Presentation Material

Consolidated Financial Results
for the Three Months Ended June 30, 2016
andSony Life’s MCEV as of June 30, 2016

Sony Financial Holdings Inc.
August 10, 2016
Sony Financial Holdings Inc. All Rights Reserved

ContentConsolidated Operating Results for the Three Months Ended June 30, 2016

P.3



Forecast of Consolidated Financial Results for the Year Ending March 31, 2017 P.28

Sony Life’s MCEV and ESR as of June 30, 2016

P.30



Appendix

P.38

Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies and beliefs of the Sony Financial Group. Anystatements contained herein that are not historical facts are forward-looking statements or pro forma information. Forward-looking statements may
include—but are not limited to—words such as “believe,” “anticipate,” “plan,” “strategy,” “expect,” “assume,” “forecast,” “predict,” “propose,” “intend” and“possibility” that describe future operating activities, business performance, events or conditions. Forward-looking statements, whether spoken or
written, may also be included in other materials released to the public. These forward-looking statements and pro forma information are based onassumptions, decisions and judgments made by the management of Sony Financial Group companies, and are based on information that is currently
available to them. As such, they are subject to various risks and uncertainties, and actual business results may vary substantially from the forecasts
expressed or implied in forward-looking statements. Consequently, investors are cautioned not to place undue reliance on forward-looking statements.
Sony Financial Group companies are under no obligation to revise forward-looking statements or pro forma information in light of new information, future
events or other findings. The information contained in this presentation does not constitute or form part of any offer for sale or subscription of orsolicitation or invitation of any offer to buy or subscribe to any securities, nor shall it or any part of it form the basis of or be relied on in connection withany contract or commitment whatsoever in Japan or abroad.
*Unless otherwise indicated, in these materials figures less than the indicated unit have been truncated, while ratios and percentage changes have been rounded.
Also, a “–” is used where percentage changes exceed 1,000% and in cases where one or both comparisons are negative.
* “Lifeplanner” is a registered trademark of Sony Life.

Sony Financial Holdings Inc. All Rights Reserved2Consolidated Operating Results for
the Three Months Ended June 30, 2016
(FY16.1Q)

Sony Financial Holdings Inc. All Rights Reserved

3

Highlights of Consolidated Operating Performancefor FY16.1Q (1)Consolidated ordinary revenues

Life
Insurancebusiness

357.3(8.6%)

Non-life
Insurancebusiness

326.6

Bankingbusiness
Others (*1)

+34.6%

25.5
Consolidated

18.9

FY15.1Q

FY15.1Q

FY16.1Q

Ordinary revenues

323.9

292.0

(31.8)(9.8%)

Ordinary profit

14.9

22.0

+7.1

+47.7%

Ordinary revenues

24.7

26.0

+1.2

+5.2%

Ordinary profit

2.1

2.8

+0.7

+35.0%

Ordinary revenues

9.3

9.2

(0.1)

(1.3%)

Ordinary profit

1.8

0.7

(1.0)

(58.6%)

(0.7)

(0.7)

+0.0

―

0.0

(0.1)

(0.2)

―

Ordinary revenues

357.3

326.6

(30.6)(8.6%)

Ordinary profit

18.9

25.5

+6.5

+34.6%

Profit attributableto owners of theparent

12.8

17.6

+4.8

+37.6%(Billions of yen)

Consolidated ordinary profit

Ordinary revenues
Ordinary profit

Change*Ordinary profit in “Intersegment adjustments” is mainly from SFH. Nursing care business has
been included in the scope of consolidation from FY16.1Q.
*Comprehensive income : FY15.1Q: ¥5.4 billion, FY16.1Q: ¥30.4 billion

FY16.1Q(Billions of yen)(Billions of yen)

Net assets

16.3.31

16.6.30

Change from
16.3.31

604.3

610.1

+5.7

+1.0%

10,352.1

10,427.0

+74.9

+0.7%

Consolidated
Total assets

Sony Financial Holdings Inc. All Rights Reserved

4Highlights of Consolidated Operating Performancefor FY16.1Q (2) Life Insurance Business: Policy amount in force increased steadily during FY16.1Q. However, ordinary

revenues decreased compared with FY15.1Q due to a decrease in insurance premium revenues led by adecline in sales of single premium products and a deterioration in investment performance in the separate
account reflecting the worsened financial market conditions. Ordinary profit increased year on year due toa significant decline in provision of policy reserves for minimum guarantees for variable life insurance
owing to a lower acquisition of new policies and a decrease in insurance claim payments.
 Non-life Insurance Business: Ordinary revenues and ordinary profit expanded year on year, owing to anincrease in net premiums written primarily for mainstay automobile insurance and an increase in gains onsale of securities.
 Banking Business: Ordinary revenues were essentially flat year on year. Interest income on loans

increased in line with a favorably growing balance of mortgage loans, whereas interest income anddividends on securities decreased. Ordinary profit decreased significantly year on year, due to an increasein operating expenses, mainly in advertising expenses for card loan business.
 Consolidated ordinary revenues decreased 8.6% year on year, to ¥326.6 billion. Ordinary revenues fromthe life insurance business decreased, while ordinary revenues from the non-life insurance businessincreased. Ordinary revenues from the banking business were essentially flat year on year. Consolidated
ordinary profit increased 34.6% year on year, to ¥25.5 billion. By business segment, ordinary profit fromthe life insurance and the non-life insurance businesses increased, whereas ordinary profit from thebanking business decreased. Profit attributable to owners of the parent was up 37.6% year on year, to¥17.6 billion due to the increase in ordinary profit.
Sony Financial Holdings Inc. All Rights Reserved

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

Ordinary profit

FY15.1Q

FY16.1Q

323.9

292.0

(31.8)(9.8%)

Income from insurance premiums

254.5

241.1

(13.4)(5.3%)

Investment income

67.7

46.8

(20.8)(30.9%)

Interest income and dividends

35.3

35.9

+0.5

+1.7%

Income from monetary trusts, net

3.1

1.1

(2.0)

(64.5%)

Gains on sale of securities

3.6

0.9

(2.7)

(74.7%)

Gains on derivatives, net

―

8.8

+8.8

―

24.7

―

(24.7)(100.0%)

308.7

268.6

(40.1)(13.0%)

Insurance claims and other payments

91.3

85.6

(5.7)

(6.3%)

Provision for policy reserves and others

176.7

93.9

(82.7)(46.8%)

4.0

48.7

+44.7

―

Losses on derivatives, net

2.0

―

(2.0)

(100.0%)Losses on separate accounts, net

―

43.9

+43.9

―

30.6

33.7

+3.0

+10.1%

Ordinary profit

15.1

23.3

+8.2

+54.4%Net income

10.2

16.6

+6.4

+62.6%(Billions of yen)
Ordinary revenues

323.9

292.0
(9.8%)

23.3
15.1+54.4%

Gains on separate accounts, net
Ordinary expenses

Investment expenses

FY15.1Q

FY16.1Q (Billions of yen)

◆ Ordinary revenues decreased but ordinary profit
increased year on year.
◆ Income from insurance premiums decreased due to a
decline in sales of single premium products.
◆ Investment income decreased due to a deterioration in
investment performance in the separate accountreflecting the worsened financial market conditions.
◆ Ordinary profit increased due to a significant decline inprovision of policy reserves for minimum guarantees forvariable life insurance owing to a lower acquisition of
new policies and a decrease in insurance claim
payments.

