Presentation Material

Consolidated Financial Results
for the Fiscal Year Ended March 31, 2018
andSony Life’s Preliminary MCEV
as of March 31, 2018

Sony Financial Holdings Inc.
May 14, 2018
Sony Financial Holdings Inc. All Rights Reserved

Content
 Consolidated Operating Results for the Fiscal Year Ended March 31, 2018
(FY2017)

P.3

 Forecast of Consolidated Financial Results for FY2018

P.29

 Dividend Forecast for FY2018

P.31

 Sony Life’s Preliminary MCEV and ESR as of March 31, 2018

P.33

 Appendix

P.36

Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies and beliefs of the SonyFinancial Group. Any statements 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 othermaterials released to the public. These forward-looking statements and pro forma information are based on assumptions, 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 substantiallyfrom 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 thispresentation does not constitute or form part of any offer for sale or subscription of or solicitation 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 with any contract orcommitment 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 Fiscal Year Ended March 31, 2018
(FY2017)

Sony Financial Holdings Inc. All Rights Reserved

3

Executive SummaryFinancial
Results for
FY2017
Forecast of
Financial
Results for
FY2018











Shareholder
Returns

All three businesses steadily expanded their business scale.
On a consolidated Group basis, ordinary revenues rose, while ordinary
profit was flat.
At Sony Life, sales of U.S. dollar-denominated insurance were favorable,
leading to a substantial increase in income from insurance premiums
year on year
The steady acquisition of new policies prompted solid growth in new
business value.
We forecast that all three businesses will continue to expand theirbusiness scale, sustaining the growth trend. On a consolidated Groupbasis, we anticipate revenue and profit increases.
At Sony Life, we expect income from insurance premiums to grow, due
to solid growth in the policy amount in force, leading to higher
revenues and profit. We forecast a rise in MCEV, owing to theacquisition of new policies.
In line with our medium-term dividend policy, for FY2018 we expect toraise the dividend amount by ¥2.5 per share compared with FY2017,
to ¥62.5, taking into overall account such factors as the operating
environment, growth in business scale, and higher profit based on
economic value. We aim to continue steadily increasing dividends going
forward.

Sony Financial Holdings Inc. All Rights Reserved

4Highlights of Consolidated Operating Performance (1)＜Consolidated＞
Ordinary revenues
Ordinary profit

1,381.6+8.8%Life insurance
business

1,503.6

Non-life
insurancebusiness
Bankingbusiness
Intersegment
adjustments*

+0.8%

66.8

66.3

FY2016FY2017FY2016FY2017

Ordinary revenues

1,243.9

1,351.2+107.2+8.6%

Ordinary profit

56.8

54.1

(2.6)

(4.7%)

Ordinary revenues

102.3

110.0

+7.7

+7.6%

Ordinary profit

5.0

6.5

+1.5

+31.5%

Ordinary revenues

38.5

39.9

+1.4

+3.7%

Ordinary profit

5.0

7.1

+2.0

+41.4%

Ordinary revenues

(3.1)

2.3

+5.4

－

Ordinary profit

(0.5)

(1.0)

(0.4)

－

1,381.6

1,503.6+121.9+8.8%

Ordinary profit

66.3

66.8

+0.5

+0.8%

Profit attributableto owners of theparent

41.6

51.8

+10.2

+24.7%

Ordinary revenues

Consolidated(JPY bn)(JPY bn)

Change*“Intersegment adjustments” is mainly from SFH and the nursing care business.
Proud Life Inc., a company of nursing care business, has been included in the scope of
consolidation from FY2017.2Q.
(Note) Comprehensive income : FY2016: ¥21.4 billion, FY2017: ¥ 52.2 billion(JPY bn)

Consolidated

Mar. 18

601.1

625.4

+24.2

+4.0%

11,471.8

12,401.4+929.6+8.1%

Net assets
Total assets

Change from
Mar. 17Mar. 17

Sony Financial Holdings Inc. All Rights Reserved

5Highlights of Consolidated Operating Performance (2) Life Insurance Business：Ordinary revenues grew year-on-year due to higher income from insurance

premiums, owing to a steady rise in the policy amount in force. Ordinary profit decreased year on year
due to a higher provision of policy reserve relating to the acquisition of new policies reflecting a revisionin the standard yields used for calculating policy reserves and lower gains on sale of securities in thegeneral account. On the other hand, gains/losses related to market fluctuations for variable life
insurance* improved year on year, which partially offset the negative impact of the above-mentioned
decreases in ordinary profit.
*Total of (a) the provision of policy reserves for minimum guarantees for variable life insurance according to market fluctuationsand (b) net gains/losses on derivative transactions to hedge market risks for the products Non-life Insurance Business: Ordinary revenues expanded year on year, owing to an increase in net

premiums written for mainstay automobile insurance. Ordinary profit increased year on year due to a
decline in the loss ratio, driven mainly by a lower car accident ratio.

 Banking Business：Ordinary revenues rose year on year due to increases in interest income on loans inline with a favorably growing balance of mortgage loans and on investment securities. Ordinary profit
grew year on year, due to a decrease in operating expenses, especially in advertising expenses for thecard loan business.

 Ordinary revenues increased 8.8% year on year, to ¥1,503.6 billion, owing to increases in ordinary

revenues from all the businesses: life insurance, non-life insurance and banking businesses. Ordinary
profit increased 0.8% year on year, to ¥66.8 billion. By business segment, ordinary profit from the life
insurance business decreased, ordinary profit from the non-life insurance and banking businesses rose.
Profit attributable to owners of the parent was up 24.7% year on year, to ¥51.8 billion. This increase wasdue mainly to a gain on disposal of fixed assets from a sale of the real estate held for investment of¥13.2 billion in the life insurance business, which was recorded in extraordinary gains.
Sony Financial Holdings Inc. All Rights Reserved

6

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

Ordinary revenues

1,243.7+8.6%

FY2016FY20171,243.7

1,351.0+107.3+8.6%

Income from insurance premiums

956.7

1,059.2+102.5+10.7%

Investment income

245.3

243.2

(2.0)

(0.8%)

148.2

157.7

+9.4

+6.4%

Gains on sale of securities

1.3

0

(1.3)

(100.0%)Foreign exchange gains, net

14.6

－

(14.6)(100.0%)Gains on separate accounts, net

76.4

80.9

+4.5

+5.9%

1,183.5

1,294.7+111.1+9.4%

Insurance claims and other payments

372.4

436.5

+64.1

+17.2%

Provision for policy reserves and others

596.7

638.3

+41.6

+7.0%

Investment expenses

36.1

33.1

(3.0)

(8.5%)

30.0

11.4(18.6)(62.1%)

－

15.2

+15.2

－

137.0

139.9

+2.8

+2.1%

60.1

56.3

(3.8)

(6.4%)

－

13.2

+13.2

－

35.1

45.1

+9.9

+28.3%(JPY bn)
Ordinary revenues

1,351.0

Interest income and dividends(6.4%)

60.1

Ordinary expenses

56.3(JPY bn)

Losses on derivatives, net
Foreign exchange losses, net

FY2016FY2017

Operating expenses◆ Ordinary revenues increased but ordinary profit decreased.

