Consolidated Financial Summary
for the Year ended March 31, 2009
May 14, 2009
Company name:Sony Financial Holdings Inc.
(URL: http://www.sonyfh.co.jp/index_en.html/)
Stock exchange listings: Tokyo Stock Exchange (code number: 8729)
Representative:
Teruhisa Tokunaka, President and Representative Director
For inquiry:
Masaaki Konoo, General Manager – Corporate Communications & Investor Relations Dept.
(discarding fractional amounts of less than 1 million yen)

1.

Consolidated financial results for the year ended March 31, 2009
(1) Operating results
Ordinary Revenues

Ordinary Profit

Net Income

millions of yen% changemillions of yen% changemillions of yen% change

860,323( +4.6 )34,253( -23.0)30,722( +26.7 )822,153( +8.3 )44,500( +142.5 )24,255( +142.0 )Net Income per
Share

Net Income per
Share(Fully Diluted)

For the year ended
March 31, 2009
For the year ended
March 31, 2008

For the year ended
March 31, 2009
For the year ended
March 31, 2008

Net Income on
Stockholders’EquityOrdinary Profit on Ordinary Profit on
Total Assets
Ordinary Revenues

yen

yen

%

%

%

14,125.14

-

13.2

0.7

4.0

11,357.53

-

9.2

1.0

5.4

Note: Equity in earnings(losses) of affiliates:

For the year ended March 31, 2009:
For the year ended March 31, 2008:¥ (173) million¥- million(2) Financial conditions
Total Assets

Total Net Assets

Net Assets Ratio

Net Assets per Sharemillions of yen

millions of yen%yen

As of March 31, 2009

5,313,677

204,897

3.9

94,205.75

As of March 31, 2008

4,977,450

261,627

5.3

120,288.66

Notes: 1. Stockholders’ equity:

As of March 31, 2009:¥ 204,897 million
As of March 31, 2008:¥ 261,627 million
2. Net assets ratio is computed by dividing the amount of total net assets by total assets at the end of the fiscal year.

(3)

Cash flows

For the year ended
March 31, 2009
For the year ended
March 31, 2008

Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash
Equivalents at end of
fiscal year

millions of yen

millions of yen

millions of yen

millions of yen

730,038(769,813)(4,591)

91,634445,452(605,280)

22,300136,18612. Dividends
Dividend per Share
Record date

1st quarter 2nd quarter 3rd quarter Year-end Annual Total

For the year ended
March 31, 2008
For the year ended
March 31, 2009
For the year ending
March 31, 2010
(forecast)3.

yenAnnualDividend
Amountyen millions of yen

Dividend
Payout
Ratio%

Dividend on
Net Assets

yen

yen

yen

%

-

0.00

-

3,000.00

3,000.00

6,525

26.4

2.5

-

0.00

-

3,000.00

3,000.00

6,525

21.2

2.8

-

0.00

-

3,000.00

3,000.00

27.2

Forecast of consolidated financial results for the year ending March 31, 2010

(percentage figures represent changes from the results of the same period of the previous fiscal year)

Ordinary Revenues

Ordinary Profit

Net Income%%%
millions of yen change millions of yen change millions of yen change

For the six months ending
September 30, 2009
For the year ending
March 31, 2010

Net Income per Shareyen

437,000(+4.0 )

20,000(-11.0)10,000(-17.9)4,597.70

900,000(+4.6 )

46,000(+34.3)24,000(-21.9)11,034.48

4. Other Information(1) Changes in significant subsidiaries during the fiscal year (changes in specified subsidiaries accompanying changes
in scope of consolidation): None
(2)

Changes in significant accounting principles, policies and presentation(a) Changes due to revision of accounting standards: Yes(b) Changes due to other reasons: None(Note) Refer to “Summary of Significant Accounting Policies”, on page 24, for details.

(3) Number of shares outstanding (common stock)(a) Number of shares outstanding (including treasury shares)
As of March 31, 2009:
2,175,000 shares
As of March 31, 2008:
2,175,000 shares(b) Number of treasury shares
As of March 31, 2009:- shares
As of March 31, 2008:- shares(Note) Refer to “Per Share Information”, on page 37, for the number of shares used in calculating (consolidated) net
income per share.

2

Qualitative Information and Financial Statements
I. Qualitative Information on Consolidated Operating Performance(1) Analysis of Operating Performance
During the year ended March 31, 2009 (April 1, 2008 through March 31, 2009), consolidated ordinary revenues
grew 4.6% compared with the previous fiscal year, to ¥860.3 billion, owing to increases in ordinary revenues fromall the businesses: life insurance, non-life insurance and banking.
In the life insurance business, ordinary revenues grew 3.4% year on year, to ¥766.2 billion, owing to higher
income from insurance premiums associated with a steady increase in policy amount in force. In the non-life
insurance business, ordinary revenues rose 11.2% year on year, to ¥61.8 billion, due to higher net premiums
written, resulting from strong sales of automobile insurance policies. In the banking business, ordinary revenues
grew 28.5% year on year, to ¥33.3 billion, as a higher balance of investment assets in line with the bank’s businessexpansion led to an increase mainly in interest income.
Consolidated ordinary expenses increased 6.2% compared with the previous fiscal year, to ¥826.0 billion, owing
to increases in ordinary expenses from all the businesses.
In the life insurance business, ordinary expenses increased 4.5% compared with the previous fiscal year, to¥733.7 billion, due to increased investment expenses associated with a significant decline in Japanese stock market
prices. In the non-life insurance business, ordinary expenses grew 13.0% year on year, to ¥59.7 billion, owing
mainly to an increase in the amount of claims paid, led by those resulting from natural disasters. In the banking
business, higher interest expenses, increased general and administrative expenses—mostly system-related
expenses—and amortization of goodwill pushed up ordinary expenses 44.0% compared with the previous fiscal
year, to ¥33.9 billion.
As a result, consolidated ordinary profit decreased 23.0% compared with the previous fiscal year, to ¥34.2
billion. Broken down by business, ordinary profit from the life insurance business declined 16.7% year on year, to¥32.5 billion. Ordinary profit from the non-life insurance business decreased 22.7% year on year, to ¥2.1 billion. In
the banking business, an ordinary loss of ¥0.5 billion was recorded, compared to ¥2.4 billion in ordinary profit in
the previous fiscal year.
Extraordinary gains of ¥20.4 billion and extraordinary losses of ¥3.9 billion were recorded. Extraordinary
gains were primarily due to a partial reversal of the reserve for price fluctuations in the life insurance business.
Extraordinary losses were due mainly to losses on disposal of fixed assets in the non-life insurance business.
After accounting for extraordinary gains and losses, reversal for reserve for policyholders’ dividends, and income
taxes, net income increased 26.7% compared with the previous fiscal year, to ¥30.7 billion.

3(2) Segment Information by Business
Ordinary Revenues(Millions of yen)Life insurance business
Non-life insurance
business
Banking business
Subtotal
Corporate andeliminations
Consolidated

For the year ended
March 31, 2008
741,340

For the year ended
March 31, 2009
766,245

55,64961,882+11.2

25,979822,969

33,378
861,507

+28.5
+4.7

(815)

(1,183)－

822,153

860,323+4.6

For the year ended
March 31, 2008
39,077For the year ended
March 31, 2009
32,540

2,817

2,178

-22.7

2,401
44,296(571)
34,147

－
-22.9

204

106

-48.0

44,50034,253-23.0

Change (%)+3.4

Ordinary Profit(Millions of yen)Life insurance business
Non-life insurance
business
Banking business
Subtotal
Corporate andeliminations
Consolidated

Change (%)-16.7(3) Consolidated Financial Forecasts for the Year Ending March 31, 2010
For the year ending March 31, 2010, we expect consolidated ordinary revenues to grow 4.6% from the actual
results for the year ended March 31, 2009, to ¥900.0 billion, backed by the steady business expansion in all thebusinesses: life insurance, non-life insurance and banking. Associated with the expected increase in consolidated
ordinary revenues, we expect consolidated ordinary profit to grow 34.3%, year on year, to ¥46.0 billion. Despite
the expected increase in consolidated ordinary profit, net income is expected to decline 21.9% year on year, to¥24.0 billion due to an expected absence of the reversal of the reserve for price fluctuations in the life insurance
business, which we experienced in the year ended March 31, 2009.
(Billions of yen)
Ordinary revenues
Ordinary profit
Net income
For the six months
Forecast for the six months ending
September 30, 2009

437.0

20.0

10.0

420.0

22.4

12.1

Forecast for the year ending
March 31, 2010

900.0

46.0

24.0

(Reference)
Actual results for the year ended
March 31, 2009

860.3

34.2

30.7

(Reference)
Actual results for the six months ended
September 30, 2008
For the full year

4

(Reference)
Forecasts of ordinary revenues and ordinary profit from each business for the year ending March 31, 2010, are as
follows.
<Life insurance business>
Ordinary revenues for the year ending March 31, 2010, are expected to increase 5.5% from the year ended March
31, 2009, to ¥808.7 billion, as we expect an increase of income from insurance premiums, in line with the steady
growth of policy amount in force. In addition to the expected increase in ordinary revenues, we expect an
improvement in gains and losses from investment, resulting in a 33.7% year-on-year rise in ordinary profit, to¥43.5 billion.
(Billions of yen)
Ordinary revenues
Ordinary profit
For the six months
Forecast for the six months ending September 30, 2009

392.1

19.8

372.1

20.0

Forecast for the year ending March 31, 2010

808.7

43.5

(Reference)
Actual results for the year ended March 31, 2009

766.2

32.5

(Reference)
Actual results for the six months ended September 30, 2008
For the full year

<Non-life insurance business>
Ordinary revenues for the year ending March 31, 2010 are expected to rise 5.5% from the year ended March 31,
2009, to ¥65.3 billion, as we expect steady business expansion, mainly in its mainstay automobile insurance.
Despite an expected increase in ordinary revenues, ordinary profit is expected to decrease 44.9% year on year, to¥1.2 billion due to an expected rise in the loss ratio and in the expense ratio resulting from higher system-related
expenses.
(Billions of yen)
Ordinary revenues
Ordinary profit
For the six months
Forecast for the six months ending September 30, 2009

32.9

0.4

30.7

1.1

Forecast for the year ending March 31, 2010

65.3

1.2

(Reference)
Actual results for the year ended March 31, 2009

61.8

2.1

(Reference)
Actual results for the six months ended September 30, 2008
For the full year

<Banking business>
Ordinary revenues for the year ending March 31, 2010 are expected to drop 21.8% from the year ended March 31,
2009, to ¥26.1 billion, as interest income is expected to decrease, affected by worldwide reductions in interest rates,
although the business is expected to expand in line with a growing balance of deposits and loans. Compared to an
ordinary loss of ¥0.5 billion in the year ended March 31, 2009, an ordinary profit of ¥1.3 billion is expected for theyear ending March 31, 2010, as gross operating profit is expected to grow steadily due to a decrease in interest
expenses, despite an expected decline in ordinary revenues.