Operating expenses(Billions of yen)

16.3.31

16.6.30

ChangeChange from 16.3.31

Securities

7,273.3

7,337.0

+63.6

+0.9%

Policy reserves

7,336.5

7,430.5

+93.9

+1.3%

482.1

499.1

+16.9

+3.5%

150.6

164.1

+13.5

+9.0%

8,035.4

8,130.5

+95.1

+1.2%

850.3

831.9

(18.3)(2.2%)Net assets
Net unrealized gains on other securities
Total assets
Separate account assets

Sony Financial Holdings Inc. All Rights Reserved

6Overview of Operating Performance:
Sony Life (Non-consolidated)
FY15.1Q

FY16.1Q

Change<Reasons for changes>

1,324.2

1,260.0(4.9%)

Lapse and surrender amount

495.0

479.8

(3.1%)

Lapse and surrender rate

1.21%

1.11%

(0.1pt)◆ Decreased due to lower salesof variable life insurance
despite higher sales of U.S.
dollar-denominated insurance.

Policy amount in force

41,609.6

43,634.2+4.9%

Annualized premiums from new policies

22.3

20.5

(8.2%)Of which, third-sector products

3.9

4.1

+5.9%

747.6

790.8

+5.8%

174.8

182.2

+4.2%

FY15.1Q

FY16.1Q

ChangeGains from investment, net (General account)

38.9

41.9

+7.9%

Core profit

13.3

14.0

+5.4%

Positive spread

4.1

3.2

(22.0%)

16.3.31

16.6.30

Change from
16.3.312,722.8%

2,831.3%+108.5pt(Billions of yen)

New policy amount

Annualized premiums from insurance in force
Of which, third-sector products(Billions of yen)

Non-consolidated solvency margin ratio

Notes:
1. Figures for new policy amount, lapse and surrender amount, lapse and surrender rate, policy amount in force,
annualized premiums from new policies and annualized premiums from insurance in force are calculated as
the total of individual life insurance and individual annuities.
2. The lapse and surrender rate shows the ratio derived by dividing the amount of lapses and surrenders, notadjusted for policy amount decreases, increases, and reinstatements, by the policy amount in force at the
beginning of the fiscal year.

Sony Financial Holdings Inc. All Rights Reserved◆ Decreased due to lower salesof variable life insurance andeducational endowment
insurance despite favorable
sales of term life insurance andU.S. dollar-denominatedinsurance.
◆ Core profit rose year on year
due to an decrease ininsurance claim payments,
despite a fall in the positive
spread and an increase in theprovision of policy reserves forminimum guarantees forvariable life insurance due to aworsening market. In ordinary
profit, however, the negative
impact on profit of policy
reserves for minimum
guarantees associated withthis worsening market wasoffset by hedge gains, which
are included in capital gains
and losses.

7

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

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

Number of new policies

176(Trillions of yen)

15,000

Annualized premiums from new policies

Of which, third-sector(Thousands ofpolicies)(15.1%)(Billions of yen)

149

154

1.5

(Individual Life Insurance + Individual Annuities)

150

1.32
1.13

1.26
(4.9%)

25

20

10,00022.3(8.2%)

20.5

3.7

3.9

+5.9%

4.1

FY14.1Q

FY15.1Q

18.9

100

1.0

15

50

5,000

0.5

10

5
00
FY14.1Q

FY15.1Q

FY16.1Q

00Sony Financial Holdings Inc. All Rights Reserved

FY16.1Q

8

Sony Life’s Product Portfolio
Annualized Premiums from New Policies by Product
FY16.1Q

FY15¥85.0 billion¥20.5 billion

Yen whole life
Endowment/
28％
Annuities
28%
Single premium
whole life U.S. dollar-denominatedwhole life 2%
5%
Protection-type(term life)37%

Yen whole life
19％

Endowment/
Annuities
29% U.S. dollar-denominatedwhole life 5%Single premium
whole life3%
Protection-type(term life)
44%

Sony Financial Holdings Inc. All Rights Reserved

9Operating Performance :Sony Life (Non-consolidated) (2)
Number and Amount of Policies in Force

Annualized Premiums from Insurance in Force(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)

Policy amount in force(Trillions of yen)

50

+5.1%

(Millions of policies)

7.04

7.13

6.78
41.6

+4.9%

Annualized premiums from insurance in force

Number of policies in force

43.1

40

+1.2%

43.6

7

Of which, third-sector(Billions of yen)

800

747.6

+5.8%

790.8

781.3
+1.2%

6

+1.1%

600
5

30

4

400

3

20

2
10
1
0

0
15.6.30

16.3.31

16.6.30

+4.2%

200
174.8

179.7

15.6.30

16.3.31

+1.4%

182.2

0

Sony Financial Holdings Inc. All Rights Reserved

16.6.30

10

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

Lapse and surrender rate
(1Q)

(%)

10

8

6

5.35

4.72

4

2

1.15

1.21

FY14

FY15

(0.10pt)

1.11

0
FY16

*The lapse and surrender rate shows the ratio derived by dividing the amount oflapses and surrenders, not adjusted for policy amount decreases, increases, andreinstatements, by the policy amount in force at the beginning of the fiscal year.

