Presentation Materials

FY2007 Consolidated Financial ResultsSony Financial Holdings Inc.
May 16, 20080

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

1

Disclaimer

1Highlights of Group Consolidated Operating
Performance for FY2007

Ordinary revenues

759.2

+8%

FY2006

Ordinary prof it

822.1

44.5

+143%

Life insurance
business

Bankingbusiness(Billions
Corporate andof yeneliminations

FY2006

Change(Billions of yen)

Non-life
insurancebusiness

18.3

FY2007

FY2007
SFH Group,
consolidated

Ordinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profit

689.8

741.3

+51.4

+8%

14.8

39.0

+24.1

+163%

51.0

55.6

+4.6

+9%

2.0

2.8

+0.7

+38%

19.4

25.9

+6.5

+33%

1.3

2.4

+1.0

+77%

(1.0)

(0.8)

+0.2

—

0.0

0.2

+0.1

—

759.2

822.1

+62.8

+8%

18.3

44.5

+26.1

+143%

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

2

Consolidated ordinary revenues for the Sony Financial Holdings Groupgrew 8% compared with the preceding fiscal year, to ¥822.1 billion, owing
to performance increases in all businesses: life insurance, non-life
insurance and banking.
Consolidated ordinary profit also increased ¥26.1 billion, to ¥44.5 billion, inline with profit increases in all businesses.
Consolidated net income grew ¥14.3 billion, to ¥24.3 billion.

2

Highlights of Group Consolidated Operating
Performance for FY2007
 In the life insurance business, both the policy amount in force and new insurance sales(individual life insurance + individual annuities) remained firm, and general accountinvestment income increased. As a result, ordinary revenues and ordinary profit bothincreased.
 In the non-life insurance business, a steady rise in the number of policies, chiefly for

automobile insurance, boosted net premiums written. The increase in net premiums
written and an improvement of net loss ratios resulted in increase in both ordinary
revenues and ordinary profit.

 In the banking business, owing to the steady expansion of operations, net interest

income increased in line with expanded operations, and ordinary revenues and ordinary
profit both increased.
 Consolidated ordinary revenues grew 8% compared with the prior fiscal year, to ¥822.1

billion. Despite a ¥9.8 billion valuation loss on securities (amount of impairment loss),
ordinary profit increased ¥26.2 billion, or 143%, to ¥44.5 billion. Net income grew ¥14.2
billion, or 142%, to ¥24.2 billion.
 Owing to a downturn in the domestic stock markets, net unrealized gains on othersecurities, net of taxes, were ¥74.9 billion on March 31, 2008, down ¥50.1 billion fromMarch 31, 2007. Consolidated net assets consequently amounted to ¥261.6 billion, down
¥8.5 billion from March 31, 2007. As of March 31, 2008, consolidated total assets
amounted to ¥4,977.4 billion, up ¥653.6 billion from March 31, 2007.

3

This is an overview of the operating performance of each businesssegment. From this point, I will go into more detail on the operating
performance of each of the three companies that handle these businesses.

3

Highlights of Operating Performance:
Sony Life (Non-Consolidated)
Ordinary prof it

Ordinary revenues

689.5

+7%

Ordinary revenues

741.2

Income from insurance
premiums

39.2

14.8

Sony Life

FY2007

Revenues and profit up compared with FY2006
New policy amount up 10.9% compared with FY2006
Income from insurance premiums increased, in line with robust
growth in policy amount in force
General account investment income rose
Investment expenses increased, owing to investment losses on
assets held in separate accounts, valuation loss on securities andexpenses on financial derivatives
Net assets fell ¥33.8 billion in FY2007, to ¥182.6 billion, owing toa ¥45.9 billion decline in net unrealized gains on other securities, netof taxes.
The lapse and surrender rate increased 0.33 percentage pointcompared with FY2006, to 6.12%

FY2006 FY2007
689.5

741.2

Change
+51.6
+7%

605.5

648.4

+42.8

+7%

Investment income

78.7

87.4

+8.7

+11%

Of which, interest and dividend income
Of which, income from money trusts
Of which, gain on sales of securities
owned
Of which, investment income on assets
held in separate accounts

34.2
12.1
11.8
14.9

47.9
14.7
24.0
－

+13.6
+2.6
+12.1
(14.9)

+40%
+21%
+102%
－

Ordinary expenses+164%(Billions of yen)

FY2006(Billions of yen)

674.6

701.9

+27.2

+4%

Insurance claims and otherpayments

219.3

241.1

+21.7

+10%

Provision for policy reserveand others

349.6

286.2

(63.4)

(18)%

8.1

69.8

+61.7

+754%

Investment expenses
Of which, separate account asset
investment expenses

—

48.3

+48.3

—

Ordinary profit
Net income
Core profit
Securities

87.3
14.8
7.4
24.3
2,217.9

94.3
39.2
18.5
23.5
2,388.9

+7.0
+24.3
+11.0
(0.7)
+171.0

+8%
+164%
+147%
(3)%
+8%

Policy reserve

3,088.8

3,375.0+286.2+9%

Total net assets
Total assets

216.5
3,445.9

182.6
3,659.7(33.8)+213.8(16)%+6%Operating expenses

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

Note: Each figure for policy amount in force, lapse and surrender rate, and new policy amount is calculated as the total of individual life insurance andindividual annuities. The lapse and surrender rate is calculated without offsetting policies that are reinstated.

4First, I will explain the highlights of operating performance of Sony Life on
non-consolidated base.
Sony Life posted a 7% increase in ordinary revenues compared with thepreceding fiscal year, to ¥741.2 billion, as the policy amount in force
remained robust, boosting income from insurance premiums, and generalaccount investment income increased.
Ordinary profit grew ¥24.3 billion, compared with the preceding fiscal year,to ¥39.2 billion, owing to such factors as the absence of an increase of theprovision for policy reserve in the current fiscal year as was incurred in thepreceding fiscal year, in addition to an increase in gains from generalaccount asset investment.
Owing to higher ordinary profit, net income expanded ¥11.0 billion, to¥18.5 billion.
The company posted extraordinary losses of ¥3.4 billion, owing mainly to
an increase in the provision for reserve for price fluctuations.

