Consolidated Financial Summary
for the Year Ended March 31, 2010
May 20, 2010

Company name:Sony Financial Holdings Inc.
(URL: http://www.sonyfh.co.jp/index_en.html)
Stock exchange listings: Tokyo Stock Exchange (code number: 8729)
Representative:
Teruhisa Tokunaka, President and Representative Director
Inquiries:
Masaaki Konoo, General Manager—Corporate Communications & Investor Relations Dept.
(Fractional amounts of less than ¥1 million are discarded.)1.

Consolidated financial results for the year ended March 31, 2010
(1) Operating results
Ordinary Revenues
Ordinary Profit
For the year ended
March 31, 2010
For the year ended
March 31, 2009

Millions of yen% change

978,99113.8

860,323

4.6

Millions of yen

Net Income per Net Income per
Share
Share
(Fully Diluted)
Yen

For the year ended
March 31, 2010
For the year ended
March 31, 2009

Net Income% change

Millions of yen% change

84,373146.3

48,126

56.7

34,253(23.0)

30,72226.7

Net Income on
Ordinary Profit on Ordinary Profit on
Shareholders’
Total Assets
Ordinary Revenues
Equity

Yen

%

%

%

22,127.13

—

20.3

1.5

8.6

14,125.14

—

13.2

0.7

4.0

Note: Equity in earnings (losses) of affiliates: For the year ended March 31, 2010: ¥(307) million
For the year ended March 31, 2009: ¥(173) million(2) Financial conditions
Total Assets

Total Net Assets

Net Asset Ratio

Net Assets per Share

Millions of yen

Millions of yen%

Yen

As of March 31, 2010

6,001,088

269,439

4.5

123,880.11

As of March 31, 2009

5,313,677

204,897

3.9

94,205.75

Notes: 1. Shareholders’ equity:

As of March 31, 2010: ¥ 269,439 million
As of March 31, 2009: ¥ 204,897 million
2. The net asset ratio is computed by dividing the amount of total net assets by total assets at the end of the fiscal period.

(3)

Cash flows

For the year ended
March 31, 2010
For the year ended
March 31, 2009

Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash
Equivalents at end of
fiscal year

Millions of yen

Millions of yen

Millions of yen

Millions of yen

494,225(378,706)(6,580)200,593730,038(769,813)(4,591)

91,6341

2. Dividends
AnnualDividend
1st quarter 2nd quarter 3rd quarter Year-end Annual Total
Amount
Yen
Yen
Yen
Yen
Yen
Millions of yen
Dividend per Share

Record date
For the year ended
March 31, 2009
For the year ended
March 31, 2010
For the year ending
March 31, 2011
(forecast)

Dividend
Payout
Ratio%

Dividend on
Net Assets
%

—

0.00

—

3,000.00

3,000.00

6,525

21.2

2.8

—

0.00

—

3,000.00

3,000.00

6,525

13.6

2.8

—

0.00

—

3,000.00

3,000.00

16.3

3. Forecast of consolidated financial results for the year ending March 31, 2011

(Percentage figures represent changes from the results of the previous fiscal year.)Ordinary Revenues

Ordinary Profit

Millions of yen % change Millions of yen

For the six months ending
September 30, 2010
For the year ending
March 31, 2011

Net Income per
Share

Net Income% change

Millions of yen% changeYen

483,000

0.4

41,0003.9

23,000(1.7)

10,574.72

974,000(0.5)

74,000(12.3)

40,000(16.9)

18,390.80

4. Other Information(1) Changes in scope of consolidation during the period under review (changes in specified subsidiaries accompanying
changes in scope of consolidation): None
(2) Changes in accounting policies, procedures and presentation(a) Changes due to revision of accounting standards: None(b) Changes due to other reasons: None
(3) Number of shares outstanding (common stock)(a) Number of shares outstanding (including treasury shares)
As of March 31, 2010:
2,175,000 shares
As of March 31, 2009:
2,175,000 shares(b) Number of treasury shares
As of March 31, 2010:— shares
As of March 31, 2009:— shares(c) Weighted-average number of shares
For the year ended March 31, 2010:
2,175,000 shares
For the year ended March 31, 2009:
2,175,000 shares