Sony Financial Holdings Inc. All Rights Reserved

11

Operating Performance :Sony Life (Non-consolidated) (4)Income from Insurance Premiums(Billions of yen)(Billions of yen)

40

300

254.5
250

Interest Income and Dividends

220.7

35.9

35.3

241.1

32.5

+1.7%

30

(5.3%)

200
20

150
100

10
50
0

0
FY14.1Q

FY15.1Q

FY16.1Q

FY14.1Q

Sony Financial Holdings Inc. All Rights Reserved

FY15.1Q

FY16.1Q

12

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

Ordinary Profit(Billions of yen)

20

(Billions of yen)

18.7

15

25

13.3

20

14.0

+5.4%

23.3
＋54.4%

17.6
15.1

15
10
10
5

5

0

0
FY14.1Q

FY15.1Q

FY14.1Q

FY16.1Q

FY15.1Q

FY16.1Q(Reference) Main differences from Core Profit(Reference) Impact on core profit(Billions of yen)

FY14.1Q

FY15.1Q

FY16.1Q

Positive spread

3.0

4.1

3.2

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

(2.1)

(6.6)

(8.9)

Others

17.8

15.8

19.7

(Billions of yen)

FY14.1Q

FY15.1Q

FY16.1Q

Capital gains (losses) excluding gains or losses
on hedges (*)

0.2

5.3

6.1

Gains (losses) on hedges of variable insurance

－

(1.9)

4.9

(1.2)

(1.5)

(1.7)

Provision of contingency reserve (*)*: “Provision of policy reserves for minimum guarantees for variable life insurance” and “Provision of contingency reserve” are described as negative amount.
Capital gains (losses) exclude gains or losses on hedges of variable life insurance..

Sony Financial Holdings Inc. All Rights Reserved

13

Operating Performance :Sony Life (Non-consolidated) (6)
Number of Lifeplanner Sales Employees+330(Number)

4,682

4,612
4,500

4,329

4,352

15.3.3115.6.30

4,415

4,376

15.9.30

15.12.31

+70

4,000

3,500

3,000
0

Sony Financial Holdings Inc. All Rights Reserved

16.3.31

16.6.30

14

Operating Performance :Sony Life (Non-consolidated) (7)Breakdown of General Account Assets
16.3.31(Billions of yen)

16.6.30<Asset management review>

Amount%Amount

%6,351.1

88.4%

6,453.8

88.4%

Japanese stocks

33.3

0.5%

33.3

0.5%

We have continued to accumulate ultralongterm bonds to match the liability
characteristics of insurance policies withlong-term maturities with the aim of reducing
interest rate risk.

Foreign bonds

70.1

1.0%

59.6

0.8%

<Bond duration>

Foreign stocks

23.0

0.3%

20.7

0.3%

Monetary trusts

280.9

3.9%

283.1

3.9%

Policy loans

171.6

2.4%

172.9

2.4%

Real estate*

115.8

1.6%

115.4

1.6%

Cash and call loans

52.5

0.7%

44.6

0.6%

Others

86.4

1.2%

114.7

1.6%

7,185.0

100.0%

7,298.6

100.0%

Japanese governmentand corporate bonds

Total

Mar. 31, 2015: 20.3 years
Mar. 31, 2016: 21.8 years
Jun. 30, 2016: 22.4 years■ Investment in the monetary trusts is mainly into
Japanese government and corporate bonds.
■ The holding ratio on the real status of Japanese
government and corporate bonds including
those invested in monetary trusts in the generalaccount: As of Jun. 30, 2016: 92.3%(As of Mar. 31, 2016: 92.3%)*Real estate is the total of land, buildings, and construction in progressSony Financial Holdings Inc. All Rights Reserved

15

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

(%)

3,000

2,831.3
2,722.8
2,555.0

2,500+108.5pt

2,000

1,500

1,000015.3.31

16.3.31

16.6.30

Sony Financial Holdings Inc. All Rights Reserved

16

Highlights of Operating Performance:
Sony Assurance
Ordinary revenues

Ordinary profit

FY15.1Q

FY16.1Q

24.7

26.0

+1.2

+5.2%

Underwriting income

24.4

25.0

+0.6

+2.6%

Investment income

0.3

0.9

+0.6

+205.4%

22.6

23.1

+0.5

+2.4%

Underwriting expenses

16.5

17.0

+0.4

+2.6%

Investment expenses

0.0

―

(0.0)

(100.0%)Operating general andadministrative expenses

6.0

6.1

+0.1

+1.9%

Ordinary profit

2.1

2.8

+0.7

+35.0%Net income

1.4

2.0

+0.5

+37.8%(Billions of yen)

24.7

+5.2%

Ordinary revenues

26.0

Ordinary expenses

2.8
2.1
FY15.1Q+35.0%

FY16.1Q(Billions of yen)

◆ Ordinary revenues and ordinary profit increased
year on year, owing to an increase in net premium
written primarily for mainstay automobile insurance
and an increase in gains on sale of securities.

ChangeChange from
16.3.31

16.3.31

16.6.30

Underwriting reserves

95.7

98.6

+2.9

+3.1%

Net assets

28.3

28.3

+0.0

+0.3%

Total assets

172.3

173.9

+1.6

+1.0%

(Billions of yen)Sony Financial Holdings Inc. All Rights Reserved

17Overview of Operating Performance:
Sony Assurance(Billions of yen)

FY15.1Q

FY16.1Q<Reasons for changes>

ChangeDirect premiums written

24.0

24.7

+2.9%

Net premiums written

24.3

25.0

+2.8%

Net losses paid

11.2

11.7

+4.1%

Underwriting profit

1.8

1.8

+4.5%

Net loss ratio

53.4%

54.1%

+0.7ptNet expense ratio

26.3%

26.2%

(0.1pt)Combined ratio

79.6%

80.3%

+0.7pt◆ Increased mainly in its mainstay
automobile insurance.

◆ Remained flat due to a proper
control on overall operating
expenses.

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

FY15.1Q

FY16.1Q

ChangeE.I. loss ratio

58.4%

59.0%

+0.6ptE.I. loss ratio + Net expense ratio

84.7%

85.2%

+0.5ptNotes:
E.I. loss ratio = (Net losses paid + Provision for reserve for outstanding losses + Loss adjustment expenses) / Earned premiums[Earthquake insurance and compulsory automobile liability insurance are excluded from the above calculation.]

Number of policies in force
Non-consolidated
solvency margin ratio

16.3.31

16.6.30

1.79 million

1.81million

693.5%

732.9％◆ Rose slightly compared with
FY15.1Q results which recorded
a reversal of reserve foroutstanding losses.
Car accident ratio remained at
low levels.

Change from 16.3.31+0.01 million+0.6%+39.4pt

Note: The number of policies in force is the total of automobile insurance and medical and cancer insurance, which accounts for 99% of net premiums written.

