Presentation Material

Consolidated Financial Results
for the Nine Months Ended December 31, 2017
andSony Lifeʼs MCEV as of December 31, 2017

Sony Financial Holdings Inc.
February 14, 2018
Sony Financial Holdings Inc. All Rights Reserved

Content
 Consolidated Operating Results for the Nine Months Ended December 31, 2017P.3

 Forecast of Consolidated Financial Results for the Fiscal Year Ending
March 31, 2018 (FY17)

P.28

 Sony Lifeʼs MCEV and ESR as of December 31, 2017

P.30

 Appendix

P.33

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

Sony Financial Holdings Inc. All Rights Reserved

Content2

Consolidated Operating Results
for the Nine Months Ended December 31, 2017
<FY17.3Q (9M)>Sony Financial Holdings Inc. All Rights Reserved3Management Message
 Taking into account performance of the life insurance business in

FY17.3Q (9M), we have revised upward our full-year forecast for
consolidated ordinary revenues, downward for consolidated ordinary
profit, and upward for profit attributable to owners of the parent.
Business continues to grow steadily at Sony Life, Sony Assurance andSony Bank.

 At Sony Life, thanks to positive performance in new products launchedin October 2017, new policy amount and new business value inFY17.3Q (3M) grew solidly quarter on quarter.

 In line with our medium-term dividend policy, after taking into accountsuch factors as the operating environment, business growth and the
expansion of profit based on economic value, we have revised upward
our FY17 year-end dividend forecast from ¥55 to ¥60 per share.

Sony Financial Holdings Inc. All Rights Reserved

4

Performance of the life insurance business in FY17.3Q (9M) differed from ourinitial expectations. Accordingly, we have revised upward our full-year forecast
for consolidated ordinary revenues, downward for consolidated ordinary profit,
and upward for profit attributable to owners of the parent. Business continues
to grow steadily at Sony Life, Sony Assurance and Sony Bank.
At Sony Life, thanks to positive performance in new products launched in
October 2017, new policy amount and new business value in FY17.3Q (3M)grew solidly quarter on quarter.
In line with our medium-term dividend policy, after taking into account suchfactors as the operating environment, business growth and the expansion of
profit based on economic value, we have revised upward our FY17 year-end
dividend forecast to ¥60 per share from ¥55, from the previous forecast,announced on April 28, 2017.

Highlights of Consolidated Operating Performance (1)Consolidated ordinary revenues
Consolidated ordinary profit

1,041.3+12.9%

1,175.8

Life insurance
business
Non-life
insurancebusiness
Bankingbusiness
Intersegment
adjustments*(1.6%)

49.5

50.3(JPY bn)

FY16.3Q (9M)

FY17.3Q (9M)

(JPY bn)

FY16.3Q(9M)

FY17.3Q(9M)

Ordinary revenues

939.1

1,062.1+123.0+13.1%

Ordinary profit

42.3

40.2

(2.1)

(5.1%)

Ordinary revenues

75.9

82.4

+6.4

+8.5%

Ordinary profit

4.9

5.0

+0.0

+0.8%

Ordinary revenues

28.5

29.6

+1.1

+3.9%
+53.4%

3.3

5.0

+1.7

Ordinary revenues

(2.3)

1.5

+3.8

－

Ordinary profit

(0.4)

(0.8)

(0.4)

－

1,041.3

1,175.8+134.5+12.9%

Ordinary profit

50.3

49.5

(0.7)

(1.6%)

Profit attributableto owners of theparent

33.7

42.4

+8.7

+26.0%

Ordinary profit

Ordinary revenues
Consolidated

Change*“Intersegment adjustments” is mainly from SFH and the nursing care business.
Proud Life Inc., a company of nursing care business, has been included in the scope of
consolidation from FY17.2Q.
(Note) Comprehensive income : FY16.3Q (9M): ¥18.2 billion, FY17.3Q (9M) : ¥ 48.6 billion(JPY bn)
Consolidated

Net assets
Total assets

Mar. 17

Dec. 17

Change from
Mar. 17

601.1

621.8

+20.7

+3.4%

11,471.8

12,271.6+799.7+7.0%Sony Financial Holdings Inc. All Rights Reserved

Consolidated ordinary revenues increased 12.9% year on year,to ¥1,175.8 billion, owing to increases in ordinary revenues from all thebusinesses: life insurance, non-life insurance and banking businesses.
Consolidated ordinary profit decreased 1.6% year on year, to ¥49.5 billion.
By business segment, ordinary profit from the life insurance businessdecreased, ordinary profit from the non-life insurance business was flatand ordinary profit form the banking business rose.
Profit attributable to owners of the parent, however, was up 26.0%
year on year, to ¥42.4 billion. This increase was due to a gain on disposalof fixed assets from a sale of the real estate held for investment of¥13.2 billion in the life insurance business, which was recorded in
extraordinary gains in FY17.3Q (3M).

5Highlights of Consolidated Operating Performance (2) Life Insurance Business︓Ordinary revenues grew year-on-year due to steady investment performance inthe separate account and higher income from insurance premiums, owing to a steady rise in the policy
amount in force. Ordinary profit decreased year on year due to a higher provision of policy reserve
relating to the acquisition of new policies reflecting a revision in the standard yields used for calculating
policy reserves, lower gains on sale of securities in the general account and a deterioration in net
gains/losses on derivative transactions to hedge market risks for available-for-sale securities. On theother hand, gains/losses related to market fluctuations for variable life insurance* improved year on year,
which partially offset the negative impact of the above-mentioned decreases in ordinary profit.

*Total of (a) the provision of policy reserves for minimum guarantees for variable life insurance according to market fluctuations and(b) net gains/losses on derivative transactions to hedge market risks for the products Non-life Insurance Business: Ordinary revenues expanded year on year, owing to an increase in net

premiums written for mainstay automobile insurance. Due to a lower car accident ratio, offset by a rise inadvertising and other operating expenses, ordinary profit was flat year on year despite a decline in theloss ratio.
 Banking Business︓Ordinary revenues rose year on year due to increases in interest income on loans inline with a favorably growing balance of mortgage loans and on investment securities. Ordinary profit
grew year on year, due to a decrease in operating expenses, especially in advertising expenses for thecard loan business.
 Consolidated ordinary revenues increased 12.9% year on year, to ¥1,175.8 billion, owing to increases inordinary revenues from all the businesses: life insurance, non-life insurance and banking businesses.
Consolidated ordinary profit decreased 1.6% year on year, to ¥49.5 billion. By business segment,
ordinary profit from the life insurance business decreased, ordinary profit from the non-life insurance
business was flat and ordinary profit from the banking business rose. Profit attributable to owners of theparent, however, was up 26.0% year on year, to ¥42.4 billion. This increase was due to a gain on
disposal of fixed assets from a sale of the real estate held for investment of ¥13.2 billion in the life
insurance business, which was recorded in extraordinary gains in FY17.3Q (3M).
Sony Financial Holdings Inc. All Rights Reserved

6

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

938.9

Ordinary profit

1,062.0+13.1%

FY16.3Q(9M)

FY17.3Q
(9M)

938.9

1,062.0+123.0

Income from insurance premiums

705.4

762.8

+57.3

+8.1%

Investment income

195.0

254.3

+59.3

+30.4%

110.0

117.7

+7.7

+7.0%

3.3

3.3

(0.0)

(0.1%)(100.0%)(JPY bn)
Ordinary revenues

Interest income and dividends
Income from money held in trust, net(7.2%)(JPY bn)

45.1
33.2
FY16.3Q (9M)

41.9

FY17.3Q (9M)

◆ Ordinary revenues increased but ordinary profit decreased.