2

I. Qualitative Information and Financial Statements(1) Qualitative Information on Consolidated Operating Performance
1) Analysis of Operating Performance
During the year ended March 31, 2010 (April 1, 2009 through March 31, 2010), consolidated ordinary revenues grew
13.8% compared with the previous fiscal year, to ¥978.9 billion, owing to increases in ordinary revenues from the life
insurance business and the non-life insurance business, despite a decrease from the banking business. In the life insurance
business, ordinary revenues grew 15.1% year on year, to ¥882.0 billion, owing to higher income from insurance premiums
associated with a steady increase in policy amount in force, as well as increases in investment income boosted by a relatively
favorable financial market environment. In the non-life insurance business, ordinary revenues rose 10.2% year on year, to¥68.1 billion, due to increases in net premiums written, reflecting a growing number of its mainstay automobile insurance
policies. In the banking business, ordinary revenues decreased 8.6% year on year, to ¥30.5 billion, due to lower interest rates
throughout the world, despite an increase in interest income reflecting a growing balance of mortgage loans.
Consolidated ordinary expenses increased 8.3% compared with the previous fiscal year, to ¥894.6 billion, owing toincreases in ordinary expenses from the life insurance business and the non-life insurance business, although those from thebanking business decreased.
In the life insurance business, ordinary expenses increased 9.3% year on year, to ¥802.2 billion, due to an increased
provision for policy reserve and others. This rise was due mainly to a significant improvement in the investment performanceof separate account assets, which offset a substantial decrease in investment expenses owing to a recovery of the stock market.
In the non-life insurance business, ordinary expenses grew 9.9% year on year, to ¥65.6 billion, owing primarily to increases in
the amount of net losses paid, led by a growing number of policies in force. In the banking business, however, ordinary
expenses declined 15.8% year on year, to ¥28.5 billion, due mainly to decreases in interest expenses, particularly a decrease ininterest expenses on deposits, owing to a decline in interest rates.
As a result, consolidated ordinary profit increased 146.3% compared with the previous fiscal year, to ¥84.3 billion, owing
to increases in ordinary profit from all the businesses. Broken down by business, ordinary profit from the life insurance
business increased 145.2% year on year, to ¥79.7 billion, the non-life insurance increased 17.8% year on year, to ¥2.5 billion,
and the banking business tuned into gain of ¥1.9 billion from ordinary losses of ¥0.5 billion in the previous fiscal year.
Extraordinary losses of ¥7.0 billion were recorded during the year ended March 31, 2010, due mainly to the provision of areserve for price fluctuations of ¥5.9 billion in the life insurance business. During the previous fiscal year, extraordinary gainsof ¥20.4 billion were recorded, due to a partial reversal of the reserve for price fluctuations in the life insurance business.
After accounting for extraordinary losses, provision for reserve for policyholders’ dividends and income taxes, net income forthe year ended March 31, 2010, was up 56.7% year on year, to ¥48.1 billion.

32) Segment Information by Business
Ordinary Revenues(Millions of yen)Life insurance business
Non-life insurance
business
Banking business
Subtotal
Corporate andeliminations
Consolidated

For the year ended
March 31, 2009
766,245

For the year ended
March 31, 2010
882,045

Change (%)
15.1

61,882

68,174

10.2

33,378
861,507

30,520980,740

(8.6)
13.8

(1,183)(1,749)－860,323

978,991

13.8

Ordinary Profit(Millions of yen)Life insurance business
Non-life insurance
business
Banking business
Subtotal
Corporate andeliminations
Consolidated

For the year ended
March 31, 2009
32,540For the year ended
March 31, 2010
79,781

Change (%)
145.2

2,178

2,565

17.8

(571)
34,147

1,928
84,275

－
146.8

106

98

(7.8)

34,25384,373

146.3

3) Consolidated Financial Forecast for the Year Ending March 31, 2011
SFH’s consolidated financial results forecast for the fiscal year ending March 31, 2011 (April 1, 2010 through March 31,2011) is as follows. No changes have been made to the consolidated results forecast previously announced on May 13, 2010.
(Billions of yen)
Ordinary revenues
Ordinary profit
Net income
For the six months
Forecast for the six months ending
September 30, 2010

