Presentation Material

Consolidated Financial Results
for the Six Months Ended September 30, 2010

Sony Financial Holdings Inc.
November 15, 20100

Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies and beliefs of the SonyFinancial Holdings Group (the “SFH Group”). Any statements contained herein that pertain to future operating performance andthat are not historic facts are forward-looking statements. Forward-looking statements may include—but are not limited to—words such as “believe,” “anticipate,” “plan,” “strategy,” “expect,” “forecast,” “predict,” and “possibility” that describe future
operating activities, business performance, events or conditions. Forward-looking statements, whether spoken or written, arebased on judgments made by the management of the SFH Group, based on information that is currently available to it. As such,these forward-looking statements 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 toplace undue reliance on forward-looking statements. The SFH Group disclaims any obligation to revise forward-looking
statements in light of new information, future events or other findings. The information contained in this presentation does notconstitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any
securities, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment
whatsoever.

1

Disclaimer

1Highlights of Consolidated Operating Performancefor the Six Months Ended September 30, 2010 (1)FY09.1H

FY10.1H

Change(Billions of yen)

Ordinary revenues

481.2

Ordinary profit

496.2
+3.1%

Life
insurancebusiness

Ordinary revenues

432.6

444.5

+11.8

+2.7%

Ordinary profit

36.3

49.5

+13.1

+36.3%

Non-life
insurancebusiness

Ordinary revenues

33.9

37.1

+3.1

+9.2%

1.5

0.6

(0.8)

(56.0%)

15.3

15.4

+0.1

+1.0%
(17.6%)

Ordinary profit
Ordinary revenues

Bankingbusiness+30.7%

51.5

Ordinary profit

Corporateandelimination

Ordinary revenues

FY09.1H

(0.2)
(0.1)

－
+42.1%

0.0

0.0

481.2

496.2

+14.9

+3.1%

Ordinary profit

39.4

51.5

+12.0

+30.7%Net income

23.3

29.4

+6.0

+25.8%

Ordinary revenues

Consolidated

1.2
(0.9)

+0.0

Ordinary profit

39.4

1.4
(0.7)

FY10.1H(Billions of yen)

09.9.30

10.3.3110.9.30

Change from 10.3.31

Total
assets5,584.7

6,001.0

6,295.4+294.3+4.9%

Netassets

249.9

269.4

299.8

+30.3

+11.3%(Billions of yen)

Consolidated

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

2

During the six months ended September 30, 2010, consolidated ordinary
revenues increased 3.1% year on year, to ¥496.2 billion. As for the
breakdown by business segment, ordinary revenues increased from thelife insurance and the non-life insurance businesses, and remainedroughly flat in the banking business.
Consolidated ordinary profit increased 30.7%, to ¥51.5 billion reflecting an
increase in ordinary profit from the life insurance business which offset
decreases in operating profit from the non-life insurance and the banking
businesses.
Consequently, net income increased 25.8% year on year, to ¥29.4 billion.

2

Highlights of Consolidated Operating Performancefor the Six Months Ended September 30, 2010 (2) Life Insurance: Ordinary revenues increased year on year, due to higher income frominsurance premiums associated with steady increases in the new policy amount and thepolicy amount in force, as well as higher gains on sale of securities and interest income
and dividends on general account assets. Ordinary profit increased year on year, due
primarily to higher gains on sale of securities in the general account assets.
 Non-Life Insurance: Ordinary revenues increased year on year, owing to an increase in

net premiums written, reflecting a growing number of in-force policies, primarily for
automobile insurance. However, ordinary profit decreased, due mainly to higher
insurance claim payments for automobile insurance.
 Banking: Ordinary revenues remained at the same level as during the same period of theprevious fiscal year. Gross operating profit increased due to an increase in interest
income on loans led by the growing balance of mortgage loans and improved investment
performance. Ordinary profit decreased, due mainly to an increase in general andadministrative expenses, particularly system-related expenses.
 Consolidated ordinary revenues increased 3.1% year on year, to ¥496.2 billion.

Consolidated ordinary profit and consolidated net income increased 30.7%, to ¥51.5
billion and 25.8%, to ¥29.4 billion, respectively.

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

432.5

+2.7%

Ordinary profit

444.3

50.0
+37.3%

36.4

FY09.1H(Billions of yen)

FY09.1H

Ordinary revenues

FY10.1H

FY10.1H

Change

432.5

444.3

+11.8

Income from insurance premiums

339.3

371.0

+31.6

+2.7%
+9.3%

Investment income

91.5

71.1

(20.4)(22.3%)

Interest income and dividends

32.9

42.3

+9.4

+28.7%

Income from monetary trusts, net

9.5

4.3

(5.2)

(54.7%)

Gains on sale of securities

9.7

24.4

+14.7

+150.6%

Gains on separate accounts, net

38.1

－

(38.1)(100.0%)

396.0

394.3

(1.7)

(0.4%)

Insurance claims and other payments

134.4

132.0

(2.3)

(1.8%)

Provision for policy reserve and others

197.3

179.3

(17.9)(9.1%)

Investment expenses

10.7

27.1

+16.4

+153.2%(86.8%)

Ordinary expenses

Losses on sale of securities

5.3

0.7

(4.6)

Losses on separate accounts, net

－

21.4

+21.4

－

47.5

49.0

+1.5

+3.2%

Ordinary profit

36.4

50.0

+13.5

+37.3%Net income

21.7

28.9

+7.2

+33.4%

Operating expenses(Billions of yen)Ordinary revenues and ordinary profit increased year onyear.
Income from insurance premiums increased due toincreases in the new policy amount and the policy amountin force.
Investment income decreased year on year due todeteriorated performance on separate account assets
which offset increases in gains on sale of securities andinterest income and dividends.
Ordinary profit increased, due primarily to higher gains
from investment, net, on general account assets.
Line item amounts are truncated below ¥100 million;
percentage change figures are rounded.

