A.M. Best Assigns ‘A+’ Rating to Nichido Fire and Marine Co. Ltd.

February 14, 2003

A.M. Best Co. has assigned an initial financial strength rating of A+ (Superior) to The Nichido Fire and Marine Insurance Company, Ltd., Tokyo, Japan, with a negative outlook. The company has a financial size category of XV.

The rating reflects the company’s superior stand-alone capitalization, strong market presence and historically sound operating profitability. The rating also recognizes the strategic benefits the company derives from its close operating relationship with the Japanese non-life insurance market leader, Tokio Marine & Fire Insurance Company, under Millea Holdings, Inc. Nichido Fire’s capitalization is enhanced by its modest outstanding debt, extensive reinsurance coverage and substantial reserves to protect against catastrophe losses. The rating also applies to the company’s U.S. branch.

Partially offsetting these positive rating factors is Japan’s intensely competitive non-life insurance marketplace, which stems from the deregulation of the insurance industry and liberalization of the financial services industry in general. Japan’s competitive environment, combined with the depressed economy, has resulted in slowed premium growth, sharply decreased dividend and interest income and weak underwriting profitability. These environmental factors will continue to place pressure on Nichido Fire’s operating performance in the near term.

In response to these pressures and in efforts to boost profitability and capital efficiency, Nichido and Tokio Marine plan to merge their life insurance subsidiaries and many overseas operations in 2003 and have discussed merging their domestic non-life insurance operations.

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