Change+13.1%

Gains on sale of securities

1.3

0.0

(1.3)

Foreign exchange gains, net

24.2

2.8

(21.4)(88.4%)

Gains on separate accounts, net

55.9

130.1

+74.2

+132.8%

Ordinary expenses

893.7

1,020.1+126.3+14.1%

Insurance claims and other payments

276.0

328.6

+52.6

+19.1%

Provision for policy reserves and others

447.0

524.3

+77.2

+17.3%

Investment expenses

38.9

28.6

(10.3)(26.5%)(30.0%)

Losses on derivatives, net
Operating expenses◆ Income from insurance premiums increased owing to a steady rise in
the policy amount in force.
◆ Investment income increased due to an increase in gains on separate
accounts, net.
◆ Ordinary profit decreased due to a higher provision of policy reserve
relating to the acquisition of new policies reflecting a revision in thestandard yields used for calculating policy reserves, lower gains onsale of securities in the general account and a deterioration in net
gains/losses on derivative transactions to hedge market risks foravailable-for-sale securities. On the other hand, gains/losses related
to market fluctuations for variable life insurance* improved year on
year, which partially offset the negative impact of the abovementioned decreases in ordinary profit.

Ordinary profit*Total of (a) the provision of policy reserves for minimum guarantees forvariable life insurance according to market fluctuations and (b) net
gains/losses on derivative transactions to hedge market risks for the products

Total assets

Gains on disposal of fixed assets
Net income

34.2

23.9

(10.2)

101.6

102.9

+1.3

+1.3%

45.1

41.9

(3.2)

(7.2%)

－

13.2

+13.2

－

31.2

37.5

+6.3

+20.4%

Mar. 17

Dec. 17

Change from Mar. 17

Securities

8,093.1

8,628.5+535.3

Policy reserves

7,929.9

8,454.2+524.3

+6.6%

473.5

491.5

+17.9

+3.8%
+2.7%

(JPY bn)

Net assets
Net unrealized gains on other securities

Separate account assets

Sony Financial Holdings Inc. All Rights Reserved

+6.6%

127.7

131.2

+3.4

8,873.6

9,450.5+576.9

+6.5%

989.6

1,161.7+172.1+17.4%

7

Sony Lifeʼs ordinary revenues increased 13.1% year on year,to ¥1,062.0 billion, due to a steady investment performance in the separate
account and higher income from insurance premiums, owing to a steady risein the policy amount in force.
Ordinary profit decreased 7.2% year on year, to ¥41.9 billion. This decrease
was due to a higher provision of policy reserve relating to the acquisition of
new policies reflecting a revision in the standard yields used for calculating
policy reserves, lower gains on sale of securities in the general account anda deterioration in net gains/losses on derivative transactions to hedge market
risks for available-for-sale securities.
On the other hand, gains/losses related to market fluctuations for variable life
insurance* improved year on year, which partially offset the negative impactof the above-mentioned decreases in ordinary profit.
*The total of (a) the provision of policy reserves for minimum guarantees for variable life
insurance according to market fluctuations and (b) net gains/losses on derivative transactions tohedge market risks for the products

While ordinary profit decreased, net income increased 20.4% year on year, to¥37.5 billion. This increase was due to a gain on disposal of fixed assets froma sale of the real estate held for investment.

Overview of Operating Performance:
Sony Life (Non-consolidated)
FY16.3Q(9M)

FY17.3Q(9M)

New policy amount

3,499.7

3,445.4

Lapse and surrender amount

1,371.1

1,330.3(3.0%)

Lapse and surrender rate

3.18%

2.94%

(0.24pt)

44,633.9

46,763.4

+4.8%

54.1

51.9

(4.1%)(JPY bn)

Policy amount in force
Annualized premiums from new policies
Of which, third-sector products
Annualized premiums from insurance in force
Of which, third-sector products

Change(1.6%)

11.2

9.3(16.8%)

807.3

842.4

+4.3%

185.1

190.7

+3.0%

＜Reasons for changes＞◆ Decreased due mainly to lower
sales of term life insurance
despite favorable sales of U.S.
dollar-denominated insurance.
◆ Decreased due mainly to lower
sales of term life insurance andliving benefit insurance despite
favorable sales of U.S. dollardenominated insurance, variable
life insurance and individual
annuities.

Notes:
1. Figures for new policy amount, lapse and surrender amount, lapse and surrender rate, policy amount in force,
annualized premiums from new policies and annualized premiums from insurance in force are calculated as thetotal of individual life insurance and individual annuities.
2. The lapse and surrender rate shows the ratio derived by dividing the amount of lapses and surrenders,
not adjusted for policy amount decreases, increases, and reinstatements, by the policy amount in force at the
beginning of the fiscal year.

(JPY bn)

FY16.3Q(9M)

FY17.3Q(9M)

ChangeGains from investment, net (General account)

100.0

95.4

Core profit

65.8

70.6

+7.3%

Positive spread

11.1

13.9

+25.2%

Non-consolidated solvency margin ratio(4.6%)

Mar. 17

Dec. 17

ChangefromMar. 17

2,568.8%

2,711.1%+142.3pt

Sony Financial Holdings Inc. All Rights Reserved◆ Increased due mainly to anincrease in profit fromaccumulated policies in force
and a rise in positive spread
despite a higher provision ofpolicy reserve relating to theacquisition of new policies
reflecting a revision in thestandard yields used for
calculating policy reserves.

8

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

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

6

4

Annualized premiums from new policies

Number of new policies（Thousandsof policies)

501

5(Individual Life Insurance + Individual Annuities)

500

388

(1.2%)

384

3.49(1.6%)

3.44

400

4.05

Of which, third-sector（JPY bn）

70

65.8

60

54.1

51.9

(4.1%)

50
300

40

3
200

2

30
20

100

1

0

0
FY15.3Q (9M)

FY16.3Q (9M)

FY17.3Q (9M)10(16.8%)

12.0

11.2

FY15.3Q (9M)

FY16.3Q (9M)

9.3

0FY17.3Q (9M)Sony Financial Holdings Inc. All Rights Reserved

9(Left-hand graph)
New policy amount for the total of individual life insurance and individual
annuities decreased 1.6% year on year, to ¥3,445.4 billion. This decrease
was due mainly to lower sales of term life insurance, despite favorable salesof U.S. dollar-denominated insurance.
The number of new policies decreased 1.2% year on year, to 384 thousand
policies.
(Right-hand graph)
Annualized premiums from new policies decreased 4.1% year on year,
to ¥51.9 billion, due mainly to lower sales of term life insurance and living
benefit insurance, despite favorable sales of U.S. dollar-denominatedinsurance, variable life insurance and individual annuities.
Of which, the figure for third-sector products decreased 16.8% year on year,to ¥9.3 billion.

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

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

+3.4%

60

7.30

7.25
44.6

Annualized premiums from insurance in force

Number of policies in force（JPY tn）

50(Individual Life Insurance + Individual Annuities)（Millionsof policies) （JPY bn）
+2.6%

6

+3.2%

40

8

800

807.3

+4.3%

842.4

820.8
+2.6%

46.7

45.3

+4.8%

7.49

Of which, third-sector

30

600

4

400

2

200

20
10
0

0
Dec. 16Mar. 17

Dec. 17

+3.0%

185.1

187.4

Dec. 16Mar. 17

+1.7%

190.7

0
Dec. 17

Sony Financial Holdings Inc. All Rights Reserved

10Sony Lifeʼs policy amount in force which reflects new policy amountand lapse and surrender amount, is shown here.
(Left-hand graph)
Policy amount in force for the total of individual life insurance andindividual annuities increased 4.8% year on year, to ¥46.7 trillion.
The number of policies in force increased 3.4% year on year,
to 7.49 million policies.
(Right-hand graph)
Annualized premiums from insurance in force increased 4.3% year on year,to ¥842.4 billion.
Of which, the figure for third-sector products was up 3.0% year on year,to ¥190.7 billion.

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

Lapse and surrender rate
(12M)

Lapse and surrender rate
（9M）

8

6

4.72

4.27

4

(0.24pt)

3.60
2

3.18

2.94

0
FY15

FY16

FY17

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

Sony Financial Holdings Inc. All Rights Reserved

Lapse and surrender rate was down 0.24 percentage points
year on year, to 2.94%.

