent P&C losses paid and P&C loss adjustment expenses paid during the period in accordance with Japanese
GAAP, except that it excludes case reserves and incurred but not reported accruals.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Calculated in accordance with Japanese GAAP.
|--- | --------------------------------------------

|(4) | Ratio of losses and loss adjustment expenses paid to premiums written.
|--- | ----------------------------------------------------------------------

|(5) | Other income (expenses) includes the following:
|--- | -----------------------------------------------

| | (a) | Change in liability for: unearned premium reserves; future benefits; case reserves; and incurred but not reported;
| | --- | ------------------------------------------------------------------------------------------------------------------

| | (b) | Premiums received on investment deposit contracts; and
| | --- | ------------------------------------------------------

| | (c) | Other income and expenses on a net basis.
| | --- | -----------------------------------------

| | After application of items in (a) and (b) above, the amounts presented under the caption Japanese GAAP income before income tax expense in this table generally reflect
premiums recognized on an earned basis and losses recognized on an incurred basis during the periods presented.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following table sets forth our segment information for our P&C internal reporting units for the fiscal years ended March 31, 2005, 2004 and 2003:



|                                 |  |                                      |        |   |                |         |   |                     |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|-------------------------------- |  | ------------------------------------ | ------ | - | -------------- | ------- | - | ------------------- | ------- | - | ---------------- | ------- | - | ---- | ------- | - | ----- | ------- | - | ----- | --------- | -
|                                 |  | Marine                               |        |   | Fire andAllied |         |   | VoluntaryAutomobile |         |   | PersonalAccident |         |   | CALI |         |   | Other |         |   | Total |          
|                                 |  | (yen in millions except percentages) |       
|2005:                            |  |                                      |        |   |                |         |   |                     |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|Premiums written(1)              |  | ¥                                    | 65,021 |   |                | 245,583 |   |                     | 854,048 |   |                  | 149,615 |   |      | 328,847 |   |       | 240,218 |   |       | 1,883,332 |  
|Losses paid(2)                   |  | ¥                                    | 34,069 |   |                | 181,422 |   |                     | 521,525 |   |                  | 60,287  |   |      | 192,041 |   |       | 133,503 |   |       | 1,122,847 |  
|Loss adjustment expenses paid(2) |  | ¥                                    | 1,790  |   |                | 3,822   |   |                     | 37,342  |   |                  | 5,103   |   |      | 17,252  |   |       | 5,981   |   |       | 71,290    |  
|Loss ratio(3)                    |  |                                      | 55.2   | % |                | 75.4    | % |                     | 65.4    | % |                  | 43.7    | % |      | 63.6    | % |       | 58.1    | % |       | 63.4      | %
|                                 |  |                                      |        |   |                |         |  
|2004:                            |  |                                      |        |   |                |         |   |                     |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|Premiums written(1)              |  | ¥                                    | 60,780 |   |                | 252,825 |   |                     | 871,761 |   |                  | 151,062 |   |      | 333,642 |   |       | 234,155 |   |       | 1,904,225 |  
|Losses paid(2)                   |  | ¥                                    | 36,471 |   |                | 78,529  |   |                     | 501,773 |   |                  | 65,228  |   |      | 137,383 |   |       | 124,256 |   |       | 943,640   |  
|Loss adjustment expenses paid(2) |  | ¥                                    | 1,843  |   |                | 3,075   |   |                     | 41,279  |   |                  | 5,407   |   |      | 17,530  |   |       | 6,046   |   |       | 75,630    |  
|Loss ratio(3)                    |  |                                      | 63.0   | % |                | 32.3    | % |                     | 62.3    | % |                  | 46.8    | % |      | 46.4    | % |       | 55.6    | % |       | 53.5      | %
|                                 |  |                                      |        |   |                |         |  
|2003:                            |  |                                      |        |   |                |         |   |                     |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|Premiums written(1)              |  | ¥                                    | 59,002 |   |                | 244,642 |   |                     | 893,507 |   |                  | 153,233 |   |      | 280,884 |   |       | 234,811 |   |       | 1,866,079 |  
|Losses paid(2)                   |  | ¥                                    | 30,636 |   |                | 86,399  |   |                     | 504,121 |   |                  | 67,861  |   |      | 100,465 |   |       | 119,401 |   |       | 908,883   |  
|Loss adjustment expenses paid(2) |  | ¥                                    | 1,812  |   |                | 3,081   |   |                     | 39,307  |   |                  | 6,716   |   |      | 16,822  |   |       | 6,313   |   |       | 74,051    |  
|Loss ratio(3)                    |  |                                      | 55.0   | % |                | 36.6    | % |                     | 60.8    | % |                  | 48.7    | % |      | 41.8    | % |       | 53.5    | % |       | 52.7      | %

---

|(1) | Premiums written represents premiums written in accordance with Japanese GAAP, except that it excludes premiums related to savings contracts.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Losses paid and loss adjustment expenses paid represent losses paid and loss adjustment expenses paid during the period in accordance with Japanese GAAP, except that it excludes
case reserve and incurred but not reported accruals.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Ratio of losses and loss adjustment expenses paid to premiums written.
|--- | ----------------------------------------------------------------------



Property and Casualty Reporting Units



Set forth below is information relating to performance of our property and casualty internal reporting units on a Japanese GAAP basis, for the year ended
March 31, 2005 compared to the year ended March 31, 2004 and for the year ended March 31, 2004 compared to the year ended March 31, 2003.



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Year Ended March 31, 2005 Compared to Year Ended March 31, 2004



Marine Insurance. Premiums written for hull and cargo insurance
increased by 7.0% in fiscal 2005 to ¥65,021 million. This increase mainly reflected the high levels of Japanese import and export trading activity as well as an increase in premium rates in the United States. The loss ratio decreased from 63.0%
in fiscal 2004 to 55.2% in fiscal 2005, mainly due to a decrease in losses paid related to large claims.



Fire and Allied Lines Insurance. Premiums written for fire and allied lines insurance decreased by 2.9% in fiscal 2005 to ¥245,583 million.
This decrease was mainly due to additional reinsurance premium payments to reinsurers in connection with a large typhoon that occurred in fiscal 2005. The loss ratio increased from 32.3% in fiscal 2004 to 75.4% in fiscal 2005, primarily due to major
natural disasters in Japan.



Voluntary Automobile
Insurance. Premiums written for voluntary automobile insurance, the largest line of our property and casualty insurance business, decreased by 2.0% in fiscal 2005 to ¥854,048 million. This decrease was primarily due to discounts in premium
rates granted upon the renewal of policies. The loss ratio increased from 62.3% in fiscal 2004 to 65.4% in fiscal 2005, mainly due to a decrease in premiums and increased severity and frequency of losses paid.



Personal Accident Insurance. Premiums written for personal accident
insurance decreased by 1.0% in fiscal 2005 to ¥149,615 million. This decrease was mainly due to decreasing sales of long-term personal accident insurance. The loss ratio decreased from 46.8% in fiscal 2004 to 43.7% in fiscal 2005, mainly due to
expanding sales of medical and cancer insurance, which has a relatively low loss ratio when compared with other personal accident insurance products.



Compulsory Automobile Liability Insurance. Premiums written for compulsory automobile insurance decreased by 1.4% in fiscal 2005 to ¥328,847
million. This was primarily due to a decrease in renewals of policies reflecting the decrease in periodic automobile inspections. The loss ratio increased from 46.4% in fiscal 2004 to 63.6% in fiscal 2005. This was primarily due to the fact that
there is a lag between the time of impact of the abolition of the governmental reinsurance scheme in fiscal 2003 being felt on losses and loss adjustment expenses paid and on premiums written, which had the effect of initially decreasing the loss
ratio immediately after the abolition but later increasing to the expected level.



Other Insurance. Premiums written for all other types of property and casualty insurance, including liability insurance, workers compensation insurance, guarantee insurance, movable comprehensive
insurance, aviation and miscellaneous pecuniary loss insurance, increased by 2.6% in fiscal 2005 to ¥240,218 million. This increase was mainly due to an increase in liability and miscellaneous pecuniary loss insurance premiums, partly offset by
a decrease in aviation insurance premiums. The loss ratio increased from 55.6% in fiscal 2004 to 58.1% in fiscal 2005, mainly due to major natural disasters in Japan as well as an increase in large claims.



Year Ended March 31, 2004 Compared to Year Ended March 31, 2003



Marine Insurance. Premiums written for cargo and transit insurance
increased by 3.0% in fiscal 2004 to ¥60,780 million. This increase mainly reflected the high levels of Japanese import and export trading activity as well as an increase in premium rates for war insurance coverage. The loss ratio increased from
55.0% in fiscal 2003 to 63.0% in fiscal 2004, mainly due to increase in losses paid related to large claims.



Fire and Allied Lines Insurance. Premiums written for fire and allied lines insurance increased by 3.3% in fiscal 2004 to ¥252,825 million.
This increase was mainly due to a temporary increase in sales prior to a premium increase for long-term policies as well as expanding sales that reflected the introduction of new products. The loss ratio decreased from 36.6% in fiscal 2003 to 32.3%
in fiscal 2004, primarily due to an increase in premiums written.



Voluntary Automobile Insurance. Premiums written for voluntary automobile insurance, the largest line of our property and casualty insurance business, decreased by 2.4% in fiscal 2004 to ¥871,761 million. This



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decrease was primarily due to discounts in premium rates granted upon the renewal of policies that did not experience any loss in the prior period. The loss
ratio increased from 60.8% in fiscal 2003 to 62.3% in fiscal 2004, mainly due to such discounts in premium rates.



Personal Accident Insurance. Premiums written for personal accident insurance decreased by 1.4% in fiscal 2004 to ¥151,062 million. This
decrease was mainly due to decreasing sales of overseas travelers personal accident insurance, affected by the outbreak of Severe Acute Respiratory Syndrome, or SARS, in Asia, partly offset by expanding sales of medical and cancer insurance.
The loss ratio decreased from 48.7% in fiscal 2003 to 46.8% in fiscal 2004, mainly due to expanding sales of medical and cancer insurance, which has a relatively low loss ratio when compared with other personal accident insurance products.



Compulsory Automobile Liability Insurance. Premiums
written for compulsory automobile insurance increased by 18.8% in fiscal 2004 to ¥333,642 million. This increase was primarily due to the abolition of the government reinsurance scheme in fiscal 2003. See Business  Property and
Casualty Insurance  Compulsory Automobile Liability. The loss ratio increased from 41.8% in fiscal 2003 to 46.4% in fiscal 2004. This was primarily due to the fact that there is a lag between the time of impact of the abolition of the
governmental reinsurance scheme in fiscal 2003 being felt on losses and loss adjustment expenses paid and on premiums written, which had the effect of initially decreasing the loss ratio immediately after the abolition but later increasing to the
expected level.



Other Insurance. Premiums written for
all other types of property and casualty insurance, including liability insurance, workers compensation insurance, guarantee insurance, movable comprehensive insurance, aviation and miscellaneous pecuniary loss insurance, decreased by 0.3% in
fiscal 2004 to ¥234,155 million. This decrease was mainly due to a decrease in workers compensation, guarantee and movables comprehensive insurance premiums, partly offset by an increase in liability insurance premiums. The loss ratio
increased from 53.5% in fiscal 2003 to 55.6% in fiscal 2004, mainly due to an increase in losses paid related to large claims.



Credit Losses and Non-Performing Loans



The continuing weak economic environment in Japan during the 1990s and the beginning of this decade have resulted in the deterioration of the financial
conditions of Japanese corporate and individual borrowers and a high number of bankruptcy filings. A substantial portion of the affected credit extended by Japanese financial institutions is secured by real estate as collateral. The deterioration in
credit and the continuing decline in the value of real estate have led to a substantial increase in the amount of non-performing loans in Japanese financial institutions portfolios. Under these circumstances, Japanese non-life insurers,
including Tokio Marine & Nichidos predecessors, saw their non-performing loans increase, although not as much as other types of financial institutions. The main reason for this is that Japanese non-life insurers are required to maintain
high levels of liquidity compared with other types of financial institutions, in order to be able to make claims payments, which has meant that they have diversified their investment portfolios. After reaching a peak in the year ended March 31,
2003, the amount of Tokio Marine & Nichidos non-performing loans has been decreasing.



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The following table, prepared on a U.S. GAAP basis, shows our recorded investment in impaired loans and
specific valuation allowances as of each of the dates indicated:



|                                       |  |                   |        |      |   |       
|-------------------------------------- |  | ----------------- | ------ | ---- | - | ------
|                                       |  | As of March 31,  
|                                       |  | 2005              |        | 2004
|                                       |  | (yen in millions)
|Recorded investment in impaired loans: |  |                   |        |      |   |       
|Mortgage loans on real estate          |  | ¥                 | 10,476 |      | ¥ | 13,408
|Collateral and bank guaranteed loans   |  |                   |       |      |   | 7     
|Unsecured loans                        |  |                   | 6,936  |      |   | 17,808
|                                       |  |                   |        |      |   |       
|Total                                  |  | ¥                 | 17,412 |      | ¥ | 31,223
|                                       |  |                   |        |      |   |       
|Specific valuation allowances:         |  |                   |        |      |   |       
|Mortgage loans on real estate          |  | ¥                 | 4,268  |      | ¥ | 6,110 
|Collateral and bank guaranteed loans   |  |                   |       |      |   | 7     
|Unsecured loans                        |  |                   | 2,725  |      |   | 9,807 
|                                       |  |                   |        |      |   |       
|Total                                  |  | ¥                 | 6,993  |      | ¥ | 15,924
|                                       |  |                   |        |      |   |       



In addition to the
valuation allowances reflected in the table above, we have made additional allowances for other loans based on past loss experience and current economic conditions. These additional allowances were ¥3,205 million at March 31, 2005.



Cash Flows



Year Ended March 31, 2005 Compared to Year Ended March 31, 2004



Net cash provided by operating activities was ¥214,242 million in fiscal 2005, compared to ¥380,647 million in
fiscal 2004. This decrease was primarily attributable to a decrease of increase in unearned premiums, net of ceded reinsurance, a decrease in changes in trading securities at fair value, and an increase in net realized gains, partially offset by an
increase and decrease of current income taxes payable and receivable.



Net cash used in investing activities was ¥346,970 million in fiscal 2005, compared to ¥253,397 million in fiscal 2004. This increase was principally due to an increase in cost of fixed maturity securities purchased, partially
offset by an increase in proceeds from the sale of fixed maturity securities.



Net cash used in financing activities was ¥13,690 million in fiscal 2005, compared to ¥34,828 million in fiscal 2004. This decrease was mainly attributable to an increase in net cash provided by investment
deposits funded by policyholders, partially offset by a decrease in cash received under securities lending transactions and an increase in cash used for the purchase of treasury stock.



The operating, investing and financing activities described above resulted in net cash at March 31, 2005 of ¥290,642
million, compared to ¥432,874 million at March 31, 2004, representing a decrease of ¥142,232 million.



Year Ended March 31, 2004 Compared to Year Ended March 31, 2003



Net cash provided by operating activities was ¥380,647 million in fiscal 2004, compared to ¥440,365 million in fiscal 2003. This decrease was
primarily attributable to a decrease in net income, a decrease in payable for current income taxes and a decrease in other liabilities, partially offset by absence of extraordinary items, a decrease in derivatives assets and liabilities (net) and an
increase in losses, claims and loss adjustment expense reserve net of ceded reinsurance.



Net cash used in investing activities was ¥253,397 million in fiscal 2004, compared to ¥391,219 million in fiscal 2003. This decrease was principally due to an increase in proceeds from the sale of fixed
maturity securities, a decrease in the cost of fixed maturity and equity securities purchased, partially offset by a decrease in the results from short-term investments.



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Net cash used in financing activities was ¥34,828 million in fiscal 2004, compared to ¥31,755
million in fiscal 2003. This increase was mainly attributable to an increase in cash used for the purchase of treasury stock, partially offset by an increase in cash received under securities lending transactions and a decrease in net cash used in
investment deposits funded by policyholders.



The operating,
investing and financing activities described above resulted in net cash at March 31, 2004 of ¥432,874 million, compared to ¥339,978 million at March 31, 2003, representing an increase of ¥92,896 million.



Recent Accounting Pronouncements



In November 2002, the Financial Accounting Standards Board, or FASB, issued
Interpretation No. 45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, or FIN 45. FIN 45 requires that upon issuance of certain types of guarantees, a
guarantor must recognize a liability for the fair value of an obligation assumed under a guaranty. FIN 45 also requires additional disclosures by a guarantor in its financial statements about the obligations associated with guarantees issued. The
recognition provisions of FIN 45 were effective for any guarantees issued or modified after December 31, 2002. The adoption of FIN 45 did not have a material effect on our financial statements. The disclosure requirements were effective for
financial statements for the periods ending after December 15, 2002. We adopted the disclosure requirements effective on March 31, 2003. See note 16 to our consolidated financial statements.



In January 2003, the FASB issued Interpretation No. 46, Consolidation
of Variable Interest Entities  an Interpretation of ARB No. 51, or FIN 46. FIN 46 clarifies when an enterprise should consolidate an entity that meets the definition of a Variable Interest Entity, or VIE, if that enterprise has a
variable interest that will absorb a majority of the VIEs expected losses, receive a majority of the VIEs expected residual returns, or both. A VIE is an entity in which equity investors do not have the characteristics of a controlling
financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties, and may include many types of special purpose entities. In December 2003, FASB
issued a revision to FIN 46, or FIN 46R. FIN 46R retains many of the basic concepts introduced in FIN 46. However, it also introduces a new scope exception for a certain type of entities that qualified as business as defined in FIN 46R,
revises the method of calculating expected losses and residual returns for determination of a primary beneficiary and includes new guidance for assessing variable interests. For fiscal 2004, we adopted the provisions of FIN 46 for all VIEs in which
we became involved after January 31, 2003. Beginning April 1, 2004, we adopted the provisions of FIN 46R for all other VIEs  those in which we became involved prior to February 1, 2003. In connection with this adoption, we recognized minority
interests of ¥5,186 million on our balance sheet as of March 31, 2005 with respect to VIEs for which we are the primary beneficiary. Our investments in these VIEs amounted to ¥23,476 million as of March 31, 2004. See note 3 to our
consolidated financial statements.



In July 2003, the
Accounting Standards Executive Committee of the American Institute of Certified Public Accountants, or the AcSEC, issued Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration
Contracts and for Separate Accounts, or SOP 03-1. AcSEC issued this SOP 03-1 to address the need for interpretive guidance in three areas: (1) separate account presentation and valuation; (2) the classification and valuation of certain
long-duration contract liabilities; and (3) the accounting recognition given sales inducements (bonus interest, bonus credits and persistency bonuses). The effect of adopting SOP 03-1 was a charge of ¥41 million, net of tax of ¥26 million,
which was reported as a Cumulative effect of accounting change, net of tax for the year ended March 31, 2005. This charge reflects the effect of establishing reserves for guaranteed minimum death benefit of our universal life-type
contracts. Upon adoption of SOP 03-1, on April 1, 2004, ¥162,715 million in separate account assets were reclassified to trading securities. Similarly, upon adoption, ¥162,715 million in separate account liabilities were reclassified to
policyholders contract deposits.



In November 2003, the
Emerging Issues Task Force of the FASB, or the EITF, reached a consensus on EITF Issue No. 03-01, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments,



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or EITF 03-01, that certain quantitative and qualitative disclosures are required for equity and fixed maturity securities that are impaired at the balance
sheet date but for which an other-than-temporary impairment has not been recognized. The guidance requires companies to disclose the aggregate amount of unrealized losses and the related fair value of investments with unrealized losses for
securities that have been in an unrealized loss position for less than 12 months and separately for those that have been in an unrealized loss position for over 12 months, each by investment category. In March 2004, the EITF also reached a consensus
on the additional accounting guidance for other-than-temporary impairments and its application to debt and equity investments. In September 2004, the FASB issued the FASB Staff Position (FSP) EITF Issue No. 03-1-1 that delays the effective date of
the measurement and recognition guidance of paragraphs 10 through 20 of EITF 03-01. We have adopted the disclosure requirements in the financial statements. See note 3 to our consolidated financial statements.



In December 2003, the FASB revised SFAS No. 132, Employers
Disclosures about Pensions and Other Postretirement Benefits to require additional disclosures related to pension plans and other postretirement benefit plans. While retaining the existing disclosure requirements for pensions and
postretirement benefits, additional disclosures are required related to pension plan assets, obligations, cash flows and net periodic benefit costs, beginning with fiscal years ended after December 15, 2003. Additional disclosures pertaining to
benefit payments are required for fiscal years ended after June 30, 2004. We have adopted the additional disclosure requirements in the financial statements. See note 12 to our consolidated financial statements.



In January 2003, the EITF released Issue No. 03-02, Accounting for the
Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities, or EITF 03-02. EITF 03-02 addresses financial accounting and reporting for a transfer to the Japanese government of a portion of a
companys pension plan which substitutes for the welfare pension plan administered by the Japanese government. We expect to adopt EITF 03-02 with respect to the transfer to the Japanese government of the substitutional portion of our pension
plan, which is expected to take place during the fiscal year ending March 31, 2006. See note 12 to our consolidated financial statements.



Effects of Inflation



Our assets are generally not significantly affected by inflation, since a substantial portion of those assets is highly liquid. However, inflation may
result in increases in our expenses, which may not be readily recoverable in the prices of services offered. If inflation results in rising interest rates and has other adverse effects on the capital markets and on the value of financial
instruments, our financial position and profitability may be adversely affected.



Exposure to Currency Fluctuations



We conduct
a portion of our business in currencies other than the yen, primarily the U.S. dollar. This business includes operations of marine insurance and certain reinsurance, as well as investments in financial products denominated in foreign currencies. If
our exposure to currency fluctuations is not properly managed, we would be exposed to risk arising from fluctuations in exchange rates on assets and liabilities denominated in foreign currencies. We seek to manage this exposure primarily by using
forward exchange contracts, currency options and other derivatives. We also seek to control currency exposure by holding offsetting foreign currency positions in order to reduce the risk of loss from currency fluctuations.



Use of Derivative Financial Instruments



We use a variety of derivative financial instruments in the normal course of
our business to reduce our exposure to fluctuations in foreign exchange, interest rates and market values in our equity portfolios. These instruments include foreign exchange contracts, foreign exchange forwards and futures, currency swaps and
currency option contracts, interest rate swap and swaption agreements, equity index futures contracts, equity index option contracts and bond futures contracts.



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Integrated Risk Management



We have adopted an integrated risk management system to measure, monitor and control risks inherent in our businesses. We
use this system to establish acceptable levels of measurable risks for each fiscal year and to ensure the sufficiency of our shareholders equity in light of those risks. These risk amounts are monitored to ensure that they are maintained
within permissible ranges based on our economic capital model and are reported to our senior management on a periodic basis.



As part of our integrated risk management system, our subsidiaries also conduct risk management based on our integrated risk management policy. Tokio
Marine & Nichido, Tokio Marine & Nichido Life and Tokio Marine & Nichido Financial Life quantify market risk and asset-liability management risk, which are discussed in detail below under Quantitative and Qualitative Disclosures
About Market Risk. We also identify and monitor the following risks:



| |  |  | Property and casualty insurance risk
| | - |  | ------------------------------------



Risk of loss arising from fluctuations in the loss ratio and operating expense ratio expected at the time of calculating premiums.



| |  |  | Life insurance risk
| | - |  | -------------------



Risk of loss arising from fluctuations in the mortality rate and operating expense rate expected at the time of calculating premiums.



| |  |  | Credit risk
| | - |  | -----------



Risk of loss arising from a decline in the value of our assets (including off-balance-sheet assets), or the total loss of these assets, as a result of
deterioration in the obligors financial condition.



| |  |  | Real estate risk
| | - |  | ----------------



Risk of loss arising from a decline in income from rentals or in the value of our real estate as a result of deterioration in the real estate market.



| |  |  | Liquidity risk
| | - |  | --------------



Risk of loss arising from being forced to dispose of assets at a significant discount to prevailing market prices because of a shortage of funds, market
disruptions or other unexpected events.



| |  |  | Operational risk
| | - |  | ----------------



Risk of loss resulting from inadequate or failed internal processes and systems or from external events.



Quantitative and Qualitative Disclosures About Market Risk



Property and Casualty Insurance Business



We conduct our property and casualty insurance business primarily through
Tokio Marine & Nichido and its subsidiaries. A substantial portion of the investments relating to our property and casualty insurance business are made at the Tokio Marine & Nichido parent company level. Tokio Marine & Nichidos
subsidiaries conduct market risk management with respect to their own investments, and report the status of their market risk situations to Tokio Marine & Nichido on a regular basis. Except as otherwise noted, the following discussion as of and
for the year ended March 31, 2005 relates to market risk management of Tokio Marine & Nichido only (and not its subsidiaries). Prior to the merger of Tokio Marine and Nichido Fire on October 1, 2004 of which Tokio Marine was the surviving
entity, Tokio Marine and Nichido Fire managed their risks separately under our control and supervision. The information presented for the fiscal year ended March 31, 2004, relates to Tokio Marines risk management only (and not its
subsidiaries) and does not include risks related to Nichido Fire for such fiscal year. Accordingly, the information relating to Tokio Marine & Nichidos risk management as of and for the fiscal year ended March 31, 2005 is not directly
comparable to the information relating to Tokio Marines risk management as of and for the fiscal year ended March 31, 2004.



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Market Risk Generally



Our property and casualty insurance business accumulates assets from premiums for the insurance policies it underwrites in
advance of being required to make payments for claims under those policies as well as deposits for deposit-type insurance policies. Our property and casualty insurance business funds the benefits it provides under insurance policies with gains and
income generated by its investment portfolio assets. These investments are subject to market risk but are managed under Tokio Marine & Nichidos asset-liability management system.



Investment Objectives



Tokio Marine & Nichido invests premiums and deposits received from
policyholders in various investments. Its principal investment objectives are to maximize its net asset value and maintain sufficient liquidity in its investment assets to meet insurance payment obligations while controlling risk within an
acceptable range. It also seeks to safeguard the interests of policyholders and shareholders.



Market Risk Measurement



Tokio Marine & Nichidos primary market risk exposure is to potential changes in interest rates and equity prices, as well as foreign exchange rates.



Interest rate risk.Tokio Marine & Nichido defines interest rate risk as the risk of loss in the fair values of
interest rate sensitive instruments caused by changes in market interest rates. Tokio Marine & Nichido is exposed to interest rate risk due to its investments in fixed income instruments, particularly bonds, loans and other long-term
investments. In addition, it is exposed to interest rate risk due to interest rate sensitive obligations and liabilities, including deposit-type insurance and long-term insurance policies. See  Assets to meet future obligations.
Tokio Marine & Nichido is exposed to risks of loss because both the market value of fixed income instruments and the present value of its obligations and liabilities may vary when market interest rates fluctuate. The level of interest rate risk
of Tokio Marine & Nichido as of March 31, 2005 increased when compared with the level of interest rate risk of Tokio Marine as of March 31, 2004. This increase was primarily a result of the increase in holdings of interest rate sensitive
obligations and liabilities due to the merger of Tokio Marine and Nichido Fire.



Equity price risk. Tokio Marine & Nichido is exposed to risks of loss due to equity prices because the value of its equity securities may decline. Most of Tokio Marine & Nichidos equity
investments are primarily in the Japanese market and are intended to be held for the long term. The level of equity price risk of Tokio Marine & Nichido as of March 31, 2005 increased when compared with the level of equity price risk of Tokio
Marine as of March 31, 2004. This increase was primarily a result of the increase in holdings of equity securities due to the merger of Tokio Marine and Nichido Fire.



Foreign exchange rate risk. Foreign exchange rate risk is the risk of a loss in the fair values of instruments
denominated in a currency other than the Japanese yen, Tokio Marine & Nichidos functional currency, due to fluctuations of foreign exchange rates. Tokio Marine & Nichido is exposed to foreign exchange rate risk because some of the
assets and liabilities are denominated in a currency other than the yen. If the value of a relevant foreign currency declines relative to the yen, the fair value of assets denominated in that foreign currency would decline when expressed in yen
terms. If the value of a relevant foreign currency increases relative to the yen, the fair value of liabilities denominated in that foreign currency would increase when expressed in yen terms. Tokio Marine & Nichidos primary exposure for
foreign exchange rate risk is the U.S. dollar, euro and pound sterling. The level of foreign exchange rate risk of Tokio Marine & Nichido as of March 31, 2005 increased when compared with the level of foreign exchange rate risk of Tokio Marine
as of March 31, 2004. This increase was primarily a result of the increase in holdings of foreign exchange rate sensitive obligations and liabilities due to the merger of Tokio Marine and Nichido Fire.



Tokio Marine & Nichido does not hold physical or derivative commodity
positions.



We do not anticipate significant changes in the
composition of Tokio Marine & Nichidos primary market risk exposure or in how such exposure is managed in future reporting periods.



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Market Risk Management and Risk Exposure Estimates



Tokio Marine & Nichidos risk management department, which is
independent of its asset management division, is responsible for implementing Tokio Marine & Nichidos market risk management process. This process includes (i) establishing appropriate controls, policies and procedures relating to market
risks; (ii) ensuring appropriate senior management oversight of market risk-taking and risk-controlling activities; and (iii) analyzing, monitoring and reporting market risks.



Tokio Marine & Nichido divides its assets under management into the following three categories for investment and risk
management purposes, with investment and risk management policies tailored to each category:



| |  |  | Assets to meet future obligations;
| | - |  | ----------------------------------



| |  |  | Risk assets; and
| | - |  | ----------------



| |  |  | Other assets.
| | - |  | -------------



Assets to meet future obligations. Assets to meet future obligations are intended to provide reserves for insurance policies, including
deposit-type insurance and long-term insurance policies. To ensure that Tokio Marine & Nichido can make required payments on those policies at maturity or lapse without regard to interest rate fluctuations, both the assets and the liabilities
must be managed effectively. This is called asset-liability management. Tokio Marine & Nichido has been developing an advanced asset-liability management system and believes that it maintains a well-controlled portfolio that includes various
bonds, loans and interest rate swap transactions used for hedging purposes.



In addition, to enhance its asset-liability management capabilities with respect to deposit-type insurance policies, Tokio Marine & Nichido groups investment deposit contracts primarily by type and duration of
insurance policies. Each month, Tokio Marine & Nichido measures interest rate sensitivity for the assets and liabilities in each of these groups. Based upon these measurements, Tokio Marine & Nichido utilizes interest rate swaps in an effort
to control the interest rate sensitivity in the assets and the liabilities in each group of investment deposits. At March 31, 2005, Tokio Marine & Nichido had ¥3.3 trillion notional amount of interest rate swaps outstanding primarily to
hedge its exposure in respect of deposit-type insurance policies.



The following tables show the effect of hypothetical changes in interest rates on the present value of the surplus in Tokio Marine & Nichidos (parent company only) asset-liability portfolio, measured as the difference between the
present value of its assets and that of its liabilities (before taxes and future policy dividends) as of March 31, 2005 and March 31, 2004. In its sensitivity analysis model, Tokio Marine & Nichido selects hypothetical changes in interest rates
which are expected to reflect reasonably possible near-term changes in those rates. For these purposes, Tokio Marine & Nichido defines near-term to mean a period of up to one year from the date of its most recent consolidated
financial statements. Actual results may differ from the hypothetical change in interest rates assumed in the following tables, especially since this sensitivity analysis does not reflect the results of any actions that Tokio Marine & Nichido
would take to mitigate these hypothetical losses in fair value. Furthermore, the information presented in the following tables was prepared for risk management purposes and does not present the effect of actual changes in interest rates that have
occurred in the past or may occur in the future on the financial condition, results of operations or corporate value of Tokio Marine & Nichido.



|                                |  |                      |       |   |     |   |     |  |     |      |  |   |      |  
|------------------------------- |  | -------------------- | ----- | - | --- | - | --- |  | --- | ---- |  | - | ---- | -
|                                |  | Yield curve shift(1) |      
|                                |  | As of March 31, 2005 |      
|                                |  | -1%                  |       |   | ±0% |   | +1% |  | +2% |     
|                                |  | (yen in billions)    |      
|General Policy Account          |  | ¥                    | (13.0 | ) |     | ¥ | 0.0 |  | ¥   | 0.8  |  | ¥ | (2.4 | )
|Deposit-Type Insurance Accounts |  |                      | (28.3 | ) |     |   | 0.0 |  |     | 23.9 |  |   | 41.5 |  
|                                |  |                      |       |   |     |   |     |  |     |      |  |   |      |  
|Asset-Liability Portfolio       |  | ¥                    | (41.2 | ) |     | ¥ | 0.0 |  | ¥   | 24.7 |  | ¥ | 39.1 |  
|                                |  |                      |       |   |     |   |     |  |     |      |  |   |      |  



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|                                |  |                      |       |   |     |   |     |  |   |      |   |  |   |       |  
|------------------------------- |  | -------------------- | ----- | - | --- | - | --- |  | - | ---- | - |  | - | ----- | -
|                                |  | Yield curve shift(1) |      
|                                |  | As of March 31, 2004 |      
|                                |  | -1%                  |       |   | ±0% |   | +1% |  |   | +2%  |  
|                                |  | (yen in billions)    |      
|General Policy Account          |  | ¥                    | (5.7  | ) |     | ¥ | 0.0 |  | ¥ | (6.2 | ) |  | ¥ | (15.5 | )
|Deposit-Type Insurance Accounts |  |                      | (15.7 | ) |     |   | 0.0 |  |   | 13.9 |   |  |   | 24.5  |  
|                                |  |                      |       |   |     |   |     |  |   |      |   |  |   |       |  
|Asset-Liability Portfolio       |  | ¥                    | (21.3 | ) |     | ¥ | 0.0 |  | ¥ | 7.7  |   |  | ¥ | 9.0   |  
|                                |  |                      |       |   |     |   |     |  |   |      |   |  |   |       |  

---

|(1) | Based on the then-prevailing yield curve for Japanese government bonds on each of the dates indicated.
|--- | ------------------------------------------------------------------------------------------------------



Interest rate risk of deposit-type insurance accounts increased primarily as a result of increased balance of deposit-type
insurance accounts due to the merger of Tokio Marine and Nichido Fire. Interest rate risk sensitivity of general policy account portfolio changed as shown in the above tables primarily due to changes in the level of interest rates between March 31,
2005 and March 31, 2004.



Assets to meet future obligations are
exposed to credit risk and liquidity risk. Credit risk increases when the obligors financial condition deteriorates, resulting in defaults or other decline in the value of our assets. In addition to using a corporate rating system, Tokio
Marine & Nichido manages credit risk with its Value-at-Credit Risk model, which Tokio Marine had developed, and Tokio Marine & Nichido succeeded, to estimate credit risk. We believe this model provides Tokio Marine & Nichido a sound
ability to manage its credit risk portfolio. Tokio Marine & Nichido manages liquidity risk by aiming to maintain various ways to raise funds quickly for the prompt payment of insurance claims and to ensure sufficient liquidity.



Risk assets. Risk assets are those investments which purely pursue
high profitability compared to risk amount. Tokio Marine & Nichidos risk assets include bonds, stocks, derivatives and foreign currency positions in the currencies of industrialized nations.



Each month, Tokio Marine & Nichido measures the risks that result from
its risk asset portfolio utilizing the expected shortfall method, at a 99% confidence level over a one-year period. Under this method, Tokio Marine & Nichido estimates the expected loss in the fair value of its risk portfolio based on the
occurrence of losses that are outside of the 99% confidence interval, as compared to the value-at-risk of that portfolio, which is estimated based on the occurrence of a loss at the 99% confidence level. Like the value-at-risk, the expected
shortfall method takes into account market factors to which the market value of the portfolio position is exposed (interest rates, equity prices and foreign exchange rates), the sensitivity of the position to changes in those market factors and the
volatilities and correlation of those factors. This method also makes assumptions about market behavior. Assuming a normal distribution, the expected shortfall for the risk assets portfolio, at a 99% confidence level, is calculated based on an
adverse market movement that exceeds the standard deviation by a factor of 2.67, while the value-at-risk for the risk assets portfolio, at a 99% confidence level, is calculated based on an adverse market movement that exceeds the standard deviation
by a factor of 2.33.



The following tables present the expected
shortfall for Tokio Marine & Nichidos risk asset portfolio for the years ended March 31, 2005 and March 31, 2004.



|                 |  |                                                 |      |      |   |      |  |                     |      |  |   |     
|---------------- |  | ----------------------------------------------- | ---- | ---- | - | ---- |  | ------------------- | ---- |  | - | ----
|                 |  | Expected shortfall for risk assets portfolio(1)
|                 |  | Year ended March 31, 2005                      
|Risk category    |  | Average                                         |      | High |   | Low  |  | As of March 31,2005
|                 |  | (yen in billions)                              
|Interest rate    |  | ¥                                               | 14.5 |      | ¥ | 20.1 |  | ¥                   | 10.9 |  | ¥ | 10.9
|Foreign exchange |  |                                                 | 18.6 |      |   | 22.3 |  |                     | 16.4 |  |   | 22.3
|Equities         |  |                                                 | 46.3 |      |   | 52.6 |  |                     | 40.7 |  |   | 45.7



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|                 |  |                                                 |      |      |   |      |  |                     |      |  |   |     
|---------------- |  | ----------------------------------------------- | ---- | ---- | - | ---- |  | ------------------- | ---- |  | - | ----
|                 |  | Expected shortfall for risk assets portfolio(1)
|                 |  | Year ended March 31, 2004                      
|Risk category    |  | Average                                         |      | High |   | Low  |  | As of March 31,2004
|                 |  | (yen in billions)                              
|Interest rate    |  | ¥                                               | 7.0  |      | ¥ | 9.9  |  | ¥                   | 3.5  |  | ¥ | 9.9 
|Foreign exchange |  |                                                 | 13.2 |      |   | 21.4 |  |                     | 10.1 |  |   | 21.4
|Equities         |  |                                                 | 49.7 |      |   | 56.0 |  |                     | 44.0 |  |   | 47.0

---

|(1) | Calculated over a one-year period and based on a 99% confidence level.
|--- | ----------------------------------------------------------------------



Other assets. Other assets are those held mainly for the purpose of operating the property and casualty insurance business. The profitability of
these assets is determined in an integrated manner with the profitability of insurance operations.



At March 31, 2005, the market value of Tokio Marine & Nichidos Japanese equity securities in this portfolio was ¥3,426.5 billion, which
accounted for 41.7% of Tokio Marine & Nichidos total investments across all portfolios. Consequently, Tokio Marine & Nichidos net asset value tends to fluctuate considerably in accordance with price movements in the domestic
stock market.



We estimated that a ten percent downward
movement in the level of the Nikkei Stock Average would have caused a loss in the fair value of Tokio Marine & Nichidos other assets of ¥287.8 billion as of March 31, 2005.



Life Insurance Business



We operate our life insurance business primarily through our subsidiaries Tokio Marine & Nichido Life and Tokio Marine & Nichido Financial Life.
See Business  Life Insurance Business. The following are discussions of market risks relating to the two subsidiaries.



Tokio Marine & Nichido Life



Market Risk Generally



Tokio Marine & Nichido Life accumulates assets from premiums for the life insurance policies it underwrites in advance of being required to make
payments for claims under those policies. Tokio Marine & Nichido Life funds the benefits it provides under insurance policies with income generated by its investment portfolio assets. These investments are subject to market risk but are managed
under Tokio Marine & Nichido Lifes asset-liability management system.



Investment Objectives



Tokio Marine & Nichido Life invests premiums and deposits received from policyholders in various investments. Its principal investment objective is to effectively control the effect of interest rate fluctuation on the surplus, measured
as the difference between the present value of its assets and that of its liabilities, and maintain stable net investment income.



Market Risk Measurement



Interest rate risk.Tokio Marine & Nichido Lifes primary market risk exposure is to potential changes in interest rates. Tokio Marine
& Nichido Life defines interest rate risk as the risk of loss in the fair values of interest rate sensitive instruments caused by changes in market interest rates. Tokio Marine & Nichido Life is exposed to interest rate risk due to its
investments in fixed income instruments, particularly bonds, policy loans and other long-term investments. In addition, Tokio Marine & Nichido Life is exposed to interest rate risk due to interest rate sensitive obligations and liabilities. See
 Assets to meet future obligations. Tokio Marine & Nichido Life is exposed to risks of loss because both the market value of fixed income instruments and the present value of its obligations and liabilities may vary when market
interest rates fluctuate.



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Equity price risks. Tokio Marine & Nichido Lifes investments in equities expose it to
changes in equity prices. However, Tokio Marine & Nichido Lifes investment in equity securities is small and its exposure to equity price risk is therefore not material.



Foreign exchange rate risk.Foreign exchange rate risk is the risk of a loss in the fair values of instruments
denominated in a currency other than the Japanese yen, Tokio Marine & Nichido Lifes functional currency, due to fluctuations of foreign exchange rates. Tokio Marine & Nichido Life is exposed to foreign exchange rate risk because some
of the assets and liabilities are denominated in a currency other than the yen. If the value of a relevant foreign currency declines relative to the yen, the fair value of assets denominated in that foreign currency would also decline when expressed
in yen terms. If the value of a relevant foreign currency increases relative to the yen, the fair value of liabilities denominated in that foreign currency would increase when expressed in yen terms. Tokio Marine & Nichido Lifes primary
exposure for foreign exchange rate risk is the U.S. dollar. However, Tokio Marine & Nichido Lifes asset-liability management seeks to maintain foreign currency denominated assets that approximately correspond to its foreign currency
denominated liabilities. As a result, any change in foreign exchange rates that would affect the value of Tokio Marine & Nichido Lifes foreign currency denominated assets would be expected to have an approximately offsetting effect on the
value of Tokio Marine & Nichido Lifes foreign currency denominated liabilities. Therefore, Tokio Marine & Nichido Life does not have material exposure to foreign exchange rate risk.



We do not anticipate significant changes in the composition of Tokio Marine
& Nichido Lifes primary market risk exposure or in how such exposure is managed in future reporting periods.



Market Risk Management and Risk Exposure Estimates



As risks associated with managing assets and liabilities are becoming increasingly diversified and complex, Tokio Marine & Nichido Life continues to
seek to enhance its risk management systems and to adopt more sophisticated methods to manage its various risks. Its risk management section, which is independent of Tokio Marine & Nichido Lifes asset management section, is responsible for
implementing Tokio Marine & Nichido Lifes market risk management process. This process includes (i) establishing appropriate controls, policies and procedures relating to market risk; (ii) ensuring appropriate senior management oversight
of market risk-taking and risk-controlling activities; and (iii) analyzing, monitoring and reporting market risk.



Tokio Marine & Nichido Life divides its assets under management into the following two categories for investment and risk management purposes, with
investment and risk management policies tailored to each category:



| |  |  | Assets to meet future obligations; and
| | - |  | --------------------------------------



| |  |  | Other assets.
| | - |  | -------------



Tokio Marine & Nichido Life does not have a material trading portfolio.



Assets to meet future obligations. Assets to meet future obligations are intended to provide reserves for insurance
policies. To ensure that Tokio Marine & Nichido Life can make required payments on those policies at maturity or lapse without regard to interest rate fluctuations, both the assets and the liabilities must be managed effectively. This is called
the asset-liability management. Tokio Marine & Nichido Life has been developing an advanced asset-liability management system and believes that it maintains a well-controlled portfolio that includes various bonds and interest rate swap
transactions used for hedging purposes.



To enhance its
asset-liability management capabilities with respect to insurance policies, Tokio Marine & Nichido Life groups life insurance and investment contracts primarily by type and duration of insurance policies. Each month, Tokio Marine & Nichido
Life measures interest rate sensitivity for the assets and liabilities in each of these groups. Based upon these measurements, Tokio Marine & Nichido Life utilizes interest rate swaps in an effort to control the interest rate sensitivity in the
assets and the liabilities in each group of insurance policies. At March 31, 2005, Tokio Marine & Nichido Life had ¥175.4 billion notional amount of interest rate swaps outstanding.



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The following tables show the effect of hypothetical changes in interest rates on the present value of
the surplus in Tokio Marine & Nichido Lifes asset-liability portfolio, measured as the difference between the present value of its assets and that of its liabilities (before taxes and future policy dividends) as of March 31, 2005 and March
31, 2004. In its sensitivity analysis model, Tokio Marine & Nichido Life selects hypothetical changes in market rates which are expected to reflect reasonably possible near-term changes in those rates. For these purposes, Tokio Marine &
Nichido Life defines near-term to mean a period of up to one year from the date of its most recent financial statements. Actual results may differ from the hypothetical change in market rates assumed in the following tables, especially
since this sensitivity analysis does not reflect the results of any actions that Tokio Marine & Nichido Life would take to mitigate these hypothetical losses in fair value. Furthermore, the information presented in the following tables was
prepared for risk management purposes and is not indicative of the effect of actual changes in interest rates that have occurred in the past or may occur in the future on the financial condition, results of operations or corporate value of Tokio
Marine & Nichido Life.



|                          |  |                      |       |   |     |   |     |  |     |      |  |   |     
|------------------------- |  | -------------------- | ----- | - | --- | - | --- |  | --- | ---- |  | - | ----
|                          |  | Yield curve shift(1)
|                          |  | As of March 31, 2005
|                          |  | -1%                  |       |   | ±0% |   | +1% |  | +2%
|                          |  | (yen in billions)   
|Asset-Liability Portfolio |  | ¥                    | (58.0 | ) |     | ¥ | 0.0 |  | ¥   | 37.5 |  | ¥ | 59.7
|                          |  |                      |       |   |     |   |     |  |     |      |  |   |     
|                          | 
|                          |  | Yield curve shift(1)
|                          |  | As of March 31, 2004
|                          |  | -1%                  |       |   | ±0% |   | +1% |  | +2%
|                          |  | (yen in billions)   
|Asset-Liability Portfolio |  | ¥                    | (32.3 | ) |     | ¥ | 0.0 |  | ¥   | 15.4 |  | ¥ | 20.7
|                          |  |                      |       |   |     |   |     |  |     |      |  |   |     

---

|(1) | Based on the then-prevailing yield curve for Japanese government bonds on each of the dates indicated and excludes assets in foreign currencies which are not material.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



Between March 31, 2005 and March 31, 2004, Tokio
Marine & Nichido Lifes interest rate risk increased primarily due to changes in the composition of its investment portfolios to include more shorter-term fixed income instruments in anticipation of a rise in the interest rates.