09.9.30

10.3.3110.9.30

Securities

3,087.2

3,539.1

3,824.7+285.6

Policy reserves

3,787.2

3,985.6

4,163.5+177.9+4.5%

Total net assets

173.2

191.3

222.4

+31.1

+16.3%(Billions of yen)

Net unrealized gains/losses onother securities
Total assets
Separate account assets

Change from 10.3.31

+8.1%

21.7

15.4

24.6

+9.1

+59.1%

4,042.0

4,286.5

4,487.8+201.3

+4.7%

331.8

373.6

367.2

(6.3)

(1.7%)

4Highlights of Sony Life’s operating performance (non-consolidated basis) are
shown here.
Sony Life’s ordinary revenues increased 2.7% year on year, to ¥444.3 billion.
Income from insurance premiums increased owing to steady increases in the newpolicy amount and the policy amount in force.
Income from insurance premiums grew 9.3% from the same period of theprevious fiscal year, to ¥371.0 billion.
Investment income decreased 22.3% year on year, to ¥71.1 billion, due mainly toa deterioration in investment performance on separate account assets, which
offset higher gains on sale of securities and interest income and dividends in linewith the shift from investing in bonds with short terms to maturity to those withultralong terms.
Investment expenses increased 153.2% year on year to ¥27.1 billion due to aloss on separate accounts, net, compared with a gain a year earlier.
Ordinary profit increased 37.3% year on year to ¥50.0 billion, due primarily tohigher gains from investment, net, on general account assets.
Consequently, net income increased 33.4% year on year, to ¥28.9 billion.

4

Overview of Performance:
Sony Life (Non-consolidated)(Billions of yen)

FY09.1H

FY10.1H

ChangeNew policy amount

1,818.4

2,068.4+13.7%

Lapse and surrender amount

1,060.5

1,039.2(2.0%)

Lapse and surrender rate

3.27%

3.11%

(0.16pt)

Policy amount in force

32,897.5

34,118.5+3.7%

Annualized premiums from newpolicies

32.0

34.9

+9.1%

Of which, third-sector
products

7.7

7.9

+3.3%

Annualized premiums frominsurance in force

558.4

589.6

+5.6%

Of which, third-sector
products

129.6

136.6

+5.4%

(Billions of yen)

FY09.1H

ChangeFY10.1H

Gains from investment, net(General account)

42.6

65.4

Core profit

28.5

26.8

(6.1%)

Negative spread

8.8

4.1

(53.4%)

Solvency Margin Ratio

09.9.30

10.3.3110.9.30

2,433.8%

2,637.3%

2,992.8%+53.3%

Change from
10.3.31(Reasons for changes)
 Increased, due mainly to favorable sales of family
income insurance, which is life insurance with disability
benefit, which trend has continued since the 2H FY09.

 Decreased due to the lowering lapse and surrender
rates in most products, mainly in term life insurance Increased, owing mainly to favorable sales ofendowment insurance and living benefit insurance.

 Increased due primarily to higher gains on sale ofsecurities in line with the shift from investing in bonds
with short terms to maturity to those with ultralongterms, as well as an increase in interest income anddividends
 Declined owing primarily to a change from the previous
year’s reversal of policy reserve for minimum
guarantee for variable life insurance to a provision in
the current period, despite increases in income frominsurance premiums and interest income anddividends.

＋355.5pt

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 is calculated without offsetting policies that are reinstated.

Line item amounts are truncated below ¥100 million;
percentage change figures are rounded.

5

Here is an overview Sony Life’s performance.

5

Sony Life Operating Performance (1)New Policy Amount

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

New policy amount

Number of new policies

Annualized premiums from new policies

Of witch, third-sector(Thousands of policies)

25,0002.5(Billions of yen)

295

(Trillions of yen)

264

276

30

+6.9%

40

2.06
20,000
2.0

1.89

34.9
+9.1%

35

30.9
1.81

20

+13.7%

32.0

30
25

15,0001.5

20
10,000
1.0

10

15
+3.3%

10
5,000
0.5

5

0

0
FY08.1H

FY09.1H

FY10.1H

Line item amounts are truncated below ¥10 billion; numbers of policies aretruncated below 1,000 policies; percentage change figures are rounded.

6.5

7.7

7.9

FY09.1H

FY10.1H

0
FY08.1H

Line item amounts are truncated below ¥100 million; percentage figures are rounded.

6(Left-hand graph)
New policy amount for the total of individual life insurance and individual
annuities increased 13.7% year on year, to ¥2.06 trillion, owing tofavorable sales of a discount rider for family income insurance, which islife insurance with disability benefit for nonsmokers and other people inexcellent health, which trend has continued since its commencement ofsales in November, 2009. The number of new policies increased 6.9%
year on year, to 295 thousand policies.
(Right-hand graph)
Annualized premiums from new policies increased 9.1%, to ¥34.9 billion,
owing mainly to favorable sales of endowment insurance and living
benefit insurance. Of this amount, the figure for third-sector products was¥7.9 billion, up 3.3% year on year.

6Sony Life Operating Performance (2)Annualized Premiums from Insurance in Force

Policy Amount in Force(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)
Policy amount in force

Annualized premiums from insurance in force

Number of policies in force

Of which, third sector(Millions of policies)(Trillions of yen)
+6.7%

50

(Billions of yen)

5.17

600

5.01

4.84

573.3
558.4

589.6

+5.6%
+2.8%

5
+3.3%

500

40
+3.7%

32.8

34.1

33.4

4
400

+1.9%

30

3
300

20

2

200
+5.4%

10

0
09.9.30

10.3.3110.9.30

Line item amounts are truncated below ¥100 billion; numbers of policies aretruncated below 10,000 policies; percentage change figures are rounded.

