Below is an edited summary of the Q&A session with institutional investors and securities analysts at the CLSA Japan Forum 2008 on February 28, 2008. 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.	How much do you set a target for ROEV?
A.	We target of 8% to 9% per year for ROEV in medium to long term.

Q.	T&D’s performance has been steady for many years and its EV has improved, but why does its share price remain undervalued now?
A.	The P/EV multiple had been around 1.0x to 1.1x historically, which is currently around 0.7x to 0.8x . We consider the reason for this is not because of our performance but the overall stock price drop in Japanese markets due to the sub-prime loan problem, etc. A little over 30% of our shares are owned by foreign investors, and they seem to be concerned about the growth potential of Japan. However, we think it is possible for us to grow further depending on our measures. For example, Daido is successful in increasing total new policy amount and reducing total surrender and lapse amount despite the overall stagnant life insurance industry. We intend to continue to help each stakeholder to understand such efforts for continuous growth in performance.

Q.	How do you respond to the demand from the activist shareholders who are increasing their presence?
A.	We sometimes hear opinions that a share buy-back should be implemented to transmit the message that the shares are undervalued. However, we intend to continue the medium-term measures of return to shareholders, returning about 30% of the adjusted net income to be returned to shareholders which are generated by adding the excess amount of reserve for contingency and price fluctuations (after-tax) to the net income, as long as we maintain continuous growth. We are conducting research and study of what effects can be obtained when, and under what situations a share buy-back should be implemented, but we wish to work for the growth of our group’s life insurance business for the time being.

Q.	Isn’t it possible to reduce costs by further expanding the current market share of total new policy amount (8.6%)?
A.	The expansion of market share doesn’t necessarily lead to cost reductions. The majority of the Japanese life insurance market is held by the major life insurance companies that focus on worksite sales, and if we compete with them in the same market, our cost-performance would deteriorate. We are a life insurance group that expands a boutique-type business in the niche market that we are good at, and we consider it is better to take an approach focused more on quality than quantity in the future.

Q.	How do you compare T&D’s business model with the financial planner-type business model of Sony Life that made its IPO last year?
A.	The financial planner-type business model in which mainly the sales representatives who entered from outside of the life insurance industry develop customers independently just like an independent agent, based on the commission system, is distinctive in the life insurance industry. The difference from T&D is the sales channel, for example, Daido’s business model is based on the tie-up with tax accountants’ organizations and small and medium sized enterprise organizations, and its customer base is already maintained by these organizations. On the other hand, Taiyo’s major market is the household market, and its main sales representatives are comprised of middle aged housewives who understand the medical and nursing care needs that meet the market better. We consider that the important point is the combination of the market, channel, and products.

Q.	41.6% of the general account assets of the overall group as of the end of December are comprised of domestic bonds; are you satisfied with the return? Are you thinking of allocating them more to stocks?
A.	Our basic investment policy to allocate assets focusing on yen fixed income assets to obtain stable income in accordance with the characteristics of each company’s insurance liabilities, and risk assets are invested flexibly in accordance with the market environment within the scope of a risk buffer. For instance, if the stock market declines, we will purchase more shares are purchased, and the asset-side duration is adjusted if the projected future interest rate changes. Due to the current decline in stock prices, net exposure to domestic stocks as of December-end was slightly down from the beginning of the term with Daido at 16.4% and Taiyo at 12.4%, but we have no plan to significantly change this level. Also, we are engaged in alternative investments to a certain extent for the assets that can expect higher return, and such balance for Daido and Taiyo is about \370 billion and \79 billion respectively as of the December-end.

Q.	As an institutional investor, do you think that the dividend payment of the Japanese companies is too small?
A.	Excluding some companies, the dividend payout ratio of Japanese companies is generally lower than foreign companies. Some companies may be focused on investment for growth opportunity, while others may keep as retained earnings. The life insurance companies are shifting their manner gradually to say what they have to say as the institutional investors. In the past, there might be a relationship of holding the shares in a stable manner to gain insurance policies, but as the group insurance and group annuity decline, etc, such relationship seems more based on economic rationality.

Q.	Daido’s major market is the small and medium sized enterprise market, but is there any link between Daido’s shareholdings and insurance policy buyers?
A.	There is no link. Daido’s net exposure to domestic stocks including investment trusts and monetary claims purchased as of the end of December is 16.4%, and the majority of the exposure is portfolio investment. As part of our portfolio, we hold the shares of our customers but they can be sold if we want.

Q.	Please explain about the reorganization of Taiyo’s sales representative channel, promotion of the third-sector products, and the competition with the Japan Post Insurance Co., Ltd..
A.	Based on the experience of higher surrender and lapse rate of insurance policies sold by the sales representatives who had worked at other life insurance companies, Taiyo curtails hiring of persons formerly employed by other companies from 2 years ago, and has been implementing a reorganization of sales representatives’ channels. The number of sales representatives has declined to about 7,800, but we consider it is positive to increase high quality insurance policies with a good persistency rate despite a temporary drop in total new policy amount. In regard to our products strategy, we plan to develop and market the third-sector products including nursing care products that meet customer needs in the household market. For competition with the Postal Life, Taiyo focuses on the metropolitan areas and major regional cities, while the Japan Post Insurance focuses on rural areas, therefore the target may be the same individual market, but the areas of sales units are separated to some extent.