Tokio Marine & Nichido Lifes exposure to credit risk with
respect to its investment securities which are categorized as assets to meet future obligations is not significant as it invests primarily in government bonds and government-guaranteed bonds and does not invest in corporate bonds. Tokio Marine &
Nichido Life is exposed to credit risk in the form of counterparty risk in connection with its interest rate swap transactions. Tokio Marine & Nichido Life manages credit risk that arises from its interest rate swap transactions by entering into
collateral arrangements through credit support annexes and managing its collateral on a daily basis.



Other assets. Assets under this category are primarily policy loans and equity investments. The outstanding aggregate amount of policy loans as of
March 31, 2005 was ¥24.8 billion. Policy loans are secured by policy liabilities and investment deposits under the respective policies. At March 31, 2005, the market value of Japanese equity securities in this portfolio was ¥1.5 billion,
which accounted for 0.1% of the aggregate value of Tokio Marine & Nichido Lifes total investments across all portfolios. Consequently, the effect of price movements in the domestic stock market on Tokio Marine & Nichido Lifes
investment assets is not significant.



Tokio Marine &
Nichido Financial Life



Market Risk Generally



Tokio Marine & Nichido Financial Life accumulates
assets for the variable insurance policies it underwrites in advance of being required to make payments under those policies. Tokio Marine & Nichido Financial Life funds the benefits it provides under variable insurance policies with purchase
payments received as well as income generated by investment portfolio assets. The investment portfolio primarily consists of stocks, government bonds and corporate bonds, in both domestic and foreign markets. A significant portion of the



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benefits provided to policyholders under our variable insurance policies fluctuates depending on the performance of the investment portfolios, which are
subject to market risk. Accordingly, policyholders generally take the market risk with respect to the performance elements of these policies. However, Tokio Marine & Nichido Financial Life also guarantees a portion of the benefits provided to
policyholders for variable insurance policies, generally taking the form of either death benefits or annuity payment base. In the event the values of our applicable investment portfolios fall below the amount we are required to guarantee under these
policies, Tokio Marine & Nichido Financial Life will be required to fund the deficiency from its own assets. Tokio Marine & Nichido Financial Life is therefore exposed to market risk with respect to the guaranteed portion of its portfolios
and monitors to control this market risk as part of asset-liability management.



Investment Objectives



Tokio Marine & Nichido Financial Life manages its investment portfolio assets for the guaranteed portion of its portfolios separately from the rest of its portfolios. Tokio Marine & Nichido Financial Lifes principal investment
objective with respect to the guaranteed portion is to maintain net asset value and liquidity by controlling risk within an acceptable range.



Market Risk Measurement



Tokio Marine & Nichido Financial Lifes primary market risk exposure is to potential changes in equity prices, foreign exchange rates and
interest rates.



Equity price risk. Tokio Marine &
Nichido Financial Life is exposed to risks of loss due to changes in equity prices because the value of equity securities held by its investment trusts may decline. Equity investments held by investment trusts of Tokio Marine & Nichido Financial
Life are in both the Japanese and foreign markets and are generally intended to be held for the long term. Between March 31, 2005 and March 31, 2004, the level of equity price risk of Tokio Marine & Nichido Financial Life increased primarily as
a result of new sales.



Foreign exchange rate risk.
Foreign exchange rate risk is the risk of a loss in the fair values of instruments denominated in a currency other than the Japanese yen, Tokio Marine & Nichido Financial Lifes functional currency, due to fluctuations of foreign exchange
rates. Tokio Marine & Nichido Financial Life is exposed to foreign exchange rate risk because some of the assets held by its investment trusts are denominated in a currency other than the yen. If the value of a relevant foreign currency declines
relative to the yen, the fair value of assets denominated in that foreign currency will also decline when expressed in yen terms. Tokio Marine & Nichido Financial Lifes primary exposure for foreign exchange rate risk is the U.S. dollar and
euro. Between March 31, 2005 and March 31, 2004, the level of foreign exchange rate risk of Tokio Marine & Nichido Financial Life increased slightly primarily as a result of new sales.



Interest rate risk.Tokio Marine & Nichido Financial Life defines
interest rate risk as the risk of loss in the fair values of interest rate sensitive instruments caused by changes in market interest rates. Tokio Marine & Nichido Financial Life is exposed to interest rate risk due to its investments through
its investment trusts in bonds. Tokio Marine & Nichido Financial Life is exposed to risks of loss because fluctuation of market interest rates affects bond prices. Between March 31, 2005 and March 31, 2004, the level of interest rate risk of
Tokio Marine & Nichido Financial Life increased slightly primarily as a result of new sales.



We do not anticipate significant changes in the composition of Tokio Marine & Nichido Financial Lifes primary market risk exposures in future
reporting periods. However, Tokio Marine & Nichido Financial Life may change the way it manages its risks through the use of hedging instruments or risk transfers as its exposure increases in future reporting periods.



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Market Risk Management and Risk Exposure Estimates



The risk management committee of the board of directors of Tokio Marine
& Nichido Financial Life is responsible for implementing Tokio Marine & Nichido Financial Lifes market risk management process. This process includes (i) establishing controls, policies and procedures relating to market risk; (ii)
ensuring appropriate senior management oversight of market risk-taking and risk-controlling activities; and (iii) analyzing, monitoring and reporting market risk.



The guaranteed portion of Tokio Marine & Nichido Financial Lifes investment portfolios is intended to provide
reserves for required payments under variable annuity and variable life insurance products. The required payments generally include guaranteed death benefits, and in some cases annuity payment base, and to ensure that Tokio Marine & Nichido
Financial Life can make such required payments without regard to market fluctuations, both the assets and the liabilities must be managed effectively. Tokio Marine & Nichido Financial Life is continuing to implement a range of strategies to
reduce market risk, including by modifying products, taking into account factors such as solvency margins and risk discount rates, creating new investment portfolios for certain products by increasing the ratio of fixed income securities, utilizing
reinsurance and developing new hedging methodologies.



The
following tables show the effect of hypothetical changes in equity prices, the present value of our foreign currency-denominated assets and interest rates on the present value of the surplus in Tokio Marine & Nichido Financial Lifes
asset-liability portfolio, measured as the difference between the present value of its assets and that of its liabilities (after taxes) as of March 31, 2005 and March 31, 2004. Tokio Marine & Nichido Financial Life selects hypothetical changes
in market rates which are expected to reflect reasonably possible near-term changes in those rates. For these purposes, Tokio Marine & Nichido Financial Life defines near-term to mean a period of up to one year from the date of its
most recent financial statements. Actual results may differ from the hypothetical change in market rates assumed in the following tables, especially since this sensitivity analysis does not reflect the results of any actions that Tokio Marine &
Nichido Financial Life would take to mitigate these hypothetical losses in fair value. Furthermore, the information presented in the following tables was prepared for risk management purposes and is not indicative of the effect of actual changes in
equity prices, the present value of our foreign currency-denominated assets and interest rates that have occurred in the past or may occur in the future on the financial condition, results of operations or corporate value of Tokio Marine &
Nichido Financial Life.



|                          |  |                                                |      |                      |     |   |      |  |      |     |  |     |      |      |  |   |     |  |   |      |  
|------------------------- |  | ---------------------------------------------- | ---- | -------------------- | --- | - | ---- |  | ---- | --- |  | --- | ---- | ---- |  | - | --- |  | - | ---- | -
|                          |  | Equity price change                            |     
|                          |  | As of March 31, 2005                           |      | As of March 31, 2004 |    
|                          |  | -10%                                           |      |                      | ±0% |   | +10% |  | -10% |     |  | ±0% |      | +10% | 
|                          |  | (yen in billions)                              |      | (yen in billions)    |    
|Asset-Liability Portfolio |  | ¥                                              | (1.5 | )                    |     | ¥ | 0.0  |  | ¥    | 1.0 |  | ¥   | (0.9 | )    |  | ¥ | 0.0 |  | ¥ | 0.7  |  
|                          |  |                                                |      |                      |     |   |      |  |      |     |  |     |      |      |  |   |     |  |   |      |  
|                          | 
|                          |  | Changes in foreign currency-denominated assets |     
|                          |  | As of March 31, 2005                           |      | As of March 31, 2004 |    
|                          |  | -10%                                           |      |                      | ±0% |   | +10% |  | -10% |     |  | ±0% |      | +10% | 
|                          |  | (yen in billions)                              |      | (yen in billions)    |    
|Asset-Liability Portfolio |  | ¥                                              | (0.3 | )                    |     | ¥ | 0.0  |  | ¥    | 0.3 |  | ¥   | (0.3 | )    |  | ¥ | 0.0 |  | ¥ | 0.3  |  
|                          |  |                                                |      |                      |     |   |      |  |      |     |  |     |      |      |  |   |     |  |   |      |  
|                          | 
|                          |  | Yield change                                   |     
|                          |  | As of March 31, 2005                           |      | As of March 31, 2004 |    
|                          |  | -1%                                            |      |                      | ±0% |   | +1%  |  | -1%  |     |  | ±0% |      | +1%  | 
|                          |  | (yen in billions)                              |      | (yen in billions)    |    
|Asset-Liability Portfolio |  | ¥                                              | (0.1 | )                    |     | ¥ | 0.0  |  | ¥    | 0.1 |  | ¥   | 0.0  |      |  | ¥ | 0.0 |  | ¥ | (0.0 | )
|                          |  |                                                |      |                      |     |   |      |  |      |     |  |     |      |      |  |   |     |  |   |      |  



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Limitations of Market Risk Management



Certain of the statements contained in this discussion of our market risks may constitute forward looking statements. These
statements inherently are subject to a variety of risks and uncertainties that could cause actual results to differ materially from those set forth in those statements. These risks and uncertainties include, among other things:



| |  |  | Changes in the composition of our financial instruments that are subject to market risk, including as a result of ordinary financing and investment decisions or as a result of
changes in strategy or regulation;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Changes in the volatility of particular instruments or groups of instruments, including, without limitation, as a result of economic developments in Japan or elsewhere, or changing
political conditions, or the increasing liquidity of international securities markets;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Deviations of the actual behavior of particular markets from those that are indicated by statistical models used by Tokio Marine & Nichido, Tokio Marine & Nichido Life and
Tokio Marine & Nichido Financial Life; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Deviations of actual loss experience from the results that might be indicated by statistical analysis.
| | - |  | ------------------------------------------------------------------------------------------------------



Liquidity and Capital Resources



Liquidity



As a holding company, we currently conduct all of our operations through our direct and indirect subsidiaries, including Tokio Marine & Nichido.
Virtually all of our consolidated assets are held by, and all of our consolidated earnings and cash flows are attributable to, our direct and indirect subsidiaries. As a result, our liquidity and ability to pay expenses and meet obligations at the
holding company level, as well as our ability to pay cash dividends on our shares, are dependent upon our ability to receive dividends from our subsidiaries. While we expect that our subsidiaries will contribute cash to us from time to time, their
ability to do so is governed not only by their profitability and liquidity but also by a number of different regulations that are subject to change. See Risk Factors  Risks Relating to Our Business.



Our subsidiaries principal sources of funds are the operations of their
property and casualty and life insurance business segments which are mainly located in Japan. These operations principally derive their cash flows from underwriting and investment operations.



In general, there is a time lag between when premiums are collected and when
losses and benefits resulting from an event specified in the policy are paid. During this intervening time period, the premiums we collect are invested to generate investment income cash flows, primarily from interest and dividends. See 
Results of Operations. Premiums collected and investment income received are our primary sources of cash resources while the payment of claim losses and benefits and related adjustment expenses are our main uses of cash resources.



While cash flows from operating activities have been generally sufficient
to meet our funding requirements for claim payments and other operating needs, we may, if required, liquidate a portion of our investment portfolio and/or arrange for financing to address liquidity needs.



For our property and casualty operations, additional liquidity may be
required if we experience a significant and prolonged increase in the frequency and severity of losses under the policies we write or assume. Significant catastrophic events  the timing and effect of which are inherently unpredictable 
may also increase liquidity requirements for our property and casualty operations.



While we utilize various types of catastrophe reinsurance to limit losses associated with significant catastrophic events including earthquakes and typhoons, a timing difference will exist between our payments in



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respect of these losses to policyholders and the receipt of any reimbursement under our reinsurance arrangements. We evaluate our liquidity requirements in
the event of catastrophic events by estimating the probable maximum loss and ensuring that we will have sufficient assets available to match anticipated resulting liquidity requirements.



We utilize an asset-liability management program to seek to ensure that we are able to make required claim payments in a
timely manner. See  Quantitative and Qualitative Disclosures About Market Risk  Property and Casualty Business.



Our insurance operations include issuances of insurance contracts classified as investment contracts for accounting purposes. These investment contracts
generally have cash payment requirements based on a stated rate which may differ in timing and amount from our returns on the asset portfolio allocated to fund the investment contract payments.



As of March 31, 2005 and 2004, almost all of our policyholders contract
deposits could be surrendered with penalties. Our average surrender rate over the past two years ended March 31, 2005 has been approximately 3% per annum of the number of outstanding policies.



For our life insurance operations, additional liquidity could be required if
there is a significant deterioration in the actual mortality experience compared to the assumptions we utilize in pricing our life insurance policies. If such deterioration were to occur, life insurance payments on our policies may be required
sooner, which would increase the liquidity requirements of our life insurance operations.



In addition, if a substantial portion of our life insurance operations bond portfolio were to diminish significantly in value, we may be required to liquidate other portions of our life insurance portfolio
(generally consisting of insurance and investment contracts) and/or arrange for supplemental external financing. Events which could give rise to these additional liquidity requirements include, but are not limited to, a significant economic collapse
of the Japanese economy or a significant change in prevailing interest rates. Interest rate changes may also affect our liquidity to the extent minimum returns or crediting rates provided in connection with some of our life insurance products vary
over time from actual returns. Our life insurance liquidity requirements are also affected by changes in the level of policy surrenders and withdrawals. Our average surrender rate over the past two years ended March 31, 2005 has been approximately
7% per annum of the face value of outstanding policies. We utilize an asset-liability management program to seek to ensure that we are able to make required insurance claim and investment contract payments in a timely manner. See 
Quantitative and Qualitative Disclosures About Market Risk  Life Insurance Business.



For our total operations, as of March 31, 2005, we had an estimated ¥9,254,103 million in contractual payment obligations, of which an estimated
¥4,754,554 million had a reasonably fixed and determinable payment period, and of which an estimated ¥4,499,549 million did not have a reasonably fixed and determinable payment period. Of the reasonably fixed and determinable payment
obligations, ¥551,516 million are scheduled to be payable during the year ending March 31, 2006.



We expect to fund our contractual payment obligations with existing cash and cash equivalent resources, short-term investment resources, long-term
investment resources and cash flows from operating activities. For the year ended March 31, 2005, after meeting cash requirements for operating activities (including contractual payment obligations), we generated net positive cash flows from
operating activities of ¥214,242 million, as compared to ¥380,647 million for the year ended March 31, 2004. We have had net positive cash flows from operating activities for each of the past 10 fiscal years, with the exception of the year
ended March 31, 2001. Cash flows from operating activities in the year ended March 31, 2001 were supplemented by cash flows from investing activities.



Positive cash flows from operating activities for fiscal 2004 enabled cash to be invested in short-term and other investments. As a result, as of March
31, 2005, we had cash and cash equivalents of ¥290,642 million, as



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compared to ¥432,874 million as of March 31, 2004. As of March 31, 2005, we also had investments of ¥10,304,749 million, as compared to
¥9,393,222 million as of March 31, 2004. The increase in investments of ¥911,527 resulted from a net purchase of held to maturities and available for sale securities of ¥904,643 million.



In addition, when we deem it appropriate or necessary, we may also seek to
complement our cash flows from operating and investing activities with offerings of debt or equity securities in the capital markets or bank financings.



We believe that cash flows from the foregoing sources will be sufficient to satisfy our current liquidity requirements based on current developments and
reasonably foreseeable contingencies.



Capital Resources



Our capital requirements consist principally of
capital expenditures and debt repayment.



We made capital
expenditures of ¥9.8 billion in the year ended March 31, 2005, ¥17.6 billion in the year ended March 31, 2004 and ¥11.5 billion in the year ended March 31, 2003, in each case primarily for real estate for operational and lease purposes
and for information technology systems development and equipment. At March 31, 2005, we had commitments in the amount of ¥5.4 billion for capital expenditures for improvements and repairs on real estate.



Our total debt outstanding amounted to ¥270,887 million as of March 31,
2005. Short-term debt outstanding at March 31, 2005, all of which are due within one year of the borrowed date, comprised the following:



|                                     |  |                   |       
|------------------------------------ |  | ----------------- | ------
|                                     |  | Short-term debt  
|                                     |  | (yen in millions)
|Loans, 0.02% to 0.89%                |  | ¥                 | 7,031 
|Equity linked notes, 2.20% to 28.00% |  |                   | 1,283 
|Fixed rate notes, 0.01% to 0.76%     |  |                   | 7,094 
|                                     |  |                   |       
|Total short-term debt                |  | ¥                 | 15,408
|                                     |  |                   |       



Long-term debt
outstanding as of March 31, 2005 comprised the following:



|                                     |  |           |  |                   |        
|------------------------------------ |  | --------- |  | ----------------- | -------
|                                     |  | Due       |  | Long-term debt   
|                                     |  |           |  | (yen in millions)
|Loans, 0.03% to 3.99%                |  | 2006-2015 |  | ¥                 | 36,512 
|Equity linked notes, zero coupon     |  | 2006-2007 |  |                   | 17,994 
|Fixed rate notes, 0.14% to 1.43%     |  | 2005-2013 |  |                   | 27,030 
|Credit linked notes, 1.99% to 11.92% |  | 2007      |  |                   | 21,954 
|Unsecured bonds, 1.47% to 2.78%      |  | 2006-2021 |  |                   | 135,703
|Other notes                          |  | 2007-2034 |  |                   | 16,286 
|                                     |  |           |  |                   |        
|Total long-term debt                 |  |           |  | ¥                 | 255,479
|                                     |  |           |  |                   |        



As of March 31, 2005,
¥248,933 million, or 91.9%, of our total debt outstanding was denominated in Japanese yen and ¥21,954 million, or 8.1%, was denominated in U.S. dollar.



These borrowings were made primarily for general corporate purposes, and there were no restrictions on the use of proceeds from these borrowings.



We also maintain policyholders contract deposits, which
are liabilities that must be returned to the policyholders under long-term insurance coverage unless there has been a substantial settlement under the policy. Policyholders contract deposits amounted to ¥3,006 billion as of March 31, 2005
and were primarily denominated in Japanese yen.



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It is our policy to fund our capital requirements principally from cash flows from operating activities
and external sources, such as issuances of debentures. In the future, we intend to explore funding opportunities from diversified external sources within the framework of applicable regulations.



At the holding company level, we intend to finance our capital requirements,
investments and working capital needs primarily with a combination of dividends and advances from our subsidiaries and access to the international and domestic capital markets. We believe that dividends and advances provided by our subsidiaries,
together with the proceeds from any capital markets offerings, will provide sufficient funds to meet our operating and capital requirements and to implement our corporate strategy.



We hold our cash and equivalents primary denominated in Japanese yen.



Effective as of August 19, 2003, we reduced our statutory additional paid-in
capital in the amount of ¥500 billion pursuant to Article 289, Section 2 of the Commercial Code and transferred that amount to our other capital surplus. This transfer enabled us, among other things, to repurchase our own shares of common stock.
At our general shareholders meeting on June 27, 2003, our shareholders approved a share buyback of up to 120,000 shares of our common stock with an aggregate value of no more than ¥100 billion, pursuant to which we repurchased 75,646
shares for an aggregate purchase price of approximately ¥100 billion during the period from July 1, 2003 to May 21, 2004. At our general shareholders meeting on June 29, 2004, our shareholders approved a change to our Articles of
Incorporation, entitling our board of directors to approve share buybacks. During the period from July 1, 2004 to May 20, 2005, we repurchased 60,823 shares of our common stock for an aggregate purchase price of approximately ¥92 billion
pursuant to resolutions of our board of directors. During the period beginning on June 29, 2005 and ended on September 9, 2005, we have repurchased 12,904 shares for an aggregate purchase price of approximately ¥20 billion.



Off-Balance Sheet Arrangements



We issue guarantees in various transactions to enhance the credit standing
of our customers and third parties. These guarantees represent irrevocable assurances that we will make payment in the event that the primary obligor of the guaranteed obligation fails to fulfill its obligation to third parties. We are obliged to
make payment when the primary obligor fails to make payments that become due under the guaranteed obligation in accordance with the contractual terms. Our maximum exposure under these guarantees as of March 31, 2005 was approximately ¥839
million. At March 31, 2005, we did not recognize any liabilities for these remote loss contingencies. In some cases, the obligations that we guarantee are secured by the guaranteed parties operating assets. In the event that we assume the
guaranteed parties obligation, we would acquire the right to the collateral.



Contractual Obligations



The table below sets
forth the estimated maturities of our contractual obligations as of March 31, 2005:



|                                                |  |                        |           |                  |   |           |  |           |           |               |   |           |  |   |          
|----------------------------------------------- |  | ---------------------- | --------- | ---------------- | - | --------- |  | --------- | --------- | ------------- | - | --------- |  | - | ---------
|                                                |  | Payments due by period
|                                                |  | Total                  |           | Less than 1 year |   | 1-3 years |  | 3-5 years |           | After 5 years
|                                                |  | (yen in millions)     
|Contractual obligations:                        |  |                        |           |                  |   |           |  |           |           |               |   |           |  |   |          
|Policyholders contract deposits (1)            |  | ¥                      | 4,470,396 |                  | ¥ | 459,394   |  | ¥         | 784,404   |               | ¥ | 697,197   |  | ¥ | 2,529,401
|Losses, claims and loss adjustment expenses (2) |  |                        | 1,345,195 |                  |   | 764,315   |  |           | 396,809   |               |   | 111,124   |  |   | 72,947   
|Future policy benefits and losses (3)           |  |                        | 3,154,354 |                  |   | 118,977   |  |           | 225,098   |               |   | 232,520   |  |   | 2,577,759
|Debt outstanding                                |  |                        | 270,887   |                  |   | 83,139    |  |           | 63,014    |               |   | 70,998    |  |   | 53,736   
|Capital lease obligations                       |  |                        | 7,850     |                  |   | 3,562     |  |           | 4,288     |               |   |          |  |   |         
|Purchase obligations                            |  |                        | 5,421     |                  |   | 5,421     |  |           |          |               |   |          |  |   |         
|                                                |  |                        |           |                  |   |           |  |           |           |               |   |           |  |   |          
|Total contractual obligations (4)               |  | ¥                      | 9,254,103 |                  | ¥ | 1,434,808 |  | ¥         | 1,473,613 |               | ¥ | 1,111,839 |  | ¥ | 5,233,843
|                                                |  |                        |           |                  |   |           |  |           |           |               |   |           |  |   |          



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---

|(1) | We estimate the timing of cash flows and our expectation of future payment patterns with respect to policyholders contract deposits based on our 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 our control. Accordingly, our actual experience may differ from our
estimates. In addition, the amounts set forth in the table above do not reflect our estimates of future premiums and reinsurance recoveries.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The sum of policyholders contract deposit amounts for the periods set forth in the table above (¥4,470,396 million) exceeds the amount of corresponding liabilities of ¥3,005,999 million reflected in our
consolidated balance sheet as of March 31, 2005, as the amounts set forth in the table above are undiscounted and do not reflect the impact of future premium revenue.

|(2) | We estimate the timing of cash flows with respect to losses, claims and loss adjustment expenses based on our historical experience regarding loss development payment patterns,
which are used to estimate ultimate losses. Uncertainties exist, however, particularly with respect to the timing of settlements and the ultimate amounts of these liabilities. Accordingly, our actual experience may differ from our estimates.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | We estimate the timing of cash flows with respect to future policy benefits and losses based on our 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, our actual experience may differ from our estimates. In addition, the amounts set forth in the table
above do not reflect our estimates of future premiums and reinsurance recoveries.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | The sum of future policy benefit and loss amounts for the periods set forth in the table above (¥3,154,354 million) exceeds the amount of corresponding liabilities of
¥982,336 million reflected in our consolidated balance sheet as of March 31, 2005, 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, 2005. We expect to contribute
approximately ¥9,209 million to our pension plans for the year ending March 31, 2006. See note 12 to our consolidated financial statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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DIRECTORS AND CORPORATE AUDITORS



Personal Data



Our current directors were elected to their respective
positions with us at the 2005 ordinary general meeting of our shareholders. The term of office for each of our directors will expire at the close of the ordinary general meeting of shareholders to be convened in 2006. The term of office for Mr.
Miki, our corporate auditor who was elected at the 2003 general meeting of our shareholders, will expire at the close of the ordinary meeting of shareholders to be convened in 2007. The term of office for Mr. Ueno and Mr. Kamioka, two of our
corporate auditors elected at the 2005 ordinary general meeting of our shareholders, will expire at the close of the ordinary meeting of shareholders to be convened in 2009.



The following table shows information about our directors and corporate auditors as of August 31, 2005:



|                   |  |                                                    |  |                   |  |                                            |  |                                                             |    
|------------------ |  | -------------------------------------------------- |  | ----------------- |  | ------------------------------------------ |  | ----------------------------------------------------------- | ---
|Name               |  | Position                                           |  | Date of birth     |  | Number ofshares ownedas of August 31, 2005 |  | Number of shareacquisition rightsheld as of August 31, 2005 |    
|Kunio Ishihara     |  | President and Representative Director              |  | October 17, 1943  |  | 61.84                                      |  | 12                                                          | (1)
|Yasuo Yaoita       |  | Senior Managing Director (Representative Director) |  | November 13, 1947 |  | 36.47                                      |  | 7                                                           |    
|Tomohiro Kotani    |  | Managing Director(Representative Director)         |  | August 28, 1944   |  | 13.21                                      |  | 6                                                           |    
|Minoru Makihara    |  | Director                                           |  | January 12, 1930  |  | 24.00                                      |  | 1                                                           |    
|Masamitsu Sakurai  |  | Director                                           |  | January 8, 1942   |  |                                           |  | 1                                                           |    
|Haruo Shimada      |  | Director                                           |  | February 21, 1943 |  |                                           |  | 1                                                           |    
|Toshiro Yagi       |  | Director                                           |  | November 1, 1947  |  | 23.61                                      |  | 6                                                           | (1)
|Sukeaki Ohta       |  | Director                                           |  | February 27, 1943 |  | 40.92                                      |  | 3                                                           | (1)
|Tomochika Iwashita |  | Director                                           |  | November 14, 1946 |  | 29.23                                      |  | 8                                                           | (1)
|Morio Ishii        |  | Director                                           |  | March 7, 1947     |  | 29.76                                      |  | 7                                                           | (1)
|Hiroshi Amemiya    |  | Director                                           |  | October 2, 1950   |  | 22.61                                      |  | 6                                                           | (1)
|Shoji Ueno         |  | Standing Corporate Auditor                         |  | February 5, 1944  |  | 36.02                                      |  | 4                                                           |    
|Tetsuo Kamioka     |  | Standing Corporate Auditor                         |  | September 3, 1948 |  | 13.12                                      |  | 4                                                           |    
|Shigemitsu Miki    |  | Corporate Auditor                                  |  | April 4, 1935     |  |                                           |  | 1                                                           |    

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|(1) | Includes acquisition rights received as a director of Tokio Marine & Nichido or Tokio Marine & Nichido Life, as applicable.
|--- | ---------------------------------------------------------------------------------------------------------------------------



Kunio Ishihara joined Tokio Marine in 1966. He became a director of
Tokio Marine in 1995, a managing director in 1998, a senior managing director in 2000 and president in 2001. He has served as our president since April 2002. He also serves as president of Tokio Marine & Nichido.



Yasuo Yaoita joined Tokio Marine in 1970. He became a director of
Tokio Marine in 2000 and served in such function until 2002. He has served as our managing director from April 2002 to June 2005 and as our senior managing director since June 2005.



Tomohiro Kotani joined Nichido Fire in 1969. He became a director of Nichido Fire in 2001 and a managing director in
2003 and served in such function until 2004. He has served as our managing director since June 2004.



Minoru Makihara joined Mitsubishi Corporation in 1956. He became president of Mitsubishi Corporation in 1992 and chairman of its board of directors
in 1998, and he has served as senior corporate advisor since April 2004. He served as a director of Tokio Marine from 1993 through 2002. He has served as one of our directors since April 2002.



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Masamitsu Sakurai joined Ricoh Company, Ltd. in 1966. He became a director of Ricoh Company, Ltd.
in 1992 and has served as its president since 1996. He has served as one of our directors since April 2002.



Haruo Shimada joined the faculty of economics at Keio University as a research assistant in 1967. He became an associate professor in 1975 and has
been a professor since 1982. He has served as one of our directors since April 2002.



Toshiro Yagi joined Tokio Marine in 1971. He became a director of Tokio Marine in 2001 and a managing director in 2003. He has served as one of our directors since June 2003. He also serves as a managing
director of Tokio Marine & Nichido.



Sukeaki Ohta
joined Tokio Marine in 1965. He became a director of Tokio Marine in 1993, a managing director in 1995, a senior managing director in 1998 and served in such function until June 2000. Mr. Ohta became the president of Tokio Marine Life in June 2000
and the president of Tokio Marine & Nichido Life in October 2003. He has served as one of our directors since June 2004. He also serves as president of Tokio Marine & Nichido Life.



Tomochika Iwashita joined Tokio Marine in 1969. He became a director
of Tokio Marine in 1998, a managing director, a director and a retired director in June, September and December 2000, respectively, a managing director in 2002, a senior managing director of Tokio Marine in 2003 and of Tokio Marine & Nichido in
2004 and an executive vice president of Tokio Marine & Nichido in June 2005. He has served as one of our directors since June 2005. He also serves as an executive vice president of Tokio Marine & Nichido.



Morio Ishii joined Tokio Marine in 1970. He became a director of Tokio
Marine in 1999, a managing director of Tokio Marine in 2001 and a senior managing director of Tokio Marine & Nichido in June 2005. He has served as one of our directors since June 2005. He also serves as a senior managing director of Tokio
Marine & Nichido.



Hiroshi Amemiya joined Tokio
Marine in 1973. He became a director of Tokio Marine in 2002 and of Tokio Marine & Nichido in 2004. He has served as one of our directors since June 2005. He also serves as a director of Tokio Marine & Nichido.



Shoji Ueno joined Tokio Marine in 1967. He became a director of Tokio
Marine in 1993, a managing director in 1996, a senior managing director in 1999, an executive vice president in 2001, an executive vice president of Tokio Marine & Nichido in 2004 and served in such function until June 2005. He served as one of
our directors from April 2002 through June 2005. He has served as one of our standing corporate auditors since June 2005.



Tetsuo Kamioka joined Nichido Fire in 1967. He became a director of Nichido Fire in 2000 and a managing director in 2002 and served in such
function until March 2003. He became the president of The Nichido Life Insurance Company, Limited in April 2003 and a senior managing director of Tokio Marine & Nichido Life in October 2003 and served in such function until June 2005. He has
served as one of our standing corporate auditors since June 2005.



Shigemitsu Miki joined The Mitsubishi Bank, Ltd. in 1958. He became a director of The Mitsubishi Bank, Ltd. in 1986 and president of The Bank of Tokyo-Mitsubishi, Ltd. in 2000 and has served as chairman of its board of directors
since June 2004. He served as a corporate auditor of Tokio Marine from 2000 through 2002. He has served as one of our corporate auditors since April 2002. He also serves as chairman of The Bank of Tokyo-Mitsubishi, Ltd.



There are no family relationships between any of our directors and corporate
auditors. There are no arrangements or understandings with major shareholders, customers or others pursuant to which any person



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referred to above was selected as a director or corporate auditor. None of our directors or corporate auditors has any service contract with us or any of our
subsidiaries that provides for benefits upon termination of service as a director or corporate auditor. The total number of shares held by our directors and corporate auditors constitute 0.02% of our total shares outstanding. No director or
corporate auditor has different voting rights from any other shareholder of Millea Holdings common stock.



Compensation and Benefits



The aggregate compensation, including bonuses, that was paid by Millea Holdings and its subsidiaries during the year ended March 31, 2005 to our directors
and corporate auditors was ¥386 million and ¥65 million, respectively. The total amount that we set aside or accrued during the year ended March 31, 2005 to provide pension, retirement or similar benefits to our directors and corporate
auditors was ¥155 million and ¥21 million, respectively.



Under the Commercial Code and local practice, we could make severance payments to retired directors or corporate auditors under retirement allowance plans with shareholder approval when our management proposes such payments based on
resolutions of our board of directors. Pursuant to a shareholder approval, the amount of such payments to retiring directors was determined by a resolution of the board of directors and the amount of such payments to retiring corporate auditors was
determined by our board of corporate auditors upon consultation among themselves. Effective June 2005, however, we terminated the retirement allowance plans that were previously in place for our directors and corporate auditors, and severance
payments will no longer be made to retiring directors or corporate auditors. We will, however, make severance payments to retiring directors and corporate auditors for services rendered prior to the date of termination of the plans in June 2005.



At the third ordinary general meeting of shareholders held on
June 28, 2005, our shareholders approved the issuance of stock acquisition rights pursuant to the July 2005 Millea Holdings Stock Acquisition Rights, a stock option scheme under a stock-linked compensation plan to be established in accordance with
Articles 280-20 and 280-21 of the Commercial Code, to our directors and corporate auditors and to the directors and corporate auditors of Tokio Marine & Nichido and Tokio Marine & Nichido Life. Directors of Tokio Marine & Nichido include
certain individuals who are referred to as directors although they are not members of the board of directors (shikko-yakuin). Pursuant to the July 2005 Millea Holdings Stock Acquisition Rights, 310 stock acquisition rights to purchase 310
shares of Millea Holdings common stock were issued, without any consideration, at the exercise price of 1 yen per share, to be exercised from July 15, 2005 through June 30, 2035 but only after the right holder no longer occupies any position
as either a director or corporate auditor of Millea Holdings, Tokio Marine & Nichido or Tokio Marine & Nichido Life, as applicable.



Consequently, compensation for our full-time directors now consists of three elements: fixed compensation; bonuses related to the business performance of
Millea Holdings and the performance of the individual; and stock options. Compensation for our corporate auditors and part-time directors now consists of two elements: fixed compensation and stock options.



Board Practices



Our board of directors has the authority to determine the fundamental policy for the administration of the boards
affairs and supervises the execution by the directors of their duties. Our articles of incorporation provide for not more than fifteen directors. Directors are elected at general meetings of shareholders, and the normal term of office of directors
is one year, although they may serve any number of consecutive terms. Our board of directors elects from among its members one or more representative directors, who have the authority individually to represent us. From among its members, the board
of directors also elects a chairman, a president and one or more executive vice presidents, senior managing directors and managing directors. The Commercial Code provides that a director may not vote on an agenda item in which he or she has a
special interest. There is no compulsory retirement age for directors. There is no requirement that a director hold our shares in order to qualify him or her as a director.



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Our articles of incorporation provide for not more than six corporate auditors, one or more of whom may
serve as a standing (or full-time) corporate auditor. Corporate auditors are elected at general meetings of shareholders. The normal term of office of a corporate auditor is four years. Corporate auditors may serve any number of consecutive terms.
The corporate auditors form the board of corporate auditors. Corporate auditors are under a statutory duty to review the administration of our affairs by the directors, examine the financial statements and business reports to be submitted by the
board of directors to the general meetings of shareholders and report their opinions thereon to the shareholders. Corporate auditors are required to attend meetings of the board of directors and are entitled to express their opinions, but they are
not entitled to vote. Corporate auditors also have a statutory duty to provide their report to the board of corporate auditors, which is required to submit its audit report to the directors. The board of corporate auditors also determines matters
relating to the duties of the corporate auditors, such as auditors policy and methods of investigation of our affairs. We currently do not have an audit committee.



In July 2005, we established a nomination committee and a compensation committee to serve as advisory bodies to our board of
directors. The nomination committee deliberates on the following matters and reports to the board of directors: the appointment and dismissal of our directors and corporate auditors; the appointment and dismissal of directors and corporate auditors
of our subsidiaries in which we directly hold a majority of the voting rights, or principal business subsidiaries; and the criteria for the appointment of our directors and corporate auditors and directors and corporate auditors of our principal
business subsidiaries. The compensation committee deliberates on the following matters and reports to the board of directors: evaluation of the performance of our directors; evaluation of the performance of directors of our principal business
subsidiaries; and the compensation system for our directors and corporate auditors and directors and corporate auditors of our principal business subsidiaries. The nomination committee and the compensation committee shall generally each consist of
approximately five members. As a general rule, a majority of the members of each committee shall be selected from outside of Millea Holdings, and the chairman of each committee shall be one of the outside members. As of September 15, 2005, both
committees consisted of Mr. Ishihara and three outside directors, Mr. Makihara, Mr. Sakurai and Mr. Shimada, as members, with Mr. Makihara chairing the nomination committee and Mr. Shimada chairing the compensation committee.



Audit Committee Financial Expert



Our board of corporate auditors has determined that Shoji Ueno, a standing
corporate auditor, is an audit committee financial expert within the meaning of the current rules of the SEC.



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THE JAPANESE INSURANCE INDUSTRY



Non-Life
Insurance Industry



History



Tokio Marine, originally founded in 1879, was the first Japanese private
non-life insurance company. Following the enactment of the Insurance Business Law in 1900, the Japanese non-life insurance business prospered, mainly as a result of the rapid expansion of the Japanese economy during World War I. However, this period
was followed by a recession, the great earthquake in Tokyo in 1923 and the financial crisis of 1929, which resulted in Japanese non-life insurance companies incurring substantial losses. This led them to reorganize and form various cartels and
co-operative associations. During World War II, under the guidance of the Japanese government, the industry was again reorganized and the number of companies was reduced from 48 in 1940 to 16 in 1945.



By the end of World War II, Japanese non-life insurance companies had lost
almost all overseas business and incurred substantial deficits. Nevertheless, Japanese non-life insurance business grew rapidly as the Japanese economy expanded since the late 1950s. In the 1980s, the non-life insurance business grew significantly
due to sales of automobile insurance and sales to individuals of insurance policies with a refund at maturity, which was seen as an attractive form of investment.



The growth of automobile insurance business, from both voluntary and (with the introduction in 1955 of the Automobile
Liability Security Law) compulsory automobile liability insurance, contributed significantly to the growth of non-life insurance business after World War II. This not only resulted in a substantial volume of business for the non-life insurance
industry but also provided new opportunities for the industrys future expansion by introducing individuals to various insurance policies. In recent years, growth in automobile insurance business has slowed down while deregulation of the
industry has led to diversification of the Japanese non-life insurance companies other business activities.



Until 1996, non-life insurance companies were prohibited from engaging in the life insurance business under Japanese law. However, under the new Insurance
Business Law which was enacted in 1996, non-life insurance companies were allowed to establish subsidiaries to engage in the life insurance business and life insurance companies were allowed to establish subsidiaries to engage in the non-life
insurance business. Tokio Marine and Nichido Fire consequently entered the life insurance industry by each establishing its life insurance subsidiary in 1996.



Life and non-life insurance companies were allowed to enter the so-called third sector insurance business through subsidiaries beginning in
January 2001 and directly beginning in July 2001. The third sector refers to insurance products and services that do not fall within the traditional life and non-life insurance areas, such as personal, accident, medical and cancer
insurance as well as insurance covering expenses for nursing care. Such deregulation of this sector has contributed to the expansion of the size of the market by raising awareness of consumers to availability of these products.



Industry Background



The growth of non-life insurance business is closely related, among other
things, to the growth in the construction and automobile industries and the volume of foreign trade, as well as to the emergence of new kinds of risks resulting from social and economic development and the increasing public awareness of insurance
and liability compensation.



According to the FSA, as of
October 1, 2004, there were 50 licensed non-life insurance companies conducting non-life insurance business in Japan.



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Life Insurance Industry



Life insurance providers in Japan can be classified into three categories: traditional life insurers; new entrants, such as the foreign life insurers
and subsidiaries of Japanese non-life insurers, including Tokio Marine & Nichido Life; and the postal life insurance system. The ten largest traditional life insurers continue to underwrite the large majority of privately underwritten life
insurance in Japan. As discussed in the non-life insurance industry section, life insurance subsidiaries of non-life companies were established in 1996 and thereafter as a result of the deregulation of insurance businesses in Japan. The postal life
insurance system, a public insurance system managed by Japan Post, is a distinctive element of the Japanese life insurance market. Postal life insurance products are offered through the network of post offices located throughout Japan. Recently,
there have been movements toward privatization of the postal life insurance system as part of the plan for privatization of Japan Post initiated by the Japanese government.



The life insurance business in Japan can generally be classified into four principal product lines: individual insurance,
individual annuities, group insurance and group annuities. Individual insurance is the largest product line in the Japanese life insurance industry as a whole in terms of policy amount. While the market for life insurance products in Japan decreased
in size during the recent period of prolonged economic weakness in Japan, there were signs of improvement in the market during the years ended March 31, 2004 and 2005. Some of the new entrants in the market have been enjoying steady growth amid the
weak economy in Japan.



According to the FSA, as of October 1,
2004, there were 40 licensed life insurance companies conducting life insurance business in Japan.



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REGULATION



Insurance Industry Regulations



General Regulatory Scheme



The Japanese insurance market is regulated by the Insurance Business Law, as
amended from time to time, as well as by cabinet orders, ministerial ordinances and various rules and regulations made by the FSA and relevant ministries. Under the Insurance Business Law, all insurance companies must be either joint stock
corporations or mutual companies, and they must each obtain a license from the Prime Minister. There are two kinds of licenses related to insurance businesses: one for life insurance businesses and another for non-life insurance businesses. The same
entity cannot obtain both of these licenses, although a consolidated entity may contemporaneously hold interests in a life insurance company and a non-life insurance company. The Insurance Business Law also contains detailed provisions regarding,
among other things, accounting principles and restrictions relating to the investment of insurance companies funds. The Insurance Business Law provides for the registration of insurance agents and insurance brokers with the relevant local
finance bureau and regulates their soliciting activities. Foreign insurance companies that intend to conduct insurance business in Japan are also subject to the Insurance Business Law and are required to obtain a license from the Prime Minister.



The FSA supervises and exercises broad regulatory powers over
the insurance companies and their business operations, including the authority to grant or, under certain conditions, revoke the operating license of a business. Certain methods of operations, general policy conditions and the basis of calculation
of premiums and reserves for unexpired risks must be approved by the FSA. The FSA may at any time require insurance companies to submit reports and other documents and may carry out inspections at the companies offices. The FSAs practice
has been to inspect and audit the business operations of insurance companies regularly.



Insurance Holding Company Regulations



Under the Insurance Business Law, an insurance holding company is prohibited from carrying on business other than the administration of the management of its subsidiaries and other incidental business. An insurance holding company may have
as its subsidiaries life and non-life insurance companies, banks (including trust banks and long-term credit banks), securities companies and foreign subsidiaries engaged in the insurance, banking or securities business. In addition, an insurance
holding company may have as its subsidiaries companies engaged in businesses relating or incidental to the businesses of the companies mentioned above, such as credit card companies, leasing companies and investment advisory companies. The
provisions of the Act Concerning Prohibition of Private Monopolization and Maintenance of Fair Trade, or the Anti-Monopoly Law, that prohibit an insurance company from holding more than 10% of another companys voting rights without the prior
approval of the Fair Trade Commission, do not apply to an insurance holding company.



The FSA supervises insurance holding companies under the Insurance Business Law. The FSA may, at any time, require an insurance holding company or its subsidiaries to submit reports and other documents and may carry
out inspections at the companies offices if the FSA deems such action necessary to secure the sound and appropriate operation of the business of the subsidiary insurance companies. In addition, if a bank or a securities company is a subsidiary
of an insurance holding company, the insurance holding company is also subject to supervision by the FSA under either the Banking Law or the Securities Exchange Law, as applicable.



Limitations on Investments for Insurance Companies



The Insurance Business Law, ministerial ordinances and the regulations thereunder specify the types of investments that
Japanese insurance companies may make and the percentage of their total assets (calculated on the basis of Japanese accounting principles) which can be invested in each type of investment. Under these provisions, Tokio Marine & Nichidos
investment portfolios must, in general, be held in the form of securities, real estate, monetary claims, gold bullion, loans, loaned securities, investments in partnerships, cash on deposit, money trusts, monetary claims trusts, securities trusts,
real estate trusts, financial derivatives or other investments



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enumerated in the Insurance Business Law Enforcement Regulations. Investments in stocks and assets denominated in foreign currencies are each limited to 30%
of total assets. The aggregate investment in real estate is limited to 20% of total assets, and investments in claims, loans and loaned securities are limited to 10% of total assets. In 1998, a limit on investments in any one company (including its
affiliates) was set at 10% of total assets. Loans to and guarantees in favor of any one company (including its affiliates) are limited to 3% of total assets.



Under the Anti-Monopoly Law, no insurance company can acquire or hold more than 10% of the total outstanding stock of any other company in Japan without
obtaining the prior approval of the Fair Trade Commission, except in certain circumstances. Additionally, the Insurance Business Law prohibits an insurance company from acquiring or holding more than 10% of the total outstanding stock of any other
company in Japan except that of other life or non-life insurance companies, banks, securities companies, foreign insurance companies, foreign banks, foreign securities companies, companies which exclusively operate businesses that provide support to
the insurance company and its subsidiaries or finance-related businesses enumerated in the Insurance Business Law, companies that cultivate certain new business fields defined in the Insurance Business Law Enforcement Regulations, and holding
companies that exclusively hold the foregoing companies.



Limitations on
Dividend Distributions for Insurance Companies



The
Insurance Business Law prescribes certain financial requirements that must be met before an insurance company can distribute dividends to its shareholders. Until the aggregate amount of additional paid-in capital and legal reserve is equal to the
amount of stated capital of an insurance company, the insurance company must credit to its legal reserve an amount equal to at least one-fifth of the amount to be appropriated from the profit for each fiscal period and an amount equal to one-fifth
of the cash distribution each time a distribution of money as an interim dividend is made pursuant to the Commercial Code. Under the Commercial Code, a company is permitted to distribute profits by way of year-end dividends out of the excess of its
net assets over the aggregate of:



(1) its stated capital;



(2) its additional paid-in capital;



(3) its accumulated legal reserve;



(4) the legal reserve to be set aside in respect of the fiscal period
concerned; and



(5) other matters specified in the Commercial
Code Enforcement Regulations.



