6-K 1 dec0902_6k.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934 Dated December 9, 2002 MILLEA HOLDINGS, INC. (Translation of Registrant's name into English) Otemachi First Square, 1-5-1 Otemachi, Chiyoda-ku Tokyo 100-0004, Japan (Address of principal executive offices) Indicate by check mark whether the Registrant files or will file annual reports under cover of Form 20-F or Form 40-F: Form 20-F [X] Form 40-F [ ] Indicate by check mark whether the Registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes [ ] No [X] Table of Documents Submitted Item 1. Summary of consolidated business results of Millea Holdings, Inc. under Japanese GAAP for the six months ended September 30, 2002 2. Summary of non-consolidated business results of Millea Holdings, Inc. under Japanese GAAP for the six months ended September 30, 2002 --------------- FORWARD-LOOKING STATEMENTS The information contained in this Form 6-K includes certain forward-looking statements that are based on our current expectations, assumptions, estimates and projections about our businesses and operations. These statements contain projections of results of operations or financial condition. These forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may materially differ from those contained in the forward-looking statements as a result of various factors. Important factors that might cause a material difference include, but are not limited to: general economic conditions in Japan or elsewhere; business conditions in the insurance industry in Japan or elsewhere; the regulatory environment, new legislation, competition with other insurance companies, changing technology and evolving insurance industry standards; changes in the composition of our subsidiaries' financial instruments that are subject to market risk, including without limitation 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 our subsidiaries, which of necessity rely on a number of assumptions and approximations; and deviations of actual loss experience from the results that might be indicated by statistical analysis. For a discussion of these and other factors which may have a material impact upon our financial condition, results of operation and liquidity, see "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our annual report on Form 20-F for the fiscal year ended March 31, 2002. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KABUSHIKI KAISHA MILLEA HOLDINGS (Millea Holdings, Inc.) December 9, 2002 By: /s/ TETSUYA UNNO --------------------------------- General Manager of Corporate Legal and Risk Management Department [English Translation] SUMMARY OF CONSOLIATED BUSINESS RESULTS OF MILLEA HOLDINGS, INC. UNDER JAPANESE GAAP FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 December 3, 2002 Company Name: Millea Holdings, Inc. Securities Code Number: 8766 Stock Exchange Listings: Tokyo and Osaka Head Office: Tokyo, Japan Representative: Kunio Ishihara, President, Millea Holdings, Inc. Contact: Masayuki Ito, Corporate Planning Dept., Millea Holdings, Inc. Phone 03-6212-3341 Satoshi Tsujigado, Corporate Finance Dept., Millea Holdings, Inc. Phone: 03-6212-3343
1. Consolidated Business Results for the Six Months ended September 30, 2002 (from April 1, 2002 to September 30, 2002) (1) Consolidated Results of Operations (Yen in millions except per share data and percentages) --------------------------------------------------------------------------------------------------------------------- For the six months ended --------------------------------------- For the year ended September 30, 2002 September 30, 2001 March 31, 2002 --------------------------------------------------------------------------------------------------------------------- Ordinary income 1,417,981 - - (change from corresponding period of the previous year) - % - % - % --------------------------------------------------------------------------------------------------------------------- Operating profit 127,198 - - (change from corresponding period of the previous year) - % - % - % --------------------------------------------------------------------------------------------------------------------- Net income 83,247 - - (change from corresponding period of the previous year) - % - % - % --------------------------------------------------------------------------------------------------------------------- Net income per common share - Basic (Yen) 44,977.68 - - --------------------------------------------------------------------------------------------------------------------- Net income per common share - Diluted (Yen) - - - --------------------------------------------------------------------------------------------------------------------- Notes: 1. Investment income and expenses on equity method: For the six months ended September 30, 2002 328 million yen 2. Average number of shares outstanding: At September 30, 2002 1,850,852 shares 3. Change in accounting method: None
(2) Consolidated Financial Conditions (Yen in millions except per share data and percentages) --------------------------------------------------------------------------------------------------------------------- For the six months ended --------------------------------------- For the year ended September 30, 2002 September 30, 2001 March 31, 2002 --------------------------------------------------------------------------------------------------------------------- Total assets 9,835,655 - - Stockholders' equity 1,927,753 - - Ratio of Stockholders' equity to total assets 19.6 - - Stockholders' equity per share (Yen) 1,041,542.08 - - --------------------------------------------------------------------------------------------------------------------- Note: Number of shares issued: At September 30, 2002 1,850,864 shares
(3) Consolidated Cash Flows (Yen in millions) -------------------------------------------------------------------------------------------------------- For the six months ended --------------------------------------- For the year ended September 30, 2002 September 30, 2001 March 31, 2002 -------------------------------------------------------------------------------------------------------- Cash flows from operating activities 137,745 - - Cash flows from investing activities (93,350) - - Cash flows from financing activities (9,853) - - Cash and cash equivalents at end 1,164,905 - - -------------------------------------------------------------------------------------------------------- (4) Scope of Consolidation and Application of Equity Method The number of consolidated subsidiaries: 15 The number of non-consolidated subsidiaries accounted for by the equity method: None The number of affiliates accounted for by the equity method: 1
2. Consolidated Business Forecast for the year ending March 31, 2003 (Yen in millions) (from April 1, 2002 to March 31, 2003) ---------------------------------------------------------------------------------------------------- Ordinary income Ordinary profit Net income ---------------------------------------------------------------------------------------------------- 2,825,000 148,000 88,000 ---------------------------------------------------------------------------------------------------- Net income per share forecasted for the year ending March 31, 2003: 47,545.35 Yen
Attachments Millea Holdings Group Millea Holdings, Inc. was formed on April 2, 2002 as the holding company for The Tokio Marine and Fire Insurance Company, Limited (Tokio Marine) and The Nichido Fire and Marine Insurance Company, Limited (Nichido Fire) in a statutory share transfer under Japanese law. Millea Holdings Group's businesses include its property and casualty (P&C) business (including P&C business, P&C related businesses, financial service and asset management related business, corporate administration and staffing related business) and its life insurance business. Principal subsidiaries of Millea Holdings are set forth in the chart below. --------------------- Millea Holdings, Inc. --------------------- | | | ------------ | | P&C business | | ------------ | | | -------------------------------------- ---------------------------------------- o Tokio Marine and Fire Insurance Co., o Nichido Fire and Marine Insurance Co., Ltd. Ltd. -------------------------------------- ---------------------------------------- ------------ P&C business ------------ {P&C business} o Tokio Marine Europe Insurance Limited (Note 1) o The Tokio Marine and Fire Insurance Company (Hong Kong) Limited o Tokio Marine Brasil Seguradora S.A. o The Tokio Marine and Fire Insurance Company (Singapore) Pte. Limited o Trans Pacific Insurance Company o Tokio Millennium Re Ltd. o Tokio Marine Global Re Limited > First Insurance Company of Hawaii, Ltd. {Financial service and asset management related business} o The Tokio Marine Capital Research Ltd. (Note 2) o Nichido Investment (Luxembourg) S.A. {Corporate administration and staffing related business} o The Tokio Marine Career Service Co., Ltd. ----------------------- Life insurance business ----------------------- o The Tokio Marine Life Insurance Co., Ltd. o The Nichido Life Insurance Co., Ltd. ---------------- Other businesses ---------------- ---------------------------- o Tokio Marine Asset Management Co., Ltd. o: Consolidated subsidiaries (Securities investment advisory business and >: Investment accounted for securities investment trusts business) by the equity method ---------------------------- ------------------------------------------------------------------------------- (Note 1) The Tokio Marine & Fire Insurance Company (UK) Limited was renamed Tokio Marine Europe Insurance Limited during the six months ended September 30, 2002. (Note 2) The Tokio Marine Capital Research Ltd. is currently under liquidation process. Management Policies 1. Group management policies and strategies Millea Holdings Group's management policies and strategies are: - Enhance customer trust by providing the best possible products and services - Improve business efficiency, thereby further strengthening our presence in the Japanese life and non-life insurance markets - Pursue profitable growth opportunities in international insurance markets - Aggressively develop new business areas involving customers' "safety and security" We intend to fully utilize the flexible management structure of the holding company to strengthen our core P&C and life insurance businesses and to manage our business operations efficiently, thereby seeking to maximize the corporate value of the entire Group. 2. Policy on profit distribution When apportioning profits in respect of any given fiscal year, we expect to pay stable dividends on our common stock taking into consideration the Group's performance and its future business environment, subject to having retained earnings and to providing sufficient capital to meet our business needs. 3. Policy on reduction in the size of minimum investment unit We believe that there is currently no need to reduce the size of the minimum investment unit of Millea Holdings shares in light of their liquidity and from a cost-benefit point of view. However, taking into consideration the needs of investors, we intend to study further whether such reduction would be necessary in the future. 