11

Operating Performance :Sony Life (Non-consolidated) (4)Income from Insurance Premiums(JPY bn)

800

754.8

762.8
705.4

Interest Income and Dividends(JPY bn)

117.7

120

105.5

＋8.1%

110.0
＋7.0%

100

600

80
400

60
40

200

20
0

0
FY15.3Q (9M)

FY16.3Q (9M)

FY17.3Q (9M)

FY15.3Q (9M)

FY16.3Q (9M)

FY17.3Q (9M)Sony Financial Holdings Inc. All Rights Reserved(Left-hand graph)
Income from insurance premiums increased 8.1% year on year,
amounting to ¥762.8 billion, owing to a steady rise in the policy amountin force.
(Right-hand graph)
Interest income and dividends increased 7.0% year on year,to ¥117.7 billion, reflecting an expansion in investment assets
along with business expansion.

12

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

Core Profit(JPY bn)

70

65.8

+7.3%

(JPY bn)

70.6

50

60

49.0

45.1

(7.2%)

41.9

40

50
40

30

35.1

30

20

20

10

10
0

0
FY15.3Q (9M)

FY16.3Q (9M)

FY17.3Q (9M)

(Reference) Impact on core profit(JPY bn)
Positive spread
Provision of policy reserves for minimum
guarantees for variable life insurance (*)
Others

FY15.3Q (9M)

FY16.3Q (9M)

(Reference) Main differences from core profit

FY15.3Q(9M)

FY16.3Q(9M)

FY17.3Q
(9M)

11.7

11.1

13.9

(24.2)

(4.5)

(4.8)

Capital gains (losses) excluding gains or losses onhedges (*)
Gains (losses) on hedges of variable life insurance

47.6

59.2

61.6

Provision of contingency reserve (*)(JPY bn)

FY17.3Q (9M)

FY15.3Q(9M)

FY16.3Q(9M)

FY17.3Q
(9M)

19.7

0.0

(9.4)

(0.6)

(14.2)(13.5)

(4.9)

(6.2)

(5.6)

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

Sony Financial Holdings Inc. All Rights Reserved(Left-hand graph)Core profit rose 7.3% year on year, to ¥70.6 billion, due mainly to
an increase in profit from accumulated policies in force and a rise inpositive spread despite a higher provision of policy reserve relating to
the acquisition of new policies reflecting a revision in the standard yields
used for calculating policy reserves.
(Right-hand graph)
Ordinary profit decreased 7.2% year on year, to ¥41.9 billion, due mainly
to lower gains on sale of securities in the general account anda deterioration in net gains/losses on derivative transactions to hedge
market risks for available-for-sale securities, despite a rise in core profit.

13

Operating Performance :Sony Life (Non-consolidated) (6)
Number of Lifeplanner Sales Employees+238(Number)

5,000
4,612

4,682

4,933

4,751

4,730

Sep. 16

Dec. 16

4,942

4,968

4,974
(6)

4,500

4,000

3,500

3,000
0

Mar. 16

Jun. 16Mar. 17

Jun. 17

Sep. 17

Dec. 17

Sony Financial Holdings Inc. All Rights Reserved

14

The number of Lifeplanner sales employees as of December 31, 2017 was
4,968, down 6 from September 30, 2017 and up 238 from December 31,
2016.
Since Sony Life does not hire new Lifeplanner sales employees in December,in addition to promoting Lifeplanner sales employees to unit manager in
October, the number of Lifeplanner sales employees as of the end of
December tends to be lower than that as of the end of September every year.

Operating Performance :Sony Life (Non-consolidated) (7)Breakdown of General Account Assets
Mar. 17<Asset management review>Dec. 17

Amount%Japanese bonds(including JGBs)

6,828.7

86.6%

7,145.8

86.2%

Japanese stocks

37.6

0.5%

36.6

0.4%

Foreign bonds

274.3

3.5%

325.4

3.9%

Foreign stocks

31.5

0.4%

32.6

0.4%

(JPY bn)Amount%Money held in trust

273.8

3.5%

270.1

3.3%

Policy loans

180.3

2.3%

186.5

2.3%

Real estate*

117.5

1.5%

92.6

1.1%

Cash and call loans

40.8

0.5%

75.2

0.9%

Others

99.1

1.3%

123.5

1.5%

7,884.0

100.0%

8,288.7

100.0%

Total*Real estate is the total of land, buildings, and construction in progress.

We have continued to accumulate
ultralong-term bonds to match the liability
characteristics of insurance policies withlong-term maturities with the aim of
reducing interest rate risk.
<Bond duration>
Mar. 16 21.8 years
Mar. 17 21.3 years
Dec. 17 21.2 years■ Investment in the money held in trust is
mainly into Japanese bonds.
■ The holding ratio on the real status ofJapanese bonds including those invested
in the money held in trust in the generalaccount : Dec. 17・・・89.5%（Mar. 17・・・90.1%）*The decrease in real estate was owing to a sale of the realestate held for investment in FY17.3Q.

Sony Financial Holdings Inc. All Rights Reserved

Here is a breakdown of Sony Lifeʼs general account assets as ofDecember 31, 2017, compared with that as of March 31, 2017.
The decrease in real estate balance was owing to a sale of the real estate
held for investment in FY17.3Q (3M).

15

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

3,000

2,722.8

2,568.8

2,500

2,711.1+142.3pt

2,000

1,500

1,000
0

Mar. 16Mar. 17

Dec. 17

Sony Financial Holdings Inc. All Rights Reserved

As of December 31, 2017, Sony Lifeʼs non-consolidated solvency margin
ratio was 2,711.1%, up 142.3 percentage points form March 31, 2017,
remaining at a high level.

16

Highlights of Operating Performance:
Sony Assurance
Ordinary revenues

Ordinary profit
FY16.3Q(9M)

FY17.3Q
(9M)

75.9

82.4

＋6.4

+8.5%

Underwriting income

74.3

81.0

+6.7

+9.1%

Investment income

1.5

1.3

(0.2)

(16.6%)

70.9

77.3

＋6.4

+9.1%

Underwriting expenses

52.5

56.7

＋4.1

+8.0%

Operating general andadministrative expenses

18.3

20.6

＋2.2

+12.3%

Ordinary profit

4.9

5.0

＋0.0

+0.9%

Net income

3.6

3.6

＋0.0

+0.9%

Mar. 17

Dec. 17

Underwriting reserves

106.1

114.9

+8.7

+8.3%

Net assets

29.4

31.6

+2.2

+7.7%

Total assets

186.5

196.1

+9.6

+5.2%

(JPY bn)

82.4

+8.5%

75.9

Ordinary revenues

Ordinary expenses
+0.9%

5.0

4.9
(JPY bn)

FY16.3Q (9M)

FY17.3Q (9M)

◆Ordinary revenues increased but ordinary
profit was flat year on year.
◆Ordinary revenues expanded owing to anincrease in net premiums written for
mainstay automobile insurance.
◆Due to a decline in the loss ratio, driven by alower car accident ratio, offset by a rise inadvertising and other operating expenses,
ordinary profit was flat year on year.

(JPY bn)

Sony Financial Holdings Inc. All Rights Reserved

ChangeChange from
Mar. 1717Sony Assuranceʼs ordinary revenues expanded 8.5% year on year,to ¥82.4 billion, owing to an increase in net premiums written for mainstay
automobile insurance.
Due to a decline in the loss ratio, driven by a lower car accident ratio,
offset by a rise in advertising and other operating expenses, ordinary profit
was flat year on year, to ¥5.0 billion.
Net income was flat year on year, to ¥3.6 billion.

Overview of Operating Performance:
Sony Assurance(JPY bn)

FY16.3Q(9M)

FY17.3Q(9M)<Reasons for changes>

ChangeDirect premiums written

73.3

80.0

+9.2%

Net premiums written

74.2

81.0

+9.1%

Net losses paid

36.9

38.5

+4.3%

Underwriting profit

3.4

3.7

+9.0%

Net loss ratio

57.2%

54.4%

(2.8pt)Net expense ratio

26.3%

27.1%

+0.8ptCombined ratio

83.5%

81.5%

(2.0pt)◆ Increased in its mainstay
automobile insurance.

◆ Increased due to a rise inadvertising and otheroperating expenses.

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

FY16.3Q(9M)

FY17.3Q(9M)

ChangeE. I. loss ratio

62.9%

61.8%

(1.1pt)E. I. loss ratio +Net expense ratio

89.2%

88.9%

(0.3pt)◆ Declined due to a lower car
accident ratio in automobile
insurance.