In the case of interim
dividends, net assets are calculated by reference to the non-consolidated balance sheet as of the end of the preceding fiscal year, as adjusted to reflect (A) any subsequent payment by way of appropriation of retained earnings and the related
transfer to legal reserve, (B) any subsequent transfer of retained earnings to stated capital and (C) if we have been authorized by a resolution of an ordinary general meeting of shareholders or of the board of directors to purchase shares, the
total amount of the purchase price of such shares to be paid by us; provided that (x) if we reduce our stated capital, additional paid-in capital or accumulated legal reserve after the end of the preceding fiscal year, the amounts so reduced, less
the amount paid to shareholders upon such reduction and certain other amounts, and (y) such other amounts as are set out in the Commercial Code Enforcement Regulations, will be added to the amount distributable as interim dividends as described
above. Interim dividends may not be paid when there is a risk that at the end of the financial year net assets may be less than the aggregate of the amounts referred to in (1) through (5) above. For more information on share repurchases, see
Description of Common Stock  Repurchase by Millea Holdings of Shares.



Recent Changes to Insurance Laws



A
number of measures have been implemented under the Insurance Business Law over the past several years in order to provide greater protection to policyholders. Under amendments to the Insurance Business Law passed in 1998, an early warning measure
was introduced. This early warning measure is based on an insurance



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companys solvency margin ratio. When the solvency margin ratio of an insurance company falls below a certain prescribed ratio, regulators can require
that the insurance company take certain actions, such as reducing certain business operations or refraining from making certain investments. Also in 1998, the Non-Life Insurance Policyholders Protection Corporation and the Life Insurance
Policyholders Protection Corporation were established to provide assistance to policyholders in the event a non-life or life insurance company becomes insolvent. All insurance companies operating in Japan, including foreign insurers, are obligated
to become members of these organizations. These organizations aid policyholders by rendering financial assistance to an insurance company that assumes the affected policies, by assuming the policies itself or through other methods stipulated in the
Insurance Business Law.



Other amendments to the Insurance
Business Law passed in 1998 permitted insurance companies to enter the banking business through their subsidiaries from October 1999 and permitted banks to enter the insurance businesses through their subsidiaries from October 2000. These 1998
amendments also abolished the requirements that insurance companies obtain approvals from the FSA for certain changes to methods of operations, general policy conditions or the basis of calculations of premiums and reserves for unexpired risks from
those previously approved by the FSA. A notification requirement was introduced instead.



Amendments to the Law Concerning the Non-Life Insurance Rating Organizations were also passed in 1998. These amendments abolished the requirement that non-life insurance companies use the premium rates established by
the rating organizations. Today, with the exception of earthquake insurance and compulsory automobile liability insurance, non-life insurance companies may set their own premium rates for insurance policies.



These changes in insurance industry-related laws have contributed to
increased competition among insurance companies.



In April
2001, the Consumer Contracts Law and the Law on Sales of Financial Products were enacted, which regulate soliciting and selling activities of insurance products. Recent amendments to the Insurance Business Law which became effective in April 2000
allow insurance companies to sell some of their products (including credit insurance provided in connection with housing loans made by banks) through branch offices of banks.



The most recent amendments to the Insurance Business Law enacted on August 24, 2003 allow insurance companies under
difficulty to continue operations to change the terms of their insurance policies, including reductions of insurance payments. This is subject to obtaining approvals from the FSA and the shareholders of the insurance company, implementing procedures
to protect the interests of policyholders and other conditions and procedures prescribed in the Insurance Business Law.



Foreign Exchange Regulations



General Description



The Foreign Exchange and Foreign Trade Law of Japan, or the Foreign Exchange Law, and the cabinet orders and ministerial ordinances thereunder govern the
issuance of shares by companies and the acquisition and holding of shares by non-residents of Japan and foreign investors, as defined by the Foreign Exchange Law.



Non-residents of Japan are:



(1) individuals who do not reside in Japan; and



(2) corporations whose principal offices are not located in Japan.



Generally, branches and offices of non-resident corporations which are located in Japan are regarded as residents of Japan
while branches and offices of Japanese corporations located outside Japan are regarded as non-residents of Japan.



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Foreign investors are:



(1) individual not resident in Japan;



| | (2) | corporations organized under the laws of foreign countries or whose principal offices are located outside Japan; and
| | --- | --------------------------------------------------------------------------------------------------------------------



| | (3) | corporations organized in Japan not less than 50% of the issued shares of which are directly or indirectly held by (1) and/or (2) above or a majority of the officers (or officers
having the power of representation) of which are non-resident individuals.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Dividends and Proceeds of Sale



Under the Foreign Exchange Law, dividends paid on, and the proceeds of sales in Japan of, shares held by non-residents of Japan may, in general, be converted into any foreign currency and repatriated abroad.



Acquisition of Shares



Under the Foreign Exchange Law, in general, a non-resident who acquires
shares from a resident of Japan is not subject to any prior filing requirement, although the Minister of Finance of Japan may require a prior approval for any such acquisition in certain limited circumstances.



If a foreign investor acquires shares of a listed company and, together with
parties who have a special relationship with that foreign investor, holds 10% or more of the issued shares of the company as a result of the acquisition, the foreign investor must file a report of the acquisition with the Minister of Finance and any
other competent Minister within 15 days from and including the date of such acquisition. In certain limited circumstances, however, a prior notification of such acquisition must be filed with the Minister of Finance and any other competent Minister,
who may then modify or prohibit the proposed acquisition. The acquisition of shares of Millea Holdings by non-residents by way of a stock split is not subject to any notification or reporting requirements.



Reporting of Substantial Shareholdings



Under the Securities and Exchange Law of Japan, if any person becomes,
beneficially and solely or jointly, a holder of more than 5% of the total issued shares of a public company, that shareholder must file a report concerning the shareholders shareholdings with the relevant local finance bureau within five
business days. In addition, if there is any subsequent change of 1% or more in such shareholding, the shareholder must file a similar report. For these purposes, the total number of issued shares and the number of shares held by the shareholder
include shares to be issued on the exercise of warrants to subscribe for new shares or on the conversion of bonds or debentures with warrants to subscribe for new shares. The shareholder also must file a copy of the relevant report with the issuer
of the shares and the stock exchanges on which the shares are listed.



Under the Insurance Business Law, a shareholder of an insurance company or insurance holding company that holds more than 5% of the total voting rights of the insurance company or insurance holding company is required to file a report of
its share holdings with the Prime Minister within five days after the acquisition of the shares and other reports concerning changes in the reported matters (including any increase or decrease of more than 1% in the shareholding ratio). In addition,
a shareholder of an insurance company that intends to acquire and hold 20% or more (in some cases, 15% or more) of the total voting rights of the insurance company is required to obtain the approval of the FSA in advance of acquiring such percentage
of shares. Furthermore, a shareholder of an insurance company approved by the FSA to acquire and hold 20% or more (in some cases, 15% or more) of the total voting rights of the insurance company is required to report to the FSA if its shareholding
ratio exceeds 50%.



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DESCRIPTION OF COMMON STOCK



The
following information relates to shares of our common stock, including summaries of certain provisions of our articles of incorporation, the Commercial Code relating to joint stock corporations (known in Japanese as kabushiki kaisha) and
certain relevant regulations under the Insurance Business Law.



Shares and
Share Capital



Our authorized share capital is 6,870,000
shares of common stock, of which 1,727,048.75 shares were issued as of March 31, 2005. Since recent amendments to the Commercial Code have abolished the concept of par value, the stock issued by us does not have any par value.



We acquired 68,222.62 shares of our own stock for approximately ¥103,988
million during the year ended March 31, 2005. We canceled 70,000 shares and 60,000 shares in July 2004 and March 2005, respectively, which we held as treasury shares. As of March 31, 2005, we held 7,149.64 treasury shares. Under the Commercial Code,
we may transfer these treasury shares by resolution of the board of directors. However, we cannot transfer these shares at a specially favorable price, as described in   Voting Rights below.



Under the Commercial Code, the transfer of shares is effected by delivery of
share certificates. However, in order to assert shareholders rights against us, a transferee must have his or her name and address registered on our register of shareholders. Shareholders are required to file their names, addresses and seal
impressions with The Mitsubishi Trust and Banking Corporation, the transfer agent for our common stock. Foreign shareholders may file a specimen signature in lieu of a seal impression. Non-resident shareholders are required to appoint a standing
proxy in Japan or file a mailing address in Japan. Japanese securities firms and commercial banks customarily offer the service of standing proxy and render related services on payment of their standard fee.



The central clearing system of share certificates under the Law Concerning
Central Clearing of Share Certificates and Other Securities in Japan applies to our common stock. Under this system, shareholders may deposit certificates for shares with the Japan Securities Depositary Center, Inc., the sole depositary under the
central clearing system, through institutions which have accounts with the Japan Securities Depositary Center. These institutions are securities companies, banks and other financial institutions.



The shares deposited with the Japan Securities Depositary Center will be
registered in the Japan Securities Depositary Centers name in our register of shareholders. With information provided by the Japan Securities Depositary Center and by the institutions that have accounts with the Japan Securities Depositary
Center, we prepare a register of beneficial shareholders that lists the names of those who beneficially own the deposited shares. This register of beneficial shareholders is updated on pre-established record dates and on other dates when
it is necessary to determine who owns the shares and who can thus exercise rights relating to those shares. Delivery of share certificates is not required to transfer deposited shares between accounts at an institution or between accounts at the
Japan Securities Depositary Center.



In general, beneficial
shareholders of deposited shares registered in the register of beneficial shareholders are entitled to the same rights and benefits with respect to those shares as holders of shares registered in the register of shareholders. Registered beneficial
shareholders may exercise the rights attached to the beneficially owned shares, such as voting and receiving of dividends (if any) and convocation notices of shareholders meetings directly from us. The shares held by an individual as a
registered shareholder and those held by the same individual as a registered beneficial shareholder are aggregated for these purposes.



New shares issued with respect to deposited shares, including those issued upon a stock split, automatically become deposited shares. Beneficial
shareholders may at any time withdraw their shares from deposit and receive share certificates.



A new law to establish a new central clearing system for shares of listed companies and to eliminate the issuance and use of certificates for such shares
was promulgated in June 2004. This new law will come into



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effect within five years of the date of promulgation. On the effective date, a new central clearing system will be established and the shares of all Japanese
companies listed on any Japanese stock exchange, including our shares, will be subject to the new central clearing system. On such date, all existing share certificates for shares of all Japanese companies listed on any Japanese stock exchange,
including our shares, will become null and void and the transfer of such shares will be effected through entry in the books maintained under the new central clearing system.



Dividends



Following approval at a general shareholders meeting, annual dividends, if any, are distributed to shareholders (or pledgees) appearing in the
register of shareholders and to the holders of fractional shares appearing on the register of fractional shares as of the close of business on March 31 of the relevant year. Interim dividends, if any, approved by the board of directors are
distributed to shareholders (or pledgees) appearing in the register of shareholders and to the holders of fractional shares appearing in the register of fractional shares as of the close of business on September 30 of the relevant year. Dividends
are distributed in cash. Our articles of incorporation provide that we are relieved of the obligation to pay any dividends that are unclaimed for five years after the payment date.



The Commercial Code provides that, until the aggregate amount of our legal reserve and additional paid-in capital is at
least one-quarter of our stated capital, we may not make any distribution of profits by way of annual cash dividends or interim dividends unless we set aside in our legal reserve an amount equal to at least one-tenth of any amount that we pay out as
an appropriation of retained earnings, including any payment by way of annual dividends and bonuses to directors and corporate auditors, or equal to one-tenth of any interim dividend. The Commercial Code permits us to distribute profits by way of
dividends out of the excess of our net assets, on a non-consolidated basis, over the aggregate of:



(1) our stated capital;



(2) our additional paid-in capital;



(3) our accumulated legal reserve;



| | (4) | the legal reserve to be set aside in respect of the dividends concerned and proposed payment by way of appropriation of retained earnings; and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------



(5) other matters specified in the Commercial Code
Enforcement Regulations.



In the case of interim dividends, net
assets are calculated by reference to the non-consolidated balance sheet as of the end of the preceding fiscal year, as adjusted to reflect (A) any subsequent payment by way of appropriation of retained earnings and the related transfer to legal
reserve, (B) any subsequent transfer of retained earnings to stated capital and (C) if we have been authorized by a resolution of an ordinary general meeting of shareholders or of the board of directors, to purchase shares, the total amount of the
purchase price of such shares to be paid by us; provided that (x) if we reduce our stated capital, additional paid-in capital or accumulated legal reserve after the end of the preceding fiscal year, the amounts so reduced, less the amount paid to
shareholders upon such reduction and certain other amounts, and (y) such other amounts as are set out in the Commercial Code Enforcement Regulations, will be added to the amount distributable as interim dividends as described above. Interim
dividends may not be paid when there is a risk that at the end of the financial year net assets may be less than the aggregate of the amounts referred to in (1) through (5) above. For more information on share repurchases, see Repurchase
by Millea Holdings of Shares.



We may, by resolution of
the board of directors, pay interim dividends in cash to the shareholders (or pledgees) appearing on the register of shareholders and to the holders of fractional shares appearing on the register of fractional shares as of the close of business on
September 30 of each year.



The amounts of capital and other
items discussed in this section are in accordance with Japanese GAAP.



The Commercial Code does not provide for stock dividends. However, the Commercial Code does provide that our shareholders may, by resolution, transfer any amount which is distributable as dividends to stated capital, and the
board of directors may, by resolution, issue additional shares by way of a stock split, which together achieve the same effect as a stock dividend.



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In Japan, the ex-dividend date and the record date used to determine the shareholders who
will receive a dividend, if paid, are determined before the date the company decides the amount of the dividends, if any, to be paid.



For information as to Japanese taxes on dividends, see Taxation.



Stock Splits (Free Share Distributions)



Under the Commercial Code, our board of directors is permitted to declare a stock split without needing to ensure there is a minimum net asset value per
share (based on our most recent non-consolidated balance sheet) following the stock split. In addition, in connection with any stock split, our board of directors may increase our authorized number of shares to account for the stock split and amend
our articles of incorporation accordingly without the need for shareholder approval. For example, if each share becomes three shares by way of a stock split, we can increase our authorized number of shares by up to three times the existing number
and do not need to obtain shareholder approval for that increase.



Fractional Shares



The holder of any
fractional share constituting one one-hundredth of one share of our common stock or any integral multiple thereof is registered in the register of fractional shares. Any fractional interest representing less than one one-hundredth of one share will
not be registered, but entitles the holder to receive cash in lieu of that fractional interest. Certificates are not be issued for fractional shares and fractional shares do not carry voting rights. Our articles of incorporation provide that any
registered holder of fractional shares has the right to receive dividends and interim dividends.



A holder of fractional shares may at any time require us to purchase its shares. These shares will be purchased at (a) the closing price of the shares
reported by the Tokyo Stock Exchange on the day when the request to purchase is made or (b) if no sale takes place on the Tokyo Stock Exchange on that day, then the price at which a sale of shares is effected on the Tokyo Stock Exchange immediately
thereafter. In such case, we will request payment of an amount equal to the brokerage commission applicable to the shares purchased pursuant to our share handling regulations. However, because holders of ADSs representing less than one share are not
able to withdraw the underlying fractional shares from deposit, these holders will not be able to exercise this right as a practical matter.



Our articles of incorporation also provide that a holder of fractional shares may require us to sell any fractional shares we may have to the holder so
that the holder can increase its fractional ownership to a whole share. These shares will be sold at (a) the closing price of the shares reported by the Tokyo Stock Exchange on the day when the request to sell is made or (b) if no sale has taken
place on the Tokyo Stock Exchange on that day, then the price at which a sale of shares is effected on the Tokyo Stock Exchange immediately thereafter. In connection with a sale, we will request payment of an amount equal to the brokerage commission
applicable to the shares sold pursuant to our share handling regulations. However, because holders of ADSs representing less than one share are not able to withdraw the underlying shares from deposit, these holders will not be able to exercise this
right as a practical matter.



Voting Rights



A shareholder is entitled to one vote per share, subject to limitations on
voting rights described in this section and in  Fractional Shares. Except as otherwise provided by law or by our articles of incorporation, a resolution can be adopted at a shareholders meeting by the holders of a majority of
the shares having voting rights present at the meeting. Shareholders may exercise their voting rights by voting card or proxy, provided that the person acting as proxy is a holder of our shares with voting rights and is present at the meeting. The
Commercial Code and our articles of incorporation provide that the quorum for election of directors and



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corporate auditors shall not be less than one-third of the total number of outstanding shares having voting rights. Our articles of incorporation provide
that our shareholders are not entitled to cumulative voting in the election of directors. Under the Commercial Code, cumulative voting is not applicable to the election of corporate auditors.



A corporate shareholder, more than one-quarter of whose shares with voting
rights are directly or indirectly owned by us, may not exercise its voting rights in respect of our shares. We have no voting rights with respect to the shares of our common stock we own.



The Commercial Code and our articles of incorporation provide that a quorum of not less than one-third of outstanding shares
with voting rights must be present at a shareholders meeting to approve any material corporate action such as:



| |  |  | the reduction of our stated capital;
| | - |  | ------------------------------------



| |  |  | the removal of a director or corporate auditor;
| | - |  | -----------------------------------------------



| |  |  | the establishment of a 100% parent-subsidiary relationship by way of a share exchange or share transfer;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | our dissolution, merger or corporate split;
| | - |  | -------------------------------------------



| |  |  | the transfer of the whole or an important part of the business;
| | - |  | ---------------------------------------------------------------



| |  |  | the takeover of the whole business of any other company;
| | - |  | --------------------------------------------------------



| |  |  | the issuance of new shares at a specially favorable price (or any issuance of warrants to subscribe for new shares with specially favorable conditions, or
bonds or debentures with warrants to subscribe for new shares with specially favorable conditions) to persons other than current shareholders; and
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the discharge of liabilities of a director or corporate auditor that are owed to us.
| | - |  | ------------------------------------------------------------------------------------



At least two-thirds of the shares having voting rights represented at the meeting must be voted to approve these actions. In
addition, the Insurance Business Law requires the approval of the FSA for certain transfers of our business, certain takeovers of whole or important parts of other businesses and certain corporate splits.



General Meetings of Shareholders



The ordinary general meeting of our shareholders is held in Tokyo, Japan
within three months after the close of each fiscal year. Notice of a shareholders meeting stating the place, time and purpose of the meeting and a summary of the matters to be acted upon must be sent to each shareholder having voting rights
(or, in the case of a non-resident shareholder, to his mailing address or proxy in Japan) at least two weeks prior to the date set for the meeting. In addition, we may hold an extraordinary general meeting of shareholders whenever necessary by
giving at least two weeks advance notice to shareholders, as well as giving prior public notice concerning the record date for establishing which shareholders are entitled to exercise rights at the meeting.



Under the Commercial Code, any shareholder holding at least 300 shares or 1%
of the total number of shares having voting rights for six months or more may propose a matter to be considered at a general meeting of shareholders by submitting a written request to a representative director at least eight weeks prior to the date
set for such meeting.



Liquidation Rights



In the event of our liquidation, the assets remaining after payment of all
taxes, liquidation expenses and debts will be distributed among the shareholders in proportion to the respective number of shares which they hold.



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Issue of Additional Shares of Common Stock and Pre-Emptive Rights



Holders of our shares have no pre-emptive rights. Authorized but unissued
shares may be issued at any time and upon any terms, subject to the limitations as to the issuance of new shares at a specially favorable price mentioned above in  Voting Rights. However, if the board of directors
resolves to give shareholders subscription rights to new shares, the subscription rights must be given on uniform terms to all shareholders who own shares on a designated record date. At least two weeks prior to this record date, public notice of
the record date must be made. Each of the shareholders to whom subscription rights are given must also be given at least two weeks prior notice of the date on which the subscription rights expire. Under the Commercial Code, we may issue
warrants to subscribe for new shares (hereafter referred to as subscription warrants) as warrants on their own or attached to bonds or debentures to any persons by resolution of the board of directors. Holders of our shares of common
stock have no pre-emptive rights under our articles of incorporation when we issue warrants to subscribe for new shares. However, the board of directors may resolve to give shareholders subscription rights in connection with a particular issue of
warrants to subscribe for new shares. In the case of an issue of warrants to subscribe for new shares, public or individual notice must be given to each of the shareholders at least two weeks prior to the date of payment (or issue of the warrants if
warrants are issued without consideration).



Rights to
subscribe for new shares may be transferable or non-transferable by resolution of the board of directors. Also, the board of directors may provide that the transfer of subscription warrants shall require the approval of the board of directors.
Whether we will make rights to subscribe for new shares or subscription warrants generally transferable in any future rights offering will depend upon the circumstances at the time of the offering.



Actions Necessary to Change the Rights of Shareholders



The Commercial Code prescribes most of the basic rights of a shareholder of
a Japanese company, including the right to vote and the right to receive dividends upon a resolution of a general meeting of shareholders. These rights cannot be changed by the articles of incorporation. Those rights which may be changed by the
articles of incorporation may only be changed by an amendment to the articles of incorporation. Under the Commercial Code and our articles of incorporation, amendments to a companys articles of incorporation require, in principle, the
affirmative vote of more than two-thirds of the voting rights present at a shareholders meeting of which shareholders holding not less than one-third of the outstanding shares having voting rights are present.



Dilution



It is possible that, in the future, due to market conditions and other factors, we will issue subscription rights for new
shares, subscription warrants or bonds or debentures with subscription warrants to shareholders at prices substantially below their then current market prices. In such event, shareholders who do not exercise or are otherwise unable to realize the
full value of their subscription rights may suffer from the dilution of their equity interest in us.



Reports to Shareholders



We furnish to shareholders notices of shareholders meetings and annual business reports, including financial statements, all of which are in Japanese. We send English translations of such notices and reports as well as an
English-language annual report to JPMorgan Chase Bank, N.A., the depositary for the ADSs, for distribution to ADS holders.



Record Date



Under our articles of incorporation, the close of business on March 31 is the record date for the determination of shareholders having rights at annual
shareholders meetings and shareholders eligible to receive our year-end dividends, if paid. The close of business on September 30 is the record date for our interim



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dividends, if paid. In addition, after giving at least two weeks prior public notice, our board of directors may, by resolution at any time, set a
record date in order to determine which shareholders are entitled to certain rights pertaining to the common stock.



Repurchase by Millea Holdings of Shares



Under a recent amendment to the Commercial Code, a Japanese company may acquire its own shares for any purpose, subject to the authorization of
shareholders at an ordinary general shareholders meeting, or if its articles of incorporation so provide, by resolution of its board of directors. In accordance with such amendment, we amended our articles of incorporation at the ordinary
general meeting of shareholders held on June 29, 2004 to authorize us to acquire our shares for any purpose by resolution of our board of directors. Our acquisition of our own shares is subject to the restriction that the aggregate amount of the
purchase price must not exceed the amount of retained earnings available for annual dividend payments, less the sum of any amount paid or to be paid by way of appropriation of retained earnings and any transfer of retained earnings to stated
capital.



In the case of shares listed on a Japanese stock
exchange, an acquisition must be made through the market or by way of a tender offer by the close of the following ordinary general shareholders meeting, except for an acquisition of shares from a specified person authorized by a special
shareholders resolution.



None of our subsidiaries can
acquire our common stock, except as permitted by the Commercial Code. Any shares of our common stock that are acquired by our subsidiaries under one of permitted exceptions, including shares that were acquired by Tokio Marine and Nichido Fire in
connection with the transactions relating to our formation, must be sold or otherwise transferred to a third party within a reasonable period thereafter. Such shares acquired by Tokio Marine and Nichido Fire have already been disposed of.



The following table sets forth, for each of the months
indicated, the total number of shares purchased by us, the average price paid per share, the number of shares purchased pursuant to the applicable shareholder resolution or board resolution, which were publicly announced, and the maximum number of
shares that may yet be purchased pursuant to these shareholder resolutions or board resolutions:



|                                       |  |                                       |  |                                 |           |                                                                                 |           |                                                                                  |       
|-------------------------------------- |  | ------------------------------------- |  | ------------------------------- | --------- | ------------------------------------------------------------------------------- | --------- | -------------------------------------------------------------------------------- | ------
|Period                                 |  | (a) Total Numberof SharesPurchased(1) |  | (b) Average PricePaid per Share |           | (c) Total Numberof SharesPurchased as Partof PubliclyAnnounced Plansor Programs |           | (d) MaximumNumber of Sharesthat May Yet BePurchased Underthe Plans orPrograms(2)
|                                       |  | (shares)                              |  | (yen)                           |           | (shares)                                                                        |           | (shares)                                                                        
|April 1 - April 30, 2004(3)            |  | 7,240.53                              |  | ¥                               | 1,609,512 |                                                                                 | 7,155.00  |                                                                                  | 49,703
|May 1 - May 31, 2004(3)                |  | 5,373.20                              |  |                                 | 1,447,339 |                                                                                 | 5,349.00  |                                                                                  | 44,354
|June 1 - June 30, 2004(3)              |  | 40.64                                 |  |                                 | 1,563,650 |                                                                                 | 0.00      |                                                                                  | 44,354
|July 1 - July 31, 2004(4)              |  | 8,145.19                              |  |                                 | 1,614,649 |                                                                                 | 8,051.00  |                                                                                  |      
|August 1 - August 31, 2004(5)          |  | 8,022.58                              |  |                                 | 1,553,969 |                                                                                 | 7,973.00  |                                                                                  |      
|September 1 - September 31, 2004(5)(6) |  | 4,322.67                              |  |                                 | 1,487,808 |                                                                                 | 4,279.00  |                                                                                  |      
|October 1 - October 31, 2004(6)(7)     |  | 7,347.17                              |  |                                 | 1,458,357 |                                                                                 | 7,293.00  |                                                                                  |      
|November 1 - November 30, 2004(7)(8)   |  | 6,385.37                              |  |                                 | 1,511,104 |                                                                                 | 6,291.00  |                                                                                  |      
|December 1 - December 31, 2004(8)      |  | 7,216.00                              |  |                                 | 1,477,873 |                                                                                 | 7,082.00  |                                                                                  |      
|January 1 - January 31, 2005(8)(9)     |  | 6,093.26                              |  |                                 | 1,496,106 |                                                                                 | 6,027.00  |                                                                                  |      
|February 1 - February 28, 2005(9)(10)  |  | 4,339.18                              |  |                                 | 1,493,331 |                                                                                 | 4,286.00  |                                                                                  |      
|March 1 - March 31, 2005(10)(11)       |  | 3,631.59                              |  |                                 | 1,575,694 |                                                                                 | 3,560.00  |                                                                                  |      
|                                       |  |                                       |  |                                 |           |                                                                                 |           |                                                                                  |       
|Total                                  |  | 68,157.38                             |  |                                 | 1,524,252 |                                                                                 | 67,346.00 |                                                                                  |      
|                                       |  |                                       |  |                                 |           |                                                                                 |           |                                                                                  |       

---

|(1) | In addition to the shares purchased through the Tokyo Stock Exchange pursuant to the applicable shareholder or board resolution, the numbers indicated also reflect small amounts of
shares purchased from and sold to individual holders of fractional shares.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(2) | At the ordinary general meeting of shareholders held on June 29, 2004, we amended our articles of incorporation to authorize us to acquire our shares for any purpose by resolution
of our board of directors from time to time. With respect to any shares not yet purchased at the end of each period authorized by the applicable resolution for purchase, the authority to purchase such shares expire at the end of each such period.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | A resolution approved at our ordinary general meeting of shareholders held on June 27, 2003 authorized us to acquire up to 120,000 shares with an aggregate purchase price of
¥100 billion prior to the closing of our ordinary general meeting of shareholders held on June 29, 2004. Prior to April 1, 2004, 63,142 shares with an aggregate purchase price of ¥81 billion had been purchased pursuant to the resolution.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | A resolution approved at the meeting of our board of directors held on June 29, 2004 authorized us to acquire up to 9,000 shares with an aggregate purchase price of ¥13 billion
during the period from July 1 through July 30, 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | A resolution approved at the meeting of our board of directors held on August 2, 2004 authorized us to acquire up to 11,000 shares with an aggregate purchase price of ¥15
billion during the period from August 3 through September 3, 2004.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) | A resolution approved at the meeting of our board of directors held on September 6, 2004 authorized us to acquire up to 9,000 shares with an aggregate purchase price of ¥11
billion during the period from September 7 through October 15, 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) | A resolution approved at the meeting of our board of directors held on October 18, 2004 authorized us to acquire up to 11,000 shares with an aggregate purchase price of ¥14
billion during the period from October 19 through November 26, 2004.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(8) | A resolution approved at the meeting of our board of directors held on November 29, 2004 authorized us to acquire up to 12,500 shares with an aggregate purchase price of ¥15
billion during the period from November 30, 2004 through January 14, 2005.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(9) | A resolution approved at the meeting of our board of directors held on January 17, 2005 authorized us to acquire up to 6,000 shares with an aggregate purchase price of ¥7
billion during the period from January 18 through February 4, 2005.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(10) | A resolution approved at the meeting of our board of directors held on February 7, 2005 authorized us to acquire up to 5,200 shares with an aggregate purchase price of ¥6
billion during the period from February 8 through March 4, 2005.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(11) | A resolution approved at the meeting of our board of directors held on March 7, 2005 authorized us to acquire up to 3,500 shares with an aggregate purchase price of ¥4 billion
during the period from March 8 through April 1, 2005.
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Liability to Further Calls or Assessments



All
shares of our common stock are fully paid and non-assessable.



Limitations
on Owning or Voting Shares by Foreign Shareholders



No
provision of applicable law or of our articles of incorporation imposes any foreign ownership limitations with respect to our shares or any limitations on the rights of non-Japanese persons or entities to vote our shares.



Employees Stock Purchase Association



Many of our employees participate, on a voluntary basis, in our
employees stock purchase association. The employees stock purchase association is authorized to acquire and sell our shares in the market on behalf of the employee participants.



Transfer Agent



The Mitsubishi Trust and Banking Corporation is the transfer agent for our common stock. As the transfer agent, it keeps the
registers of our shareholders and our fractional shareholders at its office at 4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-8212, Japan and makes transfers relating to record ownership upon presentation of the certificates representing the
transferred shares.



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TAXATION



Japanese Taxation



The discussion of Japanese taxation set forth below is intended only as a
summary and does not purport to be a complete analysis or discussion of all the potential Japanese tax consequences that may be relevant to the ownership of our common stock or ADSs by a person who is not a resident of Japan.



A non-resident of Japan or a non-Japanese corporation is generally subject to
Japanese withholding tax on cash dividends. Stock splits generally are not subject to Japanese withholding tax since they are characterized merely as an increase in the number of shares (as opposed to an increase in the value of the shares) from a
Japanese tax perspective. Due to the 2001 Japanese tax legislation, which became effective April 1, 2001, a conversion of retained earnings or legal earned reserve into stated capital is not deemed a dividend payment to shareholders for Japanese tax
purposes and therefore such a conversion does not trigger Japanese withholding taxation.



In the absence of any applicable treaty or agreement reducing the maximum rate of withholding tax, the standard rate of Japanese withholding tax applicable to dividends paid by Japanese corporations to non-residents
of Japan or non-Japanese corporations is generally 20%. However, with respect to dividends paid on listed shares issued by a Japanese corporation (such as our common stock) to any corporate or individual shareholders (including those shareholders
who are non-Japanese corporations or Japanese non-resident individuals), except for any individual shareholder who holds 5% or more of the outstanding total of the shares issued by the relevant Japanese corporation, the aforementioned standard 20%
withholding tax rate is reduced to (1) 7% for dividends due and payable on or after January 1, 2004 but on or before March 31, 2008, and (2) 15% for dividends due and payable on or after April 1, 2008.



Pursuant to the Convention Between the Government of the United States of
America and the Government of Japan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, or the Treaty, dividend payments made by a Japanese corporation to a U.S. resident or corporation, unless
the recipient of the dividend has a permanent establishment in Japan and the shares with respect to which such dividends are paid are effectively connected with such permanent establishment, will be subject to withholding tax
at rate of: (1) 10% for dividends declared on or after July 1, 2004 for portfolio investors who are qualified U.S. residents eligible for benefits of the Treaty; and (2) 0% (i.e., no withholding) for dividends declared on or after July 1, 2004 for
pension funds which are qualified U.S. residents eligible for benefits of the Treaty, provided the dividends are not derived from the carrying on of a business, directly or indirectly, by such pension funds. However, dividends declared before July
1, 2004 will still be subject to withholding at the previous United States and Japan treaty rate of 15%. For Japanese tax purposes, a treaty rate generally supersedes the tax rate under domestic tax law. However, due to the so-called
preservation doctrine under Article 4(2) of the Treaty, and/or due to Article 3-2 of the Special Measurement Law for the Income Tax Law, Corporation Tax Law and Local Taxes Law with respect to the Implementation of Tax Treaties, if the
tax rate under domestic tax law is lower than the applicable treaty rate, the domestic tax rate applies. As discussed above, the domestic tax rate on dividends paid by Millea Holdings to certain shareholders on or after January 1, 2004 but before
March 31, 2008 is 7%, and therefore this lower domestic rate will apply with respect to withholding on dividends paid to certain U.S. shareholders during such period.



The amount of withholding tax imposed on dividends payable to the holders of our common stock or ADSs who reside in a
country other than the United States is dependent upon the provisions of such treaties or agreements as may exist between such country and Japan.



Non-residents of Japan or non-Japanese corporations that hold common stock or ADSs and are entitled under an applicable tax treaty to a reduced rate of
Japanese withholding tax on dividends lower than the tax rate under the domestic tax law, are required to submit, through Millea Holdings to the relevant tax authority prior to



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the time the dividend is paid, an Application Form for the Income Tax Convention regarding Relief from Japanese Income Tax on Dividends. A standing proxy for
a non-resident of Japan or a non-Japanese corporation that holds common stock or ADSs may be used in order that Millea Holdings can submit such application on such holders behalf. Non-residents of Japan or non-Japanese corporations that hold
common stock or ADSs who do not submit such application in advance of the applicable dividend payment will be entitled to claim a refund from the relevant Japanese tax authorities of withholding taxes withheld in excess of the rate set forth in the
applicable tax treaty.



Gains derived from the sale outside
Japan of our common stock or ADSs by a non-resident of Japan or a non-Japanese corporation, or from the sale of our common stock within Japan by a non-resident of Japan as an occasional transaction or by a non-Japanese corporation not having a
permanent establishment in Japan, are generally not subject to Japanese income or corporation taxes. Japanese inheritance and gift taxes at progressive rates may apply to an individual who has acquired our common stock or ADSs as a distributee,
legatee or donee.



United States Taxation



The following is a discussion of material U.S. federal income tax
consequences of owning and disposing of our common stock or ADSs by U.S. holders (as defined below). The discussion applies only if a U.S. holder holds our common stock or ADSs as capital assets for U.S. federal income tax purposes and it does not
describe all of the tax consequences that may be relevant to holders subject to special rules, such as:



| |  |  | certain financial institutions;
| | - |  | -------------------------------



| |  |  | insurance companies;
| | - |  | --------------------



| |  |  | dealers and traders in securities or foreign currencies;
| | - |  | --------------------------------------------------------



| |  |  | persons holding our common stock or ADSs as part of a hedge, straddle, conversion or other integrated transaction;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
| | - |  | ----------------------------------------------------------------------------------------------



| |  |  | partnerships or other entities classified as partnerships for U.S. federal income tax purposes;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | persons liable for the alternative minimum tax;
| | - |  | -----------------------------------------------



| |  |  | tax-exempt organizations;
| | - |  | -------------------------



| |  |  | persons holding our common stock or ADSs that own or are deemed to own 10% or more of our voting stock; or
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | persons who acquired our common stock or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------



This discussion is based on the Internal Revenue Code of 1986, as amended, or
the Code, administrative pronouncements, judicial decisions, final, temporary and proposed Treasury regulations and the Treaty, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis. It is also based in part on
representations by the depositary and assumes that each obligation under the deposit agreement and any related agreement will be performed in accordance with its terms. U.S. holders should consult their own tax advisors concerning the U.S. federal,
state, local and foreign tax consequences of owning and disposing of our common stock or ADSs in their particular circumstances.



A U.S. holder is a beneficial owner of our common stock or ADSs that is, for U.S. federal income tax purposes, (1) a citizen or resident of
the United States; (2) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; or (3) an estate or trust the income of which is subject to U.S.
federal income taxation regardless of its source.



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In general, a U.S. holder of ADSs will be treated as the holder of the underlying common stock
represented by those ADSs for U.S. federal income tax purposes. Accordingly, no gain or loss will be recognized if a U.S. holder exchanges ADSs for the underlying common stock represented by those ADSs.



The U.S. Treasury has expressed concerns that parties to whom ADSs are
pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits for U.S. holders of ADSs. Such actions would also be inconsistent with the claiming of the reduced rate of tax applicable to dividends received by
certain non-corporate U.S. holders. Accordingly, the analysis of the creditability of Japanese taxes and the availability of the reduced tax rate for dividends received by certain non-corporate U.S. holders, each described below, could be affected
by actions taken by parties to whom ADSs are pre-released.



This discussion assumes that Millea Holdings is not, and will not become, a passive foreign investment company (as discussed below).



Taxation of distributions



Distributions paid on our common stock or ADSs, other than certain pro rata distributions of common stock, will be treated as dividends to the extent paid
out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). Subject to applicable limitations and the discussion above regarding concerns expressed by the U.S. Treasury, dividends paid to
non-corporate U.S. holders in taxable years beginning before January 1, 2009 will be taxable at a maximum rate of 15%. Non-corporate U.S. holders should consult their own tax advisors to determine whether they are subject to any special rules that
limit their ability to be taxed at this favorable rate. The amount of a dividend will include any amounts withheld by us or our paying agent in respect of Japanese taxes. The amount of the dividend will be treated as foreign source dividend income
to a U.S. holder and will not be eligible for the dividends-received deduction generally allowed to U.S. corporations under the Code.



Dividends paid in yen will be included in a U.S. holders income in a U.S. dollar amount calculated by reference to the exchange rate in effect on
the date the dividends are received by such U.S. holder in the case of a U.S. holder of our common stock or by the depositary for the ADSs in the case of a U.S. holder of ADSs, regardless of whether the payment is in fact converted into U.S.
dollars. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. holder generally should not be required to recognize foreign currency gain or loss in respect of the dividend income. A U.S. holder may have foreign currency gain
or loss if the dividend is not converted into U.S. dollars on the date of its receipt.



Japanese taxes withheld from cash dividends on our common stock or ADSs at a rate not exceeding the rate provided in the Treaty will be creditable against a U.S. holders U.S. federal income tax liability,
subject to applicable restrictions and limitations that may vary depending upon such holders circumstances and the discussion above regarding concerns expressed by the U.S. Treasury. Japanese taxes withheld in excess of the Treaty rate for
which a refund is available are not eligible for credit against a U.S. holders U.S. federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. Instead
of claiming a credit, a U.S. holder may elect to deduct such otherwise creditable Japanese taxes in computing such holders taxable income, subject to generally applicable limitations under U.S. law. U.S. holders should consult their own tax
advisors to determine whether they are subject to any special rules that limit their ability to make effective use of foreign tax credits.



Sale and other disposition of our common stock or ADSs



For U.S. federal income tax purposes, gain or loss a U.S. holder realizes on the sale or other disposition of our common stock or ADSs will be capital
gain or loss, and will be long-term capital gain or loss if the holder held the common stock or ADSs for more than one year. The amount of the U.S. holders gain or loss will be equal to the difference between the holders tax basis in our
common stock or ADSs disposed of and the amount realized on the sale or other disposition, determined in U.S. dollars. Such gain or loss will generally be U.S. source gain or loss for foreign tax credit purposes.



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Passive foreign investment company rules



Special adverse U.S. federal income tax rules apply if a U.S. holder owns
stock or ADSs of a company in any taxable year during which the company is treated as a passive foreign investment company, or a PFIC.



Based upon certain estimates of our management and the nature of the business activities conducted by the Millea Holdings corporate group, we believe that
we were not a PFIC for the taxable year ended March 31, 2005 and we do not expect to be a PFIC in the foreseeable future. However, since the determination of whether we are a PFIC is based on the composition of our income and assets and the value of
our assets from time to time, there can be no assurance that we will not be considered a PFIC for any taxable year.



In general, if we were treated as a PFIC for any taxable year during which a U.S. holder owned our common stock or ADSs, gain recognized by the U.S.
holder on a sale or other disposition of our common stock or ADSs would be allocated ratably over the U.S. holders holding period. The amounts allocated to the taxable year of the sale or other disposition and to any taxable year before we
became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on the
amount allocated to each such taxable year.



Further, any
distribution in respect of our common stock or ADSs in excess of 125% of the average of the annual distributions on such securities received by the U.S. holder during the preceding three years or the U.S. holders holding period, whichever is
shorter, would be subject to taxation as described above. As an alternative to the tax treatment described above, under certain circumstances, a mark-to-market election may be available to a U.S. holder.



In addition, if we were to be treated as a PFIC in a taxable year in which we
pay a dividend or the prior taxable year, the 15% dividend rate discussed above with respect to payment of dividends to non-corporate U.S. holders would not apply.



Information reporting and backup withholding



Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial
intermediaries generally are subject to information reporting and to backup withholding unless (1) the U.S. holder is a corporation or other exempt recipient or (2) in the case of backup withholding, the U.S. holder provides a correct taxpayer
identification number and certifies that no loss of exemption from backup withholding has occurred.



The amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against its U.S. federal income tax liability and may
entitle it to a refund, provided that the required information is furnished to the Internal Revenue Service.



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CONTROLS AND PROCEDURES



As of
March 31, 2005, we, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, performed an evaluation of the effectiveness of our disclosure controls and
procedures. Our management necessarily applied its judgment in assessing the costs and benefits of those controls and procedures, which by their nature can provide only reasonable assurance regarding managements control objectives. Based on
this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective at the reasonable assurance level for gathering, analyzing and disclosing the information we are
required to disclose in the reports we file under the Securities Exchange Act of 1934, within the time periods specified in the SECs rules and forms.



There have been no changes in our internal controls over financial reporting that occurred during the period covered by this annual report that have
materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.



CODE OF ETHICS



We have adopted a
code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. Our code of ethics is available through our website at
http://www.millea.co.jp.



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PRINCIPAL ACCOUNTANT FEES AND SERVICES



Audit
Fees



For the year ended March 31, 2005, ChuoAoyama
PricewaterhouseCoopers (including its Japanese and overseas affiliates), our auditors for Japanese domestic purposes and United States securities law reporting purposes for the year ended March 31, 2005, billed us ¥235.1 million for audit fees.
For the year ended March 31, 2004, ChuoAoyama PricewaterhouseCoopers (including its Japanese and overseas affiliates), our auditors for Japanese domestic purposes and United States securities law reporting for the year ended March 31, 2004, billed
us ¥185.6 million for audit fees.



Audit Related Fees



In the year ended March 31, 2005, ChuoAoyama PricewaterhouseCoopers
(including its Japanese and overseas affiliates) billed us ¥40.0 million for audit-related services, including advisory services relating to internal controls and procedures. In the year ended March 31, 2004, ChuoAoyama PricewaterhouseCoopers
(including its Japanese and overseas affiliates) billed us ¥17.3 million for audit-related services, including advisory services relating to internal controls and procedures.



Tax Fees



In the year ended March 31, 2005, ChuoAoyama PricewaterhouseCoopers (including its Japanese and overseas affiliates) billed us ¥10.4 million for tax
services, including tax-related advice and the preparation of tax returns. In the year ended March 31, 2004, ChuoAoyama PricewaterhouseCoopers (including its Japanese and overseas affiliates) billed us ¥37.1 million for tax services, including
tax-related advice and the preparation of tax returns.



All Other Fees



In the year ended March 31, 2005, ChuoAoyama
PricewaterhouseCoopers (including its Japanese and overseas affiliates) billed us ¥35.5 million for other products and services, including advisory services in connection with a scheme of arrangement in the United Kingdom. In the year ended
March 31, 2004, ChuoAoyama PricewaterhouseCoopers (including its Japanese and overseas affiliates) billed us ¥44.6 million for other products and services, including advisory services in connection with a scheme of arrangement in the United
Kingdom.



Pre-Approval Policies and Procedures



Our board of directors, together with our board of corporate auditors, has
adopted Pre-Approval Policies and Procedures for Audit and Non-Audit Services. These policies require that engagements of our independent accountants for audit and permitted non-audit services be pre-approved by our board of directors
and board of corporate auditors in accordance with the prescribed procedures and standards, based on review of explanative summaries of each type of services. Engagements for certain non-audit services are prohibited under these policies.
Engagements for non-audit services that are not specifically prohibited and do not violate the auditor independence requirements of the Sarbanes-Oxley Act of 2002 and the related rules may be permitted under special circumstances. In the year ended
March 31, 2005, 0.4% of the total amount of fees paid by us to ChuoAoyama PricewaterhouseCoopers was approved by our board of directors and board of corporate auditors under the de minimis exception under paragraph (c)(7)(i)(C) of Rule 2-01 of
Regulation S-X under the Exchange Act.



