Presentation Material

Consolidated Financial Results
for the Six Months Ended September 30, 2016
andSony Life’s MCEV as of September 30, 2016

Sony Financial Holdings Inc.
November 14, 2016
Sony Financial Holdings Inc. All Rights Reserved

Content
 Consolidated Operating Results for the Six Months Ended September 30, 2016

(FY16.1H)

P.3

 Forecast of Consolidated Financial Results for the Year Ending March 31, 2017

(FY16)

P.29

 Sony Life’s MCEV and ESR as of September 30, 2016

P.31

 Appendix

P.34

Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies and beliefs of the Sony Financial Group. Anystatements contained herein that are not historical facts are forward-looking statements or pro forma information. Forward-looking statements may
include—but are not limited to—words such as “believe,” “anticipate,” “plan,” “strategy,” “expect,” “assume,” “forecast,” “predict,” “propose,” “intend” and“possibility” that describe future operating activities, business performance, events or conditions. Forward-looking statements, whether spoken or
written, may also be included in other materials released to the public. These forward-looking statements and pro forma information are based onassumptions, decisions and judgments made by the management of Sony Financial Group companies, and are based on information that is currently
available to them. As such, they are subject to various risks and uncertainties, and actual business results may vary substantially from the forecasts
expressed or implied in forward-looking statements. Consequently, investors are cautioned not to place undue reliance on forward-looking statements.
Sony Financial Group companies are under no obligation to revise forward-looking statements or pro forma information in light of new information, future
events or other findings. The information contained in this presentation does not constitute or form part of any offer for sale or subscription of orsolicitation or invitation of any offer to buy or subscribe to any securities, nor shall it or any part of it form the basis of or be relied on in connection withany contract or commitment whatsoever in Japan or abroad.
*Unless otherwise indicated, in these materials figures less than the indicated unit have been truncated, while ratios and percentage changes have been rounded.
Also, a “–” is used where percentage changes exceed 1,000% and in cases where one or both comparisons are negative.
* “Lifeplanner” is a registered trademark of Sony Life.

Sony Financial Holdings Inc. All Rights Reserved2Consolidated Operating Results for
the Six Months Ended September 30, 2016
(FY16.1H)

Sony Financial Holdings Inc. All Rights Reserved

3

Highlights of Consolidated Operating Performancefor FY16.1H (1)Consolidated ordinary revenues(Billions of yen)

Consolidated ordinary profit

662.2(4.6%)

631.9

596.4

564.5

(31.9)(5.3%)

Ordinary profit

22.5

32.2

+9.6

+42.8%

Non-life
Insurancebusiness

Ordinary revenues

48.2

50.2

+2.0

+4.2%

Ordinary profit

2.7

3.3

+0.6

+22.6%

Ordinary revenues

19.0

18.6

(0.4)

(2.1%)

Ordinary profit

3.4

1.7

(1.6)

(47.5%)

(1.4)

(1.5)

(0.0)

－

0.1

(0.2)

(0.3)

－

Ordinary revenues

662.2

631.9

(30.3)(4.6%)

Ordinary profit

28.8

37.1

+8.2

+28.7%

Profit attributableto owners of theparent

19.1

25.1

+5.9

+31.2%

Ordinary revenues
Ordinary profit

Consolidated

28.8
FY15.1H

ChangeOrdinary revenues

Intersegment
adjustments*+28.7%

FY16.1H

Life
Insurancebusiness

Bankingbusiness

37.1

FY15.1H

FY16.1H(Billions of yen)*Ordinary profit in “Intersegment adjustments” is mainly from SFH. Nursing care business has
been included in the scope of consolidation from FY16.1Q.
*Comprehensive income : FY15.1H: ¥16.4 billion, FY16.1H: ¥18.9 billion(Billions of yen)

16.3.3116.9.30

Change from
16.3.31

604.3

598.6

(5.7)

(0.9%)

10,352.1

10,744.6+392.5+3.8%

Net assets

Consolidated
Total assets

Sony Financial Holdings Inc. All Rights Reserved

4Highlights of Consolidated Operating Performancefor FY16.1H (2)Life Insurance Business: Policy amount in force increased steadily year on year. However, ordinary
revenues decreased year on year due to a decrease in insurance premium revenues led by a decline insales of single premium products. Ordinary profit increased significantly year on year due to a significant
decline in provision of policy reserves for minimum guarantees for variable life insurance owing to a lower
acquisition of new policies, despite lower gains on sale of securities in the general account.
Non-life Insurance Business: Ordinary revenues expanded year on year, owing to an increase in net
premiums written primarily for mainstay automobile insurance and an increase in gains on sale ofsecurities. Ordinary profit increased year on year, due to the above-mentioned increase in gains on saleof securities.
Banking Business: Ordinary revenues decreased year on year due to a decrease in interest anddividend income on securities, partially offset by an increase in interest income on loans in line with afavorably growing balance of mortgage loans. Ordinary profit decreased significantly year on year, due tolower interest rates, an increase in operating expenses, mainly in advertising expenses for card loanbusiness, as well as decreased volumes of foreign currency and investment trust transactions.
Consolidated ordinary revenues decreased 4.6% year on year, to ¥631.9 billion. Ordinary revenues fromthe life insurance and the banking businesses decreased, while ordinary revenues from the non-life
insurance business increased. Consolidated ordinary profit increased 28.7% year on year, to ¥37.1 billion.
By business segment, ordinary profit from the life insurance and the non-life insurance businesses
increased, whereas ordinary profit from the banking business decreased. Profit attributable to owners of
the parent was up 31.2% year on year, to ¥25.1 billion due to the increase in consolidated ordinary profit.

