Presentation Material

Consolidated Financial Results
for the Three Months Ended June 30, 2017
andSony Lifeʼs MCEV as of June 30, 2017

Sony Financial Holdings Inc.
August 9, 2017
Sony Financial Holdings Inc. All Rights Reserved

Content
 Consolidated Operating Results for the Three Months Ended June 30, 2017P.3

 Forecast of Consolidated Financial Results for the Fiscal Year Ending
March 31, 2018 (FY17)

P.27

 Sony Lifeʼs MCEV and ESR as of June 30, 2017

P.29

 Appendix

P.32

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 include̶but are not limited to̶words 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 Three Months Ended June 30, 2017
(FY17.1Q)

Sony Financial Holdings Inc. All Rights Reserved

3

Highlights of Consolidated Operating Performance (1)Consolidated ordinary revenues
Consolidated ordinary profit

326.6+11.7%

364.9

Life insurance
business
Non-life
insurancebusiness
Bankingbusiness
Intersegment
adjustments*(25.5%)

25.5

18.9

(JPY bn)
FY16.1Q

FY17.1Q

Consolidated(JPY bn)

FY16.1Q

FY17.1Q

Ordinary revenues

292.0

327.9

+35.9

+12.3%

Ordinary profit

22.0

15.1

(6.8)

(31.3%)

Ordinary revenues

26.0

28.0

+1.9

+7.7%

Ordinary profit

2.8

2.3

(0.4)

(17.1%)

Ordinary revenues

9.2

9.7

+0.4

+5.3%

Ordinary profit

0.7

1.7

+0.9

+120.7%

Ordinary revenues

(0.7)

(0.7)

(0.0)

-

Ordinary profit

(0.1)

(0.2)

(0.0)

-

Ordinary revenues

326.6

364.9

+38.3

+11.7%

Ordinary profit

25.5

18.9

(6.5)

(25.5%)

Profit attributableto owners of theparent

17.6

12.5

(5.0)

(28.9%)

Change*Ordinary profit in “Intersegment adjustments” is mainly from SFH. Nursing care business has
been included in the scope of consolidation from FY16.1Q.
(Note) Comprehensive income : FY16.1Q: ¥30.4 billion, FY17.1Q: ¥13.9 billion(JPY bn)
Consolidated

Net assets
Total assets

Mar. 17

Jun. 17

Change from
Mar. 17

601.1

591.2

(9.9)

(1.7%)

11,471.8

11,806.8+334.9+2.9%Sony Financial Holdings Inc. All Rights Reserved

4Highlights of Consolidated Operating Performance(2)

 Life Insurance Business︓Ordinary revenues increased year on year, due to an improvementof investment performance in the separate account following a recovery in the financial
market conditions. Investment gains were recorded in FY17.1Q compared with investment
losses in FY16.1Q. Ordinary profit decreased year on year due to a deterioration in net
gains/losses on derivative transactions to hedge market risks for available-for-sale securities
and lower gains on sale of securities in the general account.

 Non-life Insurance Business: Ordinary revenues expanded year on year, owing mainly to anincrease in net premiums written for mainstay automobile insurance. Ordinary profit
decreased year on year due primarily to lower gains on sale of securities.

 Banking Business︓Ordinary revenues increased year on year due to an increase in interest

income on loans in line with a favorably growing balance of mortgage loans. Ordinary profit
increased year on year, due to a decrease in operating expenses, especially in advertisingexpenses for the card loan business.

 Consolidated ordinary revenues increased 11.7% year on year, to ¥364.9 billion, owing toincreases in ordinary revenues from all the businesses: life insurance, non-life insurance andbanking businesses. Consolidated ordinary profit decreased 25.5% year on year, to ¥18.9
billion. By business segment, ordinary profit from the life insurance and the non-life insurance
businesses decreased, whereas ordinary profit from the banking business increased. Profit
attributable to owners of the parent was down 28.9% year on year, to ¥12.5 billion due tothe decrease in consolidated ordinary profit.
Sony Financial Holdings Inc. All Rights Reserved

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

292.0

Ordinary profit+12.3%

327.9(JPY bn)

FY16.1Q

FY17.1Q

292.0

327.9

+35.9

+12.3%

Income from insurance premiums

241.1

241.1

+0.0

+0.0%

Investment income

46.8

83.1

+36.2

+77.5%

Interest income and dividends

35.9

38.8

+2.8

+8.0%

Income from money held in trust, net

1.1

1.1

+0.0

+0.9%

Gains on sale of securities

0.9

0.0

(0.9)

(100.0%)Gains on derivatives, net

8.8

-

(8.8)

(100.0%)

-

43.0

+43.0

-

268.6

312.1

+43.4

+16.2%

Insurance claims and other payments

85.6

96.7

+11.1

+13.0%

Provision for policy reserves and others

93.9

165.5

+71.6

+76.2%

Investment expenses

48.7

8.9

(39.8)(81.7%)

-

7.0

+7.0

-

43.9

-

(43.9)(100.0%)

33.7

33.2

(0.4)

(1.3%)

Ordinary profit

23.3

15.8

(7.5)

(32.3%)Net income

16.6

10.1

(6.5)

(39.1%)

Mar. 17

Jun. 17

Change from Mar. 17

Securities

8,093.1

8,247.7+154.5+1.9%

Policy reserves

7,929.9

8,095.5+165.5

+2.1%

473.5

461.5

(11.9)(2.5%)

127.7

128.7

+0.9

+0.8%

8,873.6

9,071.9+198.2

+2.2%

989.6

1,046.9

+57.3

+5.8%

Ordinary revenues

Gains on separate accounts, net

23.3(JPY bn)
FY16.1Q

15.8(32.3%)

FY17.1Q◆ Ordinary revenues increased but ordinary profit
decreased year on year.
◆ Income from insurance premiums was flat year on year
due to a decrease in sales of single premium whole life
insurance although policy amount in force increased
steadily.
◆ Investment income increased due to an improvement ofinvestment performance in the separate accountfollowing a recovery in the financial market conditions.
Investment gains were recorded in FY17.1Q comparedwith investment losses in FY16.1Q.
◆ Ordinary profit decreased, due to a deterioration in net
gains/losses on derivative transactions to hedge market
risks for available-for-sale securities and lower gains onsale of securities in the general account.

