Below is an edited summary of the Q&A session with institutional investors and securities analysts at the Information Meeting for Investors: Financial Results for the Six Months Ended September 30, 2006 on November 21, 2006. Answers to questions were provided by Naoteru Miyato, President and Representative Director of T&D Holdings, Inc.. The contents are partially modified for easy understanding of readers.

Q.	Sales of the third sector products have been steady in Japanese life insurance industry. Does Daido contemplate any new measures, selling new products in the third sector?
A.	Although Daido has a lineup of third-sector products and aims to increase their sales, there are actually many differences from selling protection products as part of a company's welfare scheme. Owners of companies, for example, have to pay premiums for medical and other third-sector products as policyholders and premiums cannot be tax-deductible. In addition, the sales reps reports the reality that selling 3rd-sector products is difficult. In the third sector, therefore, Daido focuses on adding riders to death protection products. At present, the percentage of current annualized premiums of new policies in the third sector is only around 4.5%. On an individual basis, however, needs in the third sector are increasing, and Daido will continue to work to capture customers' needs in the third sector. Daido will continue to strengthen its efforts in the third sector in 2007 and onward.

Q.	Does Taiyo have any pump-priming measures available for recovering the new policy amount? Taiyo had so far increased the amount of “ Hoken Kumikyoku” (whole-life insurance with a term rider) by repeat sales to customer base oriented by sales of saving products in the past. Is it correct to think the poor six-month results are attributable to sales of “ Hoken Kumikyoku” having made the rounds of all existing customers? Also, the at-home rate of 40's housewives, the target of Taiyo, is estimated to be lower than that of 20's - 30's housewives. The rate of at-home housewives tends to decrease as the employment environment improves. In this circumstance, does Taiyo think it can sustain the current door-to-door sales business model?
A.	It has been three and half years since “ Hoken Kumikyoku” was launched, and we feel a difficulty in sales of protection products has emerged. Taiyo's business model is sales of protection products on the basis of three million households. When looking in detail at Taiyo's sales routes, about 80% are to its existing customers, and about 20% are to new customers. Sales opportunities are mainly at the time of renewing saving products, and by expanding to the children, husbands and relatives of the housewives who are already Taiyo's customers. Of the current new policies of “ Hoken Kumikyoku” , 70% are for women and 30% are for men. Taiyo has so far sold 450,000 “ Hoken Kumikyoku” policies over a little more than three years through sales converting savings products to protection products. But considering the trend in the overall life-insurance industry of shifting from death-protection products to third-sector products where demand is increasing, we recognize it is getting more difficult to sell death-protection products. In addition, combined with lower at-home rates, we recognize we have covered all the areas that in-house sales reps can easily approach, or where customer needs have emerged. We think Taiyo will have to implement a fundamental and radical marketing strategy, including thorough evocation of the needs for death-protection products. Since last year, Taiyo has carried out such measures as creating several systems enabling sales reps to approach customers easily. Also, in supporting increasing sales activities, the following measures have been implemented: A call-center function has been strengthened to ensure interviews with customers who are often not at home; about 1,100 customer service staffs are used not only to maintain existing policies, but to identify potential customers; a referral agency is also utilized. In this 6-month term, the new policy amount decreased. We think now is the good time to review and revise the existing marketing strategy to sell more protection products in the household market. At the same time, it is important to continuously build the number of good quality policies. Last fiscal year, Taiyo's surrender and lapse amount increased, perhaps because there were policies in some cases for housewives who are over-insured. In the current term, measures were implemented to improve persistency rate by getting rid of such policies, but this resulted in a decrease in the new policy amount as well. On a long-term basis, however, gaining good quality policies will help increase the persistency rate. In this respect, making increasing the policy amount in force the primary target, we should also go back to the starting point and look at the policy afresh. It may take one to two years, but as Taiyo's business model itself has been established, we will review and strengthen the marketing strategy.

Q.	As for variable annuities, the entire market has steadily grown, but T&D's share does not seem to have reached the desired level. Are you considering any measures to increase the share in variable annuity market, even doing so in a giant step through, for example, M&A?
A.	We strive to increase the current 490 billion yen of policies in force to 1 trillion yen within two years or so. There are only two ways to increase the policy amount for variable annuities: adding financial institution agents, and developing new products. For the former, we will count 60 banks by the end of March 2007, 70 by the end of March 2008, and thereafter continue our efforts to increase the number to 100. For the latter, we will develop and launch three new products or so every year, meeting evolving customers’ needs. Then, as over-the-counter sales at banks are full-deregulated, we will take action after confirming that sales of protection products at banks will be possible. Seeing the emergence of Postal Savings as a result of postal privatization as a business opportunity, we will make an approach as the T&D group. As for M&A, we are willing to work wherever there is an opportunity.

