Described here is the outline of questions and answers exchanged between institutional investors and security analysts and Tetsuhiro Kida, Director and Managing Executive Officer of T&D Holdings, Inc. at a telephone conference held on February 14, 2008. Some additions and corrections were made to make the contents easier for readers to understand.

Q.	Looking at the quarterly new policy amount at Daido, the amount was 14% higher in 1Q2007 than in the same period in the previous fiscal year, but only 2% higher, year on year, in 3Q2007. Annualized premiums for new policies in 1Q2007 decreased by about 7% from the same period in the previous fiscal year, but by more than 10% in 3Q2007. What were the reasons? Do they have anything to do with the worsening business confidence among SME companies?
A.	As a result of lowering premiums and promoting non-participating products from the beginning of the fiscal year, the results in 3Q2007 were down in comparison with the first half of the year, when performance was good in comparison with the same period in the previous year. We continue to focus on increasing the new policy amount. While business confidence among SME companies is generally on the decline, many such companies are in fact doing well. We do not think the situation is having any large direct effect on Daido’s new policy amount.

Q.	The approximately 3.6 billion yen of gains on investments in trading securities was almost the same as in 1H2007. Does this mean hedge funds produced no gains in 3Q2007?
A.	There were very little gains/losses in Japanese yen, while hedge fund performance in local currencies was positive due to the stronger yen in 3Q2007.

Q.	Why did the alternative investment increase?
A.	Daido’s private equity investment increased. This was due to increased capital calls from the various funds.

Q.	Why did Daido decrease unrealized gain in other securities?
A.	There was a decline in the fair value of stock investment trusts.

Q.	What is specifically being done to improve the persistency rate of Taiyo?
A.	The key to improving persistency rate is reducing turnover among in-house sales representatives – particularly those who have worked for other insurance companies. We do not in principle hire such people now. As a result, the number of new employees decreased from about 2,900 at the end of FY2005 to about 2,200 at the end of FY2006. At the same time, however, the number of retiring sales reps fell by about 500 at the end of December 2007 compared with the previous year, which means turnover is stabilizing. Additionally, call centers follow up with customers who are not being properly serviced as a result of the decreased number of sales representatives.

Q.	Why did “other payments” in the P/L statement increase at Daido and Taiyo? And do you think this trend will continue?
A.	For both Daido and Taiyo, the main reason was increased payments with dropping management share of group annuities, and we consider this to be a temporary situation.

Q.	Why did investment yield for core profit decrease at both Daido and Taiyo?
A.	At Daido, in the first half of the year, dividend income mainly from private equity was about 16 billion yen, but fell to about 2 billion yen in 3Q2007. At Taiyo, interest on foreign bonds decreased due to the strong yen, and stock dividends, which are volatile each quarter, were also down.

Q.	Will the stock market decline in January and February 2008 affect profit and loss at T&D Financial Life?
A.	T&D Financial Life purchases put options, for example the Nikkei 225, to reduce minimum guarantee risks which increase along with a drop in stock prices, and enjoys a hedging effect from that. The drop in stock prices will have a downward effect on gains, which we expect to be at the level of about one billion yen. We think, however, that the overall effect will be slight.

Q.	Do you have any exposure to securitized products other than sub-prime loans and bonds guaranteed by monolines, especially foreign securities?
A.	We have not made direct investments in such foreign securitized products.

Q.	What is the balance for outstanding loans to consumer financing companies, and the reserve for possible loan losses?
A.	Daido’s balance was about 24.2 billion yen (at the end of September). Taiyo’s was about 16.9 billion yen (at the end of December). Both have accumulated general reserves for possible loan losses, and coverage rates are less than 1%.

Q.	Why did reversal of policy reserves increase at Daido and Taiyo?
A.	This was mainly due to an increase in surrenders and other payments for group annuities at both companies.