Ordinary expenses

Losses on derivatives, net
Losses on separate accounts, net
Operating expenses(JPY bn)

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

Sony Financial Holdings Inc. All Rights Reserved

Change6Overview of Operating Performance:
Sony Life (Non-consolidated)
FY16.1Q

FY17.1Q

1,260.0

1,115.8(11.4%)

Lapse and surrender amount

479.8

451.5

(5.9%)

Lapse and surrender rate

1.11%

1.00%

(0.11pt)

43,634.2

45,771.5+4.9%

Annualized premiums from new policies

20.5

16.1

(21.2%)Of which, third-sector products

4.1

3.1

(25.9%)

790.8

826.9

+4.6%

182.2

188.7

+3.6%

(JPY bn)
New policy amount

Policy amount in force

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

Change＜Reasons for changes＞◆ Decreased due mainly to lower
sales of family income insurance
and term life insurance despite
favorable sales of U.S. dollardenominated insurance.
◆ Decreased due mainly to lower
sales of living benefit insurance
and endowment insurance
despite favorable sales of U.S.
dollar-denominated insurance.

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)

FY16.1Q

FY17.1Q

Gains from investment, net (General account)

41.9

311

(25.9%)

Core profit

14.0

249

+77.7%

Positive spread

3.2

45

+40.6%

Non-consolidated solvency margin ratio

Mar. 17

Jun. 17

2,568.8%

2,620.4%

Change◆ Increased due to a decline in theprovision of policy reserves forminimum guarantees forvariable life insurance led by arecovery in the financial market
conditions.

ChangefromMar. 17+51.6pt

Sony Financial Holdings Inc. All Rights Reserved

7

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

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

2.0

1.5(Individual Life Insurance + Individual Annuities)
Annualized premiums from new policies

Number of new policies

Of which, third-sector（Thousandsof policies)

176

1.32

149

(21.7%)

117

20
200

0
150

1.26

1.11
(11.4%)

1.0（JPY bn）

25

22.3

20

20.5

(21.2%)

16.1
15

-20
100
10

0.5

-40
50

0.0

-60
0
FY15.1Q

FY16.1Q

FY17.1Q

5

3.9

4.1

FY15.1Q

FY16.1Q(25.9%)

3.1

0Sony Financial Holdings Inc. All Rights Reserved

FY17.1Q

8

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

60

7.30

7.13
43.6

+4.9%

Annualized premiums from insurance in force

Number of policies in force

+0.7%

7.35
45.7

45.3

40

Of which, third-sector（Millionsof policies)+3.2%（JPY tn）(Individual Life Insurance + Individual Annuities)

8（JPY bn）

800

790.8

+0.7%

+4.6%
6

+1.0%
4

826.9

820.8

600

400

20
2

0

0
Jun. 16Mar. 17

Jun. 17

+3.6%

200

182.2

187.4

Jun. 16Mar. 17

+0.7%

188.7

0

Sony Financial Holdings Inc. All Rights Reserved

Jun. 179

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

Lapse and surrender rate
（1Q）

（%）

8

6

4

2

4.72

4.27

1.21

1.11

FY15

FY16

(0.11pt)

1.00

0
FY17

*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

10Operating Performance :Sony Life (Non-consolidated) (4)Interest Income and Dividends

Income from Insurance Premiums(JPY bn)(JPY bn)

300

40

254.5

241.1

241.1

35.3

35.9

FY15.1Q

FY16.1Q

+8.0%

38.8

30

+0.0%
200

20

100
10

0

0
FY15.1Q

FY16.1Q

FY17.1Q

Sony Financial Holdings Inc. All Rights Reserved

FY17.1Q

11

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

Core Profit(JPY bn)(JPY bn)

30

25

24.9

23.3
(32.3%)

20+77.7%

20

15

14.0

13.3

15.8

15.1

10

10

5

0
FY15.1Q(Reference) Impact on core profit

FY16.1Q(JPY bn)
Positive spread

0

FY17.1Q

FY15.1Q

FY16.1Q

FY15.1Q

FY16.1Q

FY17.1Q(Reference) Main differences from core profit(JPY bn) FY15.1Q

FY16.1Q

FY17.1Q

5.3

6.1

(3.0)

Gains (losses) on hedges of variable life insurance

(1.9)

4.9

(4.2)

Provision of contingency reserve (*)

(1.5)

(1.7)

(1.7)

FY17.1Q

4.1

3.2

4.5

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

(6.6)

(8.9)

(0.1)

Others

15.8

19.7

20.6

Capital gains (losses) excluding gains orlosses on hedges (*)*“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

12

Operating Performance :Sony Life (Non-consolidated) (6)
Number of Lifeplanner Sales Employees+260(Number)

