Farallon Urges Radical Overhaul at T&D, Testing Japan's Reforms

SAN FRANCISCO, CA – January 27, 2026 – In a significant test of Japan's evolving corporate governance landscape, U.S. investment firm Farallon Capital Management today publicly released a detailed presentation demanding a strategic overhaul at T&D Holdings, Inc., one of Japan's largest insurance groups. The move escalates a long-running engagement into the public sphere, placing T&D's management under intense pressure as it prepares to unveil its next five-year strategic plan in April 2026.

Farallon, a shareholder in T&D Holdings since 2008, is urging the insurer to pursue "bold reforms to enhance corporate value" and fully commit to a framework of "EV-based management." The publication of the presentation, which Farallon states was first sent privately to T&D's board in October 2025, signals a new, more assertive phase in the activist's campaign to reshape the Japanese insurer's future.

A Public Blueprint for Change

Farallon's proposals are not mere suggestions but a comprehensive blueprint for what it sees as a necessary transformation. The firm is calling for a multi-pronged reform agenda targeting profitability, capital efficiency, and group governance. Central to its critique is the performance of Taiyo Life, one of T&D's three core insurance subsidiaries.

According to the presentation, Farallon wants a thorough review of Taiyo Life's business model. This includes curbing the sale of what Farallon deems low-return savings products, consolidating its bank-channel operations, and implementing significant cost-cutting measures by reining in salesforce expansion and consolidating branches.

Beyond specific operational changes, Farallon is pushing for a fundamental shift in how T&D allocates capital. The investment firm is a strong proponent of "EV-based management," a method that uses Embedded Value—a measure of the present value of future profits from existing policies—to guide strategic decisions. Farallon argues this approach would lead to better capital efficiency. To achieve this, the firm recommends accelerating the reduction of T&D's extensive cross-shareholdings, a long-standing feature of Japanese corporate culture that activists argue ties up capital inefficiently and entrenches management.

Furthermore, Farallon suggests a more strategic use of reinsurance to offload risk from low-return policies. The governance structure of the holding company is also in the crosshairs. Farallon has proposed discontinuing the practice of having the presidents of the Taiyo Life and Daido Life subsidiaries also serve as directors on the main T&D HD board, arguing this creates conflicts of interest. Instead, it advocates for a new "Group Value Enhancement Committee" composed solely of independent outside directors to oversee the reform process.

The Rising Tide of Activism in Japan

Farallon's public campaign against T&D Holdings is emblematic of a broader trend of increasing shareholder activism in Japan. For years, foreign and domestic investors have grown more vocal in their demands for Japanese corporations to improve capital efficiency, increase shareholder returns, and dismantle cozy governance structures. This pressure has been amplified by reforms from the Tokyo Stock Exchange and the Japanese government, which have encouraged companies to improve their return on equity and be more responsive to shareholders.

The focus on unwinding cross-shareholdings is a particularly potent theme. These intricate networks of share ownership among listed companies have long been criticized for insulating management from accountability. Farallon's repeated calls for T&D to divest these holdings align with a market-wide push for greater transparency and more disciplined capital management.

This campaign also highlights a shift in the insurance sector itself. Japan's Financial Services Agency (FSA) is set to implement new solvency regulations in 2026 based on economic-value principles, making metrics like Embedded Value more critical than ever. Farallon's push for EV-based management is not just an activist's preference but an alignment with the future direction of regulatory supervision, positioning its argument as both a value-enhancement strategy and a forward-looking risk management imperative.

T&D Holdings at a Crossroads

For T&D Holdings, Farallon's public demands come at a pivotal moment. The company, which also oversees Daido Life and T&D Financial Life, has recently posted strong financial results. For the fiscal year ending March 2025, it reported a 28% increase in profit attributable to its owners, with its Market Consistent Embedded Value (MCEV) rising to over ¥4 trillion. With a healthy solvency margin ratio and a diversified business model targeting distinct market segments, T&D's management could argue that its current strategy is bearing fruit.

This apparent success creates a complex dilemma for the company's leadership. They must now navigate the final months of preparation for their "Group Long-Term Vision" while a significant and long-standing shareholder publicly questions the very foundation of their strategy. The pressure is not just to deliver a plan, but to deliver one that convincingly addresses the detailed and data-driven critique laid out by Farallon.

The insurer has not yet issued a public response to the presentation. The coming weeks will be a crucial test of its board's resolve and its willingness to engage with the activist's proposals. The decisions made in response to this pressure will not only shape T&D's strategy for the next five years but will also send a powerful message to the market about the influence of shareholder activism in modern Japan.