5Ordinary revenues(Billions of yen)
Ordinary profit

12.7

0.3

17.7

1.1

Forecast for the year ending March 31, 2010

26.1

1.3

(Reference)
Actual results for the year ended March 31, 2009

33.3

(0.5)

For the six months
Forecast for the six months ending September 30, 2009
(Reference)
Actual results for the six months ended September 30, 2008
For the full year

The above-mentioned consolidated forecast was made based on information currently available to us. As it isdifficult to forecast future financial market conditions, we assume that interest rates, foreign exchange rates, andstock market prices will not fluctuate significantly from the levels as of March 31, 2009,

2. Qualitative Information on Consolidated Financial Position(1) Assets, Liabilities and Net Assets
As of March 31, 2009, total assets amounted to ¥5,313.6 billion, up 6.8% from March 31, 2008. As for major
components of assets, securities, mostly Japanese government bonds, amounted to ¥3,703.0 billion, up 26.4% fromMarch 31, 2008. Monetary trusts amounted to ¥608.8 billion, down 32.0% from March 31, 2008, and loans
amounted to ¥597.5 billion, up 31.1% from March 31, 2008.
Total liabilities amounted to ¥5,108.7 billion as of March 31, 2009, up 8.3% from March 31, 2008. As for major
components of liabilities, policy reserve and others amounted to ¥3,680.7 billion, up 6.6% from March 31, 2008,
and deposits amounted to ¥1,325.3 billion, up 15.9% from March 31, 2008.
Total net assets amounted to ¥204.8 billion as of March 31, 2009, down 21.7% from March 31, 2008. Net
unrealized losses on other securities, net of taxes, of ¥4.8 billion were recorded, down by ¥79.7 billion from March
31, 2008, owing to a decrease in the fair market value of securities held, associated with a significant decline inJapanese stock market prices.

(2) Cash FlowsNet cash provided by operating activities for the year ended March 31, 2009, was ¥730.0 billion, up ¥284.5
billion from the year ended March 31, 2008. The major factors were an increase in inflows due to a net decrease incall loans, although inflows from a net increase in deposits in the banking business decreased.
Net cash used in investing activities for the year ended March 31, 2009, was ¥769.8 billion, up ¥164.5 billion
from the year ended March 31, 2008. The primary reasons were outflows due to payments for purchases of
securities exceeding inflows from sales and redemption of securities, despite inflows owing to a net decrease ininvestment in monetary trusts.
Net cash used by financing activities for the year ended March 31, 2009, was ¥4.5 billion, down ¥26.8 billion
from the year ended March 31, 2008. The decrease was due to an absence of inflows of ¥28.8 billion received fromthe issuance of common stock in the year ended March 31, 2008, despite the proceeds from subordinated debts inthe banking business, which aimed to strengthen the financial soundness in the banking business.

6

As a result of the above factors, cash and cash equivalents at March 31, 2009, were ¥91.6 billion, down ¥44.5
billion from March 31, 2008.

3. Basic Policy on Returns to Shareholders and Dividends for the Year Ended March 31, 2009, andthe Year Ending March 31, 2010
We consider an increase in returns to our shareholders, as well as return on equity, as one of our most importantmanagement tasks.
Our basic policy on returning profits to its shareholders is to provide stable dividends to shareholders while
ensuring the high level of financial soundness that is necessary to maintain the trust of existing customers andattract new ones, as well as securing sufficient retained earnings for future business development.
In keeping with the basic policy outlined above, we propose to pay an annual cash dividend of ¥3,000 per share forthe year ended March 31, 2009 and for the year ending March 31, 2010.
With regard to timing, we will continue to make dividend payments once a year, following the resolution of thegeneral meeting of shareholders, with the dividend record date at the end of each fiscal year.

4. Information Concerning Significant Subsidiaries
Below, we describe the operating performance, on a non-consolidated basis, for the year ended March 31, 2009 of
SFH’s significant subsidiaries: Sony Life Insurance Co., Ltd. (Sony Life), Sony Assurance Inc. (Sony Assurance)
and Sony Bank Inc. (Sony Bank). Sony Life, Sony Assurance and Sony Bank each separately announce their own
results, which summary information in English is available on SFH’s website.

■ Sony Life (Non-Consolidated)
Sony Life’s ordinary revenues increased 3.3% from the previous fiscal year, to ¥765.9 billion, owing to higher
income from insurance premiums, associated with a steady increase in policy amount in force. Despite the steady
growth of income from insurance premiums, in line with the growing policy amount in force, ordinary profit
decreased 17.5% year on year, to ¥32.4 billion, due to increased investment expenses, associated with a significant
fall in Japanese stock market prices. The contingency reserve was partially reversed in response to lower
investment yields associated with financial market deterioration. Net income increased 82.5% year on year, to¥33.7 billion, as a result of a partial reversal of reserve for price fluctuations.
Core profit rose 61.2% year on year, to ¥38.0 billion, as a result of an increase mainly in income frominsurance premiums and interest income and dividends.
Income from insurance premiums grew 2.1% from the previous fiscal year, to ¥662.0 billion, associated with ahigher policy amount in force. Insurance claims and other payments amounted to ¥274.7 billion, up 14.0% year on
year. Investment income increased 12.9% year on year, to ¥98.7 billion, as a higher balance of securities held,
mainly ultra long-term Japanese government bonds, and other factors led to a rise in interest income and dividends.
Investment expenses expanded 91.4% year on year, to ¥133.7 billion, resulting from deteriorations in gains andlosses from investments in separate accounts as well as impairment losses on securities in the general account. As aresult, losses from investment, net, of ¥34.9 billion were recorded, as the sum of general and separate accounts,
compared to gains from investment, net, of ¥17.5 billion in the previous fiscal year. Operating expenses narrowed
0.5% year on year, to ¥93.9 billion.
Policy amount in force for the total of individual life insurance and individual annuities grew steadily, to7¥32,517.6 billion as of March 31, 2009, up 3.2% from March 31, 2008. The lapse and surrender rate* for the totalof individual life insurance and individual annuities rose 0.67 percentage point from the previous fiscal year, to6.79%. Annualized premiums from total policies as of March 31, 2009, were up 3.4% from March 31, 2008,
totaling ¥547.8 billion. Of this amount, the figure for third-sector products was up 3.1% from March 31, 2008, to¥126.6 billion.
New policy amount for the total of individual life insurance and individual annuities increased 1.9% from theprevious fiscal year, to ¥3,873.7 billion. Annualized premiums from new policies decreased 2.8% year on year, to¥61.6 billion. Of this amount, the figure for third-sector products was ¥13.4 billion, up 0.6% year on year.
Net unrealized gains on securities** decreased ¥76.9 billion from March 31, 2008, to ¥50.9 billion. Net
unrealized gains on other securities, net of taxes, amounted to ¥4.0 billion, down ¥78.7 billion from March 31,
2008.
As of March 31, 2009, Sony Life’s solvency margin ratio was 2,060.5%, compared with 1,747.9% as of March
31, 2008.
*

The lapse and surrender rate is calculated without offsetting policies that are reinstated.

**

Net unrealized gains on securities are calculated as the difference between the carrying value before mark-to-market and the fair market value forsecurities with market value, other than trading-purpose securities. (The amount includes “monetary trusts,” but excludes trading-purpose
securities.)■ Sony AssuranceSony Assurance posted an 11.2% increase in ordinary revenues compared with the previous fiscal year, to ¥61.8
billion, primarily due to strong sales of its automobile insurance, which raised net premiums written. Although
underwriting income increased due to the factors above, ordinary profit decreased 22.7% year on year, to ¥2.1
billion, owing mainly to an increased amount of claims paid, led by those resulting from natural disasters. Losses
on disposal of fixed assets were recorded as extraordinary losses, resulting in net loss of ¥1.5 billion, compared to
net income of ¥2.1 billion in the previous fiscal year.
In terms of insurance underwriting performance, owing mainly to an increased number of automobile insurance
policies in force, direct premiums written and net premiums written grew 11.4% and 11.1%, year on year, to ¥60.8
billion and ¥61.1 billion, respectively. Natural disasters and other factors influenced a net losses paid, causing a
14.2% year-on-year increase, to ¥29.9 billion. The net loss ratio rose 1.5 percentage points, compared with theprevious fiscal year, to 55.0%. The net expense ratio remained flat year on year, at 26.7%, as a result of thecompany’s efforts to enhance operational efficiency. The combined ratio (the sum of the net loss ratio and the net
expense ratio) rose 1.4 percentage points year on year, to 81.7%. Underwriting profits declined 26.9% year on year,to ¥1.6 billion, reflecting the absence of ¥0.5 billion in positive effects recorded in the previous fiscal year, whenthe method of calculating reserves for outstanding claims was changed.
For the purpose of enhancing system and operational efficiency, Sony Assurance began developing new
systems in the fiscal year ended March 31, 2007. However, during the year ended March 31, 2009, the company
decided to suspend this development and to overhaul its development policy. Accordingly, some software assetsthat were previously recorded as intangible fixed assets (software in progress) and for which future use is uncertain
were disposed of, resulting in losses on disposal of fixed assets of ¥3.7 billion, which were recorded as
extraordinary losses.
As of March 31, 2009, Sony Assurance’s solvency margin ratio was 993.0%, compared with 1,073.9% as ofMarch 31, 2008.