Note: E.I. loss ratio = (Net losses paid + Provision for reserve for outstanding losses + Loss adjustment expenses) / Earned
premiums [Earthquake insurance and compulsory automobile liability insurance are excluded from the above calculation.]Mar. 17

Dec. 17

Number of policies in force

1.89 mn

2.06 mnNon-consolidated
solvency margin ratio

730.8%

809.9%

Change from
Mar. 17+0.16 mn

+8.8%

+79.1pt

Sony Financial Holdings Inc. All Rights Reserved18Sony Assuranceʼs Underwriting Performanceby Type of Policy
Net Premiums Written

Direct Premiums Written(JPY ｍn)
Fire

FY16.3Q(9M)

FY17.3Q
(9M)

170

148

Change(12.7%)(JPY ｍn)
Fire

FY16.3Q(9M)

FY17.3Q
(9M)

18

11

Change(36.6%)

－

－

－

(2)

0

－

Personal accident

6,583

6,515

(1.0%)

Personal accident

6,811

6,671

(2.0%)

Voluntary
automobile

66,56373,379+10.2%

Voluntary
automobile

66,371

73,200+10.3%－－－

Compulsory
automobile liability

1,074

1,132

+5.3%

73,31780,043

+9.2%

Total

74,27381,016+9.1%

FY16.3Q(9M)

FY17.3Q(9M)

5

5

MarineCompulsory
automobile liability
Total

Net losses paid
(JPY ｍn)
Fire*Medical insurance is included in personal accident.

Change(4.7%)(9)2－

Personal accident

1,919

2,029

+5.7%

Voluntary
automobile

34,03435,501

+4.3%

991

995

＋0.4%

36,941

38,534+4.3%

MarineCompulsory
automobile liability
Total

MarineSony Financial Holdings Inc. All Rights Reserved

19

Operating Performance:
Sony Assurance (1)Net Premiums Written andNumber of Policies in Force
Voluntary automobile insurance
Others(JPY bn)

2.06+11.7%

1.77
71.7

1.84
74.2

+9.1%

2

1.5

60

48.5

1

0.5

20

7.3
6

4

6.0

5.0
33
4.9

27
3.8

0
FY15.3Q (9M)

FY16.3Q (9M)

FY17.3Q (9M)

The number of policies in force is the total of automobile insurance andmedical insurance policies.
Most of personal accident insurance is medical insurance.

+0.9%

2

0
FY15.3Q (9M)

0

7.6

+3.4%

(mn of policies)

81.0

40

Adjusted ordinary profit

Ordinary profit

Personal accident insurance

Number of policies in force(JPY bn)

80

Ordinary Profit andAdjusted Ordinary Profit

FY16.3Q (9M)

FY17.3Q (9M)

*Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve(Reference) Provision for catastrophe reserve(JPY bn)

Provision for catastrophe reserve

FY15.3Q(9M)

2.2

FY16.3Q(9M)

FY17.3Q
(9M)

2.3

2.5

*Provision for catastrophe reserve is described as positive amount.

Sony Financial Holdings Inc. All Rights Reserved(Left-hand graph)
The number of policies in force for the total of automobile insurance andmedical insurance increased 11.7% year on year, to 2.06 million policies.
Net premium written increased 9.1% year on year, to ¥81.0 billion,
due to stable sales of automobile insurance.
(Right-hand graph)
Ordinary profit was flat year on year as previously mentioned.
Adjusted ordinary profit is an profit indicator on a managerial accounting
basis. The figure is calculated by adjusting the amount of provision(reversal) for catastrophe reserve to ordinary profit.
Adjusted ordinary profit was ¥7.6 billion.

20

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

Net expense ratio

（%）

（%）

100

100

90.4

90.6

89.7

88.9

89.2
(0.3pt)

80

60

63.3

62.3

63.1

62.9
(1.1pt)

85.8

84.8

83.4

83.5

81.5

80

61.8

60

(2.0pt)

57.8

57.5

27.1

28.3

56.8

57.2
(2.8pt)

54.4

40

40

20

Net expense ratio

27.1

28.3

FY15

FY16

+0.8pt

26.6

20

26.3

27.1

FY16.3Q(9M)

FY17.3Q

0
FY15.3Q(12M)
Notes:
Earned/Incurred loss ratio = (Net losses paid + Provision for reserve foroutstanding losses + Loss adjustment expenses) / Earned premiums[Earthquake insurance and compulsory automobile liability insurance are excluded
from the above calculation]+0.8pt

26.6

26.3

27.1

FY15.3Q

FY16.3Q(9M)

FY17.3Q

0
FY15

(12M)

FY16

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

21(Left-hand graph)
The Earned/Incurred (E.I.) loss ratio was down 1.1 percentage points
year on year, to 61.8%, due to a lower car accident ratio in automobile
insurance.
The net expanse ratio rose 0.8 percentage points year on year, to 27.1%,
due to a rise in advertising and other operating expenses.
Consequently, the sum of the E.I. loss ratio and the net expense ratio was
down 0.3 percentage points year on year, to 88.9%.
(Right-hand graph)
The net loss ratio was down 2.8 percentage points year on year, to 54.4%.
This is different from the E.I. loss ratio, which reflects an increase or
decrease in provision for reserve for outstanding losses.
The combined ratio (the sum of the net loss ratio and the net expense ratio)
was down 2.0 percentage points year on year, to 81.5%.

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

（%）

800

693.5%

730.8%

809.9%+79.1pt

600

400

200

0
Mar. 16Mar. 17

Dec. 17

Sony Financial Holdings Inc. All Rights Reserved

22

As of December 31, 2017, Sony Assuranceʼs non-consolidated solvency
margin ratio was 809.9%, up 79.1 percentage points from March 31, 2017,
showing that Sony Assurance has maintained a financial soundness.

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

28.5

+3.9%

<Consolidated>(JPY bn)

FY16.3Q(9M)

FY17.3Q（9M)

Consolidated ordinary revenues

28.5

29.6

+1.1

+3.9%

Consolidated ordinary profit

3.3

5.1

+1.8

+54.5%

Profit attributable to owners of
the parent

2.1

3.3

+1.1

+54.2%

FY16.3Q(9M)

FY17.3Q(9M)

Ordinary revenues

25.9

26.9

+0.9

Gross operating profit

15.5

15.6

+0.0

+0.6%

Net interest income

13.0

15.3

＋2.2

+17.3%Net fees and commissions

(1.1)

(2.4)

(1.3)

－

Net other operating income

3.5

2.7

(0.8)

(22.5%)

General and administrative
expenses

12.4

11.6

(0.8)

(7.0%)Net operating profit

3.0

4.0

+0.9

+31.8%

Ordinary profit

3.0

4.6

+1.5

+52.7%Net income

2.0

3.1

＋1.0

+50.6%

29.6

Change<Non-consolidated>+54.5%(JPY bn)

5.1

3.3
FY16.3Q (9M)

FY17.3Q (9M)＜Consolidated＞◆Ordinary revenues rose year on year due to increases in interest
income on loans in line with a favorably growing balance ofmortgage loans and on investment securities.
◆Ordinary profit grew year on year, due to a decrease in operating
expenses, especially in advertising expenses for the card loanbusiness.
＜Non-consolidated＞◆Gross operating profit was flat and net operating profit increased.
・Net interest income increased due to increases in interest
income on loans and on investment securities.
・Net fees and commissions decreased due mainly to lower fees
and commissions on mortgage loans, in addition to higher fees
paid for loan guarantees reflecting the growing loan balance.
・Net other operating income decreased due mainly to a decreasein gains on foreign exchange transactions.

(JPY bn)(JPY bn)

Net assets
Net unrealized gains onother securities, net of taxes

Total assets

Mar. 17

Dec. 17

Change+3.7%

Change from
Mar. 17

81.3

84.7

+3.4

+4.2%

4.7

6.4

+1.7

+35.8%

2,424.2

2,626.2+201.9+8.3%

Sony Financial Holdings Inc. All Rights Reserved

23Sony Bankʼs consolidated ordinary revenues rose 3.9% year on year,to ¥29.6 billion, due to increases in interest income on loans in line witha favorably growing balance of mortgage loans and on investment securities.
Consolidated ordinary profit grew 54.5% year on year, to ¥5.1 billion,
due to a decrease in operating expenses, especially in advertising expenses
for the card loan business.
On a non-consolidated basis, Sony Bankʼs ordinary revenues andordinary profit increased year on year as the same reasons as in
the consolidated results.

