another step forward - t&d holdings · 2017-03-30 · growth strategy page 22 contents 25...

Editorial NoteThe Annual Report 2013 has “Another Step Forward” as its central theme. The beginning of the report introduces the unique business models of the three life insurance companies, Taiyo Life, Daido Life and T&D Financial Life. The report also includes an interview with the president in which he discusses a range of subjects, such as the full implementation of Enterprise Risk Management (ERM) from April 2013 and the T&D Life Group’s growth strategy. Later in the report, readers can find details on the current situation of the T&D Life Group, including information on the financial results and management indicators of the three life insurance companies as well as trends in Japan’s life insurance industry. This information is arranged in a clear manner to facilitate understanding.

Further, detailed information regarding embedded value (EV), one of the primary indicators of the corporate value of life insurance companies, has been assembled within the separate Market Consistent Embedded Value Report 2013. This reflects the T&D Life Group’s transition to disclosure of Market Consistent Embedded Value (MCEV) from March 31, 2013. Please use the Market Consistent Embedded Value Report 2013 to supplement the Annual Report 2013.

Forward-Looking StatementsThis annual report contains forward-looking statements about T&D Holdings’ future plans, strategies, beliefs, and performance that involve risks and uncertainties. Such statements are based on our current expectations and are subject to uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause such a difference include, but are not limited to, (I) general economic conditions, in particular, conditions in the insurance markets on which the T&D Life Group centers, (II) performance of financial markets, (III) mortality and morbidity levels and trends, (IV) persistency levels, (V) interest rate levels, (VI) currency exchange rates, (VII) general competitive factors, (VIII) changes in laws and regulations, including the tax treatment of insurance premiums, and (IX) changes in the policies of governments and/or regulatory authorities. T&D Holdings, therefore, wishes to caution readers not to place undue reliance on forward-looking statements. Furthermore, the Company under-takes no obligation to update any forward-looking statements as a result of new information, future events, or other developments.

Another Step Forward

T&D Holdings, Inc. is the holding company for three core life insurance

companies: Taiyo Life Insurance Company, Daido Life Insurance Company,

and T&D Financial Life Insurance Company. Each of the three life insurance

companies has a unique business model that is quite different from those of

other companies in the industry in terms of markets, marketing channels,

and products. Under the holding company structure, the three life insurance

companies are focusing on their respective high-potential markets. Thanks

to this focus, they boast high competitiveness within the life insurance

industry and maintain strong business performance.

2 T&D Life Group’s Corporate Philosophy/Management Vision/Fundamental Strategies

3 To Our Shareholders

4 Life Insurance Industry Trends in Japan

6 T&D Life Group’s Business Model

8 Group Performance

10 Group Topics

12 Fiscal 2012 Management Review

17 An Interview with the President

Full Implementation of ERM page 18

Growth Strategy page 22

Contents

25 Business Overview

26 Taiyo Life Insurance Company

30 Daido Life Insurance Company

34 T&D Financial Life Insurance Company

38 T&D Asset Management Co., Ltd.

40 Pet & Family Small-amount Short-term Insurance Company

41 Key Systems Underpinning T&D Life Group

42 Management Organization Board of Directors

44 Management Organization Audit & Supervisory Board Members

45 Corporate Governance

49 Corporate Social Responsibility

53 Financial Section

140 Glossary

144 History

146 IR Activities

147 Stock Information

148 Group Companies

149 Corporate Data

T&D HolDings, inc. AnnuAl RepoRt 2013 1

Try & DiscoverT&D Life Group’s Corporate Philosophy

With our “Try & Discover” motto for creating value, we aim to be a group

that contributes to all people and societies.

T&D Life Group’s Management Vision

From the customers’ point of view

Aim to provide the best products and services to increase

customer satisfaction.

From the shareholders’, investors’, and market’s point of view

Aim to be a major life insurance group with a strong presence in the

market by stable and sustainable increases in the value of the

group through new challenges for growth.

T&D Life Group’s Fundamental Strategies

1. To provide products and services tailored to customer needs accu-

rately and quickly in a kind and polite manner.

2. To maintain and develop the Group management to maximize the

individual strengths of each Group company within the Group.

3. To establish an integrated management system of profit, risk, and

capital for stable and sustainable EV growth.

4. To achieve the mid- and long-term growth of the Group by expanding

the life insurance business and entering into new business areas

through alliances and M&As.

5. To fulfill our public mission as a life insurance business and our corpo-

rate social responsibilities for the broader society including customers

and shareholders.

T&D Life Group’s Corporate Philosophy, Management Vision and Fundamental Strategies

T&D HolDings, inc. AnnuAl RepoRt 20132

In fiscal 2012, the year ended March 31, 2013, the Japanese

economy began recovering in the summer, backed by factors

such as post-disaster reconstruction demand. The economy then

weakened slightly, with a downturn in exports and production

amid the slowdown in the world economy and other develop-

ments. However, signs of a mild recovery were seen in the Japa-

nese economy toward the end of the fiscal year, backed by a

global economic pickup, among other factors.

In the life insurance industry, policy amount in force, which had

been on a downward trend, remained almost unchanged from the

previous fiscal year due to steady growth in both the number of new

policies and the new policy amount. While the asset management

environment was affected by domestic interest rates remaining at a

low level, the latter half of fiscal 2012 saw a correction of the yen’s

appreciation, and a market rise in domestic and foreign stock.

Under these conditions, the entire T&D Life Group’s new policy

amount and policy amount in force both increased year on year. In

terms of earnings, ordinary profit rose, and net income reached a

record high. All in all, we delivered a strong performance.

The T&D Life Group continues to work to increase insurance

profit by strengthening the unique business models of Taiyo Life,

Daido Life, and T&D Financial Life. At the same time, we will

promote and enhance ERM, which we fully introduced in April

2013. The aim of these efforts is to increase our corporate value

stably and sustainably.

With our “Try & Discover” motto for creating value, we aim to

be a group that contributes to all people and society. Guided by

this corporate philosophy, all the Group’s corporate officers and

employees will continue making a concerted effort to justify the

trust of stakeholders.

In closing, I would appreciate the continued support and coop-

eration of our shareholders and other investors and analysts.

September 2013

Kenji Nakagome

Representative Director and President

Leveraging unique business models to increase corporate value

The T&D Life Group aims to increase corporate value

stably and sustainably by strengthening its unique

business models, which set it apart from other companies,

and by steadily promoting and enhancing

Enterprise Risk Management (ERM).

To Our Shareholders


Comparison with Market Share 10 Years Ago310-Year Historical Variation2

04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3

100.0

118.1

103.4

04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3

76.4

102.5100.0

04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3

68.7

94.6

100.0

n T&D n Japanese life insurance industry



1 Source: Compiled by T&D Holdings based on Summary of Life Insurance Business in Japan, Life Insurance Association of Japan

The policy amount in force and the new policy amount are the sums of individual insurance and annuities. The new policy amount includes net increase from conversions. Figures from the year ended March 31, 2008, do not include Japan Post Insurance. For convenience, U.S. dollar figures have been calculated at the rate of U.S.$1 = ¥94.05.


Insurance premiums, new policy amount, and policy

amount in force for the year ended March 31, 2004, are assumed to be 100.0 (base year).

The new policy amount includes net increase from conver-sions. Figures from the year ended March 31, 2008, do not include Japan Post Insurance.

The policy amount in force and the new policy amount include the insured amount of Daido Life’s J-type product (insurance for serious diseases) from the year ended March 31, 2011.


The policy amount in force and the new policy amount are the sums of individual insurance and annuities and the insured

amount of Daido Life’s J-type product (insurance for serious diseases). Figures do not include Japan Post Insurance.

4 AIG refers to Alico Japan, AIG Star and AIG Edison. 5 Dai-ichi refers to Dai-ichi and Dai-ichi Frontier. 6 Prudential US refers to Prudential, Gibraltar and

Prudential Gibraltar Financial. 7 Sumitomo refers to Sumitomo and Medicare. 8 Sony refers to Sony and AEGON Sony Life. 9 MS&AD refers to Mitsui Sumitomo Aioi and

Mitsui Sumitomo Primary.10 Fukoku refers to Fukoku and Fukokushinrai.11 Tokio Marine & Nichido refers to Tokio Marine &

Nichido Life and Tokio Marine & Nichido Financial.

1 Nippon 19.8%

2 Dai-ichi 13.2%

3 Meiji Yasuda 12.7%

4 Sumitomo 10.4%

5 AIG4 7.3%

6 T&D 7.2%

7 Mitsui 3.5%

8 Aflac 3.4%

9 Fukoku 2.9%

10 Asahi 2.6%

11 Others 17.0%

1 Nippon 22.8%

2 Dai-ichi 16.6%

3 Sumitomo 14.4%


5 Asahi 5.1%

6 T&D 4.8%

7 Mitsui 4.5%

8 AIG4 3.3%

9 Fukoku 3.1%

10 Sony 2.1%

11 Others 9.6%

1 Nippon 18.3%

2 Dai-ichi 14.4%


4 Sumitomo 11.9%

5 T&D 7.1%

6 AIG4 5.4%

7 Mitsui 3.9%

8 Fukoku 3.5%

9 Sony 3.5%

10 Asahi 3.3%

11 Others 16.5%

1 Nippon 17.4%


3 Dai-ichi5 11.1%

4 Prudential US6 11.1%

5 Sumitomo7 10.4%

6 Aflac 6.5%

7 T&D 6.3%

8 MetLife Alico 4.2%

9 Sony8 3.2%

10 MS&AD9 2.8%

11 Others 15.0%

1 Nippon 18.8%

2 Dai-ichi5 15.4%

3 Sumitomo7 11.9%



6 T&D 6.4%

7 Sony8 4.1%

8 Fukoku10 3.2%

9 Asahi 3.1%


11 Others 16.5%

1 Nippon 13.1%

2 Dai-ichi5 11.4%


4 T&D 9.8%

5 Sumitomo7 6.5%

6 Sony8 6.2%

7 MS&AD9 5.7%


9 Meiji Yasuda 4.7%

10 Tokio Marine & Nichido11 4.6%

11 Others 21.6%

Insurance Premiums

Policy Amount in Force

New Policy Amount

Base Year (10 Years Ago) = 100.0

Life Insurance Industry Trends in JapanYears ended March 31

Total for Private-Sector Life Insurance Companies1 ¥ millions US$ millions

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013

Income from Insurance Premiums ¥ 26,390,649 ¥ 27,860,828 ¥ 29,244,801 ¥ 28,502,811 ¥ 27,953,897 ¥ 27,329,483 ¥ 27,759,869 ¥ 27,760,689 ¥ 30,173,126 ¥ 31,587,301 $ 335,856

Insurance premiums 25,960,896 27,022,177 28,332,940 27,766,283 27,023,088 26,182,776 26,610,524 27,111,973 29,432,611 30,658,791 325,983

Policy Amount in Force 1,222,212,420 1,186,279,986 1,150,987,311 1,112,199,665 1,067,365,081 1,021,458,243 983,269,573 955,441,100 938,437,268 933,494,143 9,925,509

Individual insurance 1,152,648,515 1,112,170,505 1,070,570,886 1,026,336,003 979,437,404 932,971,822 890,603,942 861,954,282 842,303,337 833,170,629 8,858,805

Individual annuities 69,563,905 74,109,481 80,416,425 85,863,662 87,927,677 88,486,421 92,665,631 93,486,818 96,133,931 100,323,514 1,066,704

New Policy Amount 106,581,055 98,626,548 89,375,093 76,907,879 66,673,005 61,306,802 60,877,823 63,158,089 66,563,317 72,759,322 773,623

Individual insurance 101,381,191 91,159,270 80,753,423 67,991,970 58,649,531 53,992,757 53,390,849 57,087,202 59,386,143 64,829,795 689,312

Individual annuities ¥ 5,199,864 ¥ 7,467,278 ¥ 8,621,670 ¥ 8,915,909 ¥ 8,023,474 ¥ 7,314,045 ¥ 7,486,974 ¥ 6,070,887 ¥ 7,177,174 ¥ 7,929,527 $ 84,311


US$ billions Premium Volume Share

1 U.S.A. 567.7 21.7%2 Japan 524.3 20.0%

3 U.K. 205.9 7.9%4 France 149.3 5.7%5 China 141.2 5.4%6 Germany 106.4 4.1%7 Italy 93.2 3.6%8 South Korea 78.9 3.0%9 Taiwan 72.5 2.8%

10 India 53.3 2.0%11 Others 627.8 24.0%

World total 2,620.8 100.0%

76,818(60.7%)

33,952(26.8%)

15,827(12.5%)

53,531(52.4%)

38,564(37.7%)

10,116(9.9%)

20150

20,000

40,000

60,000

80,000

2025 2035 2045

72,38264,470

34,694

912,0761,005,471

245,578 236,572

36,023

0

120,000

80,000

40,000

0

1,200,000

800,000

400,000

08/3 09/3 10/3 11/3 12/3

70.7

8.71.3

2.02.7

8.04.71.9

6.83.6

5.72.1

9.41.65.7

65.1

0

100

80

60

40

20

2007 2008 2009 2010 2011 2012

60.554.4

43.4

52.2

39.144.0

0

20

40

60

80

Population Projection for JapanThousands

Number of Sales Representatives, Agents, and Employees of AgenciesOffices / Persons

Utilization of Sales Channels (Private Life Insurers)

%

Interest in Protection by Type%

Japan’s Share of the Global Life Insurance Market (Insurance Premiums)

Source: National Institute of Population and Social Security Research, Japan’s Future Population Trends (demographic projections as of January 2012)

Note: Figures in parentheses represent proportion of total population.

Source: Life Insurance Association of Japan, 2012 Life Insurance TrendsNote: The number of employees of agencies is the total number of employees of corporate

and individual agencies.

Source: Japan Institute of Life Insurance, Nationwide Actualities Survey on Life Insurance in Fiscal 2012 (published December 2012)

Source: Japan Institute of Life Insurance, Nationwide Actualities Survey on Life Insurance in Fiscal 2012 (published December 2012)

Source: Compiled by T&D Holdings based on Swiss Re, sigma No 3/2013 World insurance in 2012

n Youth population (0 to 14) n Working-age population (15 to 64) n Elderly population (65 and over)

n Individual agents (offices) n Corporate agencies (offices)n Number of employees of agencies (persons) n Year-end number of sales representatives (persons)

n In-house sales representatives n Direct marketing method

n Life insurance company contact points n Post offices and sales representatives

n Banks and securities firms n Insurance agency or agency sales people

n Workplace and labor unions n Other

n Head of household n Spouse

Sickness, injury, and hospitalization

Unfortunate events

Old-age living expenses

¥ millions US$ millions

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013

Income from Insurance Premiums ¥ 26,390,649 ¥ 27,860,828 ¥ 29,244,801 ¥ 28,502,811 ¥ 27,953,897 ¥ 27,329,483 ¥ 27,759,869 ¥ 27,760,689 ¥ 30,173,126 ¥ 31,587,301 $ 335,856

Insurance premiums 25,960,896 27,022,177 28,332,940 27,766,283 27,023,088 26,182,776 26,610,524 27,111,973 29,432,611 30,658,791 325,983

Policy Amount in Force 1,222,212,420 1,186,279,986 1,150,987,311 1,112,199,665 1,067,365,081 1,021,458,243 983,269,573 955,441,100 938,437,268 933,494,143 9,925,509

Individual insurance 1,152,648,515 1,112,170,505 1,070,570,886 1,026,336,003 979,437,404 932,971,822 890,603,942 861,954,282 842,303,337 833,170,629 8,858,805

Individual annuities 69,563,905 74,109,481 80,416,425 85,863,662 87,927,677 88,486,421 92,665,631 93,486,818 96,133,931 100,323,514 1,066,704

New Policy Amount 106,581,055 98,626,548 89,375,093 76,907,879 66,673,005 61,306,802 60,877,823 63,158,089 66,563,317 72,759,322 773,623

Individual insurance 101,381,191 91,159,270 80,753,423 67,991,970 58,649,531 53,992,757 53,390,849 57,087,202 59,386,143 64,829,795 689,312

Individual annuities ¥ 5,199,864 ¥ 7,467,278 ¥ 8,621,670 ¥ 8,915,909 ¥ 8,023,474 ¥ 7,314,045 ¥ 7,486,974 ¥ 6,070,887 ¥ 7,177,174 ¥ 7,929,527 $ 84,311


Taiyo Life Insurance Company

Serving Household Insurance Needs

Taiyo Life focuses on serving the household market, mainly

targeting women, the middle-aged, and elderly people. The

company sells comprehensive life coverage, which is centered

on death protection and medical/nursing care products.

Unlike other life insurers that typically target the workplace,

Taiyo Life uses an in-house sales force of women of the same

generation as target customers to visit customers at home

and provide advice in tailoring policies to specific needs.

Based on an extensive customer database and wealth of

expertise, Taiyo Life aims to provide coverage for the whole

family by broadening its market to include heads of house-

holds and children.Market

Saleschannel

Products

Households

In-house sales representatives

Comprehensive coverage centered on death protection and medical/nursing care products

ING

Mitsui Sumitomo Aioi

NKSJ Himawari

Dai-ichi Frontier

Fukokushinrai

Mitsui Sumitomo

Primary

ORIX

SonyGibraltar

Prudential

Meiji Yasuda

Japan Post Insurance

Dai-ichiSumitomo

Death Protection

Household Market, Especially Women

Worksite Market

Medical Savings-type Products

SMEs Market

Daido

T&D Financial

Taiyo

OTC Sales at Financial Institutions

and Other Agents

Nippon

Tokio Marine &

Nichido Life

Aflac

AXA

Prudential Gibraltar Financial

MetLife Alico

Note: Complied by T&D Holdings Other companies may view the market differently.