■ Sony Bank (Non-Consolidated)
Sony Bank’s ordinary revenues increased 28.4% compared with the previous fiscal year, to ¥33.3 billion, as ahigher balance of investment assets in line with the bank’s business expansion led to an increase mainly in interest
income. Ordinary profit decreased 84.9% compared with the previous fiscal year, to ¥0.4 billion, primarily due toimpairment losses on securities, caused by deteriorated market environment. A net loss of ¥0.7 billion was

8

recorded due to the decrease in ordinary profit as well as an increase in income taxes (deferred).
Gross operating profit dropped 0.8% from the previous fiscal year, to ¥10.8 billion, led primarily by a decreasein net other operating income. With respect to the breakdown of gross operating profit, net interest income rose
30.2% year on year, to ¥6.6 billion, due to increased interest and dividends on securities as well as higher interest
on loans. Net fees and commissions declined 21.3% year on year, to ¥0.3 billion, owing primarily to a decrease in
securities-related commissions. Net other operating income declined 28.3% from the previous fiscal year, to ¥3.9
billion, as impairment losses on securities more than offset the increase in gains on foreign exchange transactions
derived from the investment of foreign currency deposits.
General and administrative expenses expanded 26.6% year on year, to ¥10.3 billion, due mainly to an increasein system-related expenses.
As of March 31, 2009, customer assets (the sum of deposits and investment trusts) grew ¥156.2 billion, or
12.5%, from March 31, 2008, to ¥1,403.6 billion, primarily due to an increase in yen deposits. As for the
breakdown of customer assets as of March 31, 2009, deposits amounted to ¥1,326.3 billion, up ¥181.9 billion, or
15.9%, from March 31, 2008. Investment trusts were ¥77.2 billion, down ¥25.6 billion, or 24.9% from March 31,
2008. Loans expanded steadily to ¥477.0 billion, up ¥130.0 billion, or 37.5%, from March 31, 2008. As of March
31, 2009, the number of accounts was up 113 thousand from March 31, 2008, to 723 thousand accounts.
Net unrealized losses on other securities, net of taxes, an item in net assets, totaled ¥9.6 billion, deteriorated¥0.6 billion from March 31, 2008.
To ensure a sound financial base, Sony Bank’s capital was raised by allocating its shares to SFH. In the year
ended March 31, 2009, ¥12.0 billion in capital was injected. As a result, Sony Bank’s common stock and capitalsurplus as of March 31, 2009, were ¥31.0 billion and ¥21.0 billion, respectively.
As of March 31, 2009, Sony Bank’s non-consolidated capital adequacy ratio* (domestic criteria) was 13.37%,
compared with 9.15% as of March 31, 2008.
*

Sony Bank’s non-consolidated capital adequacy ratio was calculated based on the standard stipulated by Article 14-2 of the Banking Law ofJapan, in accordance with the 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.

II. Status of the Corporate GroupOn April 1, 2004, SFH was established as a financial holding company (an insurance holding company and a bankholding company) through a corporate separation from Sony Corporation. On October 11, 2007, SFH listed its
common stock on the First Section of the Tokyo Stock Exchange, by publicly offering its shares to Japanese andoverseas investors, resulting in Sony Corporation’s ownerships to account for 60% of the total outstanding sharesof SFH.
As of March 31, 2009, the SFH Group included as direct subsidiaries Sony Life, Sony Assurance and Sony
Bank, and as indirect subsidiaries Sony Life Insurance (Philippines) Corporation, a subsidiary of Sony Life, andSony Bank Securities Inc., a subsidiary of Sony Bank.
 Sony Financial Holdings Inc. (management control of its subsidiaries and all duties incidental to that role)
Directly Held and Indirectly Held Subsidiaries<Life insurance business> Sony Life Insurance Co., Ltd. (Wholly-owned by SFH)
 Sony Life Insurance (Philippines) Corporation (Wholly-owned by Sony Life)<Non-life insurance business> Sony Assurance Inc. (Wholly-owned by SFH)
<Banking business> Sony Bank Inc. (Wholly-owned by SFH)
 Sony Bank Securities Inc. (Wholly-owned by Sony Bank)

9

[Organizational chart] (As of March 31, 2009)
Sony Corporation○ SFH Consolidated subsidiarySony Financial Holdings Inc.
88%

＜Life insurance business＞○
Sony Life Insurance Co., Ltd.

＜Life insurance
business＞○
Sony Life Insurance（Philippines）
Corporation＜Non-life insurance business＞○Sony Assurance Inc.

＜Banking business＞○Sony Bank Inc.

＜Banking business＞○
Sony Bank Securities Inc.

AEGON Sony
Life Planning
Co. Ltd,

Tradename and trademark License
Sales and referrals of the other’s productsManagement control fee
Shareholdings

Note: AEGON Sony Life Planning Co., Ltd., a fifty-fifty joint venture established by Sony Life and AEGON INTERNATIONAL B.V. of theNetherlands, has been accounted for as an affiliate company under the equity-method in the scope of consolidation since the six months ended in
September 30, 2008.

III. Management Policies
1. Company’s Basic Management Policies
The SFH Group positions its corporate vision and philosophy as the basic policy for setting management strategy
and expediting management decision-making. The Group’s corporate vision and philosophies are described below.
a. Corporate Vision
The SFH Group aims to integrate the diverse functions that are inherent to financial services, offer
high-value-added products and quality services that meet individual customers’ economic needs, and become
one of Japan’s most trusted financial services groups.
b. Corporate Philosophy(Customer-Oriented)
We consider each customer’s input carefully and provide services to their satisfaction, striving to help themlead lives that are abundant and trouble-free.
(Contributing to Society)We understand that financial services businesses have a certain public nature. As we pursue our vision, we
contribute to society by maintaining high ethical standards and levels of responsibility. We also fulfill our otherobligations as a member of society and a good corporate citizen.

10

(Pursuing Originality)
We always generate ideas from the fundamentals, and pursue originality and innovation while remaining
unfettered by convention.
(Corporate Culture with a Spirit of Freedom and Open-Mindedness)
Our ideal for the financial services business recognizes the importance of each employee’s contribution. Our
corporate culture features a spirit of freedom and open-mindedness and takes full advantage of individuality
and ability.

2. Key Management Benchmarks
In addition to such key indicators as consolidated ordinary revenues, consolidated ordinary profit and consolidated
net income, SFH closely follows consolidated adjusted ROE as one of its management benchmarks.
Consolidated adjusted ROE is calculated as follows.
■ Consolidated adjusted ROE = consolidated adjusted profit ÷consolidated adjusted capital
Consolidated adjusted profit is calculated as the sum of the following:
1) Sony Life: The amount of increase in embedded value (“EV*”, adjusted net worth plus value of in force
business) during the fiscal year plus dividends paid;
2) Sony Assurance: The net income plus provision for special catastrophe reserve and its provision for reservefor price fluctuations, in each case after taxes; and3) Sony Bank: Net income (loss).
Consolidated adjusted capital is calculated as the sum of the following:
1) Sony Life: EV* as of the beginning of the fiscal year less dividends paid plus EV* as of the end of the fiscal
year, divided by two;
2) Sony Assurance: The average amount of net assets plus the sum of special catastrophe reserve and its
reserve for price fluctuations, in each case after taxes; and3) Sony Bank: The average amount of net assets.
*

Sony Life changed its EV calculation from the Traditional Embedded Value (“TEV”) to Market Consistent Embedded Value (“MCEV”) in theyear ended March 31, 2009, disclosing its MCEV as of March 31, 2008. Sony Life’s MCEV is calculated in compliance with the European
Insurance Chief Financial Officer (CFO) Forum Market Consistent Embedded Value Principles© (“MCEV Principles”), the international
standard in disclosing MCEV published by the CFO Forum comprised of CFOs from major insurance companies in Europe.

Consolidated adjusted profit and consolidated adjusted capital take into consideration dividends from the Groupsubsidiaries and other special factors.

3. Medium- to Long-Term Management Strategies
The SFH Group aims to maximize the corporate value of the Group over the medium to long term byimplementing the management strategies outlined below.
(a) Sustainable and Stable Growth of Group Companies
Sony Life: Sony Life provides detailed tailored consulting and follow-up services through life insurance
professionals—Lifeplanner sales employees and Partners (independent agencies)—who havebroad-ranging expertise and extensive experience in such areas as economics, finance andtaxation. Sony Life strives to strengthen its capabilities and hone its competitive edge in the11individual life insurance market by providing value in a way that only Sony Life can.
Sony Assurance: Capitalizing on the strengths of its position as a direct insurance provider that
communicates with each of its customers directly via the Internet and the telephone, Sony
Assurance precisely understands customer opinions and needs, and provides products andservices from a customer viewpoint. Sony Assurance aims to increase its income frominsurance premiums by offering reasonably priced insurance premiums realized byrisk-segmented products and operational efficiency.
Sony Bank: Sony Bank is an Internet bank focused on the needs of individual customers. By maximizing
information technologies, the bank works to provide fair and highly convenient financial
products and services. By ensuring its trustworthiness in such ways, the bank is working to
expand its operations further.
(b) Fostering Synergy among Group Companies
In addition to the growth of each company within the Group, we seek to enhance synergies among thecompanies of the SFH Group. Such efforts include the joint offering of products and services, the sharing of
distribution channels and infrastructure and other forms of collaboration. By increasing intra-group synergies,
SFH aims to offer customers attractive and high-value-added products and services that are unmatched byconventional financial institutions.
(c) Expanding into New Business Fields, Outside the Existing Framework
Through the growth of Group companies and increased synergies within the Group, we aim to move beyond
the existing framework of the SFH Group. We are examining active advancements into new business fields
that will raise our corporate value even further.

4. Tasks Ahead for the Company
During the year ended March 31, 2009, the Japanese economy suffered the effects of a chain reaction that spreadfrom their epicenter of U.S.- and Europe-centered financial crises into the real economy. We expect the resulting
economic recession to continue for the foreseeable future.
The financial crises has precipitated a decline in confidence in the banking and insurance sectors. We consider
repairing these sectors to financial soundness and restoring the confidence of customers and the general public to
be vital management issues. Furthermore, Japanese customer needs are growing more diverse, owing to thecontinued decline in the birthrate and aging of the population, as well as public security system reforms. We
believe the ability to respond quickly and apporopriately to such needs within a rapidly changing competitiveenvironment is important.
Under these conditions, the SFH Group is redoubling its internal control efforts focused on compliance, risk
management, eradicating anti-social influences and ensuring the protection of personal information. At the sametime, we are working to realize our vision and achieve ongoing increases in corporate value by aggressively
pursuring the initiatives described below.
(a) Growing the three major businesses
Sony Life, Sony Assurance and Sony Bank have differentiated themselves from their competitors byfollowing business models that are clearly distinct and providing individual customers with highly rationaland convenient products and services. We will promote the ongoing growth of each of these companies byemphasizing their individual advantages, thereby further entrenching their presence in their respective
markets.
(b) Fostering cross-selling and other Group synergies
The easing of financial market restrictions has encouraged various companies to forge alliances that aim tomarket financial products targeting individuals. In the past, SFH has encouraged intra-Group liaisons, such12

as through the sale of Sony Assurance’s automobile insurance and Sony Bank’s mortgage loans by Sony
Life’s Lifeplanner sales employees. In the future we will encourage even greater business cooperation bypromoting efficient cultivation of new customers and cross-selling, to enhance the SFH Group’s corporate
value.
(c) Expanding into new fields of businessIn the event that providing financial products and services outside our current scope of business provesnecessary to realize the SFH Group’s corporate vision, we will consider aggressive moves to expand into
new fields of business. We will pursue such new business to diversify and expand our sources of revenues
and profits, as well as to heighten the SFH Group’s market presence.

13

IV. Consolidated Financial Statements
1. Consolidated Balance Sheets(Yen in millions)
As of March 31, 2008

As of March 31, 2009

Assets:Cash and due from banks
Call loans and bills bought
Commercial paper and other debt purchased
Monetary trusts
Securities
Loans
Tangible fixed assets
Intangible fixed assets
Goodwill
OthersDue from agencies
Due from reinsurers
Foreign exchanges
Other assets
Deferred tax assets
Reserve for possible loan losses

60,058424,868
895,672
2,930,441
455,763
84,451
16,412
2,505
13,906
256
1,683
101,229
6,937
(327)

42,794
95,70916,163608,846
3,703,062
597,542
83,61918,7882,004
16,783
1
144
6,355
91,42449,889(665)

Total Assets

4,977,450

5,313,677

Liabilities:
Policy reserve and others
Reserve for outstanding claims
Policy reserve
Reserve for policyholders’ dividends
Due to agencies
Due to reinsurers
Deposits
Call money and bills soldBorrowed money
Foreign exchanges
Other liabilities
Reserve for employees’ bonuses
Reserve for employees’ retirement benefits
Reserve for directors’ retirement benefits
Reserve for price fluctuations
Reserve for financial products transaction liabilities
Deferred tax liabilities
Deferred tax liabilities on land revaluation

3,454,167
31,653
3,418,006
4,506
1,308
926
1,143,476
10,000062,5302,240
11,920252
24,1360
4,156
706

3,680,731
34,843
3,643,348
2,539
1,216
1,042
1,325,320
10,0002,000
868,0862,251
13,435
310
3,666
1
0
706

Total Liabilities

4,715,822

5,108,779

14

(Yen in millions)

Net Assets:
Common stock
Capital surplus
Retained deficits
Total shareholders’ equity
Net unrealized gains(losses) on other securities, net of taxes
Net deferred losses on hedging instruments, net of taxes
Land revaluation, net of taxes
Foreign currency translation adjustments
Total valuation and translation adjustments
Total Net Assets
Total Liabilities and Net Assets

15

As of March 31, 2008

As of March 31, 2009

19,900195,277(26,417)
188,759
74,902(1,345)(1,475)786
72,86819,900195,277(2,251)
212,925(4,853)(1,449)(1,475)(248)(8,028)261,627

204,897

4,977,450

5,313,677

(Yen in millions)

2. Consolidated Statements of Income
For the year ended
March 31, 2008

For the year ended
March 31, 2009

Ordinary Revenues

822,153

860,323

Ordinary Revenues from the Life Insurance Business:

740,596

765,145

648,178

661,676

646,748660,308

Income from insurance premiums
Insurance premiums
Ceded reinsurance commissions

1,430

1,368

87,542

99,064

Interest income and dividends

48,22756,056

Income from monetary trusts, net

14,776-

Income from trading securities, net

324

1,084

24,06832,145145

807

Gains on derivatives, net

-

8,937

Other investment income

0

33

4,875

4,404

Investment income

Gains on sale of securities
Gains on redemption of securities

Other ordinary income
Ordinary Revenues from the Non-life Insurance Business:

55,62561,87255,036

61,13755,001

61,106

35

31

572

718

Interest income and dividends

583

685

Gains on sale of securities

24

61

Gains on redemption of securities

-

3

(35)

(31)

16

16

Underwriting income
Net premiums written
Interest and dividends on deposits of premiums
Investment income

Transfer to interest and dividends on deposits of premiums
Other ordinary income
Ordinary Revenues from the Banking Business:

25,93133,306

17,162

22,046

Interest income on loans

7,045

9,293

Interest income and dividends on securities

7,320

10,452

Interest income on call loans and bills bought

2,647

2,021

Interest income on deposits with banks

17

10Interest income on interest rate swaps

26

10

Other interest income

104

258

Fees and commissions

1,753

2,106

Other operating income

Interest income

7,001

9,035

Gains on foreign exchange transactions, net

5,773

7,938

Others

1,227

1,096

15

118

Other ordinary income

16

(Yen in millions)
For the year ended
March 31, 2008

For the year ended
March 31, 2009

Ordinary Expenses

777,653

826,070

Ordinary Expenses from the Life Insurance Business:

702,056

733,544

241,11460,0566,350
28,457
141,8452,054
2,350
286,271286,257
13
69,903
15
1,563
6,697
21
4,858
7
10
3,149
5,263
48,315
94,189274,793
62,102
7,111
32,898168,1372,172
2,371
219,075
1,708
217,327
39
133,54542856
16,15731,899
262
2,382
134
2,932
6,664
72,212
93,883

10,57852,42012,24659,257

Underwriting expenses

38,634

43,829Net losses paid
Loss adjustment expenses
Net commission and brokerage fees
Provision for reserve for outstanding claims
Provision for underwriting reserve
Other underwriting expenses
Investment expenses

26,225
3,204
586
2,010
6,607
5

29,952
3,632
681
1,482
8,079
0
177

Losses on sale of securities

3

143

Devaluation losses on securities-

29

Losses on redemption of securities

2

4

13,763

15,24216

7

Insurance claims and other payments
Insurance claims
Annuity payments
Insurance benefits
Surrender payments
Other payments
Reinsurance premiums
Provision for policy reserve and others
Provision for reserve for outstanding claims
Provision for policy reserve
Interest portion of reserve for policyholders’ dividends
Investment expenses
Interest expenses
Losses from monetary trusts, net
Losses on sale of securities
Devaluation losses on securities
Losses on redemption of securities
Losses on derivatives, net
Foreign exchange losses, net
Provision for reserve for possible loan losses
Depreciation of real estate for rent and others
Other investment expenses
Losses on separate accounts, net
Operating expenses
Other ordinary expenses
Ordinary Expenses from the Non-life Insurance Business:

Operating, general and administrative expenses
Other ordinary expenses

17

(Yen in millions)

Ordinary Expenses from the Banking Business:
Interest expenses
Interest expenses on deposits
Interest expenses on call money and bills soldInterest on borrowed money
Interest expenses on interest rate swaps
Other interest expenses

For the year ended
March 31, 2008

For the year ended
March 31, 2009

23,17533,26812,045
11,379133532
015,394
14,50158
38
796
0Fees and commissions

1,049

1,225

Other operating expenses

1,524

5,107

General and administrative expenses

8,411

11,264144

275

44,50034,2532
020,471
1

Reversal of reserve for price fluctuations-

20,470

Others

1

-

3,820
63

3,917
3,879

125

20

3,228

-

402

16

Provision(Reversal) for Reserve for Policyholders’ Dividends

3,159

(429)

Income Before Income Taxes

37,522

51,238

Income Taxes

12,76920,516- Current

6,690

14,915- Deferred

6,078

5,600

(497)

-

24,25530,722Other ordinary expenses
Ordinary Profit
Extraordinary Gains
Gains on disposal of fixed assets

Extraordinary Losses
Losses on disposal of fixed assets
Impairment losses
Provision for reserve for price fluctuations
OthersMinority Interests
Net Income

18

(Yen in millions)

3. Consolidated Statements of Changes in Net Assets
For the year ended
March 31, 2008

For the year ended
March 31, 2009

5,500

19,900Issuance of common stock

14,400-Total changes during the period

14,400-

Balance at the end of the current period

19,90019,900180,877

195,277

Issuance of common stock

14,400-Total changes during the period

14,400-

Balance at the end of the current period

195,277

195,277(44,173)(26,417)

Dividends from surplus(6,500)(6,525)

Net income
Decrease resulting from change in scope of applicationof equity method
Total changes during the period

24,25530,722-(31)

17,75524,166(26,417)(2,251)

142,203

188,759

Issuance of common stock

28,800-

Dividends from surplus(6,500)(6,525)

Net income
Decrease resulting from change in scope of applicationof equity method
Total changes during the period

24,25530,722-(31)

46,55524,166

188,759

212,925

Shareholder’s Equity
Common stock
Balance at the end of the previous period
Changes during the period

Capital surplus
Balance at the end of the previous period
Changes during the period

Retained deficits
Balance at the end of the previous period
Changes during the period

Balance at the end of the current period
Total shareholder’s equity
Balance at the end of the previous period
Changes during the period

Balance at the end of the current period

19

(Yen in millions)
For the year ended March 31, For the year ended March 31,
2008
2009
Valuation and Translation Adjustments
Net unrealized gains on other securities, net of taxes
Balance at the end of the previous period

125,043

74,902

Net changes of items other than shareholder’s equity(50,140)(79,756)

Total changes during the period(50,140)(79,756)

Balance at the end of the current period

74,902(4,853)(408)(1,345)

Net changes of items other than shareholder’s equity

(937)

(104)

Total changes during the period

(937)

(104)

Balance at the end of the current period(1,345)(1,449)(1,475)(1,475)--

Balance at the end of the current period
Foreign currency transaction adjustments(1,475)(1,475)

Balance at the end of the previous period

390

786

Net changes of items other than shareholder’s equity

396(1,035)

Total changes during the period396(1,035)

Balance at the end of the current period

786

(248)

123,549

72,868Net changes of items other than shareholder’s equity(50,681)(80,896)

Total changes during the period(50,681)(80,896)

Balance at the end of the current period

72,868(8,028)Changes during the period

Net deferred losses on hedging instruments, net of taxes
Balance at the end of the previous period
Changes during the period

Land revaluation, net of taxes
Balance at the end of the previous period
Changes during the period
Total changes during the period

Changes during the period

Total valuation and translation adjustments
Balance at the end of the previous period
Changes during the period

20

(Yen in millions)
For the year ended March 31, For the year ended March 31,
2008
2009
Minority Interests
Balance at the end of the previous period

4,425

-

Net changes of items other than shareholder’s equity(4,425)-

Total changes during the period(4,425)---

270,179

261,627

Issuance of common stock
Dividends from surplus

28,800(6,500)(6,525)

Net income

24,25530,722

Changes during the period

Balance at the end of the current period
Total Net Assets
Balance at the end of the previous period
Changes during the period

Decrease resulting from change in scope of applicationof equity method
Net changes of items other than shareholder’s equity

-

(31)