483.0

41.0

23.0

481.2

39.4

23.3

Forecast for the year ending
March 31, 2011

974.0

74.0

40.0

(Reference)
Actual results for the year ended
March 31, 2010

978.9

84.3

48.1

(Reference)
Actual results for the six months ended September 30,
2009
For the full year

4

(Reference)
Forecast of ordinary revenues and ordinary profit from each business for the fiscal year ending March 31, 2011 (April 1, 2010
through March 31, 2011) is as follows. Forecast figures from each business reflect corporate and eliminations.
<Life insurance business>
Ordinary revenues for the year ending March 31, 2011, are expected to decrease 1.2% year on year, to ¥871.3 billion,
stemming from an expected decrease in investment income compared with that of the previous fiscal year which reflected arecovery in financial market conditions, although we expect income from insurance premiums to increase in line with thesteady growth of policy amount in force. We expect ordinary profit to decrease 12.8% year on year, to ¥69.6 billion, due
mainly to a decrease in gains on sale of securities held and an increase in insurance claims and other payments.

Ordinary revenues(Billions of yen)
Ordinary profit

For the six months
Forecast for the six months ending September 30, 2010

432.1

39.6

432.6

36.3

Forecast for the year ending March 31, 2011

871.3

69.6

(Reference)
Actual results for the year ended March 31, 2010

882.0

79.7

(Reference)
Actual results for the six months ended September 30, 2009
For the full year

<Non-life insurance business>
Ordinary revenues for the year ending March 31, 2011 are expected to rise 6.6% year on year, to ¥72.7 billion, as we expect
steady business expansion, mainly in its mainstay automobile insurance. Despite an expected increase in ordinary revenues,
ordinary profit is expected to decrease 14.2% year on year, to ¥2.2 billion due mainly to an expected rise in the loss ratio, as
well as an increasing expense ratio in line with the planned reinforcement of the corporate system and infrastructure based on
the expected expansion of its business operations.

Ordinary revenues(Billions of yen)
Ordinary profit

36.5

0.7

33.9

1.5

Forecast for the year ending March 31, 2011

72.7

2.2

(Reference)
Actual results for the year ended March 31, 2010

68.1

2.5

For the six months
Forecast for the six months ending September 30, 2010
(Reference)
Actual results for the six months ended September 30, 2009
For the full year

<Banking business>
Ordinary revenues for the year ending March 31, 2011 are expected to slightly increase year on year, amounting to ¥30.6
billion, as interest income is expected to rise due to expanding business operations, although an influence of the worldwide
reductions in interest rates still remains. Ordinary profit is expected to grow 45.2% to ¥2.8 billion from the previous fiscal
year, as gross operating profit, especially net interest income, is expected to grow.

5Ordinary revenues(Billions of yen)
Ordinary profit

14.8

1.2

15.3

1.4

Forecast for the year ending March 31, 2011

30.6

2.8

(Reference)
Actual results for the year ended March 31, 2010

30.5

1.9

For the six months
Forecast for the six months ending September 30, 2010
(Reference)
Actual results for the six months ended September 30, 2009
For the full year

The above-mentioned consolidated forecast was made based on information currently available to us. As it is difficult toforecast future financial market conditions, we assume that interest rates, foreign exchange rates, and stock market prices will
not fluctuate significantly from the levels as of March 31, 2010.