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RELIEF FROM CERTAIN NASDAQ CORPORATE GOVERNANCE RULES



Recently amended Nasdaq rules provide that when the Nasdaq corporate governance standards are contrary to a law, rule or regulation of any public authority exercising jurisdiction over a foreign issuer or are contrary
to generally accepted business practices in the issuers country of domicile, such issuer may follow the relevant law, rule, regulation or generally accepted business practice of the issuers country of domicile in lieu of certain Nasdaq
corporate governance standards. In reliance on the amended Nasdaq rule, we follow business practices that are generally accepted in Japan with respect to certain corporate governance requirements as described below:



| |  |  | In lieu of the Nasdaq requirement that the majority of the board of directors be comprised of independent directors as defined under the Nasdaq rules, and the requirement that
independent directors have regularly scheduled meetings at which only independent directors are present, or the executive sessions, we follow what is generally accepted business practice in Japan. None of the Commercial Code, other laws, rules or
regulations of Japan or the Tokyo Stock Exchange regulations require us to have independent directors as defined under the Nasdaq rules, and it is still common for long-established Japanese companies, as is the case for us, that a majority of
directors will have served the company (or any of its subsidiaries) for their entire career. As it is not an established practice for Japanese companies to have a majority of the board of directors consisting of independent directors, it is not an
established practice for independent directors to hold executive sessions.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In lieu of the Nasdaq requirements regarding audit committees, we follow the requirements of the Law for Special Exceptions to the Commercial Code Concerning Audits, etc. of
Corporations, or the Special Law, which permits large companies, including us, to have a board of corporate auditors that meets the requirements prescribed by the Special Law. Our board of corporate auditors is independent from our management and
plays a significant role by auditing our companys accounting and our business operations conducted by the management. Japanese companies may, but are not required to, adopt a committee system under the amended Special Law, and we have so far
chosen to keep a board of corporate auditors in reliance on the general exemption from the audit committee requirement provided in Rule 10A-3(c)(3) under the Securities Exchange Act of 1934.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In lieu of the Nasdaq requirement that compensation of the chief executive officer and other executive officers be determined, or recommended to the board for determination, either
by a majority of the independent directors or a compensation committee comprised solely of independent directors, we, in accordance with the Commercial Code requirements and as do most major companies in Japan, have delegated to the board of
directors the authority to determine the compensation of directors within an aggregated upper limit approved by a resolution of shareholders at a shareholders meeting. In May 2005, we formed a compensation committee as an advisory body to the
board of directors, to deliberate on matters such as the evaluation of the performance of our directors, the evaluation of the performance of directors of our principal business subsidiaries, and the compensation system to be applied to our
directors and corporate auditors and directors and corporate auditors of our principal business subsidiaries. We formed this compensation committee voluntarily in connection with the adoption of our corporate governance policies in May 2005 even
though we have not chosen to adopt a Company with Committees board model as permitted under the Special Law for the Commercial Code, and it is not necessarily intended to comply with the Nasdaq requirements applicable to the formation of
nominating committees, including the requirement that all members of the committee be independent directors as defined in the applicable Nasdaq rule.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In lieu of the Nasdaq requirement that director nominees be selected, or recommended for the boards selection, either by a majority of the independent
directors or a nominations committee comprised solely of independent directors, we follow the procedures provided by the Commercial Code which require that, as a general rule, candidates for the board of directors be nominated by way of resolution
of the companys board of directors and then appointed by resolution of the shareholders. However, the Commercial Code also provides that shareholders may nominate candidates for appointment as directors
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | at a general meeting of shareholders by exercising the minority shareholder rights provided to them under the Commercial Code or by proposing alternative
candidates as a counter proposal. In May 2005, we formed a nomination committee as an advisory body to the board of directors, to deliberate on matters such as the appointment and dismissal of directors and corporate auditors of Millea, the
appointment and dismissal of directors and corporate auditors of the principal business subsidiaries of Millea Holdings and the criteria for the appointment of directors and corporate auditors of Millea Holdings and its principal business
subsidiaries. We formed this nomination committee voluntarily in connection with the adoption of our corporate governance policies in May 2005 even though we have not chosen to adopt a Company with Committees board model as permitted
under the Special Law for the Commercial Code, and it is not necessarily intended to comply with the Nasdaq requirements applicable to the formation of nominating committees, including the requirement that all members of the committee be independent
directors as defined in the applicable Nasdaq rule.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In lieu of the Nasdaq requirement for each issuer to provide for a quorum of not less than 331/3% of the outstanding shares of its voting stock for any meeting of the holders of common stock, our Articles of Incorporation provide for a quorum of one third of the outstanding
shares of voting stock for any meeting of the holders of common stock to resolve certain special matters specified by the Code, such as the appointment of directors and corporate auditors, amendment of the Articles of Incorporation, reduction of the
stated capital, dismissal of a director or a corporate auditor, merger or consolidation of our company, exchange of shares, the transfer of the whole or an important part of our business or a corporate split. For other matters not specified by the
Commercial Code, the Commercial Code does not require us to, and we do not, provide for any fixed quorum for meetings of shareholders.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In lieu of the Nasdaq requirement that each issuer solicit proxies and provide proxy statements for all meetings of shareholders, as required under the Commercial Code
Implementation Ordinances of Japan, we provide to holders of record of our common stock a Voting Right Exercise Statement, together with a convocation notice of the general meetings of shareholders, a business report and a detailed
description of each proposal. Each holder of our common stock may cast its votes in writing, i.e., without attending the meeting or appointing a proxy, by completing the Voting Right Exercise Statement and mailing or delivering it to us.
With respect to the holders of our ADRs, prior to each meeting of shareholders, we have provided and will continue to provide to each registered holder of ADRs English translations of the convocation notice and a detailed description of each
proposal to be considered at the meeting, together with a voting instruction card by which the registered ADR holder may authorize the depositary to, and instruct the depositary on how to, vote at the shareholders meeting.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In lieu of the Nasdaq requirement that each issuer conduct an appropriate review of all related party transactions for potential conflict of interest situations on an ongoing basis
and that all such transactions be approved by the companys audit committee or another independent body of the board of directors, we have a board of corporate auditors as required under the Commercial Code, whose duties include the examination
of related party transactions. In addition, certain related party transactions need to be approved by our board of directors under the Commercial Code.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | In lieu of the Nasdaq requirements relating to shareholder approval, we follow the requirements of the Commercial Code with respect to the issuance of new shares
and disposition of treasury shares as well as certain other corporate transactions accompanied by issuance of new shares or disposition of treasury shares. In the case of our issuance of common stock or stock acquisition rights (including stock
options), the approval of the board of directors is generally required. However, the issuance of shares or stock acquisition rights with a particularly favorable price or particularly favorable conditions to a person other than the shareholders must
be approved by a special resolution at a general meeting of shareholders. Such issuance includes, without limitation, the issuance of stock options without any payment of an issuance price to officers, employees or consultants. Under the Commercial
Code, the issuance of new shares in exchange for the acquisition of, or by in-kind contribution of the stock or
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| | assets of another company, requires special procedures including an inspection by an inspector designated by a court or a certification provided by a
qualified professional such as a CPA or an attorney.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We have adopted our Code of Conduct which we believe complies with the Nasdaq requirements relating to a code of conduct, except that it only covers our directors, officers and
employees and directors, officers and employees of our directly owned subsidiaries (i.e., our subsidiaries direct subsidiaries), which constitute over 95% of the aggregate number of our and our directly and indirectly owned consolidated
subsidiaries directors, officers and employees. Under Japanese law and generally accepted business practices, we are not in a position to cause our indirectly owned subsidiaries to adopt a code of conduct, although we may recommend that our
directly owned subsidiaries have their subsidiaries adopt the same code of conduct as our Code of Conduct.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



WHERE YOU CAN FIND MORE INFORMATION



We are subject to the information requirements of the Securities and Exchange Act of 1934. In accordance with those requirements, we file with the SEC annual reports on Form 20-F within six months of our fiscal year end, and provide to the
SEC other material information on Form 6-K. You may read and copy any document that we file with the SEC at the SECs public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for further
information on the operation of its public reference room. You may also view any document that we file with the SEC in electronic format by accessing the SECs home page (http://www.sec.gov).



Prior to our formation in April 2002, Tokio Marine and Nichido Fire filed a
registration statement on Form F-4 with the SEC under the Securities Act of 1933 (registration number 333-14152 with respect to Tokio Marine and registration number 333-14152-01 with respect to Nichido Fire) covering shares of our common stock to be
issued to Tokio Marine and Nichido Fire shareholders in connection with our formation. Tokio Marine and Nichido Fire also filed a related registration statement on Form F-6 with the SEC to register the American depositary shares representing our
shares (registration number 333-14154 with respect to Tokio Marine and registration number 333-14154-01 with respect to Nichido Fire). You should refer to these registration statements and their exhibits and schedules, which are also available at
the SECs public reference room identified above, if you would like to find out more about our formation or our American depositary shares.



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INDEX TO FINANCIAL STATEMENTS



|                                                                                                  |  |     
|------------------------------------------------------------------------------------------------- |  | ----
|                                                                                                  |  | Page
|Consolidated Financial Statements of Millea Holdings, Inc. and Subsidiaries:                      |  |     
|                                                                                                  | 
|Report of Independent Registered Public Accounting Firm                                           |  | F-2 
|Report of Independent Registered Public Accounting Firm                                           |  | F-3 
|Consolidated Balance Sheets as of March 31, 2005 and 2004                                         |  | F-4 
|Consolidated Statements of Income for the Years Ended March 31, 2005, 2004 and 2003               |  | F-6 
|Consolidated Statements of Stockholders Equity for the Years Ended March 31, 2005, 2004 and 2003 |  | F-7 
|Consolidated Statements of Cash Flows for the Years Ended March 31, 2005, 2004 and 2003           |  | F-8 
|Consolidated Statements of Comprehensive Income for the Years Ended March 31, 2005, 2004 and 2003 |  | F-10
|Notes to Consolidated Financial Statements                                                        |  | F-11



INDEX TO SCHEDULES



|               |  |                                                                                                  |  |     
|-------------- |  | ------------------------------------------------------------------------------------------------ |  | ----
|ScheduleNumber |  |                                                                                                  |  | Page
|I              |  | Summary of Investments  Other than Investments in Related Parties as of March 31, 2005 and 2004 |  | F-63
|III            |  | Supplementary Insurance Information for the Years Ended March 31, 2005, 2004 and 2003            |  | F-65
|IV             |  | Reinsurance for the Years Ended March 31, 2005, 2004 and 2003                                    |  | F-66
|V              |  | Valuation and Qualifying Accounts for the Years Ended March 31, 2005, 2004 and 2003              |  | F-67



Schedules other than
those listed above are omitted for the reason that they are not required or are not applicable. Columns omitted from schedules filed have been omitted because the information is not applicable.



F-1



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



To The Board of Directors and Stockholders of

Millea Holding, Inc:



In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material
respects, the financial position of Millea Holdings, Inc. and its subsidiaries (the Company) at March 31, 2005 and 2004, and the results of their operations and their cash flows for each of the two years in the period ended March
31, 2005 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedules for the years ended March 31, 2005 and 2004 listed in the accompanying index present
fairly, in all material respects, the formation set forth therein when read in conjunction with the related consolidated financial statements. These financial statements are the responsibility of the Companys
management.    Our responsibility is to express an opinion on these financial statements based on our audits.    We conducted our audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States).    Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement.    An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.    We believe that our audits provide a reasonable basis for our opinion.



As described in Notes 1 to the consolidated financial statements, the Company adopted American Institute of Certified Public Accountants Statement of
Position 03-1 Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts and Financial Accounting Standards Board revised Interpretation No.46, Consolidation of
Variable Interest Entities as of April 1, 2004.



/s/ ChuoAoyama PricewaterhouseCoopers



Tokyo, Japan

September 8, 2005



F-2



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##### Table of Contents

Report of Independent Registered Public Accounting Firm



The Board of Directors and Stockholders

Millea Holdings, Inc.:



We have audited the consolidated statements of income, stockholders equity, cash flows and comprehensive income of
Millea Holdings, Inc. and subsidiaries for the year ended March 31, 2003 as listed in the accompanying index. In connection with our audit, we also have audited the financial statement schedules for the year ended March 31, 2003 as listed in the
accompanying index. These consolidated financial statements and financial statement schedules are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements and
financial statement schedules based on our audit.



We conducted
our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.



In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations and the
cash flows of Millea Holdings, Inc. and subsidiaries for the year ended March 31, 2003, in conformity with U.S. generally accepted accounting principles.



Also in our opinion, the related financial statement schedules for the year ended March 31, 2003, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material respects, the information set forth therein.



/s/ KPMG AZSA & Co.



Tokyo, Japan

September 4, 2003



F-3



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Balance Sheets

March 31, 2005 and 2004



|                                                                                                                               |  |                   |            |      |           
|------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ---------- | ---- | ----------
|                                                                                                                               |  | (Yen in millions)
|                                                                                                                               |  | 2005              |            | 2004
|Assets                                                                                                                         |  |                   |            |      |           
|Investments  other than investments in related parties (note 3):                                                              |  |                   |            |      |           
|Securities held to maturity:                                                                                                   |  |                   |            |      |           
|Fixed maturities, at amortized cost (fair value ¥1,090,487 million ($10,191,467 thousand) in 2005; ¥1,088,552 million in
2004) |  | ¥                 | 1,109,715  |      | 1,109,861 
|Securities available for sale:                                                                                                 |  |                   |            |      |           
|Fixed maturities, at fair value (amortized cost ¥3,948,444 million ($36,901,346 thousand) in 2005; ¥3,197,782 million in
2004) |  |                   | 3,962,641  |      | 3,209,582 
|Equity securities, at fair value (cost ¥1,796,036 million ($16,785,383 thousand) in 2005; ¥1,692,457 million in 2004)          |  |                   | 3,645,779  |      | 3,457,374 
|Trading securities:                                                                                                            |  |                   |            |      |           
|Fixed maturities, at fair value (cost ¥38,849 million ($363,075 thousand) in 2005; ¥36,258 million in 2004)                    |  |                   | 37,665     |      | 35,619    
|Equity securities, at fair value (cost ¥202,150 million ($1,889,252 thousand) in 2005; ¥11,418 million in 2004)                |  |                   | 204,213    |      | 12,894    
|Mortgage loans on real estate                                                                                                  |  |                   | 71,033     |      | 129,076   
|Investment real estate                                                                                                         |  |                   | 134,180    |      | 104,110   
|Policy loans                                                                                                                   |  |                   | 38,567     |      | 33,610    
|Other long-term investments                                                                                                    |  |                   | 409,187    |      | 419,199   
|Short-term investments                                                                                                         |  |                   | 691,769    |      | 881,897   
|                                                                                                                               |  |                   |            |      |           
|Total investments                                                                                                              |  |                   | 10,304,749 |      | 9,393,222 
|                                                                                                                               |  |                   |            |      |           
|Cash and cash equivalents                                                                                                      |  |                   | 290,642    |      | 432,874   
|Premiums receivable and agents balances                                                                                       |  |                   | 185,913    |      | 185,498   
|Reinsurance recoverable on losses (notes 4 and 8)                                                                              |  |                   | 520,733    |      | 447,111   
|Prepaid reinsurance premiums (note 4)                                                                                          |  |                   | 302,886    |      | 318,432   
|Deferred policy acquisition costs (note 5)                                                                                     |  |                   | 468,074    |      | 453,403   
|Property and equipment, net of depreciation (note 6)                                                                           |  |                   | 197,533    |      | 193,068   
|Derivative assets (note 17)                                                                                                    |  |                   | 217,191    |      | 225,822   
|Separate account assets (note 1(v))                                                                                            |  |                   |           |      | 162,715   
|Goodwill (note 7)                                                                                                              |  |                   | 9,934      |      | 9,934     
|Present value of future profit (note 7)                                                                                        |  |                   | 12,959     |      | 14,744    
|Other assets                                                                                                                   |  |                   | 384,284    |      | 363,550   
|                                                                                                                               |  |                   |            |      |           
|Total assets                                                                                                                   |  | ¥                 | 12,894,898 |      | 12,200,373
|                                                                                                                               |  |                   |            |      |           



See
accompanying notes to consolidated financial statements.



F-4



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Balance Sheets - (Continued)

March 31, 2005 and 2004



|                                                                                                                                                                   |  |                   |            |   |      |            |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------- | ---------- | - | ---- | ---------- | -
|                                                                                                                                                                   |  | (Yen in millions) |           
|                                                                                                                                                                   |  | 2005              |            |   | 2004 |           
|Liabilities and Stockholders Equity                                                                                                                               |  |                   |            |   |      |            |  
|Liabilities:                                                                                                                                                       |  |                   |            |   |      |            |  
|Policy liabilities and accruals:                                                                                                                                   |  |                   |            |   |      |            |  
|Losses, claims and loss adjustment expenses (note 8)                                                                                                               |  | ¥                 | 1,345,196  |   |      | 1,221,146  |  
|Unearned premiums                                                                                                                                                  |  |                   | 1,884,482  |   |      | 1,878,824  |  
|Future policy benefits and losses (note 9)                                                                                                                         |  |                   | 982,336    |   |      | 846,926    |  
|                                                                                                                                                                   |  |                   |            |   |      |            |  
|Total policy liabilities and accruals                                                                                                                              |  |                   | 4,212,014  |   |      | 3,946,896  |  
|                                                                                                                                                                   |  |                   |            |   |      |            |  
|Policyholders contract deposits (notes 9 and 10)                                                                                                                  |  |                   | 3,005,999  |   |      | 2,711,739  |  
|Income tax liability (note 11)                                                                                                                                     |  |                   | 733,329    |   |      | 709,224    |  
|Retirement and severance benefits (note 12)                                                                                                                        |  |                   | 285,011    |   |      | 292,054    |  
|Ceded reinsurance balances payable                                                                                                                                 |  |                   | 128,365    |   |      | 109,923    |  
|Debt outstanding (note 13)                                                                                                                                         |  |                   | 270,887    |   |      | 213,446    |  
|Derivative liabilities (note 17)                                                                                                                                   |  |                   | 159,978    |   |      | 156,467    |  
|Cash received under securities lending transactions                                                                                                                |  |                   | 449,381    |   |      | 272,791    |  
|Separate account liabilities (note 1(v))                                                                                                                           |  |                   |           |   |      | 162,715    |  
|Other liabilities (note 13)                                                                                                                                        |  |                   | 210,496    |   |      | 216,767    |  
|                                                                                                                                                                   |  |                   |            |   |      |            |  
|Total liabilities                                                                                                                                                  |  |                   | 9,455,460  |   |      | 8,792,022  |  
|                                                                                                                                                                   |  |                   |            |   |      |            |  
|Commitments and contingent liabilities (notes 4 and 16)                                                                                                            |  |                   |            |   |      |            |  
|                                                                                                                                                                   |  |                  
|Minority interests (note 3)                                                                                                                                        |  |                   | 6,798      |   |      |           |  
|                                                                                                                                                                   |  |                  
|Stockholders equity:                                                                                                                                              |  |                   |            |   |      |            |  
|Common stock: 6,870,000 and 7,000,000 shares authorized in 2005 and 2004, respectively, 1,727,048.75 and 1,857,048.75 shares issued in 2005
and 2004, respectively |  |                   | 150,000    |   |      | 150,000    |  
|Additional paid-in capital                                                                                                                                         |  |                   | 163,316    |   |      | 343,155    |  
|Retained earnings (note 15)                                                                                                                                        |  |                   | 2,371,629  |   |      | 2,299,338  |  
|Accumulated other comprehensive income:                                                                                                                            |  |                   |            |   |      |            |  
|Unrealized appreciation of securities                                                                                                                              |  |                   | 852,436    |   |      | 796,304    |  
|Foreign currency translation adjustments                                                                                                                           |  |                   | (27,834    | ) |      | (26,433    | )
|Minimum pension liability adjustments (note 12)                                                                                                                    |  |                   | (66,147    | ) |      | (67,305    | )
|                                                                                                                                                                   |  |                   |            |   |      |            |  
|Total accumulated other comprehensive income                                                                                                                       |  |                   | 758,455    |   |      | 702,566    |  
|Treasury stock, at cost 7,149 and 68,992 shares in 2005 and 2004, respectively (note 15)                                                                           |  |                   | (10,760    | ) |      | (86,708    | )
|                                                                                                                                                                   |  |                   |            |   |      |            |  
|Total stockholders equity                                                                                                                                         |  |                   | 3,432,640  |   |      | 3,408,351  |  
|                                                                                                                                                                   |  |                   |            |   |      |            |  
|Total liabilities and stockholders equity                                                                                                                         |  | ¥                 | 12,894,898 |   |      | 12,200,373 |  
|                                                                                                                                                                   |  |                   |            |   |      |            |  



See
accompanying notes to consolidated financial statements.



F-5



---

##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Statements of Income

Years ended March 31, 2005, 2004 and 2003



|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------------------- | --------- | - | ---- | --------- | - | ---- | --------- | -
|                                                                                                  |  | (Yen in millions, except per share amounts) |          
|                                                                                                  |  | 2005                                        |           |   | 2004 |           |   | 2003 |          
|Operating income:                                                                                 |  |                                             |           |   |      |           |   |      |           |  
|Property and casualty:                                                                            |  |                                             |           |   |      |           |   |      |           |  
|Net premiums written (note 4)                                                                     |  | ¥                                           | 1,925,407 |   |      | 1,945,246 |   |      | 1,898,557 |  
|Less increase in unearned premiums                                                                |  |                                             | 29,757    |   |      | 85,043    |   |      | 137,589   |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Premiums earned (note 4)                                                                          |  |                                             | 1,895,650 |   |      | 1,860,203 |   |      | 1,760,968 |  
|Life premiums (note 4)                                                                            |  |                                             | 253,369   |   |      | 241,553   |   |      | 255,977   |  
|Net investment income (note 3)                                                                    |  |                                             | 133,197   |   |      | 126,173   |   |      | 108,311   |  
|Realized gains (losses) on investments (note 3)                                                   |  |                                             | 86,750    |   |      | (3,855    | ) |      | (29,875   | )
|Gains (losses) on derivatives                                                                     |  |                                             | 8,296     |   |      | (36,755   | ) |      | 76,564    |  
|Other income                                                                                      |  |                                             | 31,835    |   |      | 20,199    |   |      | 15,158    |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Total operating income                                                                            |  |                                             | 2,409,097 |   |      | 2,207,518 |   |      | 2,187,103 |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Operating costs and expenses:                                                                     |  |                                             |           |   |      |           |   |      |           |  
|Losses, claims and loss adjustment expenses (notes 4 and 8):                                      |  |                                             |           |   |      |           |   |      |           |  
|Losses and claims incurred and provided for                                                       |  |                                             | 1,262,433 |   |      | 1,048,518 |   |      | 953,681   |  
|Related adjustment expenses                                                                       |  |                                             | 68,886    |   |      | 77,389    |   |      | 76,412    |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Total losses, claims and loss adjustment expenses                                                 |  |                                             | 1,331,319 |   |      | 1,125,907 |   |      | 1,030,093 |  
|Policy benefits and losses for life                                                               |  |                                             | 210,536   |   |      | 195,659   |   |      | 219,250   |  
|Interest credited to policyholders contract deposits                                             |  |                                             | 58,148    |   |      | 58,414    |   |      | 56,011    |  
|Policy acquisition costs (note 5)                                                                 |  |                                             | 564,544   |   |      | 558,978   |   |      | 571,058   |  
|Other operating expenses                                                                          |  |                                             | 137,944   |   |      | 116,293   |   |      | 109,383   |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Total operating costs and expenses                                                                |  |                                             | 2,302,491 |   |      | 2,055,251 |   |      | 1,985,795 |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Income before income tax expense, extraordinary items and cumulative effect of accounting changes |  |                                             | 106,606   |   |      | 152,267   |   |      | 201,308   |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Income tax expense (benefit) (note 11):                                                           |  |                                             |           |   |      |           |   |      |           |  
|Current                                                                                           |  |                                             | 48,654    |   |      | 50,015    |   |      | 92,935    |  
|Deferred                                                                                          |  |                                             | (20,223   | ) |      | (630      | ) |      | (21,321   | )
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|                                                                                                  |  |                                             | 28,431    |   |      | 49,385    |   |      | 71,614    |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Minority interests (note 3)                                                                       |  |                                             | 648       |   |      |          |   |      |          |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Income before extraordinary items and cumulative effect of accounting changes                     |  |                                             | 77,527    |   |      | 102,882   |   |      | 129,694   |  
|Extraordinary items (note 2)                                                                      |  |                                             | 14,458    |   |      |          |   |      | 248,323   |  
|Cumulative effect of accounting changes, net of tax (note 1(v))                                   |  |                                             | (26       | ) |      |          |   |      |          |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Net income                                                                                        |  | ¥                                           | 91,959    |   |      | 102,882   |   |      | 378,017   |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Amounts per Share of common stock:                                                                |  |                                             |           |   |      |           |   |      |           |  
|Basic:                                                                                            |  |                                             |           |   |      |           |   |      |           |  
|Income before extraordinary items and cumulative effect of accounting changes                     |  | ¥                                           | 44,287    |   |      | 56,457    |   |      | 69,839    |  
|Extraordinary items                                                                               |  |                                             | 8,259     |   |      |          |   |      | 133,719   |  
|Cumulative effect of accounting changes, net of tax                                               |  |                                             | (15       | ) |      |          |   |      |          |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Net income                                                                                        |  | ¥                                           | 52,531    |   |      | 56,457    |   |      | 203,558   |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Diluted (note 1 (s)):                                                                             |  |                                             |           |   |      |           |   |      |           |  
|Income before extraordinary items and cumulative effect of accounting changes                     |  | ¥                                           | 44,287    |   |      | 56,457    |   |      | 69,839    |  
|Extraordinary items                                                                               |  |                                             | 7,583     |   |      |          |   |      | 133,719   |  
|Cumulative effect of accounting changes, net of tax                                               |  |                                             | (15       | ) |      |          |   |      |          |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Net income                                                                                        |  | ¥                                           | 51,855    |   |      | 56,457    |   |      | 203,558   |  
|                                                                                                  |  |                                             |           |   |      |           |   |      |           |  
|Cash dividends declared                                                                           |  | ¥                                           | 11,000    |   |      | 11,000    |   |      | 10,000    |  
|Weighted average and diluted common shares in thousands                                           |  |                                             | 1,751     |   |      | 1,822     |   |      | 1,857     |  



See
accompanying notes to consolidated financial statements.



F-6



---

##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Statements of Stockholders Equity

Years ended March 31, 2005, 2004 and 2003



|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---- | --------- | - | ---- | --------- | -
|                                                                                                        |  | (Yen in millions) |          
|                                                                                                        |  | 2005              |           |   | 2004 |           |   | 2003 |          
|Common stock:                                                                                           |  |                   |           |   |      |           |   |      |           |  
|Balance at beginning of year                                                                            |  | ¥                 | 150,000   |   |      | 150,000   |   |      | 101,995   |  
|Adjustment in connection with the acquisition                                                           |  |                   |          |   |      |          |   |      | 48,005    |  
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Balance at end of year                                                                                  |  |                   | 150,000   |   |      | 150,000   |   |      | 150,000   |  
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Additional paid-in capital:                                                                             |  |                   |           |   |      |           |   |      |           |  
|Balance at beginning of year                                                                            |  |                   | 343,155   |   |      | 343,413   |   |      | 52,917    |  
|Excess of cost of shares transferred over the amount of common stock in connection with the acquisition |  |                   |          |   |      |          |   |      | 289,780   |  
|Retirement of treasury stock (note 15)                                                                  |  |                   | (179,843  | ) |      |          |   |      |          |  
|Gains(losses) on sales of treasury stock                                                                |  |                   | 4         |   |      | (258      | ) |      | 716       |  
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Balance at end of year                                                                                  |  |                   | 163,316   |   |      | 343,155   |   |      | 343,413   |  
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Retained earnings:                                                                                      |  |                   |           |   |      |           |   |      |           |  
|Balance at beginning of year                                                                            |  |                   | 2,299,338 |   |      | 2,214,947 |   |      | 1,853,312 |  
|Net income for year                                                                                     |  |                   | 91,959    |   |      | 102,882   |   |      | 378,017   |  
|Dividends paid (note 15)                                                                                |  |                   | (19,668   | ) |      | (18,491   | ) |      | (16,382   | )
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Balance at end of year                                                                                  |  |                   | 2,371,629 |   |      | 2,299,338 |   |      | 2,214,947 |  
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Accumulated other comprehensive income:                                                                 |  |                   |           |   |      |           |   |      |           |  
|Unrealized appreciation of securities:                                                                  |  |                   |           |   |      |           |   |      |           |  
|Balance at beginning of year                                                                            |  |                   | 796,304   |   |      | 227,198   |   |      | 553,640   |  
|Change during year                                                                                      |  |                   | 56,132    |   |      | 569,106   |   |      | (326,442  | )
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Balance at end of year                                                                                  |  |                   | 852,436   |   |      | 796,304   |   |      | 227,198   |  
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Foreign currency translation adjustments:                                                               |  |                   |           |   |      |           |   |      |           |  
|Balance at beginning of year                                                                            |  |                   | (26,433   | ) |      | (15,254   | ) |      | (4,549    | )
|Change during year                                                                                      |  |                   | (1,401    | ) |      | (11,179   | ) |      | (10,705   | )
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Balance at end of year                                                                                  |  |                   | (27,834   | ) |      | (26,433   | ) |      | (15,254   | )
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Minimum pension liability adjustments (note 12):                                                        |  |                   |           |   |      |           |   |      |           |  
|Balance at beginning of year                                                                            |  |                   | (67,305   | ) |      | (88,326   | ) |      | (47,621   | )
|Change during year                                                                                      |  |                   | 1,158     |   |      | 21,021    |   |      | (40,705   | )
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Balance at end of year                                                                                  |  |                   | (66,147   | ) |      | (67,305   | ) |      | (88,326   | )
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Accumulated other comprehensive income at end of year                                                   |  |                   | 758,455   |   |      | 702,566   |   |      | 123,618   |  
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Treasury stock (note 15):                                                                               |  |                   |           |   |      |           |   |      |           |  
|Balance at beginning of year                                                                            |  |                   | (86,708   | ) |      | (7,662    | ) |      |          |  
|Change during year                                                                                      |  |                   | 75,948    |   |      | (79,046   | ) |      | (7,662    | )
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Balance at end of year                                                                                  |  |                   | (10,760   | ) |      | (86,708   | ) |      | (7,662    | )
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  
|Total stockholders equity                                                                              |  | ¥                 | 3,432,640 |   |      | 3,408,351 |   |      | 2,824,316 |  
|                                                                                                        |  |                   |           |   |      |           |   |      |           |  



See
accompanying notes to consolidated financial statements.



F-7



---

##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Statements of Cash Flows

Years ended March 31, 2005, 2004 and 2003



|                                                                                           |  |                   |           |   |      |         |   |      |          |  
|------------------------------------------------------------------------------------------ |  | ----------------- | --------- | - | ---- | ------- | - | ---- | -------- | -
|                                                                                           |  | (Yen in millions) |          
|                                                                                           |  | 2005              |           |   | 2004 |         |   | 2003 |         
|Cash flows from operating activities:                                                      |  |                   |           |   |      |         |   |      |          |  
|Net income                                                                                 |  | ¥                 | 91,959    |   |      | 102,882 |   |      | 378,017  |  
|Adjustments to reconcile net income to net cash provided by operating activities:          |  |                   |           |   |      |         |   |      |          |  
|Increase in losses, claims and loss adjustment expense reserve, net of ceded reinsurance   |  |                   | 53,831    |   |      | 92,555  |   |      | 21,090   |  
|Increase in unearned premiums, net of ceded reinsurance                                    |  |                   | 23,640    |   |      | 100,084 |   |      | 136,405  |  
|Increase in future policy benefits for life                                                |  |                   | 135,726   |   |      | 133,451 |   |      | 169,982  |  
|Decrease (increase) in premiums receivables and agents balances, net of ceded reinsurance |  |                   | 18,489    |   |      | (13,152 | ) |      | 18,202   |  
|Increase (decrease) in payable for current income taxes                                    |  |                   | 10,340    |   |      | (59,475 | ) |      | 1,126    |  
|Decrease (increase) in receivable for current income taxes                                 |  |                   | 25,764    |   |      | (28,732 | ) |      | (20,843  | )
|Deferred income taxes                                                                      |  |                   | (20,269   | ) |      | (503    | ) |      | (22,796  | )
|Provision for retirement and severance benefits                                            |  |                   | (3,043    | ) |      | 2,938   |   |      | (6,045   | )
|Increase in deferred policy acquisition costs                                              |  |                   | (14,539   | ) |      | (30,923 | ) |      | (21,094  | )
|Depreciation                                                                               |  |                   | 21,281    |   |      | 19,116  |   |      | 15,076   |  
|Extraordinary items  unallocated negative goodwill (note 2)                               |  |                   | (14,458   | ) |      |        |   |      | (248,323 | )
|Changes in trading securities, at fair value                                               |  |                   | (41,900   | ) |      | (8,065  | ) |      | (24,574  | )
|Changes in derivative assets and liabilities  net                                         |  |                   | 12,140    |   |      | 68,913  |   |      | (24,748  | )
|(Increase) decrease in other assets                                                        |  |                   | (5,266    | ) |      | 758     |   |      | (47,199  | )
|(Decrease) increase in other liabilities                                                   |  |                   | (5,704    | ) |      | 5,707   |   |      | 62,255   |  
|Net realized (gains) losses                                                                |  |                   | (75,748   | ) |      | 5,364   |   |      | 54,560   |  
|Other  net                                                                                |  |                   | 1,999     |   |      | (10,271 | ) |      | (726     | )
|                                                                                           |  |                   |           |   |      |         |   |      |          |  
|Net cash provided by operating activities                                                  |  |                   | 214,242   |   |      | 380,647 |   |      | 440,365  |  
|                                                                                           |  |                   |           |   |      |         |   |      |          |  
|Cash flows from investing activities:                                                      |  |                   |           |   |      |         |   |      |          |  
|Proceeds from investments sold or matured:                                                 |  |                   |           |   |      |         |   |      |          |  
|Fixed maturities held to maturity redeemed                                                 |  |                   | 2,803     |   |      | 2,471   |   |      | 661      |  
|Fixed maturities available for sale sold                                                   |  |                   | 1,640,958 |   |      | 870,571 |   |      | 542,909  |  
|Fixed maturities available for sale redeemed                                               |  |                   | 1,399,756 |   |      | 724,003 |   |      | 729,396  |  
|Equity securities available for sale                                                       |  |                   | 205,191   |   |      | 228,913 |   |      | 421,892  |  
|Mortgage loans on real estate                                                              |  |                   | 77,092    |   |      | 52,679  |   |      | 37,393   |  
|Investment real estate                                                                     |  |                   | 39,748    |   |      | 5,272   |   |      | 12,025   |  
|Policy loans                                                                               |  |                   | 33,069    |   |      | 21,759  |   |      | 25,606   |  
|Other long-term investments                                                                |  |                   | 176,222   |   |      | 247,498 |   |      | 400,245  |  





See accompanying notes to consolidated financial statements.



F-8



---

##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Statements of Cash Flows - (Continued)

Years ended March 31, 2005, 2004 and 2003



|                                                                                   |  |                   |            |   |      |            |   |      |            |  
|---------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ---- | ---------- | - | ---- | ---------- | -
|                                                                                   |  | (Yen in millions) |           
|                                                                                   |  | 2005              |            |   | 2004 |            |   | 2003 |           
|Cost of investments purchased:                                                     |  |                   |            |   |      |            |   |      |            |  
|Fixed maturities held to maturity                                                  |  | ¥                 | (5,480     | ) |      | (231,315   | ) |      | (405,856   | )
|Fixed maturities available for sale                                                |  |                   | (3,793,144 | ) |      | (1,593,176 | ) |      | (1,881,085 | )
|Equity securities available for sale                                               |  |                   | (275,367   | ) |      | (75,562    | ) |      | (207,260   | )
|Mortgage loans on real estate                                                      |  |                   | (17,208    | ) |      | (26,335    | ) |      | (25,924    | )
|Investment real estate                                                             |  |                   | (16,348    | ) |      | (23,594    | ) |      | (951       | )
|Policy loans                                                                       |  |                   | (38,026    | ) |      | (25,282    | ) |      | (28,696    | )
|Other long-term investments                                                        |  |                   | (162,680   | ) |      | (142,211   | ) |      | (256,205   | )
|Short-term investments  net                                                       |  |                   | 191,408    |   |      | (225,535   | ) |      | 26,662     |  
|Securities and indebtedness of related parties                                     |  |                   | (12,931    | ) |      | (17,566    | ) |      | 2,497      |  
|Property and equipment  net                                                       |  |                   | (12,161    | ) |      | (8,628     | ) |      | (13,208    | )
|Increase (decrease) in cash received under securities lending transactions         |  |                   | 220,564    |   |      | (19,397    | ) |      | 74,812     |  
|Cash and cash equivalents acquired in connection with noncash business combination |  |                   |           |   |      |           |   |      | 153,868    |  
|Cash paid on acquisition, net of cash and cash equivalents acquired                |  |                   |           |   |      | (17,962    | ) |      |           |  
|Other                                                                              |  |                   | (436       | ) |      |           |   |      |           |  
|                                                                                   |  |                   |            |   |      |            |   |      |            |  
|Net cash used in investing activities                                              |  |                   | (346,970   | ) |      | (253,397   | ) |      | (391,219   | )
|                                                                                   |  |                   |            |   |      |            |   |      |            |  
|Cash flows from financing activities:                                              |  |                   |            |   |      |            |   |      |            |  
|Investment deposits funded by policyholders and yields therefrom                   |  |                   | 506,290    |   |      | 423,363    |   |      | 499,110    |  
|Withdrawals of investment deposits by policyholders                                |  |                   | (374,636   | ) |      | (435,028   | ) |      | (549,433   | )
|Proceeds from issuance of debt                                                     |  |                   | 75,494     |   |      | 68,746     |   |      | 55,900     |  
|Repayment of debt                                                                  |  |                   | (50,909    | ) |      | (33,039    | ) |      | (14,004    | )
|(Decrease) increase in cash received under securities lending transactions         |  |                   | (43,974    | ) |      | 43,974     |   |      |           |  
|Dividends to stockholders                                                          |  |                   | (19,669    | ) |      | (18,491    | ) |      | (16,382    | )
|Increase in treasury stock                                                         |  |                   | (103,891   | ) |      | (79,304    | ) |      | (6,946     | )
|Other  net                                                                        |  |                   | (2,395     | ) |      | (5,049     | ) |      |           |  
|                                                                                   |  |                   |            |   |      |            |   |      |            |  
|Net cash used in financing activities                                              |  |                   | (13,690    | ) |      | (34,828    | ) |      | (31,755    | )
|                                                                                   |  |                   |            |   |      |            |   |      |            |  
|Effect of exchange rate changes on cash and cash equivalents                       |  |                   | 1,022      |   |      | 474        |   |      | 285        |  
|                                                                                   |  |                   |            |   |      |            |   |      |            |  
|Net change in cash and cash equivalents                                            |  |                   | (145,396   | ) |      | 92,896     |   |      | 17,676     |  
|Cash and cash equivalents due to the initial consolidation of VIEs                 |  |                   | 3,164      |   |      |           |   |      |           |  
|Cash and cash equivalents at beginning of year                                     |  |                   | 432,874    |   |      | 339,978    |   |      | 322,302    |  
|                                                                                   |  |                   |            |   |      |            |   |      |            |  
|Cash and cash equivalents at end of year                                           |  | ¥                 | 290,642    |   |      | 432,874    |   |      | 339,978    |  
|                                                                                   |  |                   |            |   |      |            |   |      |            |  
|Supplemental information of cash flows:                                            |  |                   |            |   |      |            |   |      |            |  
|Cash paid during the year for:                                                     |  |                   |            |   |      |            |   |      |            |  
|Interest                                                                           |  | ¥                 | 3,198      |   |      | 2,885      |   |      | 2,508      |  
|Income taxes                                                                       |  | ¥                 | 12,550     |   |      | 113,521    |   |      | 73,196     |  
|Noncash investing and financing activities (note 2):                               |  |                   |            |   |      |            |   |      |            |  
|Fair value of assets acquired                                                      |  | ¥                 |           |   |      |           |   |      | 2,108,703  |  
|Liabilities assumed                                                                |  |                   |           |   |      |           |   |      | (1,606,945 | )
|Negative goodwill                                                                  |  |                   |           |   |      |           |   |      | (317,841   | )
|Fair value of shares issued for acquisition                                        |  |                   |           |   |      |           |   |      | (337,785   | )
|Cash and cash equivalents acquired in connection with noncash business combination |  | ¥                 |           |   |      |           |   |      | (153,868   | )



See
accompanying notes to consolidated financial statements.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Consolidated Statements of Comprehensive Income

Years ended March 31, 2005, 2004 and 2003



|                                                                             |  |                   |         |   |      |         |   |      |          |  
|---------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---- | ------- | - | ---- | -------- | -
|                                                                             |  | (Yen in millions) |        
|                                                                             |  | 2005              |         |   | 2004 |         |   | 2003 |         
|Net income                                                                   |  | ¥                 | 91,959  |   |      | 102,882 |   |      | 378,017  |  
|Other comprehensive income (loss), net of tax:                               |  |                   |         |   |      |         |   |      |          |  
|Unrealized appreciation of securities:                                       |  |                   |         |   |      |         |   |      |          |  
|Unrealized holding gains (losses)                                            |  |                   | 106,941 |   |      | 574,678 |   |      | (216,114 | )
|Less: reclassification adjustments for gains included in net income          |  |                   | (50,809 | ) |      | (5,572  | ) |      | (110,328 | )
|                                                                             |  |                   |         |   |      |         |   |      |          |  
|                                                                             |  |                   | 56,132  |   |      | 569,106 |   |      | (326,442 | )
|                                                                             |  |                   |         |   |      |         |   |      |          |  
|Foreign currency translation adjustments:                                    |  |                   |         |   |      |         |   |      |          |  
|Foreign currency translation adjustments                                     |  |                   | (1,401  | ) |      | (11,866 | ) |      | (10,181  | )
|Less: reclassification adjustments for losses (gains) included in net income |  |                   |        |   |      | 687     |   |      | (524     | )
|                                                                             |  |                   |         |   |      |         |   |      |          |  
|                                                                             |  |                   | (1,401  | ) |      | (11,179 | ) |      | (10,705  | )
|                                                                             |  |                   |         |   |      |         |   |      |          |  
|Minimum pension liability adjustments                                        |  |                   | 1,158   |   |      | 21,021  |   |      | (40,705  | )
|                                                                             |  |                   |         |   |      |         |   |      |          |  
|Other comprehensive income (loss)                                            |  |                   | 55,889  |   |      | 578,948 |   |      | (377,852 | )
|                                                                             |  |                   |         |   |      |         |   |      |          |  
|Comprehensive income                                                         |  | ¥                 | 147,848 |   |      | 681,830 |   |      | 165      |  
|                                                                             |  |                   |         |   |      |         |   |      |          |  



See
accompanying notes to consolidated financial statements.



F-10



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements

March 31, 2005, 2004 and 2003



1. Basis of Presentation and Significant Accounting Policies



(a) Description of Business



Millea Holdings, Inc. (Millea Holdings), incorporated in Japan, is a holding company mainly engaged in property and casualty and life insurance operations.
Through its subsidiaries, Millea Holdings writes marine, fire and casualty, automobile and allied lines of insurance principally covering risks located in Japan and hull and cargo risks for Japanese business and sells a variety of life insurance
products mainly in the Japanese market.



Millea Holdings was
established on April 2, 2002 as a result of the business combination of The Tokio Marine and Fire Insurance Company, Limited (Tokio Marine) with The Nichido Fire and Marine Insurance Company, Limited (Nichido Fire), by which
both Tokio Marine and Nichido Fire have become wholly owned subsidiaries of Millea Holdings in a statutory share exchange under Japanese law. Millea Holdings is a successor registrant of Tokio Marine to the United States Securities and Exchange
Commission.



On October 1, 2004, Tokio Marine and Nichido Fire
merged and were renamed as Tokio Marine & Nichido Fire Insurance Co., Ltd. (Tokio Marine & Nichido).



See note 2 Business Combination for further detail.



(b) Basis of Presentation



The consolidated financial statements of Millea Holdings and its subsidiaries (collectively referred to as the Company) are presented herein in accordance
with accounting principles generally accepted in the United States of America (U.S. GAAP), which differ in certain respects from Japanese accounting principles (Japanese GAAP).



Certain reclassifications have been made to the prior years
consolidated financial statements to conform to the 2005 presentation.



In the consolidated financial statements, certain Japanese yen amounts have been translated into United States dollars at the rate of 107 yen to the dollar, the approximate exchange rate as of March 31, 2005. Such translations should not be
construed as representations that the Japanese yen amounts represent, or have been or could be converted into, United States dollars at that or any other rate.



(c) Principles of Consolidation



The accompanying consolidated financial statements include all significant majority-owned subsidiaries and variable interest entities to which Millea Holdings and its
subsidiaries are the primary beneficiary. Certain subsidiaries results were reported in the consolidated financial statements using December 31 year-ends. All significant affiliates are accounted for by the equity method. At March 31, 2005 and
2004, investments in related parties which were presented as other assets amounted to ¥75,712 million ($707,589 thousand) and ¥29,341 million, respectively. As for the investment in affiliated companies accounted for by equity method for
which quoted market price is available, the aggregate carrying amount and fair value of investment were ¥34,032 million ($318,056 thousand) and ¥24,327 million ($227,355 thousand) at March 31, 2005, respectively. All significant intercompany
accounts and transactions have been eliminated in consolidation.



(d) Use of Estimates



Management of the
Company has made a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements in conformity with U.S. GAAP. Actual results
could differ from these estimates.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



(e) Investments  Other than Investments in Related Parties



Fixed maturities held to maturity, which the Company has the positive intent and ability to
hold to maturity, are stated at amortized cost. Declines in fair value below amortized cost that are determined to be other than temporary are charged to earnings.



Fixed maturities available for sale are stated at fair value. When quoted market value is not available, quoted market value
for similar securities is utilized instead. Declines in fair value below amortized cost that are determined to be other than temporary are charged to earnings.



Equity securities available for sale, which include common and nonredeemable preferred stocks, are stated at their fair value based primarily on quoted
market prices. Stocks listed on Japanese or foreign stock exchanges represent approximately 83% and 87% of the investment in stocks at March 31, 2005 and 2004, respectively. Declines in fair value below cost that are determined to be other than
temporary are charged to earnings.



Gains and losses incurred
on the sale or impairment of securities are included in realized gains (losses) on investments in the consolidated statements of income. Unrealized gains and losses, net of taxes, in the value of securities available for sale is accounted for as a
component of accumulated other comprehensive income. See note 3 for further information about other-than-temporary impairment of securities.



Trading securities are held to meet short-term investment objectives. These securities are recorded on a trade date basis and carried at current market
values. Unrealized gains and losses are recognized in earnings.



The cost of securities sold is determined on a weighted moving-average basis.



Mortgage loans on real estate and other loans which are included in other long-term investments are principally carried at the unpaid balance of the principal amount, net of unamortized premium or discount and
valuation allowances. The valuation allowances for loan losses represent managements estimate of probable losses in our loan portfolios. The evaluation process involves a number of estimates and judgments. Our allowances for loan losses
consist of specific allowances for specifically identified impaired borrowers and general allowances for loans which are not specifically identified as impaired. The allowance is based on Statement of Financial Accounting Standards
(SFAS) No. 114, Accounting by Creditors for Impairment of a Loan, SFAS No. 118, Accounting by Creditors for Impairment of a Loan  Income Recognition and Disclosures, and SFAS No. 5, Accounting for
Contingencies. The Company records specific allowances for loan losses in net investment income when the Company determines that an individual borrower is not able to keep current with payments on its loans. Loans which are not specifically
identified as impaired are collectively evaluated for impairment. For these loans, the Company records general allowances, or unallocated valuation allowances, for loan losses to reflect loss contingencies underlying individual loan
portfolios. Changes in the valuation allowances are included in net investment income.