(55,106)(80,896)

Total changes during the period(8,551)(56,730)

Balance at the end of the current period

261,627

204,897

21

(Yen in millions)

4. Consolidated Statements of Cash Flows
For the year ended
March 31, 2008

For the year ended
March 31, 2009

Cash flows from operating activities:
Income before income taxes

37,522

51,238Depreciation of real estate for lease

3,149

2,932

Depreciation and amortization

2,363

3,243

125

20

-

501

1,733

3,190

292,865

225,407

13

39

3,159

(429)

Increase (decrease) in reserve for possible loan losses

101

338

Increase (decrease) in reserve for employees’ retirement benefits

(118)

1,936

Increase (decrease) in reserve for directors’ retirement bebefits

10

57

3,228

(20,470)

Impairment losses
Amortization of goodwill
Increase in reserve for outstanding claims
Increase in policy reserve
Increase in interest portion of reserve for policyholders’ dividends
Increase in reserve for policyholders’ dividends

Increase (decrease) in reserve for price fluctuations
Increase in reserve for financial products transaction liabilities-

0Interest income and dividends(65,973)(78,789)

Gains (losses) on securities

31,61587,400Interest expenses

12,061

15,437

Exchange Gains

8,902

8,416

54

68

Losses on disposal of tangible fixed assets
Equity in losses of affiliates-173

Net (increase) decrease in loans(62,352)(130,007)

Net increase (decrease) in deposits

390,559

182,175

Net (increase) decrease in call loans and bills bought(249,509)

302,659

Net (increase) decrease in foreign exchanges(assets)

2,472(4,671)0

8

Others, net(575)

22,823

Subtotal

411,410

673,703

Interest and dividends received

64,65381,813

Interest paid

(9,947)(14,567)

Policyholders’ dividends paid

(1,264)(1,577)

Income taxes paid

(19,398)(9,334)

Net cash provided by operating activities

445,452

730,038

Net increase (decrease) in foreign echanges(liabilities)

22

(Yen in millions)
For the year ended
March 31, 2008

For the year ended
March 31, 2009

Cash flows from investing activities:
Investments in monetary trusts(177,263)(34,758)-

316,794

Purchases of securities(1,544,414)(2,288,460)

Proceeds from sale and redemption of securities

1,152,322

1,285,092

Investments in loans(44,140)(47,351)

Collections of loans

32,673

13,683

Others, net(6,364)(2,655)

Total of net cash used in investment transactions(587,187)(757,656)

Total of net cash used in operating activities and investment
transactions(141,735)(27,618)

Purchases of tangible fixed assets(4,981)(2,413)0

1

Purchases of intangible fixed assets(6,361)(9,745)Purchase of securities of a consolidated subsidiary(6,750)-(605,280)(769,813)

-

2,000

Proceeds from issuance of stock

28,800-Cash dividends paid

(6,500)(6,515)-(76)

22,300(4,591)

(45)

(184)

Net increase (decrease) in cash and cash equivalents(137,573)(44,551)

Cash and cash equivalents at beginning of the fiscal year

273,760

136,186

Cash and cash equivalents at end of the fiscal year

136,186

91,634

Proceeds from sale of monetary trusts

Proceeds from sale of tangible fixed assets

Net cash used in investing activities
Cash flows from financing activities:
Increase in subordinated borrowings

OthersNet cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents

Note)
1. Cash flows from investing activities include cash flows from lending operations of the insurance business.

23

Notes to the Consolidated Financial Statements
1.

Summary of Significant Accounting Policies
Principles of Consolidation (1) Scope of consolidation
Number of consolidated subsidiaries:
5
Consolidated subsidiaries: Sony Life Insurance Co., Ltd., Sony Life Insurance (Philippines) Corporation, Sony
Assurance Inc., Sony Bank Inc., Sony Bank Securities Inc.
(2) Application of the equity method
Number of consolidated subsidiaries and affiliates accounted for by the equity method:1
Consolidated subsidiaries and affiliates accounted for by the equity method:AEGON Sony Life Planning Co., Ltd.
AEGON Sony Life Planning Co., Ltd. has been included in the scope of equity method from this fiscal year because
its net income and retained deficits are not immaterial.
(3) Fiscal year-end of consolidated subsidiaries
The financial statements of Sony Life Insurance (Philippines) Corporation are prepared with a fiscal year-end of
December 31. Appropriate adjustments are made for material transactions between December 31 and March 31, thedate of the consolidated financial statements of SFH. All other subsidiaries prepare their respective financial
statements as of March 31, the same date as the consolidated financial statements of SFH.
(4) Valuation of assets and liabilities of consolidated subsidiaries
A full portion of the assets and liabilities of the acquired subsidiaries is stated at fair value as of the date ofacquisition of control.
(5) Amortization of goodwill
Goodwill is amortized using the straight-line method over five years.
Securities Securities are stated in the following manner: Securities held for trading purposes (“trading securities”) are stated at fairvalue with unrealized gains and losses charged to income. The cost of such securities sold is determined by themoving-average method. Held-to-maturity securities are stated at amortized cost (straight-line method) using themoving-average method. Available-for-sale securities whose fair value is readily determinable are stated at fair value inthe consolidated balance sheets based on market prices prevailing at each balance sheet date, with unrealized gains (losses),
net of income taxes, included in net assets and acquisition costs calculated using the moving-average method.
Available-for-sale securities whose fair value is not readily determinable are stated at amortized cost (straight-line method)or at acquisition cost based on the moving-average method.
Derivative financial instruments Derivative financial instruments are stated at fair value, with changes in fair value included in income for the period inwhich they arise, except for derivatives that are designated by SFH and its domestic subsidiaries (the “Companies”) as“hedging instruments”.
Hedge accounting SFH’s banking subsidiary applies either deferred hedge accounting or fair value hedge accounting to account fortransactions it enters into to hedge interest rate risks on financial assets. SFH’s banking subsidiary uses interest rate swaps
to offset fluctuations in interest rates on fixed-rate loans by identifying the hedged items that are grouped based on theirmaturity, in accordance with “Accounting and Auditing Treatments on Application of Accounting Standard for Financial
Instruments in the Banking Industry” (Industry Audit Committee of Japanese Institute of Certified Public Accountants No.
24). Interest rate swaps and others are used as hedging instruments to offset fluctuations in the fair value of fixed-ratebonds which are classified as other securities. Both of the above-mentioned hedging instruments are identified so that theirsignificant terms are nearly identical to those of the hedged items. Accordingly, such hedges are considered as highly
effective, resulting in a substitution for evaluating the effectiveness of the hedging transactions.
Tangible fixed assets (excluding leased assets) All tangible fixed assets, including real estate for lease, are initially recorded at cost. Subsequent expenses related to asset
improvements are capitalized or are recognized as a separate asset, as appropriate, only when it is probable that future24

economic benefits associated with the item will flow to the Companies and the cost of the item can be measured reliably.
All other repairs and maintenance charges are charged to income when incurred.
Depreciation is generally computed by the straight-line method for buildings and by the declining-balance method forother tangible fixed assets over the estimated useful lives of the assets, as follows:
Buildings
2 to 45 years
Other tangible fixed assets
2 to 20 years
Software for internal use (excluding leased assets) Software for internal use is amortized using the straight-line method mainly over 5 years, its estimated useful life.
Leased assets All leased assets with respect to non-ownership-transfer finance leases are amortized by the straight-line method over thelease term, without any residual value.
Reserve for possible loan losses The reserve for possible loan losses is calculated by the Companies in accordance with self-assessment guidelines andwrite-off and reserve guidelines established at each subsidiary. With respect to loans to borrowers subject to bankruptcy,
court-guided rehabilitation or similar legal or formal proceedings, the Companies provide a specific reserve in the amountof the loan balance less amounts collectable from collateral, guarantees and other means. For other loans, the Companies
provide a general reserve by applying the historical loan loss ratio determined over certain periods. Each loan is subject toasset assessment by the operational department of the relevant company in accordance with its self-assessment guidelines,
and the results of the assessment are reviewed by the respective internal audit departments, which are independent fromthe operational departments, before the amount of reserve is finalized.
Reserve for employees’ bonuses The reserve for employees’ bonuses is provided for the estimated amount of bonuses the Companies are required to pay
for services provided during the current fiscal year.
Reserve for employees’ retirement benefits The reserve for employees’ retirement benefits is provided for the payment of retirement benefits to employees, in theamount deemed accrued at the fiscal year-end, based on the projected retirement benefit obligation and the fair value ofplan assets at the fiscal year-end. Unrecognized prior service cost is amortized using the straight-line method over 10 years
within the employees’ average remaining service period at incurrence. Unrecognized net actuarial gain (loss) is amortizedusing the straight-line method over 7 to 10 years within the employees’ average remaining service period, commencing
from the fiscal year immediately following incurrence. Unrecognized net obligation at transition is amortized using thestraight-line method over 15 years.
Reserve for directors’ retirement benefits The reserve for directors’ and statutory auditors’ retirement benefits is provided based on the internal regulations of SFH
and its domestic subsidiaries and calculated at the amount that would be payable if all eligible directors and statutory
auditors were to resign at the fiscal year-end.
Policy reserve Pursuant to the Insurance Business Law, SFH’s domestic life insurance subsidiary maintains a policy reserve for thefulfillment of future obligations under life insurance contracts. The policy reserve is established by the net level premium
method, which assumes a constant or level amount of net insurance premiums over the term of the relevant policy incalculating the amount of the reserve required to fund all future policy benefits. The net insurance premium is a portion of
the premium covering insurance underwriting risk, which is estimated based on factors such as mortality rates, investment
yield, surrender rates and other factors. The net level premium reserve for individual insurance contracts underwrittenfrom fiscal year 1996 is calculated using mortality and interest rates set by the Financial Services Agency as standard
policy reserve. Additionally, the net level premium reserve for individual insurance contracts underwritten before fiscal
year 1996 is calculated using mortality and interest rates approved by the supervisor of insurance business in Japan.

25

Reserve for price fluctuations Pursuant to requirements under the Insurance Business Law, the reserve for price fluctuations is provided for pricefluctuations primarily related to stocks, bonds and foreign currency-denominated assets which are exposed to losses due tomarket price fluctuations. This reserve is only used to reduce deficits arising from price fluctuations on those assets.
Translation of foreign currencies Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the foreign exchange rates in
effect at each balance sheet date, whereas components of net assets denominated in foreign currencies are translated athistorical rates. The current year’s profit and loss accounts are translated into yen using the average exchange rate for the
fiscal year.
Land revaluation On March 31, 2002, SFH’s domestic life insurance subsidiary revalued its land for operating purposes, as permitted by theLand Revaluation Law (Law No. 34, enacted March 31, 1998—the “Law”). The tax effect of the revaluation difference isaccounted for differently, depending on whether there are gains or losses; when there is a loss, a valuation allowance isfully provided for the tax effect of the loss, and when there is a gain, the tax effect is recorded in “deferred tax liabilities onland revaluation.” After excluding these amounts, the net revaluation difference is reported as “land revaluation” in net
assets. The revaluation method stipulated by Article 3-3 of the Law was based on the land appraisal in conformity with
Article 2-5 of the Law Enforcement Order related to the Law (Government Ordinance No. 119, effective from March 31,
1998).
Accounting for consumption taxes The consumption taxes received and paid by SFH and its domestic subsidiaries, excluding loss adjustment expenses andoperating, general and administrative expenses of SFH’s non-life insurance subsidiary, are not included in income andexpenses. Under the Consumption Tax Law of Japan, the consumption taxes paid on property and equipment are notdeductible from the consumption taxes received; they are recorded as “other assets” and amortized on a straight-line basis
over 5 years. Other non-deductible consumption taxes are charged to income as incurred.
Cash and cash equivalents Cash equivalents consist of highly liquid investments without significant market risks, such as demand deposits andshort-term investments with an original maturity of three months or less.

Changes in accounting policies, procedures and presentation rules(1) Reclassification of debt securities
As the Practical Issue Task Force No.26 “Tentative Solution on Reclassification of Debt Securities” (December 5,2008) is applicable from a date of its publication until March 31, 2010, a domestic life insurance subsidiary has
adopted this practical solution. A part of its “Securities” was reclassified from “available-for-sale securities” to“held-to-maturity securities”. The adoption of the practical solution resulted in an increase of ¥163 million in“Securities,” a decrease of ¥59 million in “Deferred tax assets,” and an increase of ¥104 million in “Net unrealized
gains (losses) on other securities, net of taxes” as of March 31, 2009.
(2) Lease transactions
Finance leases that do not transfer ownership of the leased assets to the lessee used to be accounted for as operatingleases. As the Accounting Standard Board of Japan (“ASBJ”) Statement No.13 “Accounting Standard for Lease
Transactions” (March 30, 2007) and ASBJ Guidance No.16 “Guidance for Accounting Standard for Lease
Transactions” (March 30, 2007) became effective for fiscal years beginning after April 1, 2008, SFH has applied themstarting from the fiscal year ended March 31, 2009. The impact of this change to SFH’s consolidated ordinary profit
and net income before taxes is not material.
Additional information(1) Evaluation of securities
Floating-rate Japanese government bonds that are included in “securities” were previously evaluated based on theirfair market values. As the Practical Issue Task Force No. 25 “Practical Solution on Measurement of Fair Value of
Financial Assets” (October 28, 2008) was published, a domestic banking subsidiary examined its accounting

26

treatment of the floating-rate Japanese government bonds it held and determined that the fair market values could not
be deemed fair values. Therefore, SFH evaluated the floating-rate Japanese government bonds based on reasonably
estimated amounts starting in the year ended March 31, 2009. This change resulted in an increase of ¥2,891 million in“Securities” a decraease of ¥240 million in “Deferred tax asetts” and an increase of ¥2,650 million in “Net unrealized
gains (losses) on other securities, net of taxes.” Reasonably estimated amounts were calculated as of March 31, 2009,
using the Constant Maturity Treasury (“CMT”) model. The interest rate used in the CMT model as a primaryparameter is the forward rate of Japanese government bonds. The discount rate used in the model is the rate of theyield curve of Japanese government bonds based on the consideration of a certain liquidity risk.
(2) Reversal of contingency reserve
Pursuant to provisions of the Insurance Business Law, a domestic life insurance subsidiary reversed its contingency
reserve of ¥19,000 million to compensate for the loss incurred due to the negative spread for the year ended March 31,
2009.
(3) Reversal of reserve for price fluctuations
Pursuant to provisions of the Insurance Business Law, a domestic life insurance subsidiary reversed its reserve forprice fluctuations of ¥21,207 million to compensate for the loss incurred due to trading or devaluation of the equity
investment and the fluctuation of foreign exchange for the year ended March 31, 2009.

2.

Segment Information
Yen in millions
As of and year ended March 31, 2008
Life insurance
business

Non-life
insurancebusiness

Bankingbusiness

Total

Ordinary revenues:
External customers
Intersegment
Total
Ordinary expenses
Ordinary profit (loss)¥ 740,596
744
741,340
702,263¥ 39,077¥ 55,625
23
55,64952,831¥ 2,817¥ 25,931
47
25,97923,577¥ 2,401

Assets, depreciation andcapital expenditure:
AssetsDepreciation
Capital expenditure¥ 3,660,554
4,195
4,223

¥ 78,645
576
2,599¥ 1,213,061
672
1,234

Elimination

Consolidated¥ 822,153
815
822,969
778,673¥ 44,296¥ (815)(815)(1,020)¥ 204¥ 822,153
822,153
777,653¥ 44,500¥ 4,952,261
5,444
8,057

¥ 25,189827¥ 4,977,450
5,452
8,085

Elimination

Consolidated

Yen in millions
As of and year ended March 31, 2009
Life insurance
business

Non-life
insurancebusiness

Bankingbusiness

Total

Ordinary revenues:
External customers
Intersegment
Total
Ordinary expenses
Ordinary profit (loss)¥ 765,145
1,100
766,245733,704¥ 32,540¥ 61,872
10
61,88259,704¥ 2,178¥ 33,306
72
33,37833,950¥ (571)¥ 860,323
1,183
861,507827,359¥ 34,147¥ (1,183)(1,183)(1,289)¥ 106¥ 860,323
860,323
826,070¥ 34,253

Assets, depreciation andcapital expenditure:
AssetsDepreciation
Capital expenditure¥ 3,810,470
4,775
7,612

¥ 86,698
501
2,176¥ 1,413,034
1,031
2,084

¥ 5,310,202
6,309
11,873¥ 3,474
12
12¥ 5,313,677
6,321
11,88527

Notes)
1. Life insurance business consists of Sony Life Insurance Co., Ltd. and Sony Life Insurance (Philippines) Corporation,
non-life insurance business consists of Sony Assurance Inc. and banking business consists of Sony Bank Inc, and Sony
Bank Security Inc, as of and year ended March 31, 2008. In addition to those companies, AEGON Sony Life PlanningCo., Ltd. has been newly included in life insurance business as of and year end March 31, 2009.
2. Amounts of unallocated ordinary expenses that are included in ‘Elimination’ for the years ended March 31, 2008 and2009 are ¥1,297 million and ¥868 million, respectively, most of which are ordinary expenses of SFH. Amounts ofunallocated corporate assets that are included in ‘Elimination’ are ¥25,473 million and ¥3,977 million, respectively, mostof which are deposits and others of SFH.

3.

Related Party Transactions(1) For the year ended March 31, 2008
Transactions between SFH and related parties
After SFH’s initial public offering, Sony Corporation has remained as its parent company by holding 60.0% of SFH’s
outstanding shares of common stock. The Sony Group conducts business in the electronics, game, pictures, financial
services, and other fields.
Transactions between SFH and Sony Corporation for the fiscal year ended March 31, 2008, are as follows;

SFH makes payments to Sony Corporation for remuneration expenses of employees that it has seconded toSFH. For the year ended March 31, 2008, such payments amounted to ¥36 million, and “accrued expenses”
of ¥1 million were outstanding as of March 31, 2008.

Transactions between the subsidiaries of SFH and Sony Corporation for the fiscal year ended March 31, 2008, are as
follows;
The subsidiaries of SFH made payments to Sony Corporation under the royalty agreements of ¥1,818
million as compensation for using the “Sony” trademark and trade name.

Sony Life Insurance Co., Ltd., made lease payments of ¥1,713 million to Sony Corporation for the use of aplot of land. Sony Corporation made lease payments of ¥8,145 million for the use of “Sony City,” an officebuilding constructed on this site, to Sony Life Insurance Co., Ltd., which is the owner of the building.

The subsidiaries of SFH made payments of ¥78 million to Sony Corporation for remuneration expenses of
employees that it has seconded to the subsidiaries of SFH.



The subsidiaries of SFH made other payments of ¥92 million in exchange for miscellaneous products andservices provided to the subsidiaries of SFH by Sony Corporation.



As of March 31, 2008, ¥1,129 million of “accrued expenses and others”, ¥712 million of “unearned
revenue” and ¥3,554 million of “guarantee deposits received” were outstanding in relation to transactions
between the subsidiaries of SFH and Sony Corporation.

Transactions between the subsidiaries of SFH and the Sony Group companies for the fiscal year ended March 31,
2008, are as follows;

The subsidiaries of SFH entered into a number of lease and service agreements with Sony FinanceInternational Inc. (“Sony Finance”), a wholly-owned subsidiary of Sony Corporation, which engages in theleasing and credit card business in Japan. The subsidiaries of SFH made payments of ¥521 million forleasing of office space and office equipment, ¥1,015 million for collecting services, ¥149 million of28

individual loan guarantee services, and ¥42 million for agency services provided by Sony Finance.


As of March 31, 2008, ¥22,546 million of “accounts receivable”, ¥84 million of “deposit”, and ¥71 millionof “accrued expenses and others” were outstanding in relation to transactions between the subsidiaries of
SFH and Sony Finance.



The subsidiaries of SFH employ the services of Frontage Inc. (“Frontage”), an advertising media purchaserthat is a consolidated subsidiary of Sony Corporation. The subsidiaries of SFH made payments of ¥3,495
million for advertisement and media planning services provided by Frontage to the subsidiaries of SFH.



As of March 31, 2008, ¥379 million of “accrued expenses and others” were outstanding in relation totransactions between the subsidiaries of SFH and Frontage.

Notes:(i) The abovementioned amounts for the fiscal year ended March 31, 2008, exclude consumption taxes and others, while theoutstanding amounts as of March 31, 2008, include consumption taxes and others.
(ii) The SFH Group make payments to Sony Corporation for remuneration expenses of employees that it has seconded to the SFH
Group based on the agreements on the lease of employees.
(iii) As part of its investment, Sony Life Insurance Co., Ltd., has leased the building to Sony Corporation for use as its corporate
headquarters, starting from October 2006. The rental is determined based on the discussions by reference to real estate appraisal.
Sony Life Insurance Co., Ltd., takes the land of this site on lease from Sony Corporation and the rental fee has been determinedby reference to the actual transactions of the vicinal land.
(iv) “Sony” trademark and trade name, which is used in the trade name of the SFH Group, belongs to Sony Corporation and eachof the SFH Group companies has entered into royalty agreements with Sony Corporation pursuant to which the SFH Group ispermitted to use the Sony name. Royalty fees are paid to Sony Corporation based on this agreements.
(v) Other transactions are determined in the same way of general transactions in consideration of fair market value.

Notes for parent company and important related companies Parent company
Sony Corporation lists its shares of common stock on Tokyo Stock Exchange, Osaka Securities Exchange, NewYork Stock Exchange (United States) and London Stock Exchange (United Kingdom).

(2) For the year ended March 31, 2009
Transactions between SFH and related parties
After SFH’s initial public offering, Sony Corporation has remained as its parent company by holding 60.0% of SFH’s
outstanding shares of common stock. The Sony Group conducts business in the electronics, game, pictures, financial
services, and other fields.
Transactions between SFH and Sony Corporation for the fiscal year ended March 31, 2009, are as follows;

SFH makes payments to Sony Corporation for remuneration expenses of employees that it has seconded toSFH. For the year ended March 31, 2009, such payments amounted to ¥32 million, and “accrued expenses”
of ¥2 million were outstanding as of March 31, 2009.

Transactions between the subsidiaries of SFH and Sony Corporation for the fiscal year ended March 31, 2009, are as
follows;
The subsidiaries of SFH made payments to Sony Corporation under the royalty agreements of ¥1,643

29

million as compensation for using the “Sony” trademark and trade name.
Sony Life Insurance Co., Ltd., made lease payments of ¥1,623 million to Sony Corporation for the use of aplot of land. Sony Corporation made lease payments of ¥8,269 million for the use of “Sony City,” an officebuilding constructed on this site, to Sony Life Insurance Co., Ltd., which is the owner of the building.

The subsidiaries of SFH made payments of ¥83 million to Sony Corporation for remuneration expenses of
employees that it has seconded to the subsidiaries of SFH.



The subsidiaries of SFH made other payments of ¥96 million in exchange for miscellaneous products andservices provided to the subsidiaries of SFH by Sony Corporation.



As of March 31, 2009, ¥73 million of “accounts receivable”, ¥764 million of “accrued expenses and others”,¥712 million of “unearned revenue” and ¥3,554 million of “guarantee deposits received” were outstanding
in relation to transactions between the subsidiaries of SFH and Sony Corporation.

Transactions between the subsidiaries of SFH and the Sony Group companies for the fiscal year ended March 31,
2009, are as follows;

The subsidiaries of SFH entered into a number of lease and service agreements with Sony FinanceInternational Inc. (“Sony Finance”), a wholly-owned subsidiary of Sony Corporation, which engages in theleasing and credit card business in Japan. The subsidiaries of SFH made payments of ¥314 million forleasing of office space and office equipment, ¥856 million for collecting services, ¥146 million of individualloan guarantee services, and ¥79 million for agency services provided by Sony Finance.



As of March 31, 2009, ¥23,130 million of “accounts receivable”, ¥72 million of “deposit” and ¥14 millionof “lease obligation” were outstanding in relation to transactions between the subsidiaries of SFH and SonyFinance.

The subsidiaries of SFH employ the services of Frontage Inc. (“Frontage”), an advertising media purchaserthat is a consolidated subsidiary of Sony Corporation. The subsidiaries of SFH made payments of ¥3,769
million for advertisement provided by Frontage to the subsidiaries of SFH.



As of March 31, 2009, ¥468 million of “accrued expenses and others” were outstanding in relation totransactions between the subsidiaries of SFH and Frontage.

Notes:(i) The abovementioned amounts for the fiscal year ended March 31, 2009, exclude consumption taxes and others, while theoutstanding amounts as of March 31, 2009, include consumption taxes and others.
(ii) The SFH Group make payments to Sony Corporation for remuneration expenses of employees that it has seconded to the SFH
Group based on the agreements on the lease of employees.
(iii) As part of its investment, Sony Life Insurance Co., Ltd., has leased the building to Sony Corporation for use as its corporate
headquarters, starting from October 2006. The rental is determined based on the discussions by reference to real estate appraisal.
Sony Life Insurance Co., Ltd., takes the land of this site on lease from Sony Corporation and the rental fee has been determinedby reference to the actual transactions of the vicinal land.
(iv) “Sony” trademark and trade name, which is used in the trade name of the SFH Group, belongs to Sony Corporation and eachof the SFH Group companies has entered into royalty agreements with Sony Corporation pursuant to which the SFH Group ispermitted to use the Sony name. Royalty fees are paid to Sony Corporation based on this agreements.
(v) Other transactions are determined in the same way of general transactions in consideration of fair market value.

Notes for parent company and important related companies Parent company
Sony Corporation lists its shares of common stock on Tokyo Stock Exchange, Osaka Securities Exchange, NewYork Stock Exchange (United States) and London Stock Exchange (United Kingdom).

30

4.

Investments in Securities
Trading securities:
Yen in millions
March 31, 2008

March 31, 2009

Consolidated balance
sheet amount

Valuation gains/losses
charged to income

Consolidated balance
sheet amount

Valuation gains/losses
charged to income¥302,375¥(55,462)¥260,401¥(73,616)

Held-to-maturity securities with fair values:
Yen in millions
March 31, 2008
Consolidated
Grossbalance sheet unrealized
amountgains

Bonds:
Japanese government
and municipal
bonds
Japanese corporate
bonds
OthersTotal

March 31, 2009

Gross
unrealized
lossesFair value

Consolidatedbalance sheet
amountGrossunrealized
gains¥50,932

¥659

¥(36)

¥51,555¥1,412,868¥29,884

4,996

83

(0)

5,079

10,206120

807¥56,737

33
¥776

¥(37)

841
¥57,476

42,524¥1,465,599

15¥30,020Grossunrealized
lossesFair value¥(2,109) ¥1,440,643(27)

10,299(167)
42,372¥(2,304) ¥1,493,315

Available-for-sale securities with fair values:
Yen in millions
March 31, 2008

March 31, 2009

Acquisition
cost

Gross
Gross
unrealized unrealized
gains
lossesConsolidated
Acquisition
balance sheet
cost
amountGrossunrealized
gains

Gross
unrealized
lossesConsolidatedbalance sheet
amount¥1,511,519¥51,130¥(7,092)¥1,555,557¥1,057,037¥31,493¥(3,640)¥1,084,890

476,018

17,168(7,001)

486,184545,918

5,528(17,767)

533,679

126,286
49,364335,423
5,676¥2,449,248 ¥123,339(3,744)(14,620)¥(32,459)

171,906
326,480¥2,540,128

46,072315,998¥1,965,026

4,115
790
¥41,928(2,217)(18,105)¥(41,732)

47,970298,683¥1,965,222

Bonds:
Japanese government
and municipal
bonds
Japanese corporate
bonds

Equity securities
Others
Total

Note:
Impairment losses amounting to ¥6,697 million and ¥34,402 million were recognized for "Available-for-sale securities" with market
value for the year ended March 31, 2008 and 2009, respectively. Impairment losses are principally recorded when their fair value asof the end of the fiscal year has declined by 30% or more from the book value.

Available-for-sale securities sold during the period:

Sales
Gains on sales
Losses on sales

Yen in millions
Year ended March 31
2008
2009
¥672,761¥861,922
24,82632,456
2,765
18,02431

Available-for-sale securities that are not marked to market:

Investment in affiliates
Available-for-salesecurities:
Equity securities
OthersTotal

Yen in millions
March 312008
2009
¥1,000¥2,795
4
30,195¥31,199

4
25,201¥28,002

Note:
Impairment losses of ¥399 million were recorded for "Available-for-sale securities" that are not marked to market for the year ended
March 31, 2009. Impairment losses are principally recorded when their fair value as of the end of the fiscal year has declined by
50% or more from the acquisition price.

Reclassification of debt securities:
As the Practical Issue Task Force No. 26 “Tentative Solution on Reclassification of Debt Securities” (December 5, 2008)
is applicable from the date of its publication until March 31, 2010, a part of “securities” was reclassified from“available-for-sale securities” to “held-to-maturity securities”. This reclassification is the result of recent drastic changes
in the market environment that have severely affected the liquidity of these securities and made them difficult to sell at
appropriate prices.
Yen in millions
Securities
Bonds linked to the Nikkei 225 stock index
Market value as of December 17, 2008:¥41,266
Market value as of March 31, 2009:¥41,262
Consolidated balance sheet amount as of March 31, 2009:¥41,426
Net unrealized gains(losses) on other securities, net of¥(8,658)
taxes as of March 31, 2009:

The future redemption schedule of available-for-sale securities with maturities and held-to-maturity securities:
Yen in millions
March 31, 2008

Bonds:
Japanese government
and municipal
bonds
Japanese corporate
bonds
OthersTotal

1 year or lessMore than 1 year
to 5 years

More than 5 years
to 10 years

Over 10 years¥ 38,797¥ 138,283¥ 992,668¥ 436,739

84,930304,025

75,091

27,132

48,958¥ 172,687

149,190¥ 591,500

88,047¥ 1,155,807

47,250¥ 511,12332

Yen in millions
March 31, 2009
1 year or lessMore than 1 year
to 5 years

More than 5 years
to 10 years

Over 10 years¥ 69,732¥ 195,995¥ 555,740¥ 1,676,290

109,188369,460

47,573

17,66375,150¥ 254,071

203,977¥ 769,432

25,851¥ 629,165

43,622¥ 1,737,577

Bonds:
Japanese government
and municipal
bonds
Japanese corporate
bonds
OthersTotal

5.

Investments in Monetary Trusts

Monetary trusts for trading purposes:
Yen in millions
March 31, 2008

March 31, 2009

Consolidated balance
sheet amount

Valuation
gains/losses charged
to incomeConsolidated balance
sheet amount

Valuation
gains/losses charged
to income¥63,203¥(2,831)¥32,020¥(4,413)

Other monetary trusts:
Yen in millions
March 31, 2008

Other monetary trusts

March 31, 2009

Gross
Gross
Consolidated
Acquisition unrealized unrealized balance sheet
gains
cost
lossesamountAcquisition
cost

Consolidated
Gross
Gross
unrealized unrealized balance sheet
lossesgains
amount¥804,405¥568,520¥17,478¥31,990¥(3,926)¥832,469¥(9,172)¥576,826

Notes)
1. Amounts of jointly invested monetary trusts that are included in the table above for the years ended March 31, 2008 and 2009 are¥50 million and ¥271 million, respectively.
2. Impairment losses amounting to ¥3,148 million and ¥12,605 million were recognized for "Other monetary trusts" withmarket value for the year ended March 31, 2008 and 2009, respectively. Impairment losses are accounted forprincipally if market value of each security decreases equal to or more than 30% of its book value at the end of theperiod.
6.

Derivative financial instruments
The Companies utilize various types of derivative financial instruments, including interest rate-related transactions (such as
interest rate futures and interest rate swaps), currency-related transactions (such as currency swaps, foreign exchanges
contracts and currency options), equity-related transactions (such as equity price index options, individual equity options andequity price index futures), bond-related transactions (such as futures and options), credit derivatives, etc.
The Companies use various derivative financial instruments primarily for hedging purposes to perform the integrated
controls of assets and liabilities. Certain derivative transactions can be executed for trading purposes within a certain limit inaccordance with the respective internal risk management policies set at a company level.
Those derivative transactions, as well as on-balance sheet assets, consist mainly of market risks, credit risks and market

33liquidity risks. Market risks are the risks of losses due to changes in the value of derivative transactions as a result of
unfavorable market fluctuations in interest rates, securities prices, foreign exchange rates and other factors. Credit risks are
the risks of losses due to a decline in the value of derivative transactions as a result of deterioration in the financial positionof individual obligors, issuers of the debt obligations we hold, or counterparties to the derivatives and other contracts wehave entered into. Market liquidity risks are the risks of losses due to an inability to conduct market transactions, inparticular from an inability to change our market position at a given time, as well as the risks of losses if we are forced tocomplete transactions under unfavorable market conditions, in each case due to market turmoil or other factors.
SFH formulates fundamental principles for risk management activities at the holding company level and the respective
operating subsidiaries establish risk management structures and carry out the risk management activities, based on thefundamental principles. The respective risk management departments of the Companies periodically evaluate, monitor andmeasure risks related to derivative financial instruments, and submit periodic report on those conditions to our Board of
Directors and Executive Committee of SFH and each subsidiary. The Board of Directors and Executive Committee thenapprove the fundamental principles and appropriate limits applied to risk management activities. In addition, as a
subcommittee of the Board of Directors and Executive Committee, SFH holds Risk Management Meeting, and othercommittees such as Investment Committee, Risk Management Committee, Assets Management Meeting and ALM
Committee, etc., each subsidiary implements appropriate risk management frameworks. The risk management structure
includes separate front, middle and back office divisions to deal with derivative transactions. Accordingly, inception andexecution of derivative transactions and risks, positions and gains and losses related to derivative financial instruments arestrictly monitored.
The following tables show a summary of the notional amounts and current market or fair values of derivative financial
instruments held as of March 31, 2008 and 2009. Notional amounts do not represent exposure to credit loss.
(1) Interest rate derivatives:
Yen in millions
March 31, 2008
Notional amount
Valuation
Over
Total
1 yearFair value gains/losses
Transaction listed on exchange:
Interest rate futures¥380,000
Over-the-counter transactions:Interest rate swaps
74,941Total--¥ (103)¥ (103)¥ 63,916-(1,536)¥ (1,640)(1,536)¥ (1,640)

Yen in millions
March 31, 2009
Notional amount
Valuation
Over
Total
1 yearFair value gains/losses
Transaction listed on exchange:
Interest rate futures
Over-the-counter transactions:Interest rate swaps¥169,864
Total
-

-

-

-

¥151,640-¥ (4,738)¥ (4,738)¥ (4,738)¥ (4,738)

Notes)
1. The above transactions are valuated at the market value, and the valuation gains (losses) are recorded in the consolidated
statements of income. Derivative transactions which hedge accounting is applied are not included in the amounts above.
2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo International Financial
Futures Exchange and others. Market value of Over-the-counter transactions is calculated mainly using discounted present value
and others.

34

(2) Currency derivatives:
Yen in millions
March 31, 2008
Notional amount
Over
Total
1 yearFair value
Over-the-counter transactions:
Currency swaps
Forward foreign exchanges:
Sold
BoughtCurrency options:
Sold
Total

Over-the-counter transactions:
Currency swaps
Forward foreign exchanges:
Sold
BoughtForeign Exchange Margin
Transactions:
Sold
BoughtCurrency options:
Sold
Total

Valuation
gains/losses¥ 4,146¥ 238¥ (562)¥ (562)

6,980
119,975-68(2,997)68(2,997)

968
-

-

(10)
¥ (3,500)10¥ (3,480)

Yen in millions
March 31, 2009
Notional amount
Over
Total
1 yearFair value

Valuation
gains/losses¥ 1,791-¥ (11)¥ (11)

115,880
268,513-(1,053)
4,716(1,053)
4,716

15,66814,009

-

451
393

451
393

404
-

-

(13)
¥ (4,482)(5)¥ (4,490)

Notes)
1. The above transactions are valuated at the market value, and the valuation gains (losses) are recorded in the consolidated
statements of income. Derivative transactions which hedge accounting is applied are not included in the amounts above.
2. Market value is calculated mainly using discounted present value and others.

(3) Equity derivatives:
Yen in millions
March 31, 2008
Notional amount
Over
Total
1 yearFair value
Transaction listed on exchange:
Equity price index options
Total

Transaction listed on exchange:
Equity price index options
Over-the-counter transactions:
Equity price index options
Total

¥ 145
-

-

Valuation
gains/losses

¥0
¥0

¥3
¥3

Yen in millions
March 31, 2009
Notional amount
Over
Total
1 yearFair value

Valuation
gains/losses

-

-

-

-

-

-

-

-

35

Notes)1. The above transactions are valuated at the market value, and the valuation gains (losses) are recorded in the consolidated
statements of income.
2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo Stock Exchange.
Market value of Over-the-counter transactions is calculated mainly using discounted present value and option pricing models.

(4) Bond derivatives:
Yen in millions
March 31, 2008
Notional amount
Over
Total
1 yearFair value
Transaction listed on exchange:
Bond futures
Over-the-counter transactions:
Bond options
Total

Transaction listed on exchange:
Bond futures
Over-the-counter transactions:
Bond options
Total

Valuation
gains/losses¥ 8,854-¥ 4,840¥ (141)

16,000--(9)¥ 4,830

17¥ (124)

Yen in millions
March 31, 2009
Notional amount
Over
Total
1 yearFair value

Valuation
gains/losses

-

-

-

-

-

-

-

-

Notes)
1. The above transactions are valuated at the market value and the valuation gains (losses) are recorded in the consolidated statements
of income.
2. Market value of transactions listed on exchange is calculated mainly using the closing prices on the Tokyo International Financial
Futures Exchange and others. Market value of Ober-the-counter transactions is calculated mainly using discounted present value
and option pricing models.

(5) Credit derivatives transactions:
Yen in millions
March 31, 2008
Notional amount
Over
Total
1 yearFair value
Over-the-counter transactions:Credit default options
Sold
BoughtTotal

Over-the-counter transactions:Credit default options
Sold
BoughtTotal¥ 2,997
16,789
-

¥ (7)
630
¥ 622

¥ (7)
630
¥ 622

Yen in millions
March 31, 2009
Notional amount
Over
Total
1 yearFair value

Valuation
gains/losses¥ 981
10,837-¥ 997
16,789-Valuation
gains/losses

¥ 981
9,837
-

36

¥ (223)
1,135
¥ 912

¥ (223)
1,135
¥ 912

Notes)1. The above transactions are valuated at the market value, and the valuation gains (losses) are recorded in the consolidated
statements of income.
2. Market value is calculated based on factors such as price of the reference assets and contract term.

7.

Per Share Information
Net income per share is calculated based on the weighted-average number of shares of common stock outstanding
during the period. For the year ended March 31, 2008 and 2009, net income per share was ¥11,357.53 and ¥14,125.14,
respectively. There were no potential dilutive securities. Net assets per share, calculated based on the number of sharesof common stock outstanding as of March 31, 2008 and 2009, were ¥120,288.66 and ¥94,205.75, respectively.
The basis for this calculation for the year ended March 31, 2008 and 2009 is net income of ¥24,255 million and¥30,722 million, the entire amount of which is applicable to common stocks. The weighted-average number of shares
outstanding for the year ended March 31, 2008 and 2009 were 2,135,655 shares and 2,175,000 shares, respectively.

8.

Subsequent Events
There were no applicable subsequent events.

V. Other Information
1. Changes in Executive Management(1) Changes in Representative Directors
Name

Newly Appointed Position

Current Position

Katsumi Ihara

Executive Vice President andCorporate Executive, and Executive Deputy

Representative Director

President of Sony Corporation(2) Date of appointment
June 23, 2009

SFH’s consolidated results* are prepared in accordance with accounting principles and practices generally accepted in Japan. As
such, these figures differ in significant respects from financial information reported by SFH’s parent company, Sony
Corporation, which prepares its financial statements in accordance with accounting principles and practices generally acceptedin the United States.
* The scope of consolidation for SFH’s consolidated results included Sony Financial Holdings Inc., Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony
Bank Inc., Sony Life Insurance (Philippines) Corporation, and Sony Bank Securities Inc. The scope of consolidation for SFH’s consolidated results for the year
ended March 31, 2009 also included AEGON Sony Life Planning Co., Ltd. as an affiliated company accounted for under the equity method.

On May 14, 2009, Sony Corporation announced its consolidated financial results for the year ended March 31, 2009. SFH
Group companies constitute the majority of Sony Group’s Financial Services segment. However, the scope of Sony Group’s
Financial Services segment differs from the scope of SFH’s consolidated results. For the scope of Sony Group’s Financial
Services segment, please refer to the May 14, 2009, news release from Sony Corporation.
Forward-looking statements may include—but are not limited to—statements using words such as “believe,” “anticipate,” “plan,” “strategy,” “expect,”“forecast,” “predict,” “possibility” and similar words that describe future operating activities, financial performance, events or conditions. Forward-looking
statements, whether spoken or written, are based on judgments made by the management of the SFH Group based on information that is currently available toit. As such, forward-looking statements are subject to various risks and uncertainties, and actual results may vary substantially from those expressed or impliedin forward-looking statements. Consequently, investors are cautioned not to place 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.

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For inquiries: Masaaki Konoo or Kayoko Miyako
Corporate Communications & Investor Relations Dept. Sony Financial Holdings Inc.
E-mail: press@sonyfh.co.jp
Telephone: +81-3-5785-1074
Website of Sony Financial Holdings Inc. http://www.sonyfh.co.jp/index_en.html

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