(2) Qualitative Information on Consolidated Financial Position
1) Assets, Liabilities and Net Assets
As of March 31, 2010, total assets amounted to ¥6,001.0 billion, up 12.9% from March 31, 2009. As for major
components of assets, securities, mostly Japanese government bonds, amounted to ¥4,488.4 billion, up 21.2% fromMarch 31, 2009. Monetary trusts amounted to ¥300.7 billion, down 50.6% and loans amounted to ¥714.4 billion, up
19.6% from March 31, 2009.
Total liabilities amounted to ¥5,731.6 billion, up 12.2% from March 31, 2009. As for major components ofliabilities, policy reserve and others amounted to ¥4,088.1 billion, up 11.1% from March 31, 2009, and deposits
amounted to ¥1,509.2 billion, up 13.9% from March 31, 2009.
Total net assets amounted to ¥269.4 billion, up 31.5% from March 31, 2009. As for major components of net
assets, net unrealized gains on other securities, net of taxes increased substantially to ¥17.5 billion from losses of ¥4.8
billion as of March 31, 2009, owing primarily to increases in the fair market value of securities held, associated with arecovery in financial market conditions.
2) Cash FlowsNet cash provided by operating activities for the year ended March 31, 2010, was ¥494.2 billion, down ¥235.8 billion
from the year ended March 31, 2009. The major factors were the absence of an increase in inflows due to a net decreasein call loans in the banking business, which was present in the previous fiscal year.
Net cash used in investing activities for the year ended March 31, 2010, was ¥378.7 billion, down ¥391.1 billion
from the year ended March 31, 2009. The primary reasons were a substantial decline in outflows due to decreased
payments for purchases of securities in the banking business.
Net cash used in financing activities for the year ended March 31, 2010, was ¥6.5 billion, up ¥1.9 billion fromthe year ended March 31, 2009. The decrease was due to the absence of inflows from subordinated debt which was
issued in the previous fiscal year to strengthen the financial soundness of the banking business.

As a result of the above factors, cash and cash equivalents at March 31, 2010, were ¥200.5 billion, up ¥108.9 billion
from March 31, 2009.

6

(3) Basic Policy on Returns to Shareholders and Dividends for the Year Ended March 31, 2010, andthe Year Ending March 31, 2011
We consider an increase in returns to our shareholders, as well as return on equity, as one of our most importantmanagement tasks. Our basic policy on returning profits to its shareholders is to provide stable dividends toshareholders while ensuring the high level of financial soundness that is necessary to maintain the trust of existingcustomers and attract new ones, as well as securing sufficient retained earnings for future business development.
In keeping with the basic policy outlined above, we propose to pay an annual cash dividend of ¥3,000 per sharefor the year ended March 31, 2010, and for the year ending March 31, 2011.
With regard to timing, we will continue to make dividend payments once a year, following the resolution of thegeneral meeting of shareholders, with the dividend record date at the end of each fiscal year.

(4) Information Concerning Significant Subsidiaries
Below, we describe the operating performance for the year ended March 31, 2010, of SFH’s significant subsidiaries:
Sony Life Insurance Co., Ltd. (Sony Life), Sony Assurance Inc. (Sony Assurance) and Sony Bank Inc. (Sony Bank).
Sony Life, Sony Assurance and Sony Bank each separately announce their own results, which summary information in
English is available on SFH’s website.

■ Sony Life (Non-Consolidated)
Sony Life’s ordinary revenues increased 15.1% from the previous fiscal year, to ¥881.7 billion, due to higher income
from insurance premiums associated with an increased policy amount in force, as well as increases in investment
income boosted by a relatively favorable financial market environment. Ordinary profit increased 147.1% year on year,to ¥80.0 billion, mainly reflecting the increase in ordinary revenues and a substantial decrease in impairment losses on
securities held. Net income increased 36.6% year on year, to ¥46.1 billion, owing to a substantial increase in ordinary
profit despite the negative impact of a change from the reversal of a reserve for price fluctuations of ¥20.4 billion for
extraordinary gains a year earlier, to a provision of ¥5.9 billion for extraordinary losses in the year ended March 31,
2010.
Core profit rose 69.8% year on year, to ¥64.5 billion, due mainly to an increase in income from insurance
premiums and higher interest income and dividends, as well as a decrease in provision for policy reserves for minimum
guarantee for variable life insurance. Income from insurance premiums grew 5.8% from the previous fiscal year, to¥700.1 billion, associated with an increased policy amount in force. Investment income increased 77.6% year on year,to ¥175.3 billion, due mainly to an improved investment performance on separate account assets driven by rising stock
prices, and higher interest income and dividends in line with the growing balance of ultralong-term bonds. Investment
expenses decreased 84.6% year on year, to ¥20.5 billion, due to an improved investment performance on separate
account assets, changing from losses on separate accounts, net, to gains, as well as a substantial decrease in impairment
losses on securities held. As a result, gains from investment, net, for the total of general and separate accounts amounted
to ¥154.8 billion from losses of ¥34.9 billion in the previous fiscal year, a part of which, gains from investment, net, on
general account assets increased 147.4%, to ¥92.0 billion.
Insurance claims and other payments decreased 0.2% year on year, to ¥274.2 billion. Operating expenses
increased 3.1% year on year, to ¥96.8 billion.
Policy amount in force for the total of individual life insurance and individual annuities grew steadily, to¥33,470.7 billion as of March 31, 2010, up 2.9% from March 31, 2009. The lapse and surrender rate* for the total ofindividual life insurance and individual annuities rose 0.42 percentage point from the previous fiscal year, to 7.21%,
reflecting the impact of individual customers conversion to more reasonably priced products. This included a discountrider for family income insurance launched in November 2009 for nonsmokers and other people in excellent health.