These impaired loans are written down to the extent that principal is judged to be uncollectible. Impaired collateral-dependent loans where repayment is expected to be provided solely by the underlying collateral and
there are no other available and reliable sources of repayment are written down to the lower of cost or collateral value. These loans identified as impaired are placed on a cash basis when it is determined that the payment of interest or principal
is doubtful of collection except when the loan is well secured and in the process of collection. Accrued interest on impaired loans is reversed and charged against current earnings, and interest is thereafter included in earnings only to the extent
actually received in cash. When there is doubt regarding the



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



ultimate collectibility of principal, all cash receipts are thereafter applied to reduce the recorded investment in the loan. These cash-basis loans are
returned to an accrual status when all contractual principal and interest amounts are reasonably assured of repayment and there is a sustained period of repayment performance in accordance with the contractual terms.



Policy loans are made to policyholders of long-term insurance with refund at
maturity. Those long-term insurance products include long-term comprehensive insurance and long-term family personal traffic accident insurance. The maximum amount of loans is limited to 90% of return premiums on the policies. Policy loans are
carried at cost.



Short-term investments are carried at costs
or amortized costs that approximate fair value, and generally include call loans and other investments maturing within one year.



(f) Repurchase Agreements and Securities Lending Activities



Securities sold with agreements to repurchase, securities purchased with agreements to resell and securities lending and borrowing
transactions are accounted for as sales of securities with related forward repurchase commitments or purchases of securities with related forward reverse repurchase commitments, if they meet the relevant conditions for the surrender of control as
provided by SFAS No.140, Accounting for Transfers and Servicing Assets and Extinguishments of Liabilities, a replacement of FASB Statement No.125. If the conditions are not met, the transactions are treated as secured, financing or
lending. Securities related to such transactions are continuously recorded on the consolidated balance sheets as securities held to maturities or available for sale.



(g) Investment Real Estate, Property and Equipment



Investment real estate, property and equipment are stated at cost less accumulated
depreciation on buildings and furniture and fixtures. Depreciation is computed principally by the declining-balance method based on estimated useful lives. The estimated useful lives of buildings based on construction method and equipment range as
follows:



|                       |  |               
|---------------------- |  | --------------
|Reinforced concrete    |  | 38 to 50 years
|Brick and block        |  | 41 years      
|Wood                   |  | 24 years      
|Wood and mortar        |  | 22 years      
|Steel                  |  | 11 to 34 years
|Building equipment     |  | 3 to 18 years 
|Furniture and fixtures |  | 2 to 15 years 



Maintenance and
repairs are charged against income as incurred. Improvements are capitalized to property and equipment.



The cost and accumulated depreciation with respect to assets retired or otherwise disposed of are eliminated from the asset and related accumulated
depreciation accounts. Any resulting profit or loss is credited or charged to income.



(h) Cash Equivalents



Cash equivalents include cash deposited in demand deposits at banks.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



(i) Derivatives



The Company employs derivative financial instruments including interest rate swaps, foreign exchange forwards, bond futures, equity index
options, equity index futures and other instruments to manage interest risk, foreign currency risks and other risks for hedging activities and other purposes.



All derivatives are recognized in the consolidated balance sheets at fair value in accordance with SFAS No.133, Accounting for Derivative
Instruments and Certain Hedging Activities., subsequently amended by SFAS No.138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of SFAS No.133.



For derivatives designated as hedges, on the date the derivative contract is
entered into, the company designates interest rate swaps, foreign exchange forwards or currency swaps and other derivative instruments as a hedge of the changes in the fair value of a recognized asset or liability (fair value hedge).



The gains or losses in the fair value of a derivative that is
appropriately and contemporaneously documented, designated and is highly effective as fair value hedge is recoded in gains (losses) on derivatives, net investment income and realized gains(losses) on investments along with the losses or gains on the
hedged item attributable to the hedged risk. Changes in the fair value of derivatives used for other than hedging activities are reported in gains (losses) on derivatives.



The Company occasionally purchases a financial instrument that contains a derivative instrument that is embedded in the
financial instrument. The Company bifurcates an embedded derivative where: (1) the economic characteristics of the embedded instrument are not clearly and closely related to those of the remaining components of the financial instrument; and (2) a
separate instrument with the same terms as the embedded instrument meets the definition of a derivative under SFAS No.133, as amended. When bifurcated, the embedded derivative is carried at fair value, and changes in its fair value are included
currently in earnings.



(j) Premium Revenues



Property and casualty insurance premiums are recognized as earned on a pro
rata basis over the terms of the policies. Unearned premiums represent the portion of premiums written relating to the unexpired terms of coverage.



Life premiums for long-duration contracts are recognized when due from policyholders. Life premiums for short-duration contracts are recognized over the
period to which the premiums relate on a pro rata basis.



Premiums are stated net of amounts ceded to reinsurers.



(k) Policy Acquisition Costs



Costs
that vary with and are primarily related to the acquisition of insurance policies are deferred to the extent such costs are deemed recoverable from future profits. These costs are principally external sales agents commissions, in-house sales
agents salaries, other compensation and other underwriting costs. Deferred policy acquisition costs are reviewed to determine if they are recoverable from future income and, if not recoverable, are charged to expense.



Policy acquisition costs for property and casualty insurance products are
deferred and amortized over the period in which the related premiums written are earned. Policy acquisition costs for traditional life insurance



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



products are generally deferred and amortized over the premium paying period of the policy. Policy acquisition costs related to investment contracts and
universal-life type contracts are deferred and amortized, with interest, in relation to the incidence of estimated gross profits to be realized over the estimated lives of the contracts.



(l) Losses, Claims and Loss Adjustment Expenses



The net liabilities stated for reported and estimated property and casualty losses and
claims and for related loss adjustment expenses are based upon the accumulation of (1) case estimates for losses and related loss adjustment expenses reported prior to the close of the accounting period on the direct business written by the Company
and (2) estimates received from ceding reinsurers. The loss adjustment expenses represent administrative expenses in connection with settling or disposing of claims, which include out-of-pocket expenses as well as allocated personnel cost. Provision
has been made for unreported losses and for loss adjustment expenses not identified with specific claims based upon past experience. These liabilities are adjusted regularly based on experience. The Company believes that the liabilities for unpaid
losses and loss adjustment expenses at March 31, 2005 and 2004 are adequate to cover the ultimate net cost of losses and claims incurred to those dates. However, the liabilities are necessarily based on estimates and management makes no
representation that the ultimate liability may not exceed or fall short of such estimates.



(m) Future Policy Benefits and Losses



Future policy benefits and losses include provisions for future policy benefits for life contracts and for unpaid life policy claims.



The liabilities for future policy benefits are computed by a net level
premium method using estimated future investment yields, withdrawals and recognized morbidity and mortality tables. Future investment yields assumptions are based on factors such as expected investment returns and market conditions. Withdrawals,
morbidity and mortality assumptions are mainly based on our own experience. For limited-payment contracts, which provide insurance coverage over a contract period that extends beyond the period in which premiums are collected, gross premiums in
excess of the net premium are deferred and recognized in earnings in a constant relationship with insurance in force or with the amount of expected future benefit payments. The Companys liabilities for future policy benefits and losses are
also inclusive of liabilities for guarantee benefits related to certain nontraditional long-duration contracts, which are discussed more in note 10.



Unpaid policy claims represent the estimated liability for reported and unreported losses on life policies on an undiscounted basis.



The Company believes that the estimated liabilities for future policy
benefits and for losses at March 31, 2005 and 2004 are adequate to cover the life insurance liability. However, the ultimate liability may vary from such estimates.



(n) Policyholders Contract Deposits



The Company sells certain property and casualty and life insurance products that do not subject the Company to significant risks arising
from policyholders mortality or morbidity. These contracts are referred to as investment contracts. For investment contracts and universal-life type contracts, the Company records the associated liabilities except for guaranteed minimum death
benefit (GMDB) under policyholders contract deposits, which is recorded as future policy benefits and losses.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Specifically, the Company sells certain long-term property and casualty insurance policies, such as
long-term comprehensive insurance, long-term family personal traffic accident insurance, and etc. which include a savings feature in addition to the insurance coverage provided under the policy. These policies are issued for periods of two to
sixty-four years.



The key terms of such policies
(deposit-type insurance), which include contractual rates of interest, are fixed at the inception of the policy and remain in effect during the policy period. At inception, policyholders can choose to pay premiums on the policy either in
a lump-sum or in annual, semiannual or monthly installments. The policy allows policyholders to later change the mode for payment with the Companys approval. In addition, the policy allows policyholders during the payment phase to change the
allocation of annuity payments they receive if certain conditions established by the Company are met. In practice, these options are rarely used by policyholders. Policyholders can terminate the contract before the maturity date with a payment of a
predetermined commission to the Company.



Premiums for
insurance portion and savings portion of the contract are allocated at inception. The premium for the insurance portion is calculated the same way as the premium for a traditional indemnity policy with no savings portion is calculated. The premium
for the savings portion represents the present value of the lump-sum or annuity refund for a fixed period, discounted using the committed interest rate and the total loss termination rate, which are both set at the inception of the
contracts. Total loss termination is an exceptional event that takes place when a full payout is made for the insurance portion of the policy, and in this case, the contract terminates without any maturity refund being paid to the
policyholder. The weighted average annual frequency of total loss termination is approximately 0.05%.



In the case of a total loss, deposit premiums under the contract are designed to be used for maturity refunds on the other policies for which a total loss
has not occurred. The use of deposit premiums, including maturity refunds for total loss policies, are legally restricted for the benefit of policyholders making investment deposits and cannot be used to fund indemnity claims in the case
of a total loss or any other losses. Accordingly, the Company does not use, in fact and in substance, maturity refunds for total loss policies to fund indemnity claims. All payments made to the policyholder in a total loss situation are
funded by using liabilities established for the insurance portion of the contract.



The premium for the insurance portion is recognized as revenue over the period of the contract, generally in proportion to the amount of insurance protection provided. Deposit accounting is utilized for the savings
portion of the contract. Accordingly, premiums received for the savings portion of outstanding contracts are recorded as liabilities captioned policyholders contract deposits. Policyholders contract deposits are accreted
using the interest rate method based on the present value of expected payments on the investment portion of outstanding contracts, without deductions for future surrender penalties. The amount of expected payments excludes payments for total
loss policies, which are paid to other holders of maturing policies. At the end of each fiscal year, policyholders contract deposits are adjusted to reflect the present value of contracts in force.



Policy acquisition costs are not charged to the savings portion of the
contract. Costs associated with policy acquisition of deposit-type policies are charged to the insurance portion and amortized over the contractual period. The possibility of a premium deficiency, relevant only to the insurance portion, is monitored
through combined loss and expense ratio. The Company did not recognize any premium deficiency for such policies for the years ended March 31, 2005, 2004 and 2003.



Interest credited to policyholders contract deposits represents interest accrued or paid for investment contracts and
universal-life type contracts. Any investment income attributable to policyholders in respect of



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



investment contracts and universal-life type contracts are presented on a gross basis and included in Net investment income, Realized gains
(losses) on investments and Gains (losses) on derivatives in the consolidated statements of income.



See note 14 for fair value information of investment contracts.



(o) Reinsurance



Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business. The Company evaluates and
monitors the financial condition of its reinsurers under voluntary reinsurance arrangements to minimize its exposure to significant losses from reinsurers insolvencies.



(p) Compulsory Automobile Liability Insurance



Japanese law provides that all automobiles are to be covered by specified amounts of
liability insurance for personal injury and that insurance companies are to accept such coverage on a nonprofit basis. In compliance with this law, which came into effect on April 1, 1966, the Company has not reflected any profit or loss from
underwriting such compulsory automobile liability insurance in financial statements prepared for distribution to stockholders under the Japanese Commercial Code. In the accompanying consolidated financial statements, which are presented in
accordance with U.S. GAAP, gains or losses from underwriting compulsory automobile liability insurance have been credited or charged to income.



(q) Foreign Currency Translation



Assets and liabilities of the subsidiaries located outside Japan are translated into Japanese yen at the rates of exchange in effect at the balance sheet date. Revenues
and expenses of the subsidiaries are translated at weighted average exchange rates during the year. Gains and losses resulting from translation of financial statements are excluded from the consolidated statements of income and are accumulated as
foreign currency translation adjustments in stockholders equity.



Losses resulting from foreign currency transactions in the amount of ¥(1,391) million ($(13,000) thousand) in 2005, ¥(5,720) million in 2004 and ¥(4,016) million in 2003 were charged to income.



(r) Impairment of Long-Lived Assets



Effective April 1, 2002, the Company adopted SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. As required by SFAS No. 144, long-lived assets and certain
identifiable intangibles are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If such assets are considered to be impaired, the amount of impairment to be recognized is the amount by which the carrying amount of the
assets exceeds the fair value of the assets. Fair value is determined primarily based on market prices, if available, or the estimated fair value based on an appraisal. Assets to be disposed of by sale are reported at the lower of the carrying
amount or fair value less estimated cost to sell.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



(s) Earnings per Share



Basic earnings per share is computed by dividing net income available to common stockholders
by the weighted-average number of shares of common stock outstanding for respective period.



The diluted earnings per share includes the effect of all dilutive potential common shares that were outstanding for respective periods.



(t) Goodwill and Present Value of Future Profit



Goodwill represents the excess of purchase price over fair value of the net assets of
acquired entity. Goodwill and present value of future profit are tested for impairment annually or when a certain triggering event requires such test.



Present value of future profit represents the present value of profits embedded in acquired long term (life) insurance contracts and is determined based
on the net present value of future cash flows expected to result from the contracts in force at the date of acquisition. Present value of future profit is amortized to match estimated gross profits from the policies acquired. The amortization is
recorded as other operating expenses.



When fair value of net
assets acquired exceeds their cost, the difference is called negative goodwill. All the acquired assets are then subject to pro rata reduction, except for financial assets other than investments accounted for by the equity method, deferred taxes,
assets to be disposed of by sale, prepaid assets relating to pension and other postretirement benefit plans, and any other current assets. If all eligible assets are reduced to zero and amount of negative goodwill still remains, the remaining
unallocated negative goodwill is recognized immediately as an extraordinary gain.



(u) Income Taxes



Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income for 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. Valuation allowances are established when there is uncertainty that such assets would be realized.



(v) New Accounting Standards



In November 2002, the FASB issued Interpretation No.45, Guarantors Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others (FIN 45). FIN 45 requires that upon issuance of certain types of guarantees, a guarantor must recognize a liability for the fair value of an obligation assumed under a guaranty. FIN 45 also requires
additional disclosures by a guarantor in its financial statements about the obligations associated with guarantees issued. The recognition provisions of FIN 45 were effective for any guarantees issued or modified after December 31, 2002. The
adoption of FIN 45 did not have a material effect on the Companys financial statements. The disclosure requirements were effective for financial statements for the periods ending after December 15, 2002. The Company adopted the disclosure
requirements effective on March 31, 2003. See note 16 for further information.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



In January 2003, the FASB issued Interpretation No.46, Consolidation of Variable Interest
Entities  an Interpretation of ARB No. 51 (FIN 46). FIN 46 clarifies when an enterprise should consolidate an entity that meets the definition of a Variable Interest Entity (VIE) if that enterprise has a variable
interest that will absorb a majority of the VIEs expected losses, receive a majority of the VIEs expected residual returns, or both. A VIE is a entity in which equity investors do not have the characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties, and may include many types of special purpose entities. In December 2003, FASB issued a
revision to Interpretation No.46 (FIN 46R). FIN 46R retains many of the basic concepts introduced in FIN 46, however it also introduces a new scope exception for a certain type of entities that qualified as business as
defined in FIN 46R, revises the method of calculating expected losses and residual returns for determination of a primary beneficiary and includes new guidance for assessing variable interests.The Company adopted FIN 46 for VIEs created
after January 31, 2003 for the year ended March 31, 2004. The Company adopted FIN 46R for all VIEs for the year ended March 31, 2005. The Company does not see the adoption of FIN 46R to have a material effect on its financial position or
results of operations. See note 3 for further information.



In
July 2003, the Accounting Standards Executive Committee (AcSEC) of the American Institute of Certified Public Accountants (AICPA) issued Statement of Position 03-1, Accounting and Reporting by Insurance Enterprises for
Certain Nontraditional Long-Duration Contracts and for Separate Accounts (SOP 03-1). AcSEC issued this SOP to address the need for interpretive guidance in three areas: separate account presentation and valuation; the
classification and valuation of certain long-duration contract liabilities; and the accounting recognition given sales inducements (bonus interest, bonus credits and persistency bonuses). The effect of adopting SOP 03-1 was a charge of ¥41
million ($383 thousand), net of tax of ¥26 million ($242 thousand), which was reported as a Cumulative effect of accounting change, net of tax for the year ended March 31, 2005. This charge reflects the effect of establishing
reserves for guaranteed minimum death benefit of the Companys universal-life type contracts. Upon adoption of SOP 03-1, on April 1, 2004, ¥162,715 million in separate account assets were reclassified to trading securities. Similarly, upon
adoption, ¥162,715 million in separate account liabilities were reclassified to policyholders contract deposits.



In November 2003, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue No. 03-01, The Meaning of
Other-Than-Temporary Impairment and its Application to Certain Investments (EITF 03-01) that certain quantitative and qualitative disclosures are required for equity and fixed maturity securities that are impaired at the balance
sheet date but for which an other-than-temporary impairment has not been recognized. The guidance requires companies to disclose the aggregate amount of unrealized losses and the related fair value of investments with unrealized losses for
securities that have been in an unrealized loss position for less than 12 months and separately for those that have been in an unrealized loss position for over 12 months, by investment category. In March 2004, the EITF also reached a consensus on
the additional accounting guidance for other-than-temporary impairments and its application to debt and equity investments. In September 2004, the FASB issued the FASB Staff Position (FSP) EITF Issue No. 03-1-1 that delays the effective date of the
measurement and recognition guidance of paragraphs 10 through 20 of EITF 03-01. The Company has adopted the disclosure requirements in the financial statements. See note 3 for further information.



In December 2003, the FASB revised SFAS No.132, Employers
Disclosures about Pensions and Other Postretirement Benefits to require additional disclosures related to pension plans and other postretirement benefit plans. While retaining the existing disclosure requirements for pensions and
postretirement benefits, additional disclosures are required related to pension plan assets, obligations, cash flows and net periodic benefit costs, beginning with fiscal years ending after December 15, 2003. Additional disclosures pertaining to
benefit payments are required for fiscal years ending after June 30, 2004. The Company has adopted the additional disclosure requirements in the financial statements. See note 12 for further information.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



In January 2003, the EITF released Issue No.03-02, Accounting for the Transfer to the Japanese
Government of the Substitutional Portion of Employee Pension Fund Liabilities (EITF 03-02). EITF 03-02 addresses financial accounting and reporting for a transfer to the Japanese government of a portion of a companys pension
plan which substitutes for the welfare pension plan administered by the Japanese government. The Company will adopt EITF 03-02 on transferring the substitutional portion of its pension plan in fiscal year ending March 31, 2006. See note 12 for
further information.



2. Business Combination



On April 2, 2002, Tokio Marine completed its business combination with Nichido Fire by way
of the creation of a holding company, Millea Holdings, by which each of the companies has become a wholly owned subsidiary of Millea Holdings in a statutory share exchange under Japanese law.



Nichido Fire, incorporated in Japan, is a property and casualty insurer which
writes marine, fire and casualty, automobile and allied lines of insurance principally covering risks located in Japan and hull and cargo risks for Japanese business. Under the holding company structure, Tokio Marine and Nichido Fire have been
integrating their respective products, information technology systems, property and casualty claims investigation functions and sales office functions to realize the potential synergies available from integration of their property and casualty
insurance businesses.



The combination was accounted for by the
purchase method in a manner that Tokio Marine had acquired Nichido Fire. The results of operations of Nichido Fire as well as those of Tokio Marine have been included in the financial statements of the Company for the years ended March 31, 2005,
2004 and 2003.



In connection with the share exchange, holders
of Tokio Marine shares received 1.00 share of Millea Holdings common stock for each 1,000 shares of Tokio Marine common stock they held, and holders of Nichido Fire shares received 0.69 of one share of Millea Holdings common stock for each 1,000
shares of Nichido Fire common stock they held. Upon the share exchange, Millea Holdings issued 307,356.26 common stock shares, representing approximately 17% of the voting interests of the holding company, to the stockholders of Nichido Fire.



The value of common stock issued to the stockholders of
Nichido Fire was ¥337,785 million, based on the share exchange ratio determined by the respective share values of Tokio Marine and Nichido Fire on September 28, 2001.



The allocation of the purchase price is summarized as follows:



|                                     |  |                   |          
|------------------------------------ |  | ----------------- | ---------
|                                     |  | (Yen in millions)
|Investments                          |  | ¥                 | 1,661,867
|Other assets                         |  |                   | 600,704  
|                                     |  |                   |          
|Assets acquired                      |  |                   | 2,262,571
|Policy liabilities and accruals      |  |                   | 709,655  
|Investment deposits by policyholders |  |                   | 635,015  
|Other liabilities                    |  |                   | 262,275  
|                                     |  |                   |          
|Liabilities assumed                  |  |                   | 1,606,945
|                                     |  |                   |          
|Net assets acquired                  |  |                   | 655,626  
|Total purchase price                 |  |                   | 337,785  
|                                     |  |                   |          
|Negative goodwill                    |  | ¥                 | 317,841  
|                                     |  |                   |          



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MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Unallocated negative goodwill arising from the combination was recognized as extraordinary gain in
the results of operations of the Company for the year ended March 31, 2003 as follows:



|                                                                              |  |                   |        
|----------------------------------------------------------------------------- |  | ----------------- | -------
|                                                                              |  | (Yen in millions)
|Income before extraordinary items and cumulative effect of accounting changes |  | ¥                 | 129,694
|Extraordinary items  unallocated negative goodwill                           |  |                   | 248,323
|                                                                              |  |                   |        
|Net income                                                                    |  | ¥                 | 378,017
|                                                                              |  |                   |        



On October 1, 2004,
the Company merged two of its wholly-owned non-life subsidiaries: Tokio Marine and Nichido Fire. The merger did not affect the consolidated financial statements.



The Company acquired approximately 31% of the issued shares of Nisshin Fire and Marine Insurance Company, Limited
(Nisshin Fire) for ¥19,575 million ($182,944 thousand) by February 2005. Nisshin Fire mainly provides non-life insurance products in Japan. The Company accounted for the acquisition of Nisshin Fire by the equity method for the year
ended March 31, 2005. The estimated fair value of net assets acquired was ¥34,032 million ($318,056 thousand). Unallocated negative goodwill arising from the transaction amounting to ¥14,458 million ($135,121 thousand) was recognized as
extraordinary gain in the results of operations of the Company for the year ended March 31, 2005.



3. Investments



The following
summarizes the Companys investments in fixed maturities held to maturity at March 31, 2005 and 2004:



|                                                         |  |                   |           |                        |        |                         |         |   |            |          
|-------------------------------------------------------- |  | ----------------- | --------- | ---------------------- | ------ | ----------------------- | ------- | - | ---------- | ---------
|                                                         |  | (Yen in millions)
|                                                         |  | Amortizedcost     |           | Gross unrealized gains |        | Gross unrealized losses |         |   | Fair value
|2005:                                                    |  |                   |           |                        |        |                         |         |   |            |          
|Bonds and notes:                                         |  |                   |           |                        |        |                         |         |   |            |          
|Other government and government agencies and authorities |  | ¥                 | 1,109,715 |                        | 24,506 |                         | (43,734 | ) |            | 1,090,487
|                                                         |  |                   |           |                        |        |                         |         |   |            |          
|Total fixed maturities held to maturity                  |  | ¥                 | 1,109,715 |                        | 24,506 |                         | (43,734 | ) |            | 1,090,487
|                                                         |  |                   |           |                        |        |                         |         |   |            |          
|2004:                                                    |  |                   |           |                        |        |                         |         |   |            |          
|Bonds and notes:                                         |  |                   |           |                        |        |                         |         |   |            |          
|Other government and government agencies and authorities |  | ¥                 | 1,095,608 |                        | 22,945 |                         | (44,810 | ) |            | 1,073,743
|Other corporate bonds                                    |  |                   | 14,253    |                        | 556    |                         |        |   |            | 14,809   
|                                                         |  |                   |           |                        |        |                         |         |   |            |          
|Total fixed maturities held to maturity                  |  | ¥                 | 1,109,861 |                        | 23,501 |                         | (44,810 | ) |            | 1,088,552
|                                                         |  |                   |           |                        |        |                         |         |   |            |          



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The following summarizes the Companys investments in fixed maturities available for sale at
March 31, 2005 and 2004:



|                                                         |  |                   |           |                        |        |                         |         |   |            |          
|-------------------------------------------------------- |  | ----------------- | --------- | ---------------------- | ------ | ----------------------- | ------- | - | ---------- | ---------
|                                                         |  | (Yen in millions)
|                                                         |  | Amortizedcost     |           | Gross unrealized gains |        | Gross unrealized losses |         |   | Fair value
|2005:                                                    |  |                   |           |                        |        |                         |         |   |            |          
|Bonds and notes:                                         |  |                   |           |                        |        |                         |         |   |            |          
|U.S. government and government agencies and authorities  |  | ¥                 | 322,554   |                        | 4,533  |                         | (11,033 | ) |            | 316,054  
|U.S. states, municipalities and political subdivisions   |  |                   | 207       |                        | 5      |                         |        |   |            | 212      
|Other government and government agencies and authorities |  |                   | 2,877,858 |                        | 36,917 |                         | (27,074 | ) |            | 2,887,701
|Other municipalities and political subdivisions          |  |                   | 117,977   |                        | 3,650  |                         | (36     | ) |            | 121,591  
|Public utilities                                         |  |                   | 73,711    |                        | 1,516  |                         | (138    | ) |            | 75,089   
|Convertibles and bonds with warrants attached            |  |                   | 1,720     |                        | 122    |                         | (1      | ) |            | 1,841    
|Mortgage-backed securities                               |  |                   | 48,610    |                        | 191    |                         | (474    | ) |            | 48,327   
|Other corporate bonds                                    |  |                   | 505,807   |                        | 8,489  |                         | (2,470  | ) |            | 511,826  
|                                                         |  |                   |           |                        |        |                         |         |   |            |          
|Total fixed maturities available for sale                |  | ¥                 | 3,948,444 |                        | 55,423 |                         | (41,226 | ) |            | 3,962,641
|                                                         |  |                   |           |                        |        |                         |         |   |            |          
|2004:                                                    |  |                   |           |                        |        |                         |         |   |            |          
|Bonds and notes:                                         |  |                   |           |                        |        |                         |         |   |            |          
|U.S. government and government agencies and authorities  |  | ¥                 | 113,778   |                        | 2,130  |                         | (734    | ) |            | 115,174  
|U.S. states, municipalities and political subdivisions   |  |                   | 1,055     |                        | 47     |                         |        |   |            | 1,102    
|Other government and government agencies and authorities |  |                   | 2,071,900 |                        | 32,290 |                         | (38,051 | ) |            | 2,066,139
|Other municipalities and political subdivisions          |  |                   | 171,977   |                        | 5,383  |                         | (247    | ) |            | 177,113  
|Public utilities                                         |  |                   | 60,172    |                        | 901    |                         | (281    | ) |            | 60,792   
|Convertibles and bonds with warrants attached            |  |                   | 42,929    |                        | 2,830  |                         | (75     | ) |            | 45,684   
|Mortgage-backed securities                               |  |                   | 22,893    |                        | 273    |                         | (850    | ) |            | 22,316   
|Other corporate bonds                                    |  |                   | 713,078   |                        | 10,932 |                         | (2,748  | ) |            | 721,262  
|                                                         |  |                   |           |                        |        |                         |         |   |            |          
|Total fixed maturities available for sale                |  | ¥                 | 3,197,782 |                        | 54,786 |                         | (42,986 | ) |            | 3,209,582
|                                                         |  |                   |           |                        |        |                         |         |   |            |          



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The amortized cost and fair value of fixed maturities by contractual maturity at March 31, 2005 are
as follows. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



|                                       |  |                   |           |            |          
|-------------------------------------- |  | ----------------- | --------- | ---------- | ---------
|                                       |  | (Yen in millions)
|                                       |  | Amortizedcost     |           | Fair value
|Fixed maturities held to maturity:     |  |                   |           |            |          
|Due in one year or less                |  | ¥                 | 2,493     |            | 2,511    
|Due after one year through five years  |  |                   | 15,952    |            | 16,824   
|Due after five years through ten years |  |                   | 95,981    |            | 97,125   
|Due after ten years                    |  |                   | 995,289   |            | 974,027  
|                                       |  |                   |           |            |          
|                                       |  | ¥                 | 1,109,715 |            | 1,090,487
|                                       |  |                   |           |            |          



|                                       |  |                   |           |            |          
|-------------------------------------- |  | ----------------- | --------- | ---------- | ---------
|                                       |  | (Yen in millions)
|                                       |  | Amortizedcost     |           | Fair value
|Fixed maturities available for sale:   |  |                   |           |            |          
|Due in one year or less                |  | ¥                 | 1,374,771 |            | 1,376,171
|Due after one year through five years  |  |                   | 976,599   |            | 985,288  
|Due after five years through ten years |  |                   | 690,846   |            | 698,774  
|Due after ten years                    |  |                   | 901,558   |            | 897,618  
|With no contractual maturity           |  |                   | 4,670     |            | 4,790    
|                                       |  |                   |           |            |          
|                                       |  | ¥                 | 3,948,444 |            | 3,962,641
|                                       |  |                   |           |            |          



Proceeds from sales of
fixed maturities available for sale prior to their scheduled maturity dates and gross gains and losses realized on those sales for the years ended March 31, 2005, 2004 and 2003 are as follows:



|                                     |  |                   |           |   |      |         |   |      |         |  
|------------------------------------ |  | ----------------- | --------- | - | ---- | ------- | - | ---- | ------- | -
|                                     |  | (Yen in millions) |          
|                                     |  | 2005              |           |   | 2004 |         |   | 2003 |        
|Fixed maturities available for sale: |  |                   |           |   |      |         |   |      |         |  
|Proceeds from sales                  |  | ¥                 | 1,640,958 |   |      | 870,571 |   |      | 542,909 |  
|                                     | 
|                                     |  | (Yen in millions) |          
|                                     |  | 2005              |           |   | 2004 |         |   | 2003 |        
|Fixed maturities available for sale: |  |                   |           |   |      |         |   |      |         |  
|Gross realized gains                 |  | ¥                 | 13,481    |   |      | 14,465  |   |      | 9,849   |  
|Gross realized losses                |  |                   | (9,213    | ) |      | (14,966 | ) |      | (5,046  | )
|                                     |  |                   |           |   |      |         |   |      |         |  
|Net realized gains(losses)           |  | ¥                 | 4,268     |   |      | (501    | ) |      | 4,803   |  
|                                     |  |                   |           |   |      |         |   |      |         |  



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



With respect to equity securities available for sale, proceeds from sales and gross gains and losses
realized on those sales for the years ended March 31, 2005, 2004 and 2003 are as follows:



|                                      |  |                   |         |   |      |         |   |      |         |  
|------------------------------------- |  | ----------------- | ------- | - | ---- | ------- | - | ---- | ------- | -
|                                      |  | (Yen in millions) |        
|                                      |  | 2005              |         |   | 2004 |         |   | 2003 |        
|Equity Securities available for sale: |  |                   |         |   |      |         |   |      |         |  
|Proceeds from sales                   |  | ¥                 | 205,191 |   |      | 228,913 |   |      | 421,892 |  
|                                      | 
|                                      |  | (Yen in millions) |        
|                                      |  | 2005              |         |   | 2004 |         |   | 2003 |        
|Equity Securities available for sale: |  |                   |         |   |      |         |   |      |         |  
|Gross realized gains                  |  | ¥                 | 74,830  |   |      | 35,438  |   |      | 110,562 |  
|Gross realized losses                 |  |                   | (788    | ) |      | (2,809  | ) |      | (29,918 | )
|                                      |  |                   |         |   |      |         |   |      |         |  
|Net realized gains                    |  | ¥                 | 74,042  |   |      | 32,629  |   |      | 80,644  |  
|                                      |  |                   |         |   |      |         |   |      |         |  



Gross unrealized gains
and losses of equity securities available for sale at March 31, 2005 and 2004 are as follows:



|                                      |  |                   |           |   |      |           |  
|------------------------------------- |  | ----------------- | --------- | - | ---- | --------- | -
|                                      |  | (Yen in millions) |          
|                                      |  | 2005              |           |   | 2004 |          
|Equity Securities available for sale: |  |                   |           |   |      |           |  
|Gross unrealized gains                |  | ¥                 | 1,858,707 |   |      | 1,775,342 |  
|Gross unrealized losses               |  |                   | (8,964    | ) |      | (10,425   | )
|                                      |  |                   |           |   |      |           |  
|Net unrealized gains                  |  | ¥                 | 1,849,743 |   |      | 1,764,917 |  
|                                      |  |                   |           |   |      |           |  



In the normal course
of business, the Company lends or collateralizes its investment securities to counterparties.



The carrying value of investment securities lent to counterparties through securities lending transactions, where they have the right to sell or repledge the securities are as follows:



|                    |  |                   |         |      |        
|------------------- |  | ----------------- | ------- | ---- | -------
|                    |  | (Yen in millions)
|                    |  | 2005              |         | 2004
|Fixed maturities    |  | ¥                 | 459,316 |      | 276,197
|Equities securities |  |                   | 6,166   |      | 19,043 
|                    |  |                   |         |      |        
|                    |  | ¥                 | 465,482 |      | 295,240
|                    |  |                   |         |      |        



At March 31, 2005 and
2004, the carrying values of investment securities pledged as collateral are as follows.



Fixed maturities carried at ¥56,913 million ($531,897 thousand) at March 31, 2005 and ¥45,632 million at March 31, 2004 were pledged as collateral primarily to reinsurance companies.



Fixed maturities carried at ¥189,190 million ($1,768,131 thousand) at
March 31, 2005 and ¥150,603 million at March 31, 2004 were used as collateral for the Bank of Japans instant gross settlement system for transactions of checking accounts and Japanese government bonds.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Fixed maturities carried at ¥98,732 million ($922,729 thousand) at March 31, 2005 and
¥101,640 million at March 31, 2004 were deposited primarily with United States and other foreign government authorities as required by law.



Fixed maturities carried at ¥14,199 million ($132,701 thousand) at March 31, 2005 and ¥10,319 million at March 31, 2004 were pledged as collateral
with the right to sell or repledge for credit support annex for derivative transactions entered into by the Company.



Fixed maturities carried at ¥1,174 million ($10,972 thousand) at March 31, 2005 and ¥4,952 million at March 31, 2004 were pledged as collateral
for letters of credit.



Fixed maturities carried at ¥2,106
million ($19,682 thousand) at March 31, 2005 and ¥1,889 million at March 31, 2004 were pledged as collateral for the Life Insurance Policyholders Protection Corporation of Japan, a corporation established to protect policyholders from losses in
case of bankruptcies of life insurance companies.



Equity
securities carried at ¥75,336 million ($704,075 thousand) at March 31, 2005, and ¥68,948 million at March 31, 2004 were deposited with securities brokers primarily as collateral for futures transactions entered into by the Company.



Equity securities carried at ¥5,824 million ($54,430
thousand) at March 31, 2005 and ¥6,783 million at March 31, 2004 were deposited with United States government authorities as required by law.



Equity securities carried at ¥694 million ($6,486 thousand) at March 31, 2005 were invested in a MBO scheme and pledged as collateral for its loans.



The Company accepts investing securities that can be sold or
pledged, mainly through securities financing transactions. The fair value of this collateral was approximately ¥85,112 million ($795,439 thousand) and ¥30,720 million at March 31, 2005 and 2004, respectively, of which no securities had been
either sold or repledged for the years ended March 31, 2005 and 2004.



The Company is involved with various types of variable interest entities in the ordinary course of business as discussed below. The Companys risk exposure to such variable interest entities is limited to the amount of its investments.



The Company invests in entities that invest in real estate
properties or start-up businesses. These entities generally take a form of a limited partnership, and the Company acts as one of the limited partners. In addition, the Company, in the ordinary course of reinsurance business, invests in catastrophe
bonds, which are issued by special purpose entities that are deemed as variable interest entities. These bonds are generally accounted for as securities available for sale in accordance with SFAS115, Accounting for Certain Investments in Debt
and Equity Securities. Further, the Company securitizes corporate loans and government bonds that it owns through securitization vehicles and underwrites the beneficial interests in those vehicles to its customers. The Company also enters into
swap transactions with those securitization vehicles.



The
Company adopted the provisions of FIN 46R for all variable interest entities that the Company became involved with after January 31, 2003. For the variable interest entities that the Company became involved with before February 1, 2003, the Company
adopted the provisions of FIN 46R on April 1, 2004. In connection with



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



this adoption, the Company recognized minority interests of ¥5,186 million ($48,467 thousand) in the balance sheet as of March 31, 2005 with respect to
the variable interest entities for which the Company is the primary beneficiary. For the variable interest entities the Company was involved before February 1, 2003 to which the Company was deemed as the primary beneficiary, the Company did not
consolidate these entities but recorded its interests as investments in the consolidated financial statements for the fiscal 2004. The Companys investments in these variable interest entities amounted to ¥23,476 million at March 31, 2004.



The real estate investment partnerships for which the Company
is the primary beneficiary borrow non-recourse loans from financial institutions. Assets of these entities amounting to ¥63,528 million ($593,720 thousand) and ¥14,491 million at March 31, 2005 and 2004, respectively, are pledged as
collateral for those non-recourse loans. The lenders of non-recourse loans have no recourse to other assets of the Company.



With respect to other real estate investment partnerships, investment partnerships that invest in start-up businesses, the issuer of the catastrophe bonds
and the securitization vehicles, the Company owns significant variable interests in these entities although it is not considered to be the primary beneficiary. The Companys risk exposure to these entities were limited to the carrying amounts
of its interests. At March 31, 2005, the Companys maximum exposure to these variable interest entities amounted to ¥53,266 million ($497,813 thousand).



Mortgage loans on real estate are primarily mortgage loans on commercial buildings.



Accumulated depreciation of investment real estate amounted to ¥80,117
million ($748,757 thousand) and ¥85,000 million at March 31, 2005 and 2004, respectively.



Depreciation of investment real estate included in net investment income amounted to ¥5,202 million ($48,617 thousand), ¥3,880 million and ¥3,650 million for the years ended March 31, 2005, 2004 and 2003,
respectively.



Other long-term investments include:



|                                         |  |                   |         |      |        
|---------------------------------------- |  | ----------------- | ------- | ---- | -------
|                                         |  | (Yen in millions)
|                                         |  | 2005              |         | 2004
|Mortgage loans on vessels and facilities |  | ¥                 | 10,979  |      | 20,356 
|Collateral and bank-guaranteed loans     |  |                   | 11,250  |      | 18,542 
|Unsecured loans                          |  |                   | 359,696 |      | 357,504
|Money trust                              |  |                   | 27,262  |      | 22,797 
|                                         |  |                   |         |      |        
|                                         |  | ¥                 | 409,187 |      | 419,199
|                                         |  |                   |         |      |        



Mortgage loans on
vessels and facilities are generally joint loans in which other financial institutions participate. The Company participates in the hull insurance on these vessels.



Collateral loans are made to commercial enterprises and are secured principally by listed stocks and/or bonds of Japanese
corporations. Certain of these loans are made jointly with other insurance companies.



Bank-guaranteed loans are made to commercial enterprises.



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MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Unsecured loans within authorized limits are made on a selective basis to corporate borrowers. These
loans are generally term loans, which had contractual maturities ranging from 2005 through 2027 at March 31, 2005. Interest rates of these loans varied from 0.03% to 7.00% at March 31, 2005, and from 0.05% to 10.00% at March 31, 2004.



Money trust is a type of portfolio investment in which trust
banks are entrusted with investments in securities or other financial instruments.



Short-term investments consist primarily of call loans and other investments maturing within one year. Short-term investments amounting to ¥524 million ($4,897 thousand) at March 31, 2005 and ¥921 million at
March 31, 2004 were deposited with the United States government authorities and other foreign government authorities as required by law.



Details of net investment income were as follows:

|
|

|                              |  |                   |         |      |         |      |        
|----------------------------- |  | ----------------- | ------- | ---- | ------- | ---- | -------
|                              |  | (Yen in millions)
|                              |  | 2005              |         | 2004 |         | 2003
|Fixed maturities              |  | ¥                 | 73,677  |      | 73,683  |      | 65,762 
|Equity securities             |  |                   | 47,216  |      | 36,692  |      | 32,785 
|Mortgage loans on real estate |  |                   | 2,414   |      | 3,286   |      | 3,715  
|Investment real estate        |  |                   | 16,592  |      | 12,501  |      | 12,817 
|Policy loans                  |  |                   | 1,396   |      | 1,280   |      | 1,156  
|Other long-term investments   |  |                   | 6,585   |      | 9,339   |      | 11,475 
|Short-term investments        |  |                   | 4,415   |      | 1,536   |      | 2,687  
|Other                         |  |                   | 1,423   |      | 1,850   |      | 1,715  
|                              |  |                   |         |      |         |      |        
|Gross investment income       |  |                   | 153,718 |      | 140,167 |      | 132,112
|                              |  |                   |        
|Less investment expenses      |  |                   | 20,521  |      | 13,994  |      | 23,801 
|                              |  |                   |         |      |         |      |        
|Net investment income         |  | ¥                 | 133,197 |      | 126,173 |      | 108,311
|                              |  |                   |         |      |         |      |        



At March 31, 2005 and
2004, accrued investment income, included in other assets, amounted to ¥18,847 million ($176,140 thousand) and ¥21,225 million, respectively.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Net realized and change in unrealized gains or losses on fixed maturities, equity securities and
other investments for the years ended March 31, 2005, 2004 and 2003 were as follows:



|                     |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|-------------------- |  | ----------------- | -------- | - | ----------------- | --------- | - | ----------------- | ------ | - | ------------------ | -------- | -
|                     |  | (Yen in millions) |         
|                     |  | Fixedmaturities   |          |   | Equity securities |           |   | Other investments |        |   | Net gains (losses) |         
|2005:                |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|Realized             |  | ¥                 | 3,432    |   |                   | 64,672    |   |                   | 18,646 |   |                    | 86,750   |  
|Change in unrealized |  |                   | 2,397    |   |                   | 84,826    |   |                   | 213    |   |                    | 87,436   |  
|                     |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|Total                |  | ¥                 | 5,829    |   |                   | 149,498   |   |                   | 18,859 |   |                    | 174,186  |  
|                     |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|2004:                |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|Realized             |  | ¥                 | (8,399   | ) |                   | 4,645     |   |                   | (101   | ) |                    | (3,855   | )
|Change in unrealized |  |                   | (184,264 | ) |                   | 1,073,508 |   |                   | 412    |   |                    | 889,656  |  
|                     |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|Total                |  | ¥                 | (192,663 | ) |                   | 1,078,153 |   |                   | 311    |   |                    | 885,801  |  
|                     |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|2003:                |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|Realized             |  | ¥                 | 11,553   |   |                   | (37,957   | ) |                   | (3,471 | ) |                    | (29,875  | )
|Change in unrealized |  |                   | 120,915  |   |                   | (635,620  | ) |                   | (1,026 | ) |                    | (515,731 | )
|                     |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  
|Total                |  | ¥                 | 132,468  |   |                   | (673,577  | ) |                   | (4,497 | ) |                    | (545,606 | )
|                     |  |                   |          |   |                   |           |   |                   |        |   |                    |          |  



F-28



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The following table shows gross unrealized losses and fair value of investments - other than
investments in related parties with unrealized losses that are not deemed to be other-than-temporary impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at
March 31, 2005 and 2004:



|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|-------------------------------------------------------- |  | ------------------- | --------- | ----------------- | ------------------- | - | ---------- | --------- | ----------------- | ------- | - | ---------- | --------- | ----------------- | ------- | -
|                                                         |  | (Yen in millions)   |          
|                                                         |  | Less than 12 months |           |                   | More than 12 months |   |            | Total     |                  
|                                                         |  | Fair value          |           | Unrealized losses |                     |   | Fair value |           | Unrealized losses |         |   | Fair value |           | Unrealized losses |        
|2005:                                                    |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Securities held to maturity:                             |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Fixed maturities:                                        |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Other government and government agencies and authorities |  | ¥                   | 25,731    |                   | (88                 | ) |            | 490,413   |                   | (43,646 | ) |            | 516,144   |                   | (43,734 | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Total fixed maturities held to maturity                  |  |                     | 25,731    |                   | (88                 | ) |            | 490,413   |                   | (43,646 | ) |            | 516,144   |                   | (43,734 | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Securities available for sale:                           |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Fixed maturities:                                        |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|U.S. government and government agencies and authorities  |  |                     | 172,541   |                   | (6,865              | ) |            | 38,184    |                   | (4,168  | ) |            | 210,725   |                   | (11,033 | )
|Other government and government agencies and authorities |  |                     | 1,081,135 |                   | (311                | ) |            | 363,368   |                   | (26,764 | ) |            | 1,444,503 |                   | (27,075 | )
|Other                                                    |  |                     | 113,647   |                   | (1,266              | ) |            | 73,362    |                   | (1,852  | ) |            | 187,009   |                   | (3,118  | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Total fixed maturities available for sale                |  |                     | 1,367,323 |                   | (8,442              | ) |            | 474,914   |                   | (32,784 | ) |            | 1,842,237 |                   | (41,226 | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Equity securities                                        |  |                     | 54,310    |                   | (4,924              | ) |            | 36,194    |                   | (4,040  | ) |            | 90,504    |                   | (8,964  | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Total securities available for sale                      |  |                     | 1,421,633 |                   | (13,366             | ) |            | 511,108   |                   | (36,824 | ) |            | 1,932,741 |                   | (50,190 | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Total                                                    |  | ¥                   | 1,447,364 |                   | (13,454             | ) |            | 1,001,521 |                   | (80,470 | ) |            | 2,448,885 |                   | (93,924 | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|2004:                                                    |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Fixed maturities (*)                                     |  | ¥                   | 1,619,245 |                   | (85,152             | ) |            | 189,632   |                   | (2,644  | ) |            | 1,808,877 |                   | (87,796 | )
|Equity securities                                        |  |                     | 101,521   |                   | (8,682              | ) |            | 16,461    |                   | (1,743  | ) |            | 117,982   |                   | (10,425 | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  
|Total                                                    |  | ¥                   | 1,720,766 |                   | (93,834             | ) |            | 206,093   |                   | (4,387  | ) |            | 1,926,859 |                   | (98,221 | )
|                                                         |  |                     |           |                   |                     |   |            |           |                   |         |   |            |           |                   |         |  

---

|(*) | Primarily relates to the Other government and governmental agencies and authorities category.
|--- | -----------------------------------------------------------------------------------------------



Unrealized losses of fixed maturities above were mainly caused by changes in interest rate. The Company has the positive
ability and intent to hold these investments until a market price recovery. Therefore the Company doesnt consider these securities to be other than temporary impaired.



