Presentation Materials

FY2007 Third Quarter
Consolidated Financial ResultsSony Financial Holdings Inc.
February 15, 2008

I am Hiromichi Fujikata, Executive Vice President and Representative
Director of Sony Financial Holdings Inc.
Today, I will report the financial results for the Sony Financial HoldingsGroup for the nine months ended December 31, 2007.
From here, I will explain the consolidated financial results of the SonyFinancial Holdings Group, based on the presentation materials that havebeen distributed to you.
Besides myself, also present today are:
Masamitsu Shimaoka, Director of Sony Life,
Yuro Fujiyama, Director of Sony Assurance andHidehiko Nakamura, Director of Sony Bank
to respond to any questions you may have. Thank you for joining us
today.

0

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 3Q FY2007
3Q FY2006(Billions of yen)

+10%

Life insurance
business

606.1

550.9
Non-life
insurancebusiness

+44%

37.8

Bankingbusiness

26.2(Billionsof yen)(Nine months, cumulative)

Eliminations
and corporate

SFH Group,
consolidated

Ordinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profit3Q FY2007(Nine months, (Nine months,
cumulative)
cumulative)

Change

499.1

547.1

+48.0

+10%

23.5

32.7

+9.2

+39%

38.2

41.6

+3.4

+9%

1.8

3.0

+1.2

+67%

14.4

18.1

+3.7

+26%

0.8

1.8

+1.0

+118%

(0.7)

(0.7)

+0.0

-

0.0

0.1

+0.0

+202%

550.9

606.1

+55.1

+10%

26.2

37.8

+11.5

+44%

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

2

Consolidated ordinary revenues for the Sony Financial Holdings Groupgrew 10% compared with the first nine months of the previous fiscal year,to ¥606.1 billion, owing to performance increases in all businesses: life
insurance, non-life insurance and banking.
Consolidated ordinary profit also increased ¥11.5 billion, to ¥37.8 billion, inline with profit increases in all businesses.
Consolidated net income grew ¥6.6 billion, to ¥22.7 billion.

2

Highlights of Group Consolidated Operating
Performance for 3Q 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 account investment income increased. As a result, ordinary
revenues and ordinary profit both increased.
 In the non-life insurance business, a steady rise in the number of policies,

chiefly for automobile insurance, boosted net premiums written. The net loss
and expense ratios both improved, and both ordinary revenues and ordinary
profit increased.
 In the banking business, owing to the steady expansion of operations, interest

income increased in line with expanded operations, and ordinary revenues andordinary profit both increased.
 Consolidated ordinary revenues grew 10% compared with the first nine monthsof the prior fiscal year, to ¥606.1 billion. Ordinary profit increased ¥11.5 billion,
or 44%, to ¥37.8 billion, and net income grew ¥6.6 billion, or 41%, to ¥22.7
billion.

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 thesebusinesses.
Let me comment on the difference between SFH’s consolidated results
and those of the Financial Services segment of SFH’s parent company,
Sony Corporation, announced on January 31, 2008.
SFH’s consolidated results are prepared in accordance with accounting
principles and practices generally accepted in Japan, while Sony
Corporation prepares its financial statements in accordance withaccounting principles and practices generally accepted in the UnitedStates.
The scope of consolidation for SFH’s consolidated results differs from thatof Sony Group’s Financial Services segment.
I will explain these differences in more detail in the Appendix at the last
page of this presentation.
Then, I will go into more detail about the operating performance of each of
the three companies, based on accounting principles and practices
generally accepted in Japan.

3

Highlights of Operating Performance:
Sony Life (Non-Consolidated)(Billions of yen)

+10%

546.9
Ordinary revenues

498.8

+40%
23.5

(Billions of yen)
(Nine months, cumulative)

Sony Life
Revenues and profit up compared with the first nine months of
FY2006
New insurance sales up 10% compared with the first nine months
of FY2006
Income from insurance premiums increased, in line with robust
growth in policy amount in force
General account investment income roseCore profit came to ¥19.8 billion
Lapse and surrender rate increased 0.27 percentage point, to
4.61%

3Q
FY2007(Ninemonths,
cum.)

(Nine
months,cum.)