Sony Financial Holdings Inc. All Rights Reserved18Sony Assurance’s Underwriting Performanceby Type of Policy
Direct Premiums Written

Net Premiums Written

FY15.1Q

FY16.1Q

Change

Fire

89

62

(30.4%)

Marine－－－Personal accident

2,156

2,190

+1.6%

Voluntary automobile

21,84022,533

+3.2%

－

－

－

24,08624,785+2.9%(Millions of yen)Compulsory
automobile liability
Total

Net losses paid
(Millions of yen)

FY15.1Q

FY16.1Q

Fire

13

6

(47.0%)

Marine11(1)(116.4%)

Personal accident

2,245

2,281

+1.6%

Voluntary automobile

21,793

22,468+3.1%

Compulsory
automobile liability

311

293

(5.9%)

24,37525,048+2.8%(Millions of yen)

Total

Change*Medical and cancer insurance is included in personal accident.

FY15.1Q

FY16.1Q

ChangeFire00+398.2%Marine12(12)(203.8%)Personal accident

593

609

+2.7%

Voluntary automobile

10,35910,813+4.4%

Compulsory
automobile liability

303

324

+6.8%

Total

11,268

11,734+4.1%

Sony Financial Holdings Inc. All Rights Reserved

19

Operating Performance:
Sony Assurance (1)Ordinary Profit andAdjusted Ordinary Profit

Net Premiums Written andNumber of Policies in Force(Billions of yen)
Voluntary automobile insurance
Personal accident insurance
OthersNumber of policies in force
4(Millions of policies)(Billions of yen)
+4.7%
1.81

30

1.63
23.4

1.72
24.3

+2.8%

25.0
2.2

3

Ordinary profit

Adjusted ordinary profit

3.6
3.4
2.8

2.8

2.7

0.2 1.5
2.1+35.0%

2

20

22.4

1

1
10
0.5

0
FY14.1Q

FY15.1Q

FY16.1Q*Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve

00

FY14.1Q

FY15.1Q

FY16.1Q

The number of policies in force is the total of automobile insurance and medical
and cancer insurance policies, which account for 99% of net premiums written.
More than 90% of personal accident insurance is medical and cancer insurance.

(Reference) Provision for catastrophe reserve(Billions of yen)

FY14.1Q
Provision for catastrophe reserve

FY15.1Q

0.7

0.7

FY16.1Q
0.7*Provision for catastrophe reserve is described as positive amountSony Financial Holdings Inc. All Rights Reserved

20

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

Net loss ratio

Net expense ratio

Net expense ratio

(%)
100

(%)
100

91.0

90.4
82.4

85.2

84.7

80

84.3

84.8

79.1

80

+0.5pt80.3

79.6+0.7pt

60
64.3

63.3

58.0

58.4

59.0

57.6

+0.6pt

57.8

54.7

53.4

54.1
＋0.7pt

40

40

20

60

26.7

27.1

20

(0.1pt)

24.4

26.3

26.2

FY14.1Q

FY15.1Q

FY16.1Q

26.7(0.1pt)

27.1
24.4

26.3

26.2

FY14.1Q

FY15.1Q

FY16.1Q

0

0
FY14

FY15

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

FY14

FY15

Notes:Net loss ratio = (Net losses paid + Loss adjustment expenses ) / Net premiums written
Net expense ratio = Expenses related to underwriting / Net premiums writtenSony Financial Holdings Inc. All Rights Reserved

21

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

(%)

800

732.9%

693.5%
629.6%

600+39.4pt

400

200

0
15.3.31

16.3.31

16.6.30

Sony Financial Holdings Inc. All Rights Reserved

22Highlights of Operating Performance:
Sony Bank (Consolidated/Non-consolidated)
Consolidated ordinary revenues
Consolidated ordinary profit

9.3<Consolidated>

9.2

FY15.1Q

FY16.1Q

Consolidated ordinary revenues

9.3

9.2

(0.1)

(1.3%)

Consolidated ordinary profit

1.8

0.7

(1.0)

(58.6%)

Profit attributable to owners of the parent

1.2

0.5

(0.7)

(59.5%)

FY15.1Q

FY16.1Q

Ordinary revenues

8.6

8.4

(0.2)

(2.7%)

Gross operating profit

5.3

5.0

(0.3)

(6.5%)Net interest income

3.9

4.1

+0.1

+4.1%

Net fees and commissions

0.0

(0.1)

(0.1)

－

Net other operating income

1.3

1.0

(0.3)

(23.2%)

General and administrative expenses

3.5

4.2

+0.7

+20.6%Net operating profit

1.8

0.7

(1.0)

(58.7%)

Ordinary profit

1.8

0.7

(1.1)

(61.5%)Net income

1.2

0.4

(0.7)

(60.7%)

16.3.31

16.6.30

77.4

75.6

(1.7)

(2.3%)

3.3

3.1

(0.2)

(6.7%)

2,126.5

2,107.1(19.4)(0.9%)(Billions of yen)

(1.3%)

Change<Non-consolidated>(Billions of yen)

(58.6%)

1.8
FY15.1Q

0.7
FY16.1Q(Billions of yen)＜Consolidated＞◆Ordinary revenues were essentially flat year on year. Interest
income on loans increased in line with a favorably growing
balance of mortgage loans, whereas interest income anddividends on securities decreased. Ordinary profit decreased
significantly year on year, due to an increase in operating
expenses, mainly in advertising expenses for card loanbusiness.

＜Non-consolidated＞◆ Both gross operating profit and net operating profit decreased
year on year.
・Net interest income increased due to an increase in interest
income on loans, although interest income and dividends on
securities decreased.
・Net fees and commissions decreased due mainly to higher
fees on guarantee commission.
・Net other operating income decreased due to lower gains on
foreign exchange transactions.

(Billions of yen)

Net assets
Net unrealized gains onother securities, net of taxes

Total assets

Sony Financial Holdings Inc. All Rights Reserved

ChangeChange from
16.3.3123

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

15.6.30

16.3.31

16.6.30

Change from
16.3.31

Customer assets

2,001.1

2,034.4

2,013.6(20.8)(1.0%)

Deposits

1,872.2

1,923.5

1,908.1(15.3)(0.8%)

Yen

1,558.9

1,587.9

1,580.6(7.3)(0.5%)

313.3

335.5

327.4

(8.0)

(2.4%)

Investment trusts

128.9

110.9

105.4

(5.4)

(4.9%)

Loans outstanding

1,226.0

1,344.1

1,395.6

+51.4

+3.8%

Mortgage loans

1,111.2

1,237.1

1,289.3

+52.2

+4.2%

5.0

10.5

13.2

+2.6

+25.5%

109.7

96.5

93.0

*1

(3.4)

(3.6%)

10.56%

9.90%

9.90%

Foreign currency

Card loans
OthersCapital adequacy ratio*2(domestic criteria)±0.00pt◆ Yen deposit balance slightly decreased
due to a decrease in yen time deposit
balance partially offset by an increasein yen ordinary deposit balance.
◆ Yen-denominated balance of foreign
currency deposit decreased due to yen
appreciation despite higher foreign
currency purchases.
◆ Loan balance expanded reflecting
higher demand of refinancing
mortgage loans.