4. Management objectives The Group intends to further increase earnings of the domestic P&C insurance business and to expand the life insurance, overseas insurance and asset management businesses, thereby seeking to improve profitability and growth potential in a stable and continuous manner. The group aims to achieve an ROE level of around 6% by FY2005. (Note) The above target ROE is "adjusted ROE" based on "adjusted earnings" which is calculated by the following method. - Adjusted ROE = Adjusted earnings / Adjusted capital - Adjusted Earnings (a) P&C insurance business Adjusted earnings = Net income + Provision for extraordinary reserves + Provision for reserves for price fluctuation - Gains (losses) from assets under asset liability management - Gains (losses) from stocks and properties - Other extraordinary items (b) Life insurance business Adjusted earnings = Increase in embedded value (sum of value of in-force business and shareholder equity of a life insurance company) (c) Overseas insurance business and other businesses Net income as shown in financial statements - Adjusted Capital (a) P&C insurance business Adjusted capital = Capital + Extraordinary reserves (net of tax) + Reserves for price fluctuation (net of tax) - Increase (decrease) in capital from asset liability management (b) Life insurance business Adjusted capital = Embedded value (c) Overseas insurance business and other businesses Capital as shown in financial statements 5. Mid- to long-term business strategies The Group aims to meet the "security and safety" needs of all of its customers. While continuing to enhance the strengths and special characteristics of each Group company, we plan to continue to take on new challenges to increase earnings from our core insurance businesses and to expand our operations into new areas that we believe offer significant growth potential and profitability. We will also seek to maximize the synergies available through management integration, so that we can build the optimum business portfolio that delivers strong profitability, growth potential and high capital efficiency. By pursuing the above, we aim to maximize the corporate value of the entire Group. (1) Enhance earnings from the core businesses The Group will work to generate greater earnings from its core domestic P&C and life insurance businesses. In particular, in our P&C insurance business, we intend to pursue the synergies and greater efficiency offered through the management integration. We will endeavor to jointly develop new products, bolster cost competitiveness and consolidate our sales networks. With these measures, we intend to further improve our earnings. Specifically, we plan to integrate products, administrative processes, systems and other infrastructure shared by our Group companies. At the same time, we aim to ensure mid- to long-term growth by launching "Super Insurance," a major new product that unifies P&C and life insurance features, and by enhancing our risk consultation services. We will also aim to achieve greater efficiency by developing new business models for sales activities and expanding our agencies. These steps will be promoted through the new mid-term business plans (for FY 2002 and 2003) of Tokio Marine and Nichido Fire. (2) Expand business domains The Group will endeavor to transform its earnings structure, centered on its domestic P&C insurance business, to secure new sources of revenues and to diversify business risks. While aggressively promoting the expansion of the domestic life insurance business, which has a substantial earnings potential and is the main focus of our current strategies, we will also seek to develop other businesses that can generate strong synergies with both our domestic P&C and life insurance businesses. These businesses will include the overseas insurance business, the asset management business and health care and senior citizen-related businesses. (3) Improve capital efficiency The Millea Holdings Group plans to closely monitor its capital and risk through its integrated risk management system. Moreover, the Group intends to reduce its high-risk assets through sales of stock, and to use the sales proceeds flexibly for strategic business areas with high profit and growth potential, as well as for new businesses. In this way, we aim to enhance capital efficiency while maintaining sufficient reserves that are essential for the sound development of the insurance businesses. Through the above initiatives, we aim to enhance the corporate value of the Group and become a leading insurance group not only in Japan, but also in the global market. Business results and financial condition 1. Business results (1) Consolidated results of operations for the six months ended September 30, 2002 During the six months ended September 30, 2002, the Japanese economy as a whole continued to show weakness as deflationary trends persisted and consumer spending and plant investment remained weak, although there were signs of partial improvement in production and exports. Under these challenging conditions, reflecting our efforts to improve performance centered on the P&C and life insurance businesses, our operating results for the six months ended September 30, 2002 were as follows: Ordinary income was 1,417.9 billion yen, the main components of which were 1,218.4 billion yen in underwriting income and 181.0 billion yen in investment income. Ordinary expenses were 1,290.7 billion yen, which mainly comprised of underwriting expenses of 1,055.2 billion yen, investment expenses of 45.4 billion yen, and underwriting and general administrative expenses of 186.8 billion yen. As a result, ordinary profit was 127.1 billion yen. Net income, comprising ordinary profit plus extraordinary profit minus extraordinary losses, income taxes and deferred income taxes was 83.2 billion yen. The results from our principal business segments were as follows: In the P&C insurance business, ordinary income was 1,269.8 billion yen (including net premiums written of 922.5 billion yen) and ordinary expenses were 1,144.8 billion yen. As a result, ordinary profit was 125.0 billion yen. In the life insurance business, ordinary income was 157.4 billion yen (including life insurance premiums of 130.5 billion yen) and ordinary expenses were 155.3 billion yen. As a result, ordinary profit was 2.0 billion yen. (2) Consolidated business forecast for the fiscal year ending March 31, 2003 Our consolidated business forecast for the fiscal year ending March 31, 2003 is 2,825.0 billion yen in ordinary income, 148.0 billion yen in ordinary profit and 88.0 billion yen in net income, based on the following assumptions. - With regard to net premiums written, the forecast is based on our own projection taking into consideration the results of the six months and of previous years, and also reflecting the impact of revisions to Compulsory Automobile Liability Insurance regulations. - With regard to net claims paid, we anticipate payment of natural disaster-related claims in the amount of 10 billion yen for Tokio Marine and 6 billion yen for Nichido Fire, taking into consideration the results of the six months and of previous years. - With regard to interest rates and exchange rates, we assume there will not be significant change from market rates as of September 30, 2002. As for equity market conditions, the forecast reflects the negative change in market environment after September 30, 2002. 2. Financial condition At the end of the six months ended September 30, 2002, total assets were 9,835.6 billion yen. Cash flows for the six months ended September 30, 2002 were as follows. Net cash provided by operating activities was 137.7 billion yen, net cash used in investing activities was 93.3 billion yen and net cash used in financing activities was 9.8 billion yen. Consolidated premiums and claims paid by line for the six months ended September 30, 2002 Net premiums written (Yen in millions, %) ------------------------------------------------------------------------- For the six months ended September 30, 2002 ------------------------------------------------------------------------- Amount Ratio (A) ------------------------------------------------------------------------- Fire and allied lines 121,882 13.2 Hull and cargo 30,945 3.4 Personal accident 83,672 9.1 Voluntary automobile 449,649 48.7 Compulsory automobile liability 116,457 12.6 Other 119,930 13.0 ------------------------------------------------------------------------- Total 922,537 100.0 ------------------------------------------------------------------------- Net claims paid (Yen in millions, %) ------------------------------------------------------------------------- For the six months ended September 30, 2002 ------------------------------------------------------------------------- Amount Ratio (A) ------------------------------------------------------------------------- Fire and allied lines 40,541 9.1 Hull and cargo 14,510 3.3 Personal accident 34,532 7.8 Voluntary automobile 245,355 55.3 Compulsory automobile liability 49,315 11.1 Other 59,163 13.3 ------------------------------------------------------------------------- Total 443,419 100.0 ------------------------------------------------------------------------- Direct premiums written including deposit premiums from policyholders (Yen in millions, %) ------------------------------------------------------------------------- For the six months ended September 30, 2002 ------------------------------------------------------------------------- Amount Ratio (A) ------------------------------------------------------------------------- Fire and allied lines 164,734 14.8 Hull and cargo 33,447 3.0 Personal accident 181,169 16.3 Voluntary automobile 456,899 41.0 Compulsory automobile liability 155,413 13.9 Other 122,596 11.0 ------------------------------------------------------------------------- Total 1,114,261 100.0 Deposit premiums from policyholders 129,749 11.6 ------------------------------------------------------------------------- Note 1. Numbers are before elimination of inter-segment transactions. Note 2. "Direct premiums written including deposit premiums from policyholders" are direct premiums after deduction of cancellation return and other return. (Includes deposit premiums from policyholders). Consolidated Interim Financial Statements Consolidated Interim Balance Sheet (Yen in millions except percentages) ------------------------------------------------------------------------------- As of September 30, 2002 ------------------------------------------------------------------------------- Amount Ratio ------------------------------------------------------------------------------- Assets % ------ Cash, deposits and savings 693,305 7.05 Call loans 526,400 5.35 Monetary receivables bought 83,535 0.85 Money trust 73,003 0.74 Securities 6,461,530 65.69 Loans 755,450 7.68 Property and equipment 385,220 3.92 Other assets 859,460 8.74 Deferred tax assets 27,496 0.28 Customers' liabilities under acceptances and guarantees 25,543 0.26 Reserve for bad debts (55,292) (0.56) ------------------------------------------------------------------------------- Total assets 9,835,655 100.00 ------------------------------------------------------------------------------- Liabilities ----------- Underwriting funds 6,394,206 65.01 Outstanding claims 685,930 Underwriting reserves 5,708,276 Bonds issued 135,000 1.37 Other liabilities 922,133 9.38 Reserve for retirement benefits 192,033 1.95 Reserve for employees' bonuses 22,459 0.23 Reserve under the special law 45,413 0.46 Reserve for price fluctuation 45,413 Deferred tax liabilities 5,049 0.05 Goodwill 164,218 1.67 Acceptances and guarantees 25,543 0.26 ------------------------------------------------------------------------------- Total liabilities 7,906,058 80.38 ------------------------------------------------------------------------------- Minority interest 1,843 0.02 ------------------------------------------------------------------------------- Stockholders' equity -------------------- Common stock 150,000 1.53 Additional paid-in capital 306,624 3.12 Retained earnings 805,043 8.18 Unrealized gains on investments, net of taxes 685,265 6.97 Foreign currency translation adjustments (13,060) (0.13) Total 1,933,871 19.66 Treasury stock (6,118) (0.06) ------------------------------------------------------------------------------- Total stockholders' equity 1,927,753 19.60 ------------------------------------------------------------------------------- Total liabilities, minority interest and stockholders' equity 9,835,655 100.00 ------------------------------------------------------------------------------- Consolidated Interim Statement of Income (Yen in millions except percentages) ------------------------------------------------------------------------------- For the six months ended September 30, 2002 ------------------------------------------------------------------------------- Amount Ratio ------------------------------------------------------------------------------- Ordinary income and expenses ---------------------------- Ordinary income 1,417,981 100.00 Underwriting income 1,218,472 85.93 Net premiums written 922,529 Deposit premiums from policyholders 129,749 Investment income on deposit premiums from policyholders 35,585 Life insurance premiums 130,453 Investment income 181,026 12.77 Interest and dividends received 80,194 Profit on investment in money trusts 474 Profit on sales of securities 116,063 Profit on redemption of securities 