Described here is the outline of questions and answers exchanged between institutional investors and security analysts and Naoteru Miyato, President of T&D Holdings, Inc. at the Information Meeting held on May 28, 2008. Some additions and corrections were made to make the contents easier for readers to understand.

Q.	Please tell us about your efforts, for the reorganization of the Taiyo’s sales representative channel and aging of such representatives.
A.	Total number of the Taiyo’s sales representatives a few years ago was about 9,000, and about 3,000 representatives were employed annually, but the current number is about 7,600 as a result of restricted hiring of the representatives formerly employed by other companies. Our target is to have 8,000 representatives by hiring about 200 every month, to bring a net increase of about 100 annually. About 50% of the sales representatives are composed of the experienced representatives whose career has spanned more than about ten years, and they are rather good at selling savings-oriented products that was the main product of the past. We intend to increase total new policy amount, mainly selling main lines of protection-oriented products by enhancing the sales skills of newly employed sales representatives to sell protection-oriented products. Taiyo has a customer base of about 2.6 million policyholders and more than 4.2 million business policies in force as a result of the sales of mainly saving-oriented products targeting housewives through the sales representative’s direct visits to the households. The key is how to make efficient and adequate proposal to such broad customer segment. The current main products are the protection-oriented products such as whole life insurance, etc., therefore, it is not easy to sell new products every time a policy expires such as savings-oriented products sold in the past. Taiyo developed a new sales support IT system that materialized the database of customer information. We intend to promote development of customer base using the new IT system.

Q.	When do you think new policy amount for Taiyo will hit the bottom?
A.	Japan’s death protection market is a shrinking trend, and Taiyo’s new policy amount decreased.The current number of new policies is up compared to the previous fiscal year. About 1.47 trillion yen of FY2007 total new policy amount is considered almost at the bottom level, and our target for this period’s total new policy amount is 1.76 trillion yen. Also, to achieve the level of total new policy amount of 2 trillion yen, we think it is necessary to increase the number of sales representatives and to introduce new products. Japan’s insurance market has a huge volume and we think there is room for development. Three companies have their respective role, and Taiyo’s mission is to protect household market with life insurance. We aim to become a more trusted company by raising the level of our sales activities.

Q.	Do you think the sales representatives-oriented business model will work for the future in the Japanese life insurance market?
A.	There are new life insurance companies specialized in the Internet marketing etc., and this type of channel may expand. However, we believe there are customers who prefer to hear explanation through traditional face-to-face communication. This will make it possible for customers to choose from more than one channel, and under the circumstances, it will be up to the decision of each company as to what should be the size of the sales representatives channel, or what level of new total policy amount can be expected through such channel.

Q.	As the reason for the decision of demutualization by other companies, it seems that they have a sense of crisis for the Japanese life insurance market, and want to shift from the sales representatives-oriented to other business models in the long term. How do you think about this?
A.	They might have judged that demutualization is necessary to maintain the size of the company in the shrinking trend of Japanese insurance market. T&D Life Group continues the strategy to focus on our strong niche areas. However, we think that the organic growth only is not sufficient, and always seek the chance of next step.

Q.	Please tell us about Daido’s FY2008 sales measures in consideration of the competitive situation in the small and medium enterprises market.
A.	There has been little change in the competitive situation of the small and medium enterprises (SME) market. The point is how to prevent the other companies’ solicitation efforts to share the Daido’s high quality agent network. Daido’s sales result through tax accountant agency channel was strong for fiscal 2007, but the number of sales representatives is in a declining trend, therefore we intend to increase the number of current hiring of about 1,100 annually. There are about 11,300 tax accountant agents, but the medium–term goal is to bring them to 12,000, and we also intend to improve sales capacity. Daido’s main objective is to solve the existing issues one by one.

Q.	Taiyo is projecting a recovery of new policy, and please tell us about your efforts for the promotion of the third-sector products that are contributing highly to EEV.
A.	For Taiyo, the third-sector products comprise about 30% of the annualized premiums of new policies with a high contribution to EV, but they are not the stand-alone type products but the package-type product named “Hoken Kumikyoku”. We intend to develop and offer products in accordance with the customer needs.

Q.	Taiyo is projecting a recovery of total new policy amount, while projecting a decrease in surrender and lapse rate. What is the level of expected future surrender and lapse rate?
A.	The target of total new policy amount is 1.76 trillion yen. The target of surrender and lapse rate is the lower half of 7% or if possible slightly less than 7%.

Q.	Please tell us about the T&D Financial’s hedging method of the minimum guarantee risk when stock prices drop.
A.	It was necessary to increase policy reserve for minimum guarantee risks due to a drop in stock prices for the year ended March 2008, and the hedging was implemented to reduce such risk. If you look at the core profit only, it declined by 11.7 billion yen year on year while the hedging gains are included in capital gains. As a result, ordinary profit has improved by 3.8 billion yen from the previous year. The hedging strategy will be applied for the year ending March 2009.

Q.	Please tell us about your ideas of how the value of new business on EEV will move considering the current trend in interest rate.
A.	Value of new business on EEV was 62 billion yen for the fiscal 2007 due to the negative impact of the premium rate revision and a decrease in Taiyo’s new policies, etc., which is a level of 3% to total EEV. We have in mind the future target of a 80 billion yen level, or 4-5% level to total EEV.

Q.	I want to confirm what you have said before about the 200 sales representatives to be hired by Taiyo. Is it monthly, and not annually?
A.	We experienced a net increase of about 100 people which came from 3,000 people hired annually before. Now, we hire about 2,400 people hired annually, not changing the target for net increase of about 100 people.

Q.	Is it the Taiyo’s plan to hire 200 people monthly?
A.	That is correct.

Q.	Regarding ALM, what is the duration of assets and liabilities?
A.	First, we assume that insurance liabilities will be about 10-15 years for the Group, although not definite yet. We have an idea of a level slightly longer than 10 years for Taiyo Life, and for Daido Life, a level is little longer than Taiyo Life. Meanwhile, on the assets side, it is about an average of 5 years for the Group, and Daido is relatively shorter than Taiyo.

Q.	The introduction of the Solvency II is expected in the medium and long-term. Is there any plan to change the stock exposure in accordance with the new regulations?
A.	In regard to the introduction of the Solvency II, or a review of current solvency margin calculation method, various impacts are expected, for example, the change in the risk assessment method. However, at this point, nothing concrete can be said about whether or not the stock exposure will be changed.