Sony Financial Holdings Inc. All Rights Reserved

5Highlights of Operating Performance:
Sony Life (Non-consolidated)
Ordinary revenues

596.3

Ordinary profit(5.4%)+45.2%

FY15.1H

FY16.1H

596.3

564.4

(31.9)(5.4%)

Income from insurance premiums

508.7

477.4

(31.1)(6.2%)

Investment income

84.4

80.4

(3.9)

(4.7%)

Interest income and dividends

69.8

72.2

+2.4

+3.5%

Income from monetary trusts, net

6.1

2.2

(3.9)

(63.7%)

Gains on sale of securities

6.5

1.3

(5.2)

(80.3%)

Gains on derivatives, net

1.6

4.5

+2.9

+173.0%

573.4

531.2

(42.2)(7.4%)

Insurance claims and other payments

173.1

163.3

(9.7)

(5.6%)

Provision for policy reserves and others

287.2

244.1

(43.1)(15.0%)

Investment expenses

35.6

40.6

+4.9

+13.8%

31.9

32.1

+0.1

+0.6%

65.6

70.0

+4.4

+6.8%

Ordinary profit

22.8

33.2

+10.3

+45.2%Net income

14.8

22.8

+7.9

+53.6%

16.3.3116.9.30

Change from 16.3.31

Securities

7,273.3

7,601.0+327.6+4.5%

Policy reserves

7,336.5

7,580.6+244.1

+3.3%

482.1

485.5

+3.3

+0.7%

150.6

144.3

(6.2)

(4.1%)

8,035.4

8,365.2+329.7

+4.1%

850.3

856.6

+6.3

+0.7%

(Billions of yen)

564.4

Ordinary revenues

33.2

Ordinary expenses

22.8
FY15.1H

FY16.1H(Billions of yen)

◆ Ordinary revenues decreased but ordinary profit
increased year on year.
◆ Income from insurance premiums decreased due to a
decline in sales of single premium products.
◆ Investment income decreased due to lower gains on saleof securities despite higher gains on interest income anddividends in the general account.
◆ Ordinary profit increased significantly due to a significant
decline in provision of policy reserves for minimum
guarantees for variable life insurance owing to a lower
acquisition of new policies, despite lower gains on sale ofsecurities in the general account.

Losses on separate accounts, net
Operating expenses(Billions of yen)

Net assets
Net unrealized gains on other securities
Total assets
Separate account assets

Sony Financial Holdings Inc. All Rights Reserved

Change6Overview of Operating Performance:
Sony Life (Non-consolidated)
FY15.1H

FY16.1H

Change2,615.0

2,449.0(6.3%)

Lapse and surrender amount

951.5

922.5

(3.0%)

Lapse and surrender rate

2.33%

2.14%

(0.19pt)

Policy amount in force

42,143.0

44,114.4+4.7%

Annualized premiums from new policies

43.0

38.7

(10.0%)Of which, third-sector products

7.3

8.1

+9.7%

759.1

799.6

+5.3%

176.1

184.0

+4.5%

(Billions of yen)

New policy amount

Annualized premiums from insurance in force
Of which, third-sector products

Notes:
1. Figures for new policy amount, lapse and surrender amount, lapse and surrender rate, policy amount in force, annualized
premiums from new policies and annualized premiums from insurance in force are calculated as the total of individual life
insurance and individual annuities.
2. The lapse and surrender rate shows the ratio derived by dividing the amount of lapses and surrenders, not adjusted for policy
amount decreases, increases, and reinstatements, by the policy amount in force at the beginning of the fiscal year.

(Billions of yen)

FY15.1H

FY16.1H

ChangeGains from investment, net (General account)

80.7

72.0

(10.8%)

Core profit

14.4

30.6

+112.2%

Positive spread

7.3

6.5

(11.0%)

Non-consolidated solvency margin ratio

16.3.3116.9.30

2,722.8%

2,774.4%

Changefrom16.3.31<Reasons for changes>◆ Decreased due to lower sales ofvariable life insurance despite
favorable sales of U.S. dollardenominated insurance, term life
insurance and living benefit
insurance.

◆ Decreased due to lower sales ofvariable life insurance andeducational endowment insurance
despite favorable sales of term life
insurance, U.S. dollar-denominatedinsurance and living benefit
insurance.

◆ Significantly increased due to asignificant decline in provision ofpolicy reserves for minimum
guarantees for variable life
insurance and an decrease ininsurance claim payments, despite
a fall in the positive spread.

+51.6pt

Sony Financial Holdings Inc. All Rights Reserved

7

Operating Performance :Sony Life (Non-consolidated) (1)
Number and Amount of New Policies

Annualized Premiums from New Policies(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)

New policy amount

Annualized premiums from new policies

Number of new policies

Of which, third-sector(Thousands ofpolicies)

327(Trillions of yen)

3.0

(14.3%)

280

286
2.61

(Billions of yen)

43.0

300

40

2.44

38.7
36.2

(10.0%)(6.3%)

2.12

200

2.0

30

20
100

1.0

10

0

0

FY14.1H

FY15.1H

FY16.1H

6.5
6.5

7.3
7.3

FY14.1H

FY15.1H

+9.7%

8.1
8.1

0

Sony Financial Holdings Inc. All Rights Reserved

FY16.1H

8

Sony Life’s Product Portfolio
Annualized Premiums from New Policies by Product
FY15 (12M) ¥85.0 billion

FY16.2Q (3M) ¥18.2 billion

Yen
Endowment/ whole life
Annuities
28%
28%
U.S. dollarSingle premium denominatedwhole life 5% whole life 2%
Protection-type(term life)
37%

FY16.1Q (3M) ¥20.5 billion
Yenwhole life
円建終身
19％

Endowment/
養老・年金
19%
Annuities
U.S. dollar29%
米ドル建終身29%
denominated5％
一時払
whole life 5%Single premium
終身保険
whole life 3%3%

Endowment/
Annuities
20%

Yenwhole life
21%

U.S. dollardenominatedwhole life
8%
Protection-type(term life)
51%

保障性商品

Protection-type（定期保険等）(term44％life)
44%Sony Financial Holdings Inc. All Rights Reserved

9Operating Performance :Sony Life (Non-consolidated) (2)
Number and Amount of Policies in Force

Annualized Premiums from Insurance in Force(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)

Policy amount in force(Trillions of yen)

50

42.1

(Millions ofpolicies)

+4.8%

7.04

6.87
+4.7%

Annualized premiums from insurance in force

Number of policies in force

+2.2%

7.20

8

(Billions of yen)
800

759.1

+5.3%

Of which, third-sector

799.6

781.3
+2.4%

44.1

43.1

40

6

600

4

400

2

200

+2.2%

30

20

10

0

0

15.9.30

16.3.3116.9.30

+4.5%

176.1

179.7

15.9.30

16.3.31

+2.4%

184.0

0

Sony Financial Holdings Inc. All Rights Reserved

16.9.30

10

Operating Performance :Sony Life (Non-consolidated) (3)Lapse and Surrender Rate*(Individual Life Insurance + Individual Annuities)
Lapse and surrender rate
(Annual)

Lapse and surrender rate
(1H)

(%)
10

8

6

5.35
4.72

4
(0.19pt)
2

2.21

2.33

FY14

FY15

2.14

0
FY16

*The lapse and surrender rate shows the ratio derived by dividing the amount oflapses and surrenders, not adjusted for policy amount decreases, increases, andreinstatements, by the policy amount in force at the beginning of the fiscal year.