◆ The balance of new card loans
launched in July 2015, steadily
expanded .

*1 Loans in others include corporate loans of ¥93.0 billion*2 Please refer to the page 27 for the graph of the non-consolidated capital adequacy ratio (domestic criteria)Sony Financial Holdings Inc. All Rights Reserved

24Overview of Operating Performance:
Sony Bank (Non-consolidated) (2)<Reference> On Managerial Accounting Basis<Reference> Interest Spread(Managerial Accounting Basis)

FY15.1Q

FY16.1Q

5.3

5.0

(0.3)

(6.5%)

4.5

4.7

+0.2

+5.2%

*2

0.2

(0.0)

(0.3)

－

*3

Net other operating income

0.5

0.2

(0.2)

(46.4%)

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

4.8

4.7

(0.0)

(1.9%)

Operating expenses and otherexpenses

3.5

4.2

+0.7

+20.2%

1.2

0.4

(0.8)

(64.4%)(Billions of yen)

Gross operating profit
Net interest income*1 ①
Net fees and commissions ②

Net operating profit (core profit)＝(A)－③③

ChangeYield on investment

Yield on financing

Interest spread
(%)

1.5
1.19

1.17
1

0.89

+0.03pt

0.92

0.5■Managerial accounting basis

0.27

0.27

FY15.1Q

FY16.1Q

The following adjustments are made to the figures on a financial account for profits andlosses more appropriately.
*1: Net interest income: Includes profits and losses associated with fund investment recorded in
net other operating income, including gains or losses from currency swap transactions.
*2: Net fees and commissions: Includes profits and losses for customer dealings in foreign
currency transactions recorded in net other operating income.
*3: Net other operating income: After the above adjustments (*1 and *2), mainly consists ofprofits and losses for bond and derivative dealing transactions.

0Note: Interest spread=(Yield on investment)-(Yield on financing)■Core profit
Profits and losses exclude net other operating income, which includes those on bond andderivative dealing transactions, and stands for Sony Bank’s basic profits.

Sony Financial Holdings Inc. All Rights Reserved

25

Operating Performance:
Sony Bank (Non-consolidated) (1)Loans

Deposits
Yen deposits

Foreign currency deposits

Mortgage loans(Billions of yen)

2,000

Others(Billions of yen)

1,878.2
327.2

1,908.1

1,923.5
335.5(15.3)

1,395.6

1,500

1,344.1

106.2

327.4

1,187.1

107.0

+51.4

*Corporate loansof ¥93.0 billion.
Card loans of ¥13.2
billion.

112.8

1,500
1,000

1,289.3

1,000

1,074.3
1,551.0

1,587.9

1,237.1

1,580.6

500

500

0

0
15.3.31

16.3.31

16.6.30

15.3.31Sony Financial Holdings Inc. All Rights Reserved

16.3.31

16.6.30

26

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

Balance of Securities by Credit Rating
AAA
BBB

AA
A
Others(%)

15(Billions of yen)

800

(Domestic Criteria)

730.0
10.66

620.9

583.2

600

9.90

±0.00pt

9.90

10(37.7)

400

5
200

0

0
15.3.31

16.3.31

16.6.30

15.3.31

16.3.31

16.6.30*Calculated based on the standard FSA Notification No. 19 (2006), which establishes
standards based on Article 14-2 of the Banking Act of Japan for determining thecapital adequacy of a bank in light of the assets held by the bank.

Sony Financial Holdings Inc. All Rights Reserved27Forecast of Consolidated Financial Results
for the Year Ending March 31, 2017 (FY16)

Sony Financial Holdings Inc. All Rights Reserved28Forecast of Consolidated Financial Results for FY16
Forecast of consolidated financial results for FY16 is unchanged from the forecast announced on April 28, 2016
(Billions of yen)
Consolidated ordinary revenues

FY15(Actual)FY16(Forecast)

ChangeFY16.1Q(3M Actual)

Progress rate

1,362.0

1,450.0

+6.5%

326.6

22.5%

1,230.2

1,309.8

+6.5%

292.0

22.3%

Non-life insurance business

96.9

101.6

+4.8%

26.0

25.6%

Banking business

37.9

37.9

(0.1%)

9.2

24.4%

Consolidated ordinary profit

71.1

71.0

(0.1%)

25.5

35.9%

Life insurance business

60.2

62.5

+3.8%

22.0

35.2%

Non-life insurance business

4.6

4.4

(6.0%)

2.8

65.1%

Banking business

5.9

4.5

(24.9%)

0.7

17.2%

43.3

46.0

+6.1%

17.6

38.4%

Life insurance businessProfit attributable to owners of the parent<Segment information for ordinary revenues and ordinary profit>■Life insurance business
In FY16.1Q, ordinary revenues were below our initial expectations because of a decline in insurance premium revenues, but
ordinary profit exceeded our initial expectations. This situation was due to valuation gains on hedges on securities, lower insurance claim
payments and a decrease in the provision of policy reserves for minimum guarantees for variable life insurance owing to the acquisition of
new policies.
We maintain our forecast for the full year, taking into consideration such factors as the market environment from the second quarter
onward and trends in insurance claim payments.
■Non-life insurance business
Ordinary revenues were essentially in line with our expectations in FY16.1Q. Ordinary profit outpaced our initial expectations, due
to factors including higher gains on sale of securities. We maintain our forecast for the full year.
■Banking business
The introduction of negative interest rates affected earnings in FY16.1Q. Also, we incurred up-front investment expenses to enact
measures aimed at expanding the customer base over the medium term. Taking into account our progress on this front, performance was
essentially in line with expectations, and we maintain our forecast for the full year.

Sony Financial Holdings Inc. All Rights Reserved29Sony Life’s MCEV and ESR
as of June 30, 2016

Please keep in mind that the validity of these calculations of MCEV as of March 31, 2016 (after restated) and as of June 30, 2016 has notbeen verified by outside specialists. A part of the calculations of MCEV as of June 30, 2016 adopted simplified method.