Change

498.8

546.9

+48.1

Income from insurance
premiums

442.9

479.7

+36.7

+8%

Investment income

53.3

63.7

+10.4

+20%

Ordinary expenses

475.3

514.1

+38.7

+8%

158.7

179.4

+20.6

+13%

241.6

235.7

(5.8)

(2)%

Investment expenses

4.3

21.9

+17.6 +406%

Operating expenses

63.2

69.3

+6.0

+10%

Ordinary profit

23.5

32.8

+9.3

+40%

Net income

14.3

18.1

+3.7

+26%

Core profit

18.6

19.8

+1.2

+7%

Securities

2,192.2

2,419.4+227.2+10%

Policy reserve

2,980.8

3,324.6+343.7+12%

Total net assets

212.8

213.8

+1.0

+0%

3,325.4

3,710.3+384.9+12%

Insurance claims andother payments
Provision for policy
reserve and others

32.8

3Q
FY2006

Total assets+10%Note: The figures above are on a non-consolidated basis. Line item amounts aretruncated below ¥100 million; percentage change figures are rounded.

4First, I will explain the highlights of non-consolidated operating
performance of Sony Life.
Sony Life posted a 10% increase in ordinary revenues compared with thefirst nine months of the previous fiscal year, to ¥546.9 billion, as the policy
amount of individual insurance in force and new insurance sales remainedrobust, boosting income from insurance premiums, and general accountinvestment income increased.
Ordinary profit grew ¥9.3 billion, to ¥32.8 billion, mainly because of
improved general account investment profit.
Owing to higher ordinary profit, net income expanded ¥3.7 billion, to ¥18.1
billion.
The Company posted extraordinary losses of ¥1.9 billion, owing mainly to
an increase in the provision for reserve for price fluctuations in the life
insurance business.

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

3Q FY2006

3Q FY2007(Nine months,
cumulative)(Nine months,
cumulative)

Percentagechange30,027.8

31,255.0+ 4.1％

497.6

524.6

+ 5.4％

115.8

122.0

+ 5.3%

Lapse and surrender rate*1, *2

4.34％

4.61％

+ 0.27 pt

New insurance sales

2,637.3

2,910.9+ 10.4％

49.2

48.3

(1.8) ％

10.9

10.3

(5.7) %

Income from insurance premiums

442.9

479.7

+ 8.3％

Investment profit

48.9

41.7

(14.6)％

18.6

19.8

+ 6.8％

Policy amount in force*1
Annualized premiums frominsurance in force*1
Of which, third-sector products*1

Annualized premiums from new
insurance sales*1
Of which, third-sector productsCore profit
Notes:

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

*1 Each figure of policy amount in force, annualized premiums from insurance in force, lapse and surrender rate, new insurance sales 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.

5

The slide below 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)Insurance in ForceNew Insurance Sales(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)(Trillions of yen)

(Millions of policies)

+7.3%

3.76
3.47
27.3

28.7

(Thousands of policies)

Number of newpolicies (3Q)

4.37

4.07
30.0

(Trillions of yen)

2.70
31.2

+4.1%

387

2.91

500

+10.4%

2.52
379

2.63
400

391 +2.3% 401
300

200

100

0

(Nine months, cumulative)
Line item amounts are truncated below ¥100billon or ¥10 billion; numbers of policies are truncated below 10,000 or 1,000 policies; percentage change figures are rounded.

6

Sony Life’s insurance in force grew steadily during the term. As a result,policy amount in force was up 4.1% from December 31, 2006, to ¥31.2
trillion. The number of policies in force rose 7.3% during the term, to 4.37
million policies.
During the first nine months, new insurance sales on a policy amountbasis increased 10.4%, to ¥2.91 trillion.
Sales of death protection products were brisk. The number of newpolicies expanded 2.3%, to 401 thousand policies.

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

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

70
+5.4％

60
▲1.8%

50
40
30
20
+5.3%

10

▲5.7%

0
(Nine months, cumulative)

Line item amounts are truncated below ¥100 million.

7

Annualized premiums from insurance in force rose 5.4% from December
31, 2006, to ¥524.6 billion. Of this amount, third-sector products rose
5.3%, to ¥122.0 billion.
Annualized premiums from new insurance sales fell 1.8% compared withthe first nine months of the previous fiscal year, to ¥48.3 billion. For thirdsector products, this amount fell 5.7%, to ¥10.3 billion.