3,939 Profit on derivative transactions 14,134 Transfer of investment income on deposit premiums (35,585) Other ordinary income 18,481 1.30 Amortiazation of goodwill 4,210 Investment income under the equity method 328 Ordinary expenses 1,290,782 91.03 Underwriting expenses 1,055,291 74.42 Net claims paid 443,419 Loss adjustment expenses 38,340 Agency commissions and brokerage 167,038 Maturity refunds to policyholders 213,955 Dividends to policyholders 41 Life insurance claims 12,100 Provision for outstanding claims 21,331 Provision for underwriting reserves 155,991 Investment expenses 45,422 3.20 Loss on investment in money trusts 1,662 Loss on trading securities 12 Loss on sales of securities 6,807 Loss on revaluation of securities 34,118 Loss on redemption of securities 148 Underwriting and general administrative expenses 186,842 13.18 Other ordinary expenses 3,225 0.23 Interest paid 1,774 Bad debt expenses 24 Amortization of deferred assets under Article 133 of Insurance Business Law 96 ------------------------------------------------------------------------------- Ordinary profit 127,198 8.97 ------------------------------------------------------------------------------- Extraordinary gains and losses ------------------------------ Extraordinary gains 6,340 0.45 Profit on sales of properties 6,340 Extraordinary losses 8,324 0.59 Loss on sales of properties 665 Provision for reserve under the special law 6,809 Provision for reserve for price fluctuation 6,809 Extra write-off against profit on sales of properties 0 Other extraordinary losses 849 ------------------------------------------------------------------------------- Income before income taxes 125,214 8.83 Income taxes - current 82,837 5.84 Income taxes - deferred (40,940) (2.89) Minority interest 70 0.00 ------------------------------------------------------------------------------- Net income 83,247 5.87 ------------------------------------------------------------------------------- Consolidated Interim Statement of Additional paid-in capital and Retained earnings (Yen in millions) ------------------------------------------------------------------------------- For the six months ended September 30, 2002 ------------------------------------------------------------------------------- Additional paid-in capital: Additional paid-in capital at beginning of period 38,782 Increase in Additional paid-in capital 267,841 Increase due to share transfer 266,210 Profit on sales of treasury stocks 1,630 Additional paid-in capital at end of period 306,624 Retained earnings: Retained earnings at beginning of period 738,446 Increase in Retained earnings 83,247 Net income 83,247 Decrease in Retained earnings 16,650 Dividends 16,381 Directors' bonuses 120 Other decreases 148 Retained earnings at end of period 805,043 ------------------------------------------------------------------------------- Notes: 1. All of directors' bonuses are for directors. 2. Other decreases relate to revaluation of assets in accordance with accounting standard of the foreign countries where consolidated subsidiaries or equity method-applied affiliates are located. Consolidated Interim Statement of Cash Flows (Yen in millions) ------------------------------------------------------------------------------- For the six months ended September 30, 2002 ------------------------------------------------------------------------------- I. Cash flows from operating activities: Income before income taxes 125,214 Depreciation 9,424 Amortization of goodwill (4,210) Increase (decrease) in outstanding claims 21,406 Increase (decrease) in underwriting reserves 154,485 Increase (decrease) in reserve for bad debts (7,205) Increase in reserve for retirement benefits (6,250) Increase in reserve for employees' bonuses 4,449 Increase in reserve for price fluctuation 6,809 Interest and dividend income (80,194) Net (profit) loss on investment securities (78,916) Interest expenses 1,774 Gain (loss) on foreign exchange 356 Loss (profit) related to properties (5,112) Investment income (loss) under the equity method (328) Increase in other assets (57,168) (other than investing and financing activities) Increase in other liabilities 28,235 (other than investing and financing activities) Other 1,780 Sub-total 114,548 Interest and dividends received 90,888 Interest paid (1,061) Income taxes (paid) refunded (66,629) Net cash provided by operating activities 137,745 ------------------------------------------------------------------------------- II. Cash flows from investing activities: Net decrease in deposit and savings 4,227 Purchases of monetary receivables bought (7,386) Proceeds from sales and redemption of monetary receivables bought 33,059 Increase in money trusts (5,500) Decrease in money trusts 32,941 Purchases of investment securities (1,252,912) Proceeds from sales and redemption of securities 995,245 Loans made (102,458) Proceeds from collection of loans receivable 184,188 Increase in cash received under securities lending transactions 23,736 Other (42) Subtotal (II(a)) (94,900) Subtotal (I+II(a)) 42,845 Purchases of property and equipment (5,934) Proceeds from sales of property and equipment 7,484 Net cash provided by (used in) investing activities (93,350) ------------------------------------------------------------------------------- III. Cash flows from financing activities: Purchase of treasury stocks 6,686 Dividends paid (16,380) Dividends paid by subsidiaries to minority shareholders (146) Other (11) Net cash provided by financing activities (9,853) ------------------------------------------------------------------------------- IV. Effect of exchange rate changes on cash and cash equivalents (7,748) ------------------------------------------------------------------------------- V. Net increase (decrease) in cash and cash equivalents 26,794 ------------------------------------------------------------------------------- VI. Cash and cash equivalents at beginning of period 962,369 ------------------------------------------------------------------------------- VII. Net increase in cash and cash equivalents due to inclusion of a subsidiary in scope of consolidation 175,741 ------------------------------------------------------------------------------- VIII. Cash and cash equivalents at end of period 1,164,905 ------------------------------------------------------------------------------- Basis of Presentation and Significant Accounting Policies 1. Scope of consolidation (1) Number of consolidated subsidiaries - 15 companies (Name of companies) The Tokio Marine and Fire Insurance Company, Limited ("Tokio Marine") The Nichido Fire and Marine Insurance Company, Limited ("Nichido Fire") The Tokio Marine Life Insurance Company, Limited ("Tokio Marine Life") The Nichido Life Insurance Company, Limited ("Nichido Life") The Tokio Marine Career Service Company, Limited ("TCS") Tokio Marine Asset Management Company, Limited Trans Pacific Insurance Company Tokio Marine Europe Insurance Limited Tokio Marine Global Re Limited The Tokio Marine and Fire Insurance Company (Singapore) Pte. Limited The Tokio Marine and Fire Insurance Company (Hong Kong) Limited Tokio Marine Brasil Seguradora S.A. Tokio Millennium Re Ltd. The Tokio Marine Capital Research Ltd. Nichido Investment (Luxembourg) S.A. The Tokio Marine & Fire Insurance Company (UK) Limited was renamed "Tokio Marine Europe Insurance Limited" during the six months ended September 30, 2002. (2) Major non-consolidated subsidiaries The Tokio Marine Claims Research Co., Ltd. and European Nichido Insurance Company Limited are the major non-consolidated subsidiaries. Each non-consolidated subsidiary is considered insignificant in respect of its total assets, sales, net profit and loss for the period, and retained earnings. Accordingly, non-consolidated subsidiaries are not considered material to prevent reasonable judgement as to financial position and operating results. For this reason, these companies are excluded from the scope of consolidation. 2. Application of the equity method (1) Number of affiliates applying the equity method - 1 company (Name of the company) First Insurance Company of Hawaii, Ltd. (2) As for the non-consolidated subsidiaries (The Tokio Marine Claims Research Co., Ltd., European Nichido Insurance Company Limited, etc.) and affiliates (Tokio Marine Malayan Insurance Co., Inc. etc.), the equity method is not applied since each of the companies does not have significant effect on the consolidated net income for the six months and retained earnings. They are also not considered material as a whole. (3) Consolidated domestic property and casualty insurance subsidiaries own 26.9% of the Japan Earthquake Reinsurance Co., Ltd. The Company eliminated the Japan Earthquake Reinsurance Co., Ltd. from its scope of application of the equity method since the Company considered that it did not have a significant controlling interest over the Japan Earthquake Reinsurance Co., Ltd. due to its communal business characteristics. (4) With regard to the companies accounted for by the equity method, financial statements as of each company's interim balance sheet date, which could differ from the six-months end for consolidated financial statements, are used for the consolidated interim financial statements. 3. Closing date of consolidated subsidiaries For one consolidated domestic subsidiary and nine consolidated foreign subsidiaries, the end of the period of six months is June 30. Since the difference in the end of the six months period does not exceed three months, financial statements of the subsidiaries as of the six months end are used in preparing the consolidated interim financial statements. As for major transactions occurring during the intervening period, necessary adjustments are made upon consolidation. 4. Accounting policies (1) Valuation of securities a. Held-to-maturity debt securities are stated at amortized cost (straight-line method) determined by the moving-average method. b. Securities other than trading securities, held-to-maturity debt securities and investments in subsidiaries and affiliates (hereinafter referred to as "other securities") with market value are stated at quoted price as of the end of the six months. Unrealized gains/losses on the securities are included in stockholders' equity, net of income taxes, and costs of securities sold are determined based on the moving-average method. c. "Other securities" with no market value are stated at cost or amortized cost (under straight-line method) determined by the moving-average method. d. Investments in non-consolidated subsidiaries and affiliates to which the equity method is not applied are stated at cost determined by the moving-average method. e. The valuation of the securities held in individually managed money trusts which are mainly invested in securities for trading are accounted for by the mark-to-market method. f. The valuation of the securities held in individually managed money trusts which are invested in securities not for trading nor held-to-maturity are accounted for by the same method as "other securities". (2) Valuation of derivative financial instruments Derivative financial instruments are accounted for by the mark-to-market method. (3) Depreciation of property and equipment Depreciation of property and equipment owned by Millea Holdings and its consolidated domestic insurance subsidiaries is computed by the declining balance method. However, depreciation of the buildings (excluding auxiliary facilities attached to buildings, etc.) which were acquired on or after April 1, 1998 is calculated by the straight-line method. (4) Reserves a. Reserve for bad debts In order to provide for losses from bad debts, reserve for bad debts is accounted for pursuant to the rules of asset self-assessment and rules of asset write off and allowance by consolidated domestic insurance subsidiaries as follows: For claims to a debtor who is in formal bankruptcy or any other bankruptcy related proceedings such as a stay order from a clearing house, and for receivables from an insolvent debtor who is not involved in such formal proceedings, the amount equal to the claims less the amount likely to be collected through collateral or applicable guarantee is reserved. For claims to a debtor who is likely to be insolvent in the near future, the amount which is considered necessary taking into account