Overview of Operating Performance:
Sony Bank (Non-consolidated) (1)Change from
Mar. 17

Dec. 16Mar. 17

Dec. 17

Customer assets

2,227.3

2,227.1

2,338.2+111.0+5.0%

Deposits

2,117.3

2,112.9

2,213.4+100.4+4.8%

Yen

1,772.1

1,764.9

1,847.0

+82.0

+4.6%

345.1

348.0

366.4

+18.3

+5.3%

110.0

114.1

124.7

+10.6

+9.3%

1,504.4

1,539.6

1,573.8

+34.2

+2.2%

1,409.0

1,452.4

1,495.2

+42.7

+2.9%

17.0

18.0

18.6

+0.5

+3.2%

(9.1)

(13.3%)(JPY bn)

Foreign currencies
Investment trusts
Loans
Mortgage loans
Card loans
OthersNon-consolidated Capital *2
adequacy ratio(domestic criteria)

*1

78.3

69.0

59.9

9.00%

9.75%

9.46%

(0.29pt)<Reasons for changes>◆ Increased in yen ordinary deposit
balance due mainly to anincrease in newly accumulated
funds via the increased numberof accounts, as well as theconversion from foreign
currencies backed by yen
depreciation.
◆ Increased in the U.S. dollardenominated time deposit
balance due to the promotional
effect from the rise in U.S.
interest rates, despite a decreasein ordinary deposit balance led
by yen depreciation.
◆ Rose due to a steady increase inmortgage loans, despite adecrease in demand forrefinancing these loans.

*1 Loans in others include corporate loans of ¥59.8 billion*2 Please refer to the graph of the non-consolidated capital adequacy ratio (domestic criteria) on page 27.
Capital adequacy ratios has been calculated by applying fundamental internal rating based approach (FIRB) from March 31, 2017.

Sony Financial Holdings Inc. All Rights Reserved

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

FY16.3Q(9M)

FY17.3Q(9M)<Reference> Interest Spread(Managerial Accounting Basis)

Change

15.5

15.6

+0.1

+0.7%

①

15.0

17.0

+1.9

+13.1%

②

(0.6)

(2.1)

(1.4)

－

1.0

0.6

(0.3)

(37.0%)

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

14.4

14.9

+0.5

+3.5%

Operating expenses and otherexpenses ③

12.4

11.6

(0.8)

(7.1%)Net operating profit (core profit)＝(A)－③

1.9

3.3

+1.3

+71.5%

Gross operating profit
Net interest income*1
Net fees and commissions*2
Net other operating income*3■Managerial accounting basis
The following adjustments are made to the figures on a financial account for profits andlosses more appropriately.
*1: Net interest income: Includes profits and losses associated with fund investment
recorded in net other operating income, including gains or losses from currency swap
transactions.
*2: Net fees and commissions: Includes profits and losses for customer dealings in foreign
currency transactions recorded in net other operating income.
*3: Net other operating income: After the above adjustments (*1 and *2), mainly consistsof profits and losses for bond and derivative dealing transactions.
■Core profit
Profits and losses exclude net other operating income, which includes those on bond andderivative dealing transactions, and stands for Sony Bankʼs basic profits.

Yield on financing

Yield on investment
Interest spread
（%）

1.5

1.20
0.94

1

1.12
(0.04pt)

0.90

0.5

0.26

0.22

0
FY16.3Q（9M）

FY17.3Q（9M）

Note: Interest spread=(Yield on investment)-(Yield on financing)Sony Financial Holdings Inc. All Rights Reserved

25

We break down gross operating profit on a managerial accounting basis tofacilitate an understanding of operational sources of revenues and profits.
(Left-hand table)
Net interest income increased 13.1% year on year, to ¥17.0 billion,
led by a growing balance of loans and securities.
Net fees and commissions were negative ¥2.1 billion, due mainly to
lower fees and commissions on mortgage loans in comparison withthe same period of the previous fiscal year, in addition to higher fees
paid for loan guarantees reflecting the growing loan balance.
Consequently, gross operating profit on a core profit basis increased 3.5%
year on year, to ¥14.9 billion. Net operating profit on a core profit basis
increased 71.5% year on year, to ¥3.3 billion, due to a decreasein general and administrative expenses.
(Right-hand graph)
The yield on investment for FY17.3Q (9M) was 1.12%.
The yield on financing for FY17.3Q (9M) was 0.22%.
Consequently, interest spread for FY17.3Q (9M) was 0.90%.

Operating Performance:
Sony Bank (Non-consolidated) (1)
Deposits
Yen Deposits

Loans

Foreign currency deposits

Mortgage loans(JPY bn)

2,213.4

2,112.9
2,000

1,923.5348.0+100.4366.4

Others(JPY bn)

1,500

1,344.1

87.1

+34.2

1,500

1,000

1,477.9
1,495.2

1,847.01,800.5
1,587.9
1,587.9

78.5*

107.0

335.5

1,000

1,573.8

1,539.6

1,452.4
1,452.4

1,764.9
1,764.9

1,237.1
1,237.1

500
500

0

0
Mar. 16Mar. 17

Dec. 17Mar. 16Mar. 17

Dec. 17*Corporate loans of ¥59.8 billion. Card loans of ¥18.6 billion.

Sony Financial Holdings Inc. All Rights Reserved

26(Left-hand graph)
As of December 31, 2017, deposits (the sum of Japanese yen and foreign
currency deposits) amounted to ¥ 2,213.4 billion, up ¥100.4 billion fromMarch 31, 2017.
Of this amount, the yen deposit balance amounted to ¥1,847.0 billion, up¥82.0 billion from March 31, 2017, as yen ordinary deposits increased
due mainly to an increase in newly accumulated funds via the increased
number of accounts, as well as the conversion from foreign currencies backed
by yen depreciation.
The yen-denominated balance of foreign currency deposits amounted to¥366.4 billion, up ¥18.3 billion from March 31, 2017, as the U.S. dollardenominated time deposit balance increased due to the promotional effectfrom the rise in U.S. interest rates, despite a decrease in ordinary deposit
balance led by yen depreciation.
(Right-hand graph)
The loan balance of December 31, 2017 expanded ¥34.2 billion fromMarch 31, 2017, to ¥1,573.8 billion, due to a steady increase inmortgage loans, despite a decrease in demand for refinancing theseloans.

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

Balance of Securities by Credit Rating
AAA

AA

BBB

Others（%）(JPY bn)
800

15

631.2

620.9
600

400

675.1
23.3

26.1

16.3

307.0

+43.8

303.0

10

165.2

9.89

304.4

106.6

200

(Domestic Criteria)

A

9.75

9.46
(0.29pt)

5

135.3
233.3

126.3

160.2

0

0
Mar. 16Mar. 17

Dec. 17Mar. 16Mar. 17
Dec. 17
Notes:
1. Calculated based on the standard FSA Notification No. 19 (2006), which
establishes standards based on Article 14-2 of the Banking Act of Japan for
determining the capital adequacy of a bank in light of the assets held by the bank.
2. Capital adequacy ratios has been calculated by applying fundamental internalrating based approach (FIRB) from March 31, 2017.

Sony Financial Holdings Inc. All Rights Reserved(Left-hand graph)
As of December 31, 2017, the balance of securities amounted to¥675.1 billion, up ¥43.8 billion from March 31, 2017.
Sony Bank continuously invests in highly rated bonds.
(Right-hand graph)
As of December 31, 2017, Sony Bankʼs non-consolidated capital adequacy
ratio (domestic criteria) was 9.46%, down 0.29 percentage points fromMarch 31, 2017. Sony Bank maintains financial soundness.