7

Annualized premiums from total policies as of March 31, 2010, were up 4.6% from March 31, 2009, totaling ¥573.3
billion. Of this amount, the figure for third-sector products was up 5.0% to ¥133.0 billion from March 31, 2009.
The new policy amount for the total of individual life insurance and individual annuities increased 4.5% from theprevious fiscal year, to ¥4,049.2 billion, owing to an increase in sales resulting from the above-mentioned productlaunch in November 2009. Annualized premiums from new policies amounted to ¥68.7 billion, up 11.5%, due primarily
to favorable sales of cancer hospitalization insurance launched in April 2009.
Net unrealized gains on securities** decreased ¥30.9 billion from March 31, 2009, to ¥19.9 billion. Net unrealized
gains on other securities, net of taxes, amounted to ¥15.4 billion, up ¥11.4 billion from March 31, 2009.
As of March 31, 2010, Sony Life’s solvency margin ratio was 2,637.3%, compared with 2,060.5% as of March 31,
2009.
*

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

**

Net unrealized gains on securities are calculated as the difference between the carrying value before marking to market and the fair market value forsecurities with market value, other than trading-purpose securities. (The amount includes monetary trusts, but excludes trading-purpose securities.)■ Sony AssuranceSony Assurance posted a 10.2% increase in ordinary revenues compared with the previous fiscal year, to ¥68.1 billion,
due to increased net premiums written, as the number of insurance policies in force grew for strong sales of new policies
in its mainstay automobile insurance. Ordinary profit increased 17.8% year on year, to ¥2.5 billion, owing mainly to anincrease in ordinary revenues and a decline in the net expense ratio, despite a higher net loss ratio. Net income
amounted to ¥1.6 billion for the year ended March 31, 2010, compared with a net loss of ¥1.5 billion in the previous
term, due mainly to a substantial decrease in extraordinary losses including losses on disposal of fixed assets.
In terms of insurance underwriting performance, owing to an increased number of automobile insurance policies
in force, both direct premiums written and net premiums written grew 10.2% year on year, amounting to ¥67.0 billionand 10.4% to ¥67.4 billion, respectively. Net losses paid increased 15.4% year on year, to ¥34.5 billion, owing to anincreased number of policies in force and a rising number of car accidents. The net loss ratio rose 2.2 percentage points,
compared with the previous fiscal year, to 57.2%. The net expense ratio decreased 0.6 percentage point year on year, to26.1%, due to the increase in net premiums written, despite a 7.7% increase in underwriting expenses of ¥17.5 billion.
Underwriting profits rose 18.9% year on year, to ¥1.9 billion, primarily reflecting the adjustment of the provision forreserves for outstanding claims and underwriting reserves.
As of March 31, 2010, Sony Assurance’s solvency margin ratio was 1,018.5%, compared with 993.0% as ofMarch 31, 2009.