the debtor's overall situation, within the amount equal to the claims less the amount likely to be collected through collateral or applicable guarantees, is reserved. For claims other than those described above, the amount of claims multiplied by the default rate, which is computed based on loss experience in certain previous periods, is reserved. For overseas claims, a reserve for specified overseas claims is provided considering possible losses arising from political or economic turmoil in foreign countries. All claims are assessed by the asset management departments in accordance with the rules for asset self-assessment and then audited by the asset auditing departments, which are independent from these asset management departments. Reserves for bad debts mentioned above is computed based on the results of this assessment. b. Reserve for retirement benefits For consolidated domestic subsidiaries, the reserve for retirement benefits is stated at the amount accrued at the end of the six months, based on projected benefit obligation and the estimated pension funds at the end of the current fiscal year. Prior service costs are accounted for as expenses at the time of occurrence using the straight-line method over a certain length of years within the average remaining employment period of employees. Actuarial differences are accounted for as expenses in the next period using the straight-line method over a certain length of years within the average remaining employment period of employees. c. Reserve for employees' bonuses In order to prepare for employee bonus payments, Millea Holdings and its consolidated domestic subsidiaries accrue for reserve for employees' bonuses based on the estimated amount of payment. d. Reserve for price fluctuation Consolidated domestic insurance subsidiaries provide reserves under Article 115 of the Insurance Business Law in order to provide for possible losses arising from price fluctuation of stock etc. (5) Consumption tax For Millea Holdings and its consolidated domestic subsidiaries, consumption tax is accounted for by the tax-segregated method, except for loss adjustment expenses and underwriting and general administrative expenses of consolidated domestic insurance subsidiaries, which are accounted for by including tax method. The undeductible consumption tax in respect of assets is included in Other assets (the suspense payments) and amortized evenly over five years. (6) Lease transactions For Millea Holdings and its consolidated domestic subsidiaries, finance lease transactions other than those which are deemed to transfer the ownership of the leased property to lessees are accounted for by a method similar to that applicable to the ordinary operating lease transactions. (7) Hedge accounting To mitigate interest rate fluctuation risks associated with long-term insurance policies, Tokio Marine and Tokio Marine Life engage in asset liability management ("ALM") that controls the risks by evaluating and analyzing financial assets and insurance liabilities simultaneously. Interest rate swap transactions that are used by Tokio Marine to manage the risks had been accounted for by the deferral method and hedge effectiveness is evaluated based on bulletin No.16 "Tentative Accounting and Auditing Treatments related to Adoption of Accounting for Financial Instruments in the Insurance Industry (Japanese Institute of Certified Public Accountants, March 31, 2000)" as an transitional treatment in bulletin No.26 "Accounting and Auditing Treatments related to Adoption of Accounting for Financial Instruments in the Insurance Industry (Japanese Institute of Certified Public Accountants, September 3, 2002)." Derivative contracts accounted for by this treatment are interest rate swap transactions with fixed income of 1,779,600 million yen in contract amount, interest rate swap transactions with fixed payments of 1,217,100 million yen in contract amount, and unrealized gain amounted to 100,394 million yen. Since the interest rate swap transactions utilized by Tokio Marine Life do not satisfy the condition under bulletin No.26 to be accounted for by using the hedge accounting, unrealized deferred gains based on bulletin No.16 at the beginning of the six months are amortized over the remaining period until hedge tools mature (6-10 years). Deferred gains under this treatment at the end of the six months amounted to 47,171 million yen and the amount of gains amortized for the six months was 3,679 million yen. In accordance with "Statement Concerning the Establishment of Accounting Standards on Financial Instruments (Business Accounting Deliberation Council, January 22, 1999)," Tokio Marine applies deferred hedge accounting to interest rate swap transactions which are used to control interest rate risk of bonds issued, while Tokio Marine Life applies the deferred hedge accounting to interest rate swap transactions at used to mitigate price fluctuation risks of bonds. Hedge effectiveness is evaluated by comparative analysis of change in market value of the hedging instruments and the related hedged items. (8) Accounting treatment for the Business combination Tokio Marine and Nichido Fire jointly established a holding company, "Millea Holdings, Inc.," through a statutory share exchange under Japanese law. The Company accounted for the business combination based on "Statement Concerning the Accounting Procedure for the Consolidation of Equity Interest Under Share Exchange or Share Transfer to Establish Wholly Owning Holding Company (Japanese Institute of Certified Public Accountants, August 31, 2000, last amended February 14, 2001)." Upon considering the facts and circumstances including such factors as size of total amount of shares of each combining entity, the Company accounted for Tokio Marine and its consolidated subsidiaries by a treatment similar to pooling of interest method, while the Company accounted for Nichido Fire and its consolidated subsidiaries using the purchase method. (9) Accounting for tax expenses Income taxes-current and Income taxes-deferred for the six months ended September 30, 2002 for consolidated domestic insurance subsidiaries are calculated assuming additions to or deductions from the surplus reserve for contraction of fixed assets at year-end. (10) Accounting for deferred assets in accordance with Article 113 of the Insurance Business Law Nichido Life accounts for amortization of deferred assets as prescribed in Article 113 of the Insurance Business Law, in accordance with applicable law and Articles of Incorporation. (11) Accounting standard for overseas subsidiaries The accounting standards applied to overseas subsidiaries are based on those in the countries where each consolidated subsidiary exists. 5. Scope of cash and cash equivalents for consolidated interim statement of cash flows Cash and cash equivalents for the consolidated interim statements of cash flows consist of short-term investments, such as cash, demand deposits and time deposits whose period from deposit to the maturity or redemption date is within 3 months. Notes Notes to consolidated interim balance sheet 1. Accumulated depreciation of property and equipment amounts to 303,316 million yen and accumulated advanced depreciation deduction adjustment of properties is 27,775 million yen. For the six months ended September 30, 2002, the amount of accumulated advanced depreciation deduction adjustment of properties is 0 million yen, which mainly relates to property and equipment for which treasury was provided. 2. Total amount of loans to borrowers in bankruptcy, past due loans, accruing loans contractually past due for 3 months or more, and restructured loans is 82,304 million yen. The breakdown is as follows: (1) The amount of loans to borrowers in bankruptcy is 18,984 million yen. Loans are generally placed on nonaccrual status when substantial doubt exists as to the ultimate collectibility of either principal or interest, if they are past due for certain period, or for other reasons. Loans to borrowers in bankruptcy represent nonaccrual loans after the partial write-off for the position are deemed uncollectible, which are defined in Article 96, Paragraph 1, Subparagraphs 3 and 4 of the Enforcement Ordinance of the Corporation Tax Law. (2) The amount of past due loans is 54,142 million yen. Past due loans are nonaccrual status loans other than loans to borrowers in bankruptcy or loans for which interest payments are deferred in order to assist the financial recovery of borrowers in financial difficulties. (3) The amount of loans contractually past due for 3 months or more is 416 million yen. Loans contractually past due for 3 months or more do not include loans classified as loans to borrowers in bankruptcy or past due loans. (4) The amount of restructured loans is 8,762 million yen. Restructured loans are loans on which concessions (e.g. reduction of the stated interest rate, deferral of interest payment, extension of the maturity date, forgiveness of debt) are made to the borrowers in financial difficulties to assist them in their financial recovery, improving their ability to repay to the creditors. Restructured loans do not include loans classified as loans to borrowers in bankruptcy, past due loans or loans past due for 3 months or more. 3. Assets pledged as collateral comprised securities totaling 39,360 million yen and deposits amounting to 340 million yen. Liabilities related to pledged assets were reserves for outstanding claims of 894 million yen and loans payable of 251 million yen. Securities pledged as replacement of collateral for futures transactions totaled 53,283 million yen, and securities pledged for the Bank of Japan's instant gross settlement system for transactions of checking accounts and Japanese government bonds totaled 151,568 million yen. 4. Securities received for the loan transaction with cash collateral amounted to 52,919 million yen at its market value. 5. Gains or losses on hedge instruments are netted and included in Other liabilities. The amount of gross gains and losses on deferred hedge are 217,638 million yen and 64,791 million yen, respectively. 6. Loaned securities of 253,755 million yen are included in Securities. 7. Loan commitments unused amounted as follows; (Yen in millions) Total loan commitments 6,039 Balance of loans in force 1,183 -------------------------------------------- Loan commitments unused 4,855 8. Tokio Marine has provided guarantees for the loans amounted to 2,000 million yen from a financial institution to First Chicago Tokio Marine Financial products Ltd. In addition, Tokio Marine has concluded a support agreement with First Chicago Tokio Marine Financial Products Ltd.("FCTM") under which Tokio Marine would provide FCTM capital if its net assets fell below a certain amount or if its liquid assets were insufficient to settle its liabilities. The support agreement is not a guarantee of the payment of FCTM's debts. As at September 30, 2002, FCTM's net assets is above a certain level and its liquid assets are not insufficient. The amount of FCTM's debt relating to the agreement as at September 30, 2002, was 137,980 million yen. 9. Other assets include deferred assets as prescribed in Article 113 of the Insurance Business Law in the amount of 673 million yen. Notes to consolidated interim statement of income 1. Major components of business expenses (Yen in millions) Agency commissions 157,119 Salaries 64,698 Business expenses consist of Underwriting and general administrative expenses, Loss adjustment expenses and Agency commissions and brokerage, as shown in the consolidated interim statement of income. Notes to consolidated interim statement of cash flows 1. Reconciliation of cash and cash equivalents to the amounts disclosed in the consolidated interim balance sheet is as follows: (At September 30, 2002, Yen in millions) Cash, deposits and savings 693,305 Call loans 526,400 Monetary receivables bought 83,535 Securities 6,461,530 Time deposits with initial term over three months to maturity (110,705) Monetary receivables bought not included in cash equivalents (78,234) Securities not included in cash equivalents (6,410,926) -------------------------------------------------------- Cash and cash equivalents 1,164,905 2. Cash flows from investing activities include cash flows arising from investment activities relating to the insurance business. Segment Information 1. Segment information by lines of business Current year (from April 1, 2002 to September 30, 2002) (Yen in millions) Property and Casualty Life Others Total Elimination Consolidated ----------------------------------------------------------------------------------------------------------------------------------- Ordinary income (1) Ordinary income from transactions with external customers 1,264,210 157,347 1,543 1,423,101 (5,120) 1,417,981 (2) Ordinary income arising from internal segment transacton 5,667 57 86 5,812 (5,812) - Total Ordinary Income 1,269,878 157,404 1,630 1,428,913 (10,932) 1,417,981 Ordinary Expenses 1,144,846 155,396 1,467 1,301,710 (10,928) 1,290,782 Ordinary Profit/Loss 125,032 2,008 162 127,203 (4) 127,198 -----------------------------------------------------------------------------------------------------------------------------------
