| Q1. |
70bn yen of investment income for the "special account for saving type policies" in the 1st quarter consolidated profit and loss statement seems to have already reached a similar scale to FY2006 full year amount. Please explain the detail. |
| A1. |
Tokio Marine & Nichido Financial Life ("Financial Life") booked 70.6bn yen of investment income for its "special account for saving type policies" as a result of a rise in stock prices during April and June.
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| Q2. |
Did the large part of 70.6bn yen come from capital gains? |
| A2. |
Agreed. However, it was not booked in net income but in Financial Life's underwriting reserves.
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| Q3. |
Which items on the balance sheet were four risk exposures related to U.S. subprime loans ("SPLs") listed on page 16 of presentation material booked in? For instance, is the exposure of "CDSs (Credit Default Swaps) in CDOs (Collateralized Debt Obligations)" an off-balance sheet item or not? |
| A3. |
CDSs are off-balanced transactions and the exposure of CDSs was included in the short positions of credit derivatives in the "credit-related instruments" on page 8 of the 1st quarter summary report (so called "Kessan-tanshin" in Japanese).
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| Q4. |
Did the net profit between appraisal gain from the short positions and appraisal loss from the long positions in credit derivatives include approximately 1bn yen of appraisal loss from the risk exposures related to U.S. SPLs? |
| A4. |
No, it didn't. (The net profit of "credit-related instruments" of the 1st quarter summary report was estimated as of the end of June and it did not include approximately 1bn yen of possible appraisal loss from the risk exposures related to U.S. SPLs which was considered after the 1st quarter results.)
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| Q5. |
Hedge fund investments were included in the "other securities"? |
| A5. |
Agreed. (Hedge fund investments were categorized in the other securities than securities held to maturity or trading.)
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| Q6. |
Were RMBSs (Residential Mortgage Backed Securities) included in the category of "bonds"? |
| A6. |
RMBSs were included in the category of "payable monetary claims bought" on the balance sheet.
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| Q7. |
Which item on the balance sheet was reinsurance written from a financial guarantee insurance company included in? |
| A7. |
It was included in underwriting reserves as it is a kind of insurance liability.
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| Q8. |
Which item on the balance sheet was 1bn of possible appraisal loss related to the risk exposure of U.S. SPLs included in? |
| A8. |
It will be included mainly in "hedge fund investments".
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| Q9. |
It is widely known that there are special procedures of account settlement such as catastrophe reserves or outstanding claims for Japanese P&C insurance companies. Are the quarterly results calculated in the same manners to full year results or interim results? |
| A9. |
Our quarterly results are calculated partially in different manners.
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| Q10. |
Is there a certain implication of profit deviation by using such manners? |
| A10. |
No, there isn't. That depends.
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| Q11. |
It is remarked that 89% of the risk exposure of reinsurance written from a financial guarantee insurance company related to U.S. SPLs is rated AAA. What kind of risks is it taking? ABSs (Asset Backed Securities), CLOs (Collateralized Loan Obligations) or CDOs? |
| A11. |
Most of the reinsurance written is not related to CLOs or CDOs as secondary securitized products but ABSs as primary securitized products.
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| Q12. |
Downturns in business of financial guarantee insurance companies are concerned in the market recently because their share prices went down sharply under the influence of U.S. SPLs. Hasn't Millea taken a large risk in this field? |
| A12. |
We are convinced that the U.S. financial guarantee insurance company from which Tokio Marine & Nichido takes risks as reinsurance has no serious fear of credit deterioration.
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| Q13. |
The negative impact caused by natural disasters on the first quarter results seemed very small but Chuetsu-shore Earthquake, Typhoon No.4 and Typhoon N.5 occurred in July. How much do you expect their impacts against the second quarter? |
| A13. |
The impacts caused by those natural disasters seem quite small at the moment and the net claims paid will be small as well. (Those impacts on Tokio Marine & Nichido and Nisshin Fire estimated at the end of July as follows: approximately 0.4bn yen by Typhoon N.4 and approximately 1bn yen by Chuetsu-shore Earthquake.)
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