T&D Holdings, Inc. (8795) Earnings Call Transcript & Summary

Good afternoon. Thank you very much for joining us in spite of a tight schedule to join the IR Day for T&D Holding. My name is Tamura from Taiyo Life, and let me talk about the Taiyo Life's sales strategy. In thinking our strategy, improvement of profitability is -- comes first. Productivity has to be improved to achieve that. That is the sales strategy base. Please turn to Page 1. This is the table of contents. And let me go right into the main business, Page 2. Taiyo Life's business model and product development. On the left-hand side, you see the business model. Conventionally, the sales staff impairs visit households and the household market is the main market that we focus on. Traditionally, the household customers, usually senior people, elderly people are the ones, and we need to focus on the livelihood protection for protection type products. On the right-hand side, for example, customizable products for the core coverage or the dementia type protection type of insurance. Well, back in those days, it was not so much discussed, but we launched this. And those with the feeling the health concerns, we try to meet their needs of the elderly people to develop our products. For this fiscal year for -- starting in April, we have embarked in the age of the positive interest rate. So let's go to Page 3, Taiyo Life, how have we evolved the business model and how are we going to change that? On the lower left, as I said earlier, we -- our sales staff visited the door-to-door the households in Paris. And more recently, we try to shift toward hybrid sales, TV commercials and online commercials or advertisement. We get the customer information from these media to reflect in our sales approach. And based on that, our sales staff visit the household. The direct leave information that we utilize for our sales staff to use when they visit the households. So this is what we call hybrid sales. That's the face-to-face plus non-face-to-face. On the upper left, you see the enhanced sales support by life counselors, LCs. It used to be that those people who were in clerical works, administrative work, we try to reduce the administrative work on the branch side and the saved time can be diverted to the sales support. So with the appointment with the customers and that kind of information, customer information can be delivered to the sales staff from LCs and the staff visit the customers based on that information. And then the transformation of the branch management. There are 150 branches. It used to be in the 150 branches, all of them have the similar approaches in responding to the calls and do the administrative work. It was uniform, where we try to transform that. More recently, as I said, we get the direct customer information to be utilized by the sales staff invested in the households. But going forward, PayPay app can be used for selling our products. That means the information strategy is getting more and more advanced, which is going to be a main pillar of sales strategy. Lower right, strengthening of the management base. In the call center, it's manually operated. People respond. We try to utilize AI here. Operational efficiency means that AI is used again for improved efficiency. AI advanced companies, there are so many AI advanced companies, SoftBank -- together mainly with SoftBank, we collaborate. And from the next page onwards, I would like to go into each theme one by one. Page 4, please. Hybrid style sales to be promoted, as I said, TV commercials, online advertising. These are the media from which we get the information about the customers and then the sales staff can benefit from that. On the left, you see the evolution. Information started in 2016 before COVID-19. And through the COVID-19 days, utilizing that kind of information was used for sales activities and LC, life counselors, those in at the branch offices with the administrative work, they use the saved time for sales support to give information to the sales staff. Last year, we take the group insurance and the members when they retire, life individual insurance can be offered. So that kind of information for the sales staff is being -- that scope is being expanded. On the right-hand side, you see the bar graphs. The dark red bars shows the information or Suma Hakan information, giving the direct information. The pink bars are the lead information from LCs or group market information. So the volume of information is getting larger and larger. And the customer -- contracts from the customers, you see the gray broken line graphs. With the increase of the volume of information, the contract successful cases is increasing as well. Page 5, please. Iphase is the terminal that the sales staff use on a daily basis. With this use, the productivity can be improved. For example, market to be expanded and the market ability can be strengthened and the sales efficiency can be improved through APhase. Market expansion. But this is the online consultation can be made possible. The customers use the smartphones for that type of communication. When they are living in the remote areas, that make it difficult for them to visit the branch offices or they can shorten the time of trouble to the branch offices through the non-face-to-face sales through the terminal or devices. And digitally, our proposal can be transmitted to the smartphones of our customers. So this non-face-to-face sales, 137% increase of productivity was achieved because of this. In the middle, consulting tailored to customer needs of the planning of the products. AI analyze the past historical data, the family information -- family member information of the customers, the information can be imported and entered that those accumulated planning or information in Taiyo can be utilized. Compared to the time before, the Iphase average premium per policy has increased by 13%. And then the efficiency -- improvement of efficiency, looking at the logging of the history of the sales activities, we can analyze the strength and weaknesses of that sales staff for improvement -- possible improvements. And there's an AI customer list, let's say, the sales staff when they try to visit a household in adjacent areas, there may be powerful prospects. And then AI phase can display that on the screen. So the number of proposals of the life insurance increased by 20%. So this is one of the ammunition we can use for the improved efficiency or productivity. Page 6, please. Transformation of branch management and expansion of sales support service through LC. LC support the sales, as I said earlier. Those who used to support the administrative work of the branch, but they were eliminated by 70%, and that can be diverted to the sales support. Education of the sales staff and the sales support in terms of quantity and quality, there has been a support. You see the broker line graph on the lower right, 150 minutes