Notes: 1. The segments are calssified based on the characteristics of operation of reporting company and its subsidiaries. 2. Major operations of each segment are as follows; Property and Casualty : Underwriting property and casualty insurance and related investment activities Life : Underwriting life insurance and related investment activities Others : Securities investment advisory and securities investment trusts business 3. Major component of the "Elimination" set for "Ordinary income from transactions with external customers" is for the reclassification of Losses on derivative transactions amounted to 5,094 million yen which is included in ordinary income from Property and Casualty segment. 2. Segment information by location Current year (from April 1, 2002 to September 30, 2002) Segment information by location is omitted because the "business in Japan" constitutes more than 90 percent of the aggregated amount of the ordinary income of all segments. 3. Segment information on overseas sales Current year (from April 1, 2002 to September 30, 2002) Since overseas sales (ordinary income) constitutes less than 10% of the consolidated sales (consolidated ordinary income), segment information on overseas sales has been omitted. Lease transactions 1. Finance leases other than which are deemed to transfer the ownership of the leased assets to lessees (1) Amounts equivalent to acquisition cost, accumulated depreciation and balance at end of period are as follows: (Yen in millions) ---------------------------------------------------------- For the six months ended September 30, 2002 --------------------------------------- Acquisition Accumulated Balance Cost depreciation at end ---------------------------------------------------------- Movables 27,564 17,660 9,903 ---------------------------------------------------------- Acquisition cost includes interest payable thereon because the balance of future lease payment at the end of the six months represent insignificant proportion of total property and equipment asset at the end of the period. (2) Balance of future lease payment at end of period (Yen in millions) As at September 30, 2002 ------------------------ Due within one year 5,493 Due over one year 4,410 ----- Total 9,903 ===== Future lease payments include interest payable thereon because the balance of future lease payment at end represent insignificant proportion of total property and equipment asset at the end of the period. (3) Lease payments paid and depreciation equivalent (Yen in millions) For the six months ended September 30, 2002 ------------------ Lease payments paid 3,219 Depreciation equivalent 3,219 (4) Depreciation equivalent is computed using the straight line method, supposing that useful life is lease period and that there is no residual value. 2. Operating Leases Future lease payments (Yen in millions) As at September 30, 2002 ------------------------ Due within one year 2 Due over one year 1 --- Total 4 === Securities 1. Securities held to maturity with market value (Yen in millions) -------------------------------------------------------------------------- Type As of September 30, 2002 ------------------------------------------------------ Carrying value Market value Difference --------------------------------------------------------------------------- Bonds 557,687 608,361 50,673 --------------------------------------------------------------------------- 2. "Other securities" with market value (Yen in millions) --------------------------------------------------------------------------- Type As of September 30, 2002 ------------------------------------------------------ Acquisition cost Carrying value Difference --------------------------------------------------------------------------- Bonds 2,359,626 2,441,613 81,987 Stocks 1,426,562 2,394,286 967,723 Foreign securities 620,752 643,498 22,746 Others 151,491 151,731 240 --------------------------------------------------------------------------- Total 4,558,433 5,631,130 1,072,697 --------------------------------------------------------------------------- Notes: 1. "Others" include foreign mortgage securities (acquisition cost Yen 41,878 million, carrying value Yen 43,291 million, difference Yen 1,412 million) which are presented as monetary receivables bought. 2. Impairment loss amounting to Yen 31,791 million were recognized for "Other securities" with market value. Impairment loss is accounted for principally if market value of each security decreases equal to or more than 30% of its book value at the end of the period. 3. Carrying values of securities with no market value (1) Bonds held to maturity None (2) Other securities (Yen in millions) Bonds 599 Stocks 175,324 Foreign securities 54,906 Others 347,106 Notes: "Others" include negotiable deposits (Yen 300,003 million) which are included in "Cash, deposits and savings"and commercial papers (Yen 7,364 million) which are included in "Monetary receivables bought". Money trusts 1. Money trusts held to maturity None 2. Money trusts other than that held to maturity or that held for trading purposes (Yen in millions) -------------------------------------------------------------------------- Item As of September 30, 2002 --------------------------------------------------------- Acquisition cost Carrying Value Difference -------------------------------------------------------------------------- Money trusts 47,595 46,325 (1,270) -------------------------------------------------------------------------- Notes: 1. Other than above, money trusts in the amount of 101 million yen are carried at their original cost at September 30, 2002. 2. Impairment losses amounting to 2,822 million yen were recognized for "Money trusts other than that held to maturity or that held for trading purposes" with market value for the six months ended September 30, 2002. Impairment loss is accounted for principally if market value of each security decreases equal to or more than 30% of its book value at the end of the period. Contract amount, fair value and unrealized gains and losses of derivative financial instruments (1) Foreign currency-related instruments (Yen in millions) ------------------------------------------------------------------------------- As of September 30, 2002 ------------------------------------------ Unrealized Contract amount Fair value gain/(loss) ------------------------------------------------------------------------------- Over-the-counter transactions: Foreign exchange forwards Short USD 146,705 (2,092) (2,092) GBP 17,878 (614) (614) HKD 8,666 24 24 EUR 9,931 (227) (227) CAD 248 (1) (1) Long USD 34,755 600 600 EUR 14,487 302 302 Currency swaps Pay Foreign/ Rec. Yen USD 46,863 (1,620) (1,620) Currency options Short Call USD 8,320 13 6 6 GBP 6,491 25 13 11 EUR 16,708 53 49 3 Put USD 1,770 10 0 10 EUR 567 4 0 4 Long Call USD 4,972 20 17 (2) GBP 4,836 31 28 (2) EUR 13,327 85 105 20 Put USD 1,187 9 0 (9) ------------------------------------------------------------------------------- Total 337,716 (3,406) (3,585) ------------------------------------------------------------------------------- Notes: 1. The fair value of the foreign exchange forwards agreements and foreign currency swap agreements at end of period is based on the futures' market price. The fair value of foreign currency options contracts at end of period is based on the option pricing model. 2. Those instruments to which hedge accounting are applied are not included in the table. 3. For foreign currency options, option premiums are shown beneath the contract amount of the option. (2) Interest rate-related instruments (Yen in millions) --------------------------------------------------------------------------- As of September 30, 2002 ------------------------------------------- Market/Fair Unrealized Contract amount value gain/(loss) --------------------------------------------------------------------------- Market transactions: Interest rate futures options Short Call 70,235 20 35 (15) Put 59,154 6 0 5 Short Call 70,235 22 39 16 Put 59,461 20 0 (19) --------------------------------------------------------------------------- Over-the-counter transactions: Interest rate swap Pay.float/Rec.fix 2,402,945 226,082 226,082 Pay.fix/Rec.float 1,226,245 (60,697) (60,697) --------------------------------------------------------------------------- Total 3,888,277 165,461 165,373 --------------------------------------------------------------------------- Notes: 1. The fair value of the interest rate future option transactions at the end of period is based on the cosing price at major stock exchanges. 2. The fair value of the interest rate swap transactions at the end of period is calculated by discounting future cash flows to the present value based on the interest rate at the date. 3. Interest rate swap transactions to which deferred hedge accounting is applied based on "Tentative Accounting and Auditing Treatment related to Adoption of Accounting for Financial Instruments in the Insurance Industry" amounted to 2,996,700 million yen in contract amount and 98,203 million yen both in far value and unrealized gain at September 30, 2002. Interest rate swap transactions to which deferred hedge accounting is applied based on "Statement Concerning the Establishment of an Accounting Standard Related to Financial Products" amounted to 54,300 million yen in contract amount and 5,285 million yen both in fair value and unrealized gain at September 30, 2002. (3) Equity-related instruments --------------------------------------------------------------------------- As of September 30, 2002 ------------------------------------------- Market/Fair Unrealized Contract amount value gain/(loss) --------------------------------------------------------------------------- Market transactions: Equity index futures Short 14,386 278 278 Long 704 (39) (39) Equity index options Short Call 4,338 31 19 12 Put 1,132 14 6 7 Long Call 7,148 75 60 (14) Put 246 7 5 (2) --------------------------------------------------------------------------- Over-the-counter transactions: Equity options Long Call 171 34 27 (6) --------------------------------------------------------------------------- Total 28,128 358 234 --------------------------------------------------------------------------- Notes: 1. The market value of the equity index futures and equity index options as of the end of period is based on the quoted final price of the primary stock exchanges. 2. The fair value of option contracts on individual equities is quoted from counter monetary facilities. 3. For option contracts, the option premiums are shown below the respective contractual amount as of the commencement date. (4) Bond-related instruments --------------------------------------------------------------------------- As of September 30, 2002 ------------------------------------------- Market/Fair Unrealized Contract amount value gain/(loss) --------------------------------------------------------------------------- Market transactions: Bond futures Short 26,890 (21) (21) Long 15,224 112 112 Bond future options Short Call 14,672 114 118 (3) Put 2,721 25 13 12 --------------------------------------------------------------------------- Total 59,508 221 99 --------------------------------------------------------------------------- Notes: 1. The market value of the bond futures and the bond options as of the end of period is based on the quoted final price at the primary stock exchanges. 