1

100

0

0

129.6

133.0

09.9.30

10.3.31

+2.7%

136.6

10.9.30

Line item amounts are truncated below ¥100 million;
percentage change figures are rounded

7(Left-hand graph)
Policy amount in force for the total of individual life insurance andindividual annuities grew steadily, to ¥34.1 trillion as of September 30,
2010, up 3.7% from September 30, 2009 and up 1.9% from March 31,
2010. The number of policies in force increased 6.7% from September 30,
2009 and up 3.3% from March 31, 2010, to 5.17 million policies.
(Right-hand graph)
Annualized premiums from total policies as of September 30, 2010, wereup 5.6% from September 30, 2009 and up 2.8% from March 31, 2010,
totaling ¥589.6 billion. Of this amount, the figure for third-sector products
was up 5.4% from September 30, 2009 and up 2.7% from March 31,
2010, to ¥136.6 billion.

7

Sony Life Operating Performance (3(3)
Lapse and Surrender Rate*

Solvency Margin Ratio(Individual Life Insurance + Individual Annuities)＜Annual・1H＞
(%)
(%)

10

3,000
Lapse and surrender rate
(Annual)+355.5pt

Lapse and surrender rate (1H)

2,992.8
2,500

8

6.79

2,637.3
2,433.8

7.21

2,000

(Annual)

6
1,500

4

2

(0.16pt)

3.11

3.27

(1H)

3.11

1,000

500

0

0
FY08

FY09

FY10

09.9.30

10.3.3110.9.30*Figures for lapse and surrender rates are calculated
without offsetting policies that are reinstated.

8(Left-hand graph)
The lapse and surrender rate for the six months ended September 30,
2010 decreased 0.16 percentage point year on year, to 3.11%, due to thelowering lapse and surrender rates in most products.
The lapse and surrender rate for family income insurance, which is life
insurance with disability benefit rose for the second half of the last fiscal
year, reflecting the impact of individual customers conversion to discountrider launched in November 2009 for nonsmokers and other people inexcellent health. However this rate during the first half of this fiscal year
declined compared with that period.
(Right-hand graph)
As of September 30, 2010, Sony Life’s solvency margin ratio was
2,992.8%, up 355.5 percentage points from March 31, 2010.

8

Sony Life Operating Performance (4)Ordinary Profit

Income from Insurance Premiums(Billions of yen)(Billions of yen)

371.0

400

327.0

60

50.0

339.3
+9.3%

50
+37.3%

300

40

36.4

30

200

20

19.9

100

10
0

0
FY08.1H

FY09.1H

FY10.1H

FY08.1H

FY09.1H

FY10.1H

Line item amounts are truncated below ¥100 million; percentage figures are rounded.

9

Both income from insurance premiums and ordinary profit increased year
on year, as described in the previous pages.

9Sony Life Operating Performance (5)Negative SpreadCore Profit(Billions of yen)(Billions of yen)

20

28.5

30

26.8
(6.1%)

15
20

16.5

10.6
10

8.8

10

(53.4%)

4.1

5

0

0
FY08.1H

FY09.1H

FY10.1H

FY08.1H

FY09.1H

FY10.1H

Line item amounts are truncated below ¥100 million; percentage figures are rounded.

10(Left-hand graph)Core profit was down 6.1% year on year, to ¥26.8 billion, due primarily toa change from the previous year’s reversal of policy reserve for minimum
guarantee for variable life insurance to a provision in the current period,
despite increases in income from insurance premiums and interest
income and dividends.
(Right-hand graph)
In line with the increase in interest income and dividends, the negative
spread declined 53.4% year on year, to ¥4.1 billion.

10

Sony Life Operating Performance (6)Number of Lifeplanner Sales Employees(Number)Number of Independent Agents(Number)

2,500

4,036
4,000

4,019

3,971
3,891

(17)

2,112

2,080

2,089

2,000

2,072
(17)

3,500
1,500

3,000
0

1,000
0

09.3.3109.9.30

10.3.3110.9.30

09.3.3109.9.30

10.3.3110.9.30

11(Left-hand graph)
The number of Lifeplanner sales employees as of September 30, 2010,
was 4,019, down 17 from March 31, 2010. This decrease was the resultof a lower number of new recruits due to the revised recruitment
standards, and a higher number of resignations.
(Right-hand graph)
The number of independent agents decreased 17 from March 31, 2010,
to 2,072.

11

Sony Life Operating Performance (7)Breakdown of General Account Assets (Based on Real Status)
10.3.3110.9.30<Asset management review>(Billions of yen)Japanese governmentand corporate bonds(excl. CBs)

Amount%Amount%3,310.4

84.6%

3,625.0

88.0%

13.2

0.3%

-

-

Japanese government and corporate bonds:
Continued to accumulate ultralong-term bonds during
2Q FY10.

<Lengthened
asset duration><L
CBs

09.3.3113.6 years

10.3.3117.6 years

10.9.30

19.3 years

Japanese stocks

72.5

1.9%

63.2

1.5%

Foreign securities

75.2

1.9%

68.5

1.7%

CBs: No balance (as of September 30, 2010)

Policyholder loans

127.5

3.3%

131.9

3.2%

Japanese stocks: Maintained the ratio of stock holding
at the end of March 2009.

Real estate

79.9

2.0%

79.1

1.9%

Cash and call loans

116.4

3.0%

54.9

1.3%

Other

117.4

3.0%

97.6

2.4%

3,912.9

100.0 %

4,120.6

100.0%

Total

Amounts for individual items included in monetary trusts(Japanese government and corporate bonds, CBs, Japanesestocks and other) have been broken down into their original
investment categories.
* The breakdowns shown at left are different from those shownin Chapter 3, “(1) Portfolio of General Account Assets” onpage 5 of the “Summary Information on Sony Life’s Financial
Results for the Six Months Ended September 30, 2010,”
announced by Sony Life.

12

Here is a breakdown of Sony Life’s general account assets based on real
status as of September 30, 2010, compared with March 31, 2010.
As Sony Life increased its investment in ultralong-term bonds, mainly
Japanese government and corporate bonds, their ratio rose to 88.0%. On
the other hand, the ratio of Japanese stock holdings remained roughly flat,and the balance of CBs was zero as of September 30, 2010.
As a result of these efforts, Sony Life extended its asset duration to 19.3
years as of September 30, 2010.
As of September 30, 2010, the duration mismatch risk between assets
and liabilities was reduced, thereby limiting interest rate sensitivity.
Going forward, Sony Life plans to continue investing most new money
acquired in ultralong-term bonds. The company will also consider
investing limited amounts of new money primarily in stocks and foreign
securities.

