May 25, 2007
Sony Financial Holdings Inc.

Consolidated Financial Results for the Fiscal Year ended March 31, 2007
(Prepared in Accordance with Japanese GAAP)Tokyo, May 25, 2007 -- Sony Financial Holdings Inc. (“SFH”) today announced its consolidated financial results
for the fiscal year ended March 31, 2007 (from April 1, 2006 to March 31, 2007).
(in millions of yen)

Ordinary revenues
Ordinary profit
Net income

For the year ended
March 31, 2006

For the year ended
March 31, 2007

Change (%)

758,71125,377
11,537759,280
18,354
10,021

+0.1
-27.7
-13.1

Highlights
Ordinary revenues increased 0.1% from the previous fiscal year to ¥759.2 billion. This was the result of
increases in ordinary revenues from the non-life insurance business and the banking business being largely offset
by a decrease in ordinary revenues from the life insurance business.
In the life insurance business, although income from insurance premiums increased associated with solid growthof insurance in force, gains on separate accounts decreased compared to the previous fiscal year, when Japanesestock prices rose significantly. As a result, ordinary revenues from the life insurance business decreased 1.0%
to ¥689.8 billion. Ordinary revenues from the non-life insurance business increased 11.6% year-on-year to¥51.0 billion as a result of an increase in net premiums written associated with steady growth in the number ofpolicies, primarily automobile insurance policies. Ordinary revenues from the banking business increased
13.0% from the previous fiscal year to ¥19.4 billion, due mainly to an increase in interest income, resulting froman increase in the balance of investment assets associated with business expansion.
Ordinary profit decreased 27.7% from the previous fiscal year to ¥18.3 billion. Decreases in ordinary profit
from the life insurance business and the banking business more than offset an improvement in ordinary profit in
the non-life insurance business.
Ordinary profit from the life insurance business decreased 38.9% year-on-year to ¥14.8 billion, for reasons
including an increase of policy reserve. In the non-life insurance business, an increase in ordinary revenues anda significant improvement in net expense ratio resulting from appropriate control over operating expenses
contributed to turning an ordinary loss of ¥0.7 billion in the previous fiscal year to an ordinary profit of ¥2.0
billion, an improvement of ¥2.8 billion. The non-life insurance business achieved profitable results on afull-year basis for the first time since it commenced operations in 1999. Ordinary profit from the banking
business decreased 20.6% year-on-year to ¥1.3 billion due to a slight decrease in gross operating profit and anincrease in general and administrative expenses such as advertisement expenses.
Net income decreased 13.1% from the previous fiscal year to ¥10.0 billion, as the above-mentioned decrease inordinary profit was partially offset by a decrease in extraordinary losses. The decrease in extraordinary losses
was the result of a decrease in provision for reserves for price fluctuations compared to the previous fiscal year.
Total assets as of March 31, 2007 increased 10.4% year-on-year to ¥4,323.7 billion.

1

Segment Information
Ordinary revenues(in millions of yen)
For the year ended
March 31, 2006

For the year ended
March 31, 2007

Change (%)

Life insurance business

696,685

689,871-1.0

Non-life insurance business45,70351,020+11.6

Banking business

17,225

19,470+13.0

Subtotal

759,614760,362

+0.1

(903)

(1,081)-

758,711759,280+0.1

Corporate and elimination
Consolidated

Ordinary profit (loss)(in millions of yen)
For the year ended
March 31, 2006
Life insurance business

For the year ended
March 31, 2007

Change (%)

24,37914,888-38.9

Non-life insurance business

(764)

2,044

-

Banking business

1,705

1,354

-20.6

Subtotal

25,32018,286

-27.8

57

67

+17.4

25,377

18,354-27.7

Corporate and elimination
Consolidated

Note: Ordinary profit in the banking business in the year ended March 31, 2006 included a one-time amortization of
goodwill associated with purchase of and subscription for shares of Sony Bank Inc. Therefore the amount ofordinary profit in the year ended March 31, 2006 shown above differs from the amount of non-consolidated
ordinary profit of Sony Bank Inc. for the year.

2

Supplementary Information on Significant Subsidiaries
The following information refers to the performance of SFH’s significant subsidiaries -- Sony Life Insurance Co.,
Ltd. (“Sony Life”), Sony Assurance Inc. (“Sony Assurance”), and Sony Bank Inc. (“Sony Bank”) -- for the fiscal
year ended March 31, 2007.