4,942

4,933

5,000

4,612

4,682

4,751

4,730

Sep. 16

Dec. 16

+9

4,500

4,000

3,500

3,000
0

Mar. 16

Jun. 16

Sony Financial Holdings Inc. All Rights Reserved

Mar. 17

Jun. 17

13

Operating Performance :Sony Life (Non-consolidated) (7)Breakdown of General Account Assets
Mar. 17<Asset management review>Jun. 17

Amount%Japanese bonds(including JGBs)

6,828.7

86.6%

6,909.2

86.1%

Japanese stocks

37.6

0.5%

33.5

0.4%

Foreign bonds

274.3

3.5%

300.2

3.7%

Foreign stocks

31.5

0.4%

32.4

0.4%

Money held in trust

273.8

3.5%

271.0

3.4%

Policy loans

180.3

2.3%

181.2

2.3%

Real estate*

117.5

1.5%

117.1

1.5%

Cash and call loans

40.8

0.5%

60.2

0.8%

Others

99.1

1.3%

120.0

1.5%

7,884.0

100.0%

8,024.9

100.0%(JPY bn)

Total

Amount%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
Jun. 17 21.2 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 money held in trust in the generalaccount : Jun. 17・・・89.5%（Mar. 17・・・90.1%）*Real estate is the total of land, buildings, and construction in progress.

Sony Financial Holdings Inc. All Rights Reserved

14

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

（%）

3,000

2,722.8

2,568.8

2,500

2,620.4+51.6pt

2,000

1,500

1,0000Mar. 16Mar. 17

Jun. 17

Sony Financial Holdings Inc. All Rights Reserved

15

Highlights of Operating Performance:
Sony Assurance
Ordinary revenues

26.0

Ordinary profit+7.7%

FY16.1Q

FY17.1Q

26.0

28.0

+1.9

+7.7%

Underwriting income

25.0

27.5

+2.5

+10.0％

Investment income

0.9

0.4

(0.5)

(53.0%)

23.1

25.6

+2.4

+10.7％

Underwriting expenses

17.0

19.0

+1.9

+11.6％

Operating general andadministrative expenses

6.1

6.6

+0.5

+8.5%

Ordinary profit

2.8

2.3

(0.4)

(17.1%)Net income

2.0

1.6

(0.3)

(17.5%)

Mar. 17

Jun. 17

Underwriting reserves

106.1

110.3

+4.1

+3.9%

Net assets

29.4

29.2

(0.1)

(0.5%)

Total assets

186.5

188.6

+2.1

+1.2%

(JPY bn)

28.0

Ordinary revenues

Ordinary expenses(17.1%)

2.8

2.3(JPY bn)

FY16.1Q

FY17.1Q◆Ordinary revenues increased but ordinary
profit decreased year on year.
◆Ordinary revenues expanded owing mainly to
an increase in net premium written for
mainstay automobile insurance.
◆Ordinary profit decreased due primarily to
lower gains on sale of securities.

(JPY bn)

Sony Financial Holdings Inc. All Rights Reserved

ChangeChange from
Mar. 1716

Overview of Operating Performance:
Sony Assurance(JPY bn)

FY16.1Q

FY17.1Q<Reasons for changes>

ChangeDirect premiums written

24.7

27.2

+10.0%Net premiums written

25.0

27.5

+10.0%Net losses paid

11.7

12.1

+3.8%

Underwriting profit

1.8

1.9

+1.0%

Net loss ratio

54.1%

50.8%

(3.3pt)Net expense ratio

26.2%

25.9%

(0.3pt)Combined ratio

80.3%

76.7%

(3.6pt)◆ Increased mainly in its mainstay
automobile insurance.

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

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

FY16.1Q

FY17.1Q

ChangeE. I. loss ratio

59.0%

58.6%

(0.4pt)E. I. loss ratio +Net expense ratio

85.2%

84.5%

(0.7pt)◆ Declined due to a persistently
low car accident ratio in
automobile insurance.

Notes:
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 theabove calculation.]Mar. 17

Jun. 17

Change from Mar. 17

Number of policies in force

1.89 mn

1.95 mn+0.06 mnNon-consolidated
solvency margin ratio

730.8%

767.6%+3.5%+36.8pt

Note: The number of policies in force is the total of automobile insurance and medical insurance policies.

Sony Financial Holdings Inc. All Rights Reserved17Sony Assuranceʼs Underwriting Performanceby Type of Policy
Direct Premiums Written

Net Premiums Written

FY16.1Q

FY17.1Q

Fire

62

52

(15.4%)

Marine－－－Personal accident

2,190

2,178

(0.6%)

Voluntary
automobile

22,53325,029+11.1%－－－

24,78527,260+10.0%(JPY ｍn)

Compulsory
automobile liability
Total

Net losses paid

FY17.1Q

00+43.3%

Marine(12)2－Personal accident

609

645

+5.9%

10,813

11,219

+3.8%

324

311

(3.7%)

11,734

12,180

+3.8%

Fire

Voluntary
automobile
Compulsory
automobile liability
Total

FY17.1Q

6

4(40.6%)

(1)

(0)

－

Personal accident

2,281

2,229

(2.3%)

Voluntary
automobile

22,46824,969+11.1%

293

352+20.4%

25,04827,556+10.0%Fire
MarineCompulsory
automobile liability
Total

Change*Medical insurance is included in personal accident.