by this fiscal year that the sales support has. And the lead referrals started to increase and the number of contracts have been gradually increasing. And then on the left, transformation of branch management Taiyo Life for several decades. All branches have the similar or the same administrative system or sales system, but we try to find the branch office dedicated to the sales promotion. This is a sales branch, but the head of the block branch office can supervise the sales activities for the enhanced operational efficiency. Per sales staff the new contract A&P increased by 16%. LC support before and after the management change, there has been an improvement by 30% or so. The sales branch LCs support hours increased by 30%. Page 7. As has been mentioned, in addition to direct leads, we collaborate with PayPay. Through PayPay app, we try to sell products and the customer information use can be more advanced. The prospect information can be expanded through this app. Page 8. The strengthening of the management foundation, mainly we collaborate with SoftBank. AI-operated call center is one example. And through AI, we try to eliminate the manual operation of the call center and the saved human resources can be diverted to sales support. On the right-hand side, improving headquarters operational efficiency, the system which -- under which the human and AI can collaborate can be materialized to reduce the human part. And then the strengthening of the sales promotion frameworks and infrastructures. AI can be -- IFace can be improved through the use of AI. even further on Page 9, increase in sales staff and productivity improvement. Hybrid sales approach is something we are trying to pursue. Under COVID-19, sales staff number increased. On the left, you see the graph. Per sales staff A&P of new business, 1.1 million to 1.5 million. The coverage amount increased before and after the introduction with those people with a tenure of 3 years or less. At the end of last year, the number went to 9,700, and now it is more than 9,900. Page 10. This is on the sales performance. Pre-COVID, it was JPY 15.7 billion, but it is JPY 22 billion in fiscal 2025. The protection type in-force A&P is JPY 171.1 billion. This is the progress compared to pre-COVID. The customer acquisition channel shown to the right, we utilize direct information and that portion is increasing. On the right-hand side bottom, there's a challenge in this surrender elapse rate, the sales rep channel, there is an increase in the surrender for contracts from the days of COVID-19. And also the agency channel, the contract that were made during the interest rate level was 0 is now the surrender is increasing. Next page. Now on Page 11. We -- from 2022, the single premium product premium is increasing. The JGB yield is declining. We have not done sales promotion, but the sales is increasing. So from this fiscal year, we will based on the needs of the customers to promote the savings type of product. We are going to restart the sales of the single premium products. We have been focusing on the third sector per person balance of the third sector, it's larger compared to the peers. And in addition to that, we're going to start to sell the savings type of product. For the savings type, the business expense margin will contribute to the A&P. Page 12, please. As I have said, and this is on bancassurance. The products sold when the interest rate is 0 is being switched by customers and the surrender is increasing. So we have changed the products that we sell through this channel. The conventional products surrender continues to stay at high level. In 2024 and 2025, the sales was roughly JPY 30 billion, but we have switched to the product with very low assumed interest rate and suppressing the volume sales. We have been focusing on product that is dedicated to the nursing care needs. The principal is recovering for the product before the switch of the product lineup. And right now, the surrender is less than 1%, and we believe this is sustainable. And now the surrender risk has been suppressed. The low-cost operation, this is very easy to explain because there is no MVA. The bancassurance has roughly 30 staff that promotes the sales. The initiative from this fiscal year is to focus on the customers of credit unions. The information is to be shared to the sales rep. We have been suppressing the bancassurance channel so the in-force balance will decline, and we expect that the risk of surrender will go down. Next is the trends in profit indicators. Group KPI is adjusted ROE and core profit. As shown to the left, in 2021, we ceded block policy. And under each measures, these indicators are on the rise. Right-hand side, core profit. In 2022, the claims payment related to COVID-19 increased. So the core profit declined. But otherwise, it is on an increasing trend. Especially last fiscal year, interest rate growth and the reversal of the reserve for the retirement allowance, that was a special factor related to the core profit. Through ceding, the positive spread is on the increasing trend. Page 14, please. This is the topic that we are working on to improve the profitability. We have been repeating 11 increase in the business expense margin over the past 7 years. And to the right, advanced underwriting, we are to reduce the moral risk from the underwriting to the assessment so that the claims payment will be at the appropriate level. The right-hand side, improvement of investment yield, the reduction of equity exposure, the shift of asset to alternative assets and others. The bottom, this is group collaboration, outsourcing of domestic equity management to TDAM and alternative asset management to TTIM. Page 15, structural change in the policies in-force. Taiyo Life's structure includes a large amount of individual annuity sold in the past. It still makes up more than 40% of the in-force A&P. This does not contribute much to the insurance bottom line. And also, it's rather difficult to generate positive spread. In the future, the payment of the annuity will be completed and it will run off. Roughly, the proportion will go down to 30% by 2030. The structure will change. And to replace that, we will increase the protection type of the product and savings type of product, which will generate positive spread. As shown to the right-hand side bottom, within the industry, some peers have nearly 10%, but ours is half of that. And through structural change of the in-force policy structures, this will be improved. Page 16. The core profit is broken down into these elements and one is the insurance bottom line and mortality margin and business expense margin are the components. We analyze them and the holdings is monitoring. And to identify what measures are working and what are not in order to constantly improve the measures and strategy. Last page, and this is full year earnings outlook. So please have a look. Thank you very much.

