FY2018 1Q Conference Call for Institutional Investors and Analysists
Q&A Executive Summary
Date:

August 9, 2018, 15:30–16:15 (JST)Respondents:

Hiroaki Kiyomiya, Managing Director, Member of the Board, Sony Financial Holdings Inc.
Eigo Nasu, Executive Officer, Sony Life Insurance Co., Ltd.
Toru Hasegawa, Executive Officer, Sony Assurance Inc.
Sachio Hayashi, Executive Officer, Sony Bank Inc.

Note: The original content has been revised, sorted appropriately and edited for ease of understanding.
Q1: [Sony Life]
During FY18.1Q (3M), all three business outpaced your expectations for ordinary profit. I understandthe factors in play in the non-life insurance business, but can you provide a factors and amounts thatmade the life insurance business exceeded your initial expectations. You had assumed that thecontribution to profits of the accumulation of policy amount in force this fiscal year would account for
an increase of around ¥6.0 billion. Was progress better than expected? Were you able to book capitalgains earlier than anticipated?
A: A major factor which progress was better than expected was on gains on sale of securities. Of the ¥6.0billion we had forecast for the full year, we booked ¥3.2 billion in FY18.1Q. Progress on the contribution toprofits of the accumulation of policy amount in force was as we have indicated. Also, gains (losses) onhedges of variable life insurance were more positive than we had expected. The shift in period on gains onsale of securities and the temporary impact of market conditions were the reasons progress was faster thanexpected.
Q2: [Sony Life]
The new policy amount was high in FY18.1Q, but surrenders also increased. In the past, annualized
premiums from insurance in force on individual life insurance (excluding individual annuities) havegrown at around 5% year on year. What is the background for the current leveling off to around 2.6%
growth?
A: The main reason for the rise in surrenders was the revision in premium rates on family income insurance.
As the new policy amount of the products for which we revised premium rates was approximately double thesurrender amount, policy amount in force was robust, rising 4.6% year on year. Given the low-interest-rateenvironment, the weight of sales is shifting from savings-type products to protection-type products, it tends
to rise policy amount in force than annualized premiums.

1Q3: [Sony Life]
The new business margin improved from 6.1% in FY17.4Q (3M) to 7.1% in FY18.1Q (3M). Last fiscal
year, you revised your methodology for measuring insurance risks, so I understand the revision
doesn’t have any impact on the improvement. I had assumed that this fiscal year’s price reductions onsuch products as family income insurance would cause the margin to fall. Why did the margin
improve?
A: We revised our methodology for measuring insurance risks at the end of last fiscal year, so the change inmethodology would not have affected FY17.4Q (3M). Of the reasons our new business margin improved by
1 percentage points, the change in measuring methodology accounted for +0.7 percentage points. The
remainder was attributable to changes in the product mix and other factors.
Q4: [Sony Life]
Didn’t the price reduction on family income insurance affect the new business margin?
A: The new business margin on family income insurance did decrease due to the revision in premium rates,
but the volume of new business in family income insurance grew substantially, which caused the overallmargin for new business to grow.
Q5: [Sony Life]
Could you break down the changes in MCEV as of June 30, 2018, in terms of interest rates and otherfactors?
A: MCEV was down approximately ¥40.0 billion from the end of last fiscal year. Breaking this down, themajor factors were dividends paid, which had a ¥26.3 billion negative impact; an increase in new businessvalue, which had a ¥21.9 billion positive impact; a decrease in yen interest rates and the flattening of theyield curve, which had a ¥20.0 billion negative impact; and the surrender rate, which had a ¥18.0 billion
negative impact. Rather than an increase in surrenders, the impact of the surrender rate was mainly due to adecrease in the surrender rate on long-term protection-type products (whole life insurance and otherinsurance products on which value of existing business are negative).
Q6: [Sony Life]
How does the gain on sale of securities Sony Life recorded in FY18.1Q compare in terms of progresswith your expectations for the full year?
A: As we had forecast ¥6.0 billion for the full year, and the figure for 1Q was ¥3.2 billion, the rate ofprogress was approximately 50%.