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

FY2006
Policy amount in force*1

30,244.4

31,497.3+ 4.1%

504.6

530.0

+ 5.0%

117.4

122.8

+ 4.6%

5.79%
3,429.4
65.5

6.12%
3,802.5
63.4+ 0.33pt+ 10.9%(3.2) %

Annualized premiums from insurance in force*1

Of which, third-sector products

Lapse and surrender rate*1,*2
New policy amount*1
Annualized premiums from new insurance sales*1
Of which, third-sector products

Income from insurance premiums
Investment profit
Core profit

14.4

13.3

(7.7)%

605.5
70.5
24.3

648.4
17.5
23.5

+ 7.1%(75.1) %(3.3) %
(28.4) %

37.3

26.7

2.77%

2.68%

(0.09)pt

1,852.0%

1,747.9%(104.1)pt

645.5
900.5

612.0
833.8

(5.2)%(7.4)%

Negative spread
Average assumed interest rate
Solvency margin ratio

PercentagechangeFY2007

Real net assets
Embedded value (EV)Line item amounts are truncated below ¥100 million; percentage change figures are rounded.
Notes:*1 Each figure of policy amount in force, annualized premiums from insurance in force, lapse and surrender rate, new policy amount and annualized premiums
from new policies is calculated as the total of individual life insurance and individual annuities.
*2 The lapse and surrender rate is calculated without offsetting policies that are reinstated.

5This slide shows the principal indicators of Sony Life's financial
performance.
I will provide additional explanation in later slides, along with past results.

5Sony Life Operating Performance (1)Policy Amount in Force

New Policy Amount(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)(Trillions of yen)

(Millions of policies)

+7.1%

4.43

(Trillions of yen)(Thousands of policies)

4.14
3.84
3.55
27.8

29.0

534
30.2 +4.1%

31.4

512

517

+1.4%

524
3.80

3.72
3.39

3.42 +10.9%

Line item amounts are truncated below ¥100 billion or ¥10 billion; numbers of policies are truncated below 10,000 or 1,000 policies; percentage change figures are rounded.

6

Sony Life's policy amount in force grew steadily during the term. As a result,policy amount in force was up 4.1% from March 31, 2007, to ¥ 31.4 trillion.
The number of policies in force rose 7.1% during the term, to 4.43 million
policies.
During the year, new policy amount increased 10.9%, to ¥3.8 trillion. Salesof such products as family income insurance and variable life insurance
were brisk. The number of new policies expanded 1.4%, to 524 thousand
policies.

6

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

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

Annualized premiums from new policies
Of w hich, third-sector products

70

+5.0%
60

(3.2%)
65.5

63.8

61.7

16.1

14.5

14.4

13.3

FY2004

FY2005

FY2006

FY2007

63.4

50
40
30
20

+4.6%

(7.7%)

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

7

Annualized premiums from insurance in force rose 5.0% compared withthe preceding fiscal year, to ¥530.0 billion. Of this amount, third-sector
products rose 4.6%, to ¥122.8 billion.
Annualized premiums from new policies fell 3.2% compared with thepreceding fiscal year, to ¥63.4 billion. For third-sector products, thisamount fell 7.7%, to ¥13.3 billion.
The reason that annualized premiums from new policies decreased, eventhough new policy amount increased, was that sales were strong for suchproducts as term life insurance, which have relatively low premiums given
their policy amounts, while sales of medical insurance, which has relatively
high premiums, decreased due to increasingly stringent competition.

7

Sony Life Operating Performance (3)Income from Insurance Premiums(Billions of yen)

Ordinary Profit (Non-Consolidated)(Billions of yen)

39.2

+7.1% 648.4

551.6

580.5

605.5

+163.8%

24.3
17.0

14.8

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

8

Income from insurance premiums grew 7.1% compared with the preceding
fiscal year, to ¥648.4 billion, owing to a robust policy amount in force.
Sony Life’s ordinary profit grew ¥24.3 billion, compared with the preceding
fiscal year, to ¥39.2 billion, owing to such factors as the absence of anincrease of the provision for policy reserve in the current fiscal year as wasincurred in the preceding fiscal year, in addition to an increase in gains
from general account asset investment.

8

Sony Life Operating Performance (4)Core Profit

Embedded Value (EV)(Billions of yen)(Billions of yen)

40

1,000

Value of in-force business
Adjusted net worth

Of which, value of new businessin the f iscal year

30

24.3

24.3

23.5
600

(3.3%)

20

833.8

776.1

800

28.5

900.5

539.3

492.0
400

261.7
10

194.8
200

38.9
0

38.1

34.2

36.7

28.9

0

FY2004

FY2005

FY2006

Line item amounts are truncated below ¥100 million.

FY200703/31/04

03/31/05

03/31/06

03/31/07

03/31/08

Different calculation methods and assumptions are used for EV results as ofMarch 31, 2004, 2005, 2006, 2007 and 2008.

9Core profit declined ¥0.7 billion, to ¥23.5 billion, mainly because of theincrease of operating expenses.
I will explain embedded value in more detail later in this presentation, but
for now:
Adjusted net worth was down ¥66.9 billion from March 31, 2007, to ¥194.8
billion.
The value of in-force business was up ¥0.1 billion from March 31, 2007, to¥638.9 billion.
Of this amount, the value of new policies was down ¥7.8 billion comparedwith March 31, 2007, to ¥28.9 billion.
Overall, embedded value was down ¥66.7 billion, to ¥833.8 billion.

9

Sony Life Operating Performance (5)Investment
Investment Yield
Yield forfor CoreCore Profit
Profit andand Investment
Investment Yield
Yield(General(General Account)
Account) versus
versus Average
Average Assumed
Assumed Interest
Interest Rate
Rate

Negative Spread(Billions of yen)

37.3
34.5

33.1
26.7

Line item amounts are truncated below ¥100 million.

10

The negative spread improved ¥10.6 billion compared with the preceding
fiscal year, to ¥26.7 billion.
As for the investment yield for core profit and the investment yield in thegeneral account with the average assumed interest rate,
The investment yield for core profit was 1.73%,
The investment yield for the general account was 2.17%, andThe average assumed interest rate was 2.68%.

10

Sony Life Operating Performance (6)Lapse and Surrender Rate*

Solvency Margin Ratio(Individual Life Insurance + Individual Annuities)
(%)

(%)

6.32

5.84

5.79

6.12

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

11

The lapse and surrender rate was up 0.33 percentage point compared withthe preceding fiscal year, to 6.12%, maintaining low level.
The solvency margin ratio remained high, at 1,747.9%.