Sony Life (Non-consolidated)
Ordinary revenues of Sony Life on a non-consolidated basis decreased 1.0% from the previous fiscal year to¥689.5 billion. Although income from insurance premiums increased with solid growth of insurance in force,
gains on separate accounts decreased compared to the previous fiscal year, when Japanese stock prices rosesignificantly. Ordinary profit decreased 38.9% year-on-year to ¥14.8 billion, for reasons including an increaseof policy reserve. Core profit decreased 14.7% year-on-year to ¥24.3 billion. Net income decreased 22.1%
from the previous fiscal year to ¥7.4 billion, as a decrease in extraordinary losses, resulting from a decrease inprovision for reserves for price fluctuations, partially offset the decrease in ordinary profit.
Income from insurance premiums increased 4.3% from the previous fiscal year to ¥605.5 billion, as a result of anincrease in insurance in force. Net investment income decreased 32.1% year-on-year to ¥70.5 billion.
Insurance claims and other payments decreased 5.4% from the previous fiscal year to ¥219.3 billion due to adecrease in payment of maturity insurance claims. Operating expenses increased 6.4% from the previous fiscal
year to ¥87.3 billion.
Insurance in force for individual life insurance and individual annuities increased steadily to ¥30,244.4 billion, up
4.0% from the end of the previous fiscal year. The lapse and surrender rate for individual life insurance andindividual annuities improved by 0.05 percentage points to 5.79%, improving for the fourth consecutive year.
Annualized premiums for individual life insurance and individual annuities in force increased 6.4% from the endof the previous fiscal year to ¥504.6 billion. Of this amount, annualized premiums from medical protection andliving benefit protection products amounted to ¥117.4 billion, up 7.3% from the end of the previous fiscal year.
On a policy amount basis, new insurance sales for individual life insurance and individual annuities increased
1.1% year-on-year to ¥3,429.4 billion, primarily due to robust sales of new products such as insurance products
for corporate customers and nursing care protection products for individuals. Annualized premiums from new
insurance sales increased 6.1% year on year to ¥65.5 billion. Of this amount, annualized premiums frommedical protection and living benefit protection products decreased 0.4% from the previous fiscal year to ¥14.4
billion.
As of March 31, 2007, Sony Life had a solvency margin ratio of 1,852.0%. Unrealized gains and losses on
securities decreased 2.3% year-on-year to ¥198.2 billion.
(1) Insurance in force(Policy amount basis)(in billions of yen)
As of March 31, 2006
Individual life insurance

As of March 31, 2007

Change (%)

28,908.8

30,038.1+3.9

Individual annuities

175.7

206.3

+17.4

Total

29,084.5

30,244.4+4.0

Note: Individual annuities in force is the sum of annuity assets as of the time of commencement of annuity payments
for individual annuities in respect of which annuity payments have not commenced and policy reserves forindividual annuities in respect of which annuity payments have commenced.

3

(Number of policies basis)(in thousands)
As of March 31, 2006
Individual life insurance

As of March 31, 2007

Change (%)

3,815

4,109

+7.7

Individual annuities

29

35

+19.9

Total

3,845

4,145

+7.8

(2) New insurance sales(Policy amount basis)(in billions of yen)
For the year ended
March 31, 2006

For the year ended
March 31, 2007

3,361.2

3,396.8+1.1

Individual annuities

30.8

32.5

+5.6

Total

3,392.1

3,429.4+1.1

Individual life insurance

Change (%)

Note: New individual annuities sales indicate the number of new annuities resources.

(Number of policies basis)(in thousands)
For the year ended
March 31, 2006
Individual life insurance

For the year ended
March 31, 2007

Change (%)

507

510

+0.8

Individual annuities

5

6

+7.2

Total

512

517

+0.9

(3) Annualized premiums
Insurance in force(in millions of yen)
As of March 31, 2006
Individual life insurance

As of March 31, 2007

Change (%)

468,081497,570+6.3

Individual annuities

6,214

7,121

+14.6

Total

474,296504,691+6.4

Of which, medical protection,living benefit protection, etc.

109,432

117,466+7.3

4

New insurance sales
For the year ended
March 31, 2006

(in millions of yen)
For the year ended
Change (%)
March 31, 2007

Individual life insurance

60,39264,204+6.3

Individual annuities

1,398

1,337

- 4.4

Total

61,79165,541+6.1

Of which, medical protection,
14,543- 0.4
14,479living benefit protection, etc.
Notes: (1) Annualized premiums refer to an amount that is calculated by multiplying individual premium amounts by acoefficient that differs depending on the premium payment methods, thereby converting the figure to a
per-year premium. (For single-payment policies, premiums are divided by the coverage period.)(2) Medical protection and living benefit protection, etc. corresponds to the annualized premiums relating to
medical protection benefits (hospitalization benefit, surgical procedure benefit, etc.) and products withliving benefit protection (benefits for specific illness, nursing care benefits, etc.).