Determinations of whether a decline is other than temporary often involve estimating the outcome of future events.
Management judgment is required in determining whether factors exist that indicate that an impairment loss should be recognized at any balance sheet date. These judgments are based on subjective as well as objective factors.



F-29



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Among the factors that management considers when determining whether declines in the value of equity
securities below their costs are other than temporary is the likelihood that those declines will be reversed. For marketable equity securities, management evaluates each of the securities and considers a variety of facts, including (a) whether the
value of the securities continued to be below cost for more than 12 months, (b) whether the value of the securities continued to be more than 20% below cost during any six-month period and (c) whether there has been a decline in value to below 30%
of cost as measured at the end of any fiscal year.



For
non-marketable equity securities and fixed maturity securities, management considers whether sharp declines in value over a short period of time reflect fundamental valuation issues such as credit deterioration of the issuer.



After considering these and other factors, we write down individual
securities to fair value when management determines that a decline in fair value below the cost of those securities is other than temporary.



The Company recognized impairment losses on investment securities - other than investments in related parties in the amount of ¥12,226 million
($114,262 thousand), ¥33,930 million and ¥119,108 million for the years ended March 31, 2005, 2004 and 2003, respectively.



Trading gains for the years ended March 31, 2005 and 2004 that relate to trading securities still held at March 31, 2005 and 2004 amounted to ¥879
million ($8,215 thousand) and ¥837 million, respectively.



The Company recognized impairment losses on certain of its investment real estate in the amount of ¥3,540 million ($33,084 thousand), ¥3,159 million and ¥5,034 million for the years ended March 31, 2005, 2004 and 2003,
respectively. Considering the state of Japanese real estate market, tests for impairment were performed as of March 31, 2005 for any significant assets where the Company observed possible decline in the fair value below the carrying amount of the
asset. For those assets, the Company recognized impairment losses for the amount by which the fair value fell bellow the carrying amount. The fair value is primarily estimated based on market prices or appraisals if market prices are not available.
The impairment losses are included in realized gains (losses) on investments for the years ended March 31, 2005, 2004 and 2003 in the property and casualty segment.



On April 1, 2000, the Company transferred certain of its fixed maturities available for sale to the held to maturity
category. This transfer was based on the Companys review of investment policies to match the duration of securities portfolio with certain life insurance liabilities with relatively long duration. The related unrealized gains on these
securities at the time of transfer in the amount of ¥9,088 million are being amortized from accumulated other comprehensive income into investment income over the remaining terms of the securities. Unamortized amounts of those unrealized gains
were ¥6,799 million ($63,542 thousand) and ¥7,261 million at March 31, 2005 and 2004, respectively.



Securities available for sale are carried in the consolidated financial statements at fair value. Changes in unrealized gains and losses, net of taxes, on
securities available for sale shown above are included in other comprehensive income.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The recorded investments in impaired loans and related specific valuation allowances, which were
established for all impaired loans, at March 31, 2005 and 2004 were as follows:



|                                     |  |                           |        |                                |       
|------------------------------------ |  | ------------------------- | ------ | ------------------------------ | ------
|                                     |  | (Yen in millions)        
|                                     |  | Total recorded investment |        | Valuation allowances -specific
|2005:                                |  |                           |        |                                |       
|Mortgage loans on real estate        |  | ¥                         | 10,476 |                                | 4,268 
|Unsecured loans                      |  |                           | 6,936  |                                | 2,725 
|                                     |  |                           |        |                                |       
|                                     |  | ¥                         | 17,412 |                                | 6,993 
|                                     |  |                           |        |                                |       
|2004:                                |  |                           |        |                                |       
|Mortgage loans on real estate        |  | ¥                         | 13,408 |                                | 6,110 
|Collateral and bank-guaranteed loans |  |                           | 7      |                                | 7     
|Unsecured loans                      |  |                           | 17,808 |                                | 9,807 
|                                     |  |                           |        |                                |       
|                                     |  | ¥                         | 31,223 |                                | 15,924
|                                     |  |                           |        |                                |       



In addition, based on
the Companys past experience that it is probable that a certain percentage of its loans not covered by specific valuation allowances are impaired at the balance sheet date even in the absence of specific loss information, the Company
established unallocated valuation allowances in order to incorporate loss contingencies underlying the loan portfolio comprehensively. In determining the amount of required allowances, the Company classifies loans into three categories based on
their current credit quality, and applies historical loan loss ratios for these respective categories. The outstanding unallocated valuation allowances were ¥3,205 million ($29,953 thousand) and ¥3,808 million at March 31, 2005 and 2004,
respectively.



The activity in valuation allowances for the
years ended March 31, 2005, 2004 and 2003 is as follows:



|                                                       |  |                   |        |   |      |        |   |      |        |  
|------------------------------------------------------ |  | ----------------- | ------ | - | ---- | ------ | - | ---- | ------ | -
|                                                       |  | (Yen in millions) |       
|                                                       |  | 2005              |        |   | 2004 |        |   | 2003 |       
|Balance at beginning of year                           |  | ¥                 | 19,732 |   |      | 36,835 |   |      | 32,745 |  
|Adjustment in connection with the acquisition (note 2) |  |                   |       |   |      |       |   |      | 9,129  |  
|Charges to income                                      |  |                   | (3,737 | ) |      | (9,415 | ) |      | 1,091  |  
|Principal charge-offs                                  |  |                   | (5,797 | ) |      | (7,688 | ) |      | (6,130 | )
|                                                       |  |                   |        |   |      |        |   |      |        |  
|Balance at end of year                                 |  | ¥                 | 10,198 |   |      | 19,732 |   |      | 36,835 |  
|                                                       |  |                   |        |   |      |        |   |      |        |  



During the years ended
March 31, 2005, 2004 and 2003, the average recorded investment in impaired loans amounted to ¥24,318 million ($227,271 thousand), ¥48,610 million and ¥63,674 million, respectively, and interest income recognized and received in cash on
those loans amounted to ¥277 million ($2,589 thousand), ¥873 million and ¥1,309 million, respectively. At March 31, 2005 and 2004, the amount of loans that were non-income producing during the preceding twelve months amounted to
¥2,016 million ($18,841 thousand) and ¥3,251 million, respectively.



The Company manages its investments to limit credit risks by diversifying its portfolio among various investment types and industry sectors. The Company monitors creditworthiness of counterparties to all financial
instruments by using controls that include credit approvals, limits and other monitory procedures. Collateral often includes pledges of assets, such as stocks and other assets and guarantees.



F-31



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The Companys investments in Toyota Motor Corporation and its affiliates amounting to
¥401,203 million ($3,749,561 thousand) and ¥443,399 million at March 31, 2005 and 2004, respectively, exceeded 10% of stockholders equity.



4. Reinsurance



In the ordinary course of business, the Company cedes risks to other insurance companies in order to better diversify its risks and limit potential losses arising from large catastrophic loss risks, although it does
not relieve the Company of its obligations as direct insurer of the risks reinsured.



Reinsurance contracts involve reinsurers sharing a proportional part of the original premiums and losses under the underlying insurance contracts being reinsured. The Company generally arranges this type of
reinsurance in the form of a reinsurance treaty arrangement, where the Company is automatically authorized to cede any business under a set of terms and conditions previously agreed upon without obtaining separate prior consent to each cession from
the reinsurers. The Companys proportional treaty reinsurance arrangements include:



 CALI Reinsurance



The Company writes compulsory automobile liability insurance (CALI) in the Japanese market, which is required for registration and periodic inspections of automobiles in Japan. Licensed non-life insurance
companies in Japan are required to offer CALI to customers, and all of the premiums written for and losses arising from these policies are required by statute to be reinsured with the CALI Reinsurance Pool, itself a Japanese government-controlled
entity in which insurers offering CALI policies participate. This mandatory pooling arrangement distributes the risk of loss equitably among participating insurers.



Our proportionate share of assumed losses is assessed by the CALI Reinsurance Pool as they are paid by this
entity. We establish loss reserves for losses assumed under the program based on actual losses reported to us by the CALI Reinsurance Pool and our estimate of incurred but not reported losses under the program.



The following table shows the Companys reinsurance
premiums assumed and reinsurance premiums ceded relating to CALI reinsurance for the years ended March 31, 2005, 2004 and 2003:



|                             |  |                   |         |      |         |      |        
|---------------------------- |  | ----------------- | ------- | ---- | ------- | ---- | -------
|                             |  | (Yen in millions)
|                             |  | 2005              |         | 2004 |         | 2003
|Reinsurance premiums assumed |  | ¥                 | 261,545 |      | 264,757 |      | 212,420
|Reinsurance premiums ceded   |  | ¥                 | 235,653 |      | 242,241 |      | 240,178



The
following table shows the Companys unearned premiums assumed and loss reserve assumed relating to CALI reinsurance as of March 31, 2005 and 2004:



|                          |  |                   |         |      |        
|------------------------- |  | ----------------- | ------- | ---- | -------
|                          |  | (Yen in millions)
|                          |  | 2005              |         | 2004
|Unearned premiums assumed |  | ¥                 | 273,418 |      | 260,183
|Loss reserve assumed      |  | ¥                 | 268,934 |      | 210,871



F-32



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



 Earthquake Reinsurance



The Company writes earthquake insurance in the Japanese market and reinsures a portion of these risks
pursuant to the Japanese Law Concerning Earthquake Insurance, which contemplates a partial reinsurance arrangement for earthquake insurance policies for dwellings and their contents.



Accordingly, when the Company writes an eligible policy, the Company generally cedes the entire risk and the
associated premiums to Japan Earthquake Reinsurance Company Limited (JER), a private company owned by major Japanese non-life insurance companies. JER then retrocedes a portion of the risk assumed to participating insurers in a
retrocession contract. Under this retrocession contract, a participating insurer, such as the Company, does not receive a retrocession premium in cash, but rather the insurer receives a contractual right to the funds held by JER, which represents
cumulative retrocession premiums plus accumulated interest. The Company treats this contractual right to the funds held by JER as a deposit asset.



Our proportionate share of assumed losses is assessed by JER as they are paid by JER, and the amount of assessed losses is deducted by JER
from our deposit balance held by JER. We establish loss reserves for losses assumed under the program based on actual losses reported to us by JER and our estimate of incurred but not reported losses under the program.



The following table shows the Companys reinsurance
premiums assumed and reinsurance premiums ceded relating to JER for the years ended March 31, 2005, 2004 and 2003:



|                             |  |                   |        |      |        |      |       
|---------------------------- |  | ----------------- | ------ | ---- | ------ | ---- | ------
|                             |  | (Yen in millions)
|                             |  | 2005              |        | 2004 |        | 2003
|Reinsurance premiums assumed |  | ¥                 | 5,284  |      | 4,930  |      | 4,550 
|Reinsurance premiums ceded   |  | ¥                 | 29,828 |      | 27,593 |      | 24,777



The
following table shows the Companys unearned premiums assumed and loss reserve assumed relating to JER as of March 31, 2005 and 2004:



|                          |  |                   |   |      |  
|------------------------- |  | ----------------- | - | ---- | -
|                          |  | (Yen in millions)
|                          |  | 2005              |   | 2004
|Unearned premiums assumed |  | ¥                 |  |      | 
|Loss reserve assumed      |  | ¥                 |  |      | 



During
each of the years ended March 31, 2005 and 2004, no significant earthquake losses were outstanding since no significant earthquake losses were charged to the Company through JER. Accordingly, the Company did not have any material JER earthquake loss
reserves as of March 31, 2005 and 2004.



The Company also cedes
facultative reinsurance which, unlike a treaty reinsurance arrangement, generally requires separate prior consent from each reinsurer for each risk ceded. The Companys facultative reinsurance arrangements include proportional and
excess-of-loss reinsurance, and the Company generally cedes facultative reinsurance if and when it determines that underwriting capacity provided by treaty reinsurance is not sufficient to address its desired risk profile.



With respect to treaty and facultative reinsurance policies, the Company
generally cedes risks under prospective reinsurance contracts, which are accounted for in accordance with SFAS No. 113, Accounting and Reporting for Reinsurance of Short-Duration and Long-Duration Contracts as short-duration reinsurance
contracts. The Company records amounts paid for prospective reinsurance as prepaid reinsurance premiums and



F-33



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



amortizes the premiums into expense over the contract periods in proportion to the amount of reinsurance protection provided. The asset captioned
reinsurance recoverable on losses represents the Companys estimate of amounts recoverable from reinsurers on reported and unreported losses and claims and loss adjustment expenses. In accordance with SFAS 113, the Company estimates
reinsurance recoverable amounts in a manner consistent with losses and claims and loss adjustment expense associated with the underlying insurance. In accordance with SFAS No. 60, Accounting and Reporting by Insurance Enterprises, the
Company recognizes its assumption of mandatory retrocession of CALI policies and retrocession from JER as premium revenue, while the Company treats the contractual rights to the funds withheld by JER as a deposit asset. Assumed retrocession losses
are estimated and recorded on an incurred basis in accordance with SFAS 60.



The Company is exposed to contingent liability with respect to reinsurance ceded which would become an actual liability to the extent that any reinsurers failed to meet its obligations to the Company. Accordingly, the
Company regularly performs credit risk reviews on our reinsurers and counterparties. No material amounts were considered uncollectible and no material provisions were made for this contingency as of March 31, 2005, 2004 and 2003.



The effect of ceded reinsurance on the consolidated statements of income for
the years ended March 31, 2005, 2004 and 2003 is as follows:



|                                  |  |                   |           |   |      |           |   |      |           |  
|--------------------------------- |  | ----------------- | --------- | - | ---- | --------- | - | ---- | --------- | -
|                                  |  | (Yen in millions) |          
|                                  |  | 2005              |           |   | 2004 |           |   | 2003 |          
|Property and casualty:            |  |                   |           |   |      |           |   |      |           |  
|Premiums written:                 |  |                   |           |   |      |           |   |      |           |  
|Direct                            |  | ¥                 | 1,965,550 |   |      | 1,978,555 |   |      | 1,987,463 |  
|Assumed                           |  |                   | 353,571   |   |      | 374,219   |   |      | 325,347   |  
|Ceded                             |  |                   | (393,714  | ) |      | (407,528  | ) |      | (414,253  | )
|                                  |  |                   |           |   |      |           |   |      |           |  
|Net premiums written              |  | ¥                 | 1,925,407 |   |      | 1,945,246 |   |      | 1,898,557 |  
|                                  |  |                   |           |   |      |           |   |      |           |  
|Premiums earned:                  |  |                   |           |   |      |           |   |      |           |  
|Direct                            |  | ¥                 | 1,953,162 |   |      | 1,952,151 |   |      | 1,952,534 |  
|Assumed                           |  |                   | 352,067   |   |      | 297,597   |   |      | 190,135   |  
|Ceded                             |  |                   | (409,579  | ) |      | (389,545  | ) |      | (381,701  | )
|                                  |  |                   |           |   |      |           |   |      |           |  
|Premiums earned                   |  | ¥                 | 1,895,650 |   |      | 1,860,203 |   |      | 1,760,968 |  
|                                  |  |                   |           |   |      |           |   |      |           |  
|Losses, claims incurred:          |  |                   |           |   |      |           |   |      |           |  
|Direct                            |  | ¥                 | 1,281,003 |   |      | 1,100,584 |   |      | 1,064,457 |  
|Assumed                           |  |                   | 321,211   |   |      | 242,720   |   |      | 174,561   |  
|Ceded                             |  |                   | (339,781  | ) |      | (294,786  | ) |      | (285,337  | )
|                                  |  |                   |           |   |      |           |   |      |           |  
|Losses, claims incurred           |  | ¥                 | 1,262,433 |   |      | 1,048,518 |   |      | 953,681   |  
|                                  |  |                   |           |   |      |           |   |      |           |  
|Life:                             |  |                   |           |   |      |           |   |      |           |  
|Premiums earned:                  |  |                   |           |   |      |           |   |      |           |  
|Direct                            |  | ¥                 | 254,397   |   |      | 242,472   |   |      | 256,852   |  
|Assumed                           |  |                   |          |   |      |          |   |      | 0         |  
|Ceded                             |  |                   | (1,028    | ) |      | (919      | ) |      | (875      | )
|                                  |  |                   |           |   |      |           |   |      |           |  
|Premiums earned                   |  | ¥                 | 253,369   |   |      | 241,553   |   |      | 255,977   |  
|                                  |  |                   |           |   |      |           |   |      |           |  
|Prepaid reinsurance premiums      |  | ¥                 | 302,886   |   |      | 318,432   |   |      | 300,847   |  
|Reinsurance recoverable on losses |  | ¥                 | 520,733   |   |      | 447,111   |   |      | 450,345   |  



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MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



5. Deferred Policy Acquisition Costs



The following sets forth the policy acquisition costs deferred for amortization against future income and the related amortization charged
to income for property and casualty and life insurance operations:



|                                                       |  |                   |         |   |      |         |   |      |         |  
|------------------------------------------------------ |  | ----------------- | ------- | - | ---- | ------- | - | ---- | ------- | -
|                                                       |  | (Yen in millions) |        
|                                                       |  | 2005              |         |   | 2004 |         |   | 2003 |        
|Property and casualty:                                 |  |                   |         |   |      |         |   |      |         |  
|Deferred at beginning of year                          |  | ¥                 | 328,411 |   |      | 323,865 |   |      | 221,914 |  
|Adjustment in connection with the acquisition (note 2) |  |                   |        |   |      |        |   |      | 99,663  |  
|Paid during year:                                      |  |                   | 524,499 |   |      | 543,373 |   |      | 546,766 |  
|                                                       |  |                   |         |   |      |         |   |      |         |  
|                                                       |  |                   | 852,910 |   |      | 867,238 |   |      | 868,343 |  
|Foreign currency translation adjustments               |  |                   | (21     | ) |      | (234    | ) |      | (331    | )
|Deferred at end of year                                |  |                   | 317,174 |   |      | 328,411 |   |      | 323,865 |  
|                                                       |  |                   |         |   |      |         |   |      |         |  
|Policy acquisition costs                               |  |                   | 535,715 |   |      | 538,593 |   |      | 544,147 |  
|                                                       |  |                   |         |   |      |         |   |      |         |  
|Life:                                                  |  |                   |         |   |      |         |   |      |         |  
|Deferred at beginning of year                          |  |                   | 124,992 |   |      | 98,615  |   |      | 79,809  |  
|Paid during year                                       |  |                   | 54,737  |   |      | 46,762  |   |      | 45,717  |  
|                                                       |  |                   |         |   |      |         |   |      |         |  
|                                                       |  |                   | 179,729 |   |      | 145,377 |   |      | 125,526 |  
|Deferred at end of year                                |  |                   | 150,900 |   |      | 124,992 |   |      | 98,615  |  
|                                                       |  |                   |         |   |      |         |   |      |         |  
|Policy acquisition costs                               |  |                   | 28,829  |   |      | 20,385  |   |      | 26,911  |  
|                                                       |  |                   |         |   |      |         |   |      |         |  
|Total policy acquisition costs                         |  | ¥                 | 564,544 |   |      | 558,978 |   |      | 571,058 |  
|                                                       |  |                   |         |   |      |         |   |      |         |  



6. Property and Equipment



A summary of property and equipment is as follows:



|                              |  |                   |         |      |        
|----------------------------- |  | ----------------- | ------- | ---- | -------
|                              |  | (Yen in millions)
|                              |  | 2005              |         | 2004
|Land                          |  | ¥                 | 85,823  |      | 83,960 
|Buildings                     |  |                   | 239,196 |      | 222,299
|Furniture and equipment       |  |                   | 60,176  |      | 63,746 
|Construction in progress      |  |                   | 39      |      | 5,925  
|                              |  |                   |         |      |        
|Total at cost                 |  |                   | 385,234 |      | 375,930
|Less accumulated depreciation |  |                   | 187,701 |      | 182,862
|                              |  |                   |         |      |        
|Net property and equipment    |  | ¥                 | 197,533 |      | 193,068
|                              |  |                   |         |      |        



Depreciation of
property and equipment included in other operating expenses amounted to ¥16,079 million ($150,271 thousand), ¥15,236 million and ¥11,426 million for the years ended March 31, 2005, 2004 and 2003, respectively.



7. Goodwill and Present Value of Future Profit



On February 2, 2004, the Company acquired Skandia Life Insurance Co. (Japan) Limited
(Skandia Japan) based in Tokyo, Japan, for a cost of ¥20,339 million which was paid in cash. Skandia Japan was renamed Tokio Marine & Nichido Financial Life Insurance Co., Ltd. (Financial Life) at April 2, 2004.
Financial Lifes main product is variable annuity.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Goodwill of ¥9,934 million and present value of future profit (PVFP) of ¥14,744
million was recognized on the balance sheet as of March 31, 2004. The Company tests goodwill and reviews PVFP for impairment. As a result, no impairments were recognized for the year ended March 31, 2005.



The balance of and changes in PVFP as of and for the years ended March 31,
2005 and 2004, are as follows:



|                             |  |                   |        |   |      |   |       
|---------------------------- |  | ----------------- | ------ | - | ---- | - | ------
|                             |  | (Yen in millions)
|                             |  | 2005              |        |   | 2004
|Balance at beginning of year |  | ¥                 | 14,744 |   |      | ¥ |      
|Acquisition                  |  |                   |       |   |      |   | 14,744
|Amortization                 |  |                   | (2,110 | ) |      |   |      
|Interest                     |  |                   | 325    |   |      |   |      
|                             |  |                   |        |   |      |   |       
|Balance at end of year       |  | ¥                 | 12,959 |   |      | ¥ | 14,744
|                             |  |                   |        |   |      |   |       



The interest accrual
rates, which vary by products, range from 1.86% to 2.54%.



Amortization of PVFP and interest accrued on the unamortized PVFP are included in other operating expenses.



The following table shows the estimated future amortization of the PVFP balance during each of the next five years:



|           |  |                   |       
|---------- |  | ----------------- | ------
|           |  | (Yen in millions)
|2006       |  | ¥                 | 1,166 
|2007       |  |                   | 1,045 
|2008       |  |                   | 1,166 
|2009       |  |                   | 1,145 
|2010       |  |                   | 1,092 
|Thereafter |  |                   | 7,345 
|           |  |                   |       
|Total PVFP |  | ¥                 | 12,959
|           |  |                   |       



The Goodwill and PVFP
were derived from life insurance business.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



8. Liability for Unpaid Losses and Claims and Loss Adjustment Expenses



The table below is a reconciliation of beginning and ending property and casualty insurance
balances for unpaid losses and claims and loss adjustment expenses for the years ended March 31, 2005, 2004 and 2003:



|                                                       |  |                   |           |      |           |   |      |           |  
|------------------------------------------------------ |  | ----------------- | --------- | ---- | --------- | - | ---- | --------- | -
|                                                       |  | (Yen in millions) |          
|                                                       |  | 2005              |           | 2004 |           |   | 2003 |          
|Balance at beginning of year                           |  | ¥                 | 1,221,146 |      | 1,131,884 |   |      | 875,463   |  
|Less reinsurance recoverables                          |  |                   | 342,217   |      | 342,132   |   |      | 247,861   |  
|                                                       |  |                   |           |      |           |   |      |           |  
|Net balance at beginning of year                       |  |                   | 878,929   |      | 789,752   |   |      | 627,602   |  
|                                                       |  |                   |           |      |           |   |      |           |  
|Adjustment in connection with the acquisition (note 2) |  |                   |          |      |          |   |      | 141,940   |  
|Incurred related to:                                   |  |                   |           |      |           |   |      |           |  
|Current year                                           |  |                   | 1,326,179 |      | 1,116,582 |   |      | 1,029,655 |  
|Prior years                                            |  |                   | 5,140     |      | 9,325     |   |      | 438       |  
|                                                       |  |                   |           |      |           |   |      |           |  
|Total incurred                                         |  |                   | 1,331,319 |      | 1,125,907 |   |      | 1,030,093 |  
|                                                       |  |                   |           |      |           |   |      |           |  
|Paid related to:                                       |  |                   |           |      |           |   |      |           |  
|Current year                                           |  |                   | 722,166   |      | 588,432   |   |      | 590,791   |  
|Prior years                                            |  |                   | 495,793   |      | 446,825   |   |      | 417,105   |  
|                                                       |  |                   |           |      |           |   |      |           |  
|Total paid                                             |  |                   | 1,217,959 |      | 1,035,257 |   |      | 1,007,896 |  
|                                                       |  |                   |           |      |           |   |      |           |  
|Foreign currency translation adjustments               |  |                   | 970       |      | (1,473    | ) |      | (1,987    | )
|Net balance at end of year                             |  |                   | 993,259   |      | 878,929   |   |      | 789,752   |  
|Plus reinsurance recoverables                          |  |                   | 351,937   |      | 342,217   |   |      | 342,132   |  
|                                                       |  |                   |           |      |           |   |      |           |  
|Balance at end of year                                 |  | ¥                 | 1,345,196 |      | 1,221,146 |   |      | 1,131,884 |  
|                                                       |  |                   |           |      |           |   |      |           |  



Prior year claims and
expenses incurred in the preceding table resulted principally from settling claims established in earlier accident years for amounts that differed from expectations.



The reinsurance recoverables referred to above are reconciled to the balance sheet carrying amounts as follows:



|                                        |  |                   |         |      |        
|--------------------------------------- |  | ----------------- | ------- | ---- | -------
|                                        |  | (Yen in millions)
|                                        |  | 2005              |         | 2004
|Property and casualty:                  |  |                   |         |      |        
|Unpaid losses                           |  | ¥                 | 351,937 |      | 342,217
|Paid losses                             |  |                   | 168,144 |      | 104,528
|Life                                    |  |                   | 652     |      | 366    
|                                        |  |                   |         |      |        
|Total reinsurance recoverable on losses |  | ¥                 | 520,733 |      | 447,111
|                                        |  |                   |         |      |        



In prior years, the
Company issued insurance policies and assumed reinsurance for cover related to environmental pollution and asbestos exposure. The Company has received and continues to receive notices of potential claims asserting environmental pollution and
asbestos losses under those insurance policies. Significant factors which affect the trends that influence the Companys ability to estimate future losses for these types of claims are the inconsistent court resolutions and the judicial
interpretations which broaden the intent of the policies and scope of coverage. Due to this uncertainty, it is not possible to determine the future development of



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MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



environmental pollution and asbestos claims with the same degree of reliability as with other types of claims. The Company believes insurance claim reserves
under insurance and reinsurance contracts related to environmental pollution and asbestos claims to be adequate, and the amount is less than 5% of its total insurance claim reserves at March 31, 2005.



9. Reserve for Future Policy Benefits and Losses and Policyholders Contract Deposits



The analysis of the future policy benefits and losses and
policyholders contract deposits at March 31, 2005 and 2004 were as follows:



|                                        |  |                   |           |      |   |          
|--------------------------------------- |  | ----------------- | --------- | ---- | - | ---------
|                                        |  | (Yen in millions)
|                                        |  | 2005              |           | 2004
|Future policy benefits and losses:      |  |                   |           |      |   |          
|Traditional long-duration contract      |  | ¥                 | 971,759   |      | ¥ | 837,739  
|Non traditional long-duration contract  |  |                   | 5,025     |      |   | 3,334    
|Short-duration contract                 |  |                   | 5,552     |      |   | 5,853    
|                                        |  |                   |           |      |   |          
|Total future policy benefits and losses |  | ¥                 | 982,336   |      | ¥ | 846,926  
|                                        |  |                   |           |      |   |          
|Policyholders contract deposits:       |  |                   |           |      |   |          
|Deposit-type insurance                  |  | ¥                 | 2,247,517 |      | ¥ | 2,326,668
|Endowment                               |  |                   | 92,326    |      |   | 86,365   
|Individual annuity                      |  |                   | 262,177   |      |   | 248,388  
|Group Annuity                           |  |                   | 11,236    |      |   | 13,851   
|US Dollar denominated annuity           |  |                   |          |      |   | 24,731   
|Others                                  |  |                   | 12,416    |      |   | 11,736   
|                                        |  |                   |           |      |   |          
|Total investment contracts              |  |                   | 2,625,672 |      |   | 2,711,739
|                                        |  |                   |           |      |   |          
|Variable contract                       |  |                   | 200,986   |      |   |         
|US Dollar denominated annuity           |  |                   | 179,341   |      |   |         
|                                        |  |                   |           |      |   |          
|Total universal-life type contracts     |  |                   | 380,327   |      |   |         
|                                        |  |                   |           |      |   |          
|Total policyholders contract deposits  |  | ¥                 | 3,005,999 |      | ¥ | 2,711,739
|                                        |  |                   |           |      |   |          



Traditional
long-duration contract liabilities included in future policy benefits and losses, as presented in the table above, result from traditional life products. Nontraditional long-duration contract liabilities represent liabilities for GMDB. See note 10
for further information of nontraditional long-duration contract. Short-duration contract liabilities primarily consist of unearned premium and benefit reserves for group life products.



The liability for future policy benefits and losses has been established based on the following assumptions:



| |  |  | Future investment yields, which vary by year of issuance and products, range from 1.00% to 3.10%.
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | Mortality, morbidity and surrender rates are based upon actual experience.
| | - |  | --------------------------------------------------------------------------



Participating life business represented approximately 53% of the gross insurance in-force at March 31, 2005 and 45% of the gross premiums for the year
ended March 31, 2005. The amount of annual dividends to be paid is determined by the Boards of Directors of life insurance subsidiaries. Policyholder dividends on participating insurance amounted to ¥3,913 million ($36,570 thousand) for the year
ended March 31, 2005.



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MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The liability for investment contract has been established based on the following assumptions:



| |  |  | Interest rates credited on deposit-type insurance, which vary by month of issuance and policy period, range from 0.06 % to 5.50 %. Interest rates credited on endowments and deferred
annuities, which vary by year of issuance, range from 1.00 % to 3.10 %. Interest rates on group annuity are guaranteed at 0.75 %.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The liability for universal-life type contract has been established based on the following assumptions:



| |  |  | Interest rates credited on US dollar denominated annuity, which vary by month of issuance and policy period, range from 2.63 % to 4.22 %.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | For variable contracts, policy values are expressed in term of investment units. Each unit is linked to an asset portfolio. The value of a unit increases or decreases based on the
value of the linked asset portfolio. The current liability at any time is the sum of the current unit value of all investment units.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Pursuant to the adoption of SOP 03-1, on April 1, 2004, the Company re-examined its product classifications based on the new guidance on the significance
of mortality and morbidity. As a result, the Company reclassified its US dollar denominated annuities from investment contracts to universal-life type (insurance) contracts.



10. Certain Nontraditional Long-duration Contracts



The Company issues variable annuity, variable life and US Dollar denominated annuity where the Company contractually guarantees to the
policyholder a death benefit even when there is insufficient value to cover policy charges.



Liabilities for GMDB are included in Future policy benefits and losses at March 31, 2005 and changes in liabilities for GMDB are included in Policy benefits and losses for life for the year
ended March 31, 2005.



For those guarantees of benefits that
are payable in the event of death, the net amount at risk is defined as the current GMDB in excess of the current account balance at the balance sheet date.



Details concerning the Companys GMDB exposures of March 31, 2005 are as follows:



|                     |  |                               |        
|-------------------- |  | ----------------------------- | -------
|                     |  | (Yen in millions, except age)
|Account Value        |  | ¥                             | 370,586
|Amount at Risk       |  | ¥                             | 13,975 
|Average Attained Age |  |                               | 41-61  



The following
summarizes GMDB liabilities:



|                             |  |                   |       |  
|---------------------------- |  | ----------------- | ----- | -
|                             |  | (Yen in millions) |      
|Balance at beginning of year |  | ¥                 | 3,375 |  
|Reserve increase             |  |                   | 2,057 |  
|Benefits paid                |  |                   | (407  | )
|Balance at end of year       |  | ¥                 | 5,025 |  



F-39



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The GMDB liability is determined each period end by estimating the accumulated value of a percentage
of the total assessments to date less the accumulated value of the death benefits in excess of the account balance. The percentage of assessments used is chosen such that, at issue, the present value of expected death benefits in excess of the
projected account balance and the percentage of the present value of total expected assessments over the lifetime of the contracts are equal. The Company regularly evaluates the estimates used and adjusts the GMDB liability balance, with a related
charge or credit to earnings, if actual experience or other evidence suggests that earlier assumptions should be revised.



In accordance with SOP 03-1, the present value of death benefits in excess of the projected account balance and the present value of total expected
assessments for GMDBs were determined over a reasonable range of stochastically generated scenarios.



11. Income Taxes



Total income taxes
for the years ended March 31, 2005, 2004 and 2003 were allocated as follows:



|                                                                              |  |                   |        |   |      |         |      |          |  
|----------------------------------------------------------------------------- |  | ----------------- | ------ | - | ---- | ------- | ---- | -------- | -
|                                                                              |  | (Yen in millions) |       
|                                                                              |  | 2005              |        |   | 2004 |         | 2003 |         
|Income before extraordinary items and cumulative effect of accounting changes |  | ¥                 | 28,431 |   |      | 49,385  |      | 71,614   |  
|Cumulative effect of accounting changes                                       |  |                   | (15    | ) |      |        |      |         |  
|Other comprehensive income:                                                   |  |                   |        |   |      |         |      |          |  
|Unrealized appreciation (depreciation) of securities during the year          |  |                   | 31,773 |   |      | 320,315 |      | (188,667 | )
|Minimum pension liability adjustments                                         |  |                   | 638    |   |      | 11,779  |      | (22,613  | )
|                                                                              |  |                   |        |   |      |         |      |          |  
|                                                                              |  | ¥                 | 60,827 |   |      | 381,479 |      | (139,666 | )
|                                                                              |  |                   |        |   |      |         |      |          |  



Total income tax
expensed (benefit) for the years ended March 31, 2005, 2004 and 2003 is made up of the following components:



|                                         |  |                   |         |   |      |        |   |      |         |  
|---------------------------------------- |  | ----------------- | ------- | - | ---- | ------ | - | ---- | ------- | -
|                                         |  | (Yen in millions) |        
|                                         |  | 2005              |         |   | 2004 |        |   | 2003 |        
|Current income tax expense:              |  |                   |         |   |      |        |   |      |         |  
|Parent company and domestic subsidiaries |  | ¥                 | 46,810  |   |      | 48,373 |   |      | 92,045  |  
|Foreign subsidiaries                     |  |                   | 1,844   |   |      | 1,642  |   |      | 890     |  
|                                         |  |                   |         |   |      |        |   |      |         |  
|Total current income tax expense         |  |                   | 48,654  |   |      | 50,015 |   |      | 92,935  |  
|                                         |  |                   |        
|Deferred income tax (benefit) expense:   |  |                   |         |   |      |        |   |      |         |  
|Parent company and domestic subsidiaries |  |                   | (20,254 | ) |      | (466   | ) |      | (20,409 | )
|Foreign subsidiaries                     |  |                   | 31      |   |      | (164   | ) |      | (912    | )
|                                         |  |                   |         |   |      |        |   |      |         |  
|Total deferred income benefit            |  |                   | (20,223 | ) |      | (630   | ) |      | (21,321 | )
|                                         |  |                   |         |   |      |        |   |      |         |  
|Total income tax expense                 |  | ¥                 | 28,431  |   |      | 49,385 |   |      | 71,614  |  
|                                         |  |                   |         |   |      |        |   |      |         |  



Total income tax
expense shown above have been based on the following components of income before income tax expense, extraordinary items and cumulative effect of accounting changes for the years ended March 31, 2005, 2004 and 2003.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



|                                         |  |                   |         |      |         |      |        
|---------------------------------------- |  | ----------------- | ------- | ---- | ------- | ---- | -------
|                                         |  | (Yen in millions)
|                                         |  | 2005              |         | 2004 |         | 2003
|Parent company and domestic subsidiaries |  | ¥                 | 99,389  |      | 139,501 |      | 199,974
|Foreign subsidiaries                     |  |                   | 7,217   |      | 12,766  |      | 1,334  
|                                         |  |                   |         |      |         |      |        
|Total                                    |  | ¥                 | 106,606 |      | 152,267 |      | 201,308
|                                         |  |                   |         |      |         |      |        



The Company is subject
to a number of taxes based on income, which in the aggregate resulted in a normal tax rate of approximately 36% in 2005, 2004 and 2003.



The effective tax rates of the Company for the years ended March 31, 2005, 2004 and 2003 differ from the Japanese normal income tax rates for the
following reasons:



|                                         |  |      |   |  |      |   |  |      |  
|---------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|                                         |  | 2005 |   |  | 2004 |   |  | 2003 |  
|Japanese normal income tax rate          |  | 36.0 | % |  | 36.0 | % |  | 36.0 | %
|Tax credit for dividends received        |  | (9.5 | ) |  | (3.8 | ) |  | (3.0 | )
|Expenses not deductible for tax purposes |  | 1.9  |   |  | 1.5  |   |  | 0.9  |  
|Other                                    |  | (1.7 | ) |  | (1.3 | ) |  | 1.7  |  
|                                         |  |      |   |  |      |   |  |      |  
|Effective tax rate                       |  | 26.7 | % |  | 32.4 | % |  | 35.6 | %
|                                         |  |      |   |  |      |   |  |      |  



F-41



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The tax effects of temporary differences that give rise to significant portions of the deferred tax
assets and deferred tax liabilities at March 31, 2005 and 2004 are presented below:



|                                                                                            |  |                   |             |   |      |             |  
|------------------------------------------------------------------------------------------- |  | ----------------- | ----------- | - | ---- | ----------- | -
|                                                                                            |  | (Yen in millions) |            
|                                                                                            |  | 2005              |             |   | 2004 |            
|Deferred tax assets:                                                                        |  |                   |             |   |      |             |  
|Net unpaid and unreported losses                                                            |  | ¥                 | 126,065     |   |      | 107,303     |  
|Future policy benefits and losses                                                           |  |                   | 9,387       |   |      | 11,342      |  
|Retirement and severance benefits                                                           |  |                   | 53,437      |   |      | 52,331      |  
|Minimum pension liability adjustments                                                       |  |                   | 38,291      |   |      | 38,929      |  
|Valuation allowance for credit losses                                                       |  |                   | 4,943       |   |      | 5,701       |  
|Property, equipment and other assets                                                        |  |                   | 40,018      |   |      | 47,816      |  
|Derivatives                                                                                 |  |                   | 31,087      |   |      | 37,868      |  
|Operating loss carryforwards for tax purposes Policyholders contract deposits              |  |                   | 4,63613,366 |   |      | 3,99714,196 |  
|Other                                                                                       |  |                   | 16,639      |   |      | 23,742      |  
|Valuation allowance                                                                         |  |                   | (527        | ) |      | (833        | )
|                                                                                            |  |                   |             |   |      |             |  
|Total deferred tax assets                                                                   |  |                   | 337,342     |   |      | 342,392     |  
|                                                                                            |  |                   |             |   |      |             |  
|Deferred tax liabilities:                                                                   |  |                   |             |   |      |             |  
|Net unearned premiums                                                                       |  |                   | (82,114     | ) |      | (80,200     | )
|Deferred policy acquisition costs                                                           |  |                   | (168,056    | ) |      | (162,425    | )
|Fair value adjustments to securities recognized in income                                   |  |                   | (58,503     | ) |      | (74,306     | )
|Derivatives                                                                                 |  |                   | (58,166     | ) |      | (71,431     | )
|Other                                                                                       |  |                   | (14,631     | ) |      | (17,878     | )
|                                                                                            |  |                   |             |   |      |             |  
|Total deferred tax liabilities                                                              |  |                   | (381,470    | ) |      | (406,240    | )
|                                                                                            |  |                   |             |   |      |             |  
|Net deferred tax liabilities before deferred taxes on unrealized appreciation of securities |  |                   | (44,128     | ) |      | (63,848     | )
|Deferred taxes on unrealized appreciation of securities                                     |  |                   | (673,125    | ) |      | (641,352    | )
|                                                                                            |  |                   |             |   |      |             |  
|Net deferred tax liabilities                                                                |  |                   | (717,253    | ) |      | (705,200    | )
|Deferred tax assets not to be offset, included in other assets                              |  |                   | 1,688       |   |      |            |  
|                                                                                            |  |                   |             |   |      |             |  
|Gross deferred tax liabilities                                                              |  |                   | (718,941    | ) |      | (705,200    | )
|Income taxes currently payable                                                              |  |                   | (14,388     | ) |      | (4,024      | )
|                                                                                            |  |                   |             |   |      |             |  
|Income tax liability                                                                        |  | ¥                 | (733,329    | ) |      | (709,224    | )
|                                                                                            |  |                   |             |   |      |             |  



The valuation
allowance was recorded related to tax benefits associated with operating loss carryforwards for tax purposes of Financial Life. Management believes that it is more likely than not that the Company will realize the benefit of the deferred tax assets.
While there are no assurances that this benefit will be realized, the Company expects sufficient taxable income in the future, based on its historical record and expected future results to realize the benefit of the deferred tax assets. The
valuation allowance decreased by ¥306 million ($2,860 thousand) for the year ended March 31, 2005 reflecting the expiration of operating loss carryforwards for tax purposes of previous fiscal years. At March 31, 2005, these carryforwards
amounting to ¥12,804 million ($119,664 thousand) are scheduled to expire from 2006 through 2012.



The Company has undistributed retained earnings of foreign subsidiaries amounting to ¥16,907 million ($158,009 thousand) and ¥14,827 million at
March 31, 2005 and 2004, respectively. The company does not



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



provide tax liabilities for these earnings because it is not apparent that these earnings will be repatriated in the foreseeable future. Determining the tax
liability that would arise if these earnings were remitted is not practicable.



12. Retirement and Severance Benefits



Employees
of the Company are covered by the defined retirement and severance benefit plans. Primary plans are described below.



The Company has a funded pension plan covering substantially all employees who meet age and service requirements. The plan covers a portion of the welfare
pension plan administered by the Japanese government. Effective October 1, 2004, the Company amended the plan to introduce a point based funded pension plan. Under the new plan, the pension payments are based on accumulated
points vested each year by the employees rank and certain other factors. As a result of the plan amendment, the projected benefit obligation decreased by ¥ 22,547 million at October 1, 2004 and resulted in an unrecognized prior
service cost, which is recognized in future service periods.



In accordance with SFAS No. 87, Employers Accounting for Pensions, the net periodic benefit cost of the funded pension plan is calculated using the projected unit credit actuarial cost method.



The Company also has an unfunded lump-sum payment retirement plan covering
substantially all employees. Under the plan, employees are entitled to lump-sum payments based on points, which are accumulated each year by the employees rank, length of service and certain other factors, upon retirement or termination of
employment for reasons other than dismissal for cause. Directors and statutory auditors are covered by a separate plan. It is not the policy of management to fund the retirement and severance benefits described above.



In accordance with EITF 88-1 Determination of Vested Benefit Obligation
for a Defined Benefit Pension Plan, for its unfunded plans, the Company records the actuarial present value of the vested benefits to which the employee is entitled if the employee separates immediately as projected benefit obligation.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The Company uses a March 31 measurement date of its plans. Reconciliations of beginning and ending
balances of the benefit obligations and the fair value of the plan assets are as follows:



|                                                     |  |                   |          |   |      |          |  
|---------------------------------------------------- |  | ----------------- | -------- | - | ---- | -------- | -
|                                                     |  | (Yen in millions) |         
|                                                     |  | 2005              |          |   | 2004 |         
|Change in benefit obligation:                        |  |                   |          |   |      |          |  
|Benefit obligation at beginning of year              |  | ¥                 | 518,258  |   |      | 532,931  |  
|Adjustment in connection with the acquisition        |  |                   |         |   |      | 38       |  
|Service cost                                         |  |                   | 15,349   |   |      | 23,964   |  
|Interest cost                                        |  |                   | 9,918    |   |      | 7,829    |  
|Plan participants contributions                     |  |                   | 1,723    |   |      | 2,758    |  
|Amendments                                           |  |                   | (22,820  | ) |      | 2,909    |  
|Actuarial gain (loss)                                |  |                   | 3,957    |   |      | (29,179  | )
|Benefits paid                                        |  |                   | (22,836  | ) |      | (22,998  | )
|Foreign currency translation adjustments             |  |                   |         |   |      | 6        |  
|                                                     |  |                   |          |   |      |          |  
|Benefit obligation at end of year                    |  | ¥                 | 503,549  |   |      | 518,258  |  
|                                                     |  |                   |          |   |      |          |  
|Change in plan assets:                               |  |                   |          |   |      |          |  
|Fair value of plan assets at beginning of year       |  | ¥                 | 199,333  |   |      | 175,559  |  
|Actual return on plan assets                         |  |                   | 6,761    |   |      | 5,711    |  
|Employer contributions                               |  |                   | 15,911   |   |      | 20,683   |  
|Plan participants contributions                     |  |                   | 1,723    |   |      | 2,758    |  
|Benefits paid                                        |  |                   | (6,009   | ) |      | (5,378   | )
|                                                     |  |                   |          |   |      |          |  
|Fair value of plan assets at end of year             |  | ¥                 | 217,719  |   |      | 199,333  |  
|                                                     |  |                   |          |   |      |          |  
|Funded status                                        |  | ¥                 | (285,830 | ) |      | (318,925 | )
|Unrecognized net actuarial loss                      |  |                   | 145,018  |   |      | 152,748  |  
|Unrecognized prior service cost                      |  |                   | (14,678  | ) |      | 7,620    |  
|                                                     |  |                   |          |   |      |          |  
|Net amount recognized                                |  | ¥                 | (155,490 | ) |      | (158,557 | )
|                                                     |  |                   |          |   |      |          |  
|Amounts recognized in the balance sheets consist of: |  |                   |          |   |      |          |  
|Accrued benefit liability                            |  | ¥                 | (285,011 | ) |      | (292,054 | )
|Intangible asset                                     |  |                   | 23,156   |   |      | 25,362   |  
|Accumulated other comprehensive income               |  |                   | 106,365  |   |      | 108,135  |  
|                                                     |  |                   |          |   |      |          |  
|Net amount recognized                                |  | ¥                 | (155,490 | ) |      | (158,557 | )
|                                                     |  |                   |          |   |      |          |  



The accumulated
benefit obligation for all the defined retirement and severance benefit plans was ¥500,328 million ($4,675,963 thousand) at March 31, 2005, and ¥488,954 million at March 31, 2004. In all the plans, projected benefit obligation and
accumulated benefit obligation exceeded its plan assets.



