T&D Holdings, Inc.

I'm Ito from T&D Holdings IR Division. Thank you very much for attending this conference call for earnings results announcement. And the materials are posted on our website in the IR section. And at the outset, I will provide a 10-minute explanation following the materials, and then we will have a Q&A. Without further ado, Let me begin my explanation. Please turn to page three. First of all, I would like to present the key highlights of the financial results. For the fiscal year ended March 2026, a group adjusted profit exceeded the full year forecast of 146 billion yen, reaching a record high of 158.5 billion with adjusted ROE at 10.5%. The full year forecast for the fiscal year Ending March 2027 is 172 billion yen, which is up 13.4 billion yen year-on-year, which is 131 billion yen up. Sales results of new policies exceeded the plan at TAIO and TDF. While DAIDO fell short of the plan, it exceeded year-on-year levels. Surrender under LAPS. Laps rates increased at Tayo and Dido while declined at TDF. Value of new business as the combined total of the three life insurance companies amounted to $169 billion. Group EV increased by $292.9 billion from the previous fiscal year to $4. 1,238.6 billion with ROEV at 12.1%, ESR was 222%. Domestic and foreign equities totaling approximately 296 billion were sold during the fiscal year by Taiyo and Daido combined. In addition, the increase in interest income resulting from the replacement of yen-denominated bonds In the fiscal year ended March 26, was approximately 6.5 billion yen on an annual basis. Dividend per share forecast for the fiscal year ending March 27 is 164 yen, an increase of 34 yen from 130 for the fiscal year ended. Thank you very much. The three life insurance companies recorded profit growth, while T&D United Capital posted a decline in profit. Next page, please. The key performance indicators of the three life insurance companies presented, Tayo and Dido, the positive spread increased mainly due to higher interest and dividend income. Although Dido recorded a capital loss, this was attributable to realize the losses incurred from bond replacement, which was undertaken with the intention of achieving cash flow matching. TDF recorded a profit increase mainly due to improvements in insurance margins driven by growth in imports policies. The factors behind the changes in core profit are shown on page 8, notably for both TAIO and DAIDO, an increase in the reversal of the reserve for retirement benefits contributed to higher core profit. Please move to page 9. Average assumed investment yields of TAIO and DAIDO were 1.36% and 1.2% respectively. Next page, please. T&D United Capital's adjusted profit decreased by 1.8 billion year-on-year, to 10.7 billion. Profit contributions from Viridium commenced from the fourth quarter. Next page, please. Cumulative adjusted profit from investments in the closed book business amounts to approximately 89 billion. In addition, dividends received for the fiscal year ended March 26th. Next page, please.

New policy amount at Daido continued to be strong and achieved a year-on-year growth. Although the surrender and lapse rate rose, in-force business volumes increased compared with the end of the previous fiscal year. Please turn to the next page. Annualized premiums of new policies at TDF declined year-on-year, mainly due to lower sales of foreign currency-linked products. In addition, the surrender and lapse rate declined due to a decrease in policies reaching their target values for foreign currency-linked products, resulting in an increase in annualized premiums of policies in force compared to the end of the previous fiscal year. Please turn to the next page. We have previously disclosed market consistent embedded value, MCEV, in accordance with the MCEV principles. However, in light of the introduction of economic value-based solvency regulations, we disclosed Group EV from the results for the fiscal year ended March 2026, reflecting calculation methodologies aligned with a new regulatory framework. The impact of this change in methodology amounted to a decrease of 136 billion yen. Group EV increased by 292.9 billion yen from the end of the previous fiscal year, primarily driven by the accumulation of the value of new business and higher domestic and overseas equity markets reaching 4,238.6 billion yen. The value of new business for the three life insurance companies increased by 2.9 billion yen from the previous fiscal year, mainly due to a stronger new business performance and rising domestic interest rates reaching 169.0 billion yen. The new business margin was 8.7%. The breakdown of EV for the three life insurance companies is presented on page 16. The drivers of change in Group EV are shown on page 17 to 18, and sensitivities are provided on page 19. Please move to page 20. This page shows the status of investment at Tayo and Daido. the combined amount of domestic and foreign equity sales by the two companies was approximately 296 billion yen. The increase in interest income associated with the replacement of yen-denominated bonds in the fiscal year ended March 2026 amounted to approximately 6.5 billion yen on an annual basis. The interest rate matching ratio stood at 88.3% for Daido and 96.7% for Taiyo. Page 21 shows you the status of foreign currency-denominated bonds. Please turn to page 24. This page shows the status of net valuation gains on losses on general account assets. While unrealized losses on public bonds increased due to the rise in domestic interest rates, unrealized gains on equities increased, reflecting higher domestic and foreign equity prices. Please turn to page 26. As of end of March 2026, the ratio of strategic shareholdings to net assets stood at 19.1%, reflecting an increase in the market value of the holdings. We will continue to work on reducing our strategic shareholdings to zero by the end of March 2031, except those for business partners and collaborators with an interim target to reduce strategic shareholdings by 40% by the end of March 2028 compared to end of March 2026. Please turn to the next page. Stocks that have been reclassified from strategic shareholdings to pure investment holdings are being sold off as part of the process of reducing equity risk. As of end of March 2026, 59% of such shareholdings were divested on a cumulative basis. Please go to the next page. While surplus increased from the end of previous fiscal year, economic capital increased and ESR declined due to increased mass surrender risks driven by rising domestic interest rates as well as investment into viridium. The ESR under the new regulatory framework is currently being calculated and preliminary figures are scheduled to be disclosed at the IR meeting planned for June 5th. Please move to the next page. Consolidated full-year earnings forecasts for the fiscal year ending March 31, 2027 are stated on this slide. Group adjusted profit is expected to increase by 13.4 billion to 172 billion yen, and adjusted ROE is expected to be 11%. Please turn to page 31. The breakdown of the earnings forecast for the three life insurance companies is as shown. At Tayo Life, beginning with the fiscal year ending March 27, the key performance indicator will be changed from annualized premiums of protection-type policies to key performance annualized premiums. This change reflects the introduction of products that respond to changes in the business environment, including rising interest rates, and incorporates the protection component of savings-type products in addition to the conventional protection-type annualized premiums. The outlook for the core profit and spread is presented on page 32. Please turn to page 33. Finally, I will explain shareholder returns. The dividend per share for the fiscal year ended March 2026 remains unchanged at 130 yen as announced on March 17th. The forecast dividend per share for the fiscal year ending March 2027 is 164 yen, an increase of 34 yen year-on-year. This concludes our presentation of our financial results for the fiscal year ending March 2026.