11

Sony Life Operating Performance (7)Breakdown of General Account Assets (March 31, 2008 vs. March 31, 2007)
Japanese government and corporate bonds (incl. CBs)Japanese stocks
Foreign government and corporate bonds
Foreign stocks

49.2%

51.6%

Monetary trusts
Policy loans (incl. commercial loans)
Real estate
Cash, deposits and call loans
Other securities

7.8%
3.2% 0.7%
23.0%
3.1%

5.2%
4.6%

0.7%

26.8%

Notes:
Japanese stocks and CBs contained in general account assets asof March 31, 2008 are as follows.
Note: Figures in brackets, [ ], are as of March 31, 2007.
Japanese stocks: ¥206.2 billion [¥298.7 billion]

2.8%
7.6%
2.6%

03/31/07

3.3%

2.5%
2.5%
2.9%

03/31/08

Of which, Japanese stocks in monetary trusts: ¥33.3 billion [¥54.3
billion]Accounting for 6.2% [9.6%] of general account assets
CBs: ¥427.0 billion [¥432.0 billion]
Of which, Convertible bonds in monetary trusts: ¥139.4 billion[¥128.7 billion]
Accounting for 12.8% [13.8%] of general account assets

12This is a breakdown of Sony Life's general account assets as of March 31,
2008, compared with March 31, 2007.
Looking in real terms at Japanese stocks and convertible bonds included
within Japanese government and corporate bonds, as well as Japanesestocks and convertible bonds included within monetary trusts andconvertible bonds, Japanese stocks make up 6.2% of general accountassets, while convertible bonds account for 12.8%.

12

Sony Life Operating Performance (8)Valuation Gains or Losses on General Account Assets(March 31, 2008 vs. March 31, 2007)(Billions of yen)

03/31/07

03/31/08

ChangeJapanese government and corporate bonds

57.1

83.4

26.3

Japanese stocks

130.0

50.8

(79.1)

Foreign securities

4.2

(95)

(13.7)

Other securities

6.8

3.0

(3.8)

198.2

127.8

(70.4)

Total
Line item amounts are truncated below ¥100 million.

Additional Information Concerning Major Fluctuations■ Lower interest rates caused an increase in valuation gains on Japanese governmentand corporate bonds. However, a downturn in the Japanese stock markets resulted in
declines in the market value of Japanese stocks held, resulting in a substantial decline invaluation gains.
■ The company holds no securitized products backed by U.S. subprime loans.
13Sony Life’s valuation gains on securities at market value amounted to¥127.8 billion, down ¥70.4 billion from March 31, 2007.
Lower interest rates caused an increase in valuation gains on Japanese
government and corporate bonds. However, a downturn in the Japanesestock markets resulted in a decline in the market value of Japanese stocks
held.
The company does not invest in securitized products backed by U.S.
subprime loans, so as far as we are aware the company is experiencing no
direct impact of the subprime loan issue.
A press release dated April 24 announced that the total amount of
impairment losses on securities for the Sony Financial Holdings Group at
the end of the fiscal year ended March 31, 2008, was ¥9.8 billion. Sony
Life’s valuation gains on general account assets* are reflected in thisamount.

* Valuation gains on general account assets are calculated by subtracting
their book value on March 31, 2007, from their market value on March 31,
2008.

13

Sony Life Operating Performance (9)Number of Lifeplanners
and Salespeople

Number of Partner Sales Agents(People)6,000(Agents）
Salespeople
Of whom, Lifeplanners

5,000

4,000

4,652
4,293

4,239

4,248

3,825

3,776

3,779

03/31/06

03/31/07

03/31/08

4,170

3,000

2,000

1,000

0
03/31/05

14

As of March 31, 2008, Sony Life’s salespeople numbered 4,248, nine morethan as of March 31, 2007. This total included 3,779 Lifeplanners, anincrease of three Lifeplanners.
In addition, partner sales agents numbered 2,151, down 35.

14

Highlights of Operating Performance:
Sony Assurance
FY2006

FY2007

51.0

55.6

+4.6

+9%

Underwriting income

50.4

55.0

+4.5

+9%

Investment income

0.4

0.5

+0.1 +22%

Ordinary expenses(Billions of yen)

+9%

Ordinary revenues

55.6
51.0

+42%
2.8
2.0
(Billions of yen)Sony AssuranceRevenues and profit up compared with FY2006
Net premiums written up 9%, to ¥55.0 billion, owing to increase in
number of policies for mainstay automobile insurance
In addition to an increase in net premiums written, the loss ratio wasstable, resulting in ordinary profit of ¥2.8 billion
Combined ratio rose 0.4 percentage point, to 80.3%

Change

48.9

52.8

+3.8

+8%

Underwriting expenses

36.4

38.9

+2.5

+7%

Investment expenses

0.0

0.0

+0.0 +82%

12.4

13.8

+1.3 +11%

Ordinary profit

2.0

2.8

+0.7 +38%

Net income

1.5

2.1

+0.5 +37%

Securities

51.1

56.2

5.0 +10%

Underwriting reserves

36.1

42.7

6.6 +18%

Total net assets

13.3

15.3

+2.0 +15%

Total assets

67.4

78.6 +11.1 +17%

Operating, general andadministrative expenses

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

15

Next, I will explain the highlights of Sony Assurance's operating
performance.
Sony Assurance posted a 9% increase in ordinary revenues comparedwith the preceding fiscal year, to ¥55.6 billion, owing chiefly to favorable
performance in mainstay automobile insurance, which raised net
premiums written.
Ordinary profit rose ¥0.7 billion, to ¥2.8 billion due to the increase inordinary revenues and the stable loss ratio.
Net income rose ¥0.5 billion, to ¥2.1 billion.

15

Overview of Performance: Sony Assurance(Billions of yen)

FY2006

FY2007

ChangeDirect premiums written

50.1

54.6

+9%

Net premiums written

50.4

55.0

+9%

Net losses paid

24.1

26.2

+9%

1.6

2.2

+41%

Net loss ratio

53.6%

53.5%

0.1 pt improvement

Net expense ratio

26.3%

26.7%

0.4 pt up

Combined ratio

79.9%

80.3%

0.4 pt up

1,009.7%

1,073.9%

64.2 pt up

0.93 million

1.02 million+ 10%

Underwriting profits

Solvency margin ratio
Number of policies in force

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.
Net expense ratio is equal to the ratio of total underwriting costs to net premiums written
Net loss ratio is equal to the ratio of net losses paid an loss adjustment expenses to net premiums written.
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. These numbers are rounded below 10,000 policies.

16This slide shows the principal indicators of Sony Assurance's financial
performance.
I will provide additional explanation in later slides, along with past results.