(4) Selected measures
For the year ended
March 31, 2006

(in millions of yen)
For the year ended
Change (%)
March 31, 2007

Ordinary revenues

696,426

689,591- 1.0

Ordinary profit

24,35914,895- 38.9Core profit

28,56424,366- 14.7

Net income
Income from insurance
premiums

9,616

7,494

- 22.1

580,516

605,561+4.3

108,438

78,722- 27.4

231,881219,347- 5.4

Investment expenses

4,561

8,184

+79.4

Operating expenses

82,04087,328

+6.4

5.84

5.79

- 0.05 pt

Investment income
Insurance claims and otherpayments

Lapse and surrender rate (%)(Note)

As of March 31, 2006
Total assets
Solvency margin ratio (%)
Unrealized gains and losses on
securities

As of March 31, 2007

Change (%)

3,103,241

3,445,970+11.0

1,547.0

1,852.0+305.0 pt

202,839

198,259- 2.3

Note: The lapse and surrender rate above does not reflect any modifications due to the reduction, increase andreinstatement of the total amount of insurance in force.

5

Sony Assurance (Non-consolidated)
Ordinary revenues of Sony Assurance increased 11.6% year-on-year to ¥51.0 billion as a result of an increase in
net premiums written associated with steady growth in the number of automobile insurance policies, Sony
Assurance’s mainstay product. An increase in ordinary revenues and a significant improvement in net expense
ratio resulting from appropriate control over operating expenses contributed to turning an ordinary loss of ¥0.7
billion in the previous fiscal year to an ordinary profit of ¥2.0 billion, an improvement of ¥2.8 billion. Net
income was ¥1.5 billion, an improvement of ¥2.0 billion from the previous fiscal year. Sony Assurance
achieved profitable results on a full-year basis for the first time since it commenced operations in 1999.
Steady growth in the number of policies, mainly in automobile insurance policies, resulted in an 11.4%
year-on-year increase in direct premiums written and an 11.5% year-on-year increase in net premiums written to¥50.1 billion and ¥50.4 billion, respectively. Net losses paid increased along with the increased number ofpolicies to ¥24.1 billion, up 14.3% from the previous fiscal year. The net loss ratio rose 1.3 percentage points
from the previous fiscal year to 53.6%. As a result of enhanced efficiencies, primarily in operations, the net
expense ratio improved by 4.0 percentage points year-on-year to 26.3%. As a result, underwrinting profits forthe year amounted to ¥1.6 billion and the combined ratio – the sum of the net loss ratio and the net expense ratio– improved by 2.6 percentage points to 79.9%.
As of March 31, 2007, Sony Assurance had a solvency margin ratio of 1,009.7%.

(1) Direct premiums written(in millions of yen)
For the year ended
March 31, 2006

For the year ended
March 31, 2007

Change (%)

Fire

279

174

- 37.6

Marine---Personal accident

4,681

5,812

+24.2

Automobile
Compulsory automobile
liability

40,03944,126

+10.2

-

-

-

44,99950,112

+11.4

Total
(2) Net premiums written(in millions of yen)
For the year ended
March 31, 2006

For the year ended
March 31, 2007

Change (%)

Fire

21

12

- 42.7

Marine

38

43

+14.6

Personal accident

4,827

5,947

+23.2

Automobile
Compulsory automobile
liability

39,85843,931

+10.2

533

532

- 0.2

45,27850,467

+11.5

Total

6

(3) Net losses paid(in millions of yen)
For the year ended
March 31, 2006

For the year ended
March 31, 2007

Change (%)

Fire

0

0

+446.7

Marine521+317.9

724

928

+28.2

20,07322,802

+13.6

321

399

+24.2

21,12424,151+14.3

Personal accident
Automobile
Compulsory automobile
liability
Total(4) Selected measures(in millions of yen)
For the year ended
March 31, 2006
Ordinary revenues

For the year ended
March 31, 2007

Change (%)

45,70351,020+11.6

Ordinary profit (loss)

(764)

2,044

-

Net income (loss)

(441)

1,598

-

Net loss ratio (%)

52.3

53.6

+1.3 pt

Net expense ratio (%)

30.3

26.3

- 4.0 pt

Underwriting profit(1,108)1,610-

As of March 31, 2006

As of March 31, 2007

Change (%)

Total assets

56,10367,468+20.3

Solvency margin ratio (%)