■ Sony Bank (Non-Consolidated)
Sony Bank’s ordinary revenues decreased 8.6% compared with the previous fiscal year, to ¥30.5 billion, due to theglobal lowering of interest rates. Ordinary profit increased 606.5% year on year, to ¥2.9 billion, owing to an increase in
net interest income due mainly to a decrease in interest expenses on deposit in the lowering of interest rates and anincrease in interest income on loans reflecting the growing balance of mortgage loans. Net income amounted to ¥1.6
billion for the year ended March 31, 2010, compared with a net loss of ¥0.7 billion in the previous fiscal year.
Gross operating profit increased 37.6% from the previous fiscal year, to ¥14.9 billion, led by an increase in net
interest income which offset decreases in net other operating income and in net fees and commissions. With respect tothe breakdown of gross operating profit, net interest income rose 96.1% year on year, to ¥13.0 billion, due to a decline
in interest on deposits in the lowering of interest rates, and an increase in interest income on loans led by the growing
balance of mortgage loans. Net fees and commissions decreased ¥ 0.5 billion year on year, to a loss of ¥0.1 billion, due
mainly to an increase in handling fees for the mortgage loan business. Net other operating income decreased 45.6%, to¥2.1 billion, mainly because foreign exchange gains on investment in foreign currency deposits decreased as a result of
lower interest rates, and the fact that gains from derivatives, net, which were held for hedging purposes, turned into
losses. These factors offset the positive results of the fact that impairment losses on securities were not recorded for the8year ended March 31, 2010.
General and administrative expenses expanded 13.3% year on year, to ¥11.6 billion, due mainly to an increase insystem-related expenses.
As of March 31, 2010, customer assets (the sum of deposits and investment trusts) were up ¥206.4 billion, or
14.7%, from March 31, 2009, to ¥1,610.0 billion. Looking at customer assets as of March 31, 2010, deposits amounted
to ¥1,510.0 billion, up ¥183.6 billion, or 13.8%, from March 31, 2009, reflecting a higher balance of yen time deposits,
boosted by a special campaign, offering higher rates for deposits made during the winter bonus season. Investment
trusts were ¥100.0 billion, up ¥22.7 billion, or 29.4% from March 31, 2009. Loans expanded to ¥586.6 billion, up¥109.5 billion, or 23.0%, from March 31, 2009, owing to a growing balance of mortgage loans, as well as an increasein corporate loans, especially syndicated loans commenced in October 2009, amounting to ¥23.3 billion. As of March
31, 2010, the number of accounts was up 72 thousand from March 31, 2009, to 796 thousand accounts.
Net unrealized gains on other securities, net of taxes, a component of net assets, totaled ¥0.9 billion, up ¥10.5
billion from March 31, 2009, reflecting a recovery in the financial market environment.
As of March 31, 2010, Sony Bank’s non-consolidated capital adequacy ratio* (domestic criteria) was 12.09%,
compared with 13.37% as of March 31, 2009.
*

Sony Bank’s non-consolidated capital adequacy ratio was calculated based on the standard stipulated by Article 14-2 of the Banking Law of Japan, in
accordance with the Financial Services Agency of Japan (“FSA”) public ministerial announcement No. 19 of 2006. The capital adequacy ratio as of andafter March 31, 2009, employed the special exception of the standard mentioned above, in accordance with FSA public ministerial announcement No. 79
of 2008.

II. Status of the Corporate GroupOn April 1, 2004, SFH was established as a financial holding company (an insurance holding company and a bankholding company) through a corporate separation from Sony Corporation. On October 11, 2007, SFH listed its common
stock on the First Section of the Tokyo Stock Exchange, by publicly offering its shares to Japanese and overseas
investors, resulting in Sony Corporation’s ownerships to account for 60% of the total outstanding shares of SFH.
As of March 31, 2010, SFH Group included as direct subsidiaries Sony Life, Sony Assurance and Sony Bank andas indirect subsidiaries Sony Life Insurance (Philippines) Corporation, a subsidiary of Sony Life, and Sony Bank
Securities Inc. (Sony Bank Securities), a subsidiary of Sony Bank. It also includes AEGON Sony Life Insurance Co.,
Ltd. (AEGON Sony Life Insurance) and SA Reinsurance Ltd., as affiliated companies accounted for under the equity
method.
• Sony Financial Holdings Inc. (Management control of its subsidiaries and all duties incidental to that role)[Directly Held, indirectly held subsidiaries and affiliated companies accounted for under the equity method]<Life insurance business> Sony Life Insurance Co., Ltd. (Wholly-owned by SFH)
 Sony Life Insurance (Philippines) Corporation (Wholly-owned by Sony Life) AEGON Sony Life Insurance Co., Ltd. (50%-owned by Sony Life)
 SA Reinsurance Ltd. (50%-owned by Sony Life)<Non-life insurance business> Sony Assurance Inc. (Wholly-owned by SFH)
<Banking business> Sony Bank Inc. (Wholly-owned by SFH)
 Sony Bank Securities Inc. (Wholly-owned by Sony Bank)

9

[Organizational chart] (As of March 31, 2010)
Note: SA Reinsurance Ltd., a fifty-fifty joint venture established by Sony Life and AEGON INTERNATIONAL B.V. of the Netherlands,
has been accounted for as an affiliate company under the equity-method in the scope of consolidation since the nine months ended
December 31, 2009.

