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, 2007 on November 21, 2007. 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.	I understand that Taiyo is working on rebuilding its sales representative’s channel. How much progress has it made?
A.	About a year and a half ago there were some 9,000 sales representatives, but, because Taiyo has refrained from hiring people who had worked at other insurance companies, the number is currently about 7,800. We have found that policies sold by representatives coming from other companies are often surrendered early or lapse, which was a factor in our increased surrender and lapse rate. Taiyo intends to also emphasize improving efficiency in sales activities, and is now working on development of a new sales support system to be put into operation this coming February or March. In the future, we will use that system to identify and locate potential customers.

Q.	How many sales representatives and agents did Daido have as of the end of September? And how does their performance compare with those at other companies?
A.	Daido had 4,491 sales representatives, 235 fewer than at the beginning of this fiscal year. There were about 14,600 agents, 339 more than at the start of the year. Daido experiences the same difficulties in hiring sales representatives as Taiyo does. Daido’s agents were TA/CPA agents and non-life agents. Registration of new TA/CPA agents has been steady, and we expect their numbers to continue to grow hereafter. Although some agency agreements are not exclusive, we will maintain a competitive advantage by providing further support.

Q.	Within core profit, mortality gain is expected to decrease as a result of lowered premium rates. What effect will that have on EV of new business?
A.	In protection products, lowered premium rates are expected to affect embedded value (EV), but the extent will depend on how much the mortality rate – one of the assumptions employed in EV calculations – positively changes. There have also been cases where premium rates of third-sector products, including medical insurance, have been raised in some age groups. Accordingly, overall, we cannot generalize about how the revised premium rates will affect EV.

Q.	Is Daido’s stopping of sales of semi-participating products and shifting to non-participating products based on the change in the measurement of corporate value from traditional embedded value (TEV) to European embedded value (EEV)?
A.	Stable profits can be expected from term life insurance products, even from the viewpoint of TEV. In particular, cash-value type products had been mainly participating products. Shifting to non-participating products is in response to the demand of customers for both lower premium rates and higher cash value.

Q.	Daido had positive spreads for the first six months, but still expects a negative spread for the full year. What is that based on?
A.	Considering possible changes in the market environment, Daido has not changed its negative spread forecast of \3 billion. If major changes in the market environment do not materialize, however, we think spreads may remain positive for this fiscal year.

Q.	Regarding investment policies of both Taiyo and Daido for the second half of the fiscal year, extension of durations depending on interest rate increases was noted. What is your estimate of long-term interest rates needed for you to extend durations?
A.	Bond investments are treated somewhat differently at Taiyo and Daido. Whereas Taiyo adjusts its bond portfolio bit by bit as the market changes within a certain range, Daido waits for the right time to adjust its bond portfolio, i.e., until interest rates rise to a certain level, because its risk buffer is relatively large.

Q.	When do you expect Taiyo’s new policy amount to stop decreasing?
A.	In the past, Taiyo’s main products were saving products; policies matured and were renewed in a short time, and surrenders were not considered seriously. This did not require a 4-to-5 year marketing strategy. Now, with the shift of main products from saving products to protection products, we have taken a step in marketing strategy under the initiative of the Head Office, developing a process ranging from the identification of potential customers all the way to signing policies, with particular emphasis on further cultivating existing customers, who account for about 80% of new policies. We think it may be a while before the new policy amount stops decreasing.

Q.	What is the plan for accumulating internal reserves?
A.	Both Taiyo and Daido will increase their reserves for price fluctuations up to 90% of the limit at the end of this fiscal year, and 100% at the end of the next fiscal year.

Q.	As for EEV sensitivity, do I understand correctly that if the risk-free rate moves up or down 25 basis points, the fluctuation amount is linearly proportional to the amount of change if the risk-free rate moved up or down 1%?
A.	There is a difference depending on whether the rate moves up or down, and it is difficult to calculate accurately, but there is little problem with what you say.

Q.	When TEV was used as a measure of corporate value, there was a 9% target for ROEV. In the disclosed EEV, the denominator has decreased, and EV of new business in the numerator has increased. Therefore, will the ROEV target under EEV be increased?
A.	The basic concept of ROEV will not change after shifting to EEV. Details will be explained when EEV as of March 2008 and analysis of EEV movements are disclosed. In Europe, there are three major ways to define expected return on the value of in-force business: implied discount rate (IDR), risk-free rate, or real-world basis. Details are under consideration in cooperation with a consulting firm.

Q.	Why did T&D Life Group use 600% as solvency margin ratio to calculate required capital?
A.	At the time Daido adopted TEV, the average solvency margin ratio at Japanese life insurance companies was about 600%. Today, it is not rare to find cases of 1000% or more, and the trend is clearly to increase it. But for calculating EEV, there is no particular reason to change, and we use the same ratio. As you can see from the cases of 1,000%, our current capital cannot be excessive. For the future, we are considering employing the model of economic capital, wherein various risks are taken more fully into account for further accuracy in measuring risks.

Q.	From an investor’s point of view, EEV looks more complicated. Would you comment on that?
A.	TEV as of March 2006 substantially increased to \2,000 billion from \1,200 billion as of March 2005, due to rising stock price. It is difficult to see and separate the portion based on our life insurance business alone, excluding external factors. Although the EEV calculation method is more complicated, transparency is improved by using assumed investment yield and discount rates consistent with financial markets. As a result, growth via the life insurance business is shown to investors more clearly.

Q.	Which part of EEV do you think the efforts of insurance companies should be judged by?
A.	We think you should look particularly at EV of new business.