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 27, 2009. Some additions and corrections were made to make the contents easier for readers to understand.

Q.	You mentioned that investment risk would be curtailed for the time being. Does this mean that your investment policy has been radically changed to avoid investment risk?
A.	There is no change in our existing basic investment policy, in which we allocate around 60 to 70% of our assets to yen-denominated income assets, and invest in market-risk assets within our risk buffer. Financial markets are still uncertain; therefore, we will keep a cautious stance for a while, reorganizing our investment portfolios in 2 to 3 years to gain stable profit.

Q.	Are you currently thinking about acquiring an asset management company?
A.	We have no such current specific project. We have T&D Asset Management Co., Ltd. in our group, and we expect it to contribute to our bottom line.

Q.	Please give us your comments about projections of interest and dividend income for the fiscal year ending March 2010?
A.	Our rough estimate shows 95 billion yen for Daido Life, which is down 27 billion yen from the previous year, and 12.5 billion yen for Taiyo Life, which is down 8.5 billion yen.

Q.	What is your prospect of Daido Life’s business performance?
A.	Due partly to the impact of the economic downturn in SMEs, we consider it will take about 2 to 3 years to bring the total new policy amount back to over 4 trillion yen. However, the sales channel has been strengthened through the increased number of tax accountant agents. Also, we will maintain our competitive edge through the enhancement of Daido Life’s advantage of strong support to the agents.

Q.	What is your prospect for Daido Life’s surrender and lapse rate? Will it improve when the economic environment improves?
A.	Daido Life’s surrender and lapse rate has been around 8 to 9% in normal times. Due to the economic downturn, there has been an increase in the surrender of term life insurance with high cash value, and the FY2008 surrender and lapse rate was up by about 1 to 1.5% compared to normal times, but we don’t expect it to increase further.

Q.	How do you foresee each group company’s operating expense rate?
A.	In the case of Daido Life, operating expenses have not increased substantially, but the operating expense rate worsened due to a decrease in the policy amount in force. We don’t expect the operating expense rate to further worsen because the new policy amount will increase in the near future. In the case of T&D Financial Life, the operating expense rate worsened due to lower average insurance benefits per policy, but the situation is not likely to worsen further. Also, in EEV, operating expenses are projected applying the best estimate assumptions up to the last year’s experience; therefore, the impact of a worsened operating expense rate are larger than other assumption changes (e.g. mortality rates are estimated based on the latest three year’s experience) in EEV calculation.

Q.	EEV fluctuates largely depending on changes in assumptions. How do you use it as an indicator in your company?
A.	We use EEV as a performance evaluation indicator, etc. internally. In order to establish EEV, we place importance on the elimination of discretion and continuity of calculation, and in this disclosure, EEV was calculated using swap rates without modifying interest rates.

Q.	In projecting the impact of lower risk-free rate to EEV using sensitivities, we anticipated the impact of a lower rate by about 20 bp in terms of the swap rate of 10 to 15 years, which is average liability-side duration of Daido Life and Taiyo Life, but the actual impact was more substantial than this. Is the impact of the interest rate fluctuation duration longer than 10 to 15 years more substantial to EEV?
A.	As long as the value of in force business is concerned, there was an impact of about minus 150 billion yen assuming a sensitivity where the risk-free rate was down by 20 bp, and we feel that the sensitivity effectively worked. Meanwhile, with regard to adjusted net worth, there was impact from the factors other than lower risk-free rate; therefore, we consider there were some parts which did not necessarily move in tandem with the lower swap rate.

Q.	Are you examining increasing the frequency of EEV disclosure?
A.	For the time being, we intend to improve the contents of disclosure, such as sensitivity and movement analysis, and to improve the internal model through the calculation of required capital on an economic capital basis. In the medium-to long-term, the accounting standards will move closer to the EEV idea through the introduction of mark-to-market accounting of liabilities. We will examine increasing disclosure frequency as a future issue.

Q.	Did Daido Life’s losses on sale of investment trusts come from alternative investments?
A.	Daido Life’s losses on sale of investment trusts were mainly from losses on sales of domestic stock investment trusts, and not from those related to alternative investments.