16

Sony Assurance Operating Performance (1)Net Premiums Written andNumber of Policies in Force(Billions of yen)

Combined Ratio(Thousands of policies)

Other

(%)

Personal accident insurance
Voluntary Automobile insurance

60

Number of policies in force

1,500

50.4

50

40

55.0

86.5

82.5

79.9

80.3

45.2
1,020

37.8

1,000

930
820

30

670
500

20

10

0

0
FY2004

FY2005

FY2006

FY2007

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. Most
personal accident insurance is medical and cancer insurance.
Line item amounts are truncated below ¥100 million for net premiums written andtruncated below 10,000 for the number of policies in force.

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

17

In terms of insurance underwriting, as you see here the number of policies
in force increased steadily. The number of policies in force as of March 31,
2008—the total number of automobile insurance and medical and cancer
insurance policies—was up 10% compared with March 31, 2007, to 1.02
million policies. Net premiums written grew 9% compared with thepreceding fiscal year, to ¥55.0 billion.
The net loss ratio improved 0.1 percentage point, to 53.5%.
The net expense ratio rose 0.4 percentage point, to 26.7%. Although thecompany pursued increases in operating efficiency, system-related
expenses increased.
As a result, the combined ratio, which is the sum of the net loss ratio andthe net expense ratio, rose 0.4 percentage point, to 80.3%.

17Sony Assurance Operating Performance (2)Ordinary Profit (Loss)

Solvency Margin Ratio(Billions of yen)

(%)

2.8
2.0

(0.7)

(2.8)

Line item amounts are truncated below ¥100 million.

18

The steady increase in the number of policies that I mentioned earlier, as
well as a stable loss ratio, enabled Sony Assurance to raise its profitability
during the fiscal year ended March 31, 2008, after having moved into theblack in the preceding fiscal year.
The expense ratio rose from the preceding fiscal year, but remained
favorable in comparison with other companies in the industry.
The solvency margin ratio remained at a sound level, amounting to
1,073.9% as of March 31, 2008.

18

Highlights of Operating Performance:
Sony Bank (Non-Consolidated)
Ordinary revenues
Ordinary profit+33%

FY2006

FY2007

Ordinary revenues

19.4

25.9

+6.5

+33%

Gross operating profit

9.0

10.9

+1.9

+21%

4.5

5.1

+0.5

+11%

0.5

0.3

(0.1)

(28)%

3.9

5.4

+1.5

+40%

7.6

8.1

+0.4

+6%

(Billions of yen)

Change25.9

19.4

Net interest income

+103%

2.7

1.3
(Billions of yen)

Net fees andcommissions
Net other operating
incomeGeneral and administrative
expenses

1.3

2.7

+1.3

+103%

Net income
億

1.0

4.4

+3.4

+339%

Securities円

381.2

488.7

+107.5

+28%

Loans

284.7

347.0

+62.3

+22%

Deposits

752.3

1,144.3+392.0+52%

Customer assets

848.8

1,247.3+398.4＋47%

Total net assets

36.8

35.7

(1.1)

(3)%

Total assets

806.8

1,211.0+404.1+50%

Ordinary profit
FY2006（

FY2007

Sony Bank
Revenues and profit were both up, compared with FY2006
Net interest income and net other operating income increased,
owing mainly to higher interest on loans—stemming from a higher
mortgage loan balance—and higher market investment income
Net income amounted to ¥4.4 billion, owing to an increase indeferred income taxes
Gross operating profit totaled ¥10.9 billion; the sum of net
interest income of ¥5.1 billion, net fees and commissions of ¥0.3
billion and net other operating income of ¥5.4 billion. General andadministrative expenses were up slightly, to ¥8.1 billion
Customer assets were up ¥398.4 billion, compared with March
31, 2007, to ¥1,247.3 billion）

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

19

Now I will explain the highlights of Sony Bank’s operating performance on
a non-consolidated base.
Sony Bank’s ordinary revenues increased 33% compared with thepreceding fiscal year, to ¥25.9 billion, as a higher balance of mortgage
loans resulted in increased interest on loans, leading to higher interest
income, and a higher balance of deposits led to greater investment
income.
Owing to the rise in gross operating profit, ordinary profit increased ¥1.3
billion compared with the preceding fiscal year, to ¥2.7 billion.
Owing to an increase in deferred income taxes, Sony Bank’s net income
increased substantially, to ¥4.4 billion.

19

Overview of Performance:
Sony Bank (Non-Consolidated)(Billions of yen)

FY2006

FY2007

ChangeGross operating profit

9.0

10.9

+ 21%

General and administrative expenses

7.6

8.1

+ 6%

Net operating profit

1.3

2.8

+ 107%

Ordinary profit

1.3

2.7

+ 103%

Customer assets

848.8

1,247.3

+ 47%

173.7

398.4

+ 129%

284.7

347.0

+ 22%

45.2

62.3

+ 38%

11.49%

9.15%(2.34)pt

491 thousand

610 thousand+ 24%

61 thousand

118 thousand+ 57 thousand

Of which, FY2007 increase
Loans
Of which, FY2007 increase
Capital adequacy ratio(domestic criteria)
Number of accounts
Of which, FY2007 increase

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

20

This slide shows the principal indicators of Sony Bank's financial
performance.
I will provide additional explanation in later slides, along with past results.

20Sony Bank Operating Performance (1)Customer Assets (Deposits + Investment Trusts)
and Number of Accounts(Billions of yen)

610

Number of accounts (thousands)
Investment trusts

1,247.3

Foreign-currency deposits

491

Yen deposits

430
367
848.8
675.1

Loans

(Billions of yen)

Investment
trusts:¥102.9 billion

347.0

Foreigncurrency
deposits:¥251.7 billion

284.7
239.4

Yen deposits:¥892.6 billion

576.3

Others:¥8.1
billionMortgageloans:¥338.8billion126.3

Amounts are truncated below ¥100 million.

21

As of March 31, 2008, the balance of customer assets (the total of deposits
and investment trusts) expanded, largely due to the contribution ofincreased deposits and amounted to ¥1,247.3 billion, up ¥398.5 billion, or
46.9%, from March 31, 2007.
Total yen and foreign currency deposits amounted to ¥1,144.3 billion, up¥392.0 billion, or 52.1%, from March 31, 2007.
Investment trusts were up ¥6.4 billion compared with March 31, 2007, or
6.7%, to ¥102.9 billion. Loans were up ¥62.3 billion, or 21.9%, to ¥347.0
billion.
On March 31, 2008, accounts numbered 610 thousand, up 118 thousand
from March 31, 2007.