*In this part, figures, ratios and percentages changes have been rounded.

Sony Financial Holdings Inc. All Rights Reserved30Sony Life Adopts UFR for MCEV and ESR
Taking the points described below into consideration, from FY16, Sony Life has changed tothe method of using ultimate forward rates (UFR) as its extrapolation method for ultralongterm interest rates to obtain the risk-free rate used in calculating MCEV and ESR.
When evaluating ESR, which indicates capital sufficiency, we consider it appropriate toreflect the status of deliberations on international capital regulations. However, as noevaluation method is established at present, taking market consistency into account wehave set the start of extrapolation beyond the 40th year.
We judge it desirable at present to maintain consistency with MCEV and ESR, an important
indicator for the company. We have taken into consideration the compliance with MCEV
Principles (ensuring consistency in asset and liability valuations by using reliable market
data to determine interest rates up to the 40th year) and such factors as the disclosure
status of European and Japanese life insurers.
Note: For interest rates up to the 40th year, we use rates on Japanese government bonds, which can be obtained in themarket. For interest rates beyond the 40th year, we employ the Smith-Wilson method (in the past we conducted
extrapolation using a fixed 40th-year forward rate) for extrapolation so that the 60-year forward rate will converge on
the UFR (3.5%). As a result, whereas the 40-year interest rate as of March 31, 2016, is 0.63%, based on market
data, and 60- and 80-year rates are 1.23% and 1.47%, for which market data is not available. Please refer to theappendix page 51 for details.

In line with this change, we disclose revalued key indicators as of March 31, 2016.
Sony Financial Holdings Inc. All Rights Reserved31Sony Life’s MCEV as March 31, 2016 (after restated)(Billions of yen)

MCEV

16.3.31(before restated)

16.3.31(after restated)

1,063.7

1,330.1

Adjusted net worth

2,074.4

2,074.4

Value of existing business(1,010.7)(744.4)(Billions of yen)

FY15.4Q (3M)
(before restated)

FY15.4Q (3M)(after restated)

New business value

(1.7)

3.9

New business margin(0.5%)

1.2%*Please refer to the appendix page 47 for details of adjusted net worth and value of existing business .

Sony Financial Holdings Inc. All Rights Reserved32Sony Life’s ESR as of March 31, 2016 (after restated)(after tax)
(Billions of yen)

16.3.31(before restated)

16.3.31(after restated)

1,097.6

989.3

256.3

324.2

183.6

255.2

Operational risk

31.4

31.4

Counter party risk

2.0

2.0

Variance effect(368.1)(374.4)

The risk amount based on economic value

1,019.2

972.4

Insurance risk*
Market-related risk
Of which, interest rate risk**(* ) Risk amount excluding the variance effect within Life module and Health module.
(**) Risk amount excluding the variance effect within market-related risk.

(Billions of yen)

16.3.31(before restated)

MCEV + Frictional costs***
ESR

16.3.31(after restated)

1,063.7

1,366.5

104%

141%

(*** ) The amount as of March 31, 2016 (before restated) is only for MCEV.

Sony Financial Holdings Inc. All Rights Reserved33Sony Life’s Interest Rate Sensitivities
as of March 31, 2016 (after restated)<Sensitivities of MCEV>
Assumption
Base(Billions of yen)

Change in assumption
No Change

Change inamount

MCEV
1,330.1

Rate ofchange－－（億円）

Interest rates

50bp decrease

1,170.4(159.7)(12%)

50bp increase

1,398.7

68.6

5%<Sensitivities of new business value>
Assumption
BaseInterest rates(Billions of yen)

New business
value

Change inamount

No Change

3.9

－

－

50bp decrease(7.7)(11.5)(298%)

50bp increase

12.4

8.5

221%

Change in assumption

Rate ofchangeNotes:
1. For interest rate sensitivity, we have shifted the yield curve by 50bp up to the year in which extrapolation commenced and extrapolatedusing the same UFR.
2. Regarding sensitivity to MCEV, the adoption of UFR does not affect on the changes in adjusted net worth.
3. The definition of new business for interest rate sensitivity is that for FY15.4Q (3M).
Please be aware that the definition of new business differs from MCEV full report disclosed on May 23, 2016.

Sony Financial Holdings Inc. All Rights Reserved34Sony Life’s MCEV as of June 30, 2016
(Billions of yen)

16.3.31

MCEV

16.6.30

Change1,330.1

1,076.4(253.7)

Adjusted net worth

2,074.4

2,671.8

597.4

Value of existing business(744.4)(1,595.5)(851.1)(Billions of yen)

FY15.4Q(3M)

FY16.1Q(3M)

New business value

3.9

(0.2)

New business margin

1.2%(0.0%)

Notes:
1. Calculated MCEV as of June 30, 2016 by using updated economic assumptions and lapse and surrender rate from March 31, 2016.
2. New business value for FY16.1Q is calculated accumulating new business value for each month based on economic assumptions at the end of each month.
New business value for FY15.4Q is calculated accumulating new business value for each quarter based on economic assumptions at the end of each quarter.

 Reasons for changes in MCEV
・MCEV as of June 30, 2016 decreased ¥253.7 billion from March 31, 2016 due to a significant decline in interest rates inJapanese yen.
 New business value / new business margin
・From FY16, Sony Life has changed to the calculation method of new business value and new business margin. The method
has been changed to one of accumulating new business value from at the end of each quarter to the end of each month.
・For FY16.1Q(3M), the new business value was negative ¥0.2 billion, and the new business margin was negative 0.0%, down
1.2pt from FY15.4Q(3M).
*Please refer to the appendix page 50 for trend on JGB yield.

Sony Financial Holdings Inc. All Rights Reserved35Sony Life’s ESR as of June 30, 2016
(after tax)
(Billions of yen)

16.3.31

16.6.30

Insurance risk*

989.3

1,227.6

Market-related risk

324.2

295.0

255.2

218.0

Operational risk

31.4

31.5

Counter party risk

2.0

2.2

Variance effect(374.4)(414.5)

The risk amount based on economic value

972.4

1,141.8

Of which, interest rate risk**(* ) Risk amount excluding the variance effect within Life module and Health module.
(**) Risk amount excluding the variance effect within market-related risk.
(Billions of yen)

MCEV + Frictional costs
ESR

16.3.31

16.6.30

1,366.5

1,085.5

141%

95%

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

Sony Financial Holdings Inc. All Rights Reserved36Responses to an Environment of Ultralow Interest Rates and
Our Perspective on Soundness<Responses to an Environment of Ultralow Interest Rates>Product and sales strategies:•
We discontinued sales of some saving-type products in May 2016.
•
In October 2016, we plan to revise insurance premium rates on such products as
variable life insurance (whole life type), limited payment whole life insurance, living
benefit whole life insurance (living standard type) and living benefit insurance (whole lifetype), and discontinue sales of interest rate-sensitive whole life insurance.
•
We will reinforce our ability to offer U.S. dollar-denominated insurance and term life
insurance.

