T&D : Outside Director Roundtable

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Outside Director Roundtable

Strengthening gov-

FY2022 review of the strengthening of the Group's corporate governance

ernance for the next stage of growth

We asked the outside directors to discuss T&D Holdings' corporate governance challenges, efforts to resolve them, their roles as outside directors, and other topics, while also taking into account the issues mentioned in the FY2022 roundtable.

Ohgo

I believe that the Group's governance has greatly progressed over this year. I acted as the chairman of the Nomination and Compensation Committee for the first time. Thanks to the efforts of the committee members, individual compensation for directors and Audit and Supervisory Committee members is now determined by a resolution of the Board of Directors, instead of the discretionary decision of the Representative Director as it had been before. An even greater new epoch is the process for nominating a president of each core company. Previously, each core company would list up candidates for President, discuss it at the Nomination and Compensation Committee and then again in the Board of Directors. This time, a different process was used-T&D

Holdings took the lead in discussing the selection of candidates for President of core companies. To be honest, I think that this is a huge step forward in the sense that T&D Holdings, which used to have each company acting individually, has started to move together as one Group.

Taishido

I was appointed an outside director last June, and I understood that the promotion of integrated Group management with T&D Holdings at the helm was an extremely key management issue. At the same time, it was a year where I was keenly felt, from my outside perspective, how the management team had a strong awareness of promoting integrated Group management and were trying to

Higaki

Having already touched on some of the challenges, I would further say that from a shareholder and investor perspective, it is all about managing the company with capital in mind. There is a need to make clear where capital is being used, sufficiently improve return on this capital, and distribute it appropriately. In order to achieve this, we need to take the scalpel to pain points and push forward with reforms. At present, we have not yet gotten that far. When I look into the cause of this, I feel that it lies in a culture where everyone is looking for comfort and trying to avoid friction as much as possible. This cannot be overlooked as an outside director, that is, a representative of stakeholders, including shareholders. This is why I believe that not turning a blind eye to the pain involved and overcoming it to move forward will lead to the next step up.

Yamada

The Group is committed to management on both an economic value basis and a financial accounting basis. FY2022 was a very difficult year when it comes to this goal. With costs increasing due to COVID-19 hospitalization benefits payments as well as foreign exchange hedging, I witnessed firsthand how important it is to strike a balance between securing profits for financial accounting purposes, which are the source of shareholder return, while also ensuring a stable increase in economic value. I highly commend the fact that the executive side was sensitive to changes in the market environment, discussed awareness of the issues at the Board of Directors in a timely and appropriate manner, and reviewed the revised profit targets at an early stage and disclosed them promptly, rather than postponing them. However, it is a fact that profits have decreased both on an economic value basis and on a financial accounting basis. Accordingly, I believe that this is

an issue to be discussed at the Board of Directors meetings and other forums from a medium- to long-term perspective.

Watanabe

At the IR Meeting held the other day, I was impressed by the power of T&D Financial Life President Morinaka's message in response to an investor question: "there are still many things we should do in terms of integrated Group management." At the same time, I used to be an Audit and Supervisory Board member for the company, so I would like to use that experience to monitor the company closely and support its growth.

Taishido

I would like to see further progress in strengthening the function of the Nomination and Compensation Committee. Sufficient commitment is required for outside directors to be effectively involved in personnel for directors and Audit and Supervisory Committee members, so I would like to commit to working on reform. With respect to management, outside directors are in a position to supervise from an outside perspective. After I was appointed last year, I wanted to determine what the Group's management issues were, and in particular, what issues should be prioritized.

I actively communicated with all of the outside directors as well as the executive side and management team to understand the various issues we face. In light of this, I would like to persevere as an outside director to see through to the end whether the Group is steadily advancing measures and achieving certain results toward the realization of Group Long-Term Vision. During my term in this position, I would like to push to leave a legacy of significant progress and great improvements in this area.

I would like to see further progress in strengthening the function of the Nomination and Compensation Committee.

--- Taishido

Ohgo

As a consultant, I have seen many cases in which companies that vocally emphasize only corporate governance have not necessarily done well. While it is important to push forward with efforts to strengthen governance, I am keenly aware that, ultimately, the primary objective of a company is to sustainably increase its corporate value. A company that is growing sustainably is the one that is able to continue to provide new value to its customers.

If this is done, then as a matter of course, earnings will expand, shareholders and investors will highly evaluate the company, compensation will increase, employee satisfaction will rise, and further business expansion will increase the number of managerial posts, which will increase motivation to work and contribute to society in terms of employment. It is our responsibility to work hard to transform into a company that will please our stakeholders through such a virtuous cycle. However, the answer to the question of what approaches can help us find new value is not

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Outside Director Roundtable

before at the Board of Directors. On the other hand, people in the sciences are in the business of taking on the unknown, so I think it is rather natural for reform to start from a place where one's common sense is negated. In this light, I believe that it is difficult for reforms to progress, much less innovation, in a company

with a large concentration of administrative personnel. As is demonstrated by the calls for the ratio of female managers to be brought to 30%, I think it will be difficult to become an innovative company unless we increase the diversity of the organization, be it in the ratio of people with science backgrounds or in mid-career

hiring. The company will change considerably when it becomes an organization that mobilizes people through their skills, abili- ties, and judgments. I would like the company to aim to become like this.

Message to stakeholders

Higaki

Encourage the Group to fulfill its accountability to policyholders in the most understandable and appropriate manner, and to provide products and services that are superior to any other com- pany. At the very least, I believe it is the duty of those of us who are appointed as outside directors in this company.

I believe the company will not be innovative unless it increases its organizational diversity.

--- Higaki

Yamada

The Group takes an extremely positive stance toward information disclosure. This is highly commendable. The company has also started preparing its annual securities report much earlier, and is one of the few companies that submit it before the Shareholders' Meeting. Not only does it publish its integrated report at an early stage, but it also appears to work hard to enhance the report's content. The company is also proactive when it comes to constructive dialogue with investors. While the amount of information communicated externally is increasing every year, I would like the company to establish a system to ensure accountability without fleeing from the issue. I believe this will help improve the corporate value of the Group.

Watanabe

Because I have been a business revitalization attorney for so long, I often think about things from the employee's perspective, which is key to business revitalization. A comfortable and rewarding working environment for employees and the development of human resources are also important for the growth of a company. I would like to ensure that the company and employees can grow together, and from this perspective, I would like to supervise the management of the company.

Taishido

Customer satisfaction and employee engagement scores are the KPIs of the Group Long-Term Vision, so I would like to properly see a change in them. It is important that those scores steadily increase, and I will focus my supervision on whether new issues are being identified from the survey results, and whether improvement measures are being formulated and implemented. In addition, I advocate for ROE management and actively discuss our business portfolio. Concerning this point, I believe that we should proceed while further deepening our dialogue with the capital market, and I intend to keep a close eye on such matters during this year.

Ohgo

I would like to see the Group steadily implement "Try & Discover" as stated in the T&D Insurance Group's Corporate Philosophy and the "Make Change with Boldness" committed to in the Group Long-Term Vision. My hope is that the company will not only uphold these ideals, but also carry them through.