T&D Life Group’s Business Fields

T&D Life Group’s Business Model

T&D Holdings, Inc. is the holding company for three core life insurance companies: Taiyo Life Insurance Company, Daido Life Insurance

Company, and T&D Financial Life Insurance Company. Each of the three core life insurance companies has a unique business model that is

quite different from those of other companies in the industry in terms of markets, marketing channels, and products. Under the holding

company structure, the three life insurance companies are focusing on their respective markets and responding to customer needs by

leveraging their own strengths. Thanks to this focus, they boast high competitiveness and have earned a high level of trust within the life

insurance industry.


Daido Life Insurance Company

T&D Financial Life Insurance Company

Serving the Needs of SMEs

Catering to a Variety of Needs through OTC Sales at Financial Institutions and Other Agents

Daido Life focuses on the small and medium enterprises

(SMEs) market and provides protection for corporations cen-

tered on the sale of partner-specific products in collaboration

with tie-up groups. The links to entities such as the National

Federation of Corporate Taxpayers Associations (NFCTA), the

Tax Payment Associations (TPA) and the TKC National Fed-

eration have afforded Daido Life’s business model a competi-

tive edge over other firms, helping Daido Life to build a

leading position in term life insurance in the SME market.

Going forward, the firm aims to provide a full range of

protection by providing policies that cater to various insurance

needs of SME business owners. To this end, Daido Life will

offer its core term life insurance and insurance for serious

diseases (J-type product), as well as products catering to

high-risk individuals, medical insurance (M-type product),

other Third Sector products, and savings-type products (Life

Gift, etc.) designed for inheritance planning, wealth building

and other purposes.

T&D Financial Life provides insurance products through inde-

pendent insurance agents, including banks, securities firms

and insurance shop agents. As of the end of March 2013, the

firm had expanded its network to 89 agents, establishing a

solid sales base centered on Japan’s top commercial banks.

In the future, T&D Financial Life aims to offer products to

serve a broad range of needs, such as post-retirement living

expenses and protection for bereaved families. Initiatives here

include enhancing and expanding sales channels by strength-

ening ties with agents and product lineups incorporating

customer needs.

Market

Saleschannel

Products

Small and medium enterprises (SMEs)

In-house sales representatives, Agents (tax accountants, etc.)

Term life insurance, insurance for serious diseases, etc.

Market

Saleschannel

Products

OTC sales at financial institutions and other agents

Banks, securities firms and insurance shop agents, etc.

Single premium products and level premium products


Taiyo LifeGROUP BREAKDOWN

1,939.6

0

2,500

2,000

1,500

1,000

500

09/3 10/3 11/3 12/3 13/3

182.4

0

200

150

100

50

(50) 09/3 10/3 11/3 12/3 13/3

63.7

0

100

50

(100)

(50)

09/3 10/3 11/3 12/3 13/3

Income from Insurance Premiums (Three Companies)¥ billions

New Policy Amount¥ billions

Policy Amount in Force¥ billions

MCEV

¥ billions

Core Profit (Loss) (Three Companies)¥ billions

Net Income (Loss) (Consolidated)

¥ billions

Income from insurance premiums increased 14.7% year on year to ¥1,939.6 billion, mainly reflecting increased income from insurance premi-ums at Taiyo Life and T&D Financial Life due to higher OTC sales at banks.

Core profit increased 25.9% year on year to ¥182.4 billion, mainly due to increases in interest, dividends and income from real estate for rent and a reversal of policy reserve relating to minimum guarantee risks for variable annuities.

Net income increased 138.1% to ¥63.7 billion, setting a record high. This increase was mainly due to higher ordinary profit, along with the absence of the negative impact of the reversal of deferred income tax assets accompanying the lower corporate tax rates, which was recorded in the previous fiscal year.

¥ billions

2012 2013 Change

n New Policy Amount ¥ 2,911.9 ¥ 2,974.3 ¥ 62.3

Surrender and lapse amount 1,222.1 1,236.2 14.0

n Policy Amount in Force 20,234.1 21,023.2 789.0

n MCEV 555.4 637.0 81.6

Adjusted net worth 480.1 698.5 218.4

Value of in-force business 75.3 (61.5) (136.8)

Value of new business 21.4 13.2 (8.2)

2,974.3

2,000

4,000

3,500

3,000

2,500

12/3 13/3

21,023.2

15,000

25,000

22,500

20,000

17,500

12/3 13/3

637.0

500

700

650

600

550

12/3 13/3

Group PerformanceYears ended March 31

Year ended March 31, 2013

New Policy Amount/Policy Amount in Force/MCEV%

Taiyo Life Daido Life T&D Financial Life

nnn New Policy Amount 41.5% 55.8% 2.7%

nnn Policy Amount in Force 35.0% 61.6% 3.4%

nnn MCEV 38.9% 56.4% 4.7%


Daido Life2 T&D Financial Life

7,158.9

5,500

7,500

7,000

6,500

6,000

09/3 10/3 11/3 12/3 13/3

59,996.5

57,000

61,000

60,000

59,000

58,000

09/3 10/3 11/3 12/3 13/3

1,664.4

750

1,750

1,500

1,250

1,000

09/3 10/3 11/3 12/3 13/3





MCEV

¥ billions

MCEV

¥ billions

New Policy Amount (Three Companies)¥ billions

Policy Amount in Force (Three Companies)¥ billions

Embedded Value (EV)1

¥ billions

The new policy amount increased 8.0% to ¥7,158.9 billion, mainly due to strong sales of individual term life insurance at Daido Life, as well as of Taiyo Life’s and T&D Financial Life’s strong OTC sales at banks.

The policy amount in force increased 2.1% to ¥59,996.5 billion, mainly due to an increase in the new policy amount and a decline in the surrender and lapse amount.

Group MCEV increased 7.9% year on year to ¥1,664.4 billion, mainly due to an increase in adjusted net worth accompanying an increase of the market value of securities, despite a decline in the value of in-force business caused mainly by a decrease in the level of interest rates.

1 EV is represented by EEV from the fiscal year ended March 31, 2009 to March 31, 2011, and Group MCEV from the fiscal year ended March 31, 2012.

¥ billions

2012 2013 Change

n New Policy Amount ¥ 3,666.7 ¥ 3,992.5 ¥ 325.7

Surrender and lapse amount 2,954.5 2,738.4 (216.0)


n MCEV 896.4 923.5 27.0


Value of in-force business 406.0 278.7 (127.2)

Value of new business 46.7 45.4 (1.2)

¥ billions

2012 2013 Change

n New Policy Amount ¥ 52.2 ¥ 192.0 ¥ 139.8

Surrender and lapse amount 92.3 96.6 4.3


n MCEV 64.8 77.5 12.6


Value of in-force business (1.2) (14.9) (13.7)

Value of new business 0.1 2.9 2.8

3,992.5

2,500

4,500

4,000

3,500

3,000

12/3 13/3

192.0

0

250

200

150

100

50

12/3 13/3

36,933.2

30,000

40,000

37,500

35,000

32,500

12/3 13/3

2,040.0

1,500

2,500

2,250

2,000

1,750

12/3 13/3

923.5

850

950

925

900

875

12/3 13/3

77.5

60

80

75

70

65

12/3 13/3

2 The new policy amount and the policy amount in force include the insured amount of J-type product


Group Topics

Enhanced Disclosure to Shareholders

MCEV Disclosure

The T&D Life Group began to disclose its embedded value in

compliance with the European Insurance CFO Forum Market

Consistent Embedded Value Principles (MCEV Principles) from

March 31, 2013.

The Group has been disclosing its European embedded value

(EEV) with market consistent methodology. The Group has tran-

sitioned to disclosure of MCEV for further improvement of its

embedded value disclosure and consistency with the Group’s

risk management on an economic value basis accompanying full

implementation of ERM.

For details of MCEV, please refer to the separate Market

Consistent Embedded Value Report 2013.

T&D’s History of EV Disclosure

TEV

From March 31, 2007

EEV

From March 31, 2013

MCEV

T&D Life Group

• Adopted a market consistent approach

• Improved comparability

• Enhanced risk assessment

ESR Disclosure in Step With Full Implementation of ERM

From March 31, 2013, the T&D Life Group started disclosing the

Economic Solvency Ratio (ESR), which indicates economic

value-based solvency, in investor relations’ presentation materi-

als. In conjunction with disclosure of ESR, the Group has also

started providing data on the surplus, which is economic value-

based net assets, as well as economic capital, which represents

the economic value-based risk amount.

The details of the full implementation of ERM are explained in

“An Interview with the President” on pages 18 to 21.

Capital Adequacy Indicator (As of March 31, 2013)

T&D Life Group

ESR

Surplus

Economic capital150%

¥1,524.3 billion

¥1,013.6 billion


Insurance companies with a long history in the T&D Life Group

120th Anniversary

Taiyo Life was founded as the Nagoya Life Insurance Co., Ltd. in 1893. Thanks to the support of its

stakeholders, Taiyo Life celebrated its 120th anniversary in May 2013.

Over the past 120 years, Taiyo Life has been steadily taking initiatives and transforming itself in

response to changes in society. As part of these efforts, Taiyo Life started implementing paperless and

cashless contract procedures in March 2012.

All corporate officers and employees of Taiyo Life will make a concerted effort to fulfill the company’s

commitment to delivering peace of mind to people.


Former head office building com-

pleted in 1930 (Nihonbashi, Tokyo)

110th Anniversary

Ten Years Since its Reorganization and the Launch of OTC Sales at Banks

Daido Life was born in 1902 through the merger of three life insurance companies and celebrated its

110th anniversary in July 2012. Kajimaya (Hirooka family), a prominent merchant in Osaka during the

Edo period (1603-1868), laid the foundation of Daido Life.

In the 1970s, Daido Life made a major shift in its marketing strategy to focus on term life insurance, and

established a distinctive business model targeting the corporate market through tie-ups with various groups.

Staying true to the founding corporate mottos of “Customer-oriented Service” and “Stable Manage-

ment,” Daido Life has continuously embraced challenges in step with changes in the times. Looking

ahead, Daido Life will continue to work on bringing the greatest peace of mind and the utmost satisfac-

tion to its customers.

T&D Financial Life, formerly Tokyo Life Insurance Company, joined the T&D Life Group in October 2001 as a strategic

company focused on OTC sales at financial institutions. In October 2002, the company began OTC sales at banks.

During the four years following its reorganization, T&D Financial Life ran its business using both the sales repre-

sentative channel and the OTC sales channel at financial institutions. In September 2005, however, the company

transferred the sales representative channel to Taiyo Life and Daido Life, and made a new start as a company

specializing in OTC sales at financial institutions and other agents.

Playing a key role as a strategic company in the T&D Life Group focused on OTC sales at financial institutions

and other agents, T&D Financial Life will further strengthen its business models.



Kajimaya (Hirooka head family house)

located near Tosabori River in Osaka

A poster announcing

the operational start of

T&D Financial Life


The Group recorded solid results in fiscal 2012 in terms of both sales performance

and earnings. The aim going forward is to continue growing corporate value by

reinforcing the Group’s robust financial base and working to increase the profitability

of the core life insurance business.

For details, please refer to the Business Overview and the separate Market Consistent Embedded Value Report 2013.

The aggregate new policy amount of the three life insurance companies

Ordinary profit Group MCEV

The aggregate policy amount in force of the three life insurance companies

Net income Value of new business

¥59,996.5 billion ¥63.7 billion ¥61.6 billion

2.1% increase ¥36.9 billion increase ¥6.6 billion decrease

¥7,158.9 billion ¥151.6 billion ¥1,664.4 billion

8.0% increase ¥30.7 billion increase ¥121.3 billion increase

SALES RESULTS EARNINGS EMBEDDED VALUE (EV)

Fiscal 2012 Management Review


Policy Results1

For fiscal 2012, the aggregate new policy amount for the Group’s three life insurance companies increased 8.0% year on year to ¥7,158.9

billion. The surrender and lapse amount declined 4.6% year on year to ¥4,071.3 billion. Consequently, as of March 31, 2013, the policy

amount in force was ¥59,996.5 billion, a 2.1% year-on-year increase.1. Includes individual insurance and individual annuities, as well as Daido Life’s J-type product.

The new policy amount increased 2.1% at Taiyo Life, 8.9% at Daido Life, and 267.9% at T&D Financial Life.

At Taiyo Life, the total new policy amount for individual insurance and individual annuities increased by 2.1% from the previous fiscal year, due to strong OTC sales at banks.

The surrender and lapse rate improved 0.23 of a percentage point chiefly due to continuing efforts to improve the quality of the company’s underwriting policy, reaching the lowest level in the past 10 years. As a result, the policy amount in force surpassed ¥21 trillion. This was a record level for the fourth straight year. In fiscal 2013, Taiyo Life aims to achieve a sustained increase in the policy amount in force, by continuing to deliver high-quality products and services. To this end, Taiyo Life will steadily refine Hoken Kumikyoku Best in line with customer needs.

At Daido Life, the “comprehensive new policy amount”—new policy amount including the insured amount of the company’s core J-type prod-

uct (non-participating insurance for serious diseases)—increased by 8.9% over the previous fiscal year. The surrender and lapse rate improved 0.55 of a percentage point year on year, reaching its lowest-ever level in the past

10 years. In fiscal 2013, Daido Life will continue stepping up the integrated promotion of core products, namely partner-specific products based on tie-ups in the SME market, and the J-type product. Together with these core products, Daido Life will provide the new M-type product (medical insurance (rider)) to deliver a full range of protection, with the aim of attain-ing stable and sustainable growth.

T&D Financial Life’s new policy amount rose 267.9% year on year atop strong sales of the company’s core product Shougai Premium Japan [non-participating whole life insurance (accumulation rate-selective type I)] and whole life insurance which focuses on inheritance planning needs [non-participating whole life insurance (increasing death benefit type I)]. In fiscal 2013, T&D Financial Life will continue its efforts to diversify its products and sales channels through a multi-track approach. Measures will include enhancing its product lineup incorporating customer needs and increasing the number of financial institutions and insurance shop agents. In doing so, T&D Financial Life seeks to increase the new policy amount and the policy amount in force, with the aim of enhancing its corporate value.

n Taiyo Life ¥2,813.2 ¥2,911.9 ¥2,974.3 ¥19.27 ¥20.23 ¥21.02 6.25 6.34 6.11

n Daido Life 3,607.0 3,666.7 3,992.5 36.75 36.55 36.93 8.75 8.04 7.49

n T&D Financial Life 21.7 52.2 192.0 2.10 1.98 2.04 4.38 4.39 4.86

Total ¥6,441.9 ¥6,630.9 ¥7,158.9 Total ¥58.13 ¥58.78 ¥59.99

¥ billions

FY 2013 forecasts YoY change FY 2012 results FY 2011 results

New Policy Amount ¥ 7,140 (0.3)% ¥ 7,158.9 ¥ 6,630.9

Taiyo Life 3,040 2.2% 2,974.3 2,911.9

Daido Life 3,830 (4.1)% 3,992.5 3,666.7

T&D Financial Life 270 40.6% 192.0 52.2

Policy Amount in Force 60,840 1.4% 59,996.5 58,780.1

Taiyo Life 21,830 3.8% 21,023.2 20,234.1

Daido Life 37,110 0.5% 36,933.2 36,557.3

T&D Financial Life 1,900 (6.9)% 2,040.0 1,988.6

Surrender and Lapse Rate — — — —

Taiyo Life 5.90% — 6.11% 6.34%

Daido Life 7.50% — 7.49% 8.04%

T&D Financial Life 3.50% — 4.86% 4.39%

Fiscal 2013 Policy Results Forecasts



Surrender and Lapse Rate%

8,000

6,000

4,000

2,000

0 11/3 12/3 13/3

80

60

40

20

0 11/3 12/3 13/3

12

9

6

3

0 11/3 12/3 13/3


EARNINGSIn fiscal 2012, ordinary profit rose due to an increase in net investment income. Net income increased sharply to a new record, partly due to

the absence of the negative impact of the reversal of deferred income tax assets accompanying lower corporate tax rates, which was

recorded in the previous fiscal year.

Ordinary Profit/Net Income (Consolidated)Ordinary profit increased by ¥30.7 billion to ¥151.6 billion, mainly due to increased net investment income supported by higher interest, dividends and income from real estate for rent. In terms of extraordinary losses, a provision of ¥24.8 billion was recorded for a provision for reserve for price fluctuations including additional internal reserves in excess of legal require-ments of ¥8.7 billion at Daido Life, and ¥12.0 billion at Taiyo Life. Reflecting these factors, net income rose by ¥36.9 billion to ¥63.7 billion. Excluding one-time factors such as the reversal of reserve for outstanding claims due to the effect of the Great East Japan Earthquake and the impact of lower corporate tax rates recorded in the previous fiscal year, net income increased ¥18.6 billion year on year.

Core ProfitThe core profit for the Group’s three life insurance companies increased ¥37.5 billion year on year to ¥182.4 billion, despite the absence of the ¥8.3 billion impact of the reversal of reserve for outstanding claims due to the

effects of the Great East Japan Earthquake, which was recorded in the previous fiscal year. One of the main contributing factors was a ¥21.8 billion increase in interest, dividends and income from real estate for rent. Another factor was a ¥22.3 billion increase in the reversal of the policy reserve relating to minimum guarantee risks at T&D Financial Life, which was booked as core profit, due to a rise in stock prices in Japan and overseas.

In addition, the negative spread of the three life insurance companies improved by ¥22.1 billion to a positive spread of ¥1.8 billion.

