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 November 19, 2009. Some additions and corrections were made to make the contents easier for readers to understand.

Q.	How do you feel about the impact of the revision of solvency margin (SM) ratio standards? Did Taiyo Life conduct the refinancing of subordinated debt in response to the revision of these standards?
A.	Precise estimates cannot be made at this time because many aspects still remain uncertain. Although we see that strict measurement of investment risk will largely affect the revised SM ratio, not only T&D Life Group but other life insurance companies will also be impacted. Taiyo Life conducted the refinancing of subordinated debt mainly to reduce the interest burden, not to address the revision of SM ratio standards.

Q.	How did Daido Life’s sales results change in 2Q2009 compared with 1Q2009? How did Daido Life perform in October?
A.	Business conditions remain difficult in the SME market. On a quarter-to-quarter basis, the new policy amount improved, falling 13.2% in 2Q2009 compared with 17.0% in 1Q2009. This improvement continued in October. On the same basis, the annualized surrender and lapse rate has also been improving from 10.86% in 1Q2009 to 10.38% in 2Q2009.

Q.	EEV (European Embedded Value) Sensitivities as of September 30, 2009 have not been disclosed. Can I use the sensitivities as of March 31, 2009?
A.	Please refer to sensitivities as of March 31 as an overall estimate, with the exception of the sensitivity to equities that had large volatility for the six months through September 30.

Q.	Why did T&D Holdings file a shelf registration? To what extent can T&D Holdings respond to future regulatory changes by increasing its capital?
A.	The competitiveness of the T&D Group’s three life insurance companies is underpinned by their outstanding financial soundness. By enhancing the quality of capital and strengthening our financial base in anticipation of changes in the regulatory environment, we seek to maintain and sharpen that competitive edge. While some aspects of future regulatory changes remain uncertain, we believe that the capital increase will enable us to respond effectively to almost all of the changes.

Q.	Is it really necessary for T&D Holdings to raise capital of around 100 billion yen through an offering of new shares? How will this financing be approached from a risk-management standpoint? What kind of management decision-making led to the choice of new share issuance as the means of financing?
A.	Currently, the Group does not have any capital shortfalls. Our intention is to achieve future growth with a superior business model by strengthening our financial base in anticipation of future changes in the regulatory environment. In light of the growing debate about enhancing the quality of capital, management chose the issuance of new shares because it provides the highest quality in terms of capital.

Q.	Will you increase capital to boost the SM ratio?
A.	We have already secured an adequate SM ratio, and therefore capital will not be increased for this purpose.

Q.	What issues will arise if double-leverage is not eliminated?
A.	One rating agency downgraded credit ratings of Taiyo Life and Daido Life because of double-leverage. There are no signs at this time that the other rating agencies will follow suit. Going forward, however, we believe that the rating agencies will increasingly tend to not recognize components of capital that are subject to double leverage.

Q.	Why did you file a shelf registration only half a year after your previous capital increase? I understand that the trend toward stricter regulations is one factor, but did anything else influence management’s decision-making?
A.	The reason we filed a shelf registration was to strengthen our financial base in anticipation of changes in the regulatory environment; there was no other reason.

Q.	Do you think your credit ratings will be upgraded as a result of the 120 billion yen capital increase?
A.	There is no guarantee of an upgrade, but we believe that the capital increase will work in our favor.

Q.	Could management decide not to move forward with a resolution on the capital increase if a possible downgrade has no impact on the Group’s fundamentals?
A.	Nothing beyond the information contained in the shelf registration has been decided on as a matter of fact at this time. While monitoring market conditions going forward, we will consider implementing the capital increase within the time frame specified by the shelf registration. We stress that the main thrust of the shelf registration is to strengthen our financial base in anticipation of changes in the global regulatory environment.

Q.	Were sales of T&D Financial Life’s “Five Ten” non-participating individual variable annuity suspended because of concerns over double-leverage?
A.	Sales were suspended because profitability had declined since the product was developed, and not because of double leverage. Hedges against falling share prices were working effectively, but the decline in current short- and medium-term interest rates has caused earnings to deteriorate. Therefore, we decided to suspend sales of this product from the standpoint of capital efficiency and profitability.

Q.	How does management approach the cost of capital? Does management see the issuance of new shares as the least expensive option for increasing capital without careful consideration?
A.	Management remains constantly mindful of the expected return demanded by shareholders in the course of business activities, and strives to deliver returns that surpass shareholder expectations. By working to improve ROEV (Return on Embedded Value) as a yardstick of internal growth, while properly seizing on external growth opportunities, we seek to deliver growth that exceeds the cost of capital.