Sony Financial Holdings Inc. All Rights Reserved

11

Operating Performance :Sony Life (Non-consolidated) (4)Income from Insurance Premiums(Billions of yen)(Billions of yen)

508.7
500

Interest Income and Dividends

69.8

477.4

+3.5%

72.2

65.8

454.0
(6.2%)

60

400

300

40

200
20

100

0

0
FY14.1H

FY15.1H

FY16.1H

FY14.1H

Sony Financial Holdings Inc. All Rights Reserved

FY15.1H

FY16.1H

12

Operating Performance :Sony Life (Non-consolidated) (5)Core Profit

Ordinary Profit(Billions of yen)(Billions of yen)

40.4

38.5

40

40

33.2

30.6
30

30

22.8
+45.2%

20

20

14.4
+112.2%

10

10

0

0

FY14.1H

FY15.1H

FY16.1H(Reference) Impact on core profit

FY14.1H(Billions of yen)

FY14.1H

FY15.1H

5.5

7.3

6.5

Provision of policy reserves for minimum
guarantees for variable life insurance (*)(2.5)(22.1)(11.6)

Others

35.5

29.2

35.7

FY16.1H(Reference) Main differences from core profit(Billions of yen)

FY14.1H

FY16.1H

Positive spread

FY15.1H

Capital gains (losses) excluding gains orlosses on hedges (*)
Gains (losses) on hedges of variable life
insurance
Provision of contingency reserve (*)

FY15.1H

FY16.1H

4.4

10.3

5.0

－

1.4

1.0

(2.4)

(3.1)

(3.4)

“Provision of policy reserves for minimum guarantees for variable life insurance” and “Provision of contingency reserve” are described as negative amount.
Capital gains (losses) exclude gains or losses on hedges of variable life insurance.

Sony Financial Holdings Inc. All Rights Reserved

13

Operating Performance :Sony Life (Non-consolidated) (6)
Number of Lifeplanner Sales Employees+336(Number)

5,000

4,751
4,612
4,500

4,329

4,352

15.3.3115.6.30

4,415

4,682
+69

4,376

4,000

3,500

3,000
0
15.9.30

15.12.31

16.3.31Sony Financial Holdings Inc. All Rights Reserved

16.6.30

16.9.30

14

Operating Performance :Sony Life (Non-consolidated) (7)Breakdown of General Account Assets
16.3.3116.9.30<Asset management review>(Billions of yen)Amount%Amount%Japanese governmentand corporate bonds

6,351.1

88.4%

6,586.5

87.7%

Japanese stocks

33.3

0.5%

33.0

0.4%

Foreign bonds

70.1

1.0%

164.0

2.2%

Foreign stocks

23.0

0.3%

19.3

0.3%

Monetary trusts

280.9

3.9%

279.5

3.7%

Policy loans

171.6

2.4%

175.9

2.3%

Real estate*

115.8

1.6%

118.1

1.6%

Cash and call loans

52.5

0.7%

44.4

0.6%

Others

86.4

1.2%

87.3

1.2%

7,185.0

100.0%

7,508.5

100.0%We have continued to accumulate ultralongterm bonds to match the liability
characteristics of insurance policies with longterm maturities with the aim of reducing
interest rate risk.
<Bond duration>
Mar. 31, 2015: 20.3 years

Total

Mar. 31, 2016: 21.8 years
Sep. 30, 2016: 22.0 years■ Investment in the monetary trusts is mainly into
Japanese government and corporate bonds.
■ The holding ratio on the real status of Japanese
government and corporate bonds including
those invested in monetary trusts in the generalaccount assets: As of Sep. 30, 2016: 91.4%(As of Mar. 31, 2016: 92.3%)*Real estate is the total of land, buildings, and construction in progress.

Sony Financial Holdings Inc. All Rights Reserved

15

Review of Sony Life’s Asset Management
Diversify asset management under the negative interest rate environment(purchase securities in the general account asset)
Japanese

FY14 (12M) stocks 0.4%

Other securities
0.4%

・Significantly increase investments in U.S. dollar
bonds, responding to higher sales of U.S. dollardenominated insurance policies.

JGBs 95.4%

JGB
95.4%

Japanese stocks
0.5%

Foreignbonds
Japanese 2.3%
corporatebonds 11.9%
JGBs国債
85.3%
85.3%

continue to invest in assets that match the liability
characteristics.
・Expand investments in ultralong-term Japanese
corporate bonds (including FILP agency bonds)

Foreign bonds
3.9%

FY15 (12M)■Promote diversification of investment assets while

stocks2016年度第2四半期（3カ月）
FY16.1H(6M) Japanese
0.5%

Foreign
外国公社債 JGBs
bonds
32.0% 30.3%
32.0%
Japanese
Corporate
社債
corporatebonds
bonds 37.1%
37.1%

37.1%

(Note 1) Japanese corporate bonds include FILP agency bonds and Government-guaranteed bonds.
(Note 2) The graphs above are asset allocation for the relevant period. Total invested amount for the relevant period as 100%.
(excluding, investment in subsidiaries and affiliates, and strategic investments)

Sony Financial Holdings Inc. All Rights Reserved

16

Operating Performance :Sony Life (Non-consolidated) (8)Non-consolidated Solvency Margin Ratio

(%)