Asset management policy:•
Based on an ALM perspective, we will continue to invest in assets that match our liability
characteristics, while at the same time working to diversify our investment methods.
•
We will expand our investment in ultralong-term FILP bonds and corporate bonds.
•
Although continuing to invest in ultralong-term bonds, we will not invest in products withnegative interest rates.

<Our Perspective on Soundness>


ESR fell below 100% as of June 30, 2016, but the figure had recovered to around 110%* as ofJuly 31, 2016. As described above, we are working to revise our products and reinforce oursales capabilities. We believe that current ESR levels will recover due to the accumulation of
new business value from the second half of FY16. Accordingly, at present we do not believe an
increase in capital is necessary.
*ESR as of July 31, 2016 is calculated by using updated interest rates as of June 30, 2016, based on ESR as of June 30, 2016.

Sony Financial Holdings Inc. All Rights Reserved37

Appendix

Sony Financial Holdings Inc. All Rights Reserved38

Recent Topics 1
AEGON Sony Life Insurance
Launch of sales: December 1, 2009
Common stock: ¥14 billion
Equity ownership: Sony Life insurance Co Ltd 50%, AEGON international B.V. 50%
Marketing products: Individual Variable Annuities
Sales Channels: Lifeplanner sales employees and partner Banks (26*) *As of Aug. 10, 2016

SA Reinsurance Ltd
Established： October 29, 2009
Common stock: ¥13.4 billion
Equity ownership: Sony Life insurance Co., Ltd. 50%, AEGON international B.V. 50%
Business： Reinsurance business*AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint ventures established by Sony Life and AEGON Group.

Sony Bank’s Mortgage Loans through Sony Life
■Sony Life accounts for 20% of the balance of mortgage loans as of Jun. 30, 2016
Sony Life accounts for 17% of the amount of new mortgage loans for FY16.1Q*Sony Life started handling banking agency business in January 2008.

Sony Assurance’s Auto Insurance Sold by Sony Life
■Sony Life accounts for approx. 4% of new automobile policies for FY16.1Q*Sony Life started handling automobile insurance in May 2001.

Sony Financial Holdings Inc. All Rights Reserved

39

Recent Topics 2<Highlights on and after FY16.1Q>

2016-04-01

Sony Life opened its new sales office in Akita and Yamaguchi prefecture

2016-04-01

Sony Lifecare Group opened its first newly built nursing care home “SONARE Soshigaya-Okura” in Tokyo

2016-04-07

Sony Bank began offering “Sony Bank WALLET App.” for smart-phone users

2016-05-12

Sony Life commenced sale of a new product: “Level Premium Plan Term Life Insurance with Reduced
Surrender Value (Disability/Nursing Care Type)” and “Level Premium Plan Term Life Insurance with No
Surrender Value (Disability/Nursing Care Type)”
Sony Lifecare Group announced an opening of the second SONARE newly built nursing care home in
Saitama prefecture in Spring 20172016-05-18

Sony Life closed a representative office in Taipei

2016-05-19

Sony Life announced to begin new services for corporate policyholders to support their health, management
and employee welfare

2016-06-23

SFH changed its President, Representative Director

2016-07-01

Sony Life opened a representative office in Singapore

2016-07-04

SFH and Sony Life relocated their headquarters to Chiyoda-ku, Tokyo

2016-05-02

Sony Financial Holdings Inc. All Rights Reserved40Sony Life: Fair Value Information on Securities(General Account Assets)
Fair Value Information on Securities
Fair value information on securities with market value (except trading-purpose securities)(Billions of yen)

Notes:
1. The above table includes monetary trusts other than trading-purpose securities.
2. Derivative financial products such as principal protected 30 year notes with Nikkei 225 index-linked coupons are included in the “Held-to-maturity-securities” above.
Principal protected 30 year notes with Nikkei 225 index-linked coupons
As of Mar. 31, 2015; Carrying amount: ¥44.2 billion, Fair market value: ¥57.5 billion, Net unrealized gain (losses): ¥13.2 billion
As of Mar. 31, 2016; Carrying amount: None
As of Jun. 30, 2016; Carrying amount: None

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

Note: The above chart includes trading-purpose securities included in “monetary trusts,” etc

Sony Financial Holdings Inc. All Rights Reserved41Sony Life’s Interest Income and Dividends (Details)(Millions of yen)

FY15.1Q

FY16.1Q

ChangeCash and deposits
Japanese governmentand corporate bonds
Japanese stocks

00(94.1%)

27,811

29,862+ 7.4%

7962(20.4%)

Foreign securities

2,334

1,698

(27.2%)

Other securities

1,036

25

(97.6%)

Loans

1,512

1,572

+ 3.9%

Real estate

2,570

2,703

+ 5.2%

18

23+ 25.7%35,36335,948+ 1.7%

Others
Total

Sony Financial Holdings Inc. All Rights Reserved42Sony Life’s Quarterly Trend on New Policy Amount
Quarterly Trend on New Policy Amount(Billions of yen)

1,491.6

1,500

1,437.4
1,324.2

1,250

1,290.7

1,260.0

1,152.5

1,135.8

1,098.9

991.5

1,000
750
500
250
0
FY14.1Q

FY14.2Q

FY14.3Q

FY14.4Q

FY15.1Q

FY15.2Q

Sony Financial Holdings Inc. All Rights Reserved

FY15.3Q

FY15.4Q

FY16.1Q

43

Sony Life’s Quarterly Trend on
Annualized Premiums from New Policies
Quarterly Trend on Annualized Premiums from New Policies
Annualized premiums from new policies

Of which, third-sector(Billions of yen)