Thank you, Mr. Tamura. Next, we would like to proceed to the Daido Life sales strategy. Mr. Fujita, please.

Good afternoon. My name is Fujita from Daido Life. I'd like to present Daido Life sales strategy. Page 1, table of contents. I will follow this table of content. Page 2, please. First, I will explain our sales performance. During -- on the left-hand side, as you can see on the bar graph, the new contract or new insurance. During the previous medium-term management plan, new policy amount increased slightly reaching JPY 5.3 trillion in fiscal '25, up approximately JPY 170 billion from the previous fiscal year. This growth was driven by our consultative sales approach, which carefully address the customers' diverse protection needs and by the expansion of a total coverage proposal, which promotes death coverage and disability benefit as a combined solution. The total coverage proposal has helped strengthen relationship with existing customers while also expanding our customer base. As a result, the number of new corporate clients increased by approximately 300. Well, our customers have the business succession issues or so, they discontinue their business or because of the funding shortage they may surrender. As a result, the lost corporate clients increased. So the overall number of corporate clients remains almost flat. Page 3, please. On the left, the policy amount in-force increased for the second consecutive year, supported by strong new policy amount. It's an increase of approximately JPY 360 billion, reaching JPY 47 trillion from the end of the previous fiscal year, and it is the highest year-end level. Meanwhile, the surrender and lapse amount increased by approximately JPY 60 billion from the previous year, the lapse and surrender rate remained largely unchanged year-on-year. The increase in the surrender and lapse amount was mainly attributable to policy reviews associated with the launch of severe cancer coverage J-type in June 2025. This has a wider scope of coverage, and there was a review of the existing contract. But the result was broadly in line with our plan. Page 4, please. In line with the growth in the new policy amount, the value of new business, which represents profitability on the economic value basis has continued to expand steadily. In addition as a result of the continued efforts to protect SMEs through total coverage, embedded value, which represent corporate value on an economic value basis has also grown steadily. On a financial accounting basis, the profit increased by JPY 9.6 billion year-on-year, reaching a record high level as was the case with the policy amount in force. Page 5, please. Next, let me turn to the performance by sales channel. Our traditional sales channel, the sales tax channel and the tax accounting channel have strong advantage in activities conducted in collaboration with our partner organizations. As a result, both organizational indicators such as the number of sales staff and agencies and the new policy amount have continued to grow steadily. In the sales staff channel, we have strengthened initiatives related to personnel systems, recruitment, training and development. As a result, retention rates have shown a steady improvement and the number of sales staff returned to growth during the previous medium-term management plan, or MTMP. The tax channel has also continued to perform well with steady growth in both the number of agencies and new policy amounts. We expect this channel to remain a key driver of our future growth. The financial institutional institution channel, which has a strong advantage in accessing midsized companies, has steadily expanded its agency network. However, new policy amounts declined year-on-year for the second consecutive year, affected by factors such as the diversification of products promoted by agencies driven by the growing popularity of variable life insurance and the foreign currency denominated insure products. But this remains the main driver. So in addition to the protection type, protection, we will fully leverage our strength in providing solution related to inheritance and business succession measures. Page 6, please. Next, I'd like to discuss our FP and inheritance consultants and channel mix strategy. The FP and inheritance consultants are dedicated organization that provide support to branch sales staff in order to steadily capture customers' inheritance and business succession needs. The organization has expanded steadily and deployment across all regions in Japan was completed in fiscal '24. In addition, both number of company stock valuation consultations and the number of successful sales cases supported by the staff have increased steadily, making a significant contribution to improve productivity. Looking ahead, we believe that the need to address inheritance and business succession needs will continue to increase. Accordingly, we'll remain committed to further enhancing our wealth management business, including building relationships that span generations. Our channel mix initiative brings together tax contract