FY16.1Q(JPY ｍn)

FY16.1Q(JPY ｍn)

ChangeChangeSony Financial Holdings Inc. All Rights Reserved

18

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)

30

1.72
24.3

+8.3%

1.81
25.0

+10.0%

1.95
27.5
2.2

(ｍn ofpolicies)

Adjusted ordinary profit

Ordinary profit

Personal accident insurance(JPY bn)

4

3.6

2

1.5
2

20

24.9
10

3.2

2.8

2.8

3

0.3

(11.3%)

2.3

2.1(17.1%)

1
1

0.5

0
FY15.1Q

FY16.1Q

FY17.1Q*Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve

00
FY15.1Q

FY16.1Q

FY17.1Q

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

FY15.1Q

0.7

FY16.1Q
0.7

FY17.1Q
0.8*Provision for catastrophe reserve is described as positive amount.

Sony Financial Holdings Inc. All Rights Reserved

19

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

Net loss ratio

Net expense ratio

（%）

（%）

100

100

90.4

90.6

84.7

84.5

85.2

80

84.8

Net expense ratio

85.8

80

(0.7pt)

79.6

80.3

76.7
(3.6pt)

60

63.3

62.3

58.4

59.0
(0.4pt)

58.6

60

57.8

57.5

53.4

54.1
(3.3pt)

40

20

50.8

40

27.1

28.3

(0.3pt)

26.3

26.2

20
25.9

27.1

28.3

FY15

FY16

(0.3pt)

26.3

26.2

25.9

FY15.1Q

FY16.1Q

FY17.1Q

0

0
FY15

FY16

FY15.1Q

FY16.1Q

FY17.1Q

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.]

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

20

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

800

693.5%

730.8%

767.6%+36.8pt

600

400

200

0
Mar. 16Mar. 17

Jun. 17

Sony Financial Holdings Inc. All Rights Reserved21

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

Consolidated ordinary revenues
Consolidated ordinary profit

9.2

+5.3%

9.7

(JPY bn)

FY16.1Q

FY17.1Q

ChangeConsolidated ordinary
revenues

9.2

9.7

+0.4

+5.3%

Consolidated ordinary profit

0.7

1.7

+0.9

+120.7%

Profit attributable to ownersof the parent

0.5

1.1

+0.6

+125.0%FY16.1Q

FY17.1Q

Ordinary revenues

8.4

8.8

+0.4

+5.1%

Gross operating profit

5.0

5.3

+0.3

+6.5%

Net interest income

4.1

4.9

+0.7

+18.2%Net fees and commissions

(0.1)

(0.7)

(0.5)

－

Net other operating income

1.0

1.1

+0.1

+12.9%

General and administrative
expenses

4.2

3.8

(0.4)

(9.9%)Net operating profit

0.7

1.5

+0.7

+98.5%

Ordinary profit

0.7

1.5

+0.8

+116.5%

Net income

0.4

1.0

+0.5

+117.3%Mar. 17

Jun. 17

81.3

81.1

(0.2)

(0.3%)

4.7

5.0

+0.2

+5.1%

2,424.2

2,552.3+128.1+5.3%<Non-consolidated>(JPY bn)+120.7%(JPY bn)1.7

0.7
FY16.1Q

FY17.1Q＜Consolidated＞◆Ordinary revenues increased due to an increase in interest
income on loans in line with a favorably growing balance ofmortgage loans. Ordinary profit increased due to a decrease inoperating expenses, especially in advertising expenses for thecard loan business.
＜Non-consolidated＞◆ Both gross operating profit and net operating profit increased.
・Net interest income increased due to an increase in interest
income on loans and interest income and dividends on securities.
・Net fees and commissions decreased due mainly to lower fees
and commissions on mortgage loans.
・Net other operating income increased due to an increase in gains
on sales of bonds.

(JPY bn)
Net assets
Net unrealized gains onother securities, net of taxes
Total assets

Sony Financial Holdings Inc. All Rights Reserved

ChangeChange from
Mar. 1722

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

Jun. 16Mar. 17

Jun. 17

Customer assets

2,013.6

2,227.1

2,263.0

+35.9

+1.6%

Deposits

1,908.1

2,112.9

2,147.8

+34.8

+1.7%

Yen

1,580.6

1,764.9

1,794.3

+29.4

+1.7%

327.4

348.0

353.5

+5.4

+1.6%

105.4

114.1

115.1

+1.0

+0.9%

1,395.6

1,539.6

1,552.0

+12.4

+0.8%

1,289.3

1,452.4

1,467.0

+14.5

+1.0%

Card loans

13.2

18.0

18.5

+0.4

+2.6%

Others

93.0

69.0

66.4

(2.5)

(3.7)

9.90%

9.75%

9.37%

(JPY bn)

Foreign currencies
Investment trusts
Loans
Mortgage loans

Non-consolidated
Capital adequacy ratio*2(domestic criteria)*1(0.38pt)<Reasons for changes>◆ Increased due mainly to anincrease in newly accumulated
funds via the increased numberof accounts, as well as theconversion from foreign
currencies backed by yen
depreciation.
◆ Increased due to a favorable
exchange rate even after thenegative impact of theconversion from foreign
currencies into yen led by a shift
in the trend from yen
appreciation to yen depreciation.
◆ Rose due to a steady increase inmortgage loans, despite aleveling off in demand forrefinancing these loans.

*1 Loans in others include corporate loans of ¥66.4 billion*2 Please refer to the graph of the non-consolidated capital adequacy ratio (domestic criteria) on page 26.
Capital adequacy ratios has been calculated by applying fundamental internal rating based approach (FIRB) from March 31, 2017.