7

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

Ordinary Profit(Non-Consolidated)Core Profit(Billions of yen)(Billions of yen)Core profit (3Q)
40

479.7
442.9

32.8

+8%
30

23.5

+40%

20

18.6

19.8
+7%

10

0
3Q FY2006(Nine months, cumulative)(Nine months, cumulative)

3Q FY07(Nine months, cumulative)

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

Income from insurance premiums grew 8% compared with the first ninemonths of the previous fiscal year, to ¥479.7 billion, owing to a robust
policy amount in force.
Sony Life's non-consolidated ordinary profit increased ¥9.3 billion, to ¥32.8
billion, owing to improved general account investment profit.
Core profit came to ¥19.8 billion, up ¥1.2 billion.

Sony Life Operating Performance (4)Lapse and Surrender Rate*

Lapse and Surrender Rate*(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)<fiscal year & first half>

<3Q>

（%）

（％）

6.32

3.16

5.84

5.79

4.34
2.89

2.81

4.61

3.01

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

The lapse and surrender rate was up 0.27 percentage point compared withthe first nine months of the previous fiscal year, to 4.61%. That is still a low
level compared with other companies in the same industry.

Sony Life Operating Performance (5)Breakdown
31, 2007 vs. September 30, 2007 vs. March 31, 2007)
Breakdown ofof General
General Account
Account Assets
Assets (December(December 31, 2007 vs. September 30, 2007 vs. March 31, 2007)

2.6%

Other securities
Real estate
Policyholder loans, including commercial loans
Monetary trusts
Foreign stocks
Foreign government and corporate bonds
Japanese stocks
Japanese government and corporate bonds (incl. CBs)
Cash and call loans

Notes:
CBs account for slightly more than 10% of generalaccount assets (CBs within government andcorporate bonds and CBs within monetary trusts).
Stocks account for slightly less than 10% of generalaccount assets, including stocks in monetary trusts.

10This is a breakdown of Sony Life’s general account assets as ofDecember 31, 2007, compared with March 31, 2007 and September 30,
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 slightly under 10% ofgeneral account assets, while convertible bonds account for slightly morethan 10%.

10

Sony Life Operating Performance (6)Embedded Value (EV)(Billions of yen)

Adjusted net worth

Value of in-force business

Of which, value of new business in the fiscal year

1,000

900.5
776.1

800

600

492.0

539.3
Adjusted
net worth

400

261.7

270.7

240.1

200

38.9

38.1

34.2

36.7

0

3/31/04

3/31/05

3/31/06

3/31/07

9/30/07

12/31/07

The assumptions upon which EV is calculated at the end of FY2003, FY2004,
FY2005 and FY2006 differ. For details regarding calculation methods, pleaserefer to the press releases for each of these years.

The Company discloses its embedded value at the end of each fiscal year.
At this stage, I will say that as of December 31, 2007, adjusted net worth,which is one of the figures used in this calculation, was ¥240.1 billion,
down ¥21.6 billion from March 31, 2007. This decrease was due primarily
to a reduction in net unrealized gains on other securities.

Highlights of Operating Performance:
Sony Assurance(Billions of yen)

38.2

+9%

3.0

1.8
(Billions of yen)

(Nine months,
cumulative)

41.6

Change+3.4+9%Underwriting income

37.8

41.2

+3.3

+9%

Investment income

0.3

0.4

+0.0

+20%
+6%

Ordinary expenses+67%

3Q FY2007(Nine months,
cumulative)

38.2

Ordinary revenues

41.6

3Q FY2006

36.4

38.6

+2.2

Underwriting expenses

27.4

28.9

+1.5

+6%

Investment expenses

0.0

0.0

+0.0

+62%

9.0

9.6

+0.6

+7%

1.8
1.3
13.0
63.4

3.0
2.5
15.8
74.3

+1.2
+1.2
+2.8
+10.9

+67%
+90%
+22%
+17%

Operating, general andadministrative expenses
Ordinary profit
Net income
Total net assets
Total assets(Nine months, cumulative)

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

Sony AssuranceRevenues and profit up compared with first nine months of
FY2006
Net premiums written of ¥41.1 billion , owing to increase in
number of policies for mainstay automobile insuranceLoss ratio and net expense ratio improved, pushing ordinary
profit up to ¥3.0 billion
Combined ratio improved 0.5 percentage point, to 77.4%
12

Next, I will explain the highlights of Sony Assurance’s operating
performance.
Sony Assurance posted a 9% increase in ordinary revenues comparedwith the first nine months of the previous fiscal year, to ¥41.6 billion, owing
chiefly to favorable performance in automobile insurance, which raised net
premiums written.
Ordinary profit rose ¥1.2 billion to ¥3.0 billion. In addition to the increase inordinary revenues, this increase in ordinary profit was also due to an
improvement both in the net loss ratio and the net expense ratio.
Net income rose ¥1.2 billion to ¥2.5 billion.

12

Overview of Performance: Sony Assurance(Billions of yen)

3Q FY2006

3Q FY2007(Nine months, cumulative)(Nine months, cumulative)

Direct premiums written

37.5

40.9

+9％

Net premiums written

37.8

41.1

+9％

ChangeNet losses paid

17.7

19.1

+8％

Net loss ratio

52.4％

52.3％

0.1 pt improvement

Net expense ratio

25.5％

25.1％

0.4 pt improvement

Combined ratio

77.9％

77.4％

0.5 pt improvement

910 thousand

1,000 thousand+ 10％

Number of policies in force

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.
Net expense ratio = Operating expenses related to underwriting ÷ net premiums written
Net loss ratio = (Net losses paid + expenses incurred in surveying damages) ÷ 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.

13This slide shows the principal indicators of Sony Assurance’s financial
performance.
I will provide additional explanation in later slides, along with past results.

13

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

60

50

(%)

(Thousands of policies)

Other
Personal accident insurance
Automobile insurance
Number of policies in force

910
40

Combined Ratio

37.8

+10%

86.5
1,000

1,000

(3Q)

82.5

79.9

77.9

77.4

41.1

+9%

30
500
20

10

0

0
3Q FY2006

3Q FY2007(Nine months, cumulative)

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 androunded below 10,000 for the number of policies in force; percentage change
figures are rounded.

Net expense ratio = Operating expenses related to underwriting ÷ net
premiums written
Net loss ratio = (Net losses paid + expenses incurred in surveying damages)
÷ net premiums written

14

In terms of insurance underwriting, as you see here the number ofpolicies in force increased steadily. The number of policies in force as ofDecember 31, 2007—the total number of automobile insurance andmedical and cancer insurance policies—was up 10% compared with
December 31, 2006, to 1 million policies. Net premiums written grew 9%
compared with the first nine months of the previous fiscal year, to ¥41.1
billion.
The net loss ratio improved 0.1 percentage point to 52.3%.
The net expense ratio improved 0.4 percentage point, to 25.1% due toongoing increases in operating efficiency.
As a result, the combined ratio, which is the sum of the net loss ratio andthe net expense ratio, improved 0.5 percentage point, to 77.4%.

14

Sony Assurance Operating Performance (2)Ordinary Profit(Billions of yen)

3.0

+67%

1.8

(Nine months, cumulative)
Line item amounts are truncated below ¥100 million.

15

The steady increase in the number of policies that I mentioned earlier, as
well as appropriate control of operating expenses, enabled Sony
Assurance to continue improving its profitability. As a result, ordinary profit
increased ¥1.2 billion compared with the first nine months of the previous
year, to ¥3.0 billion.

15

Highlights of Operating Performance:
Sony Bank (Non-Consolidated)
Ordinary revenues
Ordinary profit+26%

Ordinary revenues

14.4

18.1

+3.7

+26%

Gross operating profit

6.7

7.9

+1.2

+19%

Net interest income

3.1

3.8

+0.6

+21%

0.1

0.3

+0.1

+78%

3.3

3.8

+0.4

+14%

General andadministrative
expenses

5.8

5.8

+0.0

+0%

Ordinary profit

（

0.8

2.0

+1.2

+144%

億
Net income

0.4

2.5

+2.1

+488%

Securities）

393.2

441.7

+48.4

+12%

Loans

260.7

331.6

+70.9

+27%

Deposits

717.5

980.6

+263.0+37%

Customer assets

807.3

1,097.4+290.1＋36%

Total net assets

36.0

38.5

+2.5

+7%

Total assets

782.6

1,058.1+275.5+35%

Net fees andcommissions
Net other operating
income2.0

0.8(Billions of yen)
3Q FY2006

3Q
FY2007(Nine months,
cumulative)

18.1

14.4

+144%

3Q
FY2006(Nine months,
cumulative)(Billions of yen)

3Q FY2007(Nine months, cumulative)

Sony Bank
Revenues and profit both up compared with the first nine months of
FY2006
Principally, net interest income and net fees and commissions
expanded, driven up primarily by higher interest on loans—stemming froma higher mortgage loan balance—and higher brokerage fees andcommissions received.
Owing to an increase in deferred income taxes, net income expanded
substantially, to ¥2.5 billion.
Gross operating profit totaled ¥7.9 billion; the sum of net interest incomeof ¥3.8 billion, net fees and commissions of ¥0.3 billion and net otheroperating income of ¥3.8 billion. General and administrative expenses
remained even, at ¥5.8 billion.
Customer assets were up ¥248.5 billion, compared with March 31, 2007,
to ¥1,097.4 billion.

円

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

16

Sony Bank delivered a 26% rise in ordinary revenues compared with thefirst nine months of the previous fiscal year, to ¥18.1 billion. As interest on
loans increased in line with a higher mortgage loan balance, interest
income grew.
Owing to the rise in gross operating profit, ordinary profit increased ¥1.2
billion, to ¥2.0 billion.
In part due to an increase in deferred income tax assets, the company’s
net income expanded substantially, to ¥2.5 billion.

16

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

3Q FY2006

3Q FY2007(Nine months, cumulative)(Nine months, cumulative)

Percentage change

Gross operating profit

6.7

7.9

+ 19％

General andadministrative
expenses

5.8

5.8

+ 0％

Net operating profit

0.8

2.1

+ 141％

Ordinary profit

0.8

2.0

+ 144％

Customer assets

807.3

1,097.4+ 36％

Of which, 1Q-3Q increase

132.2

248.5

+ 88％

Loans

260.7

331.6

+ 27％

21.2

46.9

+ 121％

9.89％

10.79％+ 0.9 pt

Number of accounts

471 thousand

556 thousand+ 18％

Of which, 1Q-3Q increase

41 thousand

65 thousand+ 23 thousand

Of which, 1Q-3Q increase
Capital adequacy ratio(domestic criteria)

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

17

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

17

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

Number of accounts (thousands)
Investment trusts

556

Foreign-currency deposits

491
430

458

1,097.4
1,006.0

848.8
762.7

(Billions of yen)532

Yen deposits

Investment
trusts:¥116.8 billion

319.1

Foreigncurrency
deposits:¥198.7 billion

284.7
239.4

675.1

331.6

249.1

Yen deposits:¥781.8 billion

Others:¥7.6
billionMortgageloans:¥323.9billionAmounts are truncated below ¥100 million.

18

As of December 31, 2007, owing to an increase in business, the balance ofcustomer assets (the total of deposits and investment trusts) expanded,largely due to the contribution of increased yen time deposits. The balance
amounted to ¥1,097.4 billion, up ¥248.5 billion, or 29.3%, from March 31,
2007.
Total yen and foreign currency deposits amounted to ¥980.6 billion, up¥228.2 billion, or 30.3%, from March 31, 2007.
Investment trusts were up ¥20.3 billion compared with March 31, 2007, or
21.1%, to ¥116.8 billion, slightly lower than the ¥117.6 billion recorded asof September 30, 2007. Major factors behind this decrease included alackluster stock market during the third quarter, leading to lower constantvalues on investment trusts.
Loans, however, were up ¥46.9 billion, or 16.5%, to ¥331.6 billion.
On December 31, 2007, accounts numbered 556 thousand, up 65
thousand.

18

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

Capital Adequacy Ratio(Domestic Criteria)（％）(Billions of yen)

7.9
6.7

6.7
5.8

5.0

5.1

11.49
10.52

5.8

10.94

10.79

9.24

3.0
2.0
1.5
0.8

(2.0)
Amounts are truncated below ¥100 million.

(Nine months, cumulative)

Note: Capital adequacy ratios as of March 31, 2007, September 30, 2007 andDecember 31, 2007 were calculated based on the standard stipulated in the
Financial Services Agency Public Announcement No. 19 of 2006. The capital
adequacy ratios up to and including those for December 31, 2006 were
calculated based on the standard stipulated in the former public announcement.

19

Looking next at profitability, boosted by such factors as higher net interest
income, gross operating profit grew ¥1.2 billion compared with the first ninemonths of the previous fiscal year, to ¥7.9 billion.
Breaking down gross operating profit, net interest income increased ¥0.6
billion to ¥3.8 billion, as a result of a larger balance of investment assets
through the expansion of operations. Net fees and commissions grew ¥0.1
billion, to ¥0.3 billion, as a larger investment trust balance pushed up
brokerage fees and commissions received. Net other operating income
increased ¥0.4 billion, to ¥3.8 billion, as market investment profit improved.
The Bank’s capital adequacy ratio was 10.79%, a sound level.
(Next, I will explain Sony Financial Holdings’ revised consolidated
operating performance forecast, which was announced on January 31.)19

Consolidated Operating Performance Forecast
for Full Fiscal Year (FY2007)(Billions of yen)

FY2006
Consolidated ordinary
revenues

FY2007

FY2007(Previous forecast)(Current forecast)

Change fromprevious forecast

809.0

815.0

+ 0.7%+ 7.3%

759.2

Year-on-yearchangeConsolidated ordinary profit

18.3

35.0

41.0

+ 17.1%+ 123.4%

Consolidated net income

10.0

21.0

24.0

+ 14.3%+ 139.5%

Line item amounts are truncated below ¥100 million; changes are rounded.

Consolidated Ordinary Revenues(Billions of yen)

Consolidated Ordinary Profit(Billions of yen)

815.0

41.0

759.2

18.3

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On January 31, the Company revised upward its operating performance
forecast for fiscal 2007, owing to strong performance in the life insurance,
non-life insurance and banking businesses and taking into account fourthquarter operating performance expectations.
We revised our forecast for ordinary revenues upward ¥6.0 billion, to¥815.0 billion. The ordinary profit forecast was revised upward ¥6.0 billion,to ¥41.0 billion. We revised our net income forecast upward ¥3.0 billion, to¥24.0 billion.
(Next, I will provide an update on new business progress.)

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New Business Progress Update
Sony Bank Securities
 Began accepting applications to open accounts: October 1, 2007
 Began Japanese stock transactions: October 15, 2007
 Number of accounts as of December 31, 2007: 5,284
 Customer assets as of December 31, 2007: ¥1,788 million

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 deliver 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

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I will explain third-quarter new business developments, which included Sony
Bank Securities’ commencement of operations last October. Also, Sony Life
received approval to handle banking business on behalf of Sony Bank.
Sony Bank Securities was established in June 2007 with the aim of enabling
the offering to Sony Bank customers of own highly convenient securities
investment services. Sony Bank Securities commenced operations in
October. As of December 31, 2007, the company had 5,284 securities
accounts and customer assets of ¥1.7 billion. To enhance convenience toits customers after operations had begun, on January 28 the company
began handling exchange traded funds, or ETFs, and real estate investment
trusts, or REITs.
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.
Last, I will provide some details about the differences between SFH’s
consolidated results and those of Sony Group’s Financial Services segment,
owing to differences between Japanese GAAP & US GAAP. Please refer tothe following Appendix page.

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APPENDIX

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Appendix22

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(Mainly concerns the life insurance
business)

Insurance acquisition costs that vary with and areprimarily related to acquiring new insurance
policies are deferred as long as they arerecoverable generally over the premium-paying
period of the related insurance policies.

Insurance acquisition costs are charged to income
when incurred.

Method of calculating policy reserves（future insurance policy benefits)(Mainly concerns the life insurance
business)

Calculated according to the net level premium
method with certain adjustments of actuarial
assumptions for U.S. GAAP purposes.

Calculated according to methods approved by
Japan’s Financial Services Agency. Computedwith an emphasis on the early accumulation ofpolicy reserves from the standpoint of protecting
policyholders.

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

Changes in fair value (changes in market value)of so-called “hybrid financial instruments,” whichcontain embedded derivatives, are charged toincome.

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 significant to SFH’s consolidated ordinary profit for the nine months
ended December 31, 2007.
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 (for reference purposes): Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank
Inc., Sony Finance International Inc., and the other• SFH consolidated: Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank Inc., Sony Bank Securities Inc., and Sony Life Insurance(Philippines) Corporation
3.Under U.S. accounting treatments, 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 treatments the book value is carried as the CB acquisition price even after conversion. Consequently,
gains or losses on the sales of shares converted from CBs (differences between selling prices and book values) and impairment losses of shares converted
from CBs (differences between market value and book value) differ depending on the use of U.S. or Japanese accounting treatments.

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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 nine months ended December 31, 2007.
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 like ourlife 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 as changes
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 thebook 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 ofeither 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 those shares as a result ofrecording 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.
This concludes our explanation.
Now, I will take any questions you may have. Are there any questions?

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Contacts:
SFH

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

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Contacts

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