agencies and sales staff to provide protection proposals. Both the number of agencies and new policy amounts have shown consistent growth. In addition, the proportion of new corporate clients is higher than in solicitations conducted solely by sales staff. The initiative has also contributed to expanding our reach to customers who have not previously had access to our protection solutions. We will continue to strengthen our efforts in this area. Page 7, please. Next, I'd like to discuss [indiscernible] and Chemical Support Program, or KSP. Since its launch in 2022, [indiscernible] has continued to expand its membership base, has grown into Japan's largest online communities of business owners with more than 130,000 members. In particular, the number of members registering through advertisement and organic search has increased in recent years. As of the end of fiscal '25, 47% of all members have joined without going through the sales channel. Next, KSP was launched in 2017 as a tool to support SMEs in implementing health management initiatives. As of the end of fiscal '25, it had been adopted by approximately 51,000 companies and was used by around 184,000 individuals. Adoption by companies that do not currently hold Daido Life insurance policies has also been increasing gradually. As labor shortage become increasingly severe, we recognize that implementing health management initiatives to help employees remain healthy and productive for longer is a critical management issue for SMEs. By expanding our range of support services and solutions, we aim to contribute even more to addressing these challenges. In addition, the number of companies that have taken our insurance policies after engaging with [indiscernible] and KSP has been increasing. We believe that both initiatives are increasingly translating into concrete business results in the form of new insurance contracts. Page 8, please. Next, I'd like to discuss the current performance trends. Looking back on the first quarter, we believe that the uncertainty surrounding SME management increased further due to factors such as the volatile situation in the Middle East, broader global developments and changes in the interest rates and foreign exchange markets. Turning to our performance trends. Disability benefit products recorded lower sales than in previous year. In June, there was this severe cancer type J product was introduced, reflecting the absence of positive impact from the launch of that product. However, death product -- death coverage products outperformed the previous year. As a result, the total new policy amount remained broadly in line with the strong level of the previous year. While the absence surrender amount increased, policy amount in force has recorded net growth since the beginning of the fiscal year. Although there were concerns about the impact of changes in the business environment of the management, the effect of our policy sales results has been limited so far, reflecting the strength in promoting protection type products. At the same time, we recognize that this is by no means a situation that warrants optimism as the impact of rising prices and others is expected to persist. We will, therefore, continue to provide tailored consulting services to each individual company and remain committed to proposing the protection solutions that best meet their needs. Page 9, please. Here, I'd like to explain the policy of the medium-term management plan, MTMP, that commenced this fiscal year. On this page, we have organized our view of the business environment, which formed the basis of the MTMP using the 3C framework. With regard to customers and competitors, as mentioned earlier, we believe that uncertainties surrounding SME management will continue to increase amid ongoing changes in the business environment. and that the economic outlook will remain unclear. In addition, the social challenges facing SMEs are becoming increasingly complex, including a shrinking working age population and increasing frequency and severity of natural disasters. As for the competitive environment, while we continue to closely monitor developments in the corporate insurance market, we do not currently see any significant changes in the competitive landscape. Leveraging our long-standing strength in promoting protection type products, which are less susceptible to economic fluctuations, we aim to achieve further growth by enhancing the value we provide to SMEs and by developing new customer base. In addition, by delivering value beyond insurance, we will diversify our sources of profits while building multifaceted and long-term relationship with our customers. Please turn to Page 10. Here, I will provide a little more detail on business sentiment among SMEs and the competitive landscape. Business sentiment among SMEs remain weak against the backdrop of persistent inflation, labor shortages and an unstable international environment. The majority of SMEs are concerned about the impact of rising prices on their businesses. As for the competitive landscape, we recognize the need