SecProbe.io

CORRESP
1
filename1.htm

Correspondence Letter

 September 2, 2005

 By
Facsimile and E-mail

 Mr. Jim B. Rosenberg

 Mr. Don Abbott

 Mr. Frank Wyman

 United States Securities and Exchange Commission

 Division of Corporation
Finance

 Washington, D.C. 20549

 Facsimile No.: 1-202-772-9217

 E-mail: (c/o wymanf@sec.gov; abbottd@sec.gov)

Re:
Millea Holdings, Inc.

 Form 20-F for the Fiscal
Year Ended March 31, 2004

 (File No. 000-31376)

 Dear Messrs. Rosenberg, Abbott and Wyman:

 On behalf of Millea Holdings, Inc. (“Millea Holdings”), we are responding to the second comment letter of the staff (the
“Staff”) of the Securities and Exchange Commission (the “Commission”) dated August 26, 2005 relating to Millea Holdings’ annual report on Form 20-F for the fiscal year ended March 31, 2004 (the “2004
Form 20-F”).

 In accordance with our recent
discussions, set forth below are Millea Holdings’ responses to the Staff’s Comments 3, 4 and 5. We have prioritized our responses to these comments as they require changes to the notes to Millea Holdings’ consolidated financial
statements—which need to be finalized for publication in Millea Holdings’ 2005 annual report in English, currently scheduled for September 12, 2005. To accommodate Millea Holdings’ schedule for printing, board approval and other
necessary procedural requirements, we believe the notes to the consolidated financial statements will need to be finalized by September 8, 2005 (Tokyo time). Accordingly, in order to meet this timetable, we would very much appreciate the
Staff’s assistance in providing any further comments relevant

Securities and Exchange Commission

September 2, 2005

 to the notes to the consolidated
financial statements as promptly as practicable on or after September 6, 2005 (Eastern Standard Time). Millea Holdings will continue to work on responses to Comments 1 and 2 and currently expects to be in a position to submit a written response
thereto to the Staff by approximately September 9, 2005.

 References to “we”, “us” and “our” in the responses set forth below are to Millea Holdings, unless the context otherwise requires.

 Comment 3:

 Consolidated Financial Statements

 Notes to Consolidated Financial Statements

 o) Reinsurance, page F-15

3.
Please refer to prior comment 7. Please integrate the information in your response with existing footnote disclosure here or in Note 4 to describe the general nature of your
reinsurance activities and your accounting treatment for these arrangements.

 Response:

 In response
to the Staff’s comment, we confirm that in our annual report on Form 20-F for the year ended March 31, 2005 (the “2005 Form 20-F”) we will seek to integrate the information in our response to your prior Comment 7 into the note
to our consolidated financial statements regarding reinsurance to describe the general nature of our reinsurance activities and our accounting treatment for these arrangements. In this regard we do not propose to include information with respect to:
(1) catastrophe reinsurance and (2) reinsurance arrangements previously described under “Other Reinsurance Activities”, which together constitute only a small portion of our overall reinsurance activities (for example, approximately 0.7%,
1.7% and 1.8% of the total amount of reinsurance premiums ceded for the years ended March 31, 2005, 2004 and 2003, respectively, was attributable to these categories of reinsurance activities). We believe that neither of these items rises to a level
of materiality that warrants disclosure in the notes to our consolidated financial statements. We note for the Staff, however, that a significant portion of our catastrophe insurance arrangements is expected to be, as in the past, described in the
Business section of our 2005 Form 20-F. In addition, if required by the Staff, we would propose to expand the disclosure in the forepart of our 2005 Form 20-F filing to describe in “Business — Property and Casualty Insurance —
Reinsurance” our other reinsurance activities in a manner similar to that set forth in our prior response letter.

 2

Securities and Exchange Commission

September 2, 2005

 Please see Annex 3
attached hereto for an expanded form of the draft note disclosure we expect to include in our consolidated financial statements in the 2005 Form 20-F in respect of Comment 3.

 Comment 4:

 Note 4. Reinsurance, page F-26

4.
Please refer to prior comment 8. We note that you provide a discussion of your insurance pooling arrangements with the Japan Earthquake Reinsurance Company Limited and the CALI
Reinsurance Pool in the Business section but not in MD&A or the financial statements. We noted that your maximum earthquake loss exposure for any one occurrence approximates ¥100 billion, which appears to warrant more prominent disclosure in
your filing.

4-1.
Please expand your footnote disclosure for these insurance pooling arrangements to cover the basis for and timing of your assessments under each program, the amount of related
provisions in policy liabilities and accruals, and your accounting treatment for these arrangements.

 Response:

 In response to the Staff’s comment, we confirm that in our 2005 Form 20-F filing we will seek to expand the disclosure in our note to our
consolidated financial statements regarding reinsurance with respect to the Japan Earthquake Reinsurance Company Limited and the CALI Reinsurance Pool arrangements, to cover the basis for and timing of our assessments under each program, the amount
of related provisions in policy liabilities and accruals and our accounting treatment for these arrangements.

 Please see Annex 3 attached hereto for an expanded form of the draft note disclosure we expect to include in our consolidated financial statements in the
2005 Form 20-F in respect of Comment 4-1.

4-2.
Explain why the amount of loss reserves related to JER was “nil” at March 31, 2004, when you had been assigned a proportionate share of the earthquake risk in the JER
pool and had recorded a deposit asset relating to your contractual rights to related funds held by JER.

 Response:

 In response to the Staff’s comment, we note that as of March 31, 2004, there was no material JER-related loss reserve as there was no significant
earthquake losses charged to us through JER during the four-year period then ended. We also

 3

Securities and Exchange Commission

September 2, 2005

 note that we treat our contractual
right to the funds held by JER as a deposit asset. As of March 31, 2004, the funds then held by JER to which we had a contractual right had not been required to fund any significant earthquake losses and thus remained a deposit asset on our balance
sheet.

 As there was also no material JER-related loss reserve
as of March 31, 2005, in the 2005 Form 20-F we expect to provide an explanation that there has been no recent JER-related losses or loss reserve. To the extent that JER-related losses or loss reserve balances become more significant in the future,
we will update our disclosure accordingly in future Form 20-F filings.

 Please see Annex 3 attached hereto for an expanded form of the draft note disclosure we expect to include in our consolidated financial statements in the 2005 Form 20-F in respect of Comment 4-2.

 Comment 5:

 Note 16. Business Segments, page F-39

5.
Please refer to prior comments 9 and 10. We have read your proposed disclosure and have the following comments.

5-1.
It is unclear from your disclosure what is meant by “modified Japanese GAAP”. Please disclose the nature and amount of adjustments made to Japanese GAAP for internal
management reporting purposes as described on page A9-1.

 Response:

 We note the Staff’s comment.
Our reference to “modified” Japanese GAAP in Annex 9 to our prior response letter was intended to mean that our internal management reporting utilizes a different format of financial statement presentation from that utilized in our
publicly available Japanese GAAP financial reporting. While the format of financial statement presentation differs, the basis of measurement is the same between the two.

 In response to the Staff’s comment, we expect to revise the note disclosure to refer only to Japanese GAAP as the basis
for our internal management reporting measures to avoid potential confusion.

 Please see Annex 5 attached hereto for a revised form of the draft note disclosure in our consolidated financial statements we expect to include in our consolidated financial statements in the 2005 Form 20-F in
respect of Comment 5.

 4

Securities and Exchange Commission

September 2, 2005

5-2.
We note that while adjusted income is determined based on Japanese GAAP, your proposed reconciliation to US GAAP consists primarily of adjustments relating to reserves and
deferred acquisition costs. Presumably, this reconciliation would include all differences between Japanese GAAP and US GAAP. Please provide a complete description of these reconciling items in accordance with paragraph 31 of SFAS 131 and the nature
and amount of adjustments in the “other” category.

 Response:

 In response to the Staff’s
comment, we confirm that we will seek to include in our reconciliation all material differences to reconcile to U.S. GAAP. In addition, we have changed our reference to “adjusted income” to “Japanese GAAP income before income tax
expense” to enhance clarity, and we also now propose to further refine our reconciliation information.

 We currently expect that material reconciliation items presented will include:

(1)
Reversal of Japanese statutory reserves;

(2)
Adjustment for difference in the measurement basis between Japanese GAAP and U.S. GAAP for incurred but not reported and loss adjustment expense accruals;

(3)
Adjustment for difference in the measurement basis between Japanese GAAP and U.S. GAAP for unearned premiums;

(4)
Adjustment for difference in the measurement basis between Japanese GAAP and U.S. GAAP for future policy benefits and losses;

(5)
Adjustment to recognize deferred policy acquisition cost;

(6)
Adjustment for book value difference between Japanese GAAP and U.S. GAAP for realized gains (losses) on investments;

(7)
Adjustment for accounting difference between Japanese GAAP and U.S. GAAP for gains (losses) on derivatives;

(8)
Adjustment to remove amortization of goodwill in Japanese GAAP; and

(9)
Other.

 The adjustments in the “other” category will include items such as adjustment for accounting difference between Japanese GAAP and U.S. GAAP for

 5

Securities and Exchange Commission

September 2, 2005

 net periodic pension costs. These
amounts were not significant for the years ended March 31, 2004 and 2003, as indicated in Annex 5, and are not expected to be significant for the year ended March 31, 2005.

