In the fiscal year ended March 31, 2009, the global financial crisis catalyzed significant fluctuations in stock prices, interest rates, and exchange rates. Moreover, the external demand and capital investment that had previously supported the Japanese economy slowed. With the January–March 2009 real gross domestic product (GDP) falling to its lowest level since World War II, at minus 14.2% (preliminary figures) on an annualized basis, the economy took a sudden turn for the worse.

Under these circumstances, T&D Holdings’ net investment income deteriorated and our bottom line fell into the red, at ¥89.0 billion. The economic recession in Japan also affected sales results. Because of the downturn in the business performances of Daido Life’s core customers, small and medium enterprises (SMEs), its new policy amount dropped 18.8% year on year. European Embedded Value (EEV), our indicator of corporate value, fell ¥755.1 billion from the end of the previous fiscal year, to ¥866.5 billion under the influence of such factors as the decline in stock prices and lower swap rates.

Amid the turmoil in financial markets, we reduced higher-risk assets, such as equities and foreign currency-denominated assets, and increased capital, among other necessary steps. As a result, we achieved generally adequate capital levels and the solvency margin ratios, our indicator of financial soundness, for all of our three life insurance companies were over 800%. To inject capital into Taiyo Life and Daido Life, we raised ¥58.0 billion of the total of ¥120.0 billion through a public offering in Japan. We received many opinions on dilution resulting from issuing new shares regarding this financing. However, we reached the conclusion that a capital increase through public offering was appropriate in order to raise high-quality capital. Nevertheless, in consideration of dilution and the stagnation in market conditions, we combined the capital increase with ¥62.0 billion in bank loans, thereby balancing capital quality and efficiency.

Although the focus has mainly been on the negative aspects of the financial crisis, the crisis has also afforded an opportunity to test the vitality of companies and reaffirm such aspects as the strength and growth possibility of our business models. In spite of the financial crisis, the Group’s three life insurance companies expanded their sales channels. We maintained market share, retaining our 4th-placed ranking in new policy amount and moved up to the 5th spot in insurance premiums. We thus demonstrated our continued competitive advantage in the market. Going forward, we intend to take further steps to position ourselves for growth when economic conditions and the financial market recover. To that end, we will endeavor to solidify the base of the T&D Life Group through such measures as restructuring our asset portfolio, enhancing our core equity capital, and maintaining the strength of our business model.

We recognize that our fiscal 2008 performance was not a satisfying one for our shareholders and other stakeholders. Furthermore, in fiscal 2009, the market is watching the T&D Life Group to see how we overcome this critical period and whether we continue to grow. In facing these challenges, we will work together as a Group to solidify our base in preparation for our next growth stage while striving to increase corporate value. We would appreciate our shareholders and other stakeholders taking a medium- to long-term perspective in providing their continued support and cooperation.