Fiscal 2013 ForecastsOrdinary revenues are projected to fall by around ¥300 billion to about ¥2,120 billion, mainly based on an anticipated decline in income from insurance premiums from OTC sales at banks. Ordinary profit is projected to increase by around ¥13 billion, to about ¥165 billion, mainly based on an expected decline in investment expenses, as well as a reversal of the policy reserve relating to minimum guarantee risks at T&D Financial Life. Net income is expected to increase by approximately ¥2 billion to ¥66 billion.

n Taiyo Life ¥ 50.4 ¥ 57.5 ¥ 67.2

n Daido Life 62.1 82.4 84.6

n T&D Financial Life (4.8) 4.8 30.6

Total ¥107.7 ¥144.9 ¥182.4

¥94.9 ¥120.8 ¥151.6 ¥23.8 ¥26.7 ¥63.7

¥ billions

FY 2013 forecasts YoY change FY 2012 results FY 2011 results

Ordinary revenues ¥2,120 (12.4)% ¥2,418.9 ¥2,104.1

Income from insurance premiums 1,740 (10.3)% 1,939.6 1,690.3

Ordinary profit 165 8.8% 151.6 120.8

Core profit 157 (13.9)% 182.4 144.9

Net income 66 3.6% 63.7 26.7

The economic assumptions for the earnings forecasts are as follows:Nikkei Stock Average: ¥11,138.66Foreign currency: (U.S.$/¥) ¥91.03

(Euro/¥) ¥123.3910-year JGB yield: 0.754%10-year U.S. treasury bond yield: 1.9849%

Core Profit (Loss)¥ billions

Ordinary Profit¥ billions

Net Income¥ billions

1 Ordinary revenues, ordinary profit, and net income are T&D Holdings’ consolidated figures. Income from insurance premiums and core profit are the simple sum of the three life insurance companies.

200

150

100

50

0 11/3 12/3 13/3

80

60

40

20

0 11/3 12/3 13/3

200

150

100

50

11/3 12/3 13/3

0


Fiscal 2013 Forecasts1


InvestmentUnder the Group investment policy, the T&D Life Group ensured stable income by investing mainly in yen-denominated income assets, while

also working to increase investment income by investing flexibly according to market movements within each life insurance company’s risk

tolerance.

Group Investment PolicyUnder the principle of securing assumed interest yield and giving careful consideration to attribution of liability and risk tolerance, the Group invest-ment policy is to increase investment returns stably in compliance with the risk taking policy set as the Group’s common policy. To ensure stable income, we invest mainly in yen-denominated income assets, while also investing in such risk assets as domestic and foreign stocks and foreign bonds within each life insurance company’s risk tolerance, taking into consideration risk and returns.

Net Exposure to Domestic Stocks and Foreign CurrencyThe net exposure to domestic stocks and foreign currencies of Taiyo Life and Daido Life remains at an appropriate level due to well-planned initia-tives to reduce risk assets since the global financial crisis. As of March 31,

2013, net exposure of general account assets to domestic stocks was 5.3% for Taiyo Life and 4.7% for Daido Life. Foreign currency exposure after taking into account general account exchange hedging was 7.2% for Taiyo Life and 3.1% for Daido Life.

Gains (Losses) on Sales of Securities and Devaluation Losses on SecuritiesThe T&D Life Group recorded net gains on sales of securities and devaluation losses on securities of ¥13.1 billion, an increase of ¥8.6 billion year on year.

Net Unrealized Gains (Losses) on SecuritiesNet unrealized gains on securities were ¥834.9 billion, up ¥448.5 billion from the previous fiscal year. This increase was mainly due to lower interest rates in Japan and overseas, rising stock prices and the yen’s depreciation.

¥ billions

Three companies total Taiyo Life Daido Life

2013 2012 Change 2013 2012 Change 2013 2012 Change

JGBs, other bonds ¥14.5 ¥ 5.1 ¥ 9.4 ¥15.6 ¥ 4.8 ¥ 10.8 ¥(1.0) ¥ 0.2 ¥(1.3)

Stocks, etc. (4.7) 2.2 (6.9) (3.7) 10.7 (14.5) (4.0) (8.5) 4.5

Foreign securities 6.8 (0.7) 7.6 4.7 4.8 (0.0) 2.0 (5.6) 7.6

Others (3.4) (2.0) (1.4) — — — (3.4) (2.0) (1.4)

Total ¥13.1 ¥ 4.5 ¥ 8.6 ¥16.7 ¥20.4 ¥ (3.7) ¥(6.5) ¥(15.8) ¥ 9.3

Taiyo Life Daido Life

Net exposure to domestic stocks2 3.4% → 5.3% 5.2% → 4.7%

Foreign currency exposure3 3.1% → 7.2% 3.0% → 3.1%

¥ billions

Three companies total Taiyo Life Daido Life

2013 2012 Change 2013 2012 Change 2013 2012 Change

Domestic bonds ¥459.2 ¥230.5 ¥228.7 ¥253.0 ¥136.3 ¥116.7 ¥175.3 ¥ 83.0 ¥ 92.2

Domestic stocks 199.7 98.1 101.6 133.8 64.9 68.8 65.9 33.1 32.7

Foreign securities 148.2 45.8 102.4 126.0 41.2 84.7 22.1 4.5 17.6

Other securities 9.9 (1.3) 11.3 5.7 0.5 5.1 4.2 (1.9) 6.1

Others 17.7 13.3 4.3 8.0 6.4 1.5 9.5 6.9 2.6

Total ¥834.9 ¥386.4 ¥448.5 ¥526.7 ¥249.6 ¥277.0 ¥277.2 ¥125.6 ¥151.5

Net Exposure1 (Fiscal 2011 → Fiscal 2012)

Gains (Losses) on Sales of Securities and Devaluation Losses on Securities

Net Unrealized Gains (Losses) on Securities4

1 Each company calculates its exposure percentages using its own method.2 Net exposure to domestic stocks includes stock futures, stock investment trusts, and stocks, etc., in monetary trusts, etc.3 Foreign currency exposure reflects foreign currency hedges, etc.

4 Relates to securities with fair values.


Capital

Embedded Value (EV)

Financial SoundnessThe solvency margin ratios of the three life insurance companies as of March 31, 2013 were 823.4% for Taiyo Life, 1,043.2% for Daido Life, and 648.4% for T&D Financial Life. The T&D Life Group thus has sufficient financial soundness.

In order to further reinforce financial soundness in preparation for further strengthening of regulations that are expected going forward, we will continue to accumulate internal reserves. For fiscal 2012, Taiyo Life set aside ¥12.0 billion and Daido Life set aside ¥8.7 billion as additional internal reserves in excess of legal requirements related to provision for reserve for price fluctua-tions. For fiscal 2013, Taiyo Life expects to set aside ¥7.5 billion and Daido Life expects to set aside ¥12.0 billion as additional internal reserves in excess of legal requirements related to provision for reserve for price fluctuations.

The Group MCEV as of March 31, 2013 stood at ¥1,664.4 billion, an increase of ¥121.3 billion from the value as of March 31, 2012. This mainly reflected an increase in adjusted net worth due to an increase in the market value of securities, despite a decrease in the value of in-force business caused largely by a decrease in the level of interest rates.

In addition, the value of new business was ¥61.6 billion, down ¥6.6 billion year on year mainly due to lower interest rates.

Returns to ShareholdersIn deciding the payout ratio, the Group first takes into consideration main-taining sufficient equity capital to ensure the financial soundness of its three life insurance companies. Over the medium- and long-term, T&D Holdings aims to stably return profits to shareholders based on a total return to shareholders ratio of approximately 30% of adjusted net income, which is net income plus additional internal reserves in excess of legal requirements related to reserves for contingency and price fluctuations, after taxes.

Adjusted net income for fiscal 2012 was ¥78.0 billion. In fiscal 2012, T&D Holdings provided a total return to shareholders of ¥18.1 billion, comprising a cash dividend of ¥22.50 per share and a share buyback involving the repurchase of 2.1 million shares at a total cost of approximately ¥3.0 billion.

T&D Holdings also plans to pay a dividend of ¥22.50 per share for fiscal 2013.

From March 31, 2013, the Group has transitioned from disclosure of EEV to MCEV, with the view to enhancing EV disclosure. Risk assessment for MCEV employs the same internal model as risk management based on an economic value basis under ERM. Accordingly, the transition to MCEV will also increase consistency with risk management based on economic value.

The T&D Life Group will continue to position EV as a key indicator of corpo-rate value, as it endeavors to increase EV in a stable and sustainable manner.

2013 2012 Change

T&D Holdings’ Consolidated 943.8% 810.6% 133.2P

Taiyo Life 823.4% 747.3% 76.1P

Daido Life 1,043.2% 851.9% 191.3P

T&D Financial Life 648.4% 553.7% 94.7P

Years ended March 31 2010 2011 2012 20132

Annual dividend per share (¥) ¥ 45 ¥ 45 ¥22.501 ¥22.50

Total dividends (¥ billions) 15.3 15.3 15.1 15.1

Adjusted net income (¥ billions) 31.9 36.5 35.0 78.0

Net income (loss) (¥ billions) 24.2 23.8 26.7 63.7

Excess amount of reserve for contingency and price fluctuations, after taxes (¥ billions) 7.6 12.6 8.3 14.3

Solvency Margin Ratio

Annual Shareholders’ Dividends and Adjusted Net Income

n Adjusted net worth ¥1,036.6 ¥1,435.8

n Value of in-force business 480.0 202.2

MCEV 1,516.7 1,638.0

n Value of new business 68.3 61.6

Net asset value of non-covered business 26.3 26.4

Group MCEV 1,543.0 1,664.4

Embedded Value/Value of New Business¥ billions

Movement Analysis in MCEV from March 31, 2012¥ billions

1 The Company conducted a 2-for-1 stock split of common stock on October 1, 2011.2 The Company conducted a share buyback (at a total cost of approximately ¥3.0 billion) in addition to cash dividend payout.

2,000

1,500

1,000

500

0 12/3 13/3

MCEV as of March 31, 2012

1,516.7

Capital movements

(15.1)

+61.6 New

business value

Expected existing business

contribution (reference rate)

+23.8

+49.2 Expected

existing business contribution (in excess of

reference rate)

Experience variances

(10.4)

+41.9 Assumption

changes

Economic variances

(18.7)

(10.9) Other non-operating variances

MCEV as of March 31, 2013

1,638.0



An Interview with the President

Full Implementation of ERM

Growth Strategy

page 18

page 19

page 20

page 20

page 24

page 22

page 22

page 23

page 21

What benefits do you expect from introducing ERM?

What is the current status of your capital adequacy?

What progress have you made in reducing EV volatility?

Could you please go over your capital efficiency indicators (profitability)?

Could you please share your per-spectives on the T&D Life Group’s growth prospects?

What is the growth potential of the Japanese life insurance market?

• Driving further growth in the life insurance business

• Initiatives in new businesses

Are there any changes in your shareholder return policy following the full implementation of ERM?

Kenji NakagomeRepresentative Director and President

T&D HOLDINGS, INC. ANNuAL REPoRT 2013 17


What benefits do you expect from introducing ERM?

ERM Framework

The T&D Group positions Enterprise Risk Management

(ERM) as a management framework to grow corporate

value stably and sustainably through integrated man-

agement of capital, profit, and risk.

As the risks surrounding insurance companies

become increasingly diverse and complex, the T&D

Life Group intends to pursue capital efficiency (profit-

ability) while ensuring capital adequacy (financial

soundness and stability) through integrated risk man-

agement, with the aim of increasing corporate value


ERM is a fresh approach to risk management.

Rather than avoiding or reducing risk in the traditional

passive manner, ERM is a strategic risk management

approach based on the active targeting of perfor-

mance indicators, namely, raising corporate value and

maximizing income.

The introduction of ERM will enable us to quantify

various risks so that we can make a rational assess-

ment concerning the magnitude of the risks assumed

by the Group relative to the financial strength of the

Group. In addition to capital adequacy, ERM aids

rational decision-making in the area of capital effi-

ciency (profitability) by providing new decision-making

criteria for selecting acceptable risks. ERM is designed

to drive stable and sustainable growth in corporate

value through the integrated management of capital,

profit, and risk. To achieve this goal, we will enhance

and strengthen our management structure as we build

a powerful framework that is resilient to changes in

market conditions by taking on risk in a proper and

efficient manner.

Manage business by enhancing “capital

efficiency” while ensuring “capital adequacy”

AimIntegrated capital, profit, and risk management based on economic value to grow corporate value stably and sustainably

Capital adequacy (financial soundness and stability)• Maintain a comfortable capital level

• Appropriate risk management (control EV volatility)

Capital efficiency (profitability)• Enhance ROEV

• Appropriate capital management

Stable and sustainable

growth of corporate value

Capital adequacy

EV stability

EV growth


ESR

Our capital adequacy has been increasing as a result

of the beneficial impact of well-planned initiatives to

reduce risks.

In regard to capital adequacy, we have made two

major changes. First, we changed the capital ade-

quacy indicator in our disclosures from the economic

capital (EC) ratio to the Economic Solvency Ratio

(ESR). Second, we began disclosing the surplus and

economic capital. Although the Group previously

employed the EC ratio as a capital adequacy indicator,

the Group has decided to disclose ESR, which indi-

cates the economic value-based solvency ratio.

ESR is the inverse of the conventional EC ratio,

with the numerator and denominator reversed. ESR is

calculated by dividing the surplus by economic capital:

ESR = surplus / EC.

As shown in the diagram, the Group had an ESR

of 150% as of March 31, 2013, indicating a sufficient

capital buffer exceeding the risk amount. Going for-

ward, the Group’s basic policy is to consistently

maintain a comfortable capital adequacy (“A” rating

level or above).

1,524.3

1,013.6

150%

2011/03 2011/06 2011/09 2011/12 2012/03 2012/06 2012/09 2012/12 2013/03

ESR (Surplus/EC)

Comfortable capital level(Consistently maintain an “A” rating level or above)

Current internal model

Equivalent to “A” rating

(VaR: 99.93%)

High

Low

ESR

“BBB” rating

equivalent (100%)

Equivalent to “BBB” rating(VaR: 99.5%) Risk amount > Capital

Risk amount < Capital

Deficient capital

Adequate Capital

Maintain minimum capital level ¥ billions

Maintain minimum level

of financial soundness

Surplus (economic value-based net

assets)

EC (Economic value-based capital =

risk amount)

Comfortable capital level

Measures to ensure capital adequacyESR: “A” rating level and above• Maintain capital at a comfortable level through ERMESR: Above “BBB” rating level and under “A” rating level• Attain a comfortable capital level through well-planned risk reduc-

tion and steady surplus accumulation

What is the current status of your capital adequacy?

(100%)



Reducing EV volatility is one aspect of our efforts at

the T&D Life Group to enhance EV stability. In specific

terms, we have lengthened the duration of bonds to

reduce duration mismatch between assets and liabili-

ties based on a plan. We have also reduced our expo-

sure to equities and other risk assets. These measures

have lowered EV sensitivities to fluctuations in interest

rates, stock prices, and real estate prices.

As of March 31, 2013, we believe that the T&D Life

Group had made steady progress on reducing EV sensi-

tivities to fluctuations in interest rates, stock prices, and

real estate prices through well-planned risk reduction.

Trend in EV Sensitivities

EV Sensitivities

Market Indices2007/03 2008/03 2009/03 2010/03 2011/03 2012/03 2013/03

Nikkei Average (Yen) 17,287.65 12,525.54 8,109.53 11,089.94 9,775.10 10,083.56 12,397.91

10-Year JGB yield (%) 1.659% 1.284% 1.353% 1.400% 1.260% 0.989% 0.551%

–9.8% –9.0%–12.6%

–9.7%

–25.8%

–9.5%–11.6%

–6.6%

–10.1%

–5.7%

–9.8%

–5.0%

–9.6%

–5.1%

0%

–10.0%

–20.0%

–30.0% 2007/03 2008/03 2009/03 2010/03 2011/03 2012/03 2013/03

50 basis point decrease in risk-free rate 10% decrease in equity and real estate values

What progress have you made in reducing EV volatility?

The T&D Life Group positions ROEV as a key perfor-

mance indicator for capital efficiency. The Group is

targeting ROEV of 7.5% and above as its medium-

to long-term profit target.

Over the past few years, the Group has concen-

trated its efforts primarily on enhancing capital ade-

quacy. Consequently, we have achieved a measure of

success in such areas as improving the ESR level and

reducing EV volatility.

Going forward, while ensuring capital adequacy, we

aim to maintain and further enhance our capital effi-

ciency, with the view to increasing our corporate value


* Annual increase in MCEV (less capital movements)/ Annual average of MCEV

ROEV* 7.5% and above

Could you please go over your capital efficiency indicators (profitability)?


There has been no change in our policy of steadily

returning profit to shareholders based on a total return

to shareholders ratio of approximately 30% of adjusted

net income over the medium- and long-term.

For example, we will not decide to increase share-

holder returns simply because ESR reaches a certain

threshold in percentage terms. We will consider share-

holder returns as part of our capital policy, taking into

account a comprehensive range of factors, such as

the capital adequacy level, stock price, competitive

landscape and future outlook.

In fiscal 2012, we returned profit to shareholders by

combining cash dividends with a stock buyback.

Looking ahead, we plan to consider the total return to

shareholders based on adjusted net income in terms

of a combination of stable cash dividends and flexible

stock buybacks based on the stock price level and

other factors.

1 Net income plus internal reserves in excess of legal requirements, after taxes

2 Shareholders’ dividend per share for the year ended March 31, 2013 was ¥22.50

Adjusted net income1

Total return to shareholders

Actual return to shareholders (fiscal 2012)

1) Adjusted net income

(¥78.0 billion)

2) Total return to shareholders (¥18.1 billion)

Net income (¥63.7 billion)

Cash dividend2 (¥15.1 billion)

Internal reserves in excess of legal require-

ments, after taxes (¥14.3 billion)

Share buyback (¥3.0 billion)

Are there any changes in your shareholder return policy following the full implementation of ERM?