Sony
Corporation

Sony Financial
Holdings Inc.

<Life insurance business>
Sony Life InsuranceCo., Ltd.

<Non-life insurance
business>Sony Assurance Inc.

<Life insurance
business><Life insurance
business>
SA Reinsurance Ltd.

<Life insurance
business>Sony Life Insurance

AEGON Sony Life

(Philippines)

Insurance Co., Ltd.

<Banking business>
Sony Bank Inc.

<Banking business>
Sony Bank
Securities Inc.

Corporation

Consolidated subsidiaries

Trade name and trademark licenseManagement control fee

Affiliated companies
accounted for under theequity method

Sales and referrals of
the other’s products

Shareholding

III. Management Policies(1) Company’s Basic Management Policies
The SFH Group positions its corporate vision and philosophy as the basic policy for setting management strategy and
expediting management decision-making. The Group’s corporate vision and philosophies are described below.
a. Corporate Vision
The SFH Group aims to be the financial services group customers think of first and trust most by integrating the many
functions of financial service providers—everything from saving and asset building to borrowing and protection—anddelivering high-valued-added products and quality services, all tailored to the specific needs of every one of ourindividual customers.
b. Corporate Philosophy(Focus on the Customer)
We help our customers live rich and secure lives by opening our ears and hearts to their opinions and concerns to provide
products and services that meet their satisfaction.
(Contributing to Society)10We appreciate the public nature of financial services and seek to achieve our corporate vision and contribute to society
by maintaining high ethical standards and levels of responsibility. We also fulfill our other obligations as a member ofsociety and a good corporate citizen(Pursue Originality)
We pursue creativity and innovation informed by original ideas and unfettered by convention.
(Encourage a free and open-minded corporate culture)
We recognize the importance of individual employee contributions in providing ideal financial services. We encourage afree and open-minded corporate culture to allow employees to fully display their individualities and abilities in theirwork.
The SFH Group is a financial services group comprising Sony Financial Holdings, subsidiaries Sony Life, Sony Assurance,
Sony Bank, and other group companies.

(2) Key Management Benchmarks
In addition to such key indicators as consolidated ordinary revenues, consolidated ordinary profit and consolidated net income,SFH closely follows consolidated adjusted ROE as one of its management benchmarks.
Consolidated adjusted ROE is calculated as follows.
■ Consolidated adjusted ROE = consolidated adjusted profit divided by consolidated adjusted capital
Consolidated adjusted profit is calculated as the sum of the following:
1) Sony Life: The amount of increase in embedded value (“EV*”, adjusted net worth plus value of in force business)during the fiscal year plus dividends paid;
2) Sony Assurance: The net income plus provision for special catastrophe reserve and its
provision for reserve for price fluctuations, in each case after taxes; and3) Sony Bank: Net income.
Consolidated adjusted capital is calculated as the sum of the following:
1) Sony Life:EV* as of the beginning of the fiscal year less dividends paid plus EV* as of the end of the fiscal year,
divided by two;
2) Sony Assurance: The average amount of net assets plus the sum of special catastrophe reserve and its reserve forprice fluctuations, in each case after taxes; and3) Sony Bank: The average amount of net assets.
*

Sony Life changed its EV calculation from the Traditional Embedded Value (“TEV”) to Market Consistent Embedded
Value (“MCEV”) in the year ended March 31, 2009, disclosing its MCEV as of March 31, 2008. Sony Life’s MCEV iscalculated in compliance with the European Insurance Chief Financial Officer (CFO) Forum Market Consistent
Embedded Value Principles© (“MCEV Principles”), the international standard in disclosing MCