Below is an edited summary of the Q&A session with institutional investors and securities analysts at the 2007 Merill Lynch Japan Conference on September 12, 2007. Answers to questions were provided by Naoteru Miyato, President and Representative Director of T&D Holdings, Inc., and Tetsuhiro Kida, Director and Managing Executive Officer of the Company. The contents are partially modified for easy understanding of readers.

Q.	What will be the effect of shifting from the traditional embedded value (TEV) to European embedded value (EEV)?
A.	It is too early to give a firm answer, since calculations are still underway. In the case of EEV, the discount rate will be the risk-free rate. As a result, the EEV of Daido is expected to increase on the basis of stable income from death protection products. In contrast, for Taiyo, the present value of negative spreads relating to individual annuities could be compounded. In addition, option and guarantee costs, which are not clearly reflected in TEV, will be explicitly shown in EEV. Based on these factors, which are both positive and negative, we do not anticipate a significant change.

Q.	Would you consider cross-selling among the three life insurance companies to achieve organic growth?
A.	When Taiyo Life and Daido Life began their business alliance, Daido did not have savings-oriented products for the retail household market, and Taiyo did not have owners’ insurance. We tried cross-selling at several branches in the metropolitan area for three years, but the effort did not produce substantial results. Reasons included that sales representatives of each company were busy selling their own products, and that each company had expertise in a distinct market for its particular products. Accordingly, we do not plan to reinstitute cross-sales at this juncture.

Q.	Regarding the full deregulation of OTC sales at banks scheduled in December 2007, preparations underway at banks appear to be in full swing. How do you view the progress so far?
A.	T&D Financial Life is our strategic company specialized in OTC sales at banks, and it has been preparing for a year. We believe probably only one or two megabanks will commence sales immediately following the deregulation in December. This is because banks will still be prohibited from selling owners’ insurance to loan customers, in order to prevent high-pressure selling – which means banks will have to work even harder to cultivate new customers, something that is extremely challenging even for sales representatives of insurance companies. In my personal view, OTC sales at banks will continue to focus primarily on variable annuities for the next year or two, selling protection products to high-net-worth clients on a trial basis.

Q.	Globally, the trend is to mark-to-market valuations of liabilities. What are your thoughts on the impact on life insurers in Japan?
A.	International accounting standards and international solvency standards have long been topics of discussion, and we consider them important issues. As a listed company, we will welcome further improvements in accounting transparency. Life insurance accounting is, however, unique in various respects, and we believe appropriate adjustments should be made. At this point, we are the only listed life insurance company in Japan, and we see it to be part of our mission to take the initiative in promoting fair disclosure.

Q.	Some major mutual insurance companies are in the process of building up their capital. Do you think this could lead to intensify competition over policyholder dividends?
A.	Dividend increases at such companies are still small, and the internal reserves that have accumulated are larger than the increased dividends. In our group, Daido in particular has shifted from selling participating products to non-participating products, but we still recognize that policy dividend levels are important. This is because some customers prefer cash value, including policyholder dividends, and half of our total current policy amount is participating policies.

Q.	The P/EV (share price to EV) ratio for the T&D Life Group is approximately 0.7 to 0.8, which seems low compared with European insurers. Why do you not conduct share buybacks?
A.	If the growth of ROEV slows in the future, we may consider other ways of providing returns to shareholders, including share buybacks. We believe, however, that there are opportunities of both internal and external growth. When we established a long-term management plan two years ago, the goal was to double EV as of March 2005 (approximately 1.2 trillion yen) in five years. Based on the assumption of a ratio of internal growth to external growth of 4:1, more than 400 billion yen in external growth would be required, and we want to use internal reserves toward such growth rather than for share buybacks. Although, the stock price is determined by the market, we believe that our shares are undervalued partly because T&D is the only listed life insurance company in Japan. Sony Life and Mitsui Life are scheduled to be listed, and their entries will enable comparisons of valuations within the life insurance sector. We think this will be advantageous.

Q.	New policy amounts and policy amount in force are down across the life insurance industry in Japan. Is this because the industry is already at a mature stage?
A.	We believe there is sufficient room for development of both products and channels. For example, there is a growing demand for private insurance to protect against risks associated with longer lives, including the need for nursing care. Third sector insurance products, covering nursing care and medical care, are expected to enjoy sustained growth. Life insurance companies in France and Germany are reported to be eyeing entry into the Japanese variable annuities market because they also expect ongoing growth of that market in Japan. As for channel development, there remain segments we haven’t tackled yet.

Q.	Looking at rapidly growing areas, which company within the group is handling medical care insurance, for example?
A.	Each life insurance company addresses this business in accordance with its particular market. For example, Taiyo Life will develop medical care products for households and Daido Life has successfully sold term life insurance with disability and nursing care protection, to meet demand from SME owners. Banks, as OTC sales channels, will also focus on selling medical care products as customers’ demand for these products has become obvious.

Q.	We understand that you intend to cover all risks with equity capital, excluding net unrealized gains on securities. When do you expect to achieve this?
A.	It is difficult to provide a timetable at this moment. It is our intention to continue building equity capital with realized gains for the time being.

Q.	With the market currently sagging, do you plan to make any significant asset allocation changes?
A.	Our investment policy is to earn stable returns by allocating most of our assets to fixed-income yen assets. Daido, in particular, has been shifting equity to bonds since the bursting of the bubble, and it began work with alternative investments at an early stage, anticipating redemptions of those bonds. These cases reflect our long-term view when considering asset allocations, and in this fiscal year we do not plan any changes. The market is currently sluggish, and our investment management team considers this to be a good time to increase equity purchases. We will make further efforts to enhance investment returns within the acceptable risk levels.