Next, we would like to move on to the Q&A session. The first questioner is Mr. Muraki from SMBC NICO Securities. Please. Go ahead. This is Muraki from S&P Cineco Securities. I have two questions. The first one is on page 31, the TAIO and DAIDO adjusted profit, the revised guidance. So it's mostly flattish, I understand, but the proceed from a sale of Neuron Belgar and retirement allowance and Dido's business expenses increasing, but there seems to be rather huge variance. And can you explain to me the factors behind the variances? That is my first question. Thank you, Mr. Muraki, for your question. So regarding this fiscal year and last year, I would like to explain about variances. Probably it's easy to understand if you look at page 32. So the profit and dividend income. First of all, alternative assets performed extremely well last year. And because of the absence of such... exceptional performance. There is a reduction of about 20 billion yen. And also, because we saw the equities, the income related to equity reduced 6 billion yen. On the other hand, the replacement of yen-denominated bonds, the increase of 11 billion yen, and the hedging costs Next, increased expenses, 20 billion yen. So the factors behind the increase in business expenses, so the figures for three companies combined, first of all, system expenses, 8 billion yen, and then the personnel cost, 4 billion yen. And new policy acquisition cost, 3 billion yen. So these are our assumptions. Other than that, capital gains. So going back to page 31, so $64 billion, just about. And the loss from Marcelo Bayen-denominated bonds is about $60 billion. And then the remaining $20 billion is mostly a reduction in equities. And Nubin Bilgar said, So 12 billion euro sale proceed or the proceed will be 24 billion. And in May of 2026, when we obtain the approval from the authority, the deal will be completed. Extraordinary loss of 20 billion or more. occurred last year but this year we don't have this and Taiyo I forgot to mention Taiyo so last year it performed well incremental profit of 10 and this year 10 billion yen down because of the absence of that and died of 4 billion yen And we took a conservative view towards this. And page 32, and Taiyo Bank Assurance, a difference of 2 billion yen down and an increase in business expenses. And TAIO, the 2 billion yen reduction will come from downsizing of bank assurance plus increased business expenses. That is my explanation. Thank you. My second question is about surrender. Page 17, EV. So impact of surrender, what is the amount of impact, and what is your assumption about this year's surrender? Page 18, first. So insurance-related assumption and variance, the three companies, these are mostly related to surrender. Tayo of $77 billion, $54 billion is the impact of surrender. Dido out of $87 billion, $61 billion is the impact of surrender. And the surrender trend, it's difficult to say, but regarding daido life, last year we saw an increase in surrenders, which is shown on page 13. But the factors behind this is J-type surrender. product, which was launched in June, and review of the protection. So this is sort of a one-off increase, excluding that it will be below the previous year. And regarding March 2027, we are expecting slight improvement. However, EV, because we use a 10-year average, so 10 years ago and this year's surrender level is higher. So for EV, we are starting to see some negative impact. Next is Tayo. Tayo, page 12. So below a bar graph, as you can see, the surrender is increasing. So bank assurance-related surrender is increasing because of rate hike surrenders are increasing. And one-time payment products are seeing surrenders. So bank assurance-related So after five years, the cash surrender value will not increase, and therefore we are expecting surrender will be leveled off on the PLATO going forward. And impact on EV moving forward. If the surrender situation deteriorates, it will certainly have an impact on EV. So we will review this. And this year's impact is already included, but moving forward, the additional impact will be reviewed. That is my explanation. Understood very well.