to continue to closely monitor other insurers given the ongoing launch of corporate insurance products by competitors and their stated intentions to strengthen initiatives targeting the SME market. At this point, however, we have not seen any significant change in how frequently we encounter competitors when making proposals. There has also been no major change in the proportion of independent agents and new business volume is growing at both exclusive and multi-tide agencies. Please turn to the next page. This slide provides an overview of the medium-term management plan that began this fiscal year. The key point is that we will create value through both our insurance and noninsurance businesses. By steadily executing all of these strategies, we aim to maximize the value generated by both the insurance and noninsurance businesses, enhance our brand value and achieve our vision for the future. Please turn to Page 12. Here, I would like to share how we envision expanding our insurance business. As I mentioned earlier, under the previous medium-term management plan, we were able to achieve growth in in-force business. We believe this was driven by a steady increase in the number of companies which we have built strong relationships through initiatives such as the consistent implementation of our total protection proposal and efforts by our FP and inheritance consultants to address inheritance and business succession needs. It was also supported by growth in the number of newly insured companies resulting from initiatives such as the development of the financial institution channel and channel mix. Under the new medium-term management plan, we aim to further evolve our total protection approach to increase the amount of insurance coverage per company while also expanding the number of insured companies by developing our customer segments, thereby driving further growth in our insurance business. We will also evolve our customer data platform, which serves as the foundation for data utilization into a data and AI platform, enabling us to deepen our understanding of customers and achieve a significant improvement in productivity. Please turn to Page 13. From here, I will explain our initiatives under the sales strategy. As part of the development of our next-generation system, including system migration, there will be certain periods during which we will be unable to launch new products or revise underwriting standards. However, this was already factored into the medium-term management plan when it was formulated and will not affect our ability to achieve the plan. We will continue to systematically advance our initiatives towards realizing our target vision. Let me first discuss the direction of our efforts to evolve the value we provide to SMEs or further evolve our total protection approach. As the initiatives shown here are still at the stage of being developed in greater detail, I will refrain from going into specifics. One of our strategic direction is to offer value to everyone working at SMEs, which includes expanding our value proposition beyond business owners. As the first step, we have renewed Caixa Minate Kenko Plus, a health promotion insurance product that integrates KSP with the insurance coverage, including by increasing the maximum coverage amount. We believe the corporate employee market still offers significant room for further development since the renewal performance has been significantly higher than in the same period of the previous year. Please turn to Page 14. Next, I will discuss the development of new customer segments. I will refrain from going into the details of each initiative. But as one example, let me explain how we plan to further evolve DoDai. We will strengthen both its community function, which helps address the isolation and concerns faced by business owners and its solutions function, which supports problem solving and value creation by creating connections among business owners across regions and industries and accelerating growth in both membership and active users, we aim to create touch points with an even broader range of SMPs and monetize Daido. Please turn to Page 15. From here, I will explain approach to initiatives in noninsurance areas. As mentioned before, the business environment and the social and management challenges facing SMEs are becoming increasingly complex. So we would like to contribute to the SMEs in various aspects. We hope that we can reduce the gap between large enterprises and SMEs as such as possible. Please turn to Page 16. These are still under consideration. if you could confirm what are to be released in the current fiscal year. The services will be based on the solutions that will resolve the challenges that SMEs are facing in terms of the social challenges and management challenges. We will develop a long-term and multifaceted relationship with customers. Lastly, Page 17, this is our full year outlook. There's no change from the figures we have already announced. This concludes the presentation on the sales strategy of Daido Life. Thank you very much.