Considering the challenging business environment

since the global financial crisis, management issues on

the risk management front and other factors, the T&D

Life Group has pressed ahead with developing and

implementing an ERM framework and conducting

Group management with an emphasis on ensuring

financial soundness.

In regard to financial soundness, the T&D Life

Group has made progress on reducing EV volatility

through risk reduction and other measures undertaken

to date. The upturn in financial market conditions has

also led to a dramatic improvement in the Group’s

financial soundness indicators. Against this backdrop,

we believe that the T&D Life Group’s business stage

has shifted from giving top priority to ensuring financial

soundness and restoring earnings, to one where we

must pursue growth through new initiatives, while

maintaining our financial soundness. Besides driving

further growth in our core life insurance business, we

believe that initiatives in new businesses have become

increasingly important.

Driving Further Growth in the Life Insurance BusinessThe T&D Life Group is implementing a unique inte-

grated business model where each of its three life

insurance companies is focused on different markets,

sales channels, and products. Specifically, Taiyo Life

focuses on the household market, while Daido Life

specializes in serving the SME market, and T&D Finan-

cial Life specializes in OTC sales at financial institutions

and other agents. This sales strategy is quite distinct

from that of other life insurance companies.

As business performance languishes across the life

insurance industry as a whole, the T&D Life Group has

consistently delivered relatively steady business

results. Looking at its business performance for the

past 10 years, the T&D Life Group has grown the

policy amount in force, even as this measure has

decreased sharply for the industry as a whole.

We are confident that our strategy of clear differen-

tiation from the major life insurance companies will

continue to enhance the T&D Life Group’s market

presence. The T&D Life Group will endeavor to

achieve stable and sustainable growth by having its

three life insurance companies, namely Taiyo Life,

Daido Life and T&D Financial Life, maintain and rein-

force their unique business models. (Please refer to

pages 26-37 for details of the strategies pursued by

each of the three life insurance companies.)

Could you please share your perspectives on the T&D Life Group’s growth prospects?


Initiatives in New BusinessesOur growth strategy for the T&D Life Group is focused

mainly on supporting organic growth by Taiyo Life,

Daido Life and T&D Financial Life. On the other hand,

by leveraging the advantages of the Group’s structure

as a holding company, we also intend to implement

measures to realize external growth by pressing ahead

with alliances, mergers and acquisitions.

In regard to initiatives that will complement and

spur growth in the core businesses of the Group’s

three life insurance companies, and those that will help

to diversify sources of profit, T&D Holdings will work

closely with each life insurance company to conduct

initiatives such as executing strategic investments from

a Group-wide perspective.

We are also investing Group resources to develop

the Group’s existing businesses such as asset man-

agement and pet insurance. (Please refer to pages 38

- 40 for details of the asset management and pet

insurance businesses.)

The Business Models of the T&D Life Group’s Three Life Insurance Companies

Market

Sales channel

Products

HouseholdsSmall and medium enterprises (SMEs)

OTC sales at financial institutions and other

agents

Taiyo Life Daido Life T&D Financial Life


In-house sales represen-tatives, agents (tax accountants, etc.)

Banks and securities firms, insurance shop

agents, etc.

Comprehensive cover-age including death

protection and medical/nursing care products

Term life insurance, insurance for serious

diseases, etc.

Single premium products and level premium

products



There is a commonly held view that life insurance in

Japan is a mature industry with few prospects of

growth, given that Japan’s population is falling due to

aging with a low birthrate, and a high percentage of

households that already have life insurance. It is true

that the life insurance market in Japan has shrunk

drastically over the past 10 years as measured by the

total of policy amount in force of individual life insur-

ance and annuities, as well as the new policy amount.

Yet, I believe that it would be rash to conclude that

there is no longer any room for Japan’s life insurance

market to grow.

In Japan, although demand for large death protec-

tion coverage for heads of households (protection for

bereaved families) is decreasing due to low birthrates,

demand is growing for post-retirement wealth accu-

mulation products and Third Sector products, such as

medical care and nursing care insurance, as the aging

of society progresses. Furthermore, new sales chan-

nels are expanding such as OTC sales at banks and

insurance shops. Some life insurance companies are

growing their business performance by capitalizing on

these changes in market needs and sales channels.

And some foreign-based life insurance companies

conducting business globally see the Japanese life

insurance market as an attractive growth market. The

T&D Life Group also shares this view.

A comparison of the Japanese life insurance

market with the life insurance markets of overseas

countries highlights the Japanese market’s appeal.

First, in terms of scale, the Japanese life insurance

market is second only to that of the U.S. based on

premiums written. Second, Japan is also one of the

world’s most profitable life insurance markets because

of the high proportion of protection products, high

average life expectancy and health-conscious popula-

tion. Third, there is good reason to believe the private

life insurance sector will play an even larger role in the

future in supplementing Japan’s social security

system. The life insurance market in Japan is therefore

rare in the world in combining scale, profitability, and

potential for future growth.

What is the growth potential of the Japanese life insurance market?

n Male n FemaleSource: Ministry of Health, Labour and Welfare, The 21st Life Tables

(Complete Life Table)

Source: WHO, “World Health Statistics 2012”

Japanese Average Life Expectancy

Age

86.30

79.55

90

80

70

60 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

(Reference) Life Expectancy in Major Countries Age

Male Female

Italy 79 84

France 78 85

Germany 78 83

U.K. 78 82

South Korea 77 83

U.S.A. 76 81

China 72 76

India 63 66





T&D Asset Management Co., Ltd.

Pet & Family Small-amount Short-term Insurance Company

page 26

page 30

page 34

page 38

page 40

Business Overview



Focusing on life insurance sales in the household market, we

will provide leading-edge products and services by leveraging

our superior sales capabilities, aiming to expand our customer

base and increase the policy amount in force.

PERFORMANCE AND OPERATIONAL REVIEW

In fiscal 2012, ended March 31, 2013,

the new policy amount (individual insur-

ance and individual annuities) increased

2.1% year on year, to ¥2,974.3 billion.

The surrender and lapse rate decreased

by 0.23 of a percentage point to 6.11%.

The policy amount in force surpassed

¥21 trillion for the first time, reaching

¥21,023.2 billion, up 3.9% from the previ-

ous fiscal year-end. This was a record

level for the fourth straight year. As of

March 31, 2013, MCEV was ¥637.0

billion, up ¥81.6 billion year on year.

In fiscal 2012, Taiyo Life implemented

the following measures on the product

and sales fronts.

First, on the product front, Taiyo Life

continued working to enhance its main-

stay product Hoken Kumikyoku Best, in

order to provide customers with lifelong

high-quality support and services accord-

ing to the changing stages of their lives.

In July 2012, Taiyo Life extended the

permissible period for reviewing insurance

benefit plans from two years before poli-

cies mature to three months, while

expanding insurance categories eligible

for review. As a result, Taiyo Life can now

provide insurance review proposals to

customers seeking to review insurance

benefit plans whose needs it was previ-

ously unable to meet.

Furthermore, in April 2013, Taiyo Life

revised Hoken Kumikyoku Best by

expanding the scope of hospitalization

and surgery coverage. As a result, Hoken

Kumikyoku Best now provides upgraded

coverage, including protection for same-

day hospital care and an expanded

scope of surgery coverage.

Next, on the sales front, Taiyo Life

strove to enhance the training and edu-

cational framework for sales representa-

tives. Specifically, Taiyo Life increased the

number of personnel responsible for

sales force training, while revamping the

training system for new sales representa-

tives. By increasing training hours and

revising the training curriculum, Taiyo Life

sought to improve the quality and

amount of training for sales representa-

tives. At the same time, to enhance the

consulting skills of sales representatives,

Taiyo Life is also encouraging sales rep-

resentatives to gain financial planning

qualifications. A total of 1,188 people

gained the “FP” qualification in fiscal

2012, bringing the total number of quali-

fied people to 2,448.

FUNDAMENTAL STRATEGYEstablished in 1893, Taiyo Life celebrated

its 120th anniversary in May 2013. The

company rebuilt its business in the post-

war period as a mutual insurance com-

pany. From the 1950s, the company

Management TargetsFiscal 2013

n Policy amount in force

¥21,830 billion

n New policy amount

¥3,040 billion

Fundamental Strategyn Promote unique marketing methods

utilizing a wide customer base of women

and middle-aged and elderly people

n Offer comprehensive coverage that meets

customer needs for death protection as

well as medical and nursing care insurance

through the in-house sales representative

channel in the household market

n Win new customers by increasing the

number of sales representatives and

enhancing productivity

Business Model

Business Overview

Katsuhide TanakaRepresentative Director and President

Market

Sales channel

Products

Households


Comprehensive coverage centered on death protection and medical/

nursing care products


Overview of Mainstay Products for Taiyo Life’s Hoken Kumikyoku Best

All protection treated as basic policy. Customers can flexibly add or drop the protection parts to meet their needs

n Flexible custom-made design to match customer needsn Flexible revision according to changing needs

adopted a unique marketing strategy

focused on high volume sales of short-

term endowment insurance—a highly

savings-oriented product—in the house-

hold market to housewives through door-

to-door sales activities. As a result, Taiyo

Life has built a unique customer base

centered on middle-aged and elderly

people as well as women, with 7.02

million policies in force.

A combination of prolonged low inter-

est rates, declining birthrates, increasing

life expectancy, and deregulation pro-

duced major changes in the operating

environment of the Japanese life insur-

ance industry from the mid-1990s. Taiyo

Life quickly adapted to these changes.

Responding to the changing needs of

customers, the company shifted its sales

emphasis from savings-oriented products

to protection-oriented products, such as

death protection as well as medical and

nursing care insurance. Taiyo Life contin-

ues to emphasize the provision of prod-

ucts to the household market through

in-house sales representatives, focusing

mainly on middle-aged and elderly people

as well as women.

Taiyo Life’s basic marketing strategy is

to expand sales of comprehensive cover-

age including death protection and medi-

cal and nursing care products in the

household market—a strategy quite

different from that of other large domestic

life insurers. Whereas other major life

insurers have pursued a strategy of

extending their marketing networks

nationwide, Taiyo Life is conducting sales

activities closely tied to metropolitan

areas and major regional cities with high

population densities. This enables the

company to carry out home-visit market-

ing activities with efficiency and cultivate

the household market in greater depth.

Moreover, in contrast to most large

Japanese life insurers, whose core sales

target is the worksite market, Taiyo Life

uses its extensive customer base to

employ a sales consulting approach in

which sales representatives visit customers

at home and can take more time to dis-

cuss the insurance needs of the customer.

Death protection

Lifetime death protection

Additional death protection for limited term

Medical protection

Hospitalization coverage

Surgery coverage

Protection for three major diseases and nursing care

Coverage for three major diseases

Nursing care protection

Future life events

Living benefits/Savings-type insurance

Individual annuities

New Policy Amount/Policy Amount in Force/Surrender and Lapse Amount/Surrender and Lapse Rate¥ trillions %

In-house Sales Representatives

People

n New Policy Amount (left scale) n Policy Amount in Force (left scale)

n Surrender and Lapse Amount (left scale) n Surrender and Lapse Rate (right scale)

n Newly registered n In-house sales representatives n Deregistered

n Introduction of new protection (nursing care protection, surgery

coverage, hospitalization protection with lump-sum benefits)n More reasonably priced than existing products

0

25

5

10

20 9

15 8

10 7

5 6

17.35

2.011.24

2.44

18.11

1.112.81

19.27

1.132.91

20.23

1.22

7.25%

6.45% 6.25% 6.34%

2.97

21.02

1.23

6.11%

09/3 10/3 11/3 12/3 13/3 0

10,000

8,000

6,000

4,000

2,000

2,559

8,226

1,949

2,800

9,014

2,0072,563

9,102

2,475 2,333

8,886

2,548 2,691

8,856

2,721

09/3 10/3 11/3 12/3 13/3


Taiyo Life’s Sales Strategy

New Policyholders by Gender%, based on number of policies

FUTURE GROWTHLaunched in October 2008, Hoken Kumi-

kyoku Best differs from conventional

insurance plans in that it allows for com-

binations of individual insurance coverage

(basic policies) through Hoken Kumitate

Tokuyaku rider. This serves to boost the

freedom of insurance planning and revi-

sion, while also making products more

easily understood and more affordably

priced. In March 2010, Taiyo Life

launched Seikatsu Ohen Hoken (non-

participating income protection policy)

followed by Sogo Nenkin Relay Plan in

July 2010, which combines Seikatsu

Ohen Hoken with individual annuities,

making it a product that meets all post-

retirement needs and offers coverage

throughout one’s life. In March 2011,

Taiyo Life launched Seikatsu Ohen Hoken

(nursing care), a non-participating nursing

care income protection insurance policy,

expanding its lineup of nursing care pro-

tection products.

Launched in October 2008, Hoken

Kumikyoku Best uses a basic policy to

provide protection while offering the

freedom to tailor other aspects to cus-

tomer needs. Cumulative sales reached

over 6 million basic policies 4 years and

6 months after the launch of sales. This

product enables Taiyo Life to provide

many customers with lifelong high-qual-

ity, fine-tuned support and services as

their circumstances change. By continu-

ing to drive the evolution of Hoken

Kumikyoku Best in line with customer

needs, Taiyo Life will deliver high-quality

products and services to the household

market, with the aim of further expanding

the customer base and increasing the

policy amount in force.

In November 2011, with the aim of

offering high-quality products and ser-

vices to even more customers, Taiyo Life

began selling single premium fixed annu-

ity insurance through banks. Also Taiyo

Life launched juvenile insurance in

August 2012 and medical insurance in

April 2013 to expand its product range to

include installment premium policies in

these categories.

Source: Compiled by T&D Holdings based on Summary of Life Insurance Business in Japan (Fiscal 2012), Life Insurance Association of Japan

Nationwide marketing

HouseholdsTarget households starting with housewives

Corporate customers, government entities, and households (household heads)

Solid customer base: number of policies 7.02 million

In-house sales representatives, agents, etc.

Taiyo LifeOther major life insurance companies

Female l 65.0% l 49.5%

Male l 35.0% l 50.5%

Taiyo Life Industry Total

In-house sales reps

Direct home visits

Focused on metropolitan areas, major regional cities

n Flexibly designed products matched to the needs of customers such as for death protec-tion, and medical and nursing care protection

n Visit customers on a timely basis according to the life stage of policyholders based on customer data

Business Overview


Evolution of Hoken Kumikyoku Best

Enhancing Customer ServiceTo offer an improved service to custom-

ers, Taiyo Life implements paperless and

cashless contract procedures, while

conducting insurance consultations,

medical checks for underwriting and

other activities through web camera-

based videoconferencing functions. In

December 2012, Taiyo Life shifted to

paperless procedures for matured

endowment payments and annuity pay-

ments. This has enabled the in-house

sales representatives to perform the

necessary procedures to conclude insur-

ance policy contracts, process matured

endowment payments and complete

other tasks on a paperless, cashless

basis using mobile devices (touch-screen

notebook PCs). Through these initiatives,

Taiyo Life has simplified customer admin-

istration procedures, while enabling more

rapid acceptance of coverage.

By shortening the time needed to

complete the necessary customer admin-

istration procedures, the new system also

allows salespeople to spend more time

with the customer talking about issues or

answering questions.

Furthermore, Taiyo Life has started

operating customer service centers seven

days a week in order to enhance

customer convenience. These customer

service centers provide support by con-

sulting with customers and responding to

their inquiries.

In regard to the payment of insurance

claims and benefits, Taiyo Life provides

consulting services related to such pay-

ments through visits by sales representa-

tives to customers who have contacted

branches or customer service centers

about requests for payment of insurance

claims and benefits. These payments can

also be processed via the post.

Specifically, sales representatives con-

firm the customer’s policy details while

providing information and explanations

about the insurance protection that the

customer can claim and how to fill out

claim forms, in a courteous and straight-

forward manner. This allows Taiyo Life to

provide faster and more accurate pay-

ment of insurance claims and benefits.

Moreover, Payment Advisors have been

stationed at all branches to serve as con-

sultants on requests for payment of insur-

ance claims and benefits at each branch.

In addition, Taiyo Life is taking steps to

develop a framework for ensuring fast

and accurate payment of insurance

claims and benefits. To this end, Taiyo Life

has introduced a system that converts all

items necessary for claims examination,

as indicated on medical certificates

(excluding personal data), into digital data.

Transforming Taiyo Life Into a Provider of Coverage for the Whole Family

Taiyo Life is working to offer coverage for

the whole family by leveraging a customer

base in the household market, centered

on housewives, as a stepping-stone to

broaden its customers to include heads

of households and children. Generally, to

sell insurance to the head of the house-

hold in Japan, a sales agent goes to the

husband’s workplace. Taiyo Life, however,

works from the housewives’ point of view,

selecting the insurance product based on

the necessary protection for the family left

behind if something should happen to the

husband. By using this approach, Taiyo

Life wins the family’s understanding of the

necessity of insurance. Through this

process, we sell insurance that is opti-

mally designed for each customer based

on an analysis of the household’s insur-

ance coverage to determine where there

is insufficient protection, to provide cover-

age for the whole family.