Sony Financial Holdings Inc. All Rights Reserved

23

Overview of Operating Performance:
Sony Bank (Non-consolidated) (2)<Reference> Interest Spread<Reference> On Managerial Accounting Basis(JPY bn)
Gross operating profit(Managerial Accounting Basis)

FY16.1Q

FY17.1Q

5.0

5.3

+0.3

+6.6%

Yield on investment（%）

ChangeNet interest income*1

①

4.7

5.5

+0.8

+16.9%Net fees and commissions*2

②

(0.0)

(0.6)

(0.5)

ー

Net other operating income*3

0.2

0.4

+0.1

+38.4%

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

4.7

4.9

+0.2

+4.6%

Operating expenses and otherexpenses ③

4.2

3.8

(0.4)

(9.9%)Net operating profit (core profit)＝(A)－③

0.4

1.0

+0.6

+143.6%■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 Bankʼs basic profits.

Yield on financing

Interest spread

1.5

1.19
1

0.5

0.92

0.27

1.14
+0.01pt

0.93

0.22

0
FY16.1Q

FY17.1Q

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

24

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

Foreign currency deposits(JPY bn)

2,000

Loans

2,112.9
1,923.5

348.0

Mortgage loans

2,147.8

+34.8

353.5

Others(JPY bn)
1,500

335.5

1,539.6
1,344.1

87.1

1,552.0

+12.4

85.0*

107.0

1,500
1,000

1,794.3

1,467.0

1,237.1

1,764.9

1,000

1,452.4

1,587.9500

5000Mar. 16Mar. 17

Jun. 170Mar. 16Mar. 17

Jun. 17*Corporate loans of ¥66.4 billion. Card loans of ¥18.5 billion.

Sony Financial Holdings Inc. All Rights Reserved

25

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

Balance of Securities by Credit Rating
AAA

AA

BBB

OthersA(Domestic Criteria)（%）
15(JPY bn)

800

620.9

677.1

631.2

10

+45.8

600

9.89

9.75

9.37
(0.38pt)

400

5

200

0
Mar. 160Mar. 16Mar. 17

Jun. 17Mar. 17

Jun. 17

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 Reserved26Forecast of Consolidated Financial Results
for the Fiscal Year Ending March 31, 2018
(FY17)

Sony Financial Holdings Inc. All Rights Reserved27Forecast of Consolidated Financial Results for FY17
Forecast of consolidated financial results for FY17 is unchanged from the forecast announced on April 28, 2017
(JPY bn)

FY16（Actual）

FY17（Forecast）

Changes

FY17.1Q（3M Actual）

Progress rate

Consolidated ordinary revenues

1,381.6

1,430.0

+3.5%

364.9

25.5%

Life insurance business

1,243.9
102.3
38.5

1,276.1
108.9
40.6

+2.6%
+6.4%
+5.4%

327.9
28.0
9.7

25.7%
25.8%
24.0%

Consolidated ordinary profit

66.3

67.0

+1.0%

18.9

28.4%

Life insurance business

56.8
5.0
5.0

56.4
4.6
6.6

(0.7%)(8.0%)+30.6%

15.1
2.3
1.7

26.9%
51.6%
25.8%

41.6

42.0

+0.9%

12.5

29.9%

Non-life insurance businessBanking business

Non-life insurance businessBanking businessProfit attributable to owners of
the parent＜Segment information for ordinary revenues and ordinary profit＞■Life insurance business
In FY17.1Q (3M), ordinary revenues exceeded our initial expectations, as an improved market environment prompted an increase ininvestment income in the separate account.
Ordinary profit exceeded our initial expectations due to a period shift in operating expenses, despite a deterioration in net gains/losses onderivative transactions to hedge market risks for available-for-sale securities and lower gains on sale of securities in the general account.
We maintain our forecast for the full year, taking into consideration the business environment from FY17.2Q onward.
■Non-life insurance business
In FY17.1Q (3M), ordinary revenues were essentially in line with our expectations. Ordinary profit exceeded our expectations at the start ofthe period, as the loss ratio was lower than expected.
We maintain our forecast for the full year, as we believe revenue trends will need to be monitored from FY17.2Q onward.
■Banking business
In FY17.1Q (3M), ordinary revenues and ordinary profit were essentially in line with our expectations, so we maintain our full-year forecasts.

Sony Financial Holdings Inc. All Rights Reserved28Sony Lifeʼs MCEV and ESR
as of June 30, 2017

A part of the calculations of MCEV adopted simplified method for that as of June 30, 2017.
Please keep in mind that the validity of these calculations has not been verified by outside specialists.
*In this part, figures, ratios and percentages changes have been rounded.

Sony Financial Holdings Inc. All Rights Reserved29Sony Lifeʼs MCEV(JPY bn)

Mar. 17

Jun. 17

Change from
Mar. 17

1,441.1

1,478.2+37.2

Adjusted net worth

1,657.7

1,624.2(33.5)

Value of existing business(216.7)(146.0)

+70.6

MCEV

(JPY bn)

FY16.4Q(3M)

FY17.1Q(3M)

New business value

14.1

12.2

New business margin

3.8%

4.6%

Notes:
1. Calculated MCEV as of June 30, 2017 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.

 Reasons for changes in MCEV
・MCEV as of June 30, 2017 increased ¥37.2 billion form March 31, 2017, due to an acquisition of newpolicies and a rise in interest rates in Japanese yen.
 New business value/ New business margin
・New business value for FY17.1Q(3M) was ¥12.2 billion, down ¥1.9 billion form FY16.4Q(3M), due tolower acquisition of new policies.
・New business margin for FY17.1Q(3M) was up 0.7pt from FY16.4Q(3M), due mainly to a change inproduct mix.