3,000

2,774.4
2,722.8
2,555.0+51.6pt

2,500

2,000

1,500

1,000
0
15.3.31

16.3.3116.9.30

Sony Financial Holdings Inc. All Rights Reserved

17Highlights of Operating Performance:
Sony Assurance
Ordinary revenues

48.2

Ordinary profit+4.2%

FY15.1H

FY16.1H

48.2

50.2

+2.0

+4.2%

Underwriting income

47.6

48.9

+1.3

+2.9%

Investment income

0.6

1.2

+0.6

+102.4%

45.4

46.8

+1.3

+3.1%

Underwriting expenses

33.4

34.6

+1.1

+3.5%

Investment expenses

0.0

－

(0.0)

(100.0%)Operating general andadministrative expenses

12.0

12.2

+0.2

+1.9%

Ordinary profit

2.7

3.3

+0.6

+22.4%Net income

1.9

2.4

+0.4

+24.4%

16.3.3116.9.30

Underwriting reserves

95.7

100.2

+4.5

+4.7%

Net assets

28.3

28.5

+0.2

+0.9%

Total assets

172.3

177.8

+5.5

+3.2%

(Billions of yen)

50.2

Ordinary revenues

Ordinary expenses+22.4%

3.3

2.7

FY15.1H

FY16.1H(Billions of yen)

◆ Both ordinary revenues and ordinary profit
increased year on year.
◆ Ordinary revenues expanded owing to anincrease in net premiums written primarily formainstay automobile insurance and an increasein gains on sale of securities.
◆ Ordinary profit increased due to the increase ingains on sale of securities.

(Billions of yen)Sony Financial Holdings Inc. All Rights Reserved

ChangeChange from 16.3.31

18

Overview of Operating Performance:
Sony Assurance(Billions of yen)

FY15.1H

FY16.1H<Reasons for changes>

ChangeDirect premiums written

46.9

48.3

+2.9%

Net premiums written

47.5

48.9

+2.9%

Net losses paid

23.0

24.0

+4.4%

Underwriting profit

2.1

2.0

(2.1%)Net loss ratio

55.9%

56.7%

+0.8ptNet expense ratio

26.7%

26.6%

(0.1pt)Combined ratio

82.7%

83.3%

+0.6pt◆ Increased mainly in its mainstay
automobile insurance.

◆ Declined slightly due to a proper
control on overall operating
expenses.

Notes:Net loss ratio = (Net losses paid + Loss adjustment expenses ) / Net premiums written
Net expense ratio = Expenses related to underwriting / Net premiums written

FY15.1H

FY16.1H

ChangeE. I. loss ratio

62.4%

63.3%

+0.9ptE. I. loss ratio + Net expense ratio

89.1%

89.9%

+0.8ptNotes:
E.I. loss ratio = (Net losses paid + Provision for reserve for outstanding losses + Loss adjustment expenses) / Earned premiums[Earthquake insurance and compulsory automobile liability insurance are excluded from the above calculation.]

Number of policies in force
Non-consolidated
solvency margin ratio

16.3.3116.9.30

1.79 million

1.82 million

693.5%

726.8%◆ Rose slightly compared with
FY15.1H results which recorded areversal of reserve for outstanding
losses.

Change from 16.3.31+0.02 million+1.2%+33.3pt

Note: The number of policies in force is the total of automobile insurance and medical and cancer insurance, which accounts for 99% of net premiums written.

Sony Financial Holdings Inc. All Rights Reserved19Sony Assurance’s Underwriting Performanceby Type of Policy
Net Premiums Written

Direct Premiums Written
FY15.1H

FY16.1H

ChangeFY15.1H

FY16.1H

Change

Fire

28

12

(55.0%)

Marine22(2)－(Millions of yen)

(Millions of yen)

Fire

199

117

(41.2%)

Marine－－－Personal accident

4,321

4,388

+1.6%

Personal accident

4,461

4,527

+1.5%

Voluntary automobile

42,44243,814+3.2%

Voluntary automobile

42,34943,686

+3.2%

－

－

－

Compulsory
automobile liability

712

709

(0.5%)

46,96348,319+2.9%47,574

48,934+2.9%

Compulsory
automobile liability
Total

Total

*Medical and cancer insurance is included in personal accident.

Net losses paid
FY15.1H

FY16.1H

ChangeFire04+491.3%

Marine

100

(11)

－

Personal accident

1,207

1,228

+1.7%

Voluntary automobile

21,09622,175+5.1%

Compulsory
automobile liability

628

649

+3.3%

Total

23,03324,046+4.4%(Millions of yen)Sony Financial Holdings Inc. All Rights Reserved

20

Operating Performance:
Sony Assurance (1)Ordinary Profit andAdjusted Ordinary Profit

Net Premiums Written andNumber of Policies in Force
Voluntary automobile insurance
Personal accident insurance
OthersNumber of policies in force(Billions of yen)

1.65
50

45.7

1.75

＋3.9%

47.5

1.82

(Billions of yen)

Ordinary profit

5(Millions ofpolicies)

Adjusted ordinary profit

4.9

4.8

+15.8%

4.2
4

3.4
＋2.9%

3.3

48.9
0.7
4.5

3

2.7

1.5

+22.4%

40
2

30

43.6

1
1

20
0.5
0

10

FY14.1H

FY15.1H

FY16.1H*Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve

00
FY14.1H

FY15.1H

FY16.1H

The number of policies in force is the total of automobile insurance and medical
and cancer insurance policies, which account for 99% of net premiums written.
More than 90% of personal accident insurance is medical and cancer insurance.

(Reference) Provision for catastrophe reserve(Billions of yen)

FY14.1H
Provision for catastrophe reserve

FY15.1H

1.4

1.5

FY16.1H
1.5*Provision for catastrophe reserve is described as positive amount.