12

Highlights of Operating Performance:
Sony Assurance
Ordinary revenues

Ordinary profit(Billions of yen)

37.1
33.9

FY09.1H

Ordinary revenues

33.9

37.1

+3.1

+9.2%

33.6

36.7

+3.0

+9.2%

+9.2%
Underwriting income

0.3

0.3

+0.0

+8.9%

32.4

36.4

+3.9

+12.2%

Underwriting expenses

24.5

27.9

+3.3

+13.8%

Investment expenses

0.0

－

(0.0)

(100.0%)Operating, general andadministrative expenses

Investment income
Ordinary expenses

1.5(56.0%)

0.6
FY09.1H

ChangeFY10.1H

FY10.1H(Billions of yen)Ordinary revenues increased, but ordinary profit
decreased, year on year.
Ordinary revenues increased, due to an increase in
net premiums written led by a growing number of
in-force policies primarily for automobile insurance.
Ordinary profit decreased, due mainly to an increasein net losses paid for automobile insurance, resulting
from a rising number of car accidents, which offset
the positive impact of increased ordinary revenues.

7.8

8.4

+0.5

+7.5%

Ordinary profit

1.5

0.6

(0.8)

(56.0%)Net income

1.0

0.3

(0.6)

(62.2%)(Billions of yen)

Change from 10.3.31

09.9.30

10.3.3110.9.30

Underwriting reserves

55.4

58.1

62.3

+4.2

+7.3%

Total net assets

14.8

15.4

15.8

+0.4

+2.6%

0.0

0.0

0.0

+0.0

+49.3%

93.3

98.3

103.9

+5.6

+5.7%

Net unrealized gains/losses
on other securities(net of taxes)
Total assets

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

13

Sony Assurance posted a 9.2% increase in ordinary revenues year on
year, to ¥37.1 billion, due to increased net premiums written, as thenumber of insurance policies in force grew for strong sales of new policies
in its mainstay automobile insurance.
Ordinary profit decreased 56.0% year on year, to ¥0.6 billion, due mainly
to an increase in net losses paid for automobile insurance, resulting froma rising number of car accidents, which offset the positive impact ofincreased ordinary revenues.
Net income decreased 62.2% year on year, to ¥0.3 billion.

13

Overview of Performance:
Sony Assurance(Reasons for changes)

FY09.1H

FY10.1H

Direct premiums written

33.4

36.4

+8.8%

Net premiums written

33.6

36.7

+9.2%

Net losses paid

16.1

19.0

+17.6%

Underwriting profit

1.2

0.3

(70.9%)Net loss ratio

54.0%

58.2%

+4.2ptNet expense ratio

25.2%

24.7%

(0.5pt)Combined ratio

79.2%

83.0%

+3.8pt(Billions of yen)

Change Increased, owing to an increase in thenumber of policies in force for automobile
insurance.
 Increased, owing to a rising number of car
accidents.

 Decreased, due to increased net
premiums written which offset thenegative impact of an increase inunderwriting costs

Net expense ratio is equal to the ratio of total underwriting costs to net premiums written.
Net loss ratio is equal to the ratio of net losses paid and loss adjustment expenses to net premiums written.

09.9.30
Number of policies in force
Solvency margin ratio Increased, due to an increase in thenumber of policies in force for automobile
insurance.

Change from
10.3.3110.3.3110.9.30

1.22 million

1.27 million

1.33 million+0.05 million

1,033.6%

1,018.5%

1,010.3%(8.2pt)+4.5%

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.
Line item amounts are truncated below ¥ 100 million; numbers of policies aretruncated below 10,000 policies; percentage change figures are rounded.

14

Here is an overview of Sony Assurance’s performance.

14

Sony Assurance’s Underwriting Performanceby Type of Policy
Direct Premiums Written

Net Premiums Written

FY09.1H

FY10.1H

FY09.1H

Change

Fire

137

71

(47.6%)

Marine－－－Personal accident*

3,442

3,551

+3.1%

Voluntary automobile

29,86832,783+9.8%

Compulsory
automobile liability
Total

ChangeFY10.1H(Millions of yen)

(Millions of yen)

－

－

－

33,44836,406+8.8%

Net losses paid

Fire

6

3

(44.0%)

Marine76(6.0%)

Personal accident*

3,563

3,679

+3.3%

Voluntary automobile

29,75232,648

+9.7%

291

369

+26.8%

33,62036,707+9.2%

Compulsory
automobile liability
Total*SURE, medical and cancer insurance is included in personal accident.
FY09.1H

FY10.1H

Change(Millions of yen)
Fire

0

0

(26.4%)

Marine17+393.5%705

776+10.1%

15,216

17,927+17.8%

258

319+23.9%

16,181

19,031+17.6%

Personal accident*
Voluntary automobile
Compulsory
automobile liability
Total

Line item amounts are truncated below ¥ 1 million;
Percentage change figures are rounded.

15

This slide shows direct premiums written, net premiums written and net
losses paid by type.

15

Sony Assurance Operating Performance (1)Net Premiums Written andNumber of Policies in Force
Voluntary automobile insurance

Personal accident insurance(Millions of policies)

Number of policies in force

Other

Ordinary Profit(Billions of yen)

1.33

50

1.22

1.4

(Billions of yen)
2

+8.9%

1.2

36.7

40

0.3
30

33.6

+9.2%

3.6

1.5
0.3

1.5

1

3.5
0.8

(56.0%)

1

20

29.7

32.6

0.6

0.6
0.4

0.5

10
0.2
0

0
FY09.1H

FY10.1H

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.

0
FY09.1H

FY10.1H

Line item amounts are truncated below ¥100 million; numbers of policies aretruncated below 10,000 policies; percentage change figures are rounded.