*Please refer to the appendix page 46 for trend on JGB yields.

Sony Financial Holdings Inc. All Rights Reserved30Sony Lifeʼs ESR(JPY bn)

Mar. 17

Jun. 17

Insurance risk*

937.5

933.6

Market-related risk

405.1

349.3

308.9

263.1

Operational risk

28.1

28.1

Counter party risk

1.9

2.5

(392.0)(372.2)

980.6

941.3

Of which, interest rate risk**

Variance effect
The risk amount based on
economic value(* ) Risk amount excluding the variance effect within Life module and Health module.
(**) Risk amount excluding the variance effect within market-related risk.

(JPY bn)

MCEV + Frictional costs
ESR

Mar. 17

Jun. 17

1,476.6

1,505.1

151%

160%

Notes:
1. The risk amount based on economic value refers to the total amount of Sony Lifeʼs risks comprehensively examined by a market consistent approach,including insurance risk and market-related risk.
2. The solvency risk capital on an economic value basis is calibrated at VaR (99.5) over one year and based on the internal model, which is a similar
but modified model based on the EU Solvency II standard method.
3. ESR=(MCEV + Frictional costs) / Risk amount based on economic value.

 The risk amount based on economic value as of June 30, 2017 amounted to ¥941.3 billion, down ¥39.2 billion fromMarch 31, 2017, due mainly to a revision in the risk factors of market-related risk. (Please refer to page 44)
 ESR as of June 30, 2017 was 160%, up 9pt from March 31, 2017.

Sony Financial Holdings Inc. All Rights Reserved31Appendix

Sony Financial Holdings Inc. All Rights Reserved

32

Recent Topics 1
AEGON Sony Life Insurance

Launch of sales: December 1, 2009
Common stock: ¥30 billion (including capital reserves of ¥15 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 (31*) *As of Aug. 9, 2017

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 Bankʼs Mortgage Loans through Sony Life
■Sony Life accounts for 20% of the amount of new mortgage loans for FY17.1Q (3M)
Sony Life accounts for 21% of the balance of mortgage loans as of June 30, 2017

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

Sony Assuranceʼs Auto Insurance Sold by Sony Life
■Sony Life accounts for approx. 3% of new automobile policies for FY17.1Q (3M)
*Sony Life started handling automobile insurance in May 2001.

Sony Financial Holdings Inc. All Rights Reserved33

Recent Topics 2＜Highlights on and after FY17.1Q＞
2017-04-02

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

2017-04-03 Sony Life upgraded “Quick Claims Payment Service” by changing credit limit of claim payment from ¥5 million
to ¥10 million.
Bank began offering a simulation tool that suggests ways to save money for asset management
2017-04-03 Sonycustomers.
SFH announced an introduction of restricted stock compensation plan and changes in terms and conditions of
2017-04-28 stock acquisition rights as stock-type compensation stock options
2017-05-01

Sony Lifecare Group opened its second newly built nursing care home “SONARE Urawa” in Saitama
Prefecture

2017-05-25 Sony Bank announced to relocate its “Housing Loan Plaza” to Ginza CONSULTING PLAZA on Sep. 1, 2017.
2017-06-21 Sony Bank changed its President, Representative Director
2017-06-28 SFH, Sony Life , Sony Assurance and Sony Bank has formulated and disclosed “Customer-First Business
Operation Policy”
Life announced to set up a local subsidiary in Singapore and establish a joint venture with Starts
2017-06-29 Sony
Securities Co., Ltd.
2017-07-02 Sony Life began providing Web policy guides and agreements
Sony Lifecare converted Yuuai Holdigns Co., Ltd. to a wholly owned subsidiary (Yuuai Holding changed its
2017-07-10 corporate name to Proud Life Inc. on Aug. 1, 2017)2017-08-08 Sony Bank began providing cloudfunding platform “Sony Bank GATE”

Sony Financial Holdings Inc. All Rights Reserved34Sony Lifeʼs Product Portfolio
Annualized Premiums from New Policies by Product

FY16.1Q（3M）

Yen whole
life 19%
Endowment/
Annuities U.S. dollardenominated29%
whole life 5%Single premium
Whole life 3%¥20.5 billion

Protection-type（term life）
44%
円建終身

28％

FY17.1Q（3M）¥16.1 billion

Yen whole
life 8%Endowment/
Annuities
27%

U.S. dollardenominatedwhole life 11%

FY16（12M）¥78.1 billion

Yen whole
life 14%
円建終⾝
Endowment/
14%
U.S. dollarAnnuities
保障性商品
denominated21%
whole life 8%（定期保険等）
Single premium
Whole
37% life 1%

Protection-type（term life）
54%

Protection-type（term life）
56%

Sony Financial Holdings Inc. All Rights Reserved35Sony Lifeʼs Asset Management
Diversify Asset Management under the Negative Interest Rate Environment(purchase securities in the general account)

FY15 (12M）
JGBs

Japanese
corporate
bonds
11.9%

Japanese corporate
bonds
Foreign bonds

国債
95.4%

Japanese stocks

FY16 (12M）

Japanese corporate
bonds

Japanese stocks

JGBs
85.3%

Japanese
Stocks 0.5%

JGBs

Foreign bonds

Japanesestocks0.5%Foreign
bonds
2.3%

社債
11.9%

Japanese local
government bonds

Foreignbonds
28.3%
Japanese
corporate
bonds
28.6%

Japanese local
government
bonds 0.1%

・Expand investments in ultralong-term Japanese
corporate bonds (including FILP agency bonds), basedon the asset investment policy to match the liability
characteristics of insurance policies.
・Increase investments in U.S. government
bonds, responding to higher sales of U.S. dollar
denominated insurance policies.

