NEWS RELEASE. R&I Affirms Ratings, Changes Outlook to Positive: MS&AD Group, Sompo Japan Nipponkoa Group

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1 Jun 11, 2015 R&I Affirms Ratings, Changes Outlook to Positive: MS&AD Group, Sompo Japan Nipponkoa Group Rating and Investment Information, Inc. (R&I) has announced the following: SEC. COMPANY NAME CODE ---- Mitsui Sumitomo Insurance Co., Ltd Aioi Nissay Dowa Insurance Co., Ltd Sompo Japan Nipponkoa Insurance Inc Mitsui Sumitomo Aioi Life Insurance Co., Ltd Mitsui Sumitomo Primary Life Insurance Co., Ltd Sompo Japan Nipponkoa Himawari Life Insurance, Inc. * Please refer below for rated bonds, etc. RATIONALE: R&I has affirmed the ratings for the above-mentioned insurance companies held by MS&AD Insurance Group Holdings, Inc. (Sec. Code: 8725) and Sompo Japan Nipponkoa Holdings, Inc. (Sec. Code: 8630) and changed their Rating Outlooks to Positive. In May 2012, R&I downgraded the ratings based on its judgement that the entire group creditworthiness of these two insurance groups fell due to the capital erosion caused by massive claims payments relating to the Great East Japan Earthquake and the Thai floods, among others. After that, however, the earning capacity of their domestic property and casualty insurance (P&C) business has grown and accordingly their risk resilience has been increasing. R&I believes that the groups' creditworthiness is improving. In the two insurance groups, the underwriting profitability of domestic P&C business consisting mainly of automobile insurance has been rising thanks partly to their response to structural issues and premium rate increases. For the fiscal year ended March 2015, the amount of claims paid related to catastrophic natural disasters was few at home and abroad, even when compared with the average in the past. Furthermore, domestic life insurance and overseas insurance businesses are expected to grow, given the need for business and risk diversification. While the two groups' life insurance and overseas businesses carry high returns relative the risks taken, they will likely continue to allocate management resources to these areas. The overall earning capacity of each group is reaching a level commensurate with their respective ratings. Risk resilience has also been improving thanks mainly to improvements in the macro environment, such as higher stock prices and the weaker yen, and continuing ERM (enterprise risk management)-conscious efforts. While further improvements in the underwriting profitability of domestic P&C business as measured, for example, by the combined ratio (the ratio of claims payments and underwriting expenses to premium income) will likely be limited, the management of each group is highly conscious of profitability, as seen in their ERM-based efforts to improve returns relative to risks. Therefore, the possibility is low that the underwriting profitability of their P&C businesses will persistently deteriorate again. If the groups maintain a 95%-level combined ratio over the medium to long term, the earning capacities of their P&C businesses will be deemed commensurate with their respective ratings in R&I's evaluation. In order to absorb rising unit repair costs, etc. with the effect of premium rate hikes diminishing, the MS&AD Group and the Sompo Japan Nipponkoa Group need to reap the benefit of systems integration. In addition, R&I considers the former will have to successfully achieve the reorganization by function within the Group and the latter will have to create cost synergies from the merger, so that their expense ratios will fall. R&I keeps an eye on to what extent each group will diversify and strengthen their earnings portfolios by expanding domestic life insurance and overseas businesses and whether they will be able to maintain and enhance the entire group earning capacity.

2 The economic solvency ratios (ESR) disclosed by each group have reached their respective target ceilings. If the groups improve the quality of risk resilience further by making ERM-based efforts such as continuing stock sales and by increasing retained earnings through profit growth, the possibility of a rating upgrade may increase. On the other hand, because of business characteristics, attention needs to be paid to the rising risk of natural disasters that occur more frequently and with more devastation. If a catastrophic tail event, such as a major earthquake striking the Tokyo metropolitan area, occurs, the two groups are expected to face claims payments, as well as large investment losses stemming from turmoil in the financial and capital markets. In that case, considering that their risk profiles are largely comprised of domestic natural disaster risk and equity risk, it would be difficult for them to maintain the current ratings. [Evaluation of Individual Companies] Mitsui Sumitomo Insurance Co., Ltd. Aioi Nissay Dowa Insurance Co., Ltd. Mitsui Sumitomo Insurance Co., Ltd. (MSI) and Aioi Nissay Dowa Insurance Co., Ltd. (ADI) are the MS&AD Group's core P&C insurance companies. Their ratings reflect the creditworthiness of the entire Group. With a vast customer base in both personal and commercial lines, the Group's P&C business commands the largest market share in Japan in terms of consolidated net premiums written. It has strength in commercial-line products, particularly for Mitsui and Sumitomo group companies, and also benefits from close ties with large shareholders, including Toyota Motor Corp. and Nippon Life Insurance Co. The Group's domestic life insurance business is growing steadily. When looked at on an economic value basis, its contribution to Group earnings is high. The overseas insurance business has a strong presence in Asia, expanding investments in the field of life insurance as well as P&C insurance. R&I will keep an eye on future developments in the Group's business management, including whether overseas investments make an expected return commensurate with their risks. The Group's risk resilience satisfies the requirements for the AA rating category. Mitsui Sumitomo Aioi Life Insurance Co., Ltd. Mitsui Sumitomo Aioi Life Insurance Co., Ltd. is a core life insurance company of the MS&AD Group. Its rating reflects the creditworthiness of the entire Group. Based on the key strategy of cross-selling life and P&C insurance products through MSI & ADI's agent networks, the insurer utilizes multi-channels, including life insurance agents, financial institutions and captive sales representatives. It is steadily increasing businesses in force by driving sales of family income insurance and medical products. Partly because Mitsui Sumitomo Aioi Life became the primary provider of the Group's long-term, third-sector products after the reorganization by function, the proportion of third-sector policies is rising. Even when looked at over a medium- and long-term time frame, R&I expects the insurer to contribute to Group profits. Mitsui Sumitomo Primary Life Insurance Co., Ltd. Mitsui Sumitomo Primary Life Insurance Co., Ltd. is a core life insurance company of the MS&AD Group. Its rating reflects the creditworthiness of the entire Group. The company, which had operated as a joint venture with a U.S.-based major insurance company, MetLife, Inc., became a wholly-owned subsidiary of MS&AD Insurance Group Holdings, Inc., after the joint venture was terminated in April Specializing in sales of asset-building-type products with a single premium payment, such as individual annuities and whole life insurance, through financial institutions, the insurer has one of the largest customer bases in the bancassurance industry. The diversification of the product portfolio as well as the sales channels is also well underway. While minimum guarantee risk on the variable annuity insurance contracts written in the past is decreasing, sales of foreign currency-denominated, fixed products are strong. The company is working to strengthen the control of the asset-liability management (ALM) risk associated with those products. Because of the business characteristics, the