2. For option contracts, the option premiums are shown below the respective contractual amount as of the commencement date. (5) Weather-related instruments --------------------------------------------------------------------------- As of September 30, 2002 ------------------------------------------- Market/Fair Unrealized Contract amount value gain/(loss) --------------------------------------------------------------------------- Over-the-counter transactions: Weather derivatives Short 141 22 10 12 --------------------------------------------------------------------------- Total 141 10 12 --------------------------------------------------------------------------- Notes: 1. The contract amount of option premiums is the amount as of the commencement date. 2. The option premiums are shown below the respective contractual amount as of the commencement date. (6) Credit-related instruments --------------------------------------------------------------------------- As of September 30, 2002 ------------------------------------------- Market/Fair Unrealized Contract amount value gain/(loss) --------------------------------------------------------------------------- Over-the-counter transactions: Credit derivatives Short 1,262,770 (26,215) (26,215) Long 376,890 7,686 7,686 --------------------------------------------------------------------------- Total 1,639,600 (18,528) (18,528) --------------------------------------------------------------------------- Notes: The fair value of the credit derivative transactions at the end of period is calculated mainly using internal evaluation model. (7) Commodity-related instruments None Interim Financial Statements of Tokio Marine and its Consolidated Subsidiaries Consolidated Interim Balance Sheets (Yen in million except percentage) -------------------------------------------------------------------------------------------------------------- As of As of As of September 30, 2002 September 30, 2001 March 31, 2002 ------------------------------------------------------------ Amount Ratio Amount Ratio Amount Ratio -------------------------------------------------------------------------------------------------------------- Assets % % % ------ Cash, deposits and savings 531,144 6.72 104,547 1.30 463,616 5.40 Call loans 526,400 6.66 706,000 8.75 403,700 4.70 Monetary receivables bought 77,361 0.98 132,122 1.64 164,697 1.92 Money trust 44,337 0.56 64,485 0.80 76,386 0.89 Securities 5,120,212 64.82 4,800,504 59.51 5,093,731 59.33 Loans 595,467 7.54 705,336 8.74 661,375 7.70 Property and equipment 284,487 3.60 293,268 3.64 290,295 3.38 Other assets 723,365 9.16 615,427 7.63 666,788 7.77 Deferred tax assets 15,076 0.19 6,136 0.08 8,612 0.10 Customers' liabilities under acceptances and guarantees 25,543 0.32 685,875 8.50 806,659 9.40 Reserve for bad debts (44,508) (0.56) (47,146) (0.58) (50,575) (0.59) -------------------------------------------------------------------------------------------------------------- Total assets 7,898,888 100.00 8,066,558 100.00 8,585,286 100.00 -------------------------------------------------------------------------------------------------------------- Liabilities ----------- Underwriting funds 5,020,884 63.56 4,772,105 59.16 4,845,474 56.44 Outstanding claims 565,401 532,165 546,543 Underwriting reserves 4,455,482 4,239,939 4,298,931 Straight Bonds 110,000 1.39 110,000 1.36 110,000 1.28 Other liabilities 896,120 11.34 510,705 6.33 639,027 7.44 Reserve for retirement benefits 165,216 2.09 156,618 1.94 172,098 2.00 Reserve for employees' bonuses 18,459 0.23 17,297 0.21 14,207 0.17 Reserve under the special law 42,835 0.54 37,731 0.47 36,867 0.43 Reserve for price fluctuation 42,835 37,731 36,867 Deferred tax liabilities 2,220 0.03 96,093 1.19 150,124 1.75 Acceptances and guarantees 25,543 0.32 685,875 8.50 806,659 9.40 -------------------------------------------------------------------------------------------------------------- Total liabilities 6,281,278 79.52 6,386,426 79.17 6,774,459 78.91 -------------------------------------------------------------------------------------------------------------- Minority interest 1,843 0.02 1,894 0.02 2,039 0.02 -------------------------------------------------------------------------------------------------------------- Stockholders' equity -------------------- Common stock 101,994 1.29 101,994 1.26 101,994 1.19 Additional paid-in capital 38,782 0.49 38,782 0.48 38,782 0.45 Retained earnings 765,601 9.69 732,133 9.08 738,446 8.60 Unrealized gains on investments, net of taxes 721,737 9.14 814,781 10.10 933,741 10.88 Foreign currency translation adjustments (12,350) (0.16) (9,444) (0.12) (3,529) (0.04) Total 1,615,766 20.46 1,678,248 20.81 1,809,435 21.08 Treasury stock - - (11) (0.00) (648) (0.01) -------------------------------------------------------------------------------------------------------------- Total stockholders' equity 1,615,766 20.46 1,678,236 20.80 1,808,786 21.07 -------------------------------------------------------------------------------------------------------------- Total liabilities, minority interest and stockholders' equity 7,898,888 100.00 8,066,558 100.00 8,585,286 100.00 --------------------------------------------------------------------------------------------------------------
Note: Certain reclassifications are made to previous periods' presentation to conform to that of current period. Consolidated Interim Statements of Income (Yen in million except percentage) ----------------------------------------------------------------------------------------------------------------------------------- For the six months ended For the year ended September 30, 2002 September 30, 2001 March 31, 2002 --------------------------------------------------------------------- Amount Ratio Amount Ratio Amount Ratio ----------------------------------------------------------------------------------------------------------------------------------- Ordinary income and expenses % % % ---------------------------- Ordinary income 1,166,356 100.00 974,898 100.00 2,020,043 100.00 Underwriting income 977,567 83.81 883,318 90.61 1,862,711 92.21 Net premiums written 731,758 669,649 1,383,725 Deposit premiums from policyholders 100,518 102,828 205,647 Investment income on deposit premiums from policyholders 28,253 30,557 60,679 Life insurance premiums 116,896 79,794 210,530 Investment income 175,989 15.09 84,441 8.66 143,111 7.08 Interest and dividends received 68,285 76,504 141,116 Profit on investment in money trusts 212 40 315 Profit on trading securities 30 - - Profit on sales of securities 115,441 31,232 50,205 Profit on redemption of securities 3,939 1,052 8,463 Profit on derivative transactions 14,545 5,442 - Transfer of investment income on deposit premiums (28,253) (30,557) (60,679) Other ordinary income 12,800 1.10 7,138 0.73 14,220 0.70 Investment income under the equity method 328 - - Ordinary expenses 1,042,890 89.41 921,788 94.55 1,946,341 96.35 Underwriting expenses 860,515 73.78 747,560 76.68 1,583,125 78.37 Net claims paid 346,611 357,054 739,508 Loss adjustment expenses 30,314 28,595 56,707 Agency commissions and brokerage 131,457 126,710 262,596 Maturity refunds to policyholders 157,238 155,502 384,225 Dividends to policyholders 33 160 211 Life insurance claims 10,885 7,996 18,097 Provision for outstanding claims 21,649 12,882 7,742 Provision for underwriting reserves 159,506 57,315 113,187 Investment expenses 31,624 2.71 25,488 2.61 63,715 3.15 Loss on investment in money trusts 452 766 442 Loss on trading securities - - 287 Loss on sales of securities 4,002 763 5,218 Loss on revaluation of securities 24,748 22,665 42,971 Loss on redemption of securities 146 429 611 Loss on derivative transactions - - 14,057 Underwriting and general administrative expenses 148,190 12.71 143,813 14.75 283,302 14.02 Other ordinary expenses 2,560 0.22 4,926 0.51 16,197 0.80 Interest paid 1,504 1,470 3,043 Provision for bad debts reserve - 2,167 6,854 Bad-debt expenses 23 56 62 Investment loss under the equity method - 469 929 Ordinary profit 123,465 10.59 53,109 5.45 73,701 3.65 ----------------------------------------------------------------------------------------------------------------------------------- Extraordinary gains and losses ------------------------------ Extraordinary gains 6,337 0.54 7,083 0.73 7,361 0.36 Profit on sales of properties 6,337 7,083 7,361 Extraordinary losses 6,999 0.60 9,292 0.95 23,177 1.15 Loss on sales of properties 535 3,202 3,973 Provision for reserve under the special law 5,967 6,086 5,223 Provision for reserve for price fluctuation 5,967 6,086 5,223 Extra write-off against profit on sales of properties 0 4 9 Other 496 - 13,970 ----------------------------------------------------------------------------------------------------------------------------------- Income before income taxes 122,803 10.53 50,901 5.22 57,886 2.87 Income taxes - current 76,674 6.57 38,019 3.90 54,000 2.67 Income taxes - deferred (34,359) (2.95) (21,507) (2.21) (37,506) (1.86) Minority interest 70 0.01 199 0.02 320 0.02 ----------------------------------------------------------------------------------------------------------------------------------- Net income 80,417 6.89 34,190 3.51 41,072 2.03 -----------------------------------------------------------------------------------------------------------------------------------
Consolidated Interim Statements of Retained Earnings (Yen in millions) ---------------------------------------------------------------------------------------------------------------------------------- For the six months ended --------------------------------------- For the year ended September 30, 2002 September 30, 2001 March 31, 2002 ---------------------------------------------------------------------------------------------------------------------------------- Additional paid-in capital -------------------------- Additional paid-in capital at beginning of 38,782 38,782 38,782 Additional paid-in capital at end of 38,782 38,782 38,782 Retained earnings ----------------- Unappropriated retained earnings at beginning of 738,446 710,385 710,385 Increase in unappropriated retained earnings 80,417 35,039 41,624 Net income 80,417 34,190 41,072 Increase in connection with newly consolidated subsidiaries - 564 551 Other increases - 285 - Decrease in unappropriated retained earnings 53,262 13,292 13,563 Dividends 52,993 13,172 13,172 Directors' bonus 120 120 120 Other decreases 148 - 270 Unappropriated retained earnings at end of 765,601 732,133 738,446 ----------------------------------------------------------------------------------------------------------------------------------