FY17.1Q（3M）
JGBs

JGBs
42.5%

Japase corporate
bonds
Foreign bonds

国債
85.3%

Foreign
bonds
20.2%

JGBs
35.2%

Japanese
corporate bonds
44.6%

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 Reserved36Sony Life: Fair Value Information on Securities(General Account Assets)
Fair Value Information on Securities
Fair value information on securities with market value (except trading-purpose securities)

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

Valuation gains (losses) on trading-purpose securities(JPY bn)

Note: The above chart includes trading-purpose securities included in “money held in trust”, etc

Sony Financial Holdings Inc. All Rights Reserved37Sony Lifeʼs Interest Income and Dividends (Details)（JPY mn）

FY16.1Q

FY17.1Q

Change0―(100.0%)Japanese bonds(including JGBs)

29,86230,865+3.4%

Japanese stocks

62

66

+5.2%

Foreign securities

1,698

3,434

+102.2%25

7(71.8%)

Loans

1,572

1,627

+3.5%

Real estate

2,703

2,719

+0.6%

23

96

+307.5%35,94838,817+8.0%

Cash and deposits

Other securities

Others
Total

Sony Financial Holdings Inc. All Rights Reserved38Sony Lifeʼs Capital Gains/Losses
FY16

FY17

1Q (3M)

2Q (6M)

3Q (9M)

4Q (12M)

1Q (3M)

14,501

11,79625,628

16,114

124

Income from money held in trust, net

－

－

－

－

－

Income from trading securities, net

7

49

103

134

11

Gains on sale of securities

917

1,301

1,306

1,308

0

Gains on derivatives, net

8,821

4,577

－

－

－

Gains on hedges of variable life insurance

4,955

1,042

－

－

－

Gains on hedges of available-for-sale securities

3,021

1,386

－

－

－

－

－

24,218

14,670

49

－

－

2,375

2,375

－

4,754

5,868

－

－

63

3,407

5,688

39,88232,276

7,441

Losses on money held in trust, net

－

－

－

－

－

Losses on trading securities, net

－

－

－

－

－

Losses on sale of securities

－

－

－

－

－

Devaluation losses on securities

－

－

－

－

－

Losses on derivatives, net－－

34,27530,0507,015

Losses on hedges of variable life insurance－－

14,292

15,6664,247

Losses on hedges of available-for-sale securities

－

－

2,265

2,460

1,713

3,139

5,023

－

－

－

(1,681)(2,375)－－－ * (losses) represents positive figures.

Other capital losses

267

665

5,606

2,226

426

Net capital gains (losses)

11,094

6,108(14,253)(16,162)(7,316)（JPY mn）
Capital gains

Foreign exchange gains, net
Gains (losses) on sale of foreign bonds
Other capital gains
Capital losses

Foreign exchange losses, net
Losses on sale of foreign bonds*

Total of gains on sale ofsecurities and foreign exchange
gains on sale of foreign bonds:
FY17.1Q: ¥0 million
FY16.1Q: ¥2,599 million.

Notes on Sony Lifeʼs Capital Gains/Losses are disclosed in page 40.

Sony Financial Holdings Inc. All Rights Reserved39Sony Lifeʼs Capital Gains/Losses (continued)(Note1)・Foreign exchange gains, net for FY17.1Q (3M) include foreign exchange losses of ¥242 million relating to U.S. dollar-denominated insurance.
Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥515 million.
Moreover, other capital losses include the reversal of policy reserves for U.S. dollar-denominated insurance of ¥63 million relating to foreignexchange fluctuation.
(Note 2)・ Foreign exchange losses, net for FY16.1Q (3M) include foreign exchange losses of ¥4,280 million relating to U.S. dollar-denominated insurance.
Moreover, other capital gains include the reversal of policy reserves for U.S. dollar-denominated insurance of ¥4,754 million relating to foreignexchange fluctuation.
・Foreign exchange losses, net for FY16.2Q (6M) include foreign exchange losses of ¥6,720 million relating to U.S. dollar-denominated insurance.
Gains on derivatives, net include foreign exchange gains relating to U.S. dollar-denominated insurance of ¥1,337 million.
Moreover, other capital gains include the reversal of policy reserves for U.S. dollar-denominated insurance of ¥5,868 million relating to foreignexchange fluctuation.
・Foreign exchange gains, net for FY16.3Q (9M) include foreign exchange gains of ¥21,805 million relating to U.S. dollar-denominated insurance.
Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥17,445 million.
Moreover, other capital losses include the provision of policy reserves for U.S. dollar-denominated insurance of ¥4,941 million relating to foreignexchange fluctuation.
・Foreign exchange gains, net for FY16.4Q (12M) include foreign exchange gains of ¥12,389 million relating to U.S. dollar-denominated insurance.
Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥12,010 million.
Moreover, other capital losses include the provision of policy reserves for U.S. dollar-denominated insurance of ¥1,560 million relating to foreignexchange fluctuation.
（Note3）・ The figures of income (losses) from money held in trust, net, income (losses) from trading securities, net, gains (losses) on derivatives andforeign exchange gains (losses), net were recorded after offsetting gains and losses of each item.

