Another Step Forward - T&D Holdings · 2017-03-30 · Growth Strategy page 22 Contents 25 Business...
Transcript of Another Step Forward - T&D Holdings · 2017-03-30 · Growth Strategy page 22 Contents 25 Business...
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
T&D HolDings, inc. AnnuAl RepoRt 2013 3
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
n T&D n Japanese life insurance industry
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.
2 Source: Compiled by T&D Holdings based on Summary of Life Insurance Business in Japan, Life Insurance Association of Japan
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.
3 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 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%
4 Meiji Yasuda 13.8%
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%
3 Meiji Yasuda 12.2%
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%
2 Meiji Yasuda 11.9%
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%
4 Meiji Yasuda 10.4%
5 Prudential US6 7.2%
6 T&D 6.4%
7 Sony8 4.1%
8 Fukoku10 3.2%
9 Asahi 3.1%
10 MetLife Alico 3.0%
11 Others 16.5%
1 Nippon 13.1%
2 Dai-ichi5 11.4%
3 Prudential US6 11.1%
4 T&D 9.8%
5 Sumitomo7 6.5%
6 Sony8 6.2%
7 MS&AD9 5.7%
8 MetLife Alico 5.5%
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
T&D HolDings, inc. AnnuAl RepoRt 20134
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
T&D HolDings, inc. AnnuAl RepoRt 2013 5
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.
T&D HolDings, inc. AnnuAl RepoRt 20136
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
T&D HolDings, inc. AnnuAl RepoRt 2013 7
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%
T&D HolDings, inc. AnnuAl RepoRt 20138
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
New Policy Amount¥ billions
New Policy Amount¥ billions
Policy Amount in Force¥ billions
Policy Amount in Force¥ billions
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 Policy Amount in Force 36,557.3 36,933.2 375.8
n MCEV 896.4 923.5 27.0
Adjusted net worth 490.4 644.7 154.2
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 Policy Amount in Force 1,988.6 2,040.0 51.4
n MCEV 64.8 77.5 12.6
Adjusted net worth 66.1 92.4 26.3
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
T&D HolDings, inc. AnnuAl RepoRt 2013 9
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
T&D HolDings, inc. AnnuAl RepoRt 201310
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.
Taiyo Life Insurance Company
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.
Daido Life Insurance Company
T&D Financial Life Insurance Company
Kajimaya (Hirooka head family house)
located near Tosabori River in Osaka
A poster announcing
the operational start of
T&D Financial Life
T&D HolDings, inc. AnnuAl RepoRt 2013 11
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
T&D HolDings, inc. AnnuAl RepoRt 201312
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
New Policy Amount¥ billions
Policy Amount in Force¥ billions
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
T&D HolDings, inc. AnnuAl RepoRt 2013 13
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 2012 Management Review
Fiscal 2013 Forecasts1
T&D HolDings, inc. AnnuAl RepoRt 201314
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.
T&D HolDings, inc. AnnuAl RepoRt 2013 15
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
Fiscal 2012 Management Review
T&D HolDings, inc. AnnuAl RepoRt 201316
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
An Interview with the President
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
stably and sustainably.
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
T&D HolDings, inc. AnnuAl RepoRt 201318
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%)
T&D HolDings, inc. AnnuAl RepoRt 2013 19
An Interview with the President
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
stably and sustainably.
* 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)?
T&D HolDings, inc. AnnuAl RepoRt 201320
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?
T&D HolDings, inc. AnnuAl RepoRt 2013 21
An Interview with the President
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?
T&D HolDings, inc. AnnuAl RepoRt 201322
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 representatives
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
T&D HolDings, inc. AnnuAl RepoRt 2013 23
An Interview with the President
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 HolDings, inc. AnnuAl RepoRt 201324
Taiyo Life Insurance Company
Daido Life Insurance Company
T&D Financial Life Insurance Company
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
Pet & Family Small-amount Short-term Insurance Company
T&D HolDings, inc. AnnuAl RepoRt 2013 25
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
In-house sales representatives
Comprehensive coverage centered on death protection and medical/
nursing care products
T&D HolDings, inc. AnnuAl RepoRt 201326
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
T&D HolDings, inc. AnnuAl RepoRt 2013 27
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
T&D HolDings, inc. AnnuAl RepoRt 201328
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
T&D HolDings, inc. AnnuAl RepoRt 2013 29
PERFORMANCE AND OPERATIONAL REVIEW
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
Management TargetsFiscal 2013
n Policy amount in force
¥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.
T&D HolDings, inc. AnnuAl RepoRt 201330
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
T&D HolDings, inc. AnnuAl RepoRt 2013 31
• 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
T&D HolDings, inc. AnnuAl RepoRt 201332
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 HolDings, inc. AnnuAl RepoRt 2013 33
PERFORMANCE AND OPERATIONAL REVIEW
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
Management TargetsFiscal 2013
n Policy amount in force
¥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
T&D HolDings, inc. AnnuAl RepoRt 201334
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.
T&D HolDings, inc. AnnuAl RepoRt 2013 35
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
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
T&D HolDings, inc. AnnuAl RepoRt 201336
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
Financial institutions
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
T&D HolDings, inc. AnnuAl RepoRt 2013 37
PERFORMANCE AND OPERATIONAL REVIEW
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
Management TargetsFiscal 2013
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.)
T&D HolDings, inc. AnnuAl RepoRt 201338
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.
T&D HolDings, inc. AnnuAl RepoRt 2013 39
PERFORMANCE AND OPERATIONAL REVIEW
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.
Pet & Family Small-amount Short-term Insurance Company
Takashi NakaoRepresentative Director and President
Management TargetsFiscal 2013
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
T&D HolDings, inc. AnnuAl RepoRt 201340
Key Systems Underpinning T&D Life Group
page 45
page 42
page 49
Corporate Social Responsibility
Corporate Governance
Management Organization
T&D HolDings, inc. AnnuAl RepoRt 2013 41
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
T&D Holdings (current)
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
T&D HolDings, inc. AnnuAl RepoRt 201342
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
T&D HolDings, inc. AnnuAl RepoRt 2013 43
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
T&D Holdings (current)
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
Jun. 2012 Audit & Supervisory Board Member of
Daido Life (current),
Audit & Supervisory Board Member of
T&D Holdings (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)
Jun. 2013 Audit & Supervisory Board Member of
T&D Financial Life (current),
Audit & Supervisory Board Member of
T&D Holdings (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)
Jun. 2013 Audit & Supervisory Board Member of
T&D Holdings (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
Audit & Supervisory Board Member
AKIMASA YOKOKAWA Born 1955
Audit & Supervisory Board Member
SHIGEKAZU IWAI* Born 1945
Audit & Supervisory Board Member
YUICHI OZAWA* Born 1943
T&D HolDings, inc. AnnuAl RepoRt 201344
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
Corporate Governance
Pet & Family Small-amount Short-term Insurance Company
T&D HolDings, inc. AnnuAl RepoRt 2013 45
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
Corporate Governance
T&D HolDings, inc. AnnuAl RepoRt 201346
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.
T&D HolDings, inc. AnnuAl RepoRt 2013 47
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)
Number receiving compensation
Amount (¥ millions)
Number receiving compensation
Amount (¥ millions)
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
Corporate Governance
T&D HolDings, inc. AnnuAl RepoRt 201348
Corporate Social Responsibility
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
T&D HolDings, inc. AnnuAl RepoRt 2013 49
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.
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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.
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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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