Note: Certain reclassifications are made to previous periods' presentation to conform to the presentation for the current six months. Consolidated Interim Statements of Cash Flows (Yen in millions) ---------------------------------------------------------------------------------------------------------------------------------- For the six months ended --------------------------------------- For the year ended September 30, 2002 September 30, 2001 March 31, 2002 ---------------------------------------------------------------------------------------------------------------------------------- I. Cash flows from operating activities: Income before income taxes 122,803 50,901 57,886 Depreciation 7,193 7,639 15,692 Increase (decrease) in outstanding claims 21,724 13,637 8,020 Increase (decrease) in underwriting reserves 158,130 56,822 111,821 Increase (decrease) in reserve for bad debts (5,908) (2,838) 355 Increase (decrease) in reserve for retirement benefits (6,882) 740 16,220 Increase in reserve for employees' bonuses 4,276 3,114 20 Increase in reserve for price fluctuation 5,967 6,086 5,223 Interest and dividend income (68,285) (76,504) (141,116) Net (profit) loss on securities (90,513) (8,427) (9,581) Interest expenses 1,504 1,470 3,043 Loss (profit) on foreign exchange 21 (246) (1,396) Loss (profit) related to properties (5,355) (3,877) (3,378) Investment income(loss) under the equity method (328) 469 929 Increase in other assets (other than investing and financing activities) (38,838) (16,371) (12,188) Increase in other liabilities (other than investing and financing activities) 10,471 52,277 22,258 Other 832 6,224 5,299 Sub-total 116,813 91,117 79,110 Interest and dividends received 76,735 82,622 141,674 Interest paid (793) (867) (2,075) Income taxes paid (47,857) (10,229) (15,581) Net cash provided by operating activities 144,898 162,643 203,128 ----------------------------------------------------------------------------------------------------------------------------------- II. Cash flows from investing activities: Net increase in deposit and savings 3,970 7,421 17,857 Purchases of monetary receivables bought (3,717) (7,962) (32,989) Proceeds from sales and redemption of monetary receivables bought 32,403 9,683 23,776 Increase in money trusts - - (16,000) Decrease in money trusts 30,315 10,360 15,642 Purchases of securities (1,005,783) (604,890) (1,235,684) Proceeds from sales and redemption of securities 741,189 315,249 871,407 Loans made (66,615) (79,054) (152,227) Proceeds from collection of loans receivable 132,516 146,580 263,308 Increase in cash received under securities lending transactions 47,927 - 122,445 Other (35) - - II(a) Subtotal (87,829) (202,612) (122,466) Subtotal (I+II(a)) 57,068 (39,968) 80,662 Purchases of property and equipment (3,481) (6,836) (13,225) Proceeds from sales of property and equipment 7,227 15,748 16,802 Net cash provided by (used in) investing activities (84,083) (193,700) (118,889) ----------------------------------------------------------------------------------------------------------------------------------- III. Cash flows from financing activities: Purchase of treasury stock - 0 (635) Dividends paid by the Tokio Marine (13,165) (13,154) (13,173) Dividends paid by subsidiaries to minority shareholders (146) (128) (129) Other (2) - - Net cash provided by (used in) financing activities (13,314) (13,281) (13,938) ----------------------------------------------------------------------------------------------------------------------------------- IV. Effect of exchange rate changes on cash and cash equivalents (7,542) 1,369 5,243 ----------------------------------------------------------------------------------------------------------------------------------- V. Net increase (decrease) in cash and cash equivalents 39,958 (42,969) 75,544 ----------------------------------------------------------------------------------------------------------------------------------- VI. Cash and cash equivalents at beginning of 962,369 885,045 885,045 ----------------------------------------------------------------------------------------------------------------------------------- VII. Net increase in cash and cash equivalents from inclusion of a subsidiary in scope of consolidation - 548 1,779 ----------------------------------------------------------------------------------------------------------------------------------- VIII. Cash and cash equivalents at end of 1,002,327 842,624 962,369 -----------------------------------------------------------------------------------------------------------------------------------
Note: Certain reclassifications are made to previous periods' presentation to conform to that of current period. Interim Financial Statements of Nichido Fire and its Consolidated Subsidiaries Consolidated Interim Balance Sheets (Yen in millions except percentages) ----------------------------------------------------------------------------------------------------------------------------------- As of September 30, 2002 As of September 30, 2001 As of March 31, 2002 ---------------------------------------------------------------------------------- Amount Ratio Amount Ratio Amount Ratio ----------------------------------------------------------------------------------------------------------------------------------- Assets % % % ------ Cash, deposits and savings 161,494 8.38 157,078 7.94 175,493 8.75 Monetary receivables bought 6,174 0.32 3,330 0.17 3,186 0.16 Money trust 28,665 1.49 27,056 1.37 26,612 1.33 Securities 1,343,966 69.78 1,376,721 69.57 1,432,685 71.40 Loans 161,983 8.41 201,533 10.18 175,878 8.76 Property and equipment 83,689 4.35 84,603 4.27 84,745 4.22 Other assets 132,486 6.88 124,838 6.31 115,087 5.73 Deferred tax assets 18,281 0.95 11,467 0.58 - - Customers' liabilities under acceptances and guarantees - - 5,000 0.25 5,000 0.25 Reserve for bad debts (10,801) (0.56) (12,701) (0.64) (12,080) (0.60) ----------------------------------------------------------------------------------------------------------------------------------- Total Assets 1,925,939 100.00 1,978,927 100.00 2,006,609 100.00 ----------------------------------------------------------------------------------------------------------------------------------- Liabilities ----------- Underwriting funds 1,373,322 71.31 1,398,814 70.69 1,377,285 68.64 Outstanding claims 120,528 122,703 120,845 Underwriting reserves 1,252,793 1,276,111 1,256,439 Straight bonds 25,000 1.30 25,000 1.26 25,000 1.25 Convertible bonds - - 12,500 0.63 - - Other liabilities 69,052 3.59 79,731 4.03 83,739 4.17 Reserve for retirement benefits 26,817 1.39 26,862 1.36 26,185 1.30 Reserve for employees' bonuses 3,867 0.20 4,132 0.21 3,827 0.19 Reserve under the special law 2,577 0.13 7,866 0.40 1,736 0.09 Reserve for price fluctuation 2,577 7,866 1,736 Deferred tax liabilities 2,797 0.14 2,867 0.14 11,679 0.58 Acceptances and guarantees - - 5,000 0.25 5,000 0.25 ----------------------------------------------------------------------------------------------------------------------------------- Total Liabilities 1,503,434 78.06 1,562,776 78.97 1,534,453 76.47 ----------------------------------------------------------------------------------------------------------------------------------- Minority interest 0 0.00 0 0.00 0 0.00 ----------------------------------------------------------------------------------------------------------------------------------- Stockholders' Equity -------------------- Common stock 50,550 2.63 50,550 2.55 50,550 2.52 Additional paid-in capital 34,187 1.78 34,187 1.73 34,187 1.70 Retained earnings 144,705 7.51 146,028 7.38 147,542 7.35 Unrealized gains on investments, net of taxes 194,363 10.09 186,447 9.42 240,524 11.99 Foreign currency translation adjustments (1,302) (0.07) (1,062) (0.05) (591) (0.03) Total 422,505 21.94 416,152 21.03 472,213 23.53 Treasury stock - - (0) (0.00) (57) (0.00) ----------------------------------------------------------------------------------------------------------------------------------- Total stockholders' equity 422,505 21.94 416,151 21.03 472,156 23.53 ----------------------------------------------------------------------------------------------------------------------------------- Total Liabilities, Minority Interest and Stockholders' Equity 1,925,939 100.00 1,978,927 100.00 2,006,609 100.00 -----------------------------------------------------------------------------------------------------------------------------------
Notes: Certain reclassifications are made to previous periods' presentation to conform to that of current period. Consolidated Interim Statements of Income (Yen in millions except percentages) ------------------------------------------------------------------------------------------------------------------- For the six months ended For the year ended --------------------------------------- September 30, 2002 September 30, 2001 March 31, 2002 ------------------------------------------------------------ Amount Ratio Amount Ratio Amount Ratio ------------------------------------------------------------------------------------------------------------------- Ordinary income and expenses % % % ---------------------------- Ordinary income 260,325 100.00 275,783 100.00 575,626 100.00 Underwriting income 244,738 94.01 253,138 91.79 516,228 89.68 Net premiums written 190,770 188,104 371,169 Deposit premiums from policyholders 29,230 38,884 78,158 Investment income on deposit premiums from policyholders 7,332 8,214 15,688 Life insurance premiums 13,556 11,755 24,568 Reversal of reserves for outstanding claims 317 - 527 Reversal of underwriting reserves 3,514 6,097 25,681 Investment income 14,108 5.42 22,526 8.17 59,154 10.28 Interest and dividends received 13,739 15,588 30,613 Profit on investment in money trust 211 268 479 Profit on sales of securities 7,135 13,563 43,006 Profit on redemption of securities 0 0 0 Profit on derivative transactions - 1,299 675 Transfer of investment income on deposit premiums from policyholders (7,332) (8,214) (15,688) Other ordinary income 1,479 0.57 118 0.04 243 0.04 Ordinary expenses 243,042 93.36 269,263 97.64 566,779 98.47 Underwriting expenses 198,601 76.29 211,825 76.81 429,232 74.57 Net claims paid 96,808 100,055 202,632 Loss adjustment expenses 8,021 7,757 16,134 Agency commissions and brokerage 35,579 36,599 71,880 Maturity refunds to policyholders 56,717 64,806 135,858 Dividends to policyholders 7 53 78 Life insurance claims 1,215 1,029 2,348 Provision for outstanding claims - 1,329 - Investment expenses 4,908 1.89 17,114 6.21 59,155 10.28 Loss on investment in money trust 1,371 1,458 1,335 Loss on trading securities 43 - - Loss on sales of securities 751 762 5,064 Loss on revaluation of securities 2,331 13,871 52,521 Loss on redemption of securities - - 1 Loss on derivative transactions 410 - - Underwriting and general administrative expenses 38,867 14.93 39,627 14.37 76,666 13.32 Other ordinary expenses 666 0.25 695 0.25 1,724 0.30 Interest paid 270 355 693 Bad-debt expenses 0 34 34 Amortization of intangibles 96 96 192 Ordinary profit 17,282 6.64 6,519 2.36 8,847 1.53 ----------------------------------------------------------------------------------------------------------------- Extraordinary gains and losses ------------------------------ Extraordinary gains 2 0.00 2,646 0.96 9,294 1.61 Profit on sales of properties 2 48 154 Reversal of reserve under the special law - 1,196 7,326 Reversal of reserve for price fluctuation - 1,196 7,326 Reversal of reserve for bad-debts - 1,401 1,813 Extraordinary losses 1,767 0.68 303 0.11 6,982 1.21 Loss on sales of properties 130 104 273 Provision for reserve under the special law 841 - - Provision for reserve for price fluctuation 841 - - Other 795 198 6,709 ----------------------------------------------------------------------------------------------------------------- Income before income taxes 15,517 5.96 8,862 3.21 11,159 1.93 Income taxes - current 6,994 2.68 10,716 3.89 21,643 3.76 Income taxes - deferred (1,281) (0.49) (8,164) (2.96) (18,309) (3.18) Minority interest 0 0.00 0 0.00 0 0.00 ----------------------------------------------------------------------------------------------------------------- Net income 9,804 3.77 6,311 2.28 7,825 1.35 -----------------------------------------------------------------------------------------------------------------
Consolidated Interim Statements of Retained Earnings (Yen in millions) ----------------------------------------------------------------------------------------------------------------------------- For the six months ended For the year ended ------------------------------------------------------------------ September 30, 2002 September 30, 2001 March 31, 2002 ----------------------------------------------------------------------------------------------------------------------------- Additional paid-in capital -------------------------- Additional paid-in capital at beginning of 34,187 34,187 34,187 Additional paid-in capital at end of 34,187 34,187 34,187 Retained earnings ----------------- Unappropriated retained earnings at beginning of 147,542 143,105 143,105 Increase in unappropriated retained earnings 9,804 6,311 7,825 Net income 9,804 6,311 7,825 Decrease in unappropriated retained earnings 12,641 3,387 3,387 Dividends 12,641 3,340 3,340 Directors' bonus - 47 47 Unappropriated retained earnings at end of 144,705 146,028 147,542 ------------------------------------------------------------------------------------------------------------------------