◆ Income from insurance premiums increased owing to a steady rise in
the policy amount in force.
◆ Investment income decreased due to a decrease in gains on foreignexchange which turned into losses.
◆ Ordinary profit decreased due to a higher provision of policy reserve
relating to the acquisition of new policies reflecting a revision in thestandard yields used for calculating policy reserves and lower gains
on sale of securities in the general account. On the other hand,
gains/losses related to market fluctuations for variable life insurance*
improved year on year, which partially offset the negative impact of
the above-mentioned decreases in ordinary profit.

Ordinary profit
Gains on disposal of fixed assets
Net income

Mar. 17Mar. 18

Change from Mar. 17

Securities

8,093.1

8,765.9+672.7+8.3%

Policy reserves

7,929.9

8,566.0+636.1

+8.0%

473.5

492.7

+19.1

+4.1%

127.7

124.9

(2.8)

(2.2%)

8,873.6

9,567.6+694.0

+7.8%

989.6

1,128.8+139.2+14.1%(JPY bn)

Net assets
Net unrealized gains on other securities*Total of (a) the provision of policy reserves for minimum guarantees forvariable life insurance according to market fluctuations and (b) net
gains/losses on derivative transactions to hedge market risks for the products

ChangeTotal assets
Separate account assets

Sony Financial Holdings Inc. All Rights Reserved

7

Overview of Operating Performance:
Sony Life (Non-consolidated)
FY2016FY2017

New policy amount

4,957.5

5,287.9+6.7%

Lapse and surrender amount

1,839.3

2,250.8+22.4%

Lapse and surrender rate

4.27%

4.97%

+0.70pt

45,334.1

47,253.4+4.2%

Annualized premiums from new policies

78.1

73.0

(6.5%)Of which, third-sector products

15.7

12.9

(17.4%)

820.8

848.8

+3.4%

187.4

191.8

+2.4%

(JPY bn)

Policy amount in force

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

Change＜Reasons for changes＞◆ Increased due to higher salesof family income insurance andU.S. dollar-denominatedinsurance.
◆ Decreased due mainly to lower
sales of term life insurance andliving benefit insurance, despite
favorable sales of U.S. dollardenominated insurance, variable
life insurance and individual
annuities.

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 thetotal 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.

(JPY bn)

FY2016FY2017

ChangeGains from investment, net (General account)

132.7

129.2

(2.6%)

Core profit

83.8

81.3

(2.9%)

Positive spread

15.4

17.7

+14.9%

Non-consolidated solvency margin ratio

Mar. 17Mar. 18

ChangefromMar. 17

2,568.8%

2,624.3%+55.5pt

Sony Financial Holdings Inc. All Rights Reserved◆ Decreased due to a higher
provision of policy reserve
relating to the acquisition of
new policies reflecting a revisionin the standard yields used for
calculating policy reserves,
despite an increase in profit
from accumulated policies inforce and a rise in positive
spread.

8

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

Annualized Premiums from New Policies(Individual Life Insurance + Individual Annuities)
New policy amount（JPY tn）（Thousandsof policies)

7

5

Annualized premiums from new policies

Number of new policies

629
513

6

5.15

(Individual Life Insurance + Individual Annuities)

+5.2%

4.95

540

600

5.28

500

+6.7%

400

（JPY bn）

85.0

80

Of which, third-sector

78.1(6.5%)

73.0

60

4
300
3

40

200

2

20
100

1
0

0
FY2015FY2016FY2017(17.4%)

15.7

15.7

FY2015FY201612.9

0Sony Financial Holdings Inc. All Rights Reserved

FY2017

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)
Policy amount in force

50

Annualized premiums from insurance in force

Number of policies in force

Of which, third-sector（Millionsof policies) （JPY bn）（JPY tn）

60(Individual Life Insurance + Individual Annuities)

7.04
43.1

7.30

+3.6%

7.56

800

781.3

6

+4.2%

30

4

400

2

200

10
0

0
Mar. 17

848.8

600

20

Mar. 16

+3.4%

47.2

45.3

40

8

820.8

Mar. 18

+2.4%

179.7

187.4

191.8

Mar. 16Mar. 17Mar. 180Sony Financial Holdings Inc. All Rights Reserved

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

（%）

8

6

4.72

4.97
4.27

4

+0.70pt

20FY2015FY2016FY2017*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)Interest Income and Dividends

Income from Insurance Premiums(JPY bn)

1,028.0
1,000

1,059.2
956.7(JPY bn)

160
140＋10.7%

157.7
141.4

148.2
＋6.4%

120

800

100
600

80
60

400

40
200
20
0
FY2015FY2016FY20170
FY2015

Sony Financial Holdings Inc. All Rights Reserved

FY2016FY2017

12

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

Core Profit(JPY bn)

80(JPY bn)

81.3

83.8

60

(2.9%)

60.7

60.1

56.3
(6.4%)

60

40

43.0
40

20
20

0

0
FY2015FY2016FY2015FY2017

Positive spread
Provision of policy reserves for minimum
guarantees for variable life insurance (*)
Others

FY2017(Reference) Main differences from core profit(Reference) Impact on core profit(JPY bn)

FY2016FY2015FY2016FY2017(JPY bn)

FY2015FY2016FY2017

15.3

15.4

17.7

20.4

(0.4)

(9.0)

(34.7)(7.8)(18.7)

Capital gains (losses) excluding gains or losses onhedges (*)
Gains (losses) on hedges of variable life insurance

3.9(15.6)

(8.4)

62.5

76.2

82.4

(6.4)

(7.2)

(7.4)

Provision of contingency reserve (*)*“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+209(Number)