21

Sony Bank Operating Performance (2)Gross Operating Profit, General and
Administrative Expenses, Ordinary Profit(Billions of yen)

Capital Adequacy Ratio(Domestic Criteria)
(%)

10.9
9.4

6.9

7.0

9.0
7.6

8.1
11.97

11.49
9.24

9.15

5.3
2.7

2.2
1.3

Notes: On April 23, 2008, Sony Financial Holdings increased Sony Bank's capital by¥6.0 billion by accepting an allocation of new shares.

(1.6)

Amounts are truncated below ¥100 million.

Capital adequacy ratios as of March 31, 2007 and March 31, 2008 were
calculated based on the standard stipulated in the Financial Services Agency
Public Announcement No. 19 of 2006. The capital adequacy ratios up to andincluding those for March 31, 2006 were calculated based on the standard
stipulated in the former public announcement.

22

Looking next at profitability, boosted by such factors as higher net interest
income, gross operating profit grew ¥1.9 billion compared with preceding
fiscal year, to ¥10.9 billion.
Breaking down gross operating profit, net interest income increased ¥0.5
billion, to ¥5.1 billion, as a result of a higher balance of invested assets
through the expansion of operations. Net fees and commissions fell ¥0.1
billion, to ¥0.3 billion, owing to higher ATM fees and other service costs.
Net other income increased ¥1.5 billion, to ¥5.4 billion, as market
investment profit improved.
The capital adequacy ratio remained healthy, at 9.15%, although it was
down from the March 31, 2007, figure, primarily as a result of a substantial
increase in assets.

22Key Management Benchmarks (1)¾ Consolidated ordinary revenues, consolidated ordinary profit andconsolidated net income¾ Consolidated adjusted ROE
Perspective on Consolidated Adjusted ROESony Financial Holdings GroupSony Life

Sony Assurance

Net increase in EV
plus dividend
Numerator

Denominator

Note: Changes in provision forcontingency reserves and thefuture value of existing policies
are added to net income.

The average of (EV atprevious fiscal year-end
minus dividend plus EV atcurrent fiscal year-end)
Note: The contingency reserveand the future value of existing
policies are added to net assets.

Sony Bank

Net income+ Increase in provision for special
catastrophe reserves (after tax)++

+ Increase in reserve for pricefluctuations (after tax)

The average of (net assets +special catastrophe reserveand reserve (after-tax) for pricefluctuations (after-tax)) as ofthe previous fiscal year-end
and the current fiscal year-end

Net income++

The average of net assets asof the previous fiscal year-end
and the current fiscal yearend

Note: Calculations take dividends and taxes into consideration.

23

In addition to such key accounting indicators as consolidated ordinary
revenues, consolidated ordinary profit and consolidated net income, SFH
closely follows consolidated adjusted ROE as one of its management
benchmarks.
Consolidated adjusted ROE is calculated as you see here.

23

Key Management Benchmarks (2)(Millions of yen, %)FY2004

FY2005

FY2006

FY2007

Consolidated ordinary revenues

653,259

758,711759,280

822,153

 Consolidated ordinary revenues, consolidated

Consolidated ordinary profit

12,26925,377

18,35444,500ordinary profit and consolidated net income

Consolidated net income

6,375

11,537

10,021

24,255

Consolidated adjusted ROE

8.0%

35.1%

15.2%

(5.7%)Key Management Benchmarks

 Consolidated adjusted ROESony Life Embedded Value andSony Life Embedded Value andAdjusted ROE
Adjusted ROE(Billionsof yen)Source: Sony Life
Notes: Calculation of Adjusted ROE
Numerator: Net increase in EV plus dividend
Denominator: The average of (EV at previous fiscal year-end — dividend +EV at current fiscal year-end）

Sony Assurance Net Income andSony Assurance Net Income andAdjusted ROE
Adjusted ROE(Billionsof yen)Sony Bank Net Income and ROESony Bank Net Income and ROE(Billionsof yen)Source: Sony Assurance
Notes: Calculation of Adjusted ROE
Numerator: Net income plus an increase in provision for special
catastrophe reserves (after-tax) and an increase in reserve for pricefluctuations (after-tax)
Denominator: The average of (shareholders’ equity or net assets + special
catastrophe reserve and reserve for price fluctuations (after-tax)) as of theprevious fiscal year-end and the current fiscal year-end

Source: Sony Bank
Notes：Calculation of ROE:
Numerator: Net income
Denominator: The average of shareholders’ equity or net assets as of theprevious fiscal year-end and the current fiscal year-end

24

As the chart to the upper right shows, SFH’s key management benchmarks
on a consolidated basis—ordinary revenues, ordinary profit and net
income—remain steady.
Looking at consolidated adjusted ROE, Sony Life’s EV decreased, causing
consolidated adjusted ROE for FY2007 to fall, but Sony Assurance andSony Bank both posted year-on-year increases in ROE.

(For reference)

FY2004

FY2005

FY2006

FY2007

Consolidated adjusted ROE

8.0%

35.1%

15.2%

(5.7%)

Sony Life

10.5%

37.2%

15.7%

(6.9%)

Sony Assurance(8.1%)

3.3%

16.1%

17.2%

Sony Bank(5.3%)

9.3%

2.9%

12.4%

24

Consolidated Operating Performance
Forecast for FY2008(Billions of yen; line item amounts are truncated below ¥100 million; changes are rounded) Additional Information
FY2004 FY2005 FY2006 FY2007

FY2008FY2008(Interim
forecast)(Full-year
forecast)

PercentagechangeConsolidated ordinary revenues

653.2

758.7

759.2

822.1

430.0

884.0

+ 7.5%Of which, life insurance business
Of which, non-life insurance business
Of which, banking business

604.0

696.4

689.5

741.3

386.0

793.0

+ 7.0%

38.1

45.7

51.0

55.6

30.0

59.8

+ 7.5%

11.3

17.2

19.4

25.9

14.4

30.7

+ 18.5%

Consolidated ordinary profit

12.2

25.3

18.3

44.5

18.0

37.0

(16.9%)Of which, life insurance business
Of which, non-life insurance business
Of which, banking business

17.0

24.3

14.8

39.0

17.0

34.0

(13.0%)

(2.8)

(0.7)

2.0

2.8

0.6

1.3

(53.9%)

(1.6)

2.2

1.3

2.4

0.5

1.3

(45.9%)

Consolidated net income

6.3

11.5

10.0

24.2

10.0

21.0

(13.4%)

Consolidated Ordinary Revenues(Billionsof yen)Banking business
Non-life insurance businessLife insurance business

758.7

759.2

We expect ordinary revenues tocontinue increasing, owing to the robust
expansion of each business. However,ordinary profit is expected to decrease,for the reasons described below.
■ Life insurance business
The yield on general accountinvestments is expected to fall,compared with FY2008.
■ Non-life insurance business
The operating expense ratio is expected
to rise slightly, owing to higher systemrelated expenses.
■ Banking business
Expenses are expected to increase:system-related and other expenses are
expected to increase, Sony Bank
Securities is expected to operate in the
red initially, and goodwill will beamortized, among other factors.

Consolidated Ordinary Profit

884.0(Billions of yen)

822.1

Banking business
Non-life insurance businessLife insurance business

37.0

44.5

653.2
25.3
(Forecast)

12.2

18.3
(Forecast)25

Next, I will explain the Sony Financial Holdings Group’s consolidated
results forecast for the fiscal year ending March 31, 2009, which wereannounced on May 14.
For the fiscal year ending March 31, 2009, we expect consolidated
ordinary revenues of ¥884.0 billion, up 7.5% from the preceding fiscal year,
owing to the steady expansion of each business.
In the life insurance business, we assume that the yield on investment ofgeneral account assets will be lower than for the preceding fiscal year, andthat system-related expenses will increase in the non-life insurance andbanking businesses. For such reasons as these, we expect consolidated
ordinary profit to decrease 16.9%, to ¥37.0 billion, and forecast a 13.4%
decline in consolidated net income, to ¥21.0 billion.

25

New Business Progress Update (1)AEGONSony
SonyLife
LifePlanning
PlanningCo.,
Co.,Ltd.
Ltd.
AEGON
OnAugust
August29,
29,2007,2007,thisthiscompany
companywas
wasformed
formedtotoprepare
preparefor
forthetheestablishment
establishmentofofan
anindividual
individualannuities
annuitiesjoint
jointventure
venture On
withAEGON
AEGONtotosell
selluniqueuniqueindividual
individualannuities
annuitiesvia
viabank
bankteller
tellerwindows
windowsandandLifeplanner
Lifeplannersales
salesemployees.
employees.
withInitialcapitalization
capitalizationofofnew
newinsurance
insurancecompany:
company:Approx.
Approx.¥20.0¥20.0billion
billion(anticipated)(anticipated) Initial
Ownership:Sony
SonyLife
LifeInsurance
Insuranceco.,co.,Ltd.
Ltd.50%;50%;AEGON
AEGONINTERNATIONALINTERNATIONALB.V.
B.V.50%50%
 Ownership:

Sony Bank Securities
 Began accepting applications to open accounts: October 1, 2007
 Began Japanese stock transactions: October 15, 2007
 Number of accounts as of March 31, 2008: 11,883
 Customer assets as of March 31, 2008: ¥3,899 million

Note: Sony Bank Securities Inc. is a consolidated subsidiary. AEGON Sony Life Planning Co., Ltd., although an affiliated company of Sony Life, is notincluded in SFH’s scope of consolidation as an equity-method affiliate.

26

I will explain new business developments during the fiscal year ended
March 31, 2008.
Sony Life plans to establish a joint venture with AEGON, of the Netherlands,
to plan individual annuities. In August 2007, we set up a 50–50 businessplanning company with AEGON. The planning company is working toward
an operational startup of the new joint venture company in the fiscal year
ending March 31, 2009.
Today, Sony Financial Holdings resolved to accept an allocation of newshares from Sony Life, raising the company’s capital ¥10.0 billion. Pleaserefer to this press release, along with today’s materials.
Sony Bank Securities was established in June 2007 with the aim of offering
its own highly convenient financial commodity intermediary services to Sony
Bank customers. Sony Bank Securities commenced operations in October
2007. As of March 31, 2008, the company had 11,000 securities accounts
and customer assets of ¥3.8 billion. In line with its efforts to expand its
product and service offerings, in January 2008 Sony Bank Securities began
handling exchange traded funds, or ETFs, and real estate investment trusts,
or REITs.

26

New Business Progress Update (2)Sony Life Receives Permission to Handle Banking Agency Business on Behalf of Sony Bank
 Began handling banking agency business: January 16, 2008

 Products and services
1. Lifeplanner sales employees: Conduct product explanations and accept applications for mortgage loans on behalf of Sony Bank
2. Life Planning SQUARE (Ginza Sony Building): Handle Sony Bank mortgage loan and account opening procedures In FY2007, percentage of new Sony Bank mortgage loans handled by Lifeplanner sales employees: Approx. 15%

27

Meanwhile, Sony Life received permission to handle banking agency
business on behalf of Sony Bank and began offering these services on
January 16. Primarily, Sony Life handles Sony Bank’s mortgage loans. Sony
Life’s Lifeplanner sales employees explain these products and deliver
applications on behalf of Sony Bank. At Life Planning SQUARE (Ginza Sony
Building), they also handle Sony Bank mortgage loan and account opening
procedures. Life Planning SQUARE is the first physical location to handle
products offered by Sony Bank, which is an Internet bank.

27

Sony Life’s Embedded Value (EV)28

Next I’d like to explain Sony Life’s embedded value, or EV

28

Overview of Embedded Value in FY2007
 EV came to ¥833.8 billion, down ¥66.7 billion from March 31, 2007.
 The value of in-force business was ¥638.9 billion, up ¥0.1 billion from March 31, 2007, and adjusted net worth was ¥194.8 billion,

down ¥66.9 billion.
 EV of new policies during FY2007 amounted to ¥28.9 billion, down ¥7.8 billion from March 31, 2007.

Embedded
Embedded Value
Value(Billions of yen)

1,000
900
800
700
600
500
400
300
200
100
0

In-force business
Adjusted net worth

03/31/04

03/31/05

03/31/06

03/31/07

03/31/08(Billions of yen)

03/31/04

03/31/05

03/31/06

03/31/07

03/31/08

Total EV

492.0

539.3

776.1

900.5

833.8

In-force business

381.7

409.6

499.8

638.8

638.9

Adjusted net worth

110.2

129.7

276.3

261.7

194.8

Of which, EV of new policies

38.9

38.1

34.2

36.7

28.9

Source: Sony Life
Note: Assumptions and calculation methods differ for EV calculated as of March 31, 2004, March 31, 2005, March 31, 2006, March 31, 2007, and March 31, 2008.