25

20

18.9

22.7

22.3

21.8

20.6

20.5
19.1

18.5
17.2

15

10

5

5.1
3.7

2.8

3.5

3.9

3.4

FY14.4Q

FY15.1Q

FY15.2Q

4.6

3.6

4.1

FY15.4Q

FY16.1Q

0
FY14.1Q

FY14.2Q

FY14.3Q

Sony Financial Holdings Inc. All Rights Reserved

FY15.3Q

44

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

Number and Amount of New Policies

Number and Amount of Policies in Force

New policy amount

Policy amount in force

Number of new polices [ ](Thousands ofpolicies)(Billions of yen)

500

30.5
[5.2]
30

22.3
[3.7]

22.4
[3.9]

461.4
[76.9]

100
80

300

60

200

40
20

6

4

10

2

100

0

0

0

FY14.1Q
FY15.1Q
FY16.1Q
Net income (losses) for AEGON Sony Life Insurance and SA Reinsurance
FY15.1Q

407.7[66.6]

444.2[73.4]

400

20(Billions of yen)

120

600

8

40

(Thousands ofpolicies)(Billions of yen)

10

50

Number of policies in force [ ]015.6.30

16.3.31

16.6.30

ChangeFY16.1Q

AEGON Sony Life Insurance

(0.2)

(0.9)

(0.6)

SA Reinsurance

(0.2)

(1.8)

(1.6)

AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint venture established by Sony Life and AEGON Group.
SA Reinsurance prepares its financial statements in accordance with U.S. GAAP. 50% of the net income (losses) for AEGON Sony Life Insurance andSA Reinsurance are recognized as investment profit (losses) on equity method in the SFH’s consolidated net income.

Sony Financial Holdings Inc. All Rights Reserved

45Sony Life’s Medium-term Target for MCEV (after restated)
In line with adopting UFR, Sony Life’s medium-term target for MCEV
has changed as follows.

FY15

FY18

MCEV (before restated)¥1.0 trillion

ROEV4-5%Over ¥1.1 trillion

MCEV (after restated)¥1.3 trillion

ROEV4-5%Over ¥1.4 trillion

 Medium-term targets toward FY18, Sony Life’s ROEV andConsolidated Adjusted ROE are 4~5%, unchanged from theamount on before restated.
Notes:
1. Medium-term targets are calculated based on interest rates as of March 31, 2016.
2. For calculation of Sony Life’s ROEV and consolidated adjusted ROE, please refer to the page 51 on presentation material “SonyFinancial Group Corporate Strategy Meeting for Fiscal Year 2016” held on June 1, 2016.

Sony Financial Holdings Inc. All Rights Reserved

46Sony Life’s MCEV related amounts as of March 31, 2016
(after restated)(Billions of yen)

Value of existing business16.3.31(before restated)

16.3.31(after restated)(1,010.7)(744.4)Present value of certainty-equivalent profit(393.1)(169.9)Time value of options and guarantees(127.6)(137.3)

Frictional costs(55.6)(36.4)

Cost of non-hedgeable risks(434.4)(400.7)(Billions of yen)

16.3.31(before restated)

16.3.31(after restated)

Adjusted net worth

2,074.4

2,074.4

Free surplus

100.1

394.0

1,974.3

1,680.4

Required capitalSony Financial Holdings Inc. All Rights Reserved

47

Method of Measuring Risk Amount
Based on Economic Value (1) Market-related Risk*1

Interest rate risk
Fluctuations in net asset
value based on economic
value in response to theshocks in the right columns.
The same applies below.

Sony Life(Reference) EU Solvency II Implementing
Measures (Delegated Regulation)

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

Different percentage changes in interest rates areset for each term, from one year to 20 years.
For terms longer than 20 years and through 90
years, percentage changes are set using linear
interpolation, with negative 29% as the percentagechange for 20 years and negative 20% as thepercentage change for 90 years.

(Example)
For Yen 30-year, 33% decrease (parallel shift),
28% decrease (twist), 8% decrease (butterfly)

Equity risk

Listed equities 45%, Other securities 70%

Global 39%, Others 49%*2

Real estate risk

Actual real estate 25%

Same as on the left

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

Credit risk = (market value) x (risk coefficient foreach credit rating and duration)

Credit risk

Currency risk

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

(Example)
Rating A: Duration (Dur): 5-10 years(Example)
Rating A: Risk coefficient (1.4%), cap (23), floor (1)Risk coefficient=7.0% + 0.7% x (Dur – 5 )35% downside fluctuation

25% downside fluctuation

Notes
1. Principal items as of Jun. 30, 2016.
2. Symmetric adjustment (an adjustment of±10% of the average value of the stock price index during a defined period in the past) is applied.

Sony Financial Holdings Inc. All Rights Reserved

48Method of Measuring Risk Amount
Based on Economic Value (2) Insurance Risk*1

Sony Life(Reference) EU Solvency II Implementing
Measures (Delegated Regulation)

Mortality risk

Mortality rate increases by 15% for each year elapsed Same as on the leftLongevity risk

Mortality rate decreases by 20% for each year
elapsedSame as on the left

Lapse risk

The largest amount of these; *2

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

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

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

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

Same as on the left

Disability risk

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

Notes
1. Principal items as of Jun. 30, 2016.
2. At Sony Life, lapse risk is calculated by computing and adding together the largest amount of three options for each insurance policy

Sony Financial Holdings Inc. All Rights Reserved49Trend on JGB Yields
JGB Yields (par rate)

As of the end of each monthSony Financial Holdings Inc. All Rights Reserved50

Risk-free Rate as of March 31, 2016 (Japanese yen)
4.000%
Par rate(after restated)

Par rate(before restated)

Forward rate
(after restated)

Forward rate
(before restated)

3.500%

3.000%<Before restated> <After restated>
2.500%

2.000%

40 year
50 year
60 year
70 year
80 year

0.63%
0.70%
0.74%
0.77%
0.79%

0.63%
0.98%
1.23%
1.38%
1.47%
Convergence
period: 20 year

1.500%

1.000%

0.500%

0.000%
5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80 (year)-0.500%Last liquid point: 40 year
As for interest rates in U.S. dollar beyond the 30th year, we also use extrapolation in which the 60-year forward rate converges on the UFR (3.5%).

Sony Financial Holdings Inc. All Rights Reserved51Trend on Risk-free Rate (Japanese yen and par rate)
4.000%The end of Jun. 2016

The end of Mar. 2016

3.500%

3.000%

2.500%

2.000%

Convergence
period: 20 year

1.500%

1.000%

0.500%

0.000%
5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

80 (year)-0.500%Last liquid point: 40 year

Sony Financial Holdings Inc. All Rights Reserved52

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

Sony Financial Holdings Inc. All Rights Reserved53