16(Left-hand graph)
Number of policies in force for the total of automobile insurance andmedical and cancer insurance increased steadily, rising 8.9% year on
year, to 1.33 million policies.
Net premiums written posted a 9.2% year-on-year increase, to ¥36.7
billion.
(Right-hand graph)
Ordinary profit decreased year on year, as described in the previous
pages.

16

Sony Assurance Operating Performance (2)Reference
Combined Ratio(Net Expense Ratio + Net Loss Ratio)

Net Expense Ratio + Earned/Incurred Loss Ratio
Earned/incurred loss ratio

Net expense ratio(%)

Net expense ratio

Net loss ratio

(%)

94.2

+5.1pt

100

90.2

91.9

100
+3.8pt

89.1

80

80

81.7

83.3

83.0

79.2

+5.6pt

69.5

60
63.5

60

63.9

65.8

40

20

+4.2pt

57.2
55.0

58.2

54.0

40

26.7

20

(0.5pt)

26.1

25.2

24.7

FY09.1H

FY10.1H

0

26.7

26.1

(0.5pt)

25.2

24.7

FY09.1H

FY10.1H

0
FY08

FY09

FY08

FY09

Earned/incurred loss ratio is equal to the ratio of the sum of net losses paid, loss
adjustment expenses and accumulation in provision for reserve for outstanding
losses to earned premiums.
*Note that earthquake insurance and compulsory automobile liability

Net expense ratio is equal to the ratio of total underwriting costs to net premiums written.
Net loss ratio is equal to the ratio of net losses paid and loss adjustment expenses to
net premiums written.

insurance are excluded from the above calculation.

17(Left-hand graph)
To help you understand the actual condition of Sony Assurance, which isin a growth phase, we show the earned/incurred loss ratio, which is theaccrual-basis loss ratio.
For the six months ended September 30, 2010, the E.I. loss ratio
increased 5.6 percentage points year on year, to 69.5%, due to anincrease in net losses paid resulting mainly from a rising number of car
accidents.
The net expense ratio dropped 0.5 percentage point, to 24.7%, due
primarily to an increase in net premiums written.
(Right-hand graph)
The net loss ratio rose 4.2 percentage points compared with the same
period of the previous fiscal year, to 58.2%, due to the aforementioned
increase in net losses paid.
This is different from the E.I. loss ratio, which reflects an increase or adecrease in provision for reserve for outstanding losses.
As a result, the combined ratio (the sum of the net loss ratio and the net
expense ratio) rose 3.8 percentage points year on year, to 83.0%.

17Sony Assurance Operating Performance (3)Solvency Margin Ratio
(%)

1,200
(8.2pt)1,033.6

1,018.5

09.9.30

10.3.311,010.3

800

400

0
10.9.30

18

As of September 30, 2010, Sony Assurance’s solvency margin ratio was
1,010.3%, down 8.2 percentage points from March 31, 2010. Although,Sony Assurance has maintained financial soundness.

18

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

15.2

+1.1%

1.9

FY09.1H

Ordinary profit

15.4

1.6

(12.9%)

FY10.1H(Billions of yen)

FY09.1H

FY10.1H

ChangeOrdinary revenues

15.2

15.4

+0.1

Gross operating profit

7.7

8.3

+0.6

+7.8%

Net interest income

6.5

6.3

(0.2)

(3.6%)Net fees and commissions

0.01(0.07)(0.08)－Net other operating income

1.1

2.0

+0.9

+81.6%

General andadministrative expenses

5.6

6.3

+0.6

+12.2%

Ordinary profit

1.9

1.6

(0.2)

(12.9%)Net income

1.1

0.8

(0.2)

(19.5%)Net operating profit

2.1

1.8

(0.2)

(11.9%)+1.1%(Billions of yen)Ordinary revenues remained roughly flat and ordinary profit decreased
year on year.
Gross operating profit increased ¥0.6 billion year on year due to anincrease in net other operating income.
- Net interest income decreased reflecting lowering of interest
rate which offset an increase in interest income on loans led by thegrowing balance of mortgage loans.
- Net other operating income increased ¥0.9 billion, mainly reflecting
improved investment performance.
Net operating profit decreased ¥0.2 billion year on year due to anincrease in general and administrative expenses of ¥0.6 billion.
Customer assets increased ¥73.5 billion from March 31, 2010, of
which deposit balance increased ¥74.7 billion.

(Billions of yen)

Change from
10.3.3109.9.30

10.3.3110.9.30

Securities

804.5

880.1

958.3

+78.1

+8.9%

Loans

534.3

586.6

636.4

+49.7

+8.5%

Deposits

1,334.8

1,510.0

1,584.8

+74.7

+5.0%

Customer assets

1,431.3

1,610.0

1,683.6

+73.5

+4.6%

Total net assets

57.4

58.9

58.3

(0.6)

(1.1%)Net unrealized gains/losses
on other securities(net of taxes)
Total assets

(0.0)

0.9

1.1

+0.2

+32.6%

1,445.1

1,612.1

1,700.7

+88.5

+5.5%

Line item amounts are truncated below ¥100 million excluding net fees and commissions;percentage change figures are rounded.

19

Highlights of Sony Bank’s operating performance (non-consolidated
basis) are shown here.
Sony Bank’s ordinary revenues increased 1.1% year on year, to ¥15.4
billion, owing primarily to an increase in interest income on loans led by a
growing balance of mortgage loans.
Gross operating profit increased 7.8% from a year earlier, to ¥8.3 billion,
due mainly to an increase in net other operating income reflecting
improved investment performance.
General and administrative expenses expanded 12.2% year on year, to¥6.3 billion, due mainly to an increase in system-related expenses.
As a result, ordinary profit decreased ¥12.9%, to ¥1.6 billion.
Net income amounted to ¥0.8 billion, down 19.5% from the same periodof the previous fiscal year.

19Overview of Performance:
Sony Bank (Non-consolidated) (1)(Reasons for changes)(Billions of yen)

09.9.30

10.3.3110.9.30

Change from 10.3.31

Customer assets

1,431.3

1,610.0

1,683.6

+73.5

+4.6%

Deposits

1,334.8

1,510.0

1,584.8

+74.7

+5.0%

Yen

1,020.8

1,184.9

1,241.7

+56.7

+4.8%

Foreigncurrency

314.0

325.0

343.0

+18.0

+5.5%

Investment trusts

96.5

100.0

98.8

(1.1)

(1.2%)

534.3

586.6

636.4

+49.7

+8.5%

525.9

555.1

581.3

+26.2

+4.7%

8.4

31.5

55.0 (*1)+23.5+74.6%

750

796

828

+31

+4.0%

13.41%

12.09%

11.76%



Loans
Mortgage loans
OthersNumber of accounts(thousands)
Capital adequacy
ratio(*2)(domestic criteria)

Customer assets increased ¥73.5 billion
from March 31, 2010, of which total of
deposit increased ¥74.7 billion. Foreign
currency deposit increased ¥18.0 billion
under the circumstance where sharp hikein the yen might have the negative impact
on the foreign exchange conversion.

 Investment trusts decreased reflecting adecline in reference price Loan balance steadily increased due toincreases in mortgage loans andcorporate lending centering on syndicatedloans.

(0.33pt)*1 Loans in others include corporate loans of ¥46.8 billion.
*2 Please refer to the graph of the non-consolidated capital adequacy ratio (domestic criteria) on P24.
Line item amounts are truncated below ¥100 million; numbers of accounts are truncated below 1,000 accounts; percentage change figures are rounded.

20

Here is an overview of Sony Bank’s performance.

20

Overview of Performance:
Sony Bank (Non(Non-consolidated) (2)■<Reference> On Managerial Accounting Basis(Billions of yen)

FY09.1H

FY10.1H

Change

7.7

8.2

+0.5

Net interest income *1 ①

6.6

7.2

+0.5

+9.0%

Net fees andcommissions *2 ②

0.6

0.5

(0.1)

(22.4%)Net other operating
income *3

0.4

0.5

+0.1

＋26.8%

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

7.2

7.7

+0.4

+6.2%

Operating expenses andother expenses ③

5.6

6.4

+0.8

+15.1%Net operating profit(core profit)= (A)－③

1.6

1.2

(0.3)

(23.8%)

Gross operating profit<Reference>
Net Operating Profit (Core Profit),
Operating Expenses and Other Expenses& Gross Operating Profit (Core Profit)+7.3%

Net operating profit (core profit)
Gross operating profit (core profit)(Billions of yen)

Operating expenses and other expenses

8

7.2

+6.2%

6.4

7

●Managerial accounting basis
The following adjustments are made to the figures on a financial accounting basis toaccount for profits and 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), consists of 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.

6

7.7

5.6

+15.1%

5
4
3
2

1.6

(23.8%)

1.2

1
0
FY09.1H

FY10.1H

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

21

We break down gross operating profit on a managerial accounting basis to facilitate anunderstanding of operational sources of revenue and profits.
(Left-hand table)
Net interest income on a managerial accounting basis increased ¥0.5 billion year on year,to ¥7.2 billion, due to an expanded scale of business and a recovery in investment
performance on foreign currency deposits, the balance of which grew steadily during thefirst half of the fiscal year under review.
Net fees and commissions amounted to ¥0.5 billion, down ¥0.1 billion, owing primarily toa decrease in profits for customer dealings in foreign currency transactions stemmingfrom adverse foreign exchange market conditions.
Net other operating income rose ¥0.1 billion, to ¥ 0.5 billion. This was mainly because
gains on sales of bonds increased year on year, although the company recorded ahigher devaluation loss from derivatives, net, for hedging purpose on mortgage loans,owing to the lowering of long-term interest rates.
Consequently, gross operating profit on a core profit basis increased ¥0.4 billion year on
year, to ¥7.7 billion.
(Right-hand graph)
Net operating profit on a core profit basis decreased ¥0.3 billion year on year, to ¥1.2
billion, due to an increase in operating expenses and other expenses.

21

Sony Bank Operating Performance (1)<Reference>＜参考＞ Interest Spread (Managerial Accounting Basis)
Interest spread

Yield on investment

Yield on financing

(%)

2.00

1.53

1.50

1.50

1.00

1.49

0.92

0.92

0.90

0.61

0.57

FY09.2Q

FY09.3Q

1.44

1.44

0.86

0.87

0.59

0.58

0.57

FY09.4Q

FY10.1Q

FY10.2Q

0.50

0.00

Notes: Interest spread = Yield on investment – Yield on financing
Yield on investment includes primarily gains or losses from currency swap transactions in net other operating income.

22

This chart shows the interest spread on a managerial accounting basis.
The yield on investment, which has gradually declined during the past
year, remained roughly flat in the most recent quarter.
The yield on financing also remained at the same level.
As a result, the interest spread for the three months ended September 30,
2010, was 0.87%.

22

Sony Bank Operating Performance (2)Customer Assets (Deposits + Investment Trusts)
and Number of Accounts
Yen deposits
Foreign currency deposits
Number of accounts (thousands)

Investment trusts(Billions of yen)

828
796

2,000

Loans
Mortgage loans

Others*Including corporate loans of ¥46.8billion.

(Billions of yen)
800

+31

750

636.4

1,683.6
1,610.0
1,500

+73.5

98.8

+49.7

586.6

600

55.0*

534.3

1,431.3
343.0

400
1,000
Deposits total:¥1,584.8 billion

581.3

1,241.7
200

500

0

0

09.9.30

10.3.3110.9.30

09.9.30

10.3.3110.9.30

Line item amounts are truncated below ¥100 million; number of accounts are truncated below 1,000 accounts.