3 products are susceptible to changes in the financial and capital markets as compared with protection-oriented products. Even so, R&I believes the insurer will be able to maintain and expand the earnings base by continuing to increase businesses in force steadily. Sompo Japan Nipponkoa Insurance Inc. Sompo Japan Nipponkoa Insurance Inc. is the Sompo Japan Nipponkoa Group's core P&C insurance company. Its rating reflects the creditworthiness of the entire Group. After the merger of Sompo Japan Insurance Inc. and Nipponkoa Insurance Co., Ltd. in September 2014, the company became a P&C insurer with the largest domestic market share on a stand-alone basis. The profitability of the Group's domestic life insurance business is higher than that of the other two groups, and its contribution to Group profits is also large. The Group, which had lagged behind the rivals in overseas expansion through mergers and acquisitions, completed the acquisition of U.K.-based Canopius Group Ltd. In addition, the holding company announced in March 2015 it has determined to invest in shares in France-based SCOR SE. R&I will keep an eye on to what extent the Group is able to strengthen its overseas business base by utilizing these platforms. The Group's overall risk resilience satisfies the requirements for the AA rating category. Sompo Japan Nipponkoa Himawari Life Insurance, Inc. Sompo Japan Nipponkoa Himawari Life Insurance, Inc. is the Sompo Japan Nipponkoa Group's core life insurance company. Its rating reflects the creditworthiness of the entire Group. Based on the key strategy of cross-selling life and P&C insurance products through Sompo Japan Nipponkoa Insurance's agent network, the insurer utilizes multi-channels, including life insurance agents, financial institutions, tax accountants/public accountants and captive sales representatives. The company has steadily increased businesses in force, especially of third-sector insurance policies, by focusing on highly profitable protection-oriented products. Sales of the new medical insurance product (the renewed version of the existing product) released last year have been solid, and it plans to renew a medical product with limited notification requirements in the current fiscal year. Although, in R&I's view, the insurer takes a stance of placing importance on a competitive advantage over rivals in products and pricing, the risk-return balance is appropriately managed, and its contribution to Group profits is high. The primary rating methodologies applied to this rating are provided at "R&I's Basic Methodology for Corporate Credit Ratings", "Shared Rating Approach for Financial Institutions, etc.", "Non-life Insurance", "Life Insurance", "R&I's Analytical Approach to Financial Groups" and "R&I's Analytical Approach to Regulatory Capital Instruments and Financial Institutions, etc." The methodologies are available at the web site listed below, together with other rating methodologies that are taken into consideration when assigning the rating. R&I RATINGS: Mitsui Sumitomo Insurance Co., Ltd. Unsec. Str. Bonds No.5 Issue Date Maturity Date Issue Amount (mn) Jan 27, 2011 Jan 27, 2016 JPY 70,000

4 ISSUE LIMIT (mn): JPY 300,000 Aioi Nissay Dowa Insurance Co., Ltd. Unsec. Sub. Bonds No.1 Issue Date Maturity Date Issue Amount (mn) Sep 27, 2012 Sep 27, 2022 JPY 22,000 A+, Affirmed Unsec. Sub. Bonds No.2 Issue Date Maturity Date Issue Amount (mn) Sep 27, 2012 Sep 27, 2022 JPY 28,000 A+, Affirmed ISSUE LIMIT (mn): JPY 75,000 Mitsui Sumitomo Aioi Life Insurance Co., Ltd. Mitsui Sumitomo Primary Life Insurance Co., Ltd. Sompo Japan Nipponkoa Insurance Inc. ISSUE LIMIT (mn): JPY 300,000

5 Sompo Japan Nipponkoa Himawari Life Insurance, Inc.