Sony Financial Holdings Inc. All Rights Reserved

21

Operating Performance:
Sony Assurance (2)＜参考＞ (Reference) Combined Ratio

Earned/Incurred Loss Ratio +Net Expense Ratio
Earned/Incurred loss ratio(Net Loss Ratio+ Net Expense Ratio)
Net loss ratio

Net expense ratio

(%)

(%)

100

100

91.0

90.4

87.8

89.9

89.1

84.3
+0.8pt

60

62.4
64.3

+0.9pt

81.8

63.3

83.3

82.7
+0.6pt

60

62.4

63.3

84.8

80

80

56.4
57.6

57.8

26.7

27.1

55.9
+0.8pt

56.7

40

40

20

Net expense ratio(0.1pt)

26.7

27.1

25.4

26.7

20

(0.1pt)

26.6

25.4

26.7

26.6

FY14.1H

FY15.1H

FY16.1H

0

0
FY14

FY15

FY14.1H

FY15.1H

FY16.1H

Notes:
Earned/Incurred loss ratio = (Net losses paid + Provision for reserve for outstanding
losses + Loss adjustment expenses) / Earned premiums[Earthquake insurance and compulsory automobile liability insurance are excluded
from the above calculation.]

FY14

FY15

Notes:Net loss ratio = (Net losses paid + Loss adjustment expenses) / Net premiums written
Net expense ratio = Expenses related to underwriting / Net premiums writtenSony Financial Holdings Inc. All Rights Reserved

22

Operating Performance:
Sony Assurance (3)Non-consolidated Solvency Margin Ratio（%）

726.8%

800

693.5%
629.6%+33.3pt

600

400

200

0
15.3.31

16.3.3116.9.30

Sony Financial Holdings Inc. All Rights Reserved

23

Highlights of Operating Performance:
Sony Bank (Consolidated/Non-consolidated)
Consolidated ordinary revenues
Consolidated ordinary profit

19.0(2.2%)<Consolidated>
FY15.1H

FY16.1H

Consolidated ordinary revenues

19.0

18.6

(0.4)

(2.2%)

Consolidated ordinary profit

3.4

1.7

(1.6)

(47.7%)

Profit attributable to owners of theparent

2.2

1.1

(1.0)

(48.9%)

FY15.1H

FY16.1H

Ordinary revenues

17.5

16.9

(0.6)

(3.7%)

Gross operating profit

10.9

10.0

(0.9)

(8.2%)Net interest income

8.0

8.4

+0.3

+4.9%

Net fees and commissions

0.2

(0.5)

(0.7)

－

Net other operating income

2.7

2.1

(0.5)

(21.7%)

General and administrative expenses

7.6

8.4

+0.7

+10.0%Net operating profit

3.3

1.6

(1.6)

(50.0%)

Ordinary profit

3.3

1.6

(1.7)

(52.0%)Net income

2.2

1.1

(1.1)

(50.4%)

16.3.3116.9.30

77.4

77.1

(0.2)

(0.3%)

3.3

3.8

+0.4

+14.8%

2,126.5

2,190.0

+63.4

+3.0%

(Billions of yen)

18.6

Change<Non-consolidated>(47.7%)

3.4

FY15.1H(Billions of yen)

1.7

FY16.1H<Consolidated>◆Ordinary revenues decreased due to a decrease in interest anddividend income on securities, partially offset by an increase ininterest income on loans in line with a favorably growing balanceof mortgage loans. Ordinary profit decreased significantly due tolower interest rates, an increase in operating expenses, mainly
in advertising expenses for card loan business, as well as
decreased volumes of foreign currency and investment trusttransactions.
<Non-consolidated>◆Both gross operating profit and net operating profit decreased
year on year.
・Net interest income increased reflecting a growing balance ofmortgage loans under the low interest rates environment.
・Net fees and commissions decreased due to lower sales ofinvestment trusts and higher fees on guarantee commission.
・Net other operating income decreased due to lower gains on
customer dealings in foreign currency transactions.

(Billions of yen)

Net assets
Net unrealized gains onother securities, net of taxes
Total assets

Sony Financial Holdings Inc. All Rights Reserved

ChangeChange from
16.3.3124

Overview of Operating Performance:
Sony Bank (Non-consolidated) (1)15.9.30

16.3.3116.9.30

Change from
16.3.31

Customer assets

1,915.7

2,034.4

2,095.7

+61.3

+3.0%

Deposits

1,795.2

1,923.5

1,989.6

+66.1

+3.4%

Yen

1,476.4

1,587.9

1,649.7

+61.7

+3.9%

318.7

335.5

339.9

+4.3

+1.3%

Investment trusts

120.5

110.9

106.1

(4.7)

(4.3%)

Loans outstanding

1,266.7

1,344.1

1,460.6+116.5+8.7%

Mortgage loans

1,154.4

1,237.1

1,362.9+125.7+10.2%

6.1

10.5

15.3

+4.8

+46.2%(Billions of yen)

Foreign currency

Card loans
OthersNumber of accounts
Non-performing assets ratio(Based on Financial
Reconstruction Law)
Capital adequacy ratio *3(domestic criteria)

*1

106.1

96.5

82.3

(14.1)(14.7%)

1.08
million

1.13
million1.19
million+0.05
million

+4.9%

0.25%

0.23%

0.21%

(0.02pt)

10.58%

9.89%

9.57%

(0.32pt)<Reasons for changes>◆ Yen deposit balance increased
due mainly to an increase in yentime deposit balance.
◆ Yen-denominated balance of
foreign currency deposit
increased even after thenegative impact of exchange
rates led by yen appreciation.

◆ Loan balance expandedreflecting a growing balance ofmortgage loans.

*2*1 Loans in others include corporate loans of ¥82.3 billion*2 Non-performing loans (loans based on the Financial Reconstruction Act) /Total loan exposure*3 Please refer to the graph of the non-consolidated capital adequacy ratio (domestic criteria) on P28.