Thank you, Mr. Fujita. We would like to proceed to the Q&A session. [Operator Instructions] The first question is from JPMorgan Securities, Sato [indiscernible].

My name is Sato from JPMorgan Securities. I have 2 questions. First, about PayPay's collaboration, SoftBank's collaboration. That's Taio Life's business tie-up. On Page 8, you have shown us some examples. But if you can give us the time frame and the granularity of the initiative, your intent is that on a short-term basis, this can be achieved in your view? I think these initiatives have already started and the approval of the products and system has to be improved. Maybe it will take more time. There are 2 separate ways to look at this. If you could elucidate me on this. That's my first question. The second question, well, this may concern both lifes. For individual bond -- government bond and [indiscernible], if it materializes, what would be the effect or impact on your business environment if they come through? Or do you say that you don't have to worry too much about this? If you could give me a food for thought, I would appreciate it very much.

My name is [indiscernible] from CT Holding. Thank you, Sato-san. And Mr. Tamura will answer your question, but PayPay collaboration or partnership. For individuals, they have the client base and then with Taiyo Life, they were studying various possibilities. But group and PayPay's comprehensive partnership is the way to go. So the holding group as a whole is considering this partnership. So having said that, I will ask Tamura-san.

Thank you for your question, Tamura speaking. PayPay or SoftBank's collaboration with them. First about PayPay, the insurance product sales through their app. The product lineup of Taiyo Life or new products of Taiyo Life, we are studying various possibilities at this moment with PayPay. PayPay handles various insurance products, but the kind of products they never handled that is being sold by Taiyo Life for the senior citizens or the third sector products, unique -- the products with unique features are the ones we are thinking of. And PayPay app is used for sales, but system has to be built on the side of PayPay and on the side of Taiyo Life, for example, collection of the premium or the payment of the claims. So those are the technical specs that we have to cover going forward. But for new policy, in sense of the new policy, on the PayPay side, system-related subsidiaries, they have the system related companies. So we are working with them. The sales -- we have to agree on the sales timing. On the second half of next fiscal year is our target, and we are deepening the discussion -- technical discussion. Now collaboration with SoftBank. The major theme is the call center, AI-operated call center. But we have to look at the cost performance, cost benefits. The call center operation, we break down the various segments of call center operations. How can AI improve the efficiency? The SoftBank has a high level of expertise, and we use their expertise. But when we discuss with them, in the life insurance industry, call center operation is very complicated to them. And for the credit card companies, the SoftBank operates a call center. But compared to them, the life insurance companies call center operation is more complex. So the SoftBank, in order to improve their own call center productivity and efficiency, they have a very positive attitude on this. In November, there was a verification of the cost performance. And then after looking at that results, we will proceed. So that's my answer to your first question. About the advertisement and marketing area, well, we have also embarked on the discussion of the collaborations. But in due time -- due course of time, when the time comes, we would like to announce that to you. The second question -- for your second question about the government bond. Now Taiyo Life, the single premium whole life is being sold by us. Our market is for elderly people. That's the main market. So the products which merely increase the return is not the one. Protection has to be there in our products to the elderly. So Taiyo Life alone, well, we don't say that we are not affected, but our products are different in objective from government bonds in our efforts to meet the needs of our elderly customers. So we are not squarely facing their direct competition.

For Daido Life, individual sales to the individuals by the [indiscernible], allow me to answer that. Our core business, the corporate market, no -- almost no effect on the corporate market. But as Tamura-san said earlier, the single premium whole life insurance for the business owners -- for individual business owners, that's our proposal. So this, there may be a little bit of competition, but insurance products is not the product to merely increase the asset amount. We need to have the objective of the managed assets different from the products, which really looks at the return.

This is Tamura of Taiyo Life. Another point on life insurance, the inheritance tax is one of the purpose to utilize. And this is an additional benefit that is completely different from government bond. From that perspective, rather than head-on competition with the government bond, the inheritance measures will be a major topic for the customers. So that is the value.

The intent of my second question was related to the needs of inheritance. There are discussions -- careful discussions, but I think LDP is coming up with a proposal to reduce the inheritance tax. The protection is important. That part I understand. So is it all right to consider that there is no risk of competition?

This is Tamura of Taiyo Life. As you mentioned, from tax perspective, various discussions are underway. If government bond can be used for the inheritance, as I have said in the beginning, the needs is very different in terms of the product nature. I'm not saying that there is 0 impact, but our market is senior market. And in that market, protection is an attractive characteristic whereby we can capture customers.