5,142
4,933

5,000
4,612

4,682

4,751

4,730

Sep. 16

Dec. 16

4,942

4,974

4,968
+174

4,500

4,000

3,500

3,000 0Mar. 16

Jun. 16Mar. 17

Jun. 17

Sony Financial Holdings Inc. All Rights Reserved

Sep. 17

Dec. 17Mar. 18
14

Operating Performance :Sony Life (Non-consolidated) (7)Breakdown of General Account Assets<Asset management review>

Mar. 18

Mar. 17
Amount%Amount%Japanese bonds(including JGBs)

6,828.7

86.6%

7,281.1

86.3%

Japanese stocks

37.6

0.5%

38.4

0.5%

Foreign bonds

274.3

3.5%

366.5

4.3%

Foreign stocks

31.5

0.4%

30.3

0.4%

Money held in trust

273.8

3.5%

270.5

3.2%

Policy loans

180.3

2.3%

189.4

2.2%

Real estate*

117.5

1.5%

92.3

1.1%

Cash and call loans

40.8

0.5%

40.8

0.5%

Others

99.1

1.3%

129.1

1.5%

7,884.0

100.0%

8,438.8

100.0%(JPY bn)

Total*Real estate is the total of land, buildings, and construction in progress.

We have continued to accumulate
ultralong-term bonds to match the liability
characteristics of insurance policies withlong-term maturities with the aim of
reducing interest rate risk.
<Bond duration>
Mar. 16 21.8 years
Mar. 17 21.3 years
Mar. 18 21.4 years■ Investment in the money held in trust is
mainly into Japanese bonds.
■ The holding ratio on the real status ofJapanese bonds including those invested
in the money held in trust in the generalaccount : Mar. 18・・・89.5%（Mar. 17・・・90.1%）*The decrease in real estate was owing to a sale of the realestate held for investment in FY2017.3Q.

Sony Financial Holdings Inc. All Rights Reserved

15

Operating Performance :Sony Life (Non-consolidated) (8)Average Assumed Interest Rate andInvestment Yield for Core Profit

Positive Spread

Average assumed interest rate

17.7

(JPY bn)+14.9%

15

15.3

15.4

Investment yield for core profit
（%）

3.00

2.31
10
2.00

2.06

2.24

2.22

2.00

1.97

5

1.00

0
FY2015FY2016FY2017FY2015

Sony Financial Holdings Inc. All Rights Reserved

FY2016FY2017

16

Operating Performance :Sony Life (Non-consolidated) (9)Non-consolidated Solvency Margin Ratio
（%）

3,000

2,722.8

2,568.8

2,500

2,624.3+55.5pt

2,000

1,500

1,000
0

Mar. 16Mar. 17Mar. 18

Sony Financial Holdings Inc. All Rights Reserved

17Highlights of Operating Performance:
Sony Assurance
Ordinary revenues

Ordinary profit
FY2016FY2017

102.3

110.0

+7.7

+7.6%

Underwriting income

100.3

108.3

+7.9

+8.0%

Investment income

1.9

1.7

(0.2)

(11.5%)

97.3

103.5

+6.1

+6.4%

Underwriting expenses

70.5

74.4

+3.8

+5.5%

Operating general andadministrative expenses

26.7

29.0

+2.3

+8.7%

Ordinary profit

4.9

6.5

+1.5

+31.6%Net income

3.5

4.8

+1.3

+37.2%

Mar. 17Mar. 18

Underwriting reserves

106.1

117.0

+10.9

+10.3%Net assets

29.4

33.1

+3.7

+12.9%

Total assets

186.5

204.3

+17.8

+9.6%

(JPY bn)

102.3

+7.6%

+31.6%

110.0

Ordinary revenues

6.5

4.9
(JPY bn)

FY2016FY2017◆Both ordinary revenues and ordinary profit
increased year on year.
◆Ordinary revenues expanded owing to anincrease in net premiums written for
mainstay automobile insurance.
◆Due to a decline in the loss ratio, driven
by a lower car accident ratio, ordinary profit
increased year on year.

Ordinary expenses(JPY bn)

Sony Financial Holdings Inc. All Rights Reserved

ChangeChange from
Mar. 1718

Overview of Operating Performance:
Sony Assurance(JPY bn)

FY2016FY2017

ChangeDirect premiums written

99.0

107.0

+8.1%

Net premiums written

100.2

108.2

+8.0%

Net losses paid

50.1

52.4

+4.6%

Underwriting profit

3.0

4.8

+58.4%Net loss ratio

57.5%

55.9%

(1.6pt)Net expense ratio

28.3%

28.5%

+0.2ptCombined ratio

85.8%

84.4%

(1.4pt)<Reasons for changes>◆ Increased in its mainstay
automobile insurance.

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

FY2016FY2017

ChangeE. I. loss ratio

62.3%

60.7%

(1.6pt)E. I. loss ratio +Net expense ratio

90.6%

89.2%

(1.4pt)◆ Declined due to a lower car
accident ratio in automobile
insurance.

Note: 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.]Mar. 17Mar. 18

Number of policies in force

1.89 mn

2.07 mnNon-consolidated
solvency margin ratio

730.8%

782.1%

Change from
Mar. 17+0.18 mn

+9.7%

+51.3pt

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

Direct Premiums Written
FY2017

Change245

206(15.9%)－－－

Personal accident

8,767

8,679

(1.0%)

Voluntary automobile

90,001

98,123

+9.0%

－

－

－

99,014

107,008+8.1%(JPY ｍn)
Fire
MarineCompulsory
automobile liability
Total

FY2016(JPY ｍn)

FY2016FY2017

Change

Fire

24

16

(34.4%)

Marine(2)0－Personal accident

9,044

8,887

(1.7%)

Voluntary automobile

89,746

97,880+9.1%

Compulsory
automobile liability

1,460

1,469

+0.6%

Total

100,274

108,254+8.0%*Medical insurance is included in personal accident.

Net losses paid
FY2017

Change66(1.4%)(6)2－

Personal accident

2,615

2,692

+2.9%

Voluntary automobile

46,26348,464+4.8%

Compulsory
automobile liability

1,301

1,316

+1.1%

Total

50,181

52,482+4.6%(JPY ｍn)
Fire
MarineFY2016

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
OthersNumber of policies in force(JPY bn)
120

1.79

100

95.5

1.89

2.07

+9.7%

(mn ofpolicies)(JPY bn)

10.0

100

+22.3%

2

100.2
+8.0%

8.1

7.6

80

108.2

Adjusted ordinary profit

Ordinary profit

Personal accident insurance

6.5
1.5

33

60

27

80
40

+31.6%

4.9

4.6

1

60

20
40
0.5

0
FY201520

FY2016FY2017*Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve

00
FY2015FY2016FY2017

The number of policies in force is the total of automobile insurance andmedical insurance policies.
Most of personal accident insurance is medical insurance.