23(Left-hand graph)
As of September 30, 2010, customer assets (the sum of deposits andinvestment trusts) were up ¥73.5 billion from March 31, 2010, to ¥1,683.6
billion.
As for the breakdown of customer assets as of September 30, 2010,
deposits (the sum of Japanese yen and foreign currency deposits)
amounted to ¥1,584.8 billion, up ¥74.7 billion from March 31, 2010. Of
which foreign currency deposit increased ¥18.0 billion under thecircumstance where sharp hike in the yen might have the negative impact
on the foreign exchange conversion.
Investment trusts were ¥98.8 billion, down ¥1.1 billion from March 31,
2010.
As of September 30, 2010, the number of accounts was 828 thousand,up 31 thousand accounts from March 31, 2010.
(Right-hand graph)
Loans expanded to ¥636.4 billion, up ¥49.7 billion, from March 31, 2010,
owing to a growing balance of mortgage loans, as well as an increase incorporate loans.

23Sony Bank Operating Performance (3)Non-Consolidated Capital Adequacy Ratio(Domestic Criteria)

Balance of Securities by Credit Ratings
AAA
AA
BBB
BB
(Billions of yen)
1,200

A
Other

(%)
20

958.3

1,000

880.1

15

+78.1

804.5

(0.33pt)

800

11.76

13.41
12.09

10

600

400

5

200
0
09.9.30

009.9.30

10.3.3110.9.30

10.3.3110.9.30* Sony Bank’s non-consolidated capital adequacy ratio was calculated based on the standard
stipulated by Article 14-2 of the Banking Law of Japan, in accordance with Financial Services
Agency of Japan (“FSA”) public ministerial announcement No. 19 of 2006. The capital
adequacy ratio as of and after December 31, 2008, newly adopted the special exception of
the standard mentioned above, in accordance with the FSA public ministerial announcement
No. 79 of 2008.

Amounts are truncated below ¥100 million.

24(Left-hand graph)
As of September 30, 2010, the balance of securities increased ¥78.1
billion, to ¥958.3 billion from March 31, 2010.
Sony Bank continuously invests in highly rated bonds.
(Right-hand graph)
As of September 30, 2010, Sony Bank’s non-consolidated capital
adequacy ratio (domestic criteria) was 11.76%, down 0.33 percentage
point from March 31, 2010. These figures indicate that Sony Bank has
maintained a sound financial basis.

24Consolidated Financial Forecast
for the Year Ending March 31, 2011
(Billions of yen; amounts are truncated below ¥100 million; percentage changes are rounded.)
FY09

Consolidated ordinary revenues

FY10

Change(Forecast)

FY10 forecast
vs. FY09 actual

Consolidated Ordinary Revenues

978.9

974.0

(0.5%)

882.0

871.3

(1.2%)

Non-life insurance business

68.1

72.7

+ 6.6 %

Banking business

30.5

30.6

+ 0.3%

1,000

Life insurance business(Billions of yen)
1,200

84.3

74.0

(12.3%)

800

Life insurance business

79.7

69.6

(12.8%)

600

Non-life insurance business

2.5

2.2

(14.2%)

Banking business

1.9

2.8

+ 45.2%

48.1

40.0

(16.9%)

Consolidated ordinary profit

Consolidated net income

Banking business
Non-life insurance businessLife insurance business

974.0

978.9

(Forecast)

400
200
0

※SFH’s consolidated financial forecast for the fiscal year ending March 31, 2011, is unchanged from those announced on May 13, 2010.

FY09

FY10

■Life insurance business
Operating results exceed the amounts in our forecast for 1H FY10. However, our forecast for FY10 remains
unchanged from the previous announcement, due mainly to an expected increase in operating expenses anduncertainty about the financial market environment for 2H FY10.
■Non-life insurance business
Ordinary revenues for FY10 are expected to rise year on year, as we expect steady business expansion mainly in its
mainstay automobile insurance. Ordinary profit is expected to decrease year on year, due mainly to expected
increases in the loss ratio and the expense ratio in line with the planned reinforcement of the corporate system andinfrastructure based on the expected expansion of its business operations. These forecasts for FY10 remains
unchanged from the previous announcement.
■Banking Business
Ordinary revenues for FY10 are expected to slightly increase year on year, as interest income is expected to rise due
to expanding business operations, although an influence of the worldwide reductions in interest rates still remains.
Ordinary profit is expected to grow year on year, as gross operating profit, especially net interest income, is expected
to increase. These forecasts for FY10 remains unchanged from the previous announcement.

Consolidated Ordinary Profit(Billions of yen)
100
90

Banking business
Non-life insurance businessLife insurance business

84.3
74.0

80
70
60
50

(Forecast)

40
30
20
10
0
FY09

FY10

25

Here is our consolidated financial forecast for the fiscal year ending
March 31, 2011.
SFH revise upward our forecasts for ordinary revenues, ordinary profit
and net income for the six months ended September 30, 2010 due mainly
to higher gains on sale of securities in the life insurance business than
expected at the previous announcement, of May13, 2010.
However, our consolidated financial forecast for the year ending March 31,
2011, remains unchanged from the previous announcement, due mainly
to uncertainty about the financial market environment for the second halfof this fiscal year, although we expect each business to grow steadily.

25Appendix

26(Appendix)

26

Recent Topics

AEGON SONY LIFE INSURANCE Sales Update
Launch of sales：December 1, 2009
Common stock：¥20 billion (including capital surplus of ¥10 billion)
Equity ownership：Sony Life insurance Co., Ltd. 50%, AEGON・international B.V. 50%
Marketing products:
1) Winning Road (Variable Individual Annuity - Guaranteed Lifetime Withdrawal Benefit (GLWB) type)2) My History (Variable Individual Annuity - Guaranteed Lifetime Withdrawal Benefit (GLWB) type)3) Victory Run (Variable Individual Annuity - Guaranteed Minimum Accumulation Benefit (GMAB) type)
Sales Channels: Lifeplanner sales employees and affiliated Banks(The Tokyo star bank, SMBC, Minato bank, Fukushima bank, Chiba Kogyo Bank) *As of November. 15, 2010
Sales results: Number of new policies: 352 new policies, New policy amount: ¥3,401 million,(FY10.1H) Number of policies in force: 802 policies, Policy amount in force: ¥9,999 million,

Sony Bank’s Mortgage Loans through Sony Life
Sony Life accounts for 38% of the amount of
new mortgage loans for FY10.1H.
* Sony Life started handling banking agency business in Jan. 2008.