Moving on to the next question. SMBC Nikko Securities, Muraki-san, please.

This is Muraki of SMBC Nikko Securities. I have 2 questions to Mr. Tamura of Taiyo Life. First question is single premium whole life. How are you managing this product? Any ingenuity in there? You talked about the inheritance. There are many customers who are intending to use that. The average age through the sales staff channel for single premium, what would be the average age of the male consumers? And what about the compensation to the sales staff or the executives? Any creative element in that? In your presentation, you talked about bancassurance. Since there is no MVA, there's less burden of explanation in the sales staff channel. Is the hurdle very high to attach MVA? Is it realistically difficult? Is that your judgment? That's my first question about the single premium whole life.

This is Tamura of Taiyo Life. On your first question, single premium whole life sales management, the current business promotion-wise, number-wise, compared to our intended number, it is relatively low. In the past, when we were selling such a product, we had very seasoned staff. And those staff were capable of selling such product in addition to protection type. But mid-career or younger staff, their focus had been protection. The protection to decline is what we want to avoid from the insurance bottom line perspective as mid-level staff, they're not really used to selling both protection type and single premium. But when we look at the monthly performance, the sales departments are sharing the successful sales cases across Japan. So every month, the sales volume is increasing. The average age is 65 years old. Taiyo Life's market -- main market is a senior segment. So average is 65 years old. This is quite normal. But actually, 80 -- people in their 80s, they can also purchase the product. And such needs is very strong. That is what we hear from the front line. So we expanded to people in their 80s. Last month, there were 15% to 16% of people in their 80s. So in that age segment, there's strong needs to purchase such product. That is the first point. What was the second question?

On the commission.

As I have said in the presentation, we have not done any sales promotion during the past decade. So the compensation to the sales staff is very low. But still, as I have explained, from around 2022, the sales volume started to increase. The sales staff did not focus on the compensation, but -- well, rather than compensation of the sales staff, it's more of a customers' demand. And from this year, as a company, we started to promote the sales. And we raised the compensation for insurance product with a certain level of premium. And the productivity will be higher if we can sell the high amount product. We do not provide a special incentive to branch manager under the ordinary performance management, we manage the branch managers. We have not added any additional incentive to promote the sale of this product. And whether MVA is difficult for sales staff. Speaking of difficulty in bancassurance product with MVA is rampant. So even when Taiyo Life introduced this product with MVA, banks will not be motivated to add. And in the past, we have not done so through the sales rep sales staff channel. Other companies are -- have invested so much resources to try to sell products with MVA. That means such product is very difficult to sell. Another element is that without MVA, can we not differentiate for bancassurance channel. MVA will become differentiation, but for our sales staff channel, it's rather difficult to think that MVA will determine the success of the sales.

The second point is about Page 16, the restriction on the business administrative expenses. I think the priority is to improve the profitability, maintenance cost of the policy. Do you have any metric you're using or you are going to use or to be disclosed outside?

Tamura speaking. About the business expenses management, most recently, we tried to break it down to subsections. More recently, system investment is incurred, the investment in human resources, those inside the house and the sales staff included the personnel cost will -- is most likely to increase. So the business expense is going to go up to a certain extent going forward. But then those contract management work when I talked about the management foundation, I said that those are a huge amount of work that belongs to each individual worker. And with the introduction of AI, the workload can be eliminated or lightened and the operation based on AI is the way to go. In the past, the operation is based on manual work. But going forward, we can reduce the workload or eliminate the workload with the introduction of AI. So because if we do this, whether this works or not, we need to manage that properly. And there will be an opportunity for me to explain in more details about this for you.

May I. Moriya from TNG Holding. About Muraki-san's second question, Daido Life is improving the earnings structure, which is very important. And with Daido Life too, going forward, there will be a cost increase coming from inflation. This is a challenge for the group as a whole. AI and digital transformation, it can reduce the operational cost or improve the profitability. That's the challenge on the whole group, and we are working on it. About the business expense, well, we need to reduce cost and improve our productivity. And each company has a different business. It's difficult to have a uniform comparison, but how to look at the unit cost, the holding on a regular basis confirming with each company. And then in the briefing session of the T&D Holdings, there will be more disclosures and our explanation from us to you going forward. Thank you.