976.1

1,009.7+33.6 pt

Sony Bank (Non-consolidated)
Ordinary revenues of Sony Bank increased 13.0% from the previous fiscal year to ¥19.4 billion, due mainly to anincrease in interest income resulting from an increase in the balance of investment assets associated with businessexpansion. Ordinary profit decreased 39.2% year-on-year to ¥1.3 billion. This was due to a decrease in grossoperating profit and an increase in general and administrative expenses. Net income decreased 68.6% from theprevious fiscal year to ¥1.0 billion, because of the above-mentioned factors and corporate taxes associated with adeferred tax liability.
Gross operating profit decreased 3.9% year-on-year to ¥9.0 billion mainly due to declines in net other income.
Within gross operating profit, net interest income amounted to ¥4.5 billion, down 4.4% from the previous fiscal
year, mainly as a result of an increase in interest expenses. Net fees and commissions amounted to ¥0.5 billion,
up 17.0% year-on-year resulting from an increase in securities-related commissions primarily associated with anincrease in the outstanding amount of investment trusts. Net other income amounted to ¥3.9 billion, down 5.6%
year-on-year, primarily as the result of decreases in market investment profit and income from customers’ foreignexchange transactions.
7As of March 31, 2007, the total of deposited assets (the sum of total deposits and total investment trusts)
increased by 25.7% from the end of the previous fiscal year to ¥848.8 billion, particularly due to an increase inyen time deposits. Of the total of deposited assets, deposits totaled ¥752.3 billion, up 25.4% from the end of theprevious fiscal year. The balance of foreign currency deposits decreased slightly, reflecting the depreciation of
the yen over the period of the fiscal year. Yen deposits, on the other hand, achieved a record year-on-yearincrease, driven by a rise in interest rates in Japan and various Sony Bank promotional campaigns. Investment
trusts increased 28.4% year-on-year to ¥96.5 billion.
The balance of loans increased 18.9% from the end of the previous fiscal year to ¥284.7 billion. Of this figure,mortgage loans accounted for ¥278.0 billion.
As of March 31, 2007, the number of accounts increased 61 thousand from the end of the previous fiscal year to491 thousand. Sony Bank’s capital adequacy ratio as of March 31, 2007, calculated under domestic criteria was
11.49%.

(1) Deposited assets (total of deposits and investment trusts) and the number of accounts(in billions of yen)
As of March 31, 2006

As of March 31, 2007

599.9

752.3

+25.4

Yen deposits

451.0

604.4

+34.0

Foreign currency deposits

148.9

147.8

- 0.7

Investment trusts

75.1

96.5

+28.4

Total of deposited assets
Number of accounts(thousand)

675.1

848.8

+25.7

430

491

+14.3

Deposits

Change (%)(2) Loans(in billions of yen)Mortgage loans

As of March 31, 2006

As of March 31, 2007

234.3

278.0

+18.6

5.0

6.6

+31.1

239.4

284.7

+18.9

Other loans
Total loans

8

Change (%)

(3) Selected measures(in millions of yen)
For the year ended
March 31, 2006

For the year ended
March 31, 2007

Ordinary revenues

17,225

19,470+13.0

Ordinary profit

2,228

1,354

- 39.2

Net income

3,258

1,023

- 68.6Gross operating profit

9,420

9,056

- 3.9

Net interest income

4,800

4,588

- 4.4

Net fees and commissions

471

551

+17.0

Change (%)

Net other income
General and administrative
expenses

4,149

3,916

- 5.6

7,091

7,665

+8.1

Net operating profits

2,245

1,366

- 39.1

As of March 31, 2006
Total assets
Capital adequacy ratio (%)(domestic criteria)

As of March 31, 2007

Change (%)

754,768

806,848

+6.9

9.24

11.49

+2.25 pt

Note: Capital adequacy ratio as of March 31, 2007 was calculated based on the standard stipulated in the FSA public
ministerial announcement No. 19 of 2006, while capital adequacy ratio as of March 31, 2006 was calculated
based on the standard stipulated in the former public ministerial announcement.

Outlook for the Fiscal Year Ending March 31, 2008
In the life insurance business, insurance in force is expected to continue to increase during the fiscal year ending
March 31, 2008. Accordingly, both Sony Life’s income from insurance premiums and its annualized premiums
from insurance in force are expected to grow during the fiscal year ending March 31, 2008. Investment yield on
Sony Life’s general account assets is expected to deteriorate, but investment yield for purpose of calculating coreprofit is anticipated to rise. Because of the expected increased investment yield for purpose of calculating coreprofit, combined with the expected decrease in assumed rates of return, the amount of negative spread is expected
to decrease. Core profit is expected to remain flat compared to the fiscal year ended March 31, 2007.
In the non-life insurance business, Sony Assurance is expected to continue to increase its number of policies inforce, and net premiums written for the fiscal year ending March 31, 2008 are expected to increase.
We expect that Sony Bank will increase the total of deposited assets (the sum of total deposits and total
investment trusts) and loans for the fiscal year ending March 31, 2008, in part by enhancing its lineup of products
and services.
Cautionary Statement
SFH maintains its accounting records and prepares its financial statements in conformity with generally accepted accounting principles andpractices in Japan (“Japanese GAAP”). In contrast, SFH’s parent company, Sony Corporation reports its financial statements inaccordance with generally accepted accounting principles and practices in the United States (“U.S. GAAP”), which differ in significant
respects from Japanese GAAP.
The scope of SFH’s consolidation includes Sony Financial Holdings Inc., Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank
Inc., and Sony Life Insurance (Philippines) Corporation.
Sony Corporation has announced its consolidated financial results for the year ended March 31, 2007, and those results included theperformance of its Financial Services segment. Although the majority of Sony Corporation’s Financial Services segment is comprised of
the SFH Group, the scope of Sony Corporation’s Financial Services segment is not identical to the scope of SFH’s consolidation.