Sony Financial Holdings Inc. All Rights Reserved25Overview of Operating Performance:
Sony Bank (Non-consolidated) (2)<Reference> On Managerial Accounting Basis<Reference> Interest Spread(Managerial Accounting Basis)

ChangeFY15.1H

FY16.1H

10.9

10.0

(0.9)

(8.2%)

9.1

9.7

+0.5

+5.8%

Net fees and commissions*2 ②

0.7

(0.2)

(0.9)

－

Net other operating income*3

1.0

0.5

(0.4)

(45.9%)

Gross operating profit (core profit)(A)＝①＋②

9.9

9.4

(0.4)

(4.2%)

Operating expenses and otherexpenses
③

7.6

8.4

+0.7

+9.8%

Net operating profit (core profit)＝(A)－③

2.2

1.0

(1.1)

(52.5%)(Billions of yen)

Yield on investment
Gross operating profit
Net interest income*1①■Managerial accounting basis
The following adjustments are made to the figures on a financial account for profits andYield on financing

Interest spread
（%）

1.5
1.19

1.18
0.91

1

+0.02pt

0.93

0.5
0.27

0.26

FY15.1H

FY16.1H

losses more appropriately.
*1: Net interest income: Includes profits and losses associated with fund investment recorded in
net other operating income, including gains or losses from currency swap transactions.
*2: Net fees and commissions: Includes profits and losses for customer dealings in foreign
currency transactions recorded in net other operating income.
*3: Net other operating income: After the above adjustments (*1 and *2), mainly consists ofprofits and losses for bond and derivative dealing transactions.

0Note: Interest spread=(Yield on investment)-(Yield on financing)■Core profit
Profits and losses exclude net other operating income, which includes those on bond andderivative dealing transactions, and stands for Sony Bank’s basic profits.

Sony Financial Holdings Inc. All Rights Reserved

26

Operating Performance:
Sony Bank (Non-consolidated) (1)Loans

Deposits
Yen deposits

Foreign currency deposits

Mortgage loans(Billions of yen)(Billions of yen)

1,989.6
2,000

Others1,878.2
327.2

1,460.6

1,500

335.5

+66.1

97.7 *Corporate loans

1,344.1

1,923.5
1,187.1

339.9

107.0

of ¥82.3 billion
Card loans of¥15.3 billion+116.5

112.8

1,500

1,000

1,362.9
1,237.1
1,000

1,551.0

1,587.9

1,649.7

1,074.3
500

500

0

0

15.3.31

16.3.3116.9.30

15.3.31Sony Financial Holdings Inc. All Rights Reserved

16.3.3116.9.30

27

Operating Performance:
Sony Bank (Non-consolidated) (2)Non-Consolidated Capital Adequacy Ratio

Balance of Securities by Credit Rating
AAA
BBB(Domestic Criteria)

AA
A
Others(Billions of yen)
800

(%)
15

730.0
620.9

591.0

10.65
9.89

600

(29.9)

9.57

10(0.32pt)
400

5
200

0

15.3.31

16.3.3116.9.30015.3.31

16.3.3116.9.30*Calculated based on the standard FSA Notification No. 19 (2006), which
establishes standards based on Article 14-2 of the Banking Act of Japan for
determining the capital adequacy of a bank in light of the assets held by the bank.

Sony Financial Holdings Inc. All Rights Reserved28Forecast of Consolidated Financial Results
for the Year Ending March 31, 2017
(FY16)

Sony Financial Holdings Inc. All Rights Reserved29Forecast of Consolidated Financial Results for FY16
Forecast of consolidated financial results for FY16 is unchanged from the forecast announced on April 28, 2016
FY15
(Actual)(Billions of yen)

FY16
(Forecast)

ChangeFY16.1H(Actual)Progress rate

Consolidated ordinary revenues

1,362.0

1,450.0

+6.5%

631.9

43.6%

Life insurance business

1,230.2

1,309.8

+6.5%

564.5

Non-life insurance business

96.9

101.6

+4.8%

50.2

43.1%
49.5%

Banking business

37.9

37.9

(0.1%)

18.6

49.1%

Consolidated ordinary profit

71.1

71.0

(0.1%)

37.1

52.3%

Life insurance business

60.2

62.5

+3.8%

32.2

51.6%

Non-life insurance business

4.6

4.4

(6.0%)

3.3

76.7%

Banking business

5.9

4.5

(24.9%)

1.7

39.8%

43.3

46.0

+6.1%

25.1

54.6%

Profit attributable to owners of the parent■Life insurance business
In FY16.1H, ordinary revenues were below our initial expectations due mainly to a decline in insurance premium revenues, but ordinary profit
exceeded our initial expectations due mainly to an decrease in insurance claim payments. We maintain our ordinary revenues and ordinary profit
forecast for the full year, taking into consideration such factors as the trends in insurance claim payments and the financial market environment in
the second half of the fiscal year.
■Non-life insurance businessAlthough ordinary profit in the first half outpaced our initial expectations due mainly to higher gains on sale of securities, we maintain our ordinary
revenues and ordinary profit forecast for the full year because we expect higher fees related to new policy acquisitions in the second half.
■Banking businessWe maintain our ordinary revenues and ordinary profit forecast for the full year because the operating results in the first half were nearly the sameas our initial forecast, and we expect this trend to continue in the second half.

Sony Financial Holdings Inc. All Rights Reserved30Sony Life’s MCEV and ESR
as of September 30, 2016MCEV as of March 31, 2016 is restated by using ultimate forward rates (UFR).
Please keep in mind that the validity of these calculations of MCEV as of March 31, 2016, June 30, 2016 and September 30, 2016
has not been verified by outside specialists.
A part of the calculations of MCEV as of June 30, 2016 and September 30, 2016 adopted simplified method.
*In this part, figures, ratios and percentages changes have been rounded.

Sony Financial Holdings Inc. All Rights Reserved31Sony Life’s MCEV as of September 30, 2016

(Billions of yen)

MCEV

16.3.31

16.6.30

16.9.30

Change from
16.3.31

Change from
16.6.30

1,330.1

1,076.4

1,229.3(100.8)+152.9Adjusted net worth

2,074.4

2,671.8

2,187.8+113.3(484.1)

Value of existing business(744.4)(1,595.5)(958.5)(214.1)+637.0(Billions of yen)

FY15.4Q(3M)

FY16.1Q(3M)

FY16.2Q(3M)

FY16.1H(6M)

New business value

3.9

(0.2)

5.0

4.8

New business margin

1.2%(0.0%)

1.6%

0.7%

Notes:
1. Calculated MCEV as of June 30, 2016 and September 30, 2016 by using updated economic assumptions and lapse and surrender rate from March 31, 2016.
2. New business value for FY16.1Q and FY16.2Q are calculated accumulating new business value for each month based on economic assumptions at the end of eachmonth. New business value for FY15.4Q is calculated accumulating new business value for each quarter based on economic assumptions at the end of each quarter.