27

Forecast of Consolidated Financial Results
for the Fiscal Year Ending March 31, 2018
(FY17)

Sony Financial Holdings Inc. All Rights Reserved28Forecast of Consolidated Financial Results for FY17
We have revised upward our full-year forecast for consolidated ordinary revenues, downward consolidated ordinary profit
and upward profit attributable for owners of the parent from the forecast announced on April 28, 2017.
(JPY bn)

FY16（Actual）

FY17（Forecast）

Changes

FY17.3Q（Actual）

Progress rates

Consolidated ordinary revenues

1,381.6

1,430.0⇒1,540.0+3.5%⇒+11.5%

1,175.7

82.2%⇒76.4%

Life insurance business

1,243.9

1,276⇒1,388.9+2.6%⇒+11.7%

1,062.1

83.2%⇒76.5%

Non-life insurance business

102.3

110.0

+7.5%

40.6

+5.4%

74.9%

Banking business

38.5

82.4
29.6

73.0%

Consolidated ordinary profit

66.3

67.0⇒64.0+1.0%⇒(3.5%)

49.5

73.9%⇒77.4%

Life insurance business

56.8

56.4⇒52.4(0.7%)⇒(7.8%)

40.2

71.3%⇒76.8%

Non-life insurance business

5.0

6.5

+30.0%

6.6+30.6%

77.5%

Banking business

5.0

5.0
5.0

76.9%

Profit attributable to owners of
the parent

41.6

42.0⇒50.0+0.9%⇒+20.1%

42.4

101.2%⇒85.0%<Ordinary Revenues and Ordinary Profit by Business>■Life insurance businessWe have revised upward our full-year forecast for ordinary revenues because performance in FY17.3Q (9M) exceeded our initial expectations. We have revised
downward our full-year forecast for ordinary profit because performance in FY17.3Q (9M) was lower than expected. In FY17.3Q (9M), the new policy amount fell
below our initial expectations. As a result, expenses related to the acquisition of new policies were lower, which had a positive effect on profit. However, adeterioration in net gains/losses on derivative transactions to hedge market risks for available-for-sale securities and lower gains on sale of securities in thegeneral account had a negative impact on profit. As the negative factors outweighed the positive factors, profit decreased. Meanwhile, taking into consideration
our posting of a gain on disposal of sale of fixed assets in FY17.3Q (3M), we also expect the gain on sale of securities in the general account for the full year to fall
below our initial expectations.
■Non-life insurance business
In FY17.3Q (3M), ordinary revenues were firm, essentially in line with our forecast as of November. An increase in the loss ratio in FY17.3Q (3M) caused ordinary
profit to be slightly lower than we had forecast in November, but fluctuated within our range of expectations. We maintain our full-year forecasts for ordinary
revenues and ordinary profit.
■Banking business
Ordinary revenues and ordinary profit during FY17.3Q (9M) were essentially in line with our expectations. As we anticipate no significant changes in FY17.4Q(3M), we maintain our full-year forecasts.

Sony Financial Holdings Inc. All Rights Reserved

Performance of the life insurance business in FY17.3Q (9M) differed from
our initial forecasts announced on April 28, 2017.
As a result, we have revised upward our full-year forecast for consolidated
ordinary revenues, downward for consolidated ordinary profit and upward
for profit attributable to owners of the parent.
We have revised downward our forecast for consolidated ordinary profit
because Sony Life did not sell securities as initially expected, and therefore
did not record the associated gains on the sale of securities. This resulted
in the posting of a valuation loss on derivatives used as hedges.
We have revised upward our forecast for profit attributable to owners of
the parent due to the recording of gains on the sale of the real estate held
for investment as extraordinary gains.

29Sony Lifeʼs MCEV and ESR
as of December 31, 2017

A part of the calculations of MCEV adopted simplified method except that as of March 31, 2017.
Please keep in mind that the validity of these calculations has not been verified by outside specialists.
*In this part, figures, ratios and percentages changes have been rounded.

Sony Financial Holdings Inc. All Rights Reserved30Sony Lifeʼs MCEV
ChangefromMar. 17

ChangefromSep. 17Mar. 17

Sep. 17

Dec. 17

1,441.1

1,523.1

1,509.6+68.5(13.5)

Adjusted net worth

1,657.7

1,611.8

1,717.1+59.3+105.3

Value of existing business(216.7)(88.7)(207.5)+9.1(118.8)(JPY bn)

FY16.4Q(3M)

FY17.1Q(3M)

FY17.2Q(3M)

FY17.3Q(3M)

FY17.3Q(9M)

New business value

14.1

12.2

17.2

19.9

49.2

New business margin

3.8%

4.6%

6.4%

6.0%

5.7%

(JPY bn)

MCEV

Notes:
1. Calculated MCEV as of September 30, 2017 onward by using updated economic assumptions and lapse and surrender rate from March 31, 2017.
2. New business value is calculated accumulating new business value for each month based on economic assumptions at the end of each month.

 Reasons for changes in MCEV
・MCEV as of December 31, 2017 decreased ¥13.5 billion form September 30, 2017 due mainly to adecrease in interest rates in Japanese yen.
New business value/ New business margin
・New business value for FY17.3Q (3M) was ¥19.9 billion, up ¥2.7 billion from FY17.2Q (3M), due to afavorable acquisition of new policies .
・New business margin for FY17.3Q (3M) was down 0.4 percentage points from FY17.2Q (3M), due mainly
to a decrease in interest rates.
*Please refer to the appendix page 46 for trend on JGB yields.

Sony Financial Holdings Inc. All Rights ReservedSony Lifeʼs MCEV as of December 31, 2017 was ¥1,509.6 billion,
down ¥13.5 billion from September 30, 2017, due mainly to a decrease ininterest rates in Japanese yen.
New business margin for FY17.3Q (3M) was 6.0%, down 0.4 percentage
points from FY17.2Q (3M), due mainly to a rise in interest rates.
However, new business value for FY17.3Q (3M) was ¥19.9 billion,up ¥2.7 billion from FY17.2Q (3M), due to a favorable acquisition of
new policies.

31Sony Lifeʼs ESR(JPY bn)

Insurance risk*
Market-related risk
Of which, interest rate risk**

Operational riskMar. 17

The risk amount based on
economic value

Dec. 17

939.1

970.4

405.1

366.5

352.5

308.9

273.7

257.2

28.1

28.1

29.5

Counter party risk
Variance effect

Sep. 17

937.5

1.9

1.9

2.8

(392.0)(379.4)(383.1)

980.6

956.3

972.2

(* ) Risk amount excluding the variance effect within Life module and Health module.
(**) Risk amount excluding the variance effect within market-related risk.

(JPY bn)

MCEV + Frictional costs
ESR

Mar. 17

Sep. 17

Dec. 17

1,476.6

1,547.2

1,539.3

151%

162%

158%

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

 The risk amount based on economic value as of December 31, 2017 amounted to ¥972.2 billion, up ¥15.9 billion
from September 30, 2017, due mainly to an increase in insurance risk associated with accumulated policies in force.
 ESR as of December 31, 2017 was 158%, down 3pt from September 30, 2017 due to an increase in risk amountbased on economic value and a decrease in MCEV.

Sony Financial Holdings Inc. All Rights Reserved

The risk amount based on economic value as of December 31, 2017
amounted to ¥972.2 billion, up ¥15.9 billion form September 30, 2017,
due mainly to an increase in insurance risk associated with accumulated
policies in force.
ESR as of December 31, 2017 was 158%, down 3 percentage points
from September 30, 2017, due to an increase in risk amount based on
economic value and a decrease in MCEV.

32

Appendix

Sony Financial Holdings Inc. All Rights Reserved33

Recent Topics 1
AEGON Sony Life Insurance

Launch of sales: December 1, 2009
Common stock: ¥31 billion (including capital reserves of ¥15.5 billion)
Equity ownership: Sony Life insurance Co Ltd 50%, AEGON international B.V. 50%
Marketing products: Individual Variable Annuities
Sales Channels: Lifeplanner sales employees and partner Banks (31*) *As of February 14, 2018

SA Reinsurance Ltd

Established: October 29, 2009
Common stock: ¥15.9 billion
Equity ownership: Sony Life insurance Co., Ltd. 50%, AEGON international B.V. 50%
Business: Reinsurance business*AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint ventures established by Sony Life and AEGON Group.

