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 February 12, 2009. Some additions and corrections were made to make the contents easier for readers to understand.

Q.	T&D Life Group reduced its market-risk assets in the third quarter and, as a result the solvency margin ratios of both Taiyo and Daido were over 800% as of the end of the quarter. What is the possibility of reinforcing capital with the current financial situation in mind?
A.	T&D Life Group has no problems in stability and soundness at this time because we have a certain level of internal reserves. However, we will consider taking action toward strengthening our financial base in view of uncertainty over the financial and economic situation.

Q.	In the case you were to reinforce your capital, is it possible to reallocate capital from a company with relatively sufficient capital to a company with relatively insufficient capital in the group?
A.	Capital reinforcement will be decided in a comprehensive manner that includes considering necessity, methods, timing, etc.

Q.	Increasing numbers of banks and securities firms use hybrid securities for capital reinforcement. Are you considering similar methods that do no entail dilution? If you intend to reinforce your capital, isn’t it better to do so soon?
A.	Again, capital reinforcement will be decided in a comprehensive manner that includes considering necessity, methods, timing, etc.

Q.	People often talk about the lower liquidity of hedge funds and private equity funds. It is possible for T&D Life Group to sell these assets smoothly when you consider doing so?
A.	Daido is considering selling part of its hedge funds in the near future, but we hear that the cash position of hedge funds is improving, and we don’t consider liquidity a big problem. We have been investing in private equity funds from the middle to long-term point of view, recognizing that these assets originally have low liquidity. Currently we do not intend to sell these assets but we will take a prudent approach, watching the situation carefully.

Q.	Taiyo and Daido increased their short positions in stock-indexed futures in the third quarter. Is this recognized as a reduction of market-risk assets in calculating your solvency margin ratio? Do you plan to increase your short positions in stock-indexed futures in the near future?
A.	Daido has about 98.4 billion yen in short positions of stock-indexed futures on a fair value basis as of the end of the third quarter. This is the result of flexible actions taken for the purpose of adjusting net exposure to domestic stocks. This action will reduce the risk of exposure to domestic stocks in calculating the solvency margin ratio. However, we do not consider it appropriate to increase short positions above a certain level because the fluctuation of the fair value of derivatives will be directly reflected on the P/L. As of the end of the third quarter, Taiyo has a fair value of about 48.5 billion yen of short positions in stock-indexed futures, and a contract amount for options of about 80.0 billion yen. Future usage of derivatives will be considered, when appropriate, from a flexible viewpoint for the purpose of adjusting net exposure to domestic stocks.

Q.	For Daido, the surrender and lapse amount is in an increasing trend, and the total amount of new policies is in a decreasing trend. What are the prospects for the near future?
A.	The surrender and lapse amount is increasing mainly in long-term life insurance with high cash value due to worsening business sentiment, etc. On the other hand, the amount of new policies are decreasing because there are no such positive factors as a revision of insurance premium rates this business year, in addition to deteriorating business sentiment. The severe economic environment is considered to continue for some time, but our policies are to continue to work on measures such as an increase in efficiency of new policies acquired by sales representatives, an increase in the number of certified tax accountant agencies, etc.

Q.	Please tell us whether you will move forward with the extension of asset-side duration or forgo it under the situation of the currently decreasing over 20 years swap rate.
A.	Daido is not in a position to extend asset-side duration at the current interest rate level. Taiyo extended the duration in the rising interest rate phase in April through May this business year, but the current policy is to maintain the present position.

Q.	Both Taiyo and Daido reduced their alternative investments in the third quarter. Please show us the amount of gains/losses from such investments on the P/L.
A.	Daido posts all hedge fund gains/losses as net gains/losses on investments in trading securities, and the total losses amounted to about 30.0 billion yen for the third quarter (October through December). Devaluation losses on securities had posted from private equities for the interim results, but almost no gains/losses posted to the P/L in the third quarter (October through December). Taiyo Life classifies alternative investment assets as available-for-sale securities. Almost no new devaluation losses on securities posted to the P/L in the third quarter (October through December).

Q.	You made a revision on the full-year forecast in the press release of the third-quarter results. What were your economic assumptions for the said revision?
A.	We assumed a Nikkei Average of 8,000 yen, 90 yen to the dollar, and 125 yen to the euro.