Oct. 2008 Introduction of Hoken Kumikyoku Best

Jun. 2009 Launch of single premium endowment insurance

Oct. 2009 Start offering additional designated coverage

Mar. 2010 Launch of Seikatsu Ohen Hoken

Jul. 2010 Launch of Sogo Nenkin Relay Plan

Mar. 2011 Launch of Seikatsu Ohen Hoken (nursing care)

Apr. 2013 Product revisions related to medical coverage

Evolution

Introduction



Daido Life’s sales activities target the

SME market. Policies from the corporate

market (the total of collective policies for

individual insurance and individual annui-

ties as well as insurance for serious dis-

eases (J-type product) sold through

tie-up groups and group insurance poli-

cies) accounted for approximately 93.7%

of the company’s new policy amount in

fiscal 2012.

For fiscal 2012, the company’s new

policy amount for individual insurance and

individual annuities increased 5.0% year

on year to ¥3,556.0 billion. The surrender

and lapse amount declined 7.9% to

¥2,713.1 billion, which was less than the

new policy amount for the third year in a

row. The policy amount in force declined

0.1% to ¥36,157.9 billion.

In terms of “comprehensive results”

including the insured amount of J-type

product as one of the core products

(insurance for serious diseases), the

“comprehensive new policy amount” rose

8.9% to ¥3,992.5 billion. In contrast, the

“comprehensive surrender and lapse

amount” declined 7.3% to ¥2,738.4 billion

and the “comprehensive policy amount in

force” rose 1.0% to ¥36,933.2 billion.

MCEV amounted to ¥923.5 billion at

March 31, 2013, an increase of ¥27.0

billion. This mainly reflected an increase in

adjusted net worth due to higher net

unrealized gains on securities. Addition-

ally, although the value of in-force busi-

ness declined overall due to lower interest

Individual Term Life Insurance Market Shares by Policy Amount in Force% As of March 31, 2012

1 Daido 17.8%

2 Asahi 10.3%

3 Gibraltar 8.9%

4 Sony 7.3%

5 NKSJ Himawari 6.9%

6 Nippon 6.3%

7 Prudential 6.0%

8 Other 36.4%

1

2

3

456

7

8

Source: Life Insurance Association of Japan, 2012 Summary of Life Insurance Business in Japan

Note: Covers the 43 private-sector life insurance companies.

Business Overview

By strengthening its core business of protecting even more

small and medium enterprise (SME) owners from various risks,

Daido Life aims to increase corporate value stably and sustainably.

Tetsuhiro KidaRepresentative Director and President



¥37,110 billion

n New policy amount

¥3,830 billion* Targets with Addition of Insured Amount for

Serious Diseases (J-type Product)

Fundamental Strategyn Further strengthen the core business of

selling partner-specific products through

tie-up groups

n Enhance products and underwriting by

offering new protection that serves the

varied needs of SME owners

Business Model

Market

Sales channel

Products

Small and medium enterprises (SMEs)

In-house sales representatives, agents (tax accountants, etc.)

Term life insurance, insurance for serious diseases, etc.


rates, Daido Life curtailed the decrease in

the value of in-force business mainly due

to an increase in the new policy amount,

including J-type product, and an

improved mortality rate.

FUNDAMENTAL STRATEGYDaido Life was established in 1902. In the

ensuing years, it has continued to work to

always earn a high level of customer

trust. Since the 1970s, the company has

positioned as its core business the sale of

partner-specific products in collaboration

with tie-up groups in the SME market.

Daido Life has driven the evolution of this

business model, which is not easily imi-

tated by competitors, according to

changes in the times. As a result, the

company has built a solid position as the

leading provider of individual term life

insurance in the SME market.

MarketingDaido Life employs a distinctive business

strategy targeting the SME market.

In addition to specializing in this

market, the company has developed an

effective marketing system that organi-

cally links products and sales channels. In

specific terms, Daido Life forms business

tie-ups with SME-related groups to offer

partner-specific products designed

according to each group’s needs. These

partner-specific products are marketed to

member enterprises of the SME-related

groups and are offered by tax accoun-

tants and CPAs to corporate clients either

as protection insurance or as part of

employment benefit packages for SME

owners and employees.

Tie-ups with the NFCTA and the TPASince 1971, Daido Life has been the

official underwriter of the comprehensive

insurance plan, Ohgata Hosho Plan,

implemented by the National Federation

of Corporate Taxpayers Associations

(NFCTA, known as Hojinkai) and the Tax

Payment Associations (TPA, known as

Nouzei-kyokai). Under this arrangement,

Daido Life sells partner-specific products

to member companies. The spread of

partner-specific products to member

companies has made it easy for Daido

Life’s in-house sales representatives to

earn the trust of managers of SMEs. In

this sense, the system is an effective

Daido Life’s Relationship with Tie-up Groups NFCTA and TPA Tie-up Scheme

Daido Life

Enterprises Member Enterprises

In-house sales representatives (approx. 4,000)Non-life agents (1,200)

Insurance products at group-rate discounts

Compensation and support for sales

agencies

Employment contractAgency contract

Activity support

Fees for premium collection

Tie-ups

Promotion of products

Partner-specific products

Business tie-ups

Risk management

Daido Life NFCTA/TPA

Quarterly Trends in Comprehensive New Policy Amount

% YoY Change

Quarterly Trends in Comprehensive Surrender and Lapse Amount (Rate)% Surrender and Lapse Rate

n Fiscal 2011 n Fiscal 2012 n Fiscal 2011 n Fiscal 2012

825.4983.2

1,072.7

785.3906.5

1,002.8 1,068.5 1,014.5

9.8%2.0% (0.4)%

29.2%

0

30

0

(30)

1,200

800

400

1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q

753.8 769.5 781.8649.3695.9 704.0 720.7

617.7

8.20% 8.38% 8.51%

7.07%7.61% 7.70% 7.89%

6.76%

0

9

8

7

6

1,000

500

1Q 2Q 3Q 4Q

1Q 2Q 3Q 4Q

NFCTA TPA TKC

CPTA Associations &

CPTA Cooperative Associations

Other groups

In-house sales representatives and agencies

¥ billions New Policy Amount ¥ billions Surrender and Lapse Amount


• Using the membership of the tie-up groups as a sales base provides an efficient market-ing system

• Together, the tie-up groups and Daido Life form a solid marketing organization that gives Daido Life a competitive advantage in the SME market.

sales promotion method for customer

base expansion.

Tie-ups with the TKC National Federation, CPTA Associations, and CPTA Cooperative AssociationsIn 1976, Daido Life started underwriting

TKC Corporate Defense Plan, imple-

mented by the TKC National Federation*,

and in the 1970s the Comprehensive

Business Security Plan, implemented by

CPTA Associations and CPTA Cooperative

Associations in various regions. As mem-

bers of this federation or associations, TAs

sell to their corporate clients partner-

specific products that provide protection

for the various risks their businesses are

exposed to, based on their calculation of

the appropriate amount of protection

required by the client.* An organization of working accountants, including TAs,

who utilize a proprietary computerized accounting system.

As shown in the diagram above, Daido

Life’s business model based on sales of

partner-specific products through tie-up

groups has created a win-win situation for

all stakeholders—SME customers, tie-up

groups, TAs and CPAs, and Daido Life.

FUTURE GROWTHDaido Life will continue to focus on sales of

partner-specific products through tie-up

groups in the SME market, as well as offer-

ing products that serve the varied needs of

SME owners. Through these initiatives, the

company will further cultivate its core mar-

kets in greater depth and pursue the cre-

ation and expansion of new markets.

Further Enhancement of Core BusinessFor many years, Daido Life has sold term

life insurance as a form of death protec-

tion to SME owners to help mitigate the

related business risk. An emerging risk in

recent years is the danger posed to busi-

ness survival by the owner being absent

from the firm after suffering serious dis-

eases such as cancer, acute myocardial

infarction or a stroke.

In response, Daido Life has positioned

J-type product, which addresses busi-

ness continuity risks in the event that an

SME owner suffers a serious disease, as

a second mainstay product alongside

term life insurance. Accordingly, Daido

Life is pressing ahead with the integrated

promotion of both products.

Further Enhancement of Core Business

TKC, CPTA Associations and CPTA Cooperative Associations Tie-up Scheme

Win-Win Situation for Stakeholders Created by Partner-specific Sales

Protection for SMEs and its businessProtection of SME owners and

individual business ownersProtection for a “business crisis”Benefit for temporary

absence of SME owners

Term life insurance (R-type product, L-type product)

Insurance for serious diseases (J-type product)

Medical insurance (rider) (M-type product)

Medical insurance (rider) (M-type product)

Savings-type products (Life Gift*, etc.)

Retirement of an SME owner or individual business owner

due to serious diseases

Preparation for individual medical expenses

Deterioration in sales due to temporary work absence of an SME owner or individual

business owner

Inheritance, wealth building, etc.

Market expansion via products catering to high risk individuals

Meet further individual needs of SME owners

* Single premium whole life insurance

Corporate Clients

TA and CPA sales agents (12,000)

Insurance products at group-rate discounts

Compensation and support for sales

agenciesAgency contract

Activity support and information provision

Fees for premium collection

Tie-ups

Insurance advice regarding risk management

Daido Life

Win for Daido Life

TKC, CPTA Associations,

CPTA CooperativeAssociations

Win for Customers (SMEs)• Safety offered by group• Confidence provided by

involvement of advising tax accountant

• Discount rates (applied group rates)

Win for Tie-up Groups and TAs[Tie-up Groups]• Can offer risk avoidance measures to members• Receive fees for premium collection[TAs (Sales Agents)]• Earn trust of customers based on risk

management services provided• Receive compensation

Death of an SME owner or individual business owner

Expand coverage

Expand underwriting eligibility for the elderly and high risk individuals

Business Overview


Death benefit

Main funds required• Funds for repaying debt• Working capital• Death benefit,

condolence money

Term life insurance (R-type product, L-type product)

Retirement due to serious diseases

Main funds required• Funds for repaying debt• Working capital• Retirement benefit

Insurance for serious diseases (J-type product)

(1) Daily amounts of hospitalization benefits (daily hospitalization benefits) range from ¥3,000 to ¥40,000* The insurance payout can be used for medical expenses and living expenses during hospitalization, which tend to be costly, as well as provision of working capital during the temporary absence of an SME owner. (The maximum daily hospitalization benefit has been increased from ¥20,000.)

* Policies with a daily hospitalization benefit of more than ¥20,000 must be the “standard” type of policy (up to 60 payment days per hospitalization). They must also be corporate policies for business owners. • Only when SME managers are the insured persons.

(2) Thirty times the daily hospitalization benefit will be paid out for hospitalization due to cancer, myocardial infarction, or cerebral strokeThe policy enables business owners to secure provisional working capital through a lump-sum payment. [Launched Lump-sum Payments Rider for Hospitalization due to Specified Diseases]

(3) Policies may be chosen from three types of policy, each with a different limit on the number of payment days per hospitalizationThe “180 payment days per hospitalization” type of policy has been added to the two existing types: “standard” and “long-term hospitalization due to specified diseases.”

(4) For policies with daily hospitalization benefits of up to ¥20,000, enrollment is possible with only a disclosure of current state of health.The maximum daily hospitalization benefit for policies written based only on health disclosures was increased from ¥10,000. (Differs according to entry age.)

Daido Life is working to create and

expand markets while cultivating core

markets in greater depth by offering prod-

ucts that serve the varied needs of SME

owners, including products catering to high

risk individuals, medical insurance (M-type

product) and other Third Sector products,

as well as savings-type products (Life Gift,

etc.) designed for inheritance, wealth build-

ing and other purposes.

Providing a Full Range of Protection for SME Owners and Individual Business OwnersIn fiscal 2012, the new insured amount

for J-type product was ¥436.4 billion, up

55.2% from the previous fiscal year. From

May 2012, to allow the provision of

adequate serious diseases coverage for

lawyers, tax accountants, doctors and

other professional business owners,

Daido Life also raised the maximum sum

insured for J-type product from ¥20

million to ¥100 million, which is the same

maximum sum insured as corporate

policyholders. In June 2012, to expand

the product lineup, Daido Life began

selling a J wide rider to expand the scope

of coverage and a low-premium J-type

product (no surrender value and death

benefit type). From August 2012, Daido

Life stepped up the integrated promotion

of term life insurance and J-type product

by calculating the appropriate amount of

protection required for the risk of death

and serious diseases.

In October 2012, Daido Life launched

M-type product as medical insurance

protection for SMEs against the owner’s

hospitalization risk. Through this product,

Daido Life has enhanced financial cover-

age for working capital needs in the event

of the hospitalization of an SME owner.

With term life insurance covering

death, J-type product covering serious

diseases and M-type product medical

insurance, Daido Life aims to provide a

full range of protection to even more SME

owners and individual business owners.

In doing so, the company will ensure

stable and sustainable growth.

Providing a Full Range of Protection for SME Owners and Individual Business Owners

(1) Insurance payout before death for a particular condition (serious diseases: cancer, acute myocardial infarction, or cerebral stroke)

• The insured is paid out if he/she suffers from a serious disease that reaches a particular condition

(2) Master contract excluding death protection with higher and extended coverage possible for SME owners

• Exclusion of death protection from the master contract makes the policy more suitable for those with existing coverage; maximum sum insured for serious diseases is ¥100 million; coverage is available up to 100 years of age

(3) Payouts can be taken as a pension• Inclusion of an additional rider allows payout to be

taken in the form of a pension

Main Features of J-type product Main Features of M-type product

Temporary work absence due to injury or illnessMain funds required• Provisional working

capital• Sympathy money

Creation and expansion of new markets

Protection for a business crisis at a company or business

Protection for deterioration in sales due to temporary work absence of an SME owner

or individual business owner

Medical insurance (M-type product)

Integrated Promotion of Term Life Insurance and J-type product

Calculating the appropriate amount of protection required for risk of death and serious diseases

Appropriate amount of protection

Funds to protect SMEsFunds to protect family

members

• Funds required • Funds for repaying debt• Working capital, etc.

• Retirement benefit, etc.

[Preparation for funds to protect business]

[Preparation for retirement benefits]

Death of SME owner or individual business owner

Term life insurance

Retirement of SME owner or individual business owner due

to serious disease

J-type product

Risk

Proposed product



T&D Financial Life specializes in providing

insurance products through independent

insurance agents, including banks,

securities firms and insurance shop

agents, which handle products from

multiple insurers.

The new policy amount for T&D Finan-

cial Life in fiscal 2012 was ¥192.0 billion,

up 267.9% year on year. This result out-

performed the company’s full-year fore-

cast. The main contributing factors were

strong sales of our mainstay product

Shougai Premium Japan [non-participating

whole life insurance (accumulation rate-

selective type I)], and Minna Ni Yasashii

Shushinhoken [non-participating whole life

insurance (increasing death benefit type I)],

which focuses on inheritance planning

needs. Reflecting the increase in the new

policy amount, the policy amount in force

for products sold through financial institu-

tions and other agents increased by

18.0% from ¥965.7 billion at the previous

fiscal year-end to ¥1,139.4 billion.

As of March 31, 2013, MCEV was up

¥12.6 billion from the previous fiscal year-

end to ¥77.5 billion. The value of new

business increased by ¥2.8 billion from the

previous fiscal year-end to ¥2.9 billion. The

value of new business increased due to an

increase in the new policy amount. In

addition, sales efficiency improved as sales

674.9

1,014.8966.6 965.7

1,139.4

0

1,200

900

600

300

09/3 10/3 11/3 12/3 13/3

T&D Financial Life’s Policy Amount in Force (Portion corresponding to OTC sales at financial institutions and other agents)¥ billions

Business Overview

Focusing on OTC sales at financial institutions and other

agents, T&D Financial Life aims to generate stable and

sustainable growth by increasing the new policy amount and

the policy amount in force based on multi-tracked development

of products and channels.

Kazuyoshi ShimadaRepresentative Director and President



¥1,900 billion

n New policy amount

¥270 billion

Fundamental Strategyn Playing a key role as a strategic company in

the T&D Life Group focused on OTC sales

at financial institutions and other agents

n Aiming to establish a strong brand in life

insurance sales through financial institutions

and other agents, the company is

focusing its management resources on

bolstering product development and sales

support capabilities

Business Model

Market

Sales channel

Products

OTC sales at financial institutions and other agents

Banks, securities firms and insurance shop agents, etc.

Single premium products and level premium products


improved, and we were able to recover the

fixed cost portion of operating expenses

associated with sales of new policies.

Going forward, we aim to help increase the

entire Group’s EV by improving operating

expense efficiency through improved sales

efficiency and operational efficiency.

FUNDAMENTAL STRATEGYT&D Financial Life is a strategic company

in the T&D Life Group focused on OTC

sales channel at financial institutions and

other agents*. In October 2001, the T&D

Life Group acquired Tokyo Life and

restarted its operations as T&D Financial

Life. The company began sales of variable

annuities in November 2001.

During the four years following its

reorganization, T&D Financial Life pursued

business expansion using two distribution

channels—the sales representative channel

and the OTC sales channel at financial

institutions. In September 2005, how-

ever, the company transferred the sales

representative channel to Taiyo Life and

Daido Life, and made a new start as a

company specializing in OTC sales at

financial institutions.

In the period to the end of March

2010, T&D Financial Life expanded the

number of agencies and the policy

amount in force by selling mainly individual

variable annuities with guaranteed

minimum living benefits, which were the

major product sold in the market at that

time. This helped the company to establish

and enhance a solid sales network base,

including Japan’s top commercial banks

and securities firms.* The OTC sales channel at financial institutions and other

agents collectively refers to the OTC sales channel at financial institutions, including banks and securities firms, and the insurance shop agent channel.

Promoting Sales of Shougai Premium SeriesFollowing a contraction in sales of variable

annuities, the market for OTC sales at

financial institutions was dominated by

single premium assumed interest rate-

type products without market value

adjustments (MVA), which were offered by

the major domestic life insurers.

Under these circumstances, T&D

Financial Life has been taking a different

product strategy than other Japanese

major life insurers which mainly focused on

single premium assumed interest rate-type

products. Specifically, T&D Financial Life

has focused on selling Shougai Premium

Series, a product series that offers differ-

entiated benefits based on the idea of

“gaining annual bonus incomes without

withdrawing from one’s accumulated

amount.” In August 2011, the company

launched Shougai Premium Japan from this

series as the company’s core product.

Shougai Premium Japan’s marketing

concept of “gaining annual bonus

incomes without withdrawing from one’s

accumulated amount,” was received

positively by agents and customers. As a

result, the agency network for this prod-

uct and the new policy amount increased.

In fiscal 2012, the competitive environ-

ment showed some signs of shifting when

other life insurers lowered assumed inter-

est rates and limited sales of their

assumed interest rate-type products.

Against this backdrop, the new policy

amount for Shougai Premium Japan

increased significantly compared to the

previous fiscal year.

Multi-tracked Development of Products and ChannelsT&D Financial Life employs a multi-track

approach to products and channels,

with the aim of achieving stable and

sustainable growth.

Based on this policy, in an effort to

diversify products through a multi-track

approach, we launched Kakei Ni Yasashii

Shunyuhoshou [non-participating income

protection insurance (no surrender value

type I)], as a level premium protection-

type product for customers in their 20s to

50s who are seeking to review their insur-

ance benefit plans. Kakei Ni Yasashii

Shunyuhoshou provides a monthly

T&D Financial Life’s Sales NetworkNumber of sales agents

Business Model

59

2313

35

6

2413

36

8

2 2513

38

2

8

1513

41

8

1513

51

8

12514

60

7

63 66 68

7889

0

100

80

60

40

20

08/3 09/3 10/3 11/3 12/3 13/3

Product and marketing training by wholesalers

Marketing support from support desk operations

IT-based agent support system

Customer support

Agent support

Customer Customer

T&D Financial

Life

Customer support through call center

n Megabanks/Trust Banks n Regional Banks n Credit Associations (Shinkin Banks)

n Securities Firms n Insurance Shop Agents n Others

Provision of single premium products and level premium products

Sales channel81 banks (including

shinkin banks)5 securities firms

2 insurance shop agents1 other

OTC sales through financial institutions, etc.


survivor annuity over a fixed period in the

event of the death of the insured during

the policy term. One of the main features

of this product is that the insurance

premiums are more affordable than the

conventional term life insurance products.

Leveraging our wealth of expertise in

supporting independent insurance

agents over the years, we also began

sales of Kakei Ni Yasashii Shunyuhoshou

at insurance shop agents in September

2012. This initiative was also aimed at

diversifying sales channels through a

multi-track approach.

Furthermore, T&D Financial Life has

been working to enhance its lineup of

single premium products. In December

2012, T&D Financial Life began sales of

Minna Ni Yasashii Shushinhoken, a whole

life insurance policy that addresses inheri-

tance planning needs. The policy can be

purchased by customers in a wide range

of age groups from 50 to 95 simply by

providing the company with information

about their occupation.

FUTURE GROWTHContinue Aiming to Develop a Business Model for More Stable GrowthThe market for OTC sales at financial

institutions is a highly competitive market-

place. However, we see this market as

one of the segments with high growth

potential. For instance, there are existing

needs for products that dispel anxieties

over post-retirement living expenses, while

sales of protection-oriented insurance

products such as medical and nursing

care through this channel are expected to

increase more in the future.

We also expect the insurance shop

agents market to continue expanding

based on increases in consumers who

prefer to consider and compare a variety

of products before deciding to purchase

an insurance policy. Insurance shop

agents also provide an effective means of

reaching customers who are now difficult

for conventional sales representatives of

life insurance companies to visit, amid

heightened company security and a rise

in dual-earning households.

For fiscal 2013, T&D Financial Life will

remain focused on these growing markets

while continuing to aim to develop a

business model for more stable growth

even in a fiercely competitive market by

diversifying its products and sales chan-

nels through a multi-track approach.

In terms of specific product strategies,

T&D Financial Life launched Shougai

Premium World 2 [non-participating

variable whole life insurance (foreign

exchange linked, multi-currency type II)] in

July 2013. The product is a revised

version of the former Shougai Premium

World [non-participating variable whole

life insurance (foreign exchange rate

linked, multi-currency type I)]. The company

revised the product by raising the entry

age of the insured from 70 to 75 as well

as upgrading other features. This product

is for customers who are interested in

overseas interest rates, which are higher

than domestic interest rates, and in

foreign currencies.

T&D Financial Life’s Products and Sales Channel

Product Sales Channel

Single premium wealth

accumulation products

Level premium

protection-type products

Shougai Premium Series Main Features:• Under the concept of “gaining annual bonus incomes without withdrawing from one’s accumulated

amount,” Shougai Premium Series is a single premium whole life insurance series that features annual additions of a prescribed bonus policy amount to the “accumulated bonus amount” throughout the insured’s lifetime.

• Shougai Premium Japan 2 is a product for customers interested in investing in yen-denominated assets, as the annual bonus policy amount is steadily added to the accumulated bonus policy amount every year using the JGB yields as the reference rate.

• Shougai Premium World 2 is a product for customers interested in overseas interest rates, which are higher than domestic interest rates, and in foreign currencies, as the product is based on the reference rate of its linked foreign currency (Australian dollar or U.S. dollar).

Main Features:• Designed to be simple and easy to understand, this single premium whole life insurance product

can be purchased by customers in a wide range of age groups from 50 to 95 simply by providing the company with information about their occupation.

Main Features:• This is an income protection insurance product which provides either a monthly survivor annuity

or a disability annuity over a fixed period in the event of the death or the total disability of the insured. One of the main features of this product is that the insurance premiums are more affordable than conventional term life insurance products.

Financial institutions


Insurance shop agents

Shougai Premium World 2[Non-participating variable whole life insurance (foreign exchange linked, multi-currency type II)]Launched in July 2013

Minna Ni Yasashii Shushinhoken[Non-participating whole life insurance (increasing death benefit type I)]Launched in December 2012

Kakei Ni Yasashii Shunyuhoshou[Non-participating income protection insurance (no surrender value type I)]Launched in August 2012

Business Overview

Shougai Premium Japan 2[Non-participating whole life insurance (accumulation rate renewing type I)]Launched in August 2013


0

10

8

6

4

2

10/309/3 11/3 12/3 13/3 14/3(projection)

In August 2013, the company

launched Shougai Premium Japan 2

[non-participating whole life insurance

(accumulation rate renewing type I)]. While

maintaining the existing product concept

of Shougai Premium Japan, T&D Financial

Life has upgraded the product to ensure

that it can be supplied in a stable manner

even amid low interest rates.

In terms of sales strategy, T&D Financial

Life will continue working to expand the

number of sales agents for single premium

products in the OTC sales channel at

financial institutions. The company also

aims to expand the number of sales

agents for level premium products in the

OTC sales channel at financial institu-

tions as well as in the insurance shop

agent channel.

Going forward, T&D Financial Life will

strive to further strengthen the business

model. Measures will include enhancing

its product lineup incorporating customer

needs and increasing the number of finan-

cial institutions and insurance shop agents.

Increase Competitiveness by Establishing a Low-cost StructureTo survive in a highly competitive inde-

pendent insurance agent business,

establishing a low-cost structure through

cost reductions and other measures is

essential because it links directly to the

competitiveness of products. T&D

Financial Life has reduced costs by

improving operational efficiency and

reducing IT and personnel costs. We

believe that T&D Financial Life is the only

member of the T&D Life Group that can

specialize in the competitive independent

insurance agent business by leveraging a

business model with a lean cost struc-

ture. While maintaining levels of customer

service, the company will remain focused

on realizing a “low-cost structure” that

enables the company to offer competitive

products with “simple product features,”

“low premiums” and other advantages.

Rebuilding of the Business Model for More Stable Growth

Diversify products

Establish a low-cost structure

Diversify sales channels

Single premium wealth accumulation products:For middle-aged and older customers with the need to fund retirement and for inheritance planning needs

Reduce costs by improving operational efficiency, BPO (business process outsourcing), reducing IT costs, etc.

Develop and offer competitive products with:• Simple product features• Low premiums• Suitable agent commission levels

Establish business platform


Level premium protection-type products:For working-age customers seeking to review their insurance benefit plans

Increase value of new business

Insurance shop agents

n Personnel costs n Others* Comprehensive maintenance costs = Maintenance costs (less holding company fees and

commissions and contributions to the Life Insurance Policyholders Protection Corporation) + expenses for premium collection + provision for increase in reserve for bonus + depreciation

Establish a low-cost structure

Comprehensive Maintenance Costs*¥ billions

Boost the new policy amount and

policy amount in force

Enhance product competitiveness



In fiscal 2012, the financial and securities

markets saw domestic interest rates

remain low throughout the fiscal year. On

the other hand, in the second half of the

fiscal year, stock prices in Japan and

overseas rose against the backdrop of a

correction of the strong yen and anticipa-

tion for economic stimulus and monetary

policies, among other factors. As a result,

at the fiscal year-end, assets under man-

agement in Japan—the total of investment

trusts and investment advisory agree-

ments—increased ¥42.5 trillion from the

previous fiscal year-end to ¥291.4 trillion.

Under these conditions, T&D Asset

Management saw a large increase in

assets under management in the invest-

ment trust business, mainly atop favorable

sales of new publicly offered investment

trusts. In investment advisory services,

however, asset under management

decreased due to outflows from pension

investments reflecting the impact of a

string of pension mismanagement scan-

dals at certain independent investment

advisory firms. Operating income as a

whole decreased slightly as a result.

Meanwhile, we curtailed operating

expenses through rigorous cost cutting.

Consequently, T&D Asset Management

restored profitability by posting net income

for fiscal 2012, after having recorded a net

loss in the previous fiscal year.

Regarding assets under management,

while publicly offered investment trust

assets at March 31, 2013 amounted to

¥398.0 billion, up from ¥312.9 billion at

March 31, 2012, private placement

Asset Management Market in Japan¥ trillions

0

300

200

100

04/3 05/3 06/3 07/3 08/3 09/3 10/3 11/3 12/3 13/3

Source: Compiled from information from the Investment Trusts Association and the Japan Securities Investment Advisers AssociationNote: Total of contractual-type investment trusts and assets held under investment advisory agreements.

Business Overview

As the T&D Life Group’s core asset management company,

T&D Asset Management aims to become a trusted asset

management company in the eyes of its customers.

Hiroshi FujiseRepresentative Director and President


n Adjusted operating income

¥3.4 billion

n Net income

¥270 millionNote: Adjusted operating income is the actual

income of T&D Asset Management after deducting commissions to sales companies and fees to external investment institutions to which asset management is entrusted.

Fundamental Strategyn Strengthen competitiveness by executing

differentiated strategies under the action

policy of “Make a Difference”

n Strengthen growth areas by strategically

allocating management resources

n Continue to transform the earnings structure

to improve management efficiency further

Business Segment

Investment advisory services

Investment trust

business

Provide timely solutions to domestic and overseas

pension funds and institutional investors

Provide a wide array of prime investment products mainly to

individual investors through sales companies

(securities firms, etc.)


ToPIC

investment trust assets stood at ¥924.2

billion, down from ¥939.1 billion. As for

investment advisory agreements,

entrusted assets declined from ¥1,065.7

billion to ¥999.3 billion.

FUNDAMENTAL STRATEGYT&D Asset Management contributes to

stable investment returns as the insur-

ance asset management arm of the T&D

Life Group. In conjunction with these

activities, the company is increasing

assets entrusted by customers from

outside the T&D Life Group.

Primarily, T&D Asset Management has

provided the expertise it has developed

through the investment of life insurance

assets to domestic pension funds and

institutional investors. In recent years,

however, the company has been expand-

ing its businesses for individual investors

and overseas pension funds and institu-

tional investors.

T&D Asset Management’s value strat-

egy of Japanese equities and credit invest-

ment has earned high marks among many

investors and external rating agencies. In

the domestic equity and bond investment

area, the company takes advantage of its

asset management capabilities to provide

competitive investment products.

As for foreign equities, bonds, and

other investment vehicles, T&D Asset

Management has formed business

tie-ups with prominent overseas invest-

ment institutions to enable the company

to offer attractive investment products

and investment opportunities.

FUTURE GROWTHT&D Asset Management is strengthening

internal asset management expertise and

leveraging alliances with leading overseas

asset management institutions to provide

products and services that respond to

customer needs in a timely manner.

A critical aim is to expand the portfolio

of assets entrusted by non-group cus-

tomers both in the investment advisory

services for domestic and overseas pen-

sion funds and institutional investors, and

in the investment trust business, compris-

ing mainly publicly offered investment

trusts and private placement investment

trusts. The company also aims to win

greater trust as an asset management

company by implementing thorough

measures to improve its asset manage-

ment services for existing customers.

Investment Advisory Services(Domestic and Overseas Pension Funds

and Institutional Investors)

The business environment of the pension

market is going through a period of major

fluctuations during the lead up to the imple-

mentation of changes in Japan’s pension

system and accounting system. With its

customers facing a variety of issues, T&D

Asset Management is aiming to win long-

term trust by providing them with suitable

solutions for their investment needs.

The company is also actively offering

its distinctive asset management capabili-

ties to foreign institutional investors.

Investment Trust BusinessIn its investment trust business, T&D

Asset Management is further strengthen-

ing its systems to develop and offer com-

petitive products tailored to customer

needs in a timely manner.

Moreover, the company is upgrading its

information provision capabilities for cus-

tomers to inform customers about the

nature of its products and the risks

involved in an easy-to-understand manner.

Out of Group Assets under Management¥ billions

Out of Group Assets under Management (As of March 31, 2013)%

Investment trust business60.8%

Investment advisory services

39.2%

0

1,200

900

600

300

09/3 10/3 11/3 12/3 13/3

As part of its CSR activities, T&D Asset Management has been hosting the T&D Asset Management Investment Seminar for Universities since 2010. The company believes that the essence of CSR is to contribute broadly to society in its core business field of asset management. Accordingly, T&D Asset Management holds lectures on themes concerning private university administration and securities investment for staff involved in asset man-agement at universities. In doing so, the company is helping universities to establish a governance structure and strong financial foundation with respect to asset management.



In fiscal 2012, Pet & Family Small-amount

Short-term Insurance (P&F) worked to

expand business and improve profitability

by focusing on expanding pet shop sales,

the core sales channel, and developing

this sales channel. As a result, the

number of new policies in fiscal 2012 was

18,168, compared with 14,542 in fiscal

2011. The number of policies in force as

of March 31, 2013 was 44,407, up from

31,328 as of March 31, 2012. Net pre-

mium income in fiscal 2012 was ¥1,236

million, up from ¥853 million in the previ-

ous fiscal year.

FUNDAMENTAL STRATEGYP&F aims to establish and build an earn-

ings base with future growth potential by

positioning pet shops as the core sales

channel for this type of insurance.

In an age where pets are regarded as

lifelong family members, pet owners are

increasingly concerned about the costs

of veterinary care. Pet insurance is con-

siderably less prevalent in Japan than in

Western countries, where pet culture is

more advanced. P&F considers it a

mission to serve the needs of pet

owners in meeting the veterinary

expenses of pets by making pet insur-

ance more widely available.

FUTURE GROWTHThe pet insurance market is expected to

see increasing demand going forward. In

this growing market, P&F aims to establish

a more stable revenue base, while devel-

oping proper operations with an emphasis

on efficiency, to achieve compliance and

low-cost operations as a provider of small-

amount, short-term insurance.

154292

538

853

1,236

0

2,000

1,500

1,000

500

09/3 10/3 11/3 12/3 13/3

Net Premium Income (Pet Insurance)¥ millions

Business Overview

Pet & Family Small-amount Short-term Insurance aims to

establish a firm presence in the pet insurance sector by

expanding its market share. This will be achieved by

expanding and strengthening the sales base centered on

the pet shop sales channel.


Takashi NakaoRepresentative Director and President


n No. of policies in force

64,000n No. of new policies

28,000

Fundamental Strategyn Build and strengthen a revenue base

grounded on trust as a provider of small-

amount, short-term insurance and a

member of the T&D Life Group

n Grow sales by expanding and strengthen-

ing the sales base centered on the core pet

shop sales channel

Business Model

Market

Sales channel

Products

Pets

Agents (pet shops, etc.)

Compensation insurance for pet vet expenses


Key Systems Underpinning T&D Life Group

page 45

page 42

page 49

Corporate Social Responsibility

Corporate Governance

Management Organization


Management OrganizationAs of June 26, 2013

Board of Directors

Apr. 1976 Joined Taiyo LifeMar. 2001 General Manager of General Affairs DepartmentJul. 2001 Director of Taiyo LifeJun. 2003 Managing Director of Taiyo LifeApr. 2004 Managing Director of T&D HoldingsJun. 2006 Director and Managing Executive Officer of Taiyo Life, Director

and Managing Executive Officer of T&D Holdings

Apr. 1976 Joined Daido LifeSep. 1996 General Manager of Separate Account Investment DepartmentJul. 2000 Director of Daido LifeJul. 2001 Representative Director and President of

T&D Taiyo Daido Asset ManagementJul. 2002 Representative Director and President of

T&D Asset ManagementApr. 2008 Senior Executive Officer of T&D Financial LifeJun. 2008 Representative Director and Senior Executive Officer of

T&D Financial Life

Apr. 1977 Joined Taiyo LifeOct. 1999 General Manager of Actuarial Accounting DepartmentJul. 2001 Director of Taiyo LifeJun. 2003 Managing Director of Taiyo LifeJun. 2006 Director and Managing Executive Officer of Taiyo LifeApr. 2010 Senior Executive Officer of T&D Holdings

Apr. 1976 Joined Daido LifeMar. 1999 General Manager of Marketing Planning DepartmentJul. 1999 Director of Daido LifeApr. 2003 Managing Director of Daido Life

Apr. 1978 Joined Daido LifeApr. 2004 General Manager of General Affairs Department of

T&D HoldingsApr. 2005 General Manager of Planning Department of Daido LifeJun. 2006 Executive Officer of Daido Life

Apr. 1977 Joined Taiyo LifeJul. 2003 General Manager of General Planning DepartmentApr. 2004 General Manager of Group Planning Department of

T&D HoldingsJun. 2006 Executive Officer and General Manager of Group

Planning Department of T&D Holdings

Apr. 2007 Director and Senior Executive Officer of Taiyo Life, Director and Senior Executive Officer of T&D Holdings

Jun. 2008 Representative Director and Senior Executive Officer of Taiyo Life

Jun. 2009 Director of T&D Holdings, Representative Director and President of Taiyo Life

Apr. 2011 Representative Director and President of T&D Holdings (current)

Jun. 2009 Director of T&D Asset Management (current)Apr. 2010 Director of T&D Financial Life (current),

Senior Executive Officer of T&D HoldingsJun. 2010 Director of Daido Life (current),

Director and Senior Executive Officer of T&D HoldingsApr. 2011 Director and Executive Vice President of T&D HoldingsJun. 2013 Representative Director and Executive Vice President of

T&D Holdings (current)

Jun. 2010 Director of Taiyo Life (current), Representative Director and Senior Executive Officer of T&D Holdings

Apr. 2011 Director and Senior Executive Officer of T&D Holdings (current)Jun. 2012 Director of T&D Asset Management (current)

Jun. 2006 Director and Managing Executive Officer of Daido LifeApr. 2008 Director and Senior Executive Officer of Daido Life (current)Apr. 2011 Senior Executive Officer of T&D HoldingsJun. 2011 Director and Senior Executive Officer of T&D Holdings (current)

Apr. 2008 Managing Executive Officer of Daido LifeJun. 2008 Director and Managing Executive Officer of Daido LifeApr. 2011 Director and Senior Executive Officer of Daido Life (current)Apr. 2013 Senior Executive Officer of T&D HoldingsJun. 2013 Director and Senior Executive Officer of T&D Holdings (current)

Apr. 2007 Managing Executive Officer, and Marketing Executive General Manager of Taiyo Life

Jun. 2007 Director and Managing Executive Officer, and Marketing Executive General Manager of Taiyo Life

Feb. 2008 Director and Managing Executive Officer of Taiyo Life (current)Jun. 2009 Director and Managing Executive Officer of


Representative Director and President

KENJI NAKAGOME Born 1954

Representative Director and Executive Vice President Group Planning Department

SONOSUKE USUI Born 1953

Director and Senior Executive Officer Group Finance & Accounting Department

TAMIJI MATSUMOTO Born 1954

Director and Senior Executive Officer Risk Management Department and Business Auditing Department

TSUTOMU IGARASHI Born 1951

Director and Senior Executive Officer Public Relations Department and second in charge of General Affairs Department

MASAHIRO UEDA Born 1953

Director and Managing Executive Officer General Affairs Department and second in charge of Business Auditing Department

TERUNORI YOKOYAMA Born 1954


Apr. 1966 Joined Iwai Sangyo CompanyJun. 1996 Director of Nissho Iwai CorporationJun. 2000 Managing Director of Nissho Iwai CorporationJun. 2002 Senior Managing Executive Officer of Nissho Iwai CorporationApr. 2003 Professor of Waseda University School of LawApr. 2004 Professor of Waseda Law School (current)

Apr. 1995 Assistant Judge to the Tokyo District CourtJul. 2000 Registered as an AttorneyJun. 2013 Director of T&D Holdings (current)

Attorney * Ms. Matsuyama is an outside director as provided for in the Japanese

Companies Act.

Apr. 1977 Joined Taiyo LifeSep. 2000 General Manager of Policy Service, Conservation and

Premium Receipts DepartmentJul. 2001 Director of Taiyo LifeJun. 2006 Director and Managing Executive Officer of Taiyo LifeApr. 2007 Director and Senior Executive Officer of Taiyo LifeMay 2007 Director and Senior Executive Officer, and Customer Service

Executive General Manager of Taiyo Life

Apr. 1976 Joined Daido LifeMar. 1999 General Manager of Planning DepartmentJul. 2000 Director of Daido LifeApr. 2003 Managing Director of Daido LifeJun. 2006 Managing Executive Officer of Daido LifeApr. 2007 Director of T&D Financial Life,

Director of T&D Asset Management, Managing Executive Officer of T&D Holdings

Apr. 1976 Joined Daido LifeJan. 2001 General Manager of Reorganization Planning DepartmentJul. 2002 Director of T&D Financial LifeJun. 2006 Executive Officer of T&D Financial LifeApr. 2007 Managing Executive Officer of T&D Financial LifeJun. 2007 Director and Managing Executive Officer of T&D Financial Life

Jun. 2006 Corporate Auditor of Daido LifeJun. 2010 Director of Daido LifeJun. 2012 Director of T&D Holdings (current)

University Professor* Mr. Hori is an outside director as provided for in the Japanese

Companies Act.

Feb. 2008 Director and Senior Executive Officer, and Marketing Executive General Manager of Taiyo Life

Jun. 2008 Representative Director and Senior Executive Officer, and Marketing Executive General Manager of Taiyo Life

Jun. 2009 Representative Director and Executive Vice President, and Marketing Executive General Manager of Taiyo Life

Apr. 2011 Representative Director and President of Taiyo Life (current)Jun. 2011 Director of T&D Holdings (current)

Jun. 2007 Director and Managing Executive Officer of T&D HoldingsApr. 2008 Director and Senior Executive Officer of T&D HoldingsApr. 2010 Representative Director and President of Daido Life (current),

Director of T&D Holdings (current)

Apr. 2010 Director of T&D Asset ManagementApr. 2011 Representative Director and Managing Executive Officer of

T&D Financial LifeJun. 2011 Representative Director and President of

T&D Financial Life (current), Director of T&D Holdings (current)

Director

RYUJI HORI* Born 1943

Director

HARUKA MATSUYAMA* Born 1967

Director

KATSUHIDE TANAKA Born 1954

Director

TETSUHIRO KIDA Born 1953

Director

KAZUYOSHI SHIMADA Born 1953


Audit & Supervisory Board Members

Management Organization

Apr. 1977 Joined Daido Life

Apr. 2010 General Manager in charge of Contract Department

Jun. 2010 Audit & Supervisory Board Member of

Daido Life (current),

Audit & Supervisory Board Member of


Apr. 1978 Joined Taiyo Life

Mar. 2001 General Manager of Securities Investment Department

Jun. 2003 Director of Taiyo Life

Jun. 2006 Executive Officer of Taiyo Life

Jun. 2008 Director and Executive Officer of Taiyo Life

Jun. 2009 Executive Officer of Taiyo Life

Apr. 1972 Registered as an Attorney

Apr. 1991 Vice President of the Tokyo Bar Association

Apr. 2004 President of the Tokyo Bar Association, Vice President of

the Japan Federation of Bar Associations


Daido Life (current),



Apr. 1969 Registered as an Attorney

May 1985 Organizer, Commercial Law Subcommittee of

the Legislative Council of the Ministry of Justice

Apr. 1991 Professor of Legal Training and Research Institute,

Supreme Court of Japan (Defense of Civil Cases)

Jan. 1998 Member of National Bar Examination Committee

(Commercial Law)

Oct. 2011 Audit & Supervisory Board Member of Taiyo Life (current)


T&D Financial Life (current),



Attorney

* Mr. Iwai is an outside audit & supervisory board member as

provided for in the Japanese Companies Act.

Jun. 2007 Audit & Supervisory Board Member of Taiyo Life (current)



Attorney

* Mr. Ozawa is an outside audit & supervisory board member as

provided for in the Japanese Companies Act.

Audit & Supervisory Board Member

MASAAKI UNO Born 1954


AKIMASA YOKOKAWA Born 1955


SHIGEKAZU IWAI* Born 1945


YUICHI OZAWA* Born 1943


Basic Policy on Corporate GovernanceThe T&D Life Group’s basic corporate governance policy is to

create efficient and transparent management systems to facilitate

flexible and cohesive Group operations.

Based on this view, the role within the Group of the holding

company T&D Holdings is to determine Group business and capital

strategies and to ensure optimal allocation of resources within the

Group. T&D Holdings is also responsible for the development and

operation of oversight systems for managing profits and risks at

the Group level, including systems for accurately evaluating the

operational risks of the five direct subsidiaries (the Group’s three

life insurance companies—Taiyo Life, Daido Life, and T&D Financial

Life—as well as T&D Asset Management and Pet & Family Small-

amount Short-term Insurance). Based on an independent business

strategy, each of the direct subsidiaries determines its own

marketing strategies in line with its strengths. This approach

seeks to maximize the corporate value of the Group by enabling

each company to make the most of its autonomy and originality in

its business operations.

Initiatives to Enhance Corporate GovernanceTo ensure the effectiveness of its corporate governance, in fiscal

2012 T&D Holdings held the following meetings. The Board of

Directors met 21 times to make decisions on important issues on

the execution of business and to oversee the execution of duties by

directors. In addition, the Audit & Supervisory Board met 14 times.

The Executive Committee met 48 times, the Group Management

Committee 16 times, the Group Risk Management Committee 12

times, the Group Compliance Committee 4 times, the Group

Investment Committee 4 times, the Group CSR Committee 3

times, and the Group Information Technology and Administration

Committee 6 times.

The functions of the Group Investment Committee have been

integrated into the Group ERM Committee, which was established

in April 2013.

Corporate Governance System Framework

Shareholders’ Meeting Audit & Supervisory Board Members

Audit & Supervisory Board

Audit & Supervisory Board

Members’ Office

Group Compliance Committee

Board of Directors

President

Organizational Units

Executive Committee Group Management Committee

Group Risk Management Committee

Group ERM Committee

Discusses matters relating to strengthen-ing Group compliance

Discusses matters relating to comprehensive management of Group risks and ensuring thorough risk management

Discusses matters relating to securing the required equity capital and promoting efficient utilization of same so as to maintain Group management stability and soundness

and Other Group Companies

Group Information Technology and

Administration Committee

Group CSR Committee

Discusses matters for formulating policies and measures pertaining to cross-Group issues concerning IT and administration strategy

Discusses matters relating to establishing and strengthening Group CSR initiatives and formulating and executing Group-wide plans and measures




Appointment of outside Directors and outside Audit & Supervisory Board MembersAs one facet of its internal control systems, T&D Holdings has estab-

lished the policy of appointing outside directors that are unrelated to

the Company and can serve as a control to ensure the appropriate-

ness of the operational execution of directors. Accordingly, it has

appointed two outside directors. In addition, the Company has

established an Audit & Supervisory Board consisting of four audit &

supervisory board members, two of which are outside audit & super-

visory board members as provided by the Japanese Companies Act.

Further, the outside directors and outside audit & supervisory

board members of the Company are registered with the Tokyo

Stock Exchange and Osaka Securities Exchange as independent

officers who are free of conflicts with the common interests of

shareholders (as of June 26, 2013).

In this way, the Company believes that the outside directors and

outside audit & supervisory board members are properly overseeing

and serving as a control and that governance is functioning effec-

tively. However, in order to bolster governance further, the Company

will continue to look at ways to improve the approach to governance,

taking into consideration examples and trends at other companies.

Stock Compensation-type Stock options (Stock Acquisition Rights)T&D Holdings and the three life insurance companies have intro-

duced stock compensation-type stock options (stock acquisition

rights) for directors (excluding outside directors) and executive

officers, with the aim of boosting motivation to further contribute

to the improvement of corporate value. These stock options

will provide them with further incentives to work to stably and

continuously improve the corporate value of the whole Group by

aligning their interests more with shareholders, while they continue

to manage the Company from a long-term standpoint.

Risk Management SystemIn light of the important social role played by its life insurance

business, the T&D Life Group considers the accurate assessment

and control of risk to be a top management priority for ensuring

sound and appropriate management. Under the guidance of T&D

Holdings, each Group company carries out appropriate risk man-

agement based on the principle of self-responsibility.

Furthermore, the Group conducts integrated risk management

through such means as utilizing risk management indicators

based on economic value, which values assets and liabilities on a

mark-to-market basis.

Basic Policy on Risk Management SystemsT&D Holdings has established a Group Risk Management Policy

that sets forth the basic concepts for managing risk within the

T&D Life Group. Based on this policy, the three life insurance

companies have upgraded their risk management systems,

including those for affiliates.

T&D Holdings has established the Group Risk Management

Committee, to integrate the management of risk within the Group.

Moreover, the three life insurance companies are required to

submit risk status reports based on integrated risk management

indices periodically as well as on an as-needed basis. In this way,

T&D Holdings is able to assess and manage the various risks

faced by individual Group companies. In principle, the Group Risk

Management Committee meets once a month. In fiscal 2012, it

met 12 times.

Also, T&D Holdings reports the risk status of each Group

company to the Board of Directors and, based on these findings,

provides guidance and assistance to the three life insurance

companies as necessary. This not only ensures that each of the

companies conducts thorough risk management but also

strengthens the management of risk for the Group as a whole.

Risk Management Framework

Board of Directors

Taiyo Life Daido Life T&D Financial LifeT&D Asset

Management

Pet & Family Small-amount

Short-term Insurance

Audit & Supervisory Board Members, Audit & Supervisory Board

Executive Committee Group Risk Management Committee

Risk Management Department

and Other Group Companies

Deliberation GuidanceReporting AdviceInternal

Auditing



Basic Policy for Responding to Antisocial Powers

1. Respond as an OrganizationWhen antisocial powers make threats or demands, the

Company responds as a unified organization, rather than

delegating this responsibility to the related personnel or

divisions. Further, the Company takes steps to ensure the

safety of the corporate officers and employees responsible

for dealing with such threats or demands.

2. Cooperate with External ExpertsThe Company maintains close contact with external organi-

zations, such as the police, the National Center for the

Elimination of Boryokudan, and lawyers, to protect itself

against the threats or demands of antisocial powers.

3. Avoid ContactThe Company avoids making any contact with antisocial

powers and does not conduct any transactions with these

powers. Also, the Company does not cooperate with threats

or demands from antisocial powers.

4. Take Legal ActionWhen necessary, the Company will take legal action in response

to threats or demands from antisocial powers, including bringing

civil and criminal charges against these powers.

5. Forbid Illegal Transactions and Provision of FundsEven in the event that the threats or demands of antisocial

powers are in response to misdeeds in the Company’s

business operations or by its corporate officers or employ-

ees, the Company will not engage in illegal transactions with

these powers to conceal this fact. Further, the Company will

not provide funds to antisocial powers.

ComplianceBasic Compliance PoliciesThe Group has formulated the T&D Life Group CSR Charter, the

T&D Life Group Compliance Code of Conduct, and the T&D Life

Group Basic Policy for Strengthening the Compliance Structure.

The Group ensures that corporate officers and employees are

conversant with these basic compliance policies and standards to

promote rigorous Group-wide compliance efforts.

Fostering ComplianceIn line with the Group’s basic policies on compliance, each

company in the T&D Life Group has implemented a program of

compliance awareness-raising measures that is tailored to the

character and scale of that company’s operations. For example, T&D

Holdings and the three life insurance companies have formulated

specific action plans called the “Compliance Program” and a

guideline called the “Compliance Manual” to ensure full legal and

regulatory compliance by corporate officers and employees.

Internal Reporting SystemWithin the T&D Life Group, each of the Group’s three life insurance

companies and other Group members previously operated their

own internal reporting systems. In April 2005, however, the T&D

Life Group Helpline was established for use by all corporate

officers and employees in the Group. Rules applied to the T&D

Life Group Helpline stipulate that whistleblowers will not suffer

any disadvantageous treatment as a result of using the system to

submit information relating to suspected compliance violations.

Compliance-related reports can also be submitted by phone or

online through an external independent company to help pre-

serve anonymity, thereby enhancing the effectiveness of the

system. Going forward, the T&D Life Group is committed to

promoting greater compliance through the use of this internal

reporting system.

AccountabilityTo maintain and reinforce trust among all of its stakeholders,

beginning with its shareholders, investors, and policyholders, and to

increase the level of transparency in its corporate governance, T&D

Holdings strives to provide easy-to-understand disclosure based on

its core disclosure principles of timeliness, fairness, and accuracy.

T&D Holdings discloses statutory information stipulated in the

Japanese Companies Act, the Insurance Business Act, the

Financial Instruments and Exchange Act, other related laws and

ordinances, and the rules of the stock exchanges on which its

stock is listed. T&D Holdings also discloses information it deems

to be important for its stakeholders, taking into account the

business environment, economic conditions, and industry trends

in accordance with its basic policy on disclosure.

In releasing information, T&D Holdings works positively to

disclose information to all stakeholders, utilizing various communi-

cation channels that include the Timely Disclosure Circulation

System (TDnet) offered by the Tokyo Stock Exchange, news

releases, and the T&D Holdings website, as well as printed materials

such as disclosure materials, annual reports, and CSR reports.

Furthermore, T&D Holdings is actively engaged in IR activities

based on its IR policy (see page 146), while ensuring that briefings

are provided by members of senior management, in principle.

Basic Policy for Eliminating Antisocial PowersIn its Group Compliance Code of Conduct, the T&D Life Group

defines its policy toward antisocial powers as to “Reject and strin-

gently respond to any antisocial powers and organizations that

threaten the order and safety of civil society.” In accordance

with this policy, the Group responds to antisocial powers in the

following manner.