Weighted-average actuarial assumptions used to determine benefit obligation at March 31, 2005 and 2004 are as follows:



|                        |  |      |   |  |         |  
|----------------------- |  | ---- | - |  | ------- | -
|                        |  | 2005 |   |  | 2004    |  
|Discount rate           |  | 2.0  | % |  | 2.0     | %
|Rate of salary increase |  | 0.4  | % |  | 0.7-1.7 | %



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The components of net periodic benefit cost for the years ended March 31, 2005, 2004 and 2003 are as
follows:



|                                         |  |                   |        |   |      |        |   |      |        |  
|---------------------------------------- |  | ----------------- | ------ | - | ---- | ------ | - | ---- | ------ | -
|                                         |  | (Yen in millions) |       
|                                         |  | 2005              |        |   | 2004 |        |   | 2003 |       
|Components of net periodic benefit cost: |  |                   |        |   |      |        |   |      |        |  
|Service cost                             |  | ¥                 | 15,349 |   |      | 23,964 |   |      | 19,148 |  
|Interest cost                            |  |                   | 9,918  |   |      | 7,829  |   |      | 10,874 |  
|Expected return on plan assets           |  |                   | (3,956 | ) |      | (3,250 | ) |      | (3,108 | )
|Amortization of prior service cost       |  |                   | (522   | ) |      | 1,031  |   |      | 805    |  
|Recognized actuarial loss                |  |                   | 8,878  |   |      | 11,663 |   |      | 7,162  |  
|                                         |  |                   |        |   |      |        |   |      |        |  
|Net periodic benefit cost                |  | ¥                 | 29,667 |   |      | 41,237 |   |      | 34,881 |  
|                                         |  |                   |        |   |      |        |   |      |        |  



Unrecognized net
actuarial loss in excess of 10% of the greater of the projected benefit obligation or the fair value of plan assets are amortized over the average remaining service period of active participants expected to receive benefits under the plan. The prior
service cost is amortized on a straight-line basis over the average remaining service period of active participants at the date of the amendment.



Weighted-average actuarial assumptions used to determine net periodic benefit cost for the years ended March 31, 2005, 2004 and 2003 are as follows:



|                                         |  |         |   |  |         |   |  |         |  
|---------------------------------------- |  | ------- | - |  | ------- | - |  | ------- | -
|                                         |  | 2005    |   |  | 2004    |   |  | 2003    |  
|Discount rate                            |  | 2.0     | % |  | 1.5     | % |  | 2.5     | %
|Rate of salary increase                  |  | 0.7-1.7 | % |  | 0.6-1.7 | % |  | 1.8     | %
|Expected long-term return on plan assets |  | 1.9     | % |  | 1.8-2.0 | % |  | 1.3-2.0 | %



The expected long-term
rate of return on plan assets reflects the average rate of earnings expected on plan assets. This assumption is reviewed annually giving consideration to plan asset allocation, historical returns on plan assets and other relevant market data.



The Companys pension plan assets are mainly invested
with the long-term objective of earning sufficient amounts to cover expected benefit obligation, within the risk it can take. The asset allocation by major asset class of the Companys pension plan at March 31, 2005 and 2004, and the target
allocation percentage for 2006 are as follows:



|                  |  |                         |   |  |                   |         |      |        
|----------------- |  | ----------------------- | - |  | ----------------- | ------- | ---- | -------
|                  |  | (% of Totalplan assets) |   |  | (Yen in millions)
|                  |  | 2006(target)            |   |  | 2005              |         | 2004
|Fixed maturities  |  | 45                      | % |  | ¥                 | 89,014  |      | 74,153 
|Equity securities |  | 15                      |   |  |                   | 41,765  |      | 36,387 
|Other             |  | 40                      |   |  |                   | 86,940  |      | 88,793 
|                  |  |                         |   |  |                   |         |      |        
|Total plan assets |  | 100                     | % |  | ¥                 | 217,719 |      | 199,333
|                  |  |                         |   |  |                   |         |      |        



Other shown in the
above table mainly consists of investment trusts with minimum interest rate guarantee.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The Company expects to contribute ¥9,209 million ($86,065 thousand) to its pension plan in 2006.
Estimated future benefit payments are as follows:



|             |  |                   |        |                |        |       |        
|------------ |  | ----------------- | ------ | -------------- | ------ | ----- | -------
|             |  | (Yen in millions)
|             |  | Fundedplans       |        | Unfunded plans |        | Total
|2006         |  | ¥                 | 7,794  |                | 13,970 |       | 21,764 
|2007         |  |                   | 8,087  |                | 14,450 |       | 22,537 
|2008         |  |                   | 8,613  |                | 14,545 |       | 23,158 
|2009         |  |                   | 9,145  |                | 13,637 |       | 22,782 
|2010         |  |                   | 9,760  |                | 13,265 |       | 23,025 
|2011 to 2015 |  |                   | 57,730 |                | 59,755 |       | 117,485



The Japanese
government issued a new law concerning defined benefit plans in June 2001. This law allows a company, at its own discretion, to transfer to the government a portion of its pension plan which substitutes for the welfare pension plan administered by
the government. In order to transfer the substitutional portion, a company must first make an application to the government for an exemption from the obligation to pay benefits for future employee service. After obtaining the first approval, a
company must make a final application for separation of the benefit obligation related to past employee services. After obtaining the final approval, a company will transfer the benefit obligation related to past employee services as well as the
related government-specified portion of its plan assets. A company accounts for the entire separation process upon completion of the transfer of the benefit obligation and related plan assets in a single settlement transaction, in accordance with
the provisions of EITF 03-02, Accounting for the Transfer to the Japanese Government of the Substitutional Portion of Employee Pension Fund Liabilities. Under this approach, the difference between the benefit obligation settled and the
related plan assets transferred to the government, determined pursuant to the government formula, is accounted for separately as a government subsidy. The derecognition of previously accrued salary progression at the time of settlement is accounted
for separately from the government subsidy.



In June
2004, Tokio Marine, a wholly owned subsidiary of the Company, obtained the first approval from the government. The transfer is expected to be completed in fiscal year ending March 31, 2006. The Company expects to recognize a gain of ¥14,431
million ($134,869 thousand) upon completion of the transfer. This consists of ¥41,994 million ($392,467 thousand) of a subsidy from the government, ¥8,647 million ($80,813 thousand) of derecognition of previously accrued salary progression
and ¥36,210 million ($338,411 thousand) of recognition of related unrecognized actuarial loss.



13. Debt Outstanding



Short-term debt
outstanding at March 31, 2005 and 2004 comprised the following:



|                                     |  |                   |        |      |       
|------------------------------------ |  | ----------------- | ------ | ---- | ------
|                                     |  | (Yen in millions)
|                                     |  | 2005              |        | 2004
|Loans, 0.02% to 0.89%                |  | ¥                 | 7,031  |      | 3,000 
|Equity linked notes, 2.20% to 28.00% |  |                   | 1,283  |      | 1,716 
|Fixed rate notes, 0.01% to 0.76%     |  |                   | 7,094  |      | 8,000 
|                                     |  |                   |        |      |       
|Total short-term debt                |  | ¥                 | 15,408 |      | 12,716
|                                     |  |                   |        |      |       



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Long-term debt outstanding at March 31, 2005 and 2004 comprised the following:



|                                     |  |           |  |                   |         |      |        
|------------------------------------ |  | --------- |  | ----------------- | ------- | ---- | -------
|                                     |  |           |  | (Yen in millions)
|                                     |  | Due       |  | 2005              |         | 2004
|Loans, 0.03% to 3.99%                |  | 2006-2015 |  | ¥                 | 36,512  |      | 10,627 
|Equity linked notes, zero coupon     |  | 2006-2007 |  |                   | 17,994  |      | 6,192  
|Fixed rate notes, 0.14% to 1.43%     |  | 2005-2013 |  |                   | 27,030  |      | 19,024 
|Floating rate notes, 0.06%           |  | 2005      |  |                   |        |      | 2,000  
|Credit linked notes, 1.99% to 11.92% |  | 2007      |  |                   | 21,954  |      | 22,644 
|Unsecured bonds, 1.47% to 2.78%      |  | 2006-2021 |  |                   | 135,703 |      | 135,843
|Other notes                          |  | 2007-2034 |  |                   | 16,286  |      | 4,400  
|                                     |  |           |  |                   |         |      |        
|Total long-term debt                 |  |           |  | ¥                 | 255,479 |      | 200,730
|                                     |  |           |  |                   |         |      |        



Non-recourse loans of
¥32,996 million ($308,374 thousand) borrowed by VIEs required to be consolidated under the FIN 46R are included in loans at March 31, 2005. See note 3 for further information.



Maturities of long-term debt at March 31, 2005 are as follows:



|                     |  |                   |        
|-------------------- |  | ----------------- | -------
|                     |  | (Yen in millions)
|2006                 |  | ¥                 | 67,731 
|2007                 |  |                   | 58,528 
|2008                 |  |                   | 4,486  
|2009                 |  |                   | 5,076  
|2010                 |  |                   | 65,922 
|Thereafter           |  |                   | 53,736 
|                     |  |                   |        
|Total long-term debt |  | ¥                 | 255,479
|                     |  |                   |        



The proceeds of these
debts were used primarily for general corporate purposes, and there were no restrictions on the use of proceeds from these borrowings.



The Company leases certain property and equipment under noncancelable lease agreements. At March 31, 2005 and 2004, obligations under capital leases which
were included in other liabilities amounted to ¥7,850 million ($73,364 thousand) and ¥6,115 million. Of this amount, the obligations due within one year amounted to ¥3,562 million ($33,290 thousand) at March 31, 2005.



F-47



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



14. Fair Values of Financial Instruments



SFAS No. 107, Disclosures about Fair Value of Financial Instruments requires disclosure of estimated fair value for all
financial instruments. See note 17 for discussion of fair value of derivative financial instruments. The carrying amounts and the fair values of the Companys nonderivative financial instruments at March 31, 2005 and 2004 are as follows:



|                                         |  |                   |            |   |            |            |   |                 |            |   |            |            |  
|---------------------------------------- |  | ----------------- | ---------- | - | ---------- | ---------- | - | --------------- | ---------- | - | ---------- | ---------- | -
|                                         |  | (Yen in millions) |           
|                                         |  | 2005              |            |   | 2004       |           
|                                         |  | Carryingamount    |            |   | Fair value |            |   | Carrying amount |            |   | Fair value |           
|Policy loans                             |  | ¥                 | 38,567     |   |            | 38,567     |   |                 | 33,610     |   |            | 33,610     |  
|Mortgage loans on real estate            |  |                   | 71,033     |   |            | 70,935     |   |                 | 129,076    |   |            | 130,040    |  
|Mortgage loans on vessels and facilities |  |                   | 10,979     |   |            | 11,378     |   |                 | 20,356     |   |            | 19,989     |  
|Collateral and bank-guaranteed loans     |  |                   | 11,250     |   |            | 12,465     |   |                 | 18,542     |   |            | 22,868     |  
|Unsecured loans                          |  |                   | 359,696    |   |            | 367,430    |   |                 | 357,504    |   |            | 363,411    |  
|Money trust                              |  |                   | 27,262     |   |            | 27,262     |   |                 | 22,797     |   |            | 22,797     |  
|Short-term investments                   |  |                   | 691,769    |   |            | 691,769    |   |                 | 881,897    |   |            | 881,897    |  
|Investment contracts                     |  |                   | (2,625,672 | ) |            | (2,831,690 | ) |                 | (2,711,739 | ) |            | (2,918,410 | )
|Debt outstanding                         |  |                   | (270,887   | ) |            | (278,198   | ) |                 | (213,446   | ) |            | (220,370   | )



Effective with the
adopted SOP 03-1, the Company changed the product classification of US dollar denominated annuity from investment contract to universal-life type contract at April 1, 2004. Therefore, the carrying amounts and fair values of investment contracts at
March 31, 2005 do not include those of US dollar denominated annuity.



The following methods and assumptions were used by the Company in estimating the fair values of its nonderivative financial instruments:



Cash and cash equivalents, accrued investment income (included in other assets), premiums receivable and agents balances, reinsurance recoverable on losses and
ceded reinsurance balances payable



The carrying amounts approximate fair
values due to the short maturity of these instruments.



Fixed maturities and
equity securities



The carrying amounts and fair values of fixed
maturities and equity securities are disclosed in note 3.



Policy loans



The carrying amounts of floating-rate policy loans approximate their fair
values as the interest rates charged on those instruments are designed so that they would be adjusted periodically to reflect changes in overall market interest rates.



Mortgage loans on real estate, other long-term investments and short-term investments



The fair values for these financial instruments are estimated based on the quoted market
prices for these or similar instruments. For financial instruments for which quoted market prices are not available, fair values are estimated using discounted cash flow analysis and interest rates currently being offered for similar loans to
borrowers with similar credit ratings or for similar deposits.



F-48



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Investment contracts



The fair values of investment contracts were estimated using discounted cash flow calculations based on market interest rates currently prevailing for similar
contracts with similar maturities. The cash flows used in fair value calculation were based on the best estimate assumptions of lapse rates and other factors.



Debt outstanding



The fair values for debt outstanding are estimated using their market prices. For debt outstanding on which quoted market prices are not available, the fair values are estimated using discounted cash flow analysis,
based on the Companys current borrowing rate for similar types of borrowings.



Limitations



Fair value estimates are made at a specific point
in time, based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.



15.
Statutory Capital and Dividend Availability



Millea Holdings is subject to
regulatory restrictions on the amount of dividends distributable to its stockholders. The amount of retained earnings available for dividends is based on the amount recorded on the Millea Holdings non-consolidated statutory books of account in
accordance with Japanese GAAP and the Commercial Code of Japan. Millea Holdings had retained earnings in the amount of ¥345,869 million ($3,232,421 thousand), capital surplus in the amount of ¥320,166 million ($2,992,206 thousand) and
treasury stock in the amount of ¥10,760 million ($100,561 thousand) as of March 31, 2005. All of the retained earnings as of March 31, 2005 are available for dividends. 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.



Provision has not been made in the accompanying consolidated balance sheet as of March 31, 2005 for dividends subsequently
proposed to and approved by Millea Holdings stockholders in the aggregate amount of ¥18,919 million ($176,813 thousand) at the ordinary general meeting of stockholders held on June 28, 2005.



Millea Holdings stockholders approved repurchase of its own shares
pursuant to Article 210 of the Commercial Code of Japan on June 27, 2003, as follows: (a) aggregate number of shares authorized for repurchase is up to 120,000 shares, (b) total value of shares authorized for repurchase is up to ¥100,000
million, (c) Millea Holdings is authorized to repurchase its stock until the closing of the ordinary general meeting of stockholders for the fiscal year ended March 31, 2004. Under this repurchase program, Millea Holdings repurchased 75,646 shares
at a cost of ¥100,000 million by June 29, 2004.



The
stockholders approved to insert a new Article in the Articles of Incorporation of Millea Holdings stating that Millea Holdings may, by resolution of the Board of Directors, repurchase its own shares pursuant to Article 211-3, paragraph 1, item 2 of
the Commercial Code of Japan, at the ordinary general meeting of stockholders held on June 29, 2004.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



In fiscal 2005, pursuant to the new Article, the Board of Directors approved repurchase of up to
67,200 shares with an aggregate value of no more than ¥85,000 million ($794,393 thousand), pursuant to which Millea Holdings repurchased 54,842 shares at a cost of ¥83,392 million ($779,364 thousand) by March 31, 2005.



On July 9, 2004 and March 14, 2005, Millea Holdings cancelled in aggregate
130,000 shares held as treasury stock, by the approval of the Board of Directors, pursuant to Article 212 of the Commercial Code of Japan. The amount of this cancellation of treasury stock was ¥179,843 million ($1,680,776 thousand).



In fiscal 2006, pursuant to Article 211-3, paragraph 1, item 2 of the
Commercial Code of Japan, the Board of Directors approved repurchase of up to 7,000 shares with an aggregate value of no more than ¥9,000 million ($84,112 thousand), pursuant to which Millea Holdings repurchased 5,981 shares at a cost of
¥8,999 million by May 20, 2005. At June 28, 2005, the Board of Directors approved repurchase of its own shares pursuant to Article 211-3, paragraph 1, item 2 of the Commercial Code of Japan, as follows: (a) aggregate number of shares authorized
for repurchase is up to 17,500 shares, (b) aggregate value of shares authorized for repurchase is up to ¥20,000 million, (c) repurchase would be made from June 29, 2005 through September 9, 2005.



The insurance subsidiaries of Millea Holdings incorporated in Japan are
required to maintain adequate solvency margins by the Japanese regulatory authorities. At March 31, 2005, these subsidiaries had sufficient capital surplus in their respective statutory stockholders equity to satisfy the solvency margin
requirements.



In the parent company only financial statements
prepared in conformity with Japanese GAAP, Millea Holdings reported net income of ¥110,585 million ($1,033,505 thousand) in 2005, ¥230,871 million in 2004 and ¥49,605 million in 2003, and stockholders equity of ¥2,316,761
million ($21,651,972 thousand) at March 31, 2005 and ¥2,329,735 million at March 31, 2004.



The amounts of statutory net income (loss) for the years ended March 31, 2005, 2004 and 2003, and stockholders equity at March 31, 2005 and 2004 of the consolidated insurance subsidiaries were as follows:



|                                |  |                   |           |   |      |           |      |         |  
|------------------------------- |  | ----------------- | --------- | - | ---- | --------- | ---- | ------- | -
|                                |  | (Yen in millions) |          
|                                |  | 2005              |           |   | 2004 |           | 2003 |        
|Statutory net income (loss):    |  |                   |           |   |      |           |      |         |  
|Property and casualty           |  | ¥                 | 103,413   |   |      | 123,969   |      | 112,615 |  
|Life                            |  |                   | (5,525    | ) |      | 0         |      | (966    | )
|                                |  |                  
|                                |  | (Yen in millions) |           |   |     
|                                |  | 2005              |           |   | 2004 |           |      |        
|Statutory stockholders equity: |  |                   |           |   |      |           |      |         |  
|Property and casualty           |  | ¥                 | 2,334,819 |   |      | 2,329,686 |      |         |  
|Life                            |  |                   | 47,738    |   |      | 37,362    |      |         |  



The amount of
undistributed retained earnings of affiliates which were accounted for by the equity method were ¥34,780 million ($325,047 thousand) and ¥9,002 million at March 31, 2005 and 2004, respectively.



16. Commitments and Contingent Liabilities



At March 31, 2005 and 2004, commitments outstanding for the purchase of property and
equipment approximated ¥5,421 million ($50,664 thousand) and ¥10,136 million, respectively. At March 31, 2005 and 2004, commitments outstanding for loan commitments were ¥84,259 million ($787,467 thousand) and ¥11,198 million,
respectively.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



The Company occupies certain offices and other facilities and uses certain equipment under cancelable
lease arrangements. Rental expenses for the years ended March 31, 2005, 2004 and 2003 aggregated ¥15,219 million ($142,234 thousand), ¥15,302 million and ¥14,694 million, respectively.



The Company enters into credit default swap transactions to earn investment
returns. The maximum potential amount of future payments represents the notional amounts that could be lost under the credit default swaps if there were a total default by the guaranteed parties, without consideration of possible recoveries under
recourse provisions or from collateral held or pledged. The Companys maximum potential amount of future payments under the credit default swaps was approximately ¥1,902,280 million ($17,778,318 thousand) and ¥1,981,668 million at March
31, 2005, and 2004 respectively. The carrying amount of the assets related to these credit default swaps was ¥2,862 million ($26,748 thousand) at March 31, 2005, and the carrying amount of the liabilities was ¥167 million at March 31, 2004.
Other property will be available to the Company to cover losses, or, the Company will cover losses, net of some collateral, however, the value of such property or collateral has not been determined. See also note 17 for discussion on credit default
swaps.



The Company also enters into certain derivative
contracts that could meet the definition of a guarantee. These derivative contracts include certain written options. The Companys maximum potential amount of future payments under the options was ¥51,609 million ($482,327 thousand) and
¥64,846 million at March 31, 2005, and 2004 respectively. At March 31, 2005 and 2004, the carrying amount of these options was ¥222 million ($2,075 thousand) and ¥403 million, respectively. The notional amount of these derivative
contracts were disclosed as information of the maximum potential amount because they could not be estimate due to factors such as interest rates theoretically unlimited.



Guarantees are used in various transactions to enhance the credit standing of the Companys customers and third
parties. They represent irrevocable assurances that the Company will make payment in the event that the customer fails to fulfill its obligation arising from guarantees of the indebtedness of third parties, the corporate loans and bonds, etc., to
third parties. The Company is obliged to pay the outstanding liabilities when the guaranteed parties fail to pay principal and/or interest in accordance with the contractual terms. The maximum exposure under these guarantees as of March 31, 2005 was
approximately ¥839 million ($7,841 thousand). At March 31, 2005, the Company did not recognize any liabilities for these remote loss contingencies. In some cases, those liabilities are secured by the guaranteed parties operating assets.
Once the Company assumes the guaranteed parties obligation, the Company acquires the right of the collateral.



In the ordinary course of business, the Company is involved in various legal proceedings. Although there can be no assurances, as of March 31, 2005, the
Company believes, based on information currently available, that the ultimate resolution of these legal proceedings would not be likely to have a material adverse effect on its results of operations, financial condition or liquidity.



See note 8 for the information of contingent liabilities associated with
environmental pollution and asbestos exposure.



17. Derivative Financial
Instruments



The Company utilizes derivative financial instruments in its
normal course of business (a) to manage interest rate risk, (b) to manage foreign exchange risk and (c) for other purposes. Although some types of these derivatives economically hedge the Companys risk exposure, they do not qualify for hedge
accounting under



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



SFAS No.133, as amended. All derivatives are recognized on the consolidated balance sheets at fair value as derivative assets or derivative
liabilities, with the changes in fair value recognized currently in earnings as gains (losses) on derivatives.



(a) Derivatives used for interest rate risk management



The Company uses interest rate swaps to manage interest rate exposures arising from mismatches between assets and liabilities (including
duration mismatches). The Companys insurance liabilities that bear credited interest rates, mainly those relating to deposit-type insurance and life insurance, are exposed to the risk of declines in interest rates. The Companys strategy
is to match the interest rate characteristics and duration of those liabilities with those of invested assets through its asset liability management, including the use of interest rate swaps. An interest rate swap is an agreement, generally, to
exchange fixed and floating rate interest payments without exchange of the underlying principal.



In certain cases, the Company uses hedge accounting under SFAS No.133 as amended, by designating interest rate swaps that are utilized to hedge the
interest risks of bonds and borrowings as fair value hedges. For derivative instruments that are designated and qualified as fair value hedges, any changes in fair value of the derivative instruments as well as the offsetting changes in fair value
of the hedged items are recorded in net investment income. Ineffective portion of derivatives accounted for hedge accounting was not material to the operation of the Company for the year ended March 31, 2005 and 2004, respectively.



(b) Derivatives used for foreign exchange risk management



The Company is exposed to foreign currency exposures arising mainly from
foreign currency fixed maturity investments and foreign currency receivables/payables in relation to hull and marine cargo insurance and certain reinsurance. The Company uses foreign exchange derivatives, such as foreign exchange forwards and
cross-currency swaps, to effectively manage those foreign currency exposures. A foreign exchange forward is an agreement to exchange different currencies at a specific future date. A cross-currency swap is an agreement to exchange coupon payments in
one currency for coupon payments in another currency, where the principal amount of each currency is generally exchanged at the beginning and end of the term.



In certain cases, the Company uses hedge accounting under SFAS No.133, as amended, by designating foreign exchange forwards or currency swaps that are
utilized to hedge the foreign exchange risks arising from asset-backed securities (ABS) as fair value hedges. For derivative instruments that are designated and qualified as fair value hedges, any changes in fair value of the derivative instruments
as well as the offsetting changes in fair value of the hedged items are recorded in gains (losses) on derivatives.



The discount or premium on these hedging instruments was excluded from the assessment of hedge effectiveness and the changes in fair value of the excluded
components were recorded in gains (losses) on derivatives.



(c) Derivatives used for other purposes



The
Company enters into credit default swaps as an alternative to credit insurance it provides. A credit default swap is a contract that provides the buyer with protection against the risk of a default by the reference entity in return for periodic
payments to the seller. See note 16 for further information.



The Company uses bond futures, equity index futures and other instruments to manage market risks.



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MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



In certain cases, the Company uses hedge accounting under SFAS No.133, as amended, by designating
other derivative instrument that are utilized to hedge fair value of securities available for sale. For derivative instruments that are designated and qualified as fair value hedges, any changes in fair value of the derivative instruments as well as
the offsetting changes in fair value of the hedged items are recorded in realized gains(losses) on investments.



The Company uses foreign exchange forwards, bond futures, equity index options, equity index futures, commodity swaps and other instruments to earn
investment returns.



The carrying amounts and the fair values
of the Companys derivative financial instruments at March 31, 2005 and 2004 are as follows:



|                          |  |                   |         |             |          |  
|------------------------- |  | ----------------- | ------- | ----------- | -------- | -
|                          |  | (Yen in millions) |        
|                          |  | Assets            |         | Liabilities |         
|2005:                     |  |                   |         |             |          |  
|Interest rate swaps       |  | ¥                 | 183,902 |             | (118,606 | )
|Foreign exchange forwards |  |                   | 227     |             | (3,509   | )
|Currency swaps            |  |                   | 13,017  |             | (17,269  | )
|Credit default swaps      |  |                   | 3,055   |             | (5,446   | )
|Bond futures              |  |                   | 400     |             | (1,017   | )
|Equity index options      |  |                   | 1,589   |             | (1,225   | )
|Equity index futures      |  |                   | 141     |             | (178     | )
|Commodity swaps           |  |                   | 10,461  |             | (10,010  | )
|Other                     |  |                   | 4,399   |             | (2,718   | )
|                          |  |                   |         |             |          |  
|Total derivatives         |  | ¥                 | 217,191 |             | (159,978 | )
|                          |  |                   |         |             |          |  
|2004:                     |  |                   |         |             |          |  
|Interest rate swaps       |  | ¥                 | 203,143 |             | (123,266 | )
|Foreign exchange forwards |  |                   | 1,959   |             | (197     | )
|Currency swaps            |  |                   | 13,430  |             | (18,806  | )
|Credit default swaps      |  |                   | 4,383   |             | (10,772  | )
|Bond futures              |  |                   | 226     |             | (136     | )
|Equity index options      |  |                   | 188     |             | (144     | )
|Equity index futures      |  |                   | 63      |             | (1,089   | )
|Commodity swaps           |  |                   | 1,556   |             | (1,119   | )
|Other                     |  |                   | 874     |             | (938     | )
|                          |  |                   |         |             |          |  
|Total derivatives         |  | ¥                 | 225,822 |             | (156,467 | )
|                          |  |                   |         |             |          |  



The following methods
and assumptions were used by the Company in estimating the fair values of its derivative financial instruments:



Interest rate swaps



The fair values of interest rate swaps are based on the estimated present values the Company would receive or pay to terminate agreements, taking into consideration current interest rates and the current
creditworthiness of the counterparties.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Foreign exchange forwards and currency swaps



The fair values of foreign exchange derivatives including forwards and currency swaps are estimated by obtaining current market quotes from
banks.



Credit default swaps



The fair values of credit default swaps are estimated by obtaining current market quotes
from counterparties, if available. If quoted market prices are not available, as is the case primarily with credit default swaps on pools of multiple reference assets, then the fair value is based upon estimates calculated by the Companys
internal model reflecting prevailing market conditions and certain other factors relating to the structure of the transaction.



Equity index futures and options, and bond futures



The fair values of equity index futures, equity index options and bond futures are based on the official market quotes.



Commodity swaps



The fair values of commodity swaps are based upon estimates calculated by the Companys internal model reflecting prevailing market
conditions and certain other factors relating to the structure of the transaction.



Limitations



Fair value estimates are made at a specific point
in time, based on relevant market information and information about the financial instruments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.
Changes in assumptions could significantly affect the estimates.



18.
Business Segments



The Companys business segment information is
derived from the Companys internal management reporting system used by management to measure the performance of its business segments. The business segment information is based on financial information prepared 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 an U.S. GAAP basis.



During the year ended March 31, 2005, the Company completed an internal reorganization which included an integration of the Companys two main operating property and casualty subsidiaries in Japan. Due mainly to this reorganization,
the Company has modified its internal management reporting system. This has resulted in a change during the year ended March 31, 2005 of the reportable business segments as well as the internal management information presented. The comparative
business segment disclosure presented below for the years ended March 31, 2004 and 2003 has also been reclassified to conform to the presentation for the year ended March 31, 2005.



The Company is currently organized according to the products and services it offers. These segments are as follows:



| | 1. | Property and casualty.The Company writes insurance policies, through its subsidiary Tokio Marine & Nichido, for the following lines of business: Marine;
Fire and Allied; Voluntary Automobile; Personal
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



| | Accident; Compulsory Automobile Liability Insurance (CALI); and Other, principally covering risks located in Japan (for Marine, covering risks of
Japanese businesses located in Japan or elsewhere). The Companys management evaluates the results of the segment based upon Japanese GAAP premiums written and loss ratio.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Life.The life insurance segment primarily assumes whole-life insurance and medical insurance. The Companys management evaluates the results of this segment based upon
Japanese GAAP income before income tax expense.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | Other. The Company engages in certain other businesses, including the investment management business and foreign operations. Such other businesses are not significant on a
segmental level.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



There is no revenue derived
from transactions with a single major external customer amounting to 10% or more of the Companys revenue for the years ended March 31, 2005, 2004 and 2003.



The Companys management does not evaluate the results of each segment based upon assets.



The business segment information derived from the Companys internal
management reporting system is summarized in the two types of tables below. The internal reporting presentation differs from that utilized in the Companys external Japanese GAAP financial reporting. Principal presentational differences are:



| |  |  | Summarized income statement. The Companys internal management reporting is more summarized than that presented in the Companys external Japanese GAAP financial
statements.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Subtotals. The external financial reporting does not include the subtotals presented in the internal management reports for P&C underwriting profits nor does it include
the P&C loss ratio.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The first set of tables
summarizes the information by the three operating segments while the second set of tables provides information on the property and casualty (P&C) business by major internal reporting units, in each case for the years ended March 31,
2005, 2004 and 2003.



F-55



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Information by operating segments is as follows:



|                                                       |  |                      |            |   |      |           |   |       |         |   |                         |            |   |                           |         |   |              |            |  
|------------------------------------------------------ |  | -------------------- | ---------- | - | ---- | --------- | - | ----- | ------- | - | ----------------------- | ---------- | - | ------------------------- | ------- | - | ------------ | ---------- | -
|                                                       |  | (Yen in millions)    |           
|                                                       |  | Property andcasualty |            |   | Life |           |   | Other |         |   | Totalreportablesegments |            |   | Eliminationandadjustments |         |   | Consolidated |           
|2005:                                                  |  |                      |            |   |      |           |   |       |         |   |                         |            |   |                           |         |   |              |            |  
|P&C premiums written (1)                               |  | ¥                    | 1,883,332  |   |      |          |   |       | 41,783  |   |                         | 1,925,115  |   |                           | (34     | ) |              | 1,925,081  |  
|P&C losses paid (2)                                    |  |                      | (1,122,847 | ) |      |          |   |       | (21,263 | ) |                         | (1,144,110 | ) |                           | 96      |   |              | (1,144,014 | )
|P&C losses adjustment expenses paid (2)                |  |                      | (71,290    | ) |      |          |   |       | (2,547  | ) |                         | (73,837    | ) |                           | 1,804   |   |              | (72,033    | )
|Life premiums (3)                                      |  |                      |           |   |      | 491,442   |   |       | 415     |   |                         | 491,857    |   |                           | (60,306 | ) |              | 431,551    |  
|Policy benefits and losses paid for life (3)           |  |                      |           |   |      | (94,681   | ) |       | (258    | ) |                         | (94,939    | ) |                           | 60,671  |   |              | (34,268    | )
|Underwriting expenses (3)                              |  |                      | (592,222   | ) |      | (70,378   | ) |       | (24,728 | ) |                         | (687,328   | ) |                           | (29,307 | ) |              | (716,635   | )
|P&C underwriting profit                                |  |                      | 96,973     |   |      |          |   |       | (6,755  | ) |                         |           |   |                           |        |   |              |           |  
|P&C loss ratio (4)                                     |  |                      | 63.4       | % |      |          |   |       |        |   |                         |           |   |                           |        |   |              |           |  
|Investment income and realized gains on investment (3) |  |                      | 168,409    |   |      | 40,792    |   |       | 8,980   |   |                         | 218,181    |   |                           | (31,070 | ) |              | 187,111    |  
|Other income (expenses)  net (3) (5)                  |  |                      | (130,169   | ) |      | (372,524  | ) |       | 6,652   |   |                         | (496,041   | ) |                           | 11,427  |   |              | (484,614   | )
|                                                       |  |                      |            |   |      |           |   |       |         |   |                         |            |   |                           |         |   |              |            |  
|Japanese GAAP income before income tax expense         |  | ¥                    | 135,213    |   |      | (5,349    | ) |       | 9,034   |   |                         | 138,898    |   |                           | (46,719 | ) |              | 92,179     |  
|                                                       |  |                      |            |   |      |           |   |       |         |   |                         |            |   |                           |         |   |              |            |  
|Total assets (3)                                       |  | ¥                    | 9,306,281  |   |      | 2,055,024 |   |       | 357,908 |   |                         | 11,719,213 |   |                           | (94,717 | ) |              | 11,624,496 |  

---

|(1) | P&C premiums written represents P&C premiums written in accordance with Japanese GAAP, except that it excludes premiums related to savings contracts.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | P&C losses paid and P&C loss adjustment expenses paid represent P&C losses paid and P&C loss adjustment expenses paid during the period in accordance with Japanese
GAAP, except that it excludes case reserves and incurred but not reported accruals.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Calculated in accordance with Japanese GAAP.
|--- | --------------------------------------------

|(4) | Ratio of losses and loss adjustment expenses paid to premiums written.
|--- | ----------------------------------------------------------------------

|(5) | Other Income (expenses)  net includes the following:
|--- | -----------------------------------------------------

| | (a) | Change in liability for: unearned premium reserves; future benefits; case reserves; and incurred but not reported;
| | --- | ------------------------------------------------------------------------------------------------------------------

| | (b) | Premiums received on investment deposit contracts; and
| | --- | ------------------------------------------------------

| | (c) | Other income and expenses on a net basis.
| | --- | -----------------------------------------

After
application of items in (a) and (b) above, the amounts presented under the caption Japanese GAAP income before income tax expense in this table generally reflect premiums recognized on an earned basis and losses recognized on an incurred
basis during the periods presented.



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



|                                                       |  |                      |           |   |      |           |   |       |         |   |                         |            |   |                            |         |   |              |            |  
|------------------------------------------------------ |  | -------------------- | --------- | - | ---- | --------- | - | ----- | ------- | - | ----------------------- | ---------- | - | -------------------------- | ------- | - | ------------ | ---------- | -
|                                                       |  | (Yen in millions)    |          
|                                                       |  | Property andcasualty |           |   | Life |           |   | Other |         |   | Totalreportablesegments |            |   | Eliminationand adjustments |         |   | Consolidated |           
|2004:                                                  |  |                      |           |   |      |           |   |       |         |   |                         |            |   |                            |         |   |              |            |  
|P&C premiums written (1)                               |  | ¥                    | 1,904,225 |   |      |          |   |       | 39,405  |   |                         | 1,943,630  |   |                            | (21     | ) |              | 1,943,609  |  
|P&C losses paid (2)                                    |  |                      | (943,640  | ) |      |          |   |       | (13,409 | ) |                         | (957,049   | ) |                            | 97      |   |              | (956,952   | )
|P&C losses adjustment expenses paid (2)                |  |                      | (75,630   | ) |      |          |   |       | (2,259  | ) |                         | (77,889    | ) |                            | 1,629   |   |              | (76,260    | )
|Life premiums (3)                                      |  |                      |          |   |      | 358,140   |   |       | 607     |   |                         | 358,747    |   |                            | (47,855 | ) |              | 310,892    |  
|Policy benefits and losses paid for life (3)           |  |                      |          |   |      | (75,349   | ) |       | (477    | ) |                         | (75,826    | ) |                            | 47,731  |   |              | (28,095    | )
|Underwriting expenses (3)                              |  |                      | (599,860  | ) |      | (57,866   | ) |       | (19,557 | ) |                         | (677,283   | ) |                            | (23,802 | ) |              | (701,085   | )
|P&C underwriting profit                                |  |                      | 285,095   |   |      |          |   |       | 4,180   |   |                         |           |   |                            |        |   |              |           |  
|P&C loss ratio (4)                                     |  |                      | 53.5      | % |      |          |   |       |        |   |                         |           |   |                            |        |   |              |           |  
|Investment income and realized gains on investment (3) |  |                      | 101,079   |   |      | 33,107    |   |       | 9,765   |   |                         | 143,951    |   |                            | (22,834 | ) |              | 121,117    |  
|Other income (expenses)  net (3) (5)                  |  |                      | (210,213  | ) |      | (257,829  | ) |       | (3,016  | ) |                         | (471,058   | ) |                            | 22,050  |   |              | (449,008   | )
|                                                       |  |                      |           |   |      |           |   |       |         |   |                         |            |   |                            |         |   |              |            |  
|Japanese GAAP income before income tax expense         |  | ¥                    | 175,961   |   |      | 203       |   |       | 11,059  |   |                         | 187,223    |   |                            | (23,005 | ) |              | 164,218    |  
|                                                       |  |                      |           |   |      |           |   |       |         |   |                         |            |   |                            |         |   |              |            |  
|Total assets (3)                                       |  | ¥                    | 9,077,139 |   |      | 1,680,809 |   |       | 320,338 |   |                         | 11,078,286 |   |                            | (72,030 | ) |              | 11,006,256 |  

---

|(1) | P&C premiums written represents P&C premiums written in accordance with Japanese GAAP, except that it excludes premiums related to savings contracts.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | P&C losses paid and P&C loss adjustment expenses paid represent P&C losses paid and P&C loss adjustment expenses paid during the period in accordance with Japanese
GAAP, except that it excludes case reserves and incurred but not reported accruals.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Calculated in accordance with Japanese GAAP.
|--- | --------------------------------------------

|(4) | Ratio of losses and loss adjustment expenses paid to premiums written.
|--- | ----------------------------------------------------------------------

|(5) | Other Income (expenses)  net includes the following:
|--- | -----------------------------------------------------

| | (a) | Change in liability for: unearned premiums reserves; future benefits; case reserves; and incurred but not reported;
| | --- | -------------------------------------------------------------------------------------------------------------------

| | (b) | Premiums received on investment deposit contracts; and
| | --- | ------------------------------------------------------

| | (c) | Other income and expenses on a net basis.
| | --- | -----------------------------------------

After
application of items in (a) and (b) above, the amounts presented under the caption Japanese GAAP income before income tax expense in this table generally reflect premiums recognized on an earned basis and losses recognized on an incurred
basis during the periods presented.



F-57



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



|                                                       |  |                      |           |   |      |           |   |       |         |   |                         |            |   |                           |          |   |              |           |  
|------------------------------------------------------ |  | -------------------- | --------- | - | ---- | --------- | - | ----- | ------- | - | ----------------------- | ---------- | - | ------------------------- | -------- | - | ------------ | --------- | -
|                                                       |  | (Yen in millions)    |          
|                                                       |  | Property andcasualty |           |   | Life |           |   | Other |         |   | Totalreportablesegments |            |   | Eliminationandadjustments |          |   | Consolidated |          
|2003:                                                  |  |                      |           |   |      |           |   |       |         |   |                         |            |   |                           |          |   |              |           |  
|P&C premiums written (1)                               |  | ¥                    | 1,866,079 |   |      |          |   |       | 30,594  |   |                         | 1,896,673  |   |                           | (34      | ) |              | 1,896,639 |  
|P&C losses paid (2)                                    |  |                      | (908,883  | ) |      |          |   |       | (18,565 | ) |                         | (927,448   | ) |                           | 107      |   |              | (927,341  | )
|P&C losses adjustment expenses paid (2)                |  |                      | (74,051   | ) |      |          |   |       | (2,143  | ) |                         | (76,194    | ) |                           | 1,426    |   |              | (74,768   | )
|Life premiums (3)                                      |  |                      |          |   |      | 443,236   |   |       | 819     |   |                         | 444,055    |   |                           | (39,405  | ) |              | 404,650   |  
|Policy benefits and losses paid for life (3)           |  |                      |          |   |      | (65,095   | ) |       | (430    | ) |                         | (65,525    | ) |                           | 39,385   |   |              | (26,140   | )
|Underwriting expenses (3)                              |  |                      | (609,316  | ) |      | (53,472   | ) |       | (18,865 | ) |                         | (681,653   | ) |                           | (25,669  | ) |              | (707,322  | )
|P&C underwriting profit                                |  |                      | 273,829   |   |      |          |   |       | (8,979  | ) |                         |           |   |                           |         |   |              |          |  
|P&C loss ratio (4)                                     |  |                      | 52.7      | % |      |          |   |       |        |   |                         |           |   |                           |         |   |              |          |  
|Investment income and realized gains on investment (3) |  |                      | 131,611   |   |      | 46,047    |   |       | 9,915   |   |                         | 187,573    |   |                           | (80,940  | ) |              | 106,633   |  
|Other income (expenses)  net (3)(5)                   |  |                      | (243,130  | ) |      | (371,975  | ) |       | 3,573   |   |                         | (611,532   | ) |                           | 18,692   |   |              | (592,840  | )
|                                                       |  |                      |           |   |      |           |   |       |         |   |                         |            |   |                           |          |   |              |           |  
|Japanese GAAP income before income tax expense         |  | ¥                    | 162,310   |   |      | (1,259    | ) |       | 4,898   |   |                         | 165,949    |   |                           | (86,438  | ) |              | 79,511    |  
|                                                       |  |                      |           |   |      |           |   |       |         |   |                         |            |   |                           |          |   |              |           |  
|Total assets (3)                                       |  | ¥                    | 8,622,237 |   |      | 1,291,375 |   |       | 299,242 |   |                         | 10,212,854 |   |                           | (267,045 | ) |              | 9,945,809 |  

---

|(1) | P&C premiums written represents P&C premiums written in accordance with Japanese GAAP, except that it excludes premiums related to savings contracts.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | P&C losses paid and P&C loss adjustment expenses paid represent P&C losses paid and P&C loss adjustment expenses paid during the period in accordance with Japanese
GAAP, except that it excludes case reserves and incurred but not reported accruals.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Calculated in accordance with Japanese GAAP.
|--- | --------------------------------------------

|(4) | Ratio of losses and loss adjustment expenses paid to premiums written.
|--- | ----------------------------------------------------------------------

|(5) | Other Income (expenses)  net includes the following:
|--- | -----------------------------------------------------

| | (a) | Change in liability for: unearned premiums reserves; future benefits; case reserves; and incurred but not reported;
| | --- | -------------------------------------------------------------------------------------------------------------------

| | (b) | Premiums received on investment deposit contracts; and
| | --- | ------------------------------------------------------

| | (c) | Other income and expenses on a net basis.
| | --- | -----------------------------------------

After
application of items in (a) and (b) above, the amounts presented under the caption Japanese GAAP income before income tax expense in this table generally reflect premiums recognized on an earned basis and losses recognized on an incurred
basis during the periods presented.