 Reasons for changes in MCEV
・MCEV as of September 30, 2016 increased ¥152.9 billion from June 30, 2016 due mainly to a rise in interest rates.
 New business value / New business margin
・New business value for FY16.2Q (3M), was ¥5.0 billion. New business margin was up 1.6pt from FY16.1Q (3M),
due mainly to a rise in interest rates and a change of product mix.

*Please refer to the appendix page 44 for trend on JGB yield.

Sony Financial Holdings Inc. All Rights Reserved32Sony Life’s ESR as of September 30, 2016
(after tax)

16.6.30

16.3.31(Billions of yen)

16.9.30

Insurance risk*

989.3

1,227.6

1,042.7

Market-related risk

324.2

295.0

341.6

255.2

218.0

264.1

Operational risk

31.4

31.5

31.3

Counter party risk

2.0

2.2

1.9

Variance effect(374.4)(414.5)(394.5)

The risk amount based on economic value

972.4

1,141.8

1,023.0

Of which, interest rate risk**(* ) Risk amount excluding the variance effect within Life module and Health module.
(**) Risk amount excluding the variance effect within market-related risk.
(Billions of yen)

MCEV + Frictional costs
ESR

16.3.31

16.6.30

16.9.30

1,366.5

1,085.5

1,266.2

141%

95%

124%

Notes:
1. The risk amount based on economic value refers to the total amount of Sony Life’s risks comprehensively examined by a market consistent approach,including insurance risk and market-related risk.
2. The solvency risk capital on an economic value basis is calibrated at VaR (99.5) over one year and based on the internal model, which is a similar
but modified model based on the EU Solvency II standard method.
3. ESR=(MCEV + Frictional costs) / Risk amount based on economic value.
◆ ESR as of September 30, 2016 was up 29pt from June 30, 2016 due mainly to a rise in interest rates.
◆ Sony Life will continue to improve ESR levels by accumulating new business value through reinforcing its sales capabilities as well as ensuring
profitability.

Sony Financial Holdings Inc. All Rights Reserved

33

Appendix

Sony Financial Holdings Inc. All Rights Reserved34

Recent Topics 1
AEGON Sony Life Insurance
Launch of sales: December 1, 2009
Common stock: ¥14 billion
Equity ownership: Sony Life insurance Co Ltd 50%, AEGON international B.V. 50%
Marketing products: Individual Variable Annuities
Sales Channels: Lifeplanner sales employees and partner Banks (29*) *As of Nov. 14, 2016

SA Reinsurance Ltd
Established： October 29, 2009
Common stock: ¥13.4 billion
Equity ownership: Sony Life insurance Co., Ltd. 50%, AEGON international B.V. 50%
Business： Reinsurance business*AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint ventures established by Sony Life and AEGON Group.

Sony Bank’s Mortgage Loans through Sony Life
■Sony Life accounts for 20% of the balance of mortgage loans as of September 30, 2016
Sony Life accounts for 19% of the amount of new mortgage loans for FY16.1H*Sony Life started handling banking agency business in January 2008.

Sony Assurance’s Auto Insurance Sold by Sony Life
■Sony Life accounts for approx. 4% of new automobile policies for FY16.1H*Sony Life started handling automobile insurance in May 2001.

Sony Financial Holdings Inc. All Rights Reserved35

Recent Topics 2<Highlights on and after FY16.2Q>

2016-07-01

Sony Life opened a representative office in Singapore

2016-07-04

SFH and Sony Life relocated their headquarters to Chiyoda-ku, Tokyo

2016-08-08

SFH announced the determination of the final terms of the issuance of stock acquisition rights as stock-typecompensation stock option

2016-10-01

Sony Life commenced sale of new product: “Non-participating Group Welfare Term Life Insurance”

2016-10-03

Sony Life adopted paperless insurance procedures for its policyholders

2016-10-25

Sony Life agreed to acquire an entity stake in ClearView Wealth Limited (Australia) and announced businessalliance

2016-10-31

Sony Bank began offering U.S. dollar-denominated active funds on investment trusts

2016-11-07

Sony Bank began expanding foreign currency settlement services for Sony Bank WALLET users

Sony Financial Holdings Inc. All Rights Reserved36Sony Life: Fair Value Information on Securities(General Account Assets)
Fair Value Information on Securities
Fair value information on securities with market value (except trading-purpose securities)(Billions of yen)

Notes:
1. The above table includes monetary trusts other than trading-purpose securities.
2. Derivative financial products such as principal protected 30 year notes with Nikkei 225 index-linked coupons are included in the “Held-to-maturity-securities” above.
Principal protected 30 year notes with Nikkei 225 index-linked coupons
As of Mar. 31, 2015; Carrying amount: ¥44.2 billion, Fair market value: ¥57.5 billion, Net unrealized gain (losses): ¥13.2 billion
As of Mar. 31, 2016; Carrying amount: None
As of Sep. 30, 2016; Carrying amount: None

Valuation gains (losses) on trading-purpose securities(Billions of yen)

Note: The above chart includes trading-purpose securities included in “monetary trusts,” etc

Sony Financial Holdings Inc. All Rights Reserved37Sony Life’s Interest Income and Dividends (Details)(Millions of yen)

FY15.1H

FY16.1H

ChangeCash and deposits
Japanese governmentand corporate bonds
Japanese stocks

00+ 177.5%

56,333

59,830+ 6.2%

263

260(1.3%)

Foreign securities

3,982

3,512

(11.8%)

Other securities

1,041

31

(97.0%)

Loans

3,056

3,171

+ 3.8%

Real estate

5,135

5,430

+ 5.8%

33

53+ 60.0%69,846

72,291+ 3.5%

Others
Total

Sony Financial Holdings Inc. All Rights Reserved38Sony Life’s Quarterly Trend on New Policy Amount

Quarterly Trend on New Policy Amount(Billions of yen)