9

Disclaimer
Statements made in this press release with respect to SFH’s current plans, estimates, strategies and beliefs and other statements that are nothistorical facts are forward-looking statements about the future performance of the SFH Group. Forward-looking statements include, but
are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,”“project,” “anticipate,” “may” or “might” and words of similar meaning in connection with a discussion of future operations, financial
performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials
released to the public. These statements are based on management’s assumptions and beliefs in light of the information currently
available to it. SFH cautions you that a number of important risks and uncertainties could cause actual results to differ materially fromthose discussed in the forward-looking statements, and therefore you should not place undue reliance on them. You also should not relyon any obligation of SFH to update or revise any forward-looking statements, whether as a result of new information, future events orotherwise. SFH disclaims any such obligation.

For inquiries:
Sony Financial Holdings Inc. Corporate Communications
Tel: 81-(0)3-5785-1074
Website of Sony Financial Holdings Inc.: http://www.sonyfh.co.jp/english/

10Consolidated Financial Summary
for the Fiscal Year ended March 31, 2007
May 25, 2007
Company name:
Representative:
For inquiry:

Sony Financial Holdings Inc.
(URL: http://www.sonyfh.co.jp/english/)
Teruhisa Tokunaka, President, Representative Director
Masaaki Konoo, General Manager – IR Dept.

Consolidated financial results for the year ended March 31, 2007
(in millions of yen, discarding fractional amounts of less than 1 million yen)
(1) Operating results
Ordinary Revenues
millions of yen

For the year ended
March 31, 2007
For the year ended
March 31, 2006

For the year ended
March 31, 2007
For the year ended
March 31, 2006

Ordinary Profit

Net Income% changemillions of yen% changemillions of yen% change759,280(+0.1 )

18,354( -27.7 )10,021(-13.1 )

758,711(+16.1 )

25,377( +106.8 )

11,537(+81.0 )Net Income per ShareNet Income per Share(Fully Diluted)

yen

yen

4,772.09-

5,494.28-

Notes: 1. Average number of shares outstanding (Consolidated): For the year ended March 31, 2007: 2,100,000 shares
For the year ended March 31, 2006: 2,100,000 shares
2. Changes in accounting policy: None

(2) Financial condition
Total Assets

Total Net Assets

Net Assets Ratio

Net Assets per Share

Capital Adequacy Ratio(domestic criteria)

millions of yen

millions of yen%

yen(preliminary basis) %As of March 31, 2007

4,323,780

270,179

6.1

126,549.38

12.01

As of March 31, 2006

3,917,048

263,040

6.7

125,257.54

9.99

Notes: 1. Number of shares outstanding (Consolidated): As of March 31, 2007: 2,100,000 shares
As of March 31, 2006: 2,100,000 shares
2. Net assets ratio is computed by dividing the amount of total net assets excluding minority interests by total assets at the end of
fiscal year.
3. The consolidated capital adequacy ratio as of March 31, 2007 was calculated based on the standard stipulated in the Financial
Service Agency (FSA) public ministerial announcement No. 20 of 2006, while the consolidated capital adequacy ratio as ofMarch 31, 2006 was calculated based on the standard stipulated in the former public ministerial announcement. Pursuant to
the FSA public ministerial announcement No. 20 of 2006, insurance subsidiaries are excluded from calculation of theconsolidated capital adequacy ratio.

(3)

Cash flows

For the year ended
March 31, 2007
For the year ended
March 31, 2006

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

258,171(87,215)(6,500)273,760

425,411(570,196)-

109,26311

Consolidated Balance Sheets [Unaudited]
As of March 31, 2006
Assets:Cash and due from banks
Call loans and bills bought
Commercial paper and other debt purchased
Monetary trusts
Securities
Loans
Property and equipment
Tangible fixed assets
Intangible fixed assets
Due from agencies
Due from reinsurers
Foreign exchanges
Other assets
Deferred tax assets
Reserve for possible loan losses
Total Assets
Liabilities:
Reserve for outstanding claims
Policy reserve
Reserve for policyholders’ dividends
Due to agencies
Due to reinsurers
Deposits
Call money and bills sold
Foreign exchanges
Other liabilities
Reserve for employees’ bonuses
Reserve for employees’ retirement benefits
Reserve for directors’ retirement benefits
Reserve for price fluctuations
Deferred tax liabilities
Deferred tax liabilities on land revaluation
Total Liabilities
Minority Interests
Stockholders’ Equity:
Common stock
Capital surplus
Retained earnings
Land revaluation
Net unrealized gains on other securities, net of taxes
Foreign currency translation adjustments
Total Stockholders’ Equity
Total Liabilities, Minority Interests and Stockholders’ Equity
Net Assets:
Common stock
Capital surplus
Retained earnings
Total shareholders’ equity
Net unrealized gains 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
Minority interests
Total Net Assets
Total Liabilities and Net Assets

12(in millions of yen)
As of March 31, 2007

61,30476,0742,000
658,351
2,625,081
326,392
76,5880419
5,748
82,0463,247(205)

40,996
332,459
718,492
2,649,768
381,52288,574
8,593
0
496
4,156
95,351
3,599(230)

3,917,048

4,323,780

28,4182,769,126
1,584
1,415
990
599,952
110,700
5
67,190
1,735
11,003202
20,12436,685706
3,649,842
4,165

29,9203,125,118
2,597
1,415
934
752,366
10,000075,367
1,906
11,212
241
20,90820,904706
4,053,601-

5,500
180,877(47,694)(1,475)
125,720113
263,040
3,917,048

-

-

5,500
180,877(44,173)
142,203
125,043(408)(1,475)
390
123,549
4,425-

270,179
4,323,780

Consolidated Statements of Income [Unaudited](in millions of yen)

For the year ended
March 31, 2006

For the year ended
March 31, 2007

Ordinary Revenues

758,711759,280

Ordinary Revenues from the Life Insurance Business:
Income from insurance premiums
Investment income
Other ordinary income

580,171
108,613
7,091

605,051
78,9284,874

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

45,298349
3250,495464
27

Ordinary Revenues from the Banking Business:
Interest income
Fees and commissions
Other operating income
Other ordinary income

9,472
1,635
6,039
7

12,763
1,587
5,065
21

Ordinary Expenses

733,333

740,926

Ordinary Expenses from the Life Insurance Business:
Insurance claims and other payments
Provision for policy reserve and others
Investment expenses
Operating expenses
Other ordinary expenses

231,885
344,939
4,610
81,982
8,744

219,352
349,666
8,231
87,27010,300Ordinary Expenses from the Non-life Insurance Business:
Underwriting expenses
Investment expenses
Operating, general and administrative expenses
Other ordinary expenses

33,1708
12,90315

36,166
3
12,39248

Ordinary Expenses from the Banking Business:
Interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other ordinary expenses

4,672
771
1,890
7,088
650

8,174
445
1,149
7,665
58

Ordinary Profit
Extraordinary Gains
Extraordinary Losses
Provision for Reserve for Policyholders’ Dividends

25,377
7,555
1,491

18,354
334
1,146
2,057

Income Before Income Taxes
Income Taxes - Current- Deferred
Minority Interests

16,33017,236(12,871)(427)

15,485
20,270(14,929)(123)

Net Income

11,537

10,021

13

Consolidated Statement of Changes in Net Assets [Unaudited](in millions of yen)
Shareholders’ Equity

Common stock

Capital surplus

Retained earnings

Treasury stock

Total
shareholders’equity5,500

180,877(47,694)-

138,682

Dividends from surplus--(6,500)-(6,500)Net income--

10,021-

10,021

Net changes of items other thanshareholders’ equity

-

-

-

-

-

Total changes during the period

-

-

3,521

-

3,521

5,500

180,877(44,173)-

142,203

Balance as of March 31, 2006
Changes during the period

Balance as of March 31, 2007

Valuation and Translation Adjustments
Net
Net deferred
unrealized
losses on
gains on otherhedgingsecurities, net instruments,of taxes
net of taxes

Balance as of March 31, 2006Land
revaluation,
net of taxes

ForeignTotal
currency
valuation andtranslationtranslation
adjustments adjustments

Minority
Interests

Total Net
Assets125,720-(1,475)

113

124,358

4,165

267,206

Dividends from surplus

-

-

-

-

-

-

(6,500)Net income

-

-

-

-

-

-

10,021

Net changes of items other thanshareholders’ equity

(676)

(408)

-

276

(808)

259

(548)

Total changes during the period

(676)

(408)

-

276

(808)

259

2,972

125,043(408)(1,475)

390

123,549

4,425

270,179

Changes during the period

Balance as of March 31, 200714

Consolidated Statements of Cash Flows [Unaudited](in millions of yen)
For the year ended
March 31, 2006
Cash flows from operating activities:
Income before income taxes
Depreciation and amortization
Impairment losses
Increase in policy reserve and others
Interest income and dividends
Interest expenses
Net (increase) decrease in loans
Net increase (decrease) in deposits
Net (increase) decrease in call loans and bills bought
Net increase (decrease) in call money and bills sold
Others, net

For the year ended
March 31, 2007

16,3303,524
5355,467(36,549)
4,681(113,082)
53,417
107,522
86,100(72,511)

15,4854,683
0359,544(47,714)8,182(45,245)
152,587(82,885)(100,700)(33,626)

Subtotal

404,905

230,312Interest and dividends received
Interest paid
Policyholders’ dividends paid
Income taxes paid

41,374(4,535)(644)(15,688)