(Reference) Provision for catastrophe reserve(JPY bn)

Provision for catastrophe reserve

FY2015FY2016FY2017

3.0

3.1

3.4

*Provision for catastrophe reserve is described as positive amount.

Sony Financial Holdings Inc. All Rights Reserved

21

Operating Performance:
Sony Assurance (2)Earned/Incurred Loss Ratio +Net Expense Ratio
Earned/Incurred loss ratio(Reference) Combined Ratio＜参考＞(Net Loss Ratio+ Net Expense Ratio)
Net loss ratio

Net expense ratio

（%）

（%）

100

100

90.4

89.2

90.6

63.3

62.3

(1.6pt)

60.7

85.8

60

84.4
(1.4pt)

55.9

57.8

57.5

(1.6pt)

27.1

28.3

+0.2pt

FY2015FY2016

40

40

20

84.8
80

(1.4pt)80

60

Net expense ratio

27.1

28.3

+0.2pt

28.5

0

20

28.5

0
FY2015FY2016FY2017

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

FY2017

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

（%）

800

693.5%

730.8%

782.1%+51.3pt

600

400

200

0
Mar. 16Mar. 17Mar. 18

Sony Financial Holdings Inc. All Rights Reserved

23

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

38.5<Consolidated>
+3.7%

39.9

7.1
+42.2%

5.0(JPY bn)

FY2016FY2016FY2017

Ordinary revenues

38.5

39.9

+1.4

+3.7%

Ordinary profit

5.0

7.1

+2.1

+42.2%

Profit attributable to owners of
the parent

3.3

4.7

+1.4

+42.8%FY2016FY2017

Ordinary revenues

35.1

36.2

+1.1

+3.3%

Gross operating profit

21.1

21.4

+0.3

+1.4%

Net interest income

17.9

20.6

+2.7

+15.2%Net fees and commissions

(1.5)

(2.9)

(1.3)

－

Net other operating income

4.7

3.7

(1.0)

(22.4%)

General and administrative
expenses

16.5

15.5

(1.0)

(6.1%)Net operating profit

4.6

5.9

+1.3

+28.4%

Ordinary profit

4.6

6.5

+1.9

+41.5%Net income

3.1

4.4

+1.2

+40.9%

Mar. 17Mar. 18

81.3

85.7

+4.3

+5.4%

4.7

6.0

+1.2

+26.4%

2,424.2

2,635.0+210.7+8.7%(JPY bn)

FY2017＜Consolidated＞◆Ordinary revenues rose year on year due to increases in interest
income on loans in line with a favorably growing balance ofmortgage loans and on investment securities.
◆Ordinary profit grew year on year, due to a decrease in operating
expenses, especially in advertising expenses for the card loanbusiness.
＜Non-consolidated＞◆Both gross operating profit and net operating profit increased.
・Net interest income increased due to increases in interest
income on loans and investment securities.
・Net fees and commissions decreased due mainly to lower fees
and commissions on mortgage loans, in addition to higher fees
paid for loan guarantees reflecting the growing loan balance.
・Net other operating income decreased due mainly to a decreasein gains on foreign exchange transactions.

Change<Non-consolidated>(JPY bn)(JPY bn)
Net assets
Net unrealized gains onother securities, net of taxes
Total assets

Sony Financial Holdings Inc. All Rights Reserved

ChangeChange from
Mar. 1724

Overview of Operating Performance:
Sony Bank (Non-consolidated) (1)Change from
Mar. 17Mar. 17Mar. 18

Customer assets

2,227.1

2,343.0+115.9+5.2%

Deposits

2,112.9

2,219.3+106.3+5.0%

Yen

1,764.9

1,814.7

+49.7

+2.8%

348.0

404.6

+56.5

+16.3%

114.1

123.7

+9.6

+8.5%

Loans outstanding

1,539.6

1,596.3

+56.7

+3.7%

Mortgage loans

1,452.4

1,525.5

+73.0

+5.0%

Card loans

18.0

18.8

+0.8

+4.5%

Others69.0

51.8*1(17.1)(24.8%)

1.24 mn

1.35 mn

+0.10
mn
*1

+8.8%

Non-performing assets ratio*2(Based on Financial*2
Reconstruction Law)

0.19%

0.12%

(0.06)pt

Capital adequacy ratio *3(domestic criteria)

9.75%

10.45%+0.70pt(JPY bn)

Foreign currency
Investment trusts

Number of accounts<Reasons for changes>◆ Increased in yen ordinary deposit
balance due mainly to anincrease in newly accumulated
funds via the increased numberof accounts.
◆ Increased in foreign currency
deposits, due to an increase intime deposits, led by the impactof an exchange cost campaign
and promotional effect from ofa rise in U.S. interest rates on US
dollar-denominated time
deposits.
◆ Rose due to a steady increase inmortgage loans, despite adecrease in demand forrefinancing these loans.

*1 Loans in others include corporate loans of ¥51.8 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 page 28.
Capital adequacy ratios has been calculated by applying fundamental internal rating based approach (FIRB) from March 31, 2017.

Sony Financial Holdings Inc. All Rights Reserved25Overview of Operating Performance:
Sony Bank (Non-consolidated) (2)<Reference> On Managerial Accounting Basis
FY2017

21.0

21.3

+0.3

+1.5%

①

20.6

23.0

+2.3

+11.6%

②

(0.9)

(2.5)

(1.5)

―

1.4

0.9

(0.4)

(34.9%)

19.6

20.4

+0.8

+4.2%

Gross operating profit
Net interest income*1*2

Net fees and commissions

Net other operating income<Reference> Interest Spread(Managerial Accounting Basis)

FY2016(JPY bn)*3

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

ChangeOperating expenses and otherexpenses ③

16.5

15.5

(1.0)

(6.1%)Net operating profit (core profit)＝(A)－③

3.1

4.9

+1.8

+58.4%■Managerial accounting basis
The following adjustments are made to the figures on a financial account for profits andlosses 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 consistsof profits and losses for bond and derivative dealing transactions.
■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.

Yield on investment

Yield on financing

Interest spread
（%）

1

1.19
0.94

1.13
(0.03pt)

0.91

0.5

0.25

0.22

0
FY2016FY2017

Note: Interest spread=(Yield on investment)-(Yield on financing)Sony Financial Holdings Inc. All Rights Reserved

26

Operating Performance:
Sony Bank (Non-consolidated) (1)
Deposits
Yen Deposits

Loans

Foreign currency deposits

Mortgage loans(JPY bn)(JPY bn)

2,219.3

2,112.9
2,000

Others1,923.5

348.0

1,500
+106.3404.6

1,596.3

1,539.6
1,344.1

87.1

+56.7

70.7 *

107.0

335.5

1,500

1,000

1,452.4

1,000
1,587.9

1,764.9

1,525.5

1,237.1

1,814.7

500

500

0

0
Mar. 16Mar. 17Mar. 18

Mar. 16Mar. 17Mar. 18*Corporate loans of ¥51.8 billion. Card loans of ¥18.8 billion.

Sony Financial Holdings Inc. All Rights Reserved

27

Operating Performance:
Sony Bank (Non-consolidated) (2)Balance of Securities by Credit Rating
AAA

AA

BBB

Others

Non-Consolidated Capital Adequacy Ratio(Domestic Criteria)

A(JPY bn)

631.2

620.9
600

+42.9

674.2
18.1

15

26.1

16.3

306.8
307.0

（%）

10

9.89

303.0

+0.70pt

400

109.8

200

10.45

9.75

5

135.3
165.2
232.4
126.3

160.2

0
Mar. 160Mar. 16Mar. 17Mar. 18

Mar. 17Mar. 18

Notes:
1. 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.
2. Capital adequacy ratios has been calculated by applying fundamental internalrating based approach (FIRB) from March 31, 2017.

Sony Financial Holdings Inc. All Rights Reserved28Forecast of Consolidated Financial
Results for FY2018

Sony Financial Holdings Inc. All Rights Reserved29Forecast of Consolidated Financial Results for FY2018
Ordinary revenues, ordinary profit and profit attributable to owners of the parent
are expected to increase.
(JPY bn)

FY2018（Forecast）

FY2017（Actual）

Changes

1,503.6

1,578.0+4.9%

1,351.2

1,416.1+4.8%

Non-life insurance business

110.0

112.3

+2.0%

Banking business

39.9

42.8

+7.2%

66.8

83.0

+24.2%

Life insurance business

54.1

70.9

+30.9%

Non-life insurance business

6.5

6.5

(1.1%)

Banking business

7.1

7.0

(2.0%)

51.8

55.0

+6.0%

Ordinary revenues
Life insurance business

Ordinary profit

Profit attributable to owners of the parent

For FY2018, stable business growth is expected to continue in all the businesses.
<Segment information for ordinary revenues and ordinary profit>■Life insurance businessWe forecast ordinary revenues to increase from FY2017, owing to robust income from insurance premiums.
We also anticipate a year-on-year rise in ordinary profit, stemming from an increase in profit on higher policies in force, a rise in gains on sale of securities,
and an improvement in net gains/losses on derivative transactions to hedge market risks for available-for-sale securities.
■Non-life insurance businessWe expect ordinary revenues to increase from FY2017, in line with growth in net premiums written, primarily for automobile insurance. Despite the higher
revenues, we believe ordinary profit will be flat year on year, with the loss ratio rising slightly from FY2017, when the ratio was lower than we had anticipated.
■Banking businessWe expect ordinary revenues to rise year on year due to stable business growth stemming from the ongoing steady accumulation of mortgage loans andstrengthening of foreign currency business. Although we anticipate a rise in gross operating profit in line with revenue growth, we expect ordinary profit to beflat year on year, as operating expenses rise.

Sony Financial Holdings Inc. All Rights Reserved30

Dividend Forecast for FY2018

Sony Financial Holdings Inc. All Rights Reserved

31

Dividend Forecast for FY2018■Medium-term Dividend Policy : Unchanged
We aim for steady increases in dividends in line with earnings growth over the medium to long term,
while securing sufficient internal reserves to ensure the financial soundness of Group companies andto invest in growth fields. Management will examine earnings growth over the medium to long termby placing more importance on economic value-based profit indicators that are more suitable forvaluing the growth of the life insurance business, in addition to statutory profit. Furthermore,management will determine specific dividend amounts for each year by taking into account acomprehensive range of factors surrounding the Sony Financial Group.

■Dividend results/forecast

Dividends for FY2017 are expected to be ¥60 per share.
For FY2018, considering the business environment, growth of our group and the level of economic valuebased profit growth, we forecast dividends of ¥62.5 per share, an increase of ¥2.5 from the planed
dividends of ¥60 per share for FY2017.
FY2014
Dividend per share¥40.0

FY2015¥55.0

FY2016¥55.0

Sony Financial Holdings Inc. All Rights Reserved

FY2017（Plan）¥60.0

FY2018(Forecast)
¥62.5

32

Sony Life’s Preliminary MCEV and ESR
as of March 31, 2018

Please keep in mind that the validity of these calculations has not been verified by outside specialists
as of the end of March, 2018.
The calculation of MCEV as of March 31, 2018, in accordance with the MCEV principles and verified byoutside specialists, is scheduled to be announced on May 21, 2018.
A part of the calculations of MCEV adopted simplified method for that as of December 31, 2017.
*In this part, figures, ratios and percentages changes have been rounded.

Sony Financial Holdings Inc. All Rights Reserved33Sony Life’s MCEVMar. 17

Dec. 17Mar. 18

ChangefromMar. 17

ChangefromDec. 17

1,441.1

1,509.6

1,633.2+192.1+123.6

Adjusted net worth

1,657.7

1,717.1

1,786.1+128.4+69.0

Value of existing business(216.7)(207.5)(152.9)

+63.7

+54.6

(JPY bn)

FY16.4Q(3M)

FY17.1Q(3M)

FY17.2Q(3M)

FY17.3Q(3M)

FY17.4Q(3M)

FY17.4Q(12M)

New business value

14.1

12.2

17.2

19.9

21.2

70.4

New business margin

3.8%

4.6%

6.4%

6.0%

6.1%

5.8%

(JPY bn)

MCEV*3 Reasons for changes in MCEV
・MCEV as of March 31, 2018 increased ¥123.6 billion form December 31, 2017, due mainly to a revision in theinsurance risk measurement method and favorable acquisition of new policies.
New business value/ New business margin
・New business value for FY17.4Q (3M) was ¥21.2 billion due to a favorable acquisition of new policies.
・New business margin for FY17.4Q (3M) increased 0.1pt from December 31, 2017, due mainly to the change of
product portfolio, despite a decrease in interest rates in Japanese yen.
Notes:
1. Calculated MCEV as of December 31, 2017 onward by using updated economic assumptions and lapse and surrender rate from March 31, 2017.
2. New business value is calculated accumulating new business value for each month based on economic assumptions at the end of each month. The insurance risk
measurement method and others have not changed for new business value and new business margin.
3. The amount as of March 31, 2018 was after a revision in the insurance risk measurement method and others. Please refer to page 48,49 for the details*Please refer to the appendix page 50 for trend on JGB yields.

