Described here is the outline of questions and answers exchanged between institutional investors and security analysts and Tetsuhiro Kida, Director and Senior Executive Officer of T&D Holdings, Inc. at a telephone conference held on August 12, 2008. Some additions and corrections were made to make the contents easier for readers to understand.

Q.	Daido’s return on hedge funds was well at ¥13.4 billion, which is recorded as “gains on investments in trading securities, net” on income statements. How was Taiyo’s hedge funds performance?
A.	The amount of hedge funds on the balance sheet was ¥86.4 billion. Most hedge funds settle their accounts in December; therefore there were no postings for the first quarter. The change in mark-to-market balance for the first quarter was about US$15 million on a dollar basis.

Q.	As for the private equity investment, what are your investment areas and investment strategies?
A.	Daido’s private equities came to ¥172.2 billion, which is invested in Japan, U.S., Europe, and emerging Asian countries, etc., and its investment strategies are buy-outs, venture businesses, and special situations, etc. Daido diversifies both investment areas and strategies. Taiyo’s private equities were ¥17.3 billion, of which domestic private equities are about ¥3 billion, and foreign private equities are about ¥14 billion. The main investment strategies are buy-outs and secondary funds.

Q.	Please give us the breakdown of Daido’s devaluation losses on securities.
A.	Devaluation losses on securities were ¥8.6 billion, of which other domestic securities are ¥7.2 billion, other foreign securities ¥0.9 billion, domestic stocks ¥0.2 billion, and monetary trusts ¥0.2 billion. A major factor for losses on other domestic securities was the devaluation loss on the unlisted domestic stock.

Q.	Is it correct to understand that the devaluation loss on the unlisted domestic stock was unusual case?
A.	It is correct to think that was unusual case.

Q.	How did the domestic stock investment perform in the first quarter?
A.	Daido increased domestic stocks about ¥7.7 billion as a result of sales during the stock price were rising in May and June, and a purchase in the declining phase at the end of June. Taiyo increased domestic stocks about ¥15 billion as a result of net selling of domestic stocks and additional buying of investment trusts.

Q.	What are your investment policies of domestic stock after the second quarter?
A.	Daido doesn’t have a plan to change domestic stocks exposure, and the stance is to sell when stock prices rise, and to buy when they fall. Taiyo’s investment policies of domestic stocks are almost the same as Daido’s. Taiyo extended the duration of yen fixed income assets during the interest rates rising phase in the first quarter, and Taiyo plans to extend further if the Company have a chance in this fiscal year. Meanwhile, investments in price fluctuation assets are planned to be slightly reduced.

Q.	What are the financial institutional agents selling T&D Financial’s new variable annuity launched in June? Also, did it sell well in July and August?
A.	Sumitomo Mitsui Bank began to sell it from the end of June, and as of today, eleven financial institutions sell it. Sales performance is good, amounting to about ¥22.5 billion in only July, and current sales in August continue to be strong.

Q.	Each bank sells more than one product through over-the-counter sales, so how is the competition?
A.	A special feature of the new variable annuities is to offer minimum guarantee of 100% of basic policy amount (initial lump-sum premium) in 5 year investment term. This is a unique feature not available from other companies at this point. Also, in consideration of the need for simple and easy-to-understand product, it is not equipped with ratchet or step-up functions, etc. Therefore, we expect to expand customer base by placing it as an alternative product to five-year JGB or fixed deposits, rather than competing with the variable annuities of other companies.

Q.	It is expected that surrenders will increase at Daido due to worsening business sentiment among SMEs. How do you foresee the impact to new policy amount?
A.	Our full year forecast of the new policy amount for individual term life insurance is a decline of about 7% compared with the previous fiscal year, which is almost the same level as the new policy amount from two years ago. Worsening business sentiment of SMEs is considered to have some impact on new policy amounts, however, such amount remain stable within a certain range, judging from the trend of the past ten years.

Q.	When will Taiyo launch new product?
A.	The new product is planned for sale in the second half. The product will be a successor to the current main product, “Taiyo Life’s Hoken Kumikyoku”.

Q.	What is the number of in-house sales representatives at the end of the first quarter of Taiyo Life?
A.	The number of in-house sales representatives (on the basis of registration in the Life Insurance Association of Japan), increased by 47 to 7,666 from 7,619 as of the previous fiscal year end.

Q.	Payment of insurance benefits, etc., increased at Daido compared with the same period of previous year. Are there any special factors?
A.	The primary factor of an increase of ¥56.4 billion year on year was an increase in the insurance benefits and surrender payments of the group annuities. With regard to individual life insurance, payment was slightly down for this first quarter.

Q.	Is there any quarterly bias, in the trend of Daido and Taiyo’s operating expenses?
A.	There is no particular quarterly bias for both Daido and Taiyo.

Q.	Please tell us more in detail about “other factors” indicated as the increase/decrease factors of Daido and Taiyo’s core profits.
A.	Other major factors for Daido (down ¥1.9 billion compared with the same period of the previous year) were a decrease in insurance-related profit associated with shift to non-participating policies and lower premium rates. Shares of non-participating policies are gradually increasing, and the impact to the core profit is considered to be smaller in the near future. Taiyo’s other factors (down ¥1.5 billion from a year ago) are the sum of various items, and some major factors are a decline of gains on reversal for additional policy reserves year by year, revision of premium rates, and an increase in death benefits payments of group insurances, etc.