29

Sony Life has disclosed EV, beginning with the fiscal year ended March
31, 2004, as one of the important indices used to evaluate the corporate
value of its life insurance business.
Overall, EV as of March 31, 2008, was ¥833.8 billion, down ¥66.9 billion
from the end of the preceding fiscal year. The value of in-force business
was nearly flat, but adjusted net worth declined ¥66.9 billion, to ¥194.8
billion, owing to such factors as an ¥82.7 billion decline in net unrealized
gains.
EV of new policies during the fiscal year declined ¥7.8 billion, to ¥28.9
billion. We analyze the principal reasons for the year-on-year decline in thevalue of new policies to include a rise in operating expenses—centered on
system-related expenses—which had a ¥3.5 billion negative effect. Also,
such factors as a revision in insurance rates and lower annualized
premiums from new policies on medical insurance had a ¥3.6 billion
negative effect, and lower market interest rates had a ¥1.1 billion negative
effect.

29

EV: Assumptions and Movement Analysis
Major
Major Assumptions
Assumptions Employed
Employed inin
Calculating
Calculating EV
EV at
at March
March 31,
31, 2008
2008

Movement
Movement Analysis
Analysis of
of EV
EV
from
from March
March 31,
31, 2007
2007(Billions of yen)

Discount rate

6.0%

Investment
yield on newinvestments

Investment yield on new investments isbased on implied forward rates, assumingSony Life makes all new investments only inJapanese government bonds.

EV as of March 31, 2007

900.5

Shareholder dividends(6.5)

Release from the value of in-force
business*

38.1

Mortality andmorbidity
rates

Based on Sony Life’s experience over thethree most recent fiscal years (FY2005–
FY2007)

EV of new policies for the year ended
March 31, 2008

28.9

Lapse andsurrender rate

Based on Sony Life’s experience over thethree most recent fiscal years (FY2005–
FY2007)

Difference between assumptions andactual results for the year ended March
31, 2008(113.2)

Operatingexpenses(unit costs)

Calculated using the cost (unit cost) for the
maintenance and administration of policies
and for payments of claims based on Sony
Life’s experience during the most recent
fiscal year (FY2007)

Difference from changes in theassumptions(14.1)

EV as of March 31, 2008

833.8

Effective tax
rate

Based on the most recent effective tax rate(based on the rate for FY2007)* This item corresponds to unwinding of the amount of discount for one
year made as of March 31, 2007, on the value of in-force business.

Solvency
margin ratio

For the purpose of calculating the cost ofcapital, maintenance of a solvency margin
ratio of 600% was assumed.

IPOプレゼン資料より抜粋

30

Next, I will explain the movement analysis of EV from March 31, 2007.
The table on the right shows the factors for the increases and decreases in EV since
March 31, 2007.
First, EV decreased ¥6.5 billion from March 31, 2007, owing to the payment of shareholder
dividends, but the release from the value of in-force business and the value of new policies
acquired during the year caused a ¥67.0 billion increase.
However, the difference between assumptions and actual results for the year ended March
31, 2008, came to ¥113.2 billion, and difference from changes in the assumptions such asrevised investment yields resulted in a ¥14.1 billion negative affect. As a result, EV as ofMarch 31, 2008, was ¥833.8 billion.
Of the ¥113.2 billion difference between assumptions and actual results for the year ended
March 31, 2008, ¥82.7 billion was due to decreases in valuation gains on owned stocks
and convertible and certain other bonds caused by the downturn in stock prices during the
fiscal year ended March 31, 2008.
The fluctuations in market conditions influenced both the difference between assumptions
and actual results and the difference from changes in the assumptions.
Within the difference from changes in the assumptions and actual results, an increase in
the minimum guarantee cost on variable life insurance accounted for ¥9.1 billion, andincreased capital costs on investments in ultralong-term bond investments accounted for a¥5.9 billion decline. With regard to the impact of operating expenses, an internal survey
conducted during working hours suggested that increases in the percentage of time spent
on ongoing policy maintenance should be reflected in the EV calculations, which brought
EV down ¥8.4 billion. Of the ¥14.1 billion decrease caused by the difference from changes
in the assumptions, ¥13.7 billion arose from the decrease in expected future investment
yields on securities other than bonds.
During the year ended March 31, 2008, EV decreased owing mainly to market-related
factors. In the fiscal year ending March 31, 2009, we expect the release from the value of
in-force business to remain stable and EV of new policies to increase at the same level.

30EV: Sensitivity
EV
EV Sensitivity
Sensitivity at
at March
March 31,
31, 2008
2008(Billions of yen)Amount of
Increase(Decrease)
Discount rate

Solvency margin ratio
Investment yield: +0.25%*
Investment yield: –0.25%*

EV Amount

From 6.0% to 5.0%

83.1

916.9

From 6.0% to 7.0%

(67.5)

766.3

From 600% to 500%

7.7

841.5

From 600% to 700%

(8.6)

825.2

On total investments

59.1

892.8

On new investments

34.8

868.6

On total investments(61.2)

772.5

On new investments(35.0)

798.7

Mortality and morbidity

Assumption x 1.1(65.3)

768.5

Lapse and surrender rate

Assumption x 1.1(16.1)

817.7

Operating expenses (unit cost to maintain policy)

Assumption x 1.1

(6.5)

827.2

* The impact of changes in investment yield assumptions is shown after taking into account the impact on policyholders’ dividends.

31

Here we show the effects of changing the assumptions, along with their
sensitivities. Please use this as a reference.

31EV: Breakdown of Adjusted Net Worth
Breakdown
Breakdown ofof Adjusted
Adjusted Net
Net Worth
Worth(Billions of yen)

As of March 31,
2008
Adjusted net worth

As of March 31,
2007

Change

194.8

261.7

(66.9)

Total net assets*

136.9

207.6

(70.7)

Reserve for price fluctuations

24.1

20.9

3.2

Contingency reserve

61.8

59.0

2.8

Reserve for possible loan losses

0.0

0.0

0.0

Net unrealized gains on land

8.4

6.8

1.6

Unfunded employees’ retirement
benefits liability

(3.5)

(1.9)

(1.6)

Deferred tax assets corresponding topreceding five items(32.9)(30.7)(2.2)* Excluding net unrealized gain on bonds except for convertible and certain other bonds

32

EV: Breakdown of adjusted net worth32EV: Major Assumptions (Investment Yield)
Investment Yield
Yield onon New
New Investments
Investments
Investment

Investment Yield
Yield onon Existing
Existing Assets
AssetsInvestment

The implied forward rates that were used are as follows.