Sony Financial Holdings Inc. All Rights Reserved34Sony Life’s ESR(JPY bn)

Insurance risk *1

Mar. 17Mar. 18 *3

Dec. 17

937.5

970.4

497.5

405.1

352.5

380.6

308.9

257.2

275.3

Operational risk

28.1

29.5

31.0

Counter party risk

1.9

2.8

2.6

(392.0)(383.1)(182.0)

980.6

972.2

729.7

Market-related risk
Of which, interest rate risk*2

Variance effect
The risk amount based on
economic value(JPY bn)

MCEV + Frictional costs
ESR

Mar. 17

Dec. 17Mar. 18 *3

1,476.6

1,539.3

1,655.8

151%

158%

227%

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 and others.
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.
3. ESR=(MCEV + Frictional costs) / Risk amount based on economic value.

 The risk amount based on economic value as of March 31, 2018 amounted to ¥729.7 billion, decreased ¥242.4
billion from December 31, 2017, due mainly to a revision in the insurance risk measurement method and others.
 ESR as of March 31, 2018 was 227%, up 69pt from December, 2017 due to a revision in the insurance risk
measurement method and others.
*1 Risk amount excluding the variance effect within Life module and Health module.
*2 Risk amount excluding the variance effect within market-related risk.
*3 The amount as of March 31, 2018 was after a revision in the insurance risk measurement method and others. Please refer to page 48,49 for the details.

Sony Financial Holdings Inc. All Rights Reserved

35

Appendix

Sony Financial Holdings Inc. All Rights Reserved36

Recent Topics 1
AEGON Sony Life Insurance

Launch of sales: December 1, 2009
Common stock: ¥36.9 billion (including capital reserves of ¥18.45 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 (33*) *As of May 14, 2018

SA Reinsurance Ltd

Established: October 29, 2009
Common stock: ¥15.9 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 16% of the amount of new mortgage loans for FY2017

Sony Life accounts for 20% of the balance of mortgage loans as of March 31, 2018

*Sony Life started handling banking agency business in January 2008.

Sony Assurance’s Auto Insurance Sold by Sony Life
■Sony Life accounts for 4% of new automobile policies for FY2017*Sony Life started handling automobile insurance in May 2001.

Sony Financial Holdings Inc. All Rights Reserved37

Recent Topics 2＜Highlights on and after FY17＞
2017-04-02

Sony Life commenced sale of new product: “Living Benefit Decreasing Term Life Insurance(Living Standard Type / Non-Participating Type)”

2017-05-01

Sony Lifecare Group opened the nursing care home “SONARE Urawa” in Saitama Prefecture

2017-06-21

Sony Bank changed its President, Representative Director

2017-06-28

Sony Financial Holdings, Sony Life , Sony Assurance and Sony Bank has formulated and disclosed “Customer-First Business
Operation Policy”

2017-07-10

Sony Lifecare converted Yuuai Holdigns Co., Ltd. to a wholly owned subsidiary (Yuuai Holding changed its
corporate name to Proud Life Inc. on Aug. 1, 2017)2017-08-08

Sony Bank began providing cloudfunding platform “Sony Bank GATE”

2017-08-10

Sony Life established a joint venture, Sony Life Financial Advisors Pte. Ltd., with Starts Securities Co., Ltd. in Singapore

2017-09-01

Sony Bank opened “CONCULTING PLAZA” in Ginza, Tokyo

2017-10-02

Sony Life commenced sale of new product: “U.S. Dollar-Denominated Single Premium Whole Life Insurance(Non-Notification Type)” and “U.S. Dollar-Denominated Living Benefit Whole Life Insurance (Living Standard Type)”

2017-10-09

Sony Assurance began offering a web-based insurance claims service, allowing policyholders to make medical insurance claims
via its website
Sony Bank began issuing “Takashimaya Platinum Debit Card” and recruiting its members throughan alliance with Takashimaya Co., Ltd. and Takashimaya Credit Co., Ltd.

2017-11-01

Sony Assurance expanded its “Secom accident on-site rush service” for automobile insurance policyholders

2017-11-29

Sony Financial Holdings issued ¥10 billion of No.3 unsecured corporate bonds

2017-12-01

Sony Assurance promote tie-up with auto repair shops which were certificated by TÜV Rheinland Japan Ltd.

2017-12-14

Sony Bank began offering “WealthNavi for Sony Bank” an automated asset investment service, in collaboration with
WealthNavi Inc.

2017-10-05

2017-12-18
2018-01-09
2018-04-01
2018-05-02

Sony Bank relocated its headquarter in Chiyoda-ku, Tokyo
Sony Life announced revisions to its insurance premium rates on certain tern life insurance products within
individual life insurance, in line with April 2018 revisions to the Standard Mortality Table
Sony Assurance began offering ASV (Advanced Safety Vehicles) discounts for its automobile insurance commencing on or after
Apr. 1, 2018
Sony Life announced sale of new product “Medical Benefit” and “Medical Benefit Return” from July 2, 2018

Sony Financial Holdings Inc. All Rights Reserved38Analysis on Ordinary Profit for Life Insurance Business(JPY bn)+6.0

Improvement in gains and losses onderivatives used for hedges related toavailable-for-sale securities

54.1

Gains on sale of securities

Increase in profit owing to
growing policy amount in force

FY2018FY201739
Sony Financial Holdings Inc. All Rights Reserved

Others

+6.0

70.9
+0.8
+4.0

(Forecast）

Sony Life’s Product Portfolio
Annualized Premiums from New Policies by Product

FY2017 (12M) ¥73.0 billion

FY2016 (12M) ¥78.1 billion

Yen whole
life 6%
Yen
whole
Endowment/ life 14%
Annuities
21%

U.S. dollardenominatedwhole life 8%

U.S. dollardenominated
U.S. dollar- single-premium
Endowment/
denominated whole life 6%
Annuities
whole life 13%
29%