Sony Bankʼs Mortgage Loans through Sony Life
■Sony Life accounts for 18% of the amount of new mortgage loans for FY17.3Q (9M)Sony Life accounts for 20% of the balance of mortgage loans as of December 31, 2017

*Sony Life started handling banking agency business in January 2008.

Sony Assuranceʼs Auto Insurance Sold by Sony Life
■Sony Life accounts for approx. 3% of new automobile policies for FY17.3Q (9M)*Sony Life started handling automobile insurance in May 2001.

Sony Financial Holdings Inc. All Rights Reserved34

Recent Topics 2＜Highlights on and after FY17.3Q＞
2017-10-02

Sony Life commenced sale of new product: “U.S. Dollar-Denominated Single Premium Whole Life Insurance(Non-Notification Type)” and “U.S. Dollar-Denominated Living Benefit Whole Life Insurance (Living
Standard Type)”

2017-10-05

Sony Assurance began offering a web-based insurance claims service, allowing policyholders to makemedical insurance claims via its website

2017-10-09

Sony Bank began issuing “Takashimaya Platinum Debit Card” through an alliance with Takashimaya Co., Ltd
and Takashimaya Credit Co., Ltd.

2017-11-01

Sony Assurance expanded its “Secom accident on-site rush service” for automobile insurance policyholders

2017-11-29

Sony Financial Holdings issued ¥10 billion of No.3 unsecured corporate bonds

2017-12-01

Sony Assurance promote tie-up with auto repair shops which were certificated by TÜV Rheinland Japan Ltd.

2017-12-14

Sony Bank began offering “WealthNavi for Sony Bank” an automated asset investment service, incollaboration with WealthNavi Inc.

2017-12-18

Sony Bank relocated its headquarter in Chiyoda-ku, Tokyo.

2018-01-04

Sony Life started direct insurance claims payment service to medical facilities providing advanced medicalcare

2018-01-09

Sony Life announced to revise its insurance premium rates on certain tern life insurance products within
individual life insurance, in line with April 2018 revisions to the Standard Mortality Table
Sony Financial Holdings Inc. All Rights Reserved35Sony Lifeʼs Insurance Premium Rates RevisionSony Life revised its insurance premium rates in line with April 2018 revisions to the Standard Mortality
Table. Within individual life insurance, these rate revisions were applied to certain term life insurance
products with policy dates on or after February 2, 2018, or April 2, 2018.
Effective dates and principal products on which rates were revised（１）Principal products on which insurance premium rates were revised for policy dates on or after
February 2, 2018 (applied to new policies and renewed policies)◆Non-participating Family Income Insurance◆Non-participating Decreasing Term Life Insurance◆Non-participating Level Premium Plan Term Life Insurance with No Surrender Value◆Non-participating Level Premium Plan Term Life Insurance with No Surrender Value(disability/nursing care type)（２）Principal products on which insurance premium rates are to be revised for policy dates on or after
April 2, 2018 (applied to new policies and renewed policies)◆Non-participating Level Premium Plan Term Life Insurance◆Non-participating Level Premium Plan Term Life Insurance (non-smoker preferred risk)◆Non-participating Level Premium Plan Term Life Insurance with Reduced Surrender Value(disability/nursing care type)
Note: Insurance premium rates will not be otherwise revised on whole life insurance, endowment
insurance, medical insurance, and so on.
Sony Financial Holdings Inc. All Rights Reserved36Sony Lifeʼs Product Portfolio
Annualized Premiums from New Policies by Product

FY17.3Q（9M）FY16（12M）¥51.9 billion¥78.1 billion

Yen
whole
Endowment/
U.S. dollarlife 14%
Annuities
denominated21%
whole life 8%
Yen single-premium
whole life 1%
Protection-type（term-life）
56%

円建終⾝
14%

Endowment/Annuities
30%

Yen whole
life 6%
U.S. dollardenominatedsingle-premium
U.S. dollar- whole life 4%

denominatedwhole life 13%

Protection-type（term-life）
47％

Sony Financial Holdings Inc. All Rights Reserved37Sony Lifeʼs Asset Management
Purchase Securities in the General AccountFY16（12M）

Japanese local
government
bonds 0.1%

Japanesestocks 0.5%

Japanese
corporate
Bonds
28.6%

Japanesestocks 0.5%

Foreign
bonds
11.8%

国債
95.4%

Foreign
bonds
28.3%

FY17.3Q (9M)

JGBs
42.5%

Japanese
corporate
Bonds
30.3%

国債
85.3%

JGBs
57.3%

社債
28 6%

Notes:
1. Japanese corporate bonds include FILP agency bonds and Government-guaranteed bonds.
2. The graphs above are asset allocation for the relevant period. Total invested amount for the relevant period as 100%.
(excluding, investment in subsidiaries and affiliates, and strategic investments)

Sony Financial Holdings Inc. All Rights Reserved38Sony Life: Fair Value Information on Securities(General Account Assets)
Fair Value Information on Securities
Fair value information on securities with market value (except trading-purpose securities)

Note: The above table includes money held in trust other than trading-purpose securities.

Valuation gains (losses) on trading-purpose securities（JPY bn）

Note: The above chart includes trading-purpose securities included in “money held in trust”, etc

Sony Financial Holdings Inc. All Rights Reserved39Sony Lifeʼs Interest Income and Dividends (Details)（JPY mn）

FY17.3Q (9M)

FY16.3Q (9M)

ChangeCash and deposits
Japanese bonds(including JGBs)
Japanese stocks

00+62.5%

90,44593,504

+3.4%

345

380

+10.1%

Foreign securities

6,017

10,479+74.2%

Other securities

177

127

(28.4%)

Loans

4,784

4,957

+3.6%

Real estate

8,148

8,048

(1.2%)

144

290+100.5%110,064

117,788+7.0%

Others
Total

Sony Financial Holdings Inc. All Rights Reserved40Sony Lifeʼs Capital Gains/Losses
FY16（JPY mn）
Capital gains

1Q
(3M)

2Q
(6M)

FY17
3Q
(9M)

4Q
(12M)

1Q
(3M)

2Q
(6M)

3Q
(9M)

14,501

11,79625,628

16,114124

2,098

Income from money held in trust, net

－

－

－

－

－

－

－

Income from trading securities, net

7

49

103

134

11

19

47

Gains on sale of securities

917

1,301

1,306

1,308

0

0

0

Gains on derivatives, net

2,851

8,821

4,577

－

－

－

－

－

Gains on hedges of variable life insurance

4,955

1,042

－

－

－

－

－

Gains on hedges of available-for-sale securities

3,021

1,386

－

－

－

－

－

－

－

24,218

14,670

49

2,078

2,804
－

Foreign exchange gains, net
Gains (losses) on sale of foreign bonds
Other capital gains
Capital losses

－

－

2,375

2,375

－

－

4,754

5,868

－

－

63

－

－

3,407

5,688

39,88232,276

7,441

16,25725,809Losses on money held in trust, net

－

－

－

－

－

－

－

Losses on trading securities, net

－

－

－

－

－

－

－

Losses on sale of securities

－

－

－

－

－

0

0

Devaluation losses on securities

－

－

－

－

－

－

－

Losses on derivatives, net－－

34,27530,0507,015

14,73923,990Losses on hedges of variable life insurance－－

14,292

15,666

4,247

8,555

13,515Losses on hedges of available-for-sale securities

－

－

2,265

2,460

1,713

2,767

5,877

3,139

5,023

－

－

－

－

－

(1,681)(2,375)

－

－

－

－

267

665

5,606

2,226

426

1,518

11,094

6,108(14,253)(16,162)

Foreign exchange losses, net
Losses on sale of foreign bonds*
Other capital losses
Net capital gains (losses)(7,316)

Total of gains on sale ofsecurities and foreign exchange
gains on sale of foreign bonds:
FY17.3Q : ¥0 million
FY16.3Q : ¥3,681 million－ * (losses) represents
positive figures.

1,819(14,159) (22,958)

Notes on Sony Lifeʼs Capital Gains/Losses are disclosed in page 42.

Sony Financial Holdings Inc. All Rights Reserved41Sony Lifeʼs Capital Gains/Losses (continued)(Note1)・Foreign exchange gains, net for FY17.1Q (3M) include foreign exchange losses of ¥242 million relating to U.S. dollar-denominated insurance.
Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥515 million.
Moreover, other capital losses include the reversal of policy reserves for U.S. dollar-denominated insurance of ¥63 million relating to foreignexchange fluctuation.
・Foreign exchange gains, net for FY17.2Q (6M) include foreign exchange gains of ¥1,583 million relating to U.S. dollar-denominated insurance.
Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥2,489 million.
Moreover, other capital losses include the provision of policy reserves for U.S. dollar-denominated insurance of ¥853 million relating to foreignexchange fluctuation.
・Foreign exchange gains, net for FY17.3Q (9M) include foreign exchange gains of ¥2,189 million relating to U.S. dollar-denominated insurance.
Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥3,445 million.
Moreover, other capital losses include the provision of policy reserves for U.S. dollar-denominated insurance of ¥1,155 million relating to foreignexchange fluctuation.
(Note 2)・ Foreign exchange losses, net for FY16.1Q (3M) include foreign exchange losses of ¥4,280 million relating to U.S. dollar-denominated insurance.
Moreover, other capital gains include the reversal of policy reserves for U.S. dollar-denominated insurance of ¥4,754 million relating to foreignexchange fluctuation.
・Foreign exchange losses, net for FY16.2Q (6M) include foreign exchange losses of ¥6,720 million relating to U.S. dollar-denominated insurance.
Gains on derivatives, net include foreign exchange gains relating to U.S. dollar-denominated insurance of ¥1,337 million.
Moreover, other capital gains include the reversal of policy reserves for U.S. dollar-denominated insurance of ¥5,868 million relating to foreignexchange fluctuation.
・Foreign exchange gains, net for FY16.3Q (9M) include foreign exchange gains of ¥21,805 million relating to U.S. dollar-denominated insurance.
Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥17,445 million.
Moreover, other capital losses include the provision of policy reserves for U.S. dollar-denominated insurance of ¥4,941 million relating to foreignexchange fluctuation.
・Foreign exchange gains, net for FY16.4Q (12M) include foreign exchange gains of ¥12,389 million relating to U.S. dollar-denominated insurance.
Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥12,010 million.
Moreover, other capital losses include the provision of policy reserves for U.S. dollar-denominated insurance of ¥1,560 million relating to foreignexchange fluctuation.
(Note3）・ The figures of income (losses) from money held in trust, net, income (losses) from trading securities, net, gains (losses) on derivatives andforeign exchange gains (losses), net were recorded after offsetting gains and losses of each item.

Sony Financial Holdings Inc. All Rights Reserved42Sony Lifeʼs Quarterly Trend on New Policy Amount
Quarterly Trend on New Policy Amount(JPY bn)

1,500

1,457.7

1,437.4
1,324.2

1,290.7

1,260.0

1,250

1,098.9

1,189.0
1,050.7

1,115.8

1,114.8

FY17.1Q

FY17.2Q

1,214.7

1,000
750
500
250
0
FY15.1Q

FY15.2Q

FY15.3Q

FY15.4Q

FY16.1Q

FY16.2Q

FY16.3Q

FY16.4Q

Sony Financial Holdings Inc. All Rights Reserved

FY17.3Q

43

Sony Lifeʼs Quarterly Trend on
Annualized Premiums from New Policies
Quarterly Trend on Annualized Premiums from New Policies
Annualized premiums from new policies

Of which, third-sector(JPY bn)

25
22.3

20.6

23.9

22.7

20

19.1

20.5

19.5
18.2
15.3

15

16.1

16.2

3.1

2.8

3.3

FY17.1Q

FY17.2Q

FY17.3Q

10

5
3.9

3.4

FY15.1Q

FY15.2Q

4.6

3.6

4.1

3.9

3.1

FY15.4Q

FY16.1Q

FY16.2Q

FY16.3Q

4.4

0
FY15.3Q

FY16.4Q

Sony Financial Holdings Inc. All Rights Reserved

44

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

Number and Amount of Policies in Force

Number and Amount of New Policies
New policy amount(JPY bn)60

Number of new polices [ ]

53.2
[8.9]

40

53.3
[10.5](Thousandsof policies)

15

37.9
[8.0]

10

Policy amount in force

Number of policies in force [ ](JPY bn)

600

489.1
[82.7]

501.7[85.9]

523.1[90.9](Thousandsof policies)

120

400

80

40

20

5

200

0

0

0

0

FY15.3Q (9M)
FY16.3Q (9M)
FY17.3Q (9M)
Net income (losses) for AEGON Sony Life Insurance and SA Reinsurance(JPY bn)
FY16.3Q (9M)
FY17.3Q (9M)
ChangeDec. 16

AEGON Sony Life Insurance

(3.1)

(3.3)

(0.2)

SA Reinsurance

(2.7)

(0.2)

+2.5

Mar. 17

Dec. 17

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

Sony Financial Holdings Inc. All Rights Reserved

45

Method of Measuring Risk Amount
Based on Economic Value (1)Market-related Risk*1
Sony LifeInterest rate risk
Fluctuations in net asset
value based on economic
value in response to theshocks in the rightcolumns.
The same applies below.

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

(Reference) EU Solvency II Implementing Measures(Delegated Regulation)
Different percentage changes in interest rates are set for eachterm, from one year to 20 years.
For terms longer than 20 years and through 90 years,
percentage changes are set using linear interpolation, withnegative 29% as the percentage change for 20 years andnegative 20% as the percentage change for 90 years(Example)
For Yen 30-year, 64% decrease (parallel shift), 19% decrease(twist), 4% decrease (butterfly)

Equity risk

Listed equities 45%, Other securities 70%

Global 39%, Others 49%*2

Real estate risk

Actual real estate

Same as on the left

25%

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

Credit risk

Currency risk

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

Credit risk = (market value) x (risk coefficient for each credit
rating and duration)(Example)
Rating A: Duration (Dur): 5-10 years(Example)
Rating A: Risk coefficient (1.4%), cap (23), floor (1)Risk coefficient=7.0% + 0.7% x (Dur – 5 )35% downside fluctuation

25% downside fluctuation◆Revision in the risk factors of market-related risk
・ In FY17.1Q, Sony Life partially revised the risk factors of market-related risk.
・ Regarding interest rate risk in Japanese yen, the rate of change in interest rates for 40 years or less was updated based on recent market data, andthe rate of change in interest rates beyond 40 years was revised, taking into account such factors as ICS(＊3) deliberations. The main result was adecrease in interest rate risk compared with March 31, 2017, due mainly to a decrease in the rate of change in Japanese yen beyond 40 years.
Notes＊1. Principal items as of December 31, 2017.
＊2. Symmetric adjustment (an adjustment of ±10% of the average value of the stock price index during a defined period in the past) is applied.
＊3. Capital requirements for internationally active insurance groups (IAIGs) being formulated by the International Association of Insurance Supervisors (IAIS).

Sony Financial Holdings Inc. All Rights Reserved

46

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

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

Mortality risk

Mortality rate increases by 15% for each year elapsed

Same as on the leftLongevity risk

Mortality rate decreases by 20% for each year elapsed

Same as on the left

Lapse risk

The largest amount of these;*2

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

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

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

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

Same as on the left

Disability risk

Rate of occurrence increases by 35% in the first fiscal year, risingby 25% for each year thereafter

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

Notes
＊1. Principal items as of December 31, 2017.
＊2. At Sony Life, lapse risk is calculated by computing and adding together the largest amount of three options for each insurance policy.

Sony Financial Holdings Inc. All Rights Reserved

47Trend on JGB Yields (Par rate)

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

48Trend on Risk-free Rate (Japanese yen/ Par rate)

Convergence
period:20 yearLast liquid point: 40 year

*For above risk-free rate, we employ the Smith-Wilson method for extrapolation so that the 60-year forward rate will coverage on the UFR (3.5%).

Sony Financial Holdings Inc. All Rights Reserved

49

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

Sony Financial Holdings Inc. All Rights Reserved50