Sony Assurance’s Auto Insurance Sold by Sony Life
Sony Life accounts for approx. 5% of new automobile policies
for FY10.1H.
* Sony Life started handling automobile insurance in May 2001.

27(Recent Topics)27

Highlights<Highlights Since FY10.2Q>
2010-7-12

AEGON Sony Life Insurance's variable individual annuity product to be offered at Chiba Kogyo Bank

2010-7-26

Sony Bank launched foreign currency delivery service

2010-9-13

Sony Bank began offering mortgage loans for used condominiums

2010-9-16

Sony Life opened the second one-stop insurance Shop, "LIPLA"

2010-10-4

Sony Bank entered tie-up with Ohkuraya Juutaku in mortgage loans

2010-11-2

Sony Life began offering new products: Whole life nursing-care insurance (reduced surrender value),
lump- sum payment nursing-care rider, and discount rider for nonsmokers and others in excellent health for
decreasing term life insurance

2010-11-8

Sony Bank began providing a service to accept dividends on investment trusts

28(Highlights)

28

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)Valuation gains (losses) of trading-purpose securities(Billions of yen)
09.9.30

09.12.31

10.3.3110.6.30

10.9.30

Net valuation
Net valuation
Net valuation
Net valuation
Net valuation
Balance sheet gains (losses) Balance sheet gains (losses) Balance sheet gains (losses) Balance sheet gains (losses) Balance sheet gains (losses)
amountrecorded inamountrecorded inamountrecorded inamountrecorded inamountrecorded inincomeincomeincomeincomeincome
0.7

5.6

0.3

5.6

-

5.7

-

-

-

-

Notes:
1) Line item amounts are truncated below ¥100 million.
2) Amounts above include those categorized as “monetary trusts.

29(Sony Life: Fair Value Information on Securities)

29

Sony Life’s Breakdown of Net Assets
Net Assets on BS, Real Net Assets and Solvency Margin(Billions of yen)
①Net Assets(B/S)
10.3.31②RealNet Assets

10.9.30

10.3.31③Solvency
Margin10.9.30

10.3.3110.9.30

Notes

Total shareholders’ equity

177.3

199.3

177.3

199.3

170.3

197.9

③After estimateddistributed income
deducted

Net unrealized gains on other securities, net of taxes

15.4

24.6

15.4

24.6

－

－

－

－

－
33.0

－
46.0

③Before tax x 90%

Land revaluation, net of taxes

(1.4)

(1.4)

(1.4)

(1.4)

－

－

Reserve for price fluctuations

－

－

9.6

13.0

9.6

13.0

Contingency reserve

－

－

48.4

50.1

48.4

50.1

Reserve for possible loan losses

－

－

－

－

0.0

0.0

Net unrealized gains (losses) on available-for-sale securities

Net unrealized gains on real estate
－

－

2.6

2.6

1.6

1.6

Excess amount of policy reserves based on Zillmer method

－

－

316.5

322.8

316.5

322.8

Unallotted portion of reserve for policyholders' dividends

－

－

2.3

3.1

2.3

3.1

Future profits

－

－

－

－

1.0

1.0

Deferred tax assets

－

－

－

－

47.2

63.6

Unrealized gains (losses) on held-to-maturity bonds－－(20.4)

221.6

－

－

Deferred tax liabilities for available-for-sale securities

－

－

12.8

18.3

－

－

191.3

222.4

563.4

854.4

630.2

699.5

Total

※Real net assets excluding net unrealized gains/losses on held-to-maturity securities and on policy reserve matching bonds, are¥583.8 billion as of March 31, 2010, and ¥632.7 billion as of September 30, 2010.

②Before tax（after revaluation）③Before tax(Before revaluation) X85%

②Before tax

Amounts are truncated below ¥100 million.

30(Sony Life’s Breakdown of Net Assets)

30

Sony Life’s Changes in Solvency Margin Ratio(Billions of yen)
Category

09.9.30

Total solvency margin(A)

Common stocks, etc

09.12.31

10.3.3110.6.30

10.9.30

600.7

625.6

630.2

666.6

699.5

152.9

163.3

170.3

179.9

197.9

Reserve for price fluctuations

6.3

7.9

9.6

11.2

13.0

Contingency reserve

46.9

47.8

48.4

49.2

50.1

Reserve for possible loan losses

0.0

0.0

0.0

0.0

0.0

Net unrealized gains on other securities
multiplied by 90% if gains or 100% if losses

41.6

43.0

33.0

48.4

46.0

Net unrealized gains on real estate
multiplied by 85% if gains or 100% if losses
Excess amount of policy reserves based on Zillmer
method

4.8

4.8

1.6

1.6

1.6

309.4

312.8

316.5

319.3

322.8

Unallotted portion of reserve for policyholders' dividends

0.3

1.7

2.3

2.7

3.1

Future profits

－

－

1.0

1.0

1.0

Deferred tax assets

38.1

44.0

47.2

52.9

63.6

Subordinated debt

－

－

－

－

－

Deductible items

－

－

－

－

－

49.3

48.6

47.7

47.4

46.7
19.6

Total risk

(B)

18.8

19.0

19.1

19.4

Third-sector insurance risk

R8

7.1

7.1

7.0

7.1

7.2

Assumed interest rate risk

R2

11.2

11.3

11.3

11.4

11.4

Asset management risk

R3

21.4

20.2

18.9

17.9

16.6

Business management risk

R4

1.3

1.3

1.2

1.2

1.2

Minimum guarantee risk

R7

7.6

7.8

8.0

8.3

8.6

2,433.8%

2,570.9%

2,637.3%

2,810.0%

2,992.8%

Insurance risk

R1

Solvency margin ratio [(A)/{(B)×1/2}]×100

Amounts are truncated below ¥100 million.

31(Sony Life’s Changes in Solvency Margin Ratio)

31

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32(Contact)32