52,737(7,105)(1,048)(16,724)

Net cash provided by operating activities

425,411258,171(116,304)(1,184,665)
767,116(39,996)
32,723-(127,015)
61,700(659,994)
661,927(49,602)
40,002(500)

Subtotal(541,127)(73,482)

Purchases of property and equipment
Proceeds from sale of tangible fixed assets
Purchase of securities of a consolidated subsidiary
Others, net(25,845)(1,571)(1,652)(10,148)
1(3,586)

Net cash used in investing activities(570,196)(87,215)

Cash flows from financing activities:
Cash dividends paid-

(6,500)Net cash used in financing activities-(6,500)Effect of exchange rate changes on cash and cash equivalents

79

41

Net increase (decrease) in cash and cash equivalents(144,706)

164,496

Cash and cash equivalents at beginning of year

253,969

109,263

Cash and cash equivalents at end of year

109,263273,760

Cash flows from investing activities:
Investments in monetary trusts
Proceeds from sale of monetary trusts
Purchases of securities
Proceeds from sale and redemption of securities
Investments in loans
Collections of loans
Others,net

Purchases of tangible fixed assets

Notes:
1. Cash flows from investing activities include cash flows from lending operations of the insurance business.

15

Notes to the Consolidated Financial Statements
1. Basis of Presenting Consolidated Financial Statements
Sony Financial Holdings Inc. (the “Company”) and its domestic subsidiaries maintain their accounting records
and prepare their financial statements in Japanese yen in accordance with the provisions set forth in the Company
Law of Japan, the Insurance Business Law of Japan and the Banking Law of Japan and in conformity withgenerally accepted accounting principles and practices in Japan, which are different in certain respects ascompared to the application and disclosure requirements of generally accepted accounting principles andpractices in the United States of America. The Company’s overseas subsidiary maintains its accounting records
and prepares its financial statements in conformity with generally accepted accounting principles and practices
prevailing in its country of domicile.
The accompanying consolidated financial statements are prepared based on the consolidated financial
statements of the Company and its subsidiaries (the “Companies”) which are to be filed with the Financial
Services Agency as required by the Insurance Business Law and the Banking Law. For the convenience ofreaders, the preparation is modified in certain respects from the original Japanese disclosed financial information.
2. Principles of Consolidation(1) Scope of consolidation
The number of consolidated subsidiaries: 4
Consolidated subsidiaries: Sony Life Insurance Co., Ltd.
Sony Life Insurance (Philippines) Corporation
Sony Assurance Inc.
Sony Bank Inc.
(2) Application of the equity method
Not applicable(3) Fiscal year of consolidated subsidiaries
The financial statements of Sony Life Insurance (Philippines) Corporation are prepared with a fiscal year endof December 31. Appropriate adjustments are made for material transactions between December 31 andMarch 31, the date of the consolidated financial statements. All the other subsidiaries prepare their respective
financial statements with a fiscal year end of March 31, the same as the date of the consolidated financial
statements.
(4) Valuation of assets and liabilities of consolidated subsidiaries
A portion of the assets and liabilities of consolidated subsidiaries are computed at fair value as of therespective dates when the subsidiaries were initially consolidated.
3. Summary of Significant Accounting Policies(1) Securities
Securities (including commercial paper and other debt purchased and monetary trusts) are stated in thefollowing manner:
Securities held for trading purposes (“trading securities”) are stated at fair value. The cost of such securities
sold is determined by the moving-average method. Held-to-maturity securities are stated at amortized cost(straight-line method) using the moving-average method. Other securities designated as available-for-salesecurities with fair value are stated at fair value at fiscal year end, and the cost of such securities sold isdetermined by the moving-average method. Other securities designated as available-for-sale securities withno available fair value are stated at amortized cost (straight-line method) or at acquisition cost using themoving-average method. Net unrealized gains and losses on other securities above are reported, net of
applicable income taxes, as a separate component of net assets.