 Please see Annex 5 attached hereto for the current form of draft note disclosure we expect to include in our consolidated
financial statements in the 2005 Form 20-F in respect of Comment 5-2.

 We also note for the Staff that in addition to the reconciliation information currently set forth in Annex 5, we expect to include a table presenting similar information relating to reconciliation of total assets under Japanese GAAP to
total assets under U.S. GAAP. Reconciliation items will include, without limitation, recognition of deferred policy acquisition costs, gross-up presentation of reinsurance recoverable on losses, gross-up presentation of prepaid reinsurance premiums
and reduction of fixed assets by application of negative goodwill arising from the acquisition of Nichido Fire. We confirm that we will seek to include in this assets reconciliation all material differences to reconcile to U.S. GAAP. Although Annex
5 attached hereto does not yet reflect this information, we expect to be in a position to include this information in the notes to our consolidated financial statements in our annual report in English as well as in our 2005 Form 20-F.

5-3.
Tell us how you plan to utilize these non-GAAP segment measures in your 2005 MD&A.

 Response:

 We note the Staff’s comment. As we explained in our response to the Staff’s Comment 5-1 above, our internal management reporting measures are
based on Japanese GAAP.

 We currently expect to include a
discussion of Japanese GAAP segment measures within the business segment discussion in the MD&A for our 2005 Form 20-F, which discussion will be based on Note 18 to our consolidated financial statements. Other than the business segment
discussion, our MD&A will continue to be based on U.S. GAAP financial information. A proposed draft of Note 18 is included in Annex 5 attached hereto.

 6

Securities and Exchange Commission

September 2, 2005

5-4.
On page A9-1 you state that “sum assumed” is a key financial measure of the life segment. Please clarify the nature of this financial measure and tell us why it is not
included in the tabular presentations of your proposed disclosure.

Response:

 In response to the Staff’s comment, we note that our previous response to the Staff’s comment contained a typing error –– “sum assumed” should have read “sum assured”. “Sum
assured” is the life insurance policy coverage amount; the comparable U.S. term is “insurance in force”.

 We have removed this reference in our current draft note regarding business segments, as we consider “sum assured” to be an operating measure
rather than a financial measure which we would need to include in our financial statements. As an operating measure, we expect to continue to disclose the amount of our “insurance in force” for our life segment in the Business section of
our 2005 Form 20-F.

 * * * * *

 7

Securities and Exchange Commission

September 2, 2005

 If you have any
questions about this response letter or any further comments on Millea Holdings’ 2004 Form 20-F, please do not hesitate to contact Mr. Katsumi Suetsugu of Millea Holdings in Tokyo (Tel: +81-3-6212-3597; Fax: +81-3-6212-3712), Mr. Michael
Liesmann of PricewaterhouseCoopers LLP in New York (Tel: 973-236-4569; Fax: 813-741-4625) or Eugene Gregor of Davis Polk & Wardwell in Tokyo (Tel: +81-3-5561-4566; Fax: +81-3-5561-4425).

Sincerely yours,

 /s/ Eugene C. Gregor

 Attachments

cc:
Mr. Katsumi Suetsugu

 Mr. Hirokazu Fujita

 Mr. Shigeru Taguchi

 Mr. Makoto Hirokawa

             Millea Holdings, Inc.

 Mr. Michael Liesmann

             PricewaterhouseCoopers LLP

 Mr. Akira Yamate

             ChuoAoyama PricewaterhouseCoopers

 Theodore A. Paradise, Esq.

 Fumiko Yokoo,
Esq.

             Davis Polk & Wardwell, Tokyo Office

 8

 Annex 3 - Proposed Draft Disclosure for Consolidated

 Financial Statements Note 4 for 2005 Form 20-F

 Set forth below is proposed draft disclosure for Note 4 to our consolidated financial statements which we expect to include in our 2005 Form 20-F.

 Notes to Consolidated Financial Statements

 4. Reinsurance

 In the ordinary course of business, the Company cedes risks to other
insurance companies in order to better diversify its risks and limit potential losses arising from large catastrophic loss risks, although it does not relieve the Company of its obligations as direct insurer of the risks reinsured.

 Reinsurance contracts involve reinsurers sharing a proportional part of the
original premiums and losses under the underlying insurance contracts being reinsured. The Company generally arranges this type of reinsurance in the form of a reinsurance treaty arrangement, where the Company is automatically authorized to cede any
business under a set of terms and conditions previously agreed upon without obtaining separate prior consent to each cession from the reinsurers. The Company’s proportional treaty reinsurance arrangements include:

•

CALI Reinsurance

 The Company writes compulsory automobile liability insurance (“CALI”) in the Japanese market, which is required for registration and periodic
inspections of automobiles in Japan. Licensed non-life insurance companies in Japan are required