Sony Financial Holdings Inc. All Rights Reserved40Sony Lifeʼs Quarterly Trend on New Policy Amount
Quarterly Trend on New Policy Amount(JPY bn)

1,500

1,457.7

1,437.4
1,324.2

1,290.7

1,260.0

1,250

1,098.9

1,189.0

1,115.8

1,050.7

1,000
750
500
250
0
FY15.1Q

FY15.2Q

FY15.3Q

FY15.4Q

FY16.1Q

FY16.2Q

Sony Financial Holdings Inc. All Rights Reserved

FY16.3Q

FY16.4Q

FY17.1Q

41

Sony Lifeʼs Quarterly Trend on
Annualized Premiums from New Policies
Quarterly Trend on Annualized Premiums from New Policies
Of which, third-sector

Annualized premiums from new policies(JPY bn)

25

23.9

22.7

22.3
20.6

19.1

20

20.5
18.2
16.1

15.3
15

10

5
3.9

3.4

FY15.1Q

FY15.2Q

4.6

3.6

4.1

3.9

FY15.4Q

FY16.1Q

FY16.2Q

3.1

4.4

3.1

0
FY15.3Q

Sony Financial Holdings Inc. All Rights Reserved

FY16.3Q

FY16.4Q

FY17.1Q

42

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(JPY bn)

Number of new polices [ ](Thousandsof policies)

1050

Policy amount in force(JPY bn)

600
8

40

30

22.3
[3.7]

20

22.4
[3.9]

11.4
[2.5]

461.4
[76.9]

500

501.7[85.9]

509.7[87.8](Thousandsof policies)

120
100

6

400

80

4

300

60

200

40

100

20

2

10

Number of policies in force [ ]00FY15.1Q
FY16.1Q
FY17.1Q
0
Net income (losses) for AEGON Sony Life Insurance and SA Reinsurance(JPY bn)
FY16.1Q
FY17.1Q
ChangeAEGON Sony Life Insurance

(0.9)

(1.0)

(0.1)

SA Reinsurance

(1.8)

(0.4)

+1.4

0
Jun. 16Mar. 17

Jun. 17

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 SFHʼs consolidated net income.

Sony Financial Holdings Inc. All Rights Reserved

43

Method of Measuring Risk Amount
Based on Economic Value (1)Market-related Risk*1
Sony LifeInterest rate risk
Fluctuations in net asset
value based on economic
value in response to theshocks in the rightcolumns.
The same applies below.

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

(Reference) EU Solvency II Implementing Measures(Delegated Regulation)
Different percentage changes in interest rates are set for eachterm, from one year to 20 years.
For terms longer than 20 years and through 90 years,
percentage changes are set using linear interpolation, withnegative 29% as the percentage change for 20 years andnegative 20% as the percentage change for 90 years(Example)
For Yen 30-year, 64% decrease (parallel shift), 19% decrease(twist), 4% decrease (butterfly)

Equity risk

Listed equities 45%, Other securities 70%

Global 39%, Others 49%*2

Real estate risk

Actual real estate

Same as on the left

25%

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

Credit risk

Currency risk

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

Credit risk = (market value) x (risk coefficient for each credit
rating and duration)(Example)
Rating A: Duration (Dur): 5-10 years(Example)
Rating A: Risk coefficient (1.4%), cap (23), floor (1)Risk coefficient=7.0% + 0.7% x (Dur – 5 )35% downside fluctuation

25% downside fluctuation◆Revision in the risk factors of market-related risk
・ In FY17.1Q, we partially revised the risk factors of market-related risk.
・ Regarding interest rate risk in Japanese yen, the rate of change in interest rates for 40 years or less was updated based on recent market data, andthe rate of change in interest rates beyond 40 years was revised, taking into account such factors as ICS(＊3) deliberations. The main result was adecrease in interest rate risk compared with March 31, 2017, due mainly to a decrease in the rate of change in Japanese yen beyond 40 years.
Notes＊1. Principal items as of June 30, 2017.
＊2. Symmetric adjustment (an adjustment of ±10% of the average value of the stock price index during a defined period in the past) is applied.
＊3. Capital requirements for internationally active insurance groups (IAIGs) being formulated by the International Association of Insurance Supervisors (IAIS).

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44

Method of Measuring Risk Amount
Based on Economic Value (2) Insurance Risk*1
Sony Life(Reference) EU Solvency II Implementing Measures(Delegated Regulation)

Mortality risk

Mortality rate increases by 15% for each year elapsed

Same as on the leftLongevity risk

Mortality rate decreases by 20% for each year elapsed

Same as on the left

Lapse risk

The largest amount of these;*2

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

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

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

Expense risk

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

Same as on the left

Disability risk

Rate of occurrence increases by 35% in the first fiscal year,
rising by 25% for each year thereafter

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

Notes
＊1. Principal items as of June 30, 2017.
＊2. At Sony Life, lapse risk is calculated by computing and adding together the largest amount of three options for each insurance policy.

Sony Financial Holdings Inc. All Rights Reserved

45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

As of the end of each month

May. 17Mar. 17
10 year
20 year
30 year
40 year

0.07%
0.64%
0.84%
0.96%

Apr. 17
0.02%
0.56%
0.78%
0.92%

Jun. 17
May 17

Jun. 17

0.05%
0.58%
0.80%
0.95%

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0.09%
0.59%
0.84%
1.02%

46

Trend on Risk-free Rate (Japanese yen/ Par rate)
2.00%

Convergence
period:20 yearMar. 17
1.50%

Jun. 17

1.00%

0.50%

0.00%

Last liquid point: 40 year
(0.50%)△0.50%
1 year10 year

20 year

30 year

40 year

50 year

60 year

70 year

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

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47

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

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48