16

(2) Derivative financial instruments
Derivative financial instruments are stated at fair value.
(3) Tangible fixed assets
Depreciation is generally computed by the straight-line method for buildings and by the declining-balancemethod for other property and equipment.
(4) Intangible fixed assets
Intangible fixed assets are amortized on the straight-line method. Capitalized software for internal use isamortized using the straight-line method over its estimated useful life (basically five years).
(5) Reserve for possible loan losses
The reserve for possible loan losses is established in accordance with each company’s Self-Assessment
Guidelines and Write-offs and Reserve Guidelines. With respect to loans to borrowers subject to bankruptcy,
court-guided rehabilitation or similar legal or formal proceedings, the Companies provide a specific reservein the amount of the loan balance less amounts collectable from collateral and guarantees and by other means.
For other loans, the Companies provide a general reserve by applying the historical loan loss ratio determinedover a certain period. Each loan is subject to asset assessment by the operational departments in accordancewith each company’s Self-Assessment Guidelines, and the results of the assessment are reviewed by theinternal audit departments, which are independent from the operational departments, before the reserveamount is finally determined.
(6) Reserve for employees’ bonuses
The reserve for employees’ bonus is provided for the payment of bonuses to employees, in the amount of
estimated bonuses, which are attributable to the current fiscal year.
(7) Reserve for employees’ retirement benefits
The reserve for employees’ retirement benefits is provided for the payment of retirement benefits toemployees, in the amount deemed accrued at the fiscal year end, based on the projected retirement benefit
obligation at the fiscal year end.
(8) Reserve for directors’ retirement benefits
The reserve for directors’ and statutory auditors’ retirement benefits is provided based on the internal
regulations and calculated as the amount that would be payable if all eligible directors and statutory auditors
were to resign at the fiscal year end.
(9) Reserve for price fluctuations
Pursuant to requirements under the Insurance Business Law, the reserve for price fluctuations is provided forprice fluctuations primarily related to stocks, bonds and foreign currency-denominated assets which areexposed to losses due to market price fluctuations. This reserve may only be used to reduce deficits arisingfrom price fluctuations on those assets.
(10) Translation of foreign currencies
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the foreignexchange rates in effect at the fiscal year end.
(11) Leases transactions
Finance leases that have not been deemed to transfer ownership of the leased property to the lessees areaccounted for as operating lease transactions.

17

(12) Hedge accounting
As for the hedge accounting method applied to hedging transactions for interest rate risk generated byfinancial assets and liabilities, the banking subsidiary applies deferred hedge accounting or fair value hedge
accounting. Interest rate swaps are used as hedging instruments to offset fluctuations in interest rates on
fixed-rate loans by identifying the hedged items via their grouping according to their maturity, in accordancewith the “Treatment for Accounting and Auditing of 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-rate bonds, which are classified as other securities. Both of the above-mentioned
hedging instruments are identified so that their significant 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.
(13) Accounting for consumption taxes
The consumption taxes received or paid by the Company and its domestic subsidiaries, excluding loss
adjustment expenses and operating, general and administrative expenses of the non-life insurance subsidiary,
are not included in income and expenses. Under the Consumption Tax Law of Japan, the consumption taxes
paid on property and equipment, which is not deductible from the consumption taxes received, are deferredas “other assets” and amortized over a five-year period on a straight-line basis, while other non-deductible
consumption taxes are charged as expenses in the period in which the consumption taxes are paid.
(14) Policy reserve
Pursuant to Article 116 of the Insurance Business Law, the domestic life insurance subsidiary maintains a
policy reserve for the fulfillment of future obligations under life insurance contracts, and the policy reserve iscalculated in the following manner.
a. Policies subject to the standard policy reserve apply the method stipulated by the Financial Services
Agency (Ministry of Finance Directive 48, 1996).
b. Policies not subject to the standard policy reserve apply the net level premium method.
(15) Application of consolidated tax provision
The consolidated tax provision, under which Sony Corporation is the parent company, is applied to theCompany and its domestic subsidiaries wholly owned by Sony Corporation.
(16) Statement No.5 “Accounting Standards for Presentation of Net Assets on Balance Sheet” (December 9,2005) of The Accounting Standard Board of Japan (“ASBJ”) and ASBJ Guidance No.8 “Guidance on
Accounting Standards for Presentation of Net Assets on Balance Sheet” (December 9, 2005) were applicablefrom the fiscal year ending on or after the implementation date of the Company Law. As a result, theEnforcement Ordinance of the Banking Law and the Enforcement Ordinance of the Insurance Business Law
were revised and applicable from the fiscal year beginning on and after April 1, 2006. Effective April 1, 2007,
the Company has made certain adjustments to the terminology used in its consolidated balance sheet.
a. “Stockholders’ Equity” was renamed “Net Assets” and divided into “Shareholders’ equity”, “Valuationand translation adjustments” and “Minority interests”. The amount corresponding to conventional“Stockholders’ Equity” as of March 31, 2007 was ¥266,162 million.
b. “Deferred hedge losses” and “Deferred hedge gains”, which were included in “Other assets” and “Otherliabilities”, were combined. The combined amount, net of corresponding tax, is stated as “Net deferredlosses on hedging instruments, net of taxes”.
c. “Minority interests” was reclassified under “Net Assets”.
d.“Property and equipment” was divided into “Tangible fixed assets”, “Intangible fixed assets” and “Other
assets”.
e. “Software” was transferred from “Other assets” to “Intangible fixed assets”.

18

(17) In accordance with ASBJ Statement No.6 “Accounting Standards for Statement of Changes in Net Assets”(December 27, 2005) and ASBJ Guidance No.9 “Guidance on Accounting Standards for Statement of
Changes in Net Assets” (December 27, 2005), the Company provides a Consolidated Statement of Changes
in Net Assets.

19