Q.	What is the product strategy for improving sufficiency rate of death protection?
A.	Let us explain the cases of companies and individuals separately. In the case of companies, we feel the approach of a standard coverage amount, which Daido has applied for the past several years, is penetrating among SMEs and TA agents. This is because standard a coverage amount can be estimated relatively easily based on loans and retirement payments, business continuation, covered amount available now, etc. Only around 30% of SMEs, however, ensure the standard coverage amount. The remaining 70% do not reach the level of the standard coverage amount. This provides opportunities for in-house sales reps and TA agents to potentially play an active part. In the case of individuals, it is difficult to apply a fixed model. We believe the standard coverage amount need to be estimated through conversations with the individual customers, and this requires time and effort. In selling death protection products in the household market, proposals on third-sector products are apt to be accepted relatively easily by customers because they feel it necessary to be prepared for injury or illness. The same customers, however, have difficulty seeing death protection as necessary. The way we develop such conversation will be a key. One way is with Daido’ coverage simulation uses a PC, which is also done by other life insurance companies making use of an FP channel. Introduction of the system is not easy because it requires a substantial prior investment, but, personally, I think such a sub-tool is also necessary.

Q.	Will the change in standard life table next April hurt or help T&D? Can you comment on how we should interpret the change? Also, please comment on whether the change could affect the existing “rules” in the life insurance industry.
A.	Generally speaking, as a result of revision of the standard life table, premiums for death protection products will drop, and those for individual annuities and the third-sector products will be higher. Responding appropriately to these ups and downs in combination will be the challenge for life insurance companies. Also, life insurance companies will be required to cope with the changes very strictly so as not to misguide customers – otherwise there could be compliance problems - by, for example, standardizing kinds of products, sales methods. Regarding the question whether it will help or hurt us, we cannot give a clear answer now. Both Taiyo and Daido are considering carefully what to do after April 2007. We will explain more as soon as we decide for certain on development of products, etc. sometime next year. Personally, I do not think customers will subscribe to death protection products just because the premiums are reduced. It is more important for life insurance companies to offer products corresponding to customers’ needs and abilities to pay premiums. I also think there will be a business opportunity for life insurance companies as consumers incline toward more interest in protection products as a result of revision of the standard life table.

Q.	Regarding Taiyo's sales channels, the number of in-house sales reps has decreased, and their average age is getting higher. The number of customers is also down. In addition to devising sales strategy, what are you considering in terms of increasing the number of in-house sales reps and customers?
A.	All life insurance companies whose activities are focused on in-house sales-rep channels have suffered in the way suggested by your question. As the economy recovers, recruiting of 30’s women has become harder. Taiyo had more opportunities to meet women who would be suitable for sales reps because of its door-to-door sales activities, and we used to employ 3,400-3,500 sales reps every year, until a few years ago. In the current term, however, we expect to add only 2,800 or so - less than 3,000. In this circumstance, training of sales reps is even more important, as is retaining them. Daido, for example, has extended the training period from one to three years and has implemented longer-term training for the past five years or so, halting the decline in the number of sales reps at the level of 4,800-4,900. The efficiency (sales per rep) of sales reps who recently entered Daido is also improving. We think we can achieve a certain effect if we work on training with a considerable time and cost. At Taiyo, there were about 9,100 sales reps at the beginning of last year. Since then, the campaign to increase sales reps was implemented, and the sales fronts, to achieve their targets, hired many reps with experience working at other life insurance companies. However, about 600 of such sales reps with previous working experiences, could not meet the company’s performance requirements and left during the last one year due to their low persistency rate. To enhance the sales-rep channel, there is nothing to do but be very strict in selecting and training new reps, carefully taking longer time. In-house sales reps at the end of September 2006 were down to 8,400, and we must assume the number will fall below 8,000 at some point in near future. Believing, though, that that will be the bottom, we should restart our efforts toward rebuilding a 9,000-rep structure step by step by emphasizing the selection of fewer but better, with longer-term training. Taiyo’s sales strategy has been focused on a single channel consisting of women sales reps, and there is great risk in changing this. Targeting women customers is, moreover, Taiyo’s unique business model in Japan. We should continue this model, recognizing that it is a distinctive feature in the T&D Life group. Although the performance of Taiyo has declined temporarily, there is no need to make fundamental changes to the model itself. At the same time, we should engage in efforts to develop other sales channels, including making use of referral agency and developing an agent channel that does not conflict with the sales reps, with the primary focus on the sales channel by existing women sales reps. As was pointed out, Taiyo’s sales reps have become older and more than half of them are now over 50 years old. Currently, the two largest groups are sales reps who have been with the company for five years or more, and “fresh women” who have been with the company less than three years. We try to correct this age bias, which may take two to three years.