Corporate Governance Data

Total Compensation Paid to Directors and Audit & Supervisory Board Members (Fiscal 2012)Category Monthly compensation Reserve for bonus Stock compensation-type stock options Compensation total

Number receiving compensation

Amount (¥ millions)







Directors 11 195 6 66 6 65 11 327

(Outside appointees) (2) (7) (0) (–) (0) (–) (2) (7)

Audit & Supervisory Board Members

5 61 0 – 0 – 5 61

(Outside appointees) (3) (15) (0) (–) (0) (–) (3) (15)

Total 16 256 6 66 6 65 16 388

1. The annual compensation limit established at a shareholders’ meeting is ¥500 million for directors and ¥130 million for audit & supervisory board members. Bonuses are included in the amount for directors. In addition, the annual compensation limit for stock compensation-type stock options (stock acquisition rights) for directors is ¥100 million, established separately from the above annual compensation limit for directors (excluding outside directors).

2. The above-mentioned payments include one director and one audit & supervisory board member who stepped down from their posts as of the close of the eighth ordinary shareholders’ meeting, held on June 27, 2012. As of March 31, 2013, the Group had ten directors and four audit & supervisory board members.

3. In addition to the above, the Group passed a resolution on “Final Payment of Retirement Benefits to Directors and Audit & Supervisory Board Members Following the Abolition of the Retirement Benefits Program” at the eighth ordinary shareholders’ meeting held on June 27, 2012. Accordingly, the Company expects to pay retirement benefits totaling ¥59 million to seven directors and two audit & supervisory board members who are eligible for the payment of these retirement benefits following the abolition of the retirement benefits program. These retirement benefits were not included in the reserve for directors’ and audit & supervisory board members’ retirement benefits recorded through fiscal 2011. The directors will be paid ¥40 million and the audit & supervisory board members will be paid ¥18 million.

4. In addition to the above, the Group paid a total of ¥1 million during fiscal 2012 to two directors and one audit & supervisory board member who stepped down from their posts prior to the end of fiscal 2012 as retirement benefits that were not included in the reserve for directors’ and audit & supervisory board members’ retirement benefits through fiscal 2011. The directors were paid ¥0 million and the audit & supervisory board member was paid ¥1 million. From fiscal 2013, the Group plans to pay ¥6 million as retirement benefits, ¥3 million for directors and ¥3 million for audit & supervisory board members.

Information Related to the Independent Financial Auditor (Fiscal 2012)Name Ernst & Young ShinNihon LLC

Amount paid for statutory services1 ¥185 million

Total remuneration to be paid by the Group to the independent financial auditor2 ¥401 million

1. Total remuneration for audits in accordance with the Japanese Companies Act and for audits in accordance with the Financial Instruments and Exchange Act.2. Total amounts of remuneration and other financial profits to be paid by T&D Holdings and its subsidiaries.

Holdings of the Directors and Audit & Supervisory Board MembersJune 26, 2013 June 27, 20121 June 28, 2011

President 13,881 shares 11,401 shares 4,315 shares

Other directors (average) 9,390 shares 8,950 shares 3,580 shares

Audit & supervisory board members (average) 4,448 shares 2,094 shares 900 shares

1. The Company conducted a 2-for-1 stock split of common stock on October 1, 2011.

Board of Directors, Audit & Supervisory Board, and Executive Committee (Fiscal 2012)Name Number of meetings Attendance rate Main members and attendees

Board of Directors 21 92.9% Directors, audit & supervisory board members

Audit & Supervisory Board 14 94.6% Audit & supervisory board members

Executive Committee 48 99.0% Chairman, president, executive officers, standing audit & supervisory board members

Group Management Committee 16 98.1% President, presidents of the three life insurance companies, standing audit & supervisory board members, etc.

Existence of Policy or SystemItem Yes/No Comments

Executive officer system Yes

Framework for setting directors’ compensation Yes Remuneration linked to performance

Director/Audit & supervisory board member share ownership Yes

Stock option system Yes

Liability limitation contract for outside directors and audit & supervisory board members Yes

Liability limitation contract for independent financial auditor No

Hostile takeover protection plan No

Basic code of ethics Yes T&D Life Group CSR Charter

Basic corporate ethics policy Yes T&D Life Group Compliance Code of Conduct




Top Management Commitment

Creating new value in the midst of change based on the Group’s breadth and depthThe T&D Life Group, centered on a collection of companies having more than a century of experience in the life insurance business, has always

acted in the belief that fulfilling its social responsibilities through its principal business is of the utmost importance. “Social responsibilities” in this

context refers to those responsibilities we bear with respect to customers, shareholders, local communities, employees and all other stakeholders

connected with the conduct of our business. As a corporate group hoping to grow perpetually alongside society, we absolutely must be motivated

by a self-awareness of our social responsibilities to demonstrate the corporate behavior needed by, and worthy of the trust of, all stakeholders.

Our Group shares the Corporate Philosophy, Management Vision, Fundamental Strategies, and CSR Charter. Group companies are pres-

ently leveraging their own unique features and distinctive business models to expand their businesses. At the same time these shared beliefs

underlie all of their business activities, linking these companies by strong bonds of trust that allow for mutual cooperation. We are convinced

that we can become an even stronger Group by recognizing our mutual values, sharing information, improving by learning from each other and

occasionally competing while Group companies take maximum advantage of their respective strengths.

Companies wishing to remain going concerns must always be thinking about what should be done to achieve growth five or ten years down

the road, and they must adapt to an ever-changing society. Problems deriving from an aging population and declining birthrate as well as

changes in employment patterns are becoming increasingly apparent in Japan. We must wholeheartedly face up to the changes in society,

transform these issues into opportunities for creating new value such as by providing products/services and utiliziling diverse human resources,

and exploit our Group’s breadth and depth to meet the expectations of our stakeholders.

Operating on the principle of mutual aid, insurance is inherently a business with an extremely strong public/social nature, and our Group

boasted a corporate culture of acting to fulfill its social responsibilities long before the term “CSR” ever caught on. Conscious and very much

proud of that fact, the T&D Life Group will continue its unshakable adherence to the “Try & Discover” motto as it lends an ear to the voices of all

its stakeholders and transforms together with society.

Kenji Nakagome Representative Director and President, T&D Holdings, Inc.

Government Entities

Regional Communities/

Society

Shareholders/Investors

Customers

Sales Agents

Employees

Playing a public role in society

Activities contributing to society as a community member

Providing appropriate returns on

investments

Providing excellent products and

services Partnering for mutual cooperation and

prosperity

Fair dealings

Providing workplaces that make work meaningful and

pleasurable

Effective and highly transpar-ent corporate governance

Thorough complianceProactive communication

EnvironmentProtecting the environment,

everyone’s home

Board of Directors

President

Organizational Units

Group ERM Committee Group CSR Committee

Group Risk Management Committee

Group Information Technology and Administration

Committee

Group Compliance Committee

T&D Life Group’s Basic Policy on CSR and Promotion FrameworkThe T&D Life Group’s basic policy on CSR is to contribute to

society through its core business as a life insurance company and

to earn society’s trust by dealing sincerely with the public and the

Company’s various other stakeholders based on its Group

corporate philosophy and vision. Through these processes, we

aim to achieve sustained growth in step with society.

The T&D Life Group has established the Group CSR Committee,

which is chaired by the President of T&D Holdings and consists of

directors in charge of CSR and other representatives from each

Group company. This allows all Group companies to play an active

The T&D Life Group and Its Stakeholders Group Corporate Social Responsibility Promotion System

Executive CommitteeGroup Management

Committee

Business Partners


FTSE4Good Global Index

role in the promotion of CSR-related activities. Further, this

committee discusses Group-wide CSR policies and initiatives, and

therefore has enabled the Group to strengthen its systems for

promoting CSR activities uniformly throughout the Group.

Through the Group CSR Committee, T&D Holdings and its

direct subsidiaries discuss, consider and share information on the

following matters:

1) Basic Policy on CSR

2) Common Group-wide measures

3) Promoting Group-wide collaboration on measures planned and

implemented by Group companies

4) Progress on common Group-wide measures and measures at

each company

Inclusion in Socially Responsible Investment (SRI) IndexT&D Holdings is included in the following

SRI index. (As of March 31, 2013)

T&D Life Group CSR Charter and Main CSR InitiativesT&D Life Group CSR CharterThe T&D Life Group has formulated the T&D Life Group CSR

Charter as a basic policy for further promoting CSR in accor-

dance with its corporate philosophy.

The Public Mission of the Life Insurance IndustryLife insurance is a mutual aid system based on pooling contributions

from many people and intended to reduce the future financial burden

and worry in case of need due to death, illness, or nursing care on

the part of customers or their families. It also helps supplement the

public social security system (public pensions, health insurance, etc.).

Meanwhile, life insurance companies support economic activity

by supplying capital needed by various sectors—government,

corporate, and private—through investment of customer premiums.

The life insurance industry is playing an increasingly important

role as part of the social infrastructure intended to support society

with its aging population and falling birthrate.

The three life insurance companies in the T&D Life Group will

continue contributing to people and to society by fulfilling the

public and social responsibilities their business entails.

T&D Life Group CSR Charter

The T&D Life Group is firmly committed to fulfilling the public mission of life insurance and other businesses and to undertaking its corporate responsibilities based on its management philosophy and by achieving sustainable growth along with society.

1. Providing Better Products and ServicesThe T&D Life Group will offer well-suited and high-quality products and services that meet customer needs.

2. Strict Compliance• The T&D Life Group will strictly observe laws, regulations and rules, and act

with integrity.• The T&D Life Group will maintain and promote fair and free competition.• The T&D Life Group will stand firmly against antisocial forces and groups that

may threaten the order or safety of civil society.

3. Respect for Human Rights• The T&D Life Group will respect human rights and make efforts to enlighten all

its employees on human rights.• The T&D Life Group will respect the individuality of all its employees, ensure a

safe and rewarding work environment, and develop its human resources.• The T&D Life Group will respect privacy and will strictly control and protect

personal information.

4. CommunicationThe T&D Life Group will widely disclose its management information in an appropri-ate and timely manner to the public as well as to its customers and shareholders, and will actively strive to maintain a dialogue with all its stakeholders.

5. Contribution to Communities and SocietiesThe T&D Life Group will implement social action programs as a good corporate citizen and will make contributions to the sound development of regional communities and society.

6. Global Environmental ProtectionThe T&D Life Group will carry out its activities with full awareness of the importance of environmental concerns and with sufficient consideration given to global environmental protection.

T&D Life Group Environmental Policy

The T&D Life Group will carry out business activities with full awareness of the importance of environmental concerns and will give sufficient consideration to global environmental protection based on the T&D Life Group CSR Charter. The Group will achieve sustainable growth along with society while fulfilling the public mission of life insurance and other businesses, and undertaking its corporate social responsibilities.

The Group established the following environmental policy and is committed to complying with it in all of its business activities.

1. Environmental Conservation Efforts through Business ActivitiesWe will contribute to the protection of the global environment in all of our business activities.

2. Reduction in Environmental ImpactRecognizing the environmental burden of resource and energy consumption and waste emissions, we will work toward reducing environmental impact by conserving energy and resources, recycling resources, and promoting green purchasing.

3. Compliance with Environmental LawsWe will observe all environmental laws and regulations.

4. Promotion of Environmental Awareness-Raising ActivitiesWe will raise environmental awareness among all Group members through awareness-raising activities to promote environmental protection initiatives.

5. Continuous Improvement in Environmental InitiativesBy setting environmental objectives and reviewing them regularly, we will endeavor to continuously improve our environmental performance.

All members of the T&D Life Group are notified of this environmental policy, which is also publicly disclosed.



T&D Life Group Environmental PolicyThe T&D Life Group formulated the T&D Life Group Environmental

Policy to clarify the Group’s stance on the environment and has

worked to disseminate the policy among corporate officers and

employees. The Group also promotes various activities to reduce

our environmental impact. The Group has also set out Green

Purchasing Standards and Rules, and gives priority to purchasing

environment-friendly products and services. These include not only

office furniture, equipment and consumable supplies essential for

business activities, but also printing of product pamphlets, policy

terms and conditions, real estate facilities and system equipment.

Examples of CSR InitiativesProduct Development Based on Customer FeedbackThe T&D Life Group’s three life insurance companies have created

a system for utilizing customer feedback received in the course of

daily sales activities in management. This feedback is being used

to improve product and service development and quality as well

as operations.

For instance, Taiyo Life responded to the need to add post-

contact protection so that customers can increase the coverage of

their current insurance. In October 2009, Taiyo Life started offering

add-on options for its mainstay Hoken Kumikyoku Best to allow

policyholders of this product to add the latest features or modify

details after purchase to ensure that coverage plans best meet

each policyholder according to their life stage.

At Daido Life, meanwhile, we developed new products that

reflect customers’ wishes with respect to J-type product (non-

participating insurance for serious diseases). We developed J-type

product (no surrender value or death benefit type), protection that

allows policyholders to be prepared for serious diseases with

more affordable premiums by eliminating the cash surrender value,

as well as J wide rider, which provides cover for a wider range of

serious diseases than before.

Initiatives to Support Women’s CareersTo enable work with high levels of motivation and enthusiasm by

all employees, the Group actively makes full use of all personnel

capabilities and determines postings regardless of gender. The Group

is building workplaces where women can fully utilize their skills and

engage in an extensive range of activities. Specific steps taken to this

end include the promotion of talented female employees to

management positions, provision for a change of job status from

clerical work to career track, and

organization of seminars to

encourage female workers to

build their careers.

Making Various Social ContributionsThe T&D Life Group has formulated the T&D Life Group CSR

Charter based on the Group’s Corporate Philosophy: “With our

‘Try & Discover’ motto for creating value, we aim to be a group

that contributes to all people and societies.” The Group regards

not only contribution through our main business but also through

extra activities of contribution to communities and society as

naturally being a duty that an enterprise must discharge as a

member of society. Based on this stance, the Group actively

engages in a wide range of social contribution activities.

• Daido Life was a special sponsor of the 12th National Sports

Festival for People with Disabilities (“Gifu-Seiryu National Sports

Festival”), the largest such event in the country, held in Gifu

Prefecture in October 2012. A

Daido Life booth staffed by

corporate officers and employee

volunteers from Daido Life, Taiyo

Life and T&D Holdings has been

set up each year at this event in

a space for interacting with

participating athletes.

• Taiyo Life has been conducting an annual clean-up around its

head office since 1982. In 2004, it renamed this activity the

“Nationwide Clean Campaign,” and its branches nationwide

began clean-up campaigns in the surrounding communities. In

fiscal 2012, a total of 8,551 employees and their families from

headquarters, branches and affiliated companies participated

in these activities. Employee volunteers from Group companies

(including Daido Life, T&D

Financial Life, T&D Asset Man-

agement, and T&D Holdings)

helped clean up the Shiodome

district in Tokyo where T&D

Holdings is headquartered.

• In cooperation with the Japanese Red Cross Tokyo Metropolitan

Blood Center, the T&D Life Group every year sets up a blood

donation clinic for two days at the Shiodome Head Office Building

in the summer and winter, and encourages corporate officers

and employees to donate blood. In fiscal 2012, a total of 371

people in the Group donated

blood at the Shiodome Head

Office Building.


Group Environmental Impact-Reduction Initiatives• “Cool Biz”/“Warm Biz”

As measures to help mitigate global warming, the T&D Life

Group sets room temperatures at around 28°C (82.4°F) from

May through September for “Cool Biz” and at 20°C (68°F) from

November through March for “Warm Biz.”

• Power Conservation Efforts

The T&D Life Group is implementing a number of measures to

address electricity supply shortages in summer. These power-

saving measures include setting office room temperatures at

around 28°C and reducing or turning off lighting, including in

unused areas (such as meeting rooms and hallways). The Group

also sets office equipment to energy-saving modes and has

extended “Cool Biz” periods.

• “Lights Down” Campaign

As an activity to raise the environmental awareness of each of

the Group’s corporate officers and employees, the T&D Life

Group has been conducting a campaign in which it calls for a

simultaneous “light switch-off” in offices twice a year, in July and

December. This is done in support of the “CO2 Reduction/Light-

Down’ Campaign” resting on the partnership between the

Ministry of the Environment and the Candle Night movement

organized by a private-sector group. The Campaign exhorts

businesses to turn off both indoor and outdoor lights to call

more attention to environmental problems from a standpoint of

preventing global warming.

Promoting Environmental CommunicationT&D Holdings endorses the activities of Associates of the Earth, a

Japanese environmental NGO that produces the Japanese edition

of Our Planet and TUNZA, both published by the United Nations

Environment Programme (UNEP). These two publications are

distributed to all companies in the T&D Life Group as well as to

local junior and senior high schools, public libraries, and other

parties, to raise awareness of environmental issues.

T&D Life Group CSR ReportThe T&D Life Group prepares CSR reports every year to provide

stakeholders with a clear picture of the Group’s concepts of and

approach to CSR, as well as its CSR initiatives.

In making the 2012 report, as we did with the 2011 report, we

divided the report into two different booklets—special topics and

Data Edition—in order to better communicate the Group’s various

initiatives to a wide variety of stakeholders. The special topics

booklet has been condensed into 16 pages by selectively choosing

the booklet’s contents to include information on items that are of

high interest to stakeholders, along with items that the Group has

a strong desire to communicate. Meanwhile, the Data Edition

booklet offers a comprehensive overview of the wide-ranging

management, social, and environmental initiatives the Group is

advancing based on the GRI Guidelines, which are international

guidelines for CSR reports. (Corporate Social Responsibility

Report 2013 is scheduled to be published in September 2013.)

Please read our CSR report for more on the T&D Life Group’s

CSR initiatives.

http://www.td-holdings.co.jp/en/csr/



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