The weighted average investment yields on newinvestments and existing assets that were used are as
follows.

FY

Investment Yield

FY

Investment Yield

2008

0.57%

2008

1.92%

2009

0.61%

2009

1.88%

2010

0.81%

2010

1.89%

2011

0.98%

2011

1.91%

2012

0.98%

2012

1.88%

2017

2.78%

2017

2.90%

2022

3.18%

2022

3.24%

2027

3.50%

2027

3.66%

2032

3.40%

2032

3.63%

2037

3.51%

2037

3.77%

33

EV: Major assumptions (investment yields)

33

APPENDIX

34

Appendix34

Comparison with Sony Corporation’s
Consolidated Financial Services Segment(Principal Differences between Japan GAAP and U.S. GAAP)* “SFH” refers to “Sony Financial Holdings Inc.”
Financial Services Segment of Sony
Corporation, Consolidated(U.S. GAAP)*SFH Consolidated(Japan GAAP)

Treatment of new policy acquisition
costs(Concerns the life insurance business andthe medical care insurance portion of the
non-life insurance business)

The portion of costs related to acquiring new
policies or changes in these costs that is deemed
recoverable is deferred.

Costs are treated as expenses during the period
in which they are incurred.

Method of calculating policy reserves（insurance policy liabilities)(Concerns the life insurance business andthe medical care insurance portion of the
non-life insurance business)

Under U.S. GAAP, calculated according to the net
level premium method using insurance actuarial
figures.

Calculated according to methods approved byregulatory bodies. Computed with an emphasis on
the early accumulation of policy reserves from thestandpoint of protecting policyholders.

Treatment of the market value of
convertible bonds held
(Concerns the life insurance business)

Changes in the fair value (changes in the market
value) of so-called “hybrid financial products,”
which include derivatives, are posted to theincome statement as profits or losses.

Changes in fair value are posted to the balance
sheets as increases or decreases in net assets.

Notes:
1. The above-mentioned differences between U.S. GAAP and Japan GAAP are deemed material to SFH’s consolidated ordinary profit for FY2007.
2. The scope of Sony Corporation’s consolidated Financial Services segment and SFH’s consolidation differ, as follows:• Sony Corporation’s consolidated Financial Services segment: Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank Inc., Sony FinanceInternational Inc., others• SFH consolidated: Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank Inc., Sony Bank Securities Inc., Sony Life Insurance (Philippines)
Corporation
3.Under U.S. GAAP, the book value at the date of conversion to shares is used as the market value of shares converted from convertible bonds (CBs),
whereas under Japanese accounting principles the book value is carried as the CB acquisition price even after conversion. Consequently, total gains orlosses on the sales of shares converted from CBs (differences between selling prices and book values), and total impairment losses (differences between
market value and book value)—of stocks included in the scope of impairment loss accounting—differ depending on the use of U.S. or Japanese GAAP.

35

I will explain the major differences between the accounting standards employed by the SFH Group and those
employed by Sony Corporation, our parent company, when accounting for the Financial Services segment in
its consolidated accounts.
First, as Note 2 indicates, the scope of consolidation used by Sony Corporation's consolidated Financial
Services segment and SFH's consolidation are different.
Next, we consider there to be three significant differences mainly in the life insurance business at SFH's
consolidated ordinary profit level for the year ended March 31, 2008.
The first involves the treatment of costs to acquire new policies. Under U.S. GAAP, these costs are deferred
as long as they are recoverable generally over the premium-paying period of the related insurance policies,
whereas under Japan GAAP these costs are charged to income when incurred.
The second involves the method of calculating policy reserves. Under U.S. GAAP, these reserves arecalculated according to the net level premium method with certain adjustments of actuarial assumptions for
U.S. GAAP purposes. Under Japan GAAP, however, policy reserves are calculated according to methods
approved by Japan's Financial Services Agency, which place an emphasis on the early accumulation of policy
reserves from the standpoint of protecting policy holders.
In these two areas, the Japanese statutory requirements are more conservative than the U.S. accounting
standards, in terms of profits and losses, for cases that have an upward-trending policy amount in force likeour life insurance business.
The third area concerns the treatment of convertible bonds, or CBs, held by our life insurance business.
Under U.S. accounting standards, changes in market value are charged to income, whereas under Japanese
accounting standards without charging to income these amounts are recorded on the balance sheet aschanges in net assets.
Let me add supplemental explanation on accounting treatments of shares converted from CBs. As Note 3
indicates, under U.S. accounting treatments the book value at the date of conversion to shares is recognized
as the market value of shares that are converted from CBs, whereas under Japanese accounting treatments
the book value is carried at the CB acquisition price even after conversion. Consequently, as the book value
used for computing gains/losses on sales and impairment losses of those shares are different depending on
the use of either accounting treatments, the amount of gains/losses on sales and impairment losses differ as
well.
In general, U.S. accounting treatments tend to record higher book value of shares as a result of recording
valuation gains when stock markets are rising, comparing to Japanese accounting treatments.
Conversely, when stock markets are declining, I understand that gains on sales of the shares are lesser andlosses on sales or impairment losses are larger under U.S. accounting treatments.
These are the principal differences between the two accounting standards, and I encourage you to take thesedifferences into consideration for your analysis.

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Highlights of FY2007
Apr. 2007

Sony Bank Begins Offering Mortgage Loan Group Credit Life Insurance
Rider to Cover Three Major Diseases

Jun. 2007

Sony Bank Establishes Sony Bank Securities Inc. Companies to Launch
Securities Intermediary Services from OctoberAug. 2007 Sony Assurance Revises SURE Medical and Cancer Insurance Policy
Offerings
Aug. 2007 Sony Life Establishes AEGON Sony Life Planning Co., Ltd.
Oct. 2007

Sony Financial Holdings Lists on First Section of Tokyo Stock Exchange

Oct. 2007

Sony Assurance Launches “On the Day, Any Day, Response” Service

Dec. 2007 Sony Life Receives Permission to Handle Banking Agency Business forSony Bank
Jan. 2008

Sony Bank and Sony Bank Securities Start Handling ETFs and REITs

Mar. 2008 Sony Bank Becomes Wholly Owned Subsidiary of Sony Financial
Holdings
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Highlights of the fiscal year ended March 31, 200836

Contact:
SFH

Corporate Communications & Investor Relations Department
Sony Financial Holdings Inc.
TEL： +81-3-5785-1074

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Contacts

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