Notes: Certain reclassifications are made to previous periods' presentation to conform to that of current period. Consolidated Interim Statements of Cash Flows (Yen in millions) ------------------------------------------------------------------------------------------------------------------------------------ For the six months ended For the year ended --------------------------------------- September 30, 2002 September 30, 2001 March 31, 2002 ------------------------------------------------------------------------------------------------------------------------------------ I. Cash flows from operating activities: Income before income taxes 15,517 8,862 11,159 Depreciation 2,198 2,576 5,069 Increase (decrease) in outstanding claims (317) 1,329 (527) Increase (decrease) in underwriting reserves (3,645) (6,210) (25,883) Increase (decrease) in reserve for bad debts (1,278) (2,420) (3,041) Increase in reserve for retirement benefits 631 8 (667) Increase in reserve for employees' bonuses 39 359 53 Increase in reserve for price fluctuation 841 (1,196) (7,326) Interest and dividend income (13,739) (15,588) (30,613) Net (profit) loss on securities (4,053) 971 14,582 Interest expenses 270 355 693 Loss (gain) on foreign exchange (334) 562 48 Loss (profit) related to properties 684 56 119 Increase in other assets (other than investing and financing activities) (10,480) (7,870) (1,254) Increase in other liabilities (other than investing and financing activities) 7,522 5,964 (1,228) Other 1,096 1,055 3,935 --------------------------------------------------------- Sub-total (5,046) (11,184) (34,884) Interest and dividends received 14,738 16,503 30,975 Interest paid (268) (290) (693) Income taxes paid (18,771) (6,173) (9,197) --------------------------------------------------------- Net cash provided by operating activities (9,348) (1,145) (13,798) II. Cash flows from investing activities: Net increase in deposit and savings 257 3,259 25,417 Purchases of monetary receivables bought (3,669) (1,310) (1,856) Proceeds from sales and redemption of monetary receivables bought 656 1,059 1,780 Increase in money trusts (5,500) (13,000) (16,000) Decrease in money trusts 2,625 9,566 13,600 Purchases of securities (247,129) (315,530) (584,946) Proceeds from sales and redemption of securities 264,023 263,072 541,128 Loans made (37,843) (32,912) (68,185) Proceeds from collection of loans receivable 51,672 57,075 117,967 Increase in cash received under securities lending transactions (24,190) (14,190) (10,800) Other (5) 492 882 II(a) Subtotal 896 (42,417) 18,988 Subtotal (I+II(a)) (8,451) (43,563) 5,189 Purchases of property and equipment (2,067) (2,123) (6,491) Proceeds from sales of property and equipment 257 267 2,144 --------------------------------------------------------- Net cash provided by (used in) investing activities (913) (44,274) 14,641 III. Cash flows from financing activities: Redemption of convertible bonds - - (12,625) Purchase of treasury stock - 0 (56) Dividends paid by the Nichido Fire (3,340) (3,340) (3,340) Dividends paid by subsidiaries to minority shareholders (0) (0) (0) Other (9) (5) (15) --------------------------------------------------------- Net cash provided by (used in) financing activities (3,349) (3,345) (16,038) IV. Effect of exchange rate changes on cash and cash equivalents (219) (806) 296 --------------------------------------------------------- V. Net increase (decrease) in cash and cash equivalents (13,830) (49,571) (14,899) VI. Cash and cash equivalents at beginning of 175,741 190,640 190,640 --------------------------------------------------------- VII. Cash and cash equivalents at end of 161,911 141,069 175,741 ------------------------------------------------------------------------------------------------------------------------------------
Notes: Certain reclassifications are made to previous periods' presentation to conform to that of current period. Millea Holdings, Inc. [English Translation] November 29, 2002 SUMMARY OF NON-CONSOLIDATED BUSINESS RESULTS OF MILLEA HOLDINGS, INC. UNDER JAPANESE GAAP FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2002 Company Name: Millea Holdings, Inc. Securities Code Number: 8766 Stock Exchange Listings: Tokyo and Osaka Head Office: Tokyo, Japan Representative: Kunio Ishihara, President, Millea Holdings, Inc. Contact: Masayuki Ito, Corporate Planning Dept., Millea Holdings, Inc. Phone 03-6212-3341 Satoshi Tsujigado, Corporate Finance Dept., Millea Holdings, Inc. Phone: 03-6212-3343 Interim dividends system: Established New unit system: None 1. Non-Consolidated Business Results for the six months ended September 30, 2002 (from April 2, 2002 to September 30, 2002) (1) Non-consolidated results of operations (Yen in millions except per share amounts and percentages) ------------------------------------------------------------------------------- For the six months ended September 30, 2002 ------------------------------------------------------------------------------- Operating income 51,027 Operating profits 49,077 Ordinary profits 49,118 Net income 49,119 Net income per share of common stocks 26,480.76 ------------------------------------------------------------------------------- The amounts less than respective unit are rounded down and the rates less than respective unit are rounded off. Notes: a. Average number of shares outstanding for the six months ended September 30, 2002: 1,854,902 shares b. Change in accounting method: None (2) Dividends payment Dividends paid per share for the six months ended September 30, 2002: None (3) Non-consolidated financial conditions (Yen in millions except per share amounts and percentages) ------------------------------------------------------------------------------- For the six months ended September 30, 2002 ------------------------------------------------------------------------------- Total assets 2,211,673 Stockholders' equity 2,207,111 Ratio of stockholders' equity to total assets 99.8% Stockholders' equity per share (Yen) 1,190,680.97 ------------------------------------------------------------------------------- Notes: a. Number of shares outstanding as of September 30, 2002: 1,853,654 shares b. Number of treasury stocks outstanding as of September 30, 2002: 3,394 shares 2. Non-consolidated business forecast for the year ending March 31, 2003 --------------------------------------------------------------------- (from April 2, 2002 to March 31, 2003) (Yen in millions except per share amounts) ------------------------------------------------------------------------------- Operating income 53,000 Ordinary profits 49,000 Net income 49,000 Annual cash dividends per share (yen) 8,500.00 Cash dividends per share by the year end (yen) 8,500.00 ------------------------------------------------------------------------------- Notes: Expected net income per share (yen): 26,434.27 Non-Consolidated Interim Balance Sheet (Yen in millions) ------------------------------------------------------------------------------- As of September 30, 2002 Amount Ratio ------------------------------------------------------------------------------- Current assets: % Cash, deposits and savings 666 Receivables 49,070 Others 69 ------------------------------------------------------------------------------- Total Current assets 49,807 2.25 ------------------------------------------------------------------------------- Non-current assets: Tangible fixed assets 353 Intangible fixed assets 0 Investments and other assets: Investments in subsidiaries (stock) 2,161,485 Others 25 ------------------------------------------------------------------------------- Total Non-current assets 2,161,866 97.75 ------------------------------------------------------------------------------- Total Assets 2,211,673 100.00 =============================================================================== Liabilities and Stockholders' equity ------------------------------------------------------------------------------- Liabilities: Current liabilities: Short-term borrowings 2,000 Reserve for bonus 133 Others 2,429 ------------------------------------------------------------------------------- Total Current liabilities 4,562 0.21 ------------------------------------------------------------------------------- Total Liabilities 4,562 0.21 ------------------------------------------------------------------------------- Stockholders' equity: Common stock 150,000 6.78 Additional paid-in capital 2,011,485 90.95 Retained earnings 49,119 2.22 Treasury stock (3,493) (0.16) ------------------------------------------------------------------------------- Total Stockholders' equity 2,207,111 99.79 ------------------------------------------------------------------------------- Total Liabilities and Stockholders' equity 2,211,673 100.00 =============================================================================== Non-Consolidated Interim Statement of Income (Yen in millions) ------------------------------------------------------------------------------- As of September 30, 2002 Amount Ratio ------------------------------------------------------------------------------- Operating income: % Dividends received from subsidiaries 49,127 Fees received from subsidiaries 1,900 ------------------------------------------------------------------------------- Total Operating income 51,027 100.00 Operating expenses: General and administrative expenses 1,950 3.82 ------------------------------------------------------------------------------- Operating profit 49,077 96.18 ------------------------------------------------------------------------------- Non-operating income 41 0.08 Non-operating expenses 1 0.00 ------------------------------------------------------------------------------- Ordinary profit 49,118 96.26 ------------------------------------------------------------------------------- Income before income taxes 49,118 96.26 Income taxes-current 89 Income taxes-deferred (90) ------------------------------------------------------------------------------- Total Income taxes (0) (0.00) ------------------------------------------------------------------------------- Net income 49,119 96.26 ------------------------------------------------------------------------------- Unappropriated retained earnings at the end of the six months 49,119 96.26 =============================================================================== Notes to the non-consolidated financial statements Basis for presentation and principals of financial statements 1. Valuation of securities Investments in subsidiaries are stated at cost determined by the moving-average method. 2. Depreciation for fixed assets Depreciation of tangible fixed assets other than buildings(excluding auxiliary facilities attached to the building) is computed using the declining-balance method principally over the following useful lives. Equipment and furnitures 3 to 15 years Buildings 15 to 18 years 3. Reserve In order to prepare for employees' bonus payments, Millea Holdings accrues for reserve for employees' bonuses based on the estimated amount of payment attributable to the six months ended September 30, 2002. 4. Lease transactions Finance lease transactions other than those which are deemed to transfer the ownership of the leased property to lessees are accounted for by a method similar to that applicable to the ordinary lease transactions. 5. Consumption taxes Consumption Taxes and local consumption taxes are accounted for by the tax-segregated method. Notes to non-consolidated balance sheet 1. Accumulated depreciation of tangible fixed assets amounted to 32 million yen. 2. All amounts less than one million yen are rounded down. Notes to non-consolidated statement of income 1. Depreciation expenses Tangible Fixed Assets: 32 million yen 2. All amounts less than one million yen are rounded down. Lease transactions 1. Amounts equivalent to acquisition cost, accumulated depreciation and the balance at the end of the six months are as follows: (Yen in millions) Acquisition cost 32 Accumulated depreciation 5 Balance at end 27 Acquisition cost includes interest payable thereon because the balance of future lease payment at the end of the six months represent insignificant proportion of total property and equipment asset at the end of respective period. 2. Balance of future lease payment at end (Yen in millions) Due within one year 8 Due after one year 19 --------------------------------------------- Total 27 ============================================= Future lease payments include interest payable thereon because the balance of future lease payment at the end of the six months represent insignificant proportion of total property and equivalent asset at the end of the period. 3. Lease payments and depreciation equivalent (Yen in millions) Lease payments paid 5 Depreciation equivalent 5 4. Depreciation equivalent is computed using the straight-line method, supposing that useful life is lease period and that there is no residual value. Securities Investments in subsidiaries are non-marketable securities.