F-58



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##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Information on major P&C internal reporting units is as follows:



|                                  |  |                   |        |   |                |         |   |                      |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|--------------------------------- |  | ----------------- | ------ | - | -------------- | ------- | - | -------------------- | ------- | - | ---------------- | ------- | - | ---- | ------- | - | ----- | ------- | - | ----- | --------- | -
|                                  |  | (Yen in millions) |       
|                                  |  | Marine            |        |   | Fire andAllied |         |   | VoluntaryAuto-mobile |         |   | PersonalAccident |         |   | CALI |         |   | Other |         |   | Total |          
|2005:                             |  |                   |        |   |                |         |   |                      |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|Premiums written (1)              |  | ¥                 | 65,021 |   |                | 245,583 |   |                      | 854,048 |   |                  | 149,615 |   |      | 328,847 |   |       | 240,218 |   |       | 1,883,332 |  
|Losses paid (2)                   |  |                   | 34,069 |   |                | 181,422 |   |                      | 521,525 |   |                  | 60,287  |   |      | 192,041 |   |       | 133,503 |   |       | 1,122,847 |  
|Loss adjustment expenses paid (2) |  |                   | 1,790  |   |                | 3,822   |   |                      | 37,342  |   |                  | 5,103   |   |      | 17,252  |   |       | 5,981   |   |       | 71,290    |  
|Loss ratio (3)                    |  |                   | 55.2   | % |                | 75.4    | % |                      | 65.4    | % |                  | 43.7    | % |      | 63.6    | % |       | 58.1    | % |       | 63.4      | %

---

|(1) | Premiums written represents premiums written in accordance with Japanese GAAP, except that it excludes premiums related to savings contracts.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Losses paid and loss adjustment expenses paid represent losses paid and loss adjustment expenses paid during the period in accordance with Japanese GAAP, except that it excludes
case reserve and incurred but not reported accruals.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Ratio of losses and loss adjustment expenses paid to premiums written.
|--- | ----------------------------------------------------------------------



|                                  |  |                   |        |   |                |         |   |                      |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|--------------------------------- |  | ----------------- | ------ | - | -------------- | ------- | - | -------------------- | ------- | - | ---------------- | ------- | - | ---- | ------- | - | ----- | ------- | - | ----- | --------- | -
|                                  |  | (Yen in millions) |       
|                                  |  | Marine            |        |   | Fire andAllied |         |   | VoluntaryAuto-mobile |         |   | PersonalAccident |         |   | CALI |         |   | Other |         |   | Total |          
|2004:                             |  |                   |        |   |                |         |   |                      |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|Premiums written (1)              |  | ¥                 | 60,780 |   |                | 252,825 |   |                      | 871,761 |   |                  | 151,062 |   |      | 333,642 |   |       | 234,155 |   |       | 1,904,225 |  
|Losses paid (2)                   |  |                   | 36,471 |   |                | 78,529  |   |                      | 501,773 |   |                  | 65,228  |   |      | 137,383 |   |       | 124,256 |   |       | 943,640   |  
|Loss adjustment expenses paid (2) |  |                   | 1,843  |   |                | 3,075   |   |                      | 41,729  |   |                  | 5,407   |   |      | 17,530  |   |       | 6,046   |   |       | 75,630    |  
|Loss ratio (3)                    |  |                   | 63.0   | % |                | 32.3    | % |                      | 62.3    | % |                  | 46.8    | % |      | 46.4    | % |       | 55.6    | % |       | 53.5      | %

---

|(1) | Premiums written represents premiums written in accordance with Japanese GAAP, except that it excludes premiums related to savings contracts.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Losses paid and loss adjustment expenses paid represent losses paid and loss adjustment expenses paid during the period in accordance with Japanese GAAP, except that it excludes
case reserve and incurred but not reported accruals.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Ratio of losses and loss adjustment expenses paid to premiums written.
|--- | ----------------------------------------------------------------------



|                                  |  |                   |        |   |                |         |   |                      |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|--------------------------------- |  | ----------------- | ------ | - | -------------- | ------- | - | -------------------- | ------- | - | ---------------- | ------- | - | ---- | ------- | - | ----- | ------- | - | ----- | --------- | -
|                                  |  | (Yen in millions) |       
|                                  |  | Marine            |        |   | Fire andAllied |         |   | VoluntaryAuto-mobile |         |   | PersonalAccident |         |   | CALI |         |   | Other |         |   | Total |          
|2003:                             |  |                   |        |   |                |         |   |                      |         |   |                  |         |   |      |         |   |       |         |   |       |           |  
|Premiums written (1)              |  | ¥                 | 59,002 |   |                | 244,642 |   |                      | 893,507 |   |                  | 153,233 |   |      | 280,884 |   |       | 234,811 |   |       | 1,866,079 |  
|Losses paid (2)                   |  |                   | 30,636 |   |                | 86,399  |   |                      | 504,121 |   |                  | 67,861  |   |      | 100,465 |   |       | 119,401 |   |       | 908,883   |  
|Loss adjustment expenses paid (2) |  |                   | 1,812  |   |                | 3,081   |   |                      | 39,307  |   |                  | 6,716   |   |      | 16,822  |   |       | 6,313   |   |       | 74,051    |  
|Loss ratio (3)                    |  |                   | 55.0   | % |                | 36.6    | % |                      | 60.8    | % |                  | 48.7    | % |      | 41.8    | % |       | 53.5    | % |       | 52.7      | %

---

|(1) | Premiums written represents premiums written in accordance with Japanese GAAP, except that it excludes premiums related to savings contracts.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------



F-59



---

##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



|(2) | Losses paid and loss adjustment expenses paid represent losses paid and loss adjustment expenses paid during the period in accordance with Japanese GAAP, except that it excludes
case reserve and incurred but not reported accruals.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | Ratio of losses and loss adjustment expenses paid to premiums written.
|--- | ----------------------------------------------------------------------



Reconciliation to U.S. GAAP



As noted above, the measurement bases of the income and expense items covered in the Companys internal management reporting system are different from those
accompanying consolidated income statement prepared in accordance with U.S. GAAP.



Reconciliation of total premiums per internal management reporting to premiums earned shown on the consolidated income statements prepared in accordance with U.S. GAAP for the years ended March 31, 2005, 2004 and 2003
is as follows:



|                                                                                                            |  |                   |           |   |      |           |   |      |           |  
|----------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---- | --------- | - | ---- | --------- | -
|                                                                                                            |  | (Yen in millions) |          
|                                                                                                            |  | 2005              |           |   | 2004 |           |   | 2003 |          
|P&C premiums written                                                                                        |  | ¥                 | 1,925,081 |   |      | 1,943,609 |   |      | 1,896,639 |  
|Life premiums                                                                                               |  |                   | 431,551   |   |      | 310,892   |   |      | 404,650   |  
|                                                                                                            |  |                   |           |   |      |           |   |      |           |  
|Total premiums per internal management reporting                                                            |  |                   | 2,356,632 |   |      | 2,254,501 |   |      | 2,301,289 |  
|                                                                                                            |  |                   |          
|Reclassification of investment contracts or universal-life type contracts of life insurance                 |  |                   | (178,182  | ) |      | (69,339   | ) |      | (148,673  | )
|Increase in unearned premiums in Japanese GAAP                                                              |  |                   | (69,803   | ) |      | (128,362  | ) |      | (142,984  | )
|Adjustment for difference in the measurement basis between Japanese GAAP and U.S.GAAP for unearned premiums |  |                   | 41,602    |   |      | 50,180    |   |      | 10,089    |  
|Other adjustments  net                                                                                     |  |                   | (1,230    | ) |      | (5,224    | ) |      | (2,776    | )
|                                                                                                            |  |                   |           |   |      |           |   |      |           |  
|Premiums earned (U.S.GAAP)                                                                                  |  | ¥                 | 2,149,019 |   |      | 2,101,756 |   |      | 2,016,945 |  
|                                                                                                            |  |                   |           |   |      |           |   |      |           |  
|Premiums earned (U.S.GAAP) consists of:                                                                     |  |                   |           |   |      |           |   |      |           |  
|P&C premiums                                                                                                |  | ¥                 | 1,895,650 |   |      | 1,860,203 |   |      | 1,760,968 |  
|Life premiums                                                                                               |  |                   | 253,369   |   |      | 241,553   |   |      | 255,977   |  
|                                                                                                            |  |                   |           |   |      |           |   |      |           |  
|Premiums earned (U.S.GAAP)                                                                                  |  | ¥                 | 2,149,019 |   |      | 2,101,756 |   |      | 2,016,945 |  
|                                                                                                            |  |                   |           |   |      |           |   |      |           |  



F-60



---

##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



Reconciliation of the total amount of the Companys Japanese GAAP income before income tax
expense under its internal management reporting system to income before income tax expense shown on the consolidated income statements prepared in accordance with U.S. GAAP for the years ended March 31, 2005, 2004 and 2003 is as follows:



|                                                                                                                                                         |  |                   |         |   |      |         |   |      |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---- | ------- | - | ---- | ------- | -
|                                                                                                                                                         |  | (Yen in millions) |        
|                                                                                                                                                         |  | 2005              |         |   | 2004 |         |   | 2003 |        
|Japanese GAAP income before income tax expense                                                                                                           |  | ¥                 | 92,179  |   |      | 164,218 |   |      | 79,511  |  
|                                                                                                                                                         |  |                   |        
|Reversal of Japanese statutory reserves                                                                                                                  |  |                   | (28,685 | ) |      | 61,662  |   |      | 70,537  |  
|Adjustment for difference in the measurement basis between Japanese GAAP and U.S.GAAP for incurred but not reported and loss adjustment
expense accruals |  |                   | (33,129 | ) |      | (74,830 | ) |      | 9,122   |  
|Adjustment for difference in the measurement basis between Japanese GAAP and U.S.GAAP for unearned premiums                                              |  |                   | 41,602  |   |      | 50,180  |   |      | 10,089  |  
|Adjustment for difference in the measurement basis between Japanese GAAP and U.S.GAAP for future policy benefits and losses                              |  |                   | 17,781  |   |      | 13,380  |   |      | 26,495  |  
|Adjustment to recognize deferred policy acquisition cost                                                                                                 |  |                   | 14,671  |   |      | 30,923  |   |      | 6,994   |  
|Adjustment for book value difference between Japanese GAAP and U.S.GAAP for realized gains (losses) on investments                                       |  |                   | 29,311  |   |      | (21,422 | ) |      | (19,488 | )
|Adjustment for accounting difference between Japanese GAAP and U.S.GAAP for gains (losses) on derivatives                                                |  |                   | (22,658 | ) |      | (66,432 | ) |      | 24,971  |  
|Adjustment to remove amortization of negative goodwill in Japanese GAAP                                                                                  |  |                   | (4,861  | ) |      | (8,404  | ) |      | (8,421  | )
|Other                                                                                                                                                    |  |                   | 395     |   |      | 2,992   |   |      | 1,498   |  
|                                                                                                                                                         |  |                   |         |   |      |         |   |      |         |  
|Income before income tax expense (U.S.GAAP)                                                                                                              |  | ¥                 | 106,606 |   |      | 152,267 |   |      | 201,308 |  
|                                                                                                                                                         |  |                   |         |   |      |         |   |      |         |  



Reconciliation of the
total amount of the Companys Japanese GAAP total assets under its internal management reporting system to total assets shown on its consolidated balance sheets prepared in accordance with U.S. GAAP as of March 31, 2005 and 2004 is as follows:



|                                                                                                                       |  |                   |            |   |      |            |  
|---------------------------------------------------------------------------------------------------------------------- |  | ----------------- | ---------- | - | ---- | ---------- | -
|                                                                                                                       |  | (Yen in millions) |           
|                                                                                                                       |  | 2005              |            |   | 2004 |           
|Japanese GAAP total assets                                                                                             |  | ¥                 | 11,624,496 |   |      | 11,006,256 |  
|                                                                                                                       |  |                  
|Adjustment to recognize deferred policy acquisition costs                                                              |  |                   | 468,074    |   |      | 453,403    |  
|Adjustment to present prepaid reinsurance premiums on a gross basis                                                    |  |                   | 302,886    |   |      | 318,432    |  
|Adjustment to present reinsurance recoverable on losses on a gross basis                                               |  |                   | 351,937    |   |      | 342,217    |  
|Adjustment for difference in measurement basis between Japanese GAAP and U.S. GAAP for fixed assets                    |  |                   | (62,704    | ) |      | (92,522    | )
|Adjustment to net deferred tax assets with deferred tax liabilities                                                    |  |                   | (25,179    | ) |      | (23,477    | )
|Adjustment to record incremental fair value for non-listed stocks                                                      |  |                   | 95,952     |   |      | 86,330     |  
|Adjustment to recognize variable interest entities consolidated under U.S. GAAP                                        |  |                   | 42,186     |   |      | 7,812      |  
|Adjustment to present derivative assets on a gross basis                                                               |  |                   | 75,984     |   |      | 74,255     |  
|Adjustment to apply claim payments already made to corresponding losses, claims and loss adjustment expenses liability |  |                   | (36,594    | ) |      | (36,269    | )
|Adjustment to recognize intangible asset relating to additional minimum pension liability                              |  |                   | 23,156     |   |      | 25,362     |  
|Other                                                                                                                  |  |                   | 34,704     |   |      | 38,574     |  
|                                                                                                                       |  |                   |            |   |      |            |  
|Total assets (U.S. GAAP)                                                                                               |  | ¥                 | 12,894,898 |   |      | 12,200,373 |  
|                                                                                                                       |  |                   |            |   |      |            |  



F-61



---

##### Table of Contents

MILLEA HOLDINGS, INC.

AND SUBSIDIARIES



Notes to Consolidated Financial Statements(Continued)

March 31, 2005, 2004 and 2003



19. Subsequent Events



On July 7, 2005, the Company acquired the Brazilian Business Unit of ABN AMRO Bank N.V. by purchasing all equity shares of Real Seguros
S.A., a property and casualty insurer, and 50% of the total equity of Real Vida e Previdencia S.A., a life and pension insurer. The details of the acquisition are as follows:



1. Companies acquired



(1) A Property and Casualty Insurer

Company name: Real Seguros S.A.

Head office: Sao Paulo, Brazil

Business lines: Property and casualty insurance

Gross premium written (for the fiscal year ended December 31, 2004):

1,098 million Real (¥51,606 million)

Total assets (as of December 31, 2004): 1,257 million Real (¥59,079 million)



(2) A Life and Pension Insurer

Company name: Real Vida e Previdencia S.A.

Head office: Sao Paulo, Brazil

Business lines: Life insurance and annuity pension

Gross premium written (for the fiscal year ended December 31, 2004):

777 million Real (¥36,519 million)

Total assets (as of December 31, 2004): 2,154 million Real (¥101,238 million)



2. Purpose



The purpose of the acquisition is to further expand the insurance sales network that the Company has built
in Brazil, where the economy is expected to grow significantly.



3. Acquision cost



Approximately 960
million Real (¥45,120 million)



Note: The Real amounts are
translated into yen at the rate of 47 yen to the Real, the approximate exchange rate as of July 7, 2005.



F-62



---

##### Table of Contents

Schedule I



MILLEA HOLDINGS,
INC.

AND SUBSIDIARIES



Summary of Investments - Other than Investments in Related Parties



March 31, 2005



|                                                    |  |                   |           |       |           |                                            |           
|--------------------------------------------------- |  | ----------------- | --------- | ----- | --------- | ------------------------------------------ | ----------
|                                                    |  | (Yen in millions)
|Type of investment                                  |  | Cost              |           | Value |           | Amount at which shown in the balance sheet
|Securities held to maturity:                        |  |                   |           |       |           |                                            |           
|Fixed maturities:                                   |  |                   |           |       |           |                                            |           
|Bonds and notes:                                    |  |                   |           |       |           |                                            |           
|Government and government agencies and authorities: |  |                   |           |       |           |                                            |           
|Other                                               |  | ¥                 | 1,109,715 |       | 1,090,487 |                                            | 1,109,715 
|                                                    |  |                   |           |       |           |                                            |           
|Total fixed maturities held to maturity             |  |                   | 1,109,715 |       | 1,090,487 |                                            | 1,109,715 
|                                                    |  |                   |           |       |           |                                            |           
|Securities available for sale:                      |  |                   |           |       |           |                                            |           
|Fixed maturities:                                   |  |                   |           |       |           |                                            |           
|Bonds and notes:                                    |  |                   |           |       |           |                                            |           
|Government and government agencies and authorities: |  |                   |           |       |           |                                            |           
|United States                                       |  |                   | 322,554   |       | 316,054   |                                            | 316,054   
|Other                                               |  |                   | 2,877,858 |       | 2,887,701 |                                            | 2,887,701 
|                                                    |  |                   |           |       |           |                                            |           
|                                                    |  |                   | 3,200,412 |       | 3,203,755 |                                            | 3,203,755 
|                                                    |  |                   |           |       |           |                                            |           
|States, municipalities and political subdivisions:  |  |                   |           |       |           |                                            |           
|United States                                       |  |                   | 207       |       | 212       |                                            | 212       
|Other                                               |  |                   | 117,977   |       | 121,591   |                                            | 121,591   
|                                                    |  |                   |           |       |           |                                            |           
|                                                    |  |                   | 118,184   |       | 121,803   |                                            | 121,803   
|                                                    |  |                   |           |       |           |                                            |           
|Public utilities                                    |  |                   | 73,711    |       | 75,089    |                                            | 75,089    
|Convertibles and bonds with warrants attached       |  |                   | 1,720     |       | 1,841     |                                            | 1,841     
|Mortgage-backed securities                          |  |                   | 48,610    |       | 48,327    |                                            | 48,327    
|All other corporate bonds                           |  |                   | 505,758   |       | 511,777   |                                            | 511,777   
|                                                    |  |                   |           |       |           |                                            |           
|Total bonds and notes                               |  |                   | 3,948,395 |       | 3,962,592 |                                            | 3,962,592 
|                                                    |  |                   |           |       |           |                                            |           
|Redeemable preferred stock                          |  |                   | 49        |       | 49        |                                            | 49        
|                                                    |  |                   |           |       |           |                                            |           
|Total fixed maturities available for sale           |  |                   | 3,948,444 |       | 3,962,641 |                                            | 3,962,641 
|                                                    |  |                   |           |       |           |                                            |           
|Equity securities:                                  |  |                   |           |       |           |                                            |           
|Common stocks:                                      |  |                   |           |       |           |                                            |           
|Public utilities                                    |  |                   | 34,399    |       | 69,146    |                                            | 69,146    
|Banks, trust and insurance companies                |  |                   | 287,841   |       | 479,205   |                                            | 479,205   
|Industrial, miscellaneous and all other             |  |                   | 1,295,210 |       | 2,921,565 |                                            | 2,921,565 
|                                                    |  |                   |           |       |           |                                            |           
|Total common stocks                                 |  |                   | 1,617,450 |       | 3,469,916 |                                            | 3,469,916 
|                                                    |  |                   |           |       |           |                                            |           
|Nonredeemable preferred stocks                      |  |                   | 178,586   |       | 175,863   |                                            | 175,863   
|                                                    |  |                   |           |       |           |                                            |           
|Total equity securities available for sale          |  |                   | 1,796,036 |       | 3,645,779 |                                            | 3,645,779 
|                                                    |  |                   |           |       |           |                                            |           
|Total securities available for sale                 |  |                   | 5,744,480 |       | 7,608,420 |                                            | 7,608,420 
|                                                    |  |                   |           |       |           |                                            |           
|Trading securities:                                 |  |                   |           |       |           |                                            |           
|Fixed maturities                                    |  |                   | 38,849    |       | 37,665    |                                            | 37,665    
|Equity securities                                   |  |                   | 202,150   |       | 204,213   |                                            | 204,213   
|                                                    |  |                   |           |       |           |                                            |           
|Total trading securities                            |  |                   | 240,999   |       | 241,878   |                                            | 241,878   
|                                                    |  |                   |           |       |           |                                            |           
|                                                    |  |                   | 7,095,194 |       | 8,940,785 |                                            | 8,960,013 
|                                                    |  |                   |           |       |           |                                            |           
|Mortgage loans on real estate                       |  |                   | 71,033    |       |           |                                            | 71,033    
|Investment real estate                              |  |                   | 134,180   |       |           |                                            | 134,180   
|Policy loans                                        |  |                   | 38,567    |       |           |                                            | 38,567    
|Other long-term investments                         |  |                   | 408,913   |       |           |                                            | 409,187   
|Short-term investments                              |  |                   | 691,769   |       |           |                                            | 691,769   
|                                                    |  |                   |           |       |           |                                            |           
|Total investments                                   |  | ¥                 | 8,439,656 |       |           |                                            | 10,304,749
|                                                    |  |                   |           |       |           |                                            |           



F-63



---

##### Table of Contents

Schedule I



MILLEA HOLDINGS, INC.

AND
SUBSIDIARIES



Summary of Investments - Other than
Investments in Related Parties



March 31, 2004



|                                                    |  |                   |           |       |           |                                            |          
|--------------------------------------------------- |  | ----------------- | --------- | ----- | --------- | ------------------------------------------ | ---------
|                                                    |  | (Yen in millions)
|Type of investment                                  |  | Cost              |           | Value |           | Amount at which shown in the balance sheet
|Securities held to maturity:                        |  |                   |           |       |           |                                            |          
|Fixed maturities:                                   |  |                   |           |       |           |                                            |          
|Bonds and notes:                                    |  |                   |           |       |           |                                            |          
|Government and government agencies and authorities: |  |                   |           |       |           |                                            |          
|Other                                               |  | ¥                 | 1,095,608 |       | 1,073,743 |                                            | 1,095,608
|All other corporate bonds                           |  |                   | 14,253    |       | 14,809    |                                            | 14,253   
|                                                    |  |                   |           |       |           |                                            |          
|Total fixed maturities held to maturity             |  |                   | 1,109,861 |       | 1,088,552 |                                            | 1,109,861
|                                                    |  |                   |           |       |           |                                            |          
|Securities available for sale:                      |  |                   |           |       |           |                                            |          
|Fixed maturities:                                   |  |                   |           |       |           |                                            |          
|Bonds and notes:                                    |  |                   |           |       |           |                                            |          
|Government and government agencies and authorities: |  |                   |           |       |           |                                            |          
|United States                                       |  |                   | 113,778   |       | 115,174   |                                            | 115,174  
|Other                                               |  |                   | 2,071,900 |       | 2,066,139 |                                            | 2,066,139
|                                                    |  |                   |           |       |           |                                            |          
|                                                    |  |                   | 2,185,678 |       | 2,181,313 |                                            | 2,181,313
|                                                    |  |                   |           |       |           |                                            |          
|States, municipalities and political subdivisions:  |  |                   |           |       |           |                                            |          
|United States                                       |  |                   | 1,055     |       | 1,102     |                                            | 1,102    
|Other                                               |  |                   | 171,977   |       | 177,113   |                                            | 177,113  
|                                                    |  |                   |           |       |           |                                            |          
|                                                    |  |                   | 173,032   |       | 178,215   |                                            | 178,215  
|                                                    |  |                   |           |       |           |                                            |          
|Public utilities                                    |  |                   | 60,172    |       | 60,792    |                                            | 60,792   
|Convertibles and bonds with warrants attached       |  |                   | 42,929    |       | 45,684    |                                            | 45,684   
|Mortgage-backed securities                          |  |                   | 22,893    |       | 22,316    |                                            | 22,316   
|All other corporate bonds                           |  |                   | 659,978   |       | 668,162   |                                            | 668,162  
|                                                    |  |                   |           |       |           |                                            |          
|Total bonds and notes                               |  |                   | 3,144,682 |       | 3,156,482 |                                            | 3,156,482
|                                                    |  |                   |           |       |           |                                            |          
|Redeemable preferred stock                          |  |                   | 53,100    |       | 53,100    |                                            | 53,100   
|                                                    |  |                   |           |       |           |                                            |          
|Total fixed maturities available for sale           |  |                   | 3,197,782 |       | 3,209,582 |                                            | 3,209,582
|                                                    |  |                   |           |       |           |                                            |          
|Equity securities:                                  |  |                   |           |       |           |                                            |          
|Common stocks:                                      |  |                   |           |       |           |                                            |          
|Public utilities                                    |  |                   | 41,214    |       | 77,356    |                                            | 77,356   
|Banks, trust and insurance companies                |  |                   | 310,431   |       | 487,624   |                                            | 487,624  
|Industrial, miscellaneous and all other             |  |                   | 1,303,644 |       | 2,857,418 |                                            | 2,857,418
|                                                    |  |                   |           |       |           |                                            |          
|Total common stocks                                 |  |                   | 1,655,289 |       | 3,422,398 |                                            | 3,422,398
|                                                    |  |                   |           |       |           |                                            |          
|Nonredeemable preferred stocks                      |  |                   | 37,168    |       | 34,976    |                                            | 34,976   
|                                                    |  |                   |           |       |           |                                            |          
|Total equity securities available for sale          |  |                   | 1,692,457 |       | 3,457,374 |                                            | 3,457,374
|                                                    |  |                   |           |       |           |                                            |          
|Total securities available for sale                 |  |                   | 4,890,239 |       | 6,666,956 |                                            | 6,666,956
|                                                    |  |                   |           |       |           |                                            |          
|Trading securities:                                 |  |                   |           |       |           |                                            |          
|Fixed maturities                                    |  |                   | 36,258    |       | 35,619    |                                            | 35,619   
|Equity securities                                   |  |                   | 11,418    |       | 12,894    |                                            | 12,894   
|                                                    |  |                   |           |       |           |                                            |          
|Total trading securities                            |  |                   | 47,676    |       | 48,513    |                                            | 48,513   
|                                                    |  |                   |           |       |           |                                            |          
|                                                    |  |                   | 6,047,776 |       | 7,804,021 |                                            | 7,825,330
|                                                    |  |                   |           |       |           |                                            |          
|Mortgage loans on real estate                       |  |                   | 129,076   |       |           |                                            | 129,076  
|Investment real estate                              |  |                   | 104,110   |       |           |                                            | 104,110  
|Policy loans                                        |  |                   | 33,610    |       |           |                                            | 33,610   
|Other long-term investments                         |  |                   | 419,138   |       |           |                                            | 419,199  
|Short-term investments                              |  |                   | 881,897   |       |           |                                            | 881,897  
|                                                    |  |                   |           |       |           |                                            |          
|Total investments                                   |  | ¥                 | 7,615,607 |       |           |                                            | 9,393,222
|                                                    |  |                   |           |       |           |                                            |          



See
accompanying report of independent registered public accounting firm.



F-64



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##### Table of Contents

Schedule III



MILLEA HOLDINGS,
INC.

AND SUBSIDIARIES



Supplementary Insurance Information

Years ended March 31, 2005, 2004 and 2003



|                       |  |                                |           |                  |           |                |           |                                     |           |                 |          
|---------------------- |  | ------------------------------ | --------- | ---------------- | --------- | -------------- | --------- | ----------------------------------- | --------- | --------------- | ---------
|Property and casualty: |  | (Yen in millions)             
|                       |  | Losses,claims andloss expenses |           | Unearnedpremiums |           | Premiumrevenue |           | Claims,losses andsettlementexpenses |           | Premiumswritten
|Year ended:            |  |                                |           |                  |           |                |           |                                     |           |                 |          
|March 31, 2005         |  | ¥                              | 1,345,196 |                  | 1,884,470 |                | 1,895,650 |                                     | 1,331,319 |                 | 1,925,407
|March 31, 2004         |  |                                | 1,221,146 |                  | 1,878,636 |                | 1,860,203 |                                     | 1,125,907 |                 | 1,945,246
|March 31, 2003         |  |                                | 1,131,884 |                  | 1,760,981 |                | 1,760,968 |                                     | 1,030,093 |                 | 1,898,557



|               |  |                                                       |         |                  |     |                |         |                                              |        
|-------------- |  | ----------------------------------------------------- | ------- | ---------------- | --- | -------------- | ------- | -------------------------------------------- | -------
|Life:          |  | (Yen in millions)                                    
|               |  | Future policybenefits, losses,claims andloss expenses |         | Unearnedpremiums |     | Premiumrevenue |         | Benefits,claims,losses andsettlementexpenses
|Year ended:    |  |                                                       |         |                  |     |                |         |                                              |        
|March 31, 2005 |  | ¥                                                     | 982,336 |                  | 12  |                | 253,369 |                                              | 210,536
|March 31, 2004 |  |                                                       | 846,926 |                  | 188 |                | 241,553 |                                              | 195,659
|March 31, 2003 |  |                                                       | 708,898 |                  | 174 |                | 255,977 |                                              | 219,250



See
accompanying report of independent registered public accounting firm.



F-65



---

##### Table of Contents

Schedule IV



MILLEA HOLDINGS,
INC.

AND SUBSIDIARIES



Reinsurance

Years ended March 31,
2005, 2004 and 2003



|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|------------------------------- |  | ----------------- | ---------- | ---------------------- | ------- | -------------------------- | ------- | ---------- | ---------- | ----------------------------------- | ---- | -
|                                |  | (Yen in millions) |           
|                                |  | Gross amount      |            | Cededto othercompanies |         | Assumedfrom othercompanies |         | Net amount |            | Percentage of amount assumed to net |     
|Year ended March 31, 2005:      |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Life insurance in force         |  | ¥                 | 15,486,030 |                        | 252,203 |                            |        |            | 15,233,827 |                                     | 0.0  | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Premiums:                       |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Life insurance                  |  | ¥                 | 254,397    |                        | 1,028   |                            |        |            | 253,369    |                                     | 0.0  | %
|Property and casualty insurance |  |                   | 1,953,162  |                        | 409,579 |                            | 352,067 |            | 1,895,650  |                                     | 18.6 | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Total premiums                  |  | ¥                 | 2,207,559  |                        | 410,607 |                            | 352,067 |            | 2,149,019  |                                     | 16.4 | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Year ended March 31, 2004:      |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Life insurance in force         |  | ¥                 | 14,186,071 |                        | 395,884 |                            |        |            | 13,790,187 |                                     | 0.0  | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Premiums:                       |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Life insurance                  |  | ¥                 | 242,472    |                        | 919     |                            |        |            | 241,553    |                                     | 0.0  | %
|Property and casualty insurance |  |                   | 1,952,151  |                        | 389,545 |                            | 297,597 |            | 1,860,203  |                                     | 16.0 | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Total premiums                  |  | ¥                 | 2,194,623  |                        | 390,464 |                            | 297,597 |            | 2,101,756  |                                     | 14.2 | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Year ended March 31, 2003:      |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Life insurance in force         |  | ¥                 | 12,122,086 |                        | 200,220 |                            |        |            | 11,921,866 |                                     | 0.0  | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Premiums:                       |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Life insurance                  |  | ¥                 | 256,852    |                        | 875     |                            | 0       |            | 255,977    |                                     | 0.0  | %
|Property and casualty insurance |  |                   | 1,952,534  |                        | 381,701 |                            | 190,135 |            | 1,760,968  |                                     | 10.8 | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  
|Total premiums                  |  | ¥                 | 2,209,386  |                        | 382,576 |                            | 190,135 |            | 2,016,945  |                                     | 9.4  | %
|                                |  |                   |            |                        |         |                            |         |            |            |                                     |      |  



See
accompanying report of independent registered public accounting firm.



F-66



---

##### Table of Contents

Schedule V



MILLEA HOLDINGS,
INC.

AND SUBSIDIARIES



Valuation and Qualifying Accounts

Years ended March 31, 2005, 2004 and 2003



|                                                  |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|------------------------------------------------- |  | -------------------------- | ------- | ----------------------------- | ----- | -------------------------- | ------ | - | ----------------------- | ------ | - | ---------- | ------ | -------------------- | -------
|                                                  |  | (Yen in millions)         
|                                                  |  |                            |         | Additions                     |       |                            |        |   |                        
|Description                                       |  | Balance atbeginningof year |         | Assumed bybusinesscombination |       | Chargedto costsandexpenses |        |   | Chargedto otheraccounts |        |   | Deductions |        | Balanceat end ofyear
|Year ended March 31, 2005:                        |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Applied against asset accounts:                   |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Accumulated depreciation - investment real estate |  | ¥                          | 85,000  |                               | 2,255 |                            | 5,202  |   |                         | (5,792 | ) |            | 6,548  |                      | 80,117 
|Valuation allowance - loans:                      |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Specific allowance                                |  |                            | 15,924  |                               |      |                            | (3,134 | ) |                         |       |   |            | 5,797  |                      | 6,993  
|General allowance                                 |  |                            | 3,808   |                               |      |                            | (603   | ) |                         |       |   |            |       |                      | 3,205  
|Allowance for doubtful accounts                   |  |                            | 7,710   |                               |      |                            | 985    |   |                         |       |   |            | 674    |                      | 8,021  
|Accumulated depreciation - property and equipment |  |                            | 182,862 |                               |      |                            | 16,079 |   |                         | 5,792  |   |            | 17,032 |                      | 187,701
|                                                  |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Year ended March 31, 2004:                        |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Applied against asset accounts:                   |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Accumulated depreciation - investment real estate |  | ¥                          | 79,538  |                               |      |                            | 3,880  |   |                         | 3,731  |   |            | 2,149  |                      | 85,000 
|Valuation allowance - loans:                      |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Specific allowance                                |  |                            | 30,105  |                               |      |                            | (6,493 | ) |                         |       |   |            | 7,688  |                      | 15,924 
|General allowance                                 |  |                            | 6,730   |                               |      |                            | (2,922 | ) |                         |       |   |            |       |                      | 3,808  
|Allowance for doubtful accounts                   |  |                            | 8,197   |                               |      |                            | (175   | ) |                         |       |   |            | 312    |                      | 7,710  
|Accumulated depreciation - property and equipment |  |                            | 183,676 |                               | 143   |                            | 15,236 |   |                         | (3,731 | ) |            | 12,462 |                      | 182,862
|                                                  |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Year ended March 31, 2003:                        |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Applied against asset accounts:                   |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Accumulated depreciation - investment real estate |  | ¥                          | 83,155  |                               |      |                            | 3,650  |   |                         | 2,646  |   |            | 9,913  |                      | 79,538 
|Valuation allowance - loans:                      |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        
|Specific allowance                                |  |                            | 24,070  |                               | 4,896 |                            | 7,269  |   |                         |       |   |            | 6,130  |                      | 30,105 
|General allowance                                 |  |                            | 8,675   |                               | 4,233 |                            | (6,178 | ) |                         |       |   |            |       |                      | 6,730  
|Allowance for doubtful accounts                   |  |                            | 4,681   |                               | 2,541 |                            | 975    |   |                         |       |   |            |       |                      | 8,197  
|Accumulated depreciation - property and equipment |  |                            | 162,768 |                               |      |                            | 11,426 |   |                         | 13,393 |   |            | 3,911  |                      | 183,676
|                                                  |  |                            |         |                               |       |                            |        |   |                         |        |   |            |        |                      |        



See
accompanying report of independent registered public accounting firm.



F-67



---

##### Table of Contents

LIST OF EXHIBITS



Millea Holdings
is filing the following exhibits (or incorporating them by reference) as part of this annual report:



|               |  |                                                                                                                                                                                                                                                          
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                              
|1.1            |  | English translation of the articles of incorporation of Millea Holdings, Inc.                                                                                                                                                                            
|               | 
|1.2            |  | English translation of the share handling regulations of Millea Holdings, Inc., incorporated by reference from the annual report on Form 20-F (Commission file number 000-31376) filed on
September 28, 2004.                                            
|               | 
|2(a)           |  | English translation of the specimen stock certificate of Millea Holdings, Inc., incorporated by reference from the annual report on Form 20-F/A (Commission file number 000-31376) filed on
September 27, 2002.                                          
|               | 
|7              |  | A statement explaining in reasonable detail how ratios in this annual report were calculated.                                                                                                                                                            
|               | 
|8              |  | List of subsidiaries of Millea Holdings, Inc.                                                                                                                                                                                                            
|               | 
|12             |  | Certifications required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)) under the Securities Exchange Act of 1934, as amended.                                                                                         
|               | 
|13             |  | Certification required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b)) under the Securities Exchange Act of 1934, as amended, and by Section 1350 of Chapter
63 of Title 18 of the United States Code (18 U.S.C. 1350).



We have not included
as exhibits certain instruments with respect to our long-term debt. The total amount of long-term debt securities of us or our subsidiaries authorized under any instrument does not exceed 10% of our total assets. We hereby agree to furnish to the
SEC, upon its request, a copy of any instrument defining the rights of holders of long-term debt of us or of our subsidiaries for which consolidated or unconsolidated financial statements are required to be filed.



---

##### Table of Contents

CROSS REFERENCE INDEX FOR FORM 20-F



|        |  |      |  |                                                                                                                         |  |     
|------- |  | ---- |  | ----------------------------------------------------------------------------------------------------------------------- |  | ----
|        |  |      |  |                                                                                                                         |  | Page
|        |  |      |  | Part I                                                                                                                  |  |     
|        |  |      | 
|Item 1. |  |      |  | Identity of Directors, Senior Management and Advisers                                                                   |  |     
|        |  |      |  | Not required because this Form 20-F is filed as an annual report                                                        |  |     
|Item 2. |  |      |  | Offer Statistics and Expected Timetable                                                                                 |  |     
|        |  |      |  | Not required because this Form 20-F is filed as an annual report                                                        |  |     
|Item 3. |  |      |  | Key Information                                                                                                         |  |     
|        |  | 3.A. |  | Selected Financial Data                                                                                                 |  |     
|        |  |      |  | Selected Financial Data                                                                                                 |  | 4   
|        |  |      |  | Exchange Rates                                                                                                          |  | 13  
|        |  | 3.B. |  | Capitalization and Indebtedness                                                                                         |  |     
|        |  |      |  | Not required because this Form 20-F is filed as an annual report                                                        |  |     
|        |  | 3.C. |  | Reasons for the Offer and Use of Proceeds                                                                               |  |     
|        |  |      |  | Not required because this Form 20-F is filed as an annual report                                                        |  |     
|        |  | 3.D. |  | Risk Factors                                                                                                            |  |     
|        |  |      |  | Risk Factors                                                                                                            |  | 6   
|Item 4. |  |      |  | Information on the Company                                                                                              |  |     
|        |  | 4.A. |  | History and Development of the Company                                                                                  |  |     
|        |  |      |  | Business  Group Overview                                                                                               |  | 17  
|        |  | 4.B. |  | Business Overview                                                                                                       |  |     
|        |  |      |  | Business                                                                                                                |  | 17  
|        |  |      |  | The Japanese Insurance Industry                                                                                         |  | 87  
|        |  |      |  | Regulation                                                                                                              |  | 89  
|        |  | 4.C. |  | Organizational Structure                                                                                                |  |     
|        |  |      |  | Business  Group Overview                                                                                               |  | 17  
|        |  |      |  | Business  Subsidiaries and Affiliates                                                                                  |  | 39  
|        |  | 4.D. |  | Property, Plants and Equipment                                                                                          |  |     
|        |  |      |  | Business  Properties                                                                                                   |  | 41  
|Item 5. |  |      |  | Operating and Financial Review and Prospects                                                                            |  |     
|        |  | 5.A. |  | Operating Results                                                                                                       |  |     
|        |  |      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                   |  | 42  
|        |  | 5.B. |  | Liquidity and Capital Resources                                                                                         |  |     
|        |  |      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations  Liquidity and Capital
Resources |  | 78  
|        |  | 5.C. |  | Research and Development, Patents and Licenses, etc.                                                                    |  |     
|        |  |      |  | None                                                                                                                    |  |     
|        |  | 5.D. |  | Trend Information                                                                                                       |  |     
|        |  |      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                   |  | 42  
|        |  | 5.E. |  | Off-Balance Sheet Arrangements                                                                                          |  |     
|        |  |      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations  Off-Balance Sheet
Arrangements  |  | 81  
|        |  | 5.F. |  | Tabular Disclosure of Contractual Obligations                                                                           |  |     
|        |  |      |  | Managements Discussion and Analysis of Financial Condition and Results of Operations  Contractual Obligations         |  | 81  
|Item 6. |  |      |  | Directors, Senior Management and Employees                                                                              |  |     
|        |  | 6.A. |  | Directors and Senior Management                                                                                         |  |     
|        |  |      |  | Directors and Corporate Auditors  Personal Data                                                                        |  | 83  
|        |  | 6.B. |  | Compensation                                                                                                            |  |     
|        |  |      |  | Directors and Corporate Auditors  Compensation and Benefits                                                            |  | 85  
|        |  | 6.C. |  | Board Practices                                                                                                         |  |     



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##### Table of Contents

|         |  |       |  |                                                                  |  |     
|-------- |  | ----- |  | ---------------------------------------------------------------- |  | ----
|         |  |       |  |                                                                  |  | Page
|         |  |       |  | Directors and Corporate Auditors  Personal Data                 |  | 83  
|         |  |       |  | Directors and Corporate Auditors  Board Practices               |  | 85  
|         |  | 6.D.  |  | Employees                                                        |  |     
|         |  |       |  | Business  Employees                                             |  | 41  
|         |  | 6.E.  |  | Share Ownership                                                  |  |     
|         |  |       |  | Directors and Corporate Auditors  Personal Data                 |  | 83  
|         |  |       |  | Directors and Corporate Auditors  Compensation and Benefits     |  | 85  
|         |  |       |  | Description of Common Stock                                      |  | 93  
|Item 7.  |  |       |  | Major Shareholders and Related Party Transactions                |  |     
|         |  | 7.A.  |  | Major Shareholders                                               |  |     
|         |  |       |  | Major Shareholders                                               |  | 15  
|         |  | 7.B.  |  | Related Party Transactions                                       |  |     
|         |  |       |  | None                                                             |  |     
|         |  | 7.C.  |  | Interests of Experts and Counsel                                 |  |     
|         |  |       |  | Not required because this Form 20-F is filed as an annual report |  |     
|Item 8.  |  |       |  | Financial Information                                            |  |     
|         |  | 8.A.  |  | Consolidated Statements and Other Financial Information          |  |     
|         |  |       |  | Dividend Policy                                                  |  | 15  
|         |  |       |  | Business  Legal Proceedings                                     |  | 41  
|         |  |       |  | Index to Financial Statements                                    |  | F-1 
|         |  |       |  | Index to Schedules                                               |  | F-1 
|         |  | 8.B.  |  | Significant Changes                                              |  |     
|         |  |       |  | None                                                             |  |     
|Item 9.  |  |       |  | The Offer and Listing                                            |  |     
|         |  | 9.A.  |  | Offer and Listing Details                                        |  |     
|         |  |       |  | Market Price Information                                         |  | 14  
|         |  | 9.B.  |  | Plan of Distribution                                             |  |     
|         |  |       |  | Not required because this Form 20-F is filed as an annual report |  |     
|         |  | 9.C.  |  | Markets                                                          |  |     
|         |  |       |  | Market Price Information                                         |  | 14  
|         |  | 9.D.  |  | Selling Shareholders                                             |  |     
|         |  |       |  | Not required because this Form 20-F is filed as an annual report |  |     
|         |  | 9.E.  |  | Dilution                                                         |  |     
|         |  |       |  | Not required because this Form 20-F is filed as an annual report |  |     
|         |  | 9.F.  |  | Expenses of the Issue                                            |  |     
|         |  |       |  | Not required because this Form 20-F is filed as an annual report |  |     
|Item 10. |  |       |  | Additional Information                                           |  |     
|         |  | 10.A. |  | Share Capital                                                    |  |     
|         |  |       |  | Not required because this Form 20-F is filed as an annual report |  |     
|         |  | 10.B. |  | Memorandum and Articles of Association                           |  |     
|         |  |       |  | Business                                                         |  | 17  
|         |  |       |  | Directors and Corporate Auditors  Board Practices               |  | 85  
|         |  |       |  | Description of Common Stock                                      |  | 93  
|         |  | 10.C. |  | Material Contracts                                               |  |     
|         |  |       |  | None                                                             |  |     
|         |  | 10.D. |  | Exchange Controls                                                |  |     
|         |  |       |  | Regulation  Foreign Exchange Regulations                        |  | 91  
|         |  | 10.E. |  | Taxation                                                         |  |     
|         |  |       |  | Taxation                                                         |  | 100 
|         |  | 10.F. |  | Dividends and Paying Agents                                      |  |     
|         |  |       |  | Not required because this Form 20-F is filed as an annual report |  |     
|         |  | 10.G. |  | Statement by Experts                                             |  |     
|         |  |       |  | Not required because this Form 20-F is filed as an annual report |  |     



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##### Table of Contents

|          |  |       |  |                                                                                                                                                    |  |     
|--------- |  | ----- |  | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|          |  |       |  |                                                                                                                                                    |  | Page
|          |  | 10.H. |  | Documents on Display                                                                                                                               |  |     
|          |  |       |  | Where You Can Find More Information                                                                                                                |  | 108 
|          |  | 10.I. |  | Subsidiary Information                                                                                                                             |  |     
|          |  |       |  | Not required because this Form 20-F is filed as an annual report                                                                                   |  |     
|Item 11.  |  |       |  | Quantitative and Qualitative Disclosures About Market Risk                                                                                         |  |     
|          |  |       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations  Quantitative and Qualitative Disclosures
About Market Risk |  | 69  
|Item 12.  |  |       |  | Description of Securities Other than Equity Securities                                                                                             |  |     
|          |  |       |  | Not required because this Form 20-F is filed as an annual report                                                                                   |  |     
|          |  |       | 
|          |  |       |  | Part II                                                                                                                                            |  |     
|          |  |       | 
|Item 13.  |  |       |  | Defaults, Dividend Arrearages and Delinquencies                                                                                                    |  |     
|          |  |       |  | None                                                                                                                                               |  |     
|Item 14.  |  |       |  | Material Modifications to the Rights of Security Holders and Use of Proceeds                                                                       |  |     
|          |  |       |  | None                                                                                                                                               |  |     
|Item 15.  |  |       |  | Controls and Procedures                                                                                                                            |  |     
|          |  |       |  | Controls and Procedures                                                                                                                            |  | 104 
|Item 16.  |  |       |  | Reserved                                                                                                                                           |  |     
|          |  |       |  | Not applicable                                                                                                                                     |  |     
|Item 16A. |  |       |  | Audit Committee Financial Expert                                                                                                                   |  |     
|          |  |       |  | Directors and Corporate Auditors  Audit Committee Financial Expert                                                                                |  | 86  
|Item 16B. |  |       |  | Code of Ethics                                                                                                                                     |  |     
|          |  |       |  | Code of Ethics                                                                                                                                     |  | 104 
|Item 16C. |  |       |  | Principal Accountant Fees and Services                                                                                                             |  |     
|          |  |       |  | Principal Accountant Fees and Services                                                                                                             |  | 105 
|Item 16D. |  |       |  | Exemptions from the Listing Standards for Auditing Committees                                                                                      |  |     
|          |  |       |  | Not required because this annual report does not cover a fiscal year ending on or after July 31, 2005                                              |  |     
|Item 16E. |  |       |  | Repurchases of Equity Securities by the Issuer and Affiliated Purchasers                                                                           |  |     
|          |  |       |  | Description of Common Stock  Repurchase by Millea Holdings of Shares                                                                              |  | 98  
|          |  |       | 
|          |  |       |  | Part III                                                                                                                                           |  |     
|          |  |       | 
|Item 17.  |  |       |  | Financial Statements                                                                                                                               |  |     
|          |  |       |  | Not applicable                                                                                                                                     |  |     
|Item 18.  |  |       |  | Financial Statements                                                                                                                               |  |     
|          |  |       |  | Index to Financial Statements                                                                                                                      |  | F-1 
|          |  |       |  | Index to Schedules                                                                                                                                 |  | F-1 
|Item 19.  |  |       |  | Exhibits                                                                                                                                           |  |     
|          |  |       |  | List of Exhibits                                                                                                                                   |  |     



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##### Table of Contents

SIGNATURES



The registrant hereby
certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.



MILLEA HOLDINGS, INC.  (Registrant)




By:

/s/ KUNIO ISHIHARAName: Kunio IshiharaTitle:   President and Director(Principal Executive Officer)


Date: September 28, 2005



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##### Table of Contents

EXHIBIT INDEX



|               |  |                                                                                                                                                                                                                                                          
|-------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Description                                                                                                                                                                                                                                              
|1.1            |  | English translation of the articles of incorporation of Millea Holdings, Inc.                                                                                                                                                                            
|1.2            |  | English translation of the share handling regulations of Millea Holdings, Inc., incorporated by reference from the annual report on Form 20-F (Commission file number 000-31376) filed on
September 28, 2004.                                            
|               | 
|2(a)           |  | English translation of the specimen stock certificate of Millea Holdings, Inc., incorporated by reference from the annual report on Form 20-F/A (Commission file number 0-31376) filed on
September 27, 2002.                                            
|               | 
|7              |  | A statement explaining in reasonable detail how ratios in this annual report were calculated.                                                                                                                                                            
|               | 
|8              |  | List of subsidiaries of Millea Holdings, Inc.                                                                                                                                                                                                            
|               | 
|12             |  | Certifications required by Rule 13a-14(a) (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17 CFR 240.15d-14(a)) under the Securities Exchange Act of 1934, as amended.                                                                                         
|               | 
|13             |  | Certification required by Rule 13a-14(b) (17 CFR 240.13a-14(b)) or Rule 15d-14(b) (17 CFR 240.15d-14(b)) under the Securities Exchange Act of 1934, as amended, and by Section 1350 of Chapter
63 of Title 18 of the United States Code (18 U.S.C. 1350).