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Q7: [Sony Life]On page 12 of the presentation materials, the “Others” category under core profit increased by ¥2.7billion, from ¥20.6 billion in FY17.4Q (3M) to ¥23.3 billion in FY18.1Q (3M). Why was that?
A: The main reason was a steady accumulation of policy amount in force.
Q8: [Sony Life]
Page 32 of the presentation materials shows the composition by product of annualized premiums fromnew policies. What sort of product mix are you aiming for, going forward, compared with the productcomposition in FY18.1Q?
A: As the product mix depends on customer needs, the company does not set product portfolio targets. In
FY18.2Q, we expect the ratio of medical insurance to increase in line with our launch of new medical
insurance.
Q9: [Sony Life]I have a question regarding consolidated adjusted ROE, shown on page 45 of the presentationmaterials. I believe this includes the impact of Sony Life’s revision of the methodology for measuring
insurance risks, but approximately how much did this impact on core ROEV of 1.6% in FY18.1Q(3M)?
A: Our assumptions for calculating core ROEV are pre-revision for FY17 and post-revision for FY18. In
FY18.1Q, the revision had a positive impact of around 0.7 percentage points on the new business margin.
Accordingly, the numerator increased but the denominator also grew. Our understanding, therefore, is thatthe impact of the revision on core ROEV was essentially nil.
Q10: [Sony Assurance]
Ordinary revenues on automobile insurance rose approximately 6% year on year. Direct premiums
written also improved significantly. Why was that?
A: In FY18.1Q, direct premiums written were stronger than our expectations. Among positive factors, wethink our various marketing measures are going well. Earned premiums grew more than expected, and,insurance payments per claim including the provision for reserve for outstanding losses and claims,decreased, causing the E.I. loss ratio to fall. As a result, the figure was better than we had anticipated. The
expense ratio was also lower than we had expected.
Q11: [Sony Assurance]
What is the background for Sony Assurance’s decrease in insurance payments per claim including theprovision for reserve for outstanding losses and claims? Do you expect this figure to keep trending
downward?

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A: In FY18.1Q, the number of accidents and insurance claims paid expanded in line with an increase inpolicy amount in force, but insurance payments per claim fell, causing the E.I.-based loss ratio to decline.
Insurance payments per claim in terms of net losses paid, excluding the provision for reserve for outstanding
losses and claims, were down slightly year on year. At the beginning of the fiscal year, we had expected theloss ratio to be up somewhat year on year, but this figure fell in FY18.1Q. No specific factors were in playbehind the decline in the payment per claim, so we cannot tell whether this trend will continue.
Q12: [Sony Assurance]Your competitors are stepping up discounts and other campaigns. As a direct insurer, how do you viewthe competitive situation? Major non-life insurers lowered premiums in January 2018. What has been
the impact?
A: We are not seeing any major changes in our policy acquisition or policy outflows due to rate reductions
and discounts by large non-life insurers and direct insurers, so they are having no impact at the moment. We
also began offering ASV discounts in April. We will continue to consider revisions and timing of insurance
premium rates in response to revisions in the reference loss cost rates.
Q13: [Sony Assurance]
What will be the amount of insurance claims paid due to the heavy rains in July 2018?
A: Overall, it will be around ¥0.4 billion. Our losses were essentially all on automobile insurance (vehicleinsurance).
Q14: [Sony Assurance]
What are the development status and launch timing on the telematics products you are developing incollaboration with Yahoo Japan Corporation and the Sony Group?
A: With Yahoo Japan and Sony, we are jointly developing PHYD-type telematics products based on
smartphones and the Yahoo! Car Navigation app. At present, we conducted monitor testing and accumulated
driving behavior data. Going forward, we will develop algorithms and make other moves towardcommercialization. At this stage, we are unable to discuss launch timing.
Q15: [SFH]In FY18.1Q, profit attributable to owners of the parent was nearly 40% of your forecast figure for thefull year. Do you expect to return to a normal pace from FY18.2Q onward?
A: In the life insurance business, we recorded gains on sale of securities earlier than expected. In the non-life
insurance business, profit tends to be high in 1Q. Profit was slightly higher than we had anticipated, but asnine months remain until the end of the fiscal year, we maintain our forecast.

4Q16: [SFH]
Please explain the background for Sony Corporation increasing its holdings of SFH’s shares following
the FY2017 earnings results announcement.
A: That decision is up to Sony Corporation. Our relationship will remain unchanged.
Q17: [SFH]
If Sony Corporation continues to increase its holdings of SFH’s shares, would it be accurate to assume
you would be delisted?
A: It is the basic policy of Sony Corporation and SFH for SFH to remain listed.

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