Yen single-premium
whole life 1%
Protection-type（term-life）
56%

Protection-type（term-life）
47％

Sony Financial Holdings Inc. All Rights Reserved40Sony Life’s Asset Management
Purchase Securities in the General Account

FY2016 (12M)

Japanese local
government
bonds 0.1%

Japanesestocks 0.5%

国債
95.4%

Foreign
bonds
28.3%

Japanese
corporate
Bonds
28.6%

JGBs
42.5%

FY2017 (12M)

Foreignbonds
18.5%
Japanese
corporate
Japanese
Bonds
corporate
30.3%
Bonds
25.9%

Japanesestocks 0.5%

JGBs
55.1%

国債
85.3%
Notes:
1. Japanese corporate bonds include FILP agency bonds and Government-guaranteed bonds.
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 Reserved41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)
Mar. 16Mar. 17Mar. 18

Fair valueNet
unrealized
gains(losses)

Carrying
amountFair valueNet
unrealized
gains(losses)

Fair valueNet
unrealized
gains(losses)

5,383.9

7,410.1

2,026.2

6,068.6

7,514.2

1,445.5

6,467.9

8,050.6

1,582.6

Policy reserve matching bonds

251.2

292.5

41.3

277.3

303.3

25.9

401.9

436.8

34.8

Available-for-sale securities

887.9

1,091.6

203.6

896.5

1,069.9

173.3

921.9

1,091.1

169.1

Japanese bonds(including JGBs)

854.3

1,040.3

186.0

852.6

1,013.3

160.7

847.0

1,002.1

155.0

Japanese stocks

13.6

25.6

12.0

13.6

27.0

13.3

13.6

30.6

16.9

Foreign securities

19.8

25.2

5.4

30.0

29.1

(0.8)

61.0

58.1

(2.9)

Other securities

0.1

0.3

0.1

0.1

0.3

0.1

0.1

0.2

0.1

6,523.1

8,794.3

2,271.1

7,242.5

8,887.5

1,644.9

7,791.9

9,578.6

1,786.7（JPY bn）
Held-to-maturity securities

Total

Carrying
amountCarrying
amountNote: The above table includes money held in trust other than trading-purpose securities.

Valuation gains (losses) on trading-purpose securities
Mar. 16
Balance sheet
amountMar. 18

Mar. 17

Net valuation gains (losses)
recorded in income
2.2（JPY bn）

0.1

Balance sheet
amountNet valuation gains (losses)
recorded in income
2.0

(0.1)

Sony Financial Holdings Inc. All Rights Reserved

Balance sheet
amountNet valuation gains (losses)
recorded in income
－

(0.0)

42

Sony Life’s Interest Income and Dividends (Details)（JPY mn）

FY2017FY2016

Change00+681.5%

Japanese bonds(including JGBs)

121,103125,271+3.4%

Japanese stocks

527

566

+7.4%

Foreign securities

8,886

13,975+57.3%

Other securities

255

621

+143.6%

Loans

6,377

6,610

+3.7%

Real estate

10,86910,285(5.4%)

265

395+49.0%

148,284

157,727+6.4%

Cash and deposits

Others
Total

Sony Financial Holdings Inc. All Rights Reserved43Sony Life’s Capital Gains/Losses
FY2016FY201732,27627,357

Losses on trading securities, net－

8Income from trading securities, net

Losses on sale of securities… (3)－0Gains on sale of securities…(3)30,05011,403

Gains on derivatives, net

Losses on hedges of variable life insurance…(1)15,666

8,424

Foreign exchange gains, net

Losses on hedges of available-for-salesecurities… (2)

2,460

4,350

Losses on dollar-denominated insurance…(4)12,010(2,004)－

15,280－15,465

2,226

664

1,560

－

（JPY mn）
Capital losses

Losses on derivatives, net

Foreign exchange losses, net
Losses on dollar-denominated insurance（foreign exchange losses in separate
accounting）…(4)Other capital losses
Losses on dollar-denominated insurance（the provision of policy reserves for foreignexchange fluctuations）…(4)FY2016FY2017

16,114

9,894

134

－

1,308

0

－

－

14,670－Gains on dollar-denominated insurance(foreign exchange gains in separate
accounting）…(4)12,389－Gains (losses) on sale of foreign bonds

2,375

－

－

9,894

－

9,894

(16,162)(17,463)（JPY mn）
Capital gains

Other capital gains
Gains on dollar-denominated insurance（the reversal of policy reserves for foreignexchange fluctuations）

Net capital gains (losses)

Note: The figures of income (losses) from trading securities, net, gains (losses) on derivatives and foreign exchange gains (losses), net were recorded after offsetting
gains and losses of each item.
FY2016FY2017(1) Gains (Losses）on hedges of variable life insurance(15,666)(8,424)(2) Gains (losses）on hedges of available-for-salesecurities(2,460)(4,350)1,308

0(1,181)(3,566)（JPY mn）(3) Gains (losses) on sale of securities(4) Gains (losses) on dollar-denominatedinsurance（JPY mn）
The total amount of gains (losses) on sale of securities
and gains (losses) on sale of foreign bonds

Sony Financial Holdings Inc. All Rights Reserved

FY2016FY2017

3,683

0

44

Sony Life’s Quarterly Trend on New Policy Amount
Quarterly Trend on New Policy Amount(JPY bn)

2,000

1,500

1,842.4

1,324.2 1,290.7

1,457.7

1,437.4
1,260.0
1,098.9

1,189.0
1,050.7

1,115.8 1,114.8

1,214.7

1,000

500

0
FY15.1Q FY15.2Q FY15.3Q FY15.4Q FY16.1Q FY16.2Q FY16.3Q FY16.4Q FY17.1Q FY17.2Q FY17.3Q FY17.4Q

Sony Financial Holdings Inc. All Rights Reserved

45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(JPY bn)

25

22.3

23.9

22.7
20.6

19.1

20

20.5

19.5

18.2
15.3

15

16.1

16.2

3.1

2.8

21.1

10

5
3.9

3.4

4.6

3.6

4.1

3.9

3.1

4.4

0

3.3

3.6

FY15.1Q FY15.2Q FY15.3Q FY15.4Q FY16.1Q FY16.2Q FY16.3Q FY16.4Q FY17.1Q FY17.2Q FY17.3Q FY17.4Q

Sony Financial Holdings Inc. All Rights Reserved

46

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

Number and Amount of Policies in Force

Number and Amount of New Policies
New policy amount

Number of new polices [ ](JPY bn)80

70.8[14.2]

71.5[11.8](Thousandsof policies)

Policy amount in force(JPY bn)600

50.2[10.6]

1560
10

Number of policies in force [ ]444.2[73.4]

501.7[85.9]

520.6[92.5](Thousandsof policies)

120

400

80

200

40

0

0

40
5

20

0

0

FY2015FY2016FY2017
Net income (losses) for AEGON Sony Life Insurance and SA Reinsurance(JPY bn)

FY2016FY2017Mar. 16Mar. 17Mar. 18

ChangeAEGON Sony Life Insurance

(4.4)

(4.3)

+0.1

SA Reinsurance

(2.6)

(0.5)

+2.0

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

47

Revision in Sony Life’s Method of Measuring Insurance Risk
and othersAbout the method measuring insurance risk
 From the time it began disclosing MCEV up until the present, from the perspective of transparency
and comparability Sony Life has employed a measurement method based on the EU Solvency II
standard, which is a leader in capital requirements based on economic value.
 During this time, the industry has deliberated risk measurement methods and internal models. Also,Sony Life has accumulated its own experiential data related to insurance risk, as well as knowledge
about this risk in relation to its internal model. As a result, the internal model has grown moresophisticated.
 For these reasons, as of March 31, 2018, Sony Life changed its method of measuring insurance risk
to employ an internal model that reflects the company’s own risk characteristics.

About the cost of capital rate
 We have set a cost of capital rate conforming to an MCEV framework that takes market data into
consideration. Taking the status of recent market data and trends into consideration, as of March 31,
2018, we revised the cost of capital rate for measuring MCEV as of March 31, 2018 (increasing therate from 2.5% to 3.0%).
The following page shows the impact of these changes on MCEV and ESR and others as of March 31, 2018.
Sony Financial Holdings Inc. All Rights Reserved

48

Amount of Impact led by Revision in Sony Life’s Method of
Measuring Insurance Risk and others
March 31, 2018

(JPY bn)

MCEV

Before revision

After revision

The amount of
impact

1,536.5

1,633.2+96.6

Insurance risk

987.9

497.5

(490.4)Market-related risk

380.6

380.6

ー

Operational risk

31.0

31.0

ー

Counter party risk

2.6

2.6

ー

(397.1)(182.0)+215.1

The risk amount based on
economic value

1,005.0729.7(275.3)

MCEV + Frictional costs

1,569.3

1,655.8

+86.5

156%

227%

+71pt

Variance effect

ESR Of the MCEV impact of +¥96.6 billion, changes in capital cost rates had an impact on MCEV ofnegative ¥53.0 billion.
 New business value reflects such factors as a revision in the insurance risk measurement method
and others from FY2018.The impact on the new business margin for new policies in FY2017 if therevised insurance risk measurement method were reflected would be +0.7 pt.
Sony Financial Holdings Inc. All Rights Reserved49Trend on JGB Yields (Par rate)
1.20%

10 year
20 year

1.00%

30 year
40 year

0.80%

0.60%

0.40%

0.20%

0.00%
Mar. 17 Apr. 17 May. 17 Jun. 17 Jul. 17

Aug.17 Sep.17

Oct.17

Nov.17 Dec.17

Jan.18Feb.18 Mar. 18

As of the end of each month
10 year
20 year
30 year
40 yearMar.17 Apr.17 May.17 Jun.17
0.07%
0.02%
0.05%
0.09%
0.64%
0.56%
0.58%
0.59%
0.84%
0.78%
0.80%
0.84%
0.96%
0.92%
0.95%
1.02%

Jul.17Aug.17 Sep.17 Oct.17 Nov.17 Dec.17 Jan.18
Feb.18 Mar.18
0.08%
0.01%
0.06%
0.07%
0.04%
0.05%
0.09%
0.05%
0.04%
0.59%
0.55%
0.58%
0.60%
0.58%
0.57%
0.59%
0.55%
0.53%
0.87%
0.82%
0.86%
0.86%
0.82%
0.81%
0.81%
0.76%
0.74%
1.07%
1.02%
1.06%
1.06%
1.00%
0.97%
0.96%
0.90%
0.89%

Sony Financial Holdings Inc. All Rights Reserved50Trend on Risk-free Rate (Japanese yen/ Par rate)
2.00%

Convergence
period:20 year

Mar.
17
17.3末

1.50%

17.12末Dec. 17
18.3末Mar. 18

1.00%

0.50%

0.00%

Last liquid point: 40 year
△0.50%(0.50%)

1 1年
year

10
year
10年

2020年
year

30 30年
year

40
year
40年

50
year
50年

60
year
60年

70
year
70年

80
year
80年

*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

51

Definition of Consolidated Adjusted ROE
Calculation of Consolidated Adjusted ROE
Since each company of Sony Financial Group differs by industry such as insurance andbanking, each group company calculate its “Adjusted ROE” based on adjusted profit andadjusted capital to realize its corporate value and capital efficiency.
Sony Financial Group *Sony Life
Core ROEVSony Assurance
Adjusted ROE

Numerator(Adjusted
profit)New business value +Expected existing business
contribution

Denominator(Adjusted
capital)MCEV as of the beginning of
the fiscal year less dividends
paid plus MCEV as of the endof the fiscal year, divided by
two.

＋
①

④

＋

Net income (loss) + Provision
amount for catastrophe
reserve and its provision
amount for reserve for pricefluctuations, in each case②
after taxes

The average amount of net
assets plus the sum ofcatastrophe reserve and its
reserve for price fluctuations
during the fiscal year, in eachcase after taxes⑤

Sony Bank
ROE＋

Profit (loss) attributable toowners of the parent＋

The average amount of net
assets during the fiscal year③⑥

*Consolidated Adjusted ROE = Consolidated Adjusted Profit divided by Consolidated Adjusted Capital
Consolidated Adjusted Profit ＝ ①＋②＋③
Consolidated Adjusted Capital ＝ ④＋⑤＋⑥

Sony Financial Holdings Inc. All Rights Reserved52

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

Sony Financial Holdings Inc. All Rights Reserved53