1,491.6

1,500

1,437.4
1,324.2

1,250

1,290.7

1,260.0
1,189.0

1,152.5

1,135.8

1,098.9

991.5

1,000
750
500
250
0
FY14.1Q

FY14.2Q

FY14.3Q

FY14.4Q

FY15.1Q

FY15.2Q

FY15.3Q

Sony Financial Holdings Inc. All Rights Reserved

FY15.4Q

FY16.1Q

FY16.2Q

39

Sony Life’s Quarterly Trend on
Annualized Premiums from New Policies
Quarterly Trend on Annualized Premiums from New Policies
Annualized premiums from new policies

Of which, third-sector(Billions of yen)

25
22.7

22.3

21.8

20.6
20

18.9

20.5
19.1

18.5

18.2

17.2
15

10

5

5.1
3.7

2.8

4.6

3.5

3.9

3.4

FY14.4Q

FY15.1Q

FY15.2Q

3.6

4.1

3.9

FY15.4Q

FY16.1Q

FY16.2Q

0
FY14.1Q

FY14.2Q

FY14.3Q

FY15.3Q

Sony Financial Holdings Inc. All Rights Reserved

40

Operating Performance : AEGON Sony Life Insurance*AEGON Sony Life Insurance sells individual variable annuities.

Number and Amount of New Policies

Number and Amount of Policies in Force

New policy amount

Policy amount in force

Number of new polices [ ](Thousands ofpolicies)(Billions of yen)

Number of policies in force [ ](Billions of yen)

500
417.1
[68.5]

1580
63.8[10.8]

444.2[73.4]

476.7[80.6](Thousands ofpolicies)

80

400
60

60
36.6
[6.1]

40

41.3
[7.9]

10

300
40
200

5
20

20

100

0

0
FY14.1H

FY15.1H(Billions of yen)

FY15.1H

0

0

FY16.1H

15.9.30

FY16.1H

16.3.3116.9.30

ChangeAEGON Sony Life Insurance

(0.7)

(1.9)

(1.2)

SA Reinsurance

(0.0)

(0.3)

(0.2)

AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint venture established by Sony Life and AEGON Group.
SA Reinsurance prepares its financial statements in accordance with U.S. GAAP. 50% of the net income (losses) for AEGON Sony Life Insurance andSA Reinsurance are recognized as investment profit (losses) on equity method in the SFH’s consolidated net income.

Sony Financial Holdings Inc. All Rights Reserved

41

Method of Measuring Risk Amount
Based on Economic Value (1) Market-related Risk*1

Interest rate risk
Fluctuations in net asset
value based on economic
value in response to theshocks in the right columns.
The same applies below.

Sony Life(Reference) EU Solvency II Implementing
Measures (Delegated Regulation)

Percentage increases or decreases differ for eachcurrency and term.
As for measuring interest rate risk in Japanese yen,introduced principal component analysis, where yield
curve changes are disaggregated into threecomponents, parallel shift, twist and butterfly, and theyield curve is shocked by each component.

Different percentage changes in interest rates areset for each term, from one year to 20 years.
For terms longer than 20 years and through 90
years, percentage changes are set using linear
interpolation, with negative 29% as the percentagechange for 20 years and negative 20% as thepercentage change for 90 years.

(Example)
For Yen 30-year, 33% decrease (parallel shift),
28% decrease (twist), 8% decrease (butterfly)

Equity risk

Listed equities 45%, Other securities 70%

Global 39%, Others 49%*2

Real estate risk

Actual real estate 25%

Same as on the left

Credit risk = (market value) x (risk coefficient for eachcredit rating) x duration

Credit risk = (market value) x (risk coefficient foreach credit rating and duration)

Credit risk

Currency risk

Note that durations have caps and floors, depending
on credit ratings.

(Example)
Rating A: Duration (Dur): 5-10 years(Example)
Rating A: Risk coefficient (1.4%), cap (23), floor (1)Risk coefficient=7.0% + 0.7% x (Dur – 5 )35% downside fluctuation

25% downside fluctuation

Notes
1. Principal items as of September 30, 2016.
2. Symmetric adjustment (an adjustment of±10% of the average value of the stock price index during a defined period in the past) is applied.

Sony Financial Holdings Inc. All Rights Reserved

42Method of Measuring Risk Amount
Based on Economic Value (2) Insurance Risk*1

Sony Life(Reference) EU Solvency II Implementing
Measures (Delegated Regulation)

Mortality risk

Mortality rate increases by 15% for each year elapsed Same as on the leftLongevity risk

Mortality rate decreases by 20% for each year
elapsedSame as on the left

Lapse risk

The largest amount of these; *2

The largest amount of these;•Lapse rate increases by 50% for each year elapsed• Increases by 50% in the assumed rates of• Lapse rate decreases by 50% for each year elapsed• 30% of policies on which surrender value is inexcess of best estimate liability are immediately
surrendered

lapsation for Life module, 50% for Health module•Decreases by 50% in the assumed rates oflapsation for Life module, 50% for Health module• 40% of policies (70% for group annuities, etc.) on

which surrender value is in excess of best
estimate liability are immediately surrendered
Expense risk

Operating expenses increase by 10% for each year
elapsedRate of inflation rises by 1%

Same as on the left

Disability risk

Rate of occurrence increases by 35% in the first fiscal Rate of occurrence increases by 35% in the firstyear, rising by 25% for each year thereafter
fiscal year, rising by 25% for each year thereafter.
Recovery rate decreases by 20%.

Notes
1. Principal items as of September 30, 2016.
2. At Sony Life, lapse risk is calculated by computing and adding together the largest amount of three options for each insurance policy

Sony Financial Holdings Inc. All Rights Reserved

43Trend on JGB Yields (Par rate)

As of the end of each monthSony Financial Holdings Inc. All Rights Reserved

44Trend on Risk-free Rate (Japanese yen/ Par rate)

Convergence
period: 20 year

Last liquid point: 40 year

*For above risk-free rate, we employ the Smith-Wilson method for extrapolation so that the 60-year forward rate will coverage on the UFR (3.5%).

Sony Financial Holdings Inc. All Rights Reserved

45

Contact:
Communications & Investor Relations Department
Sony Financial Holdings Inc.
TEL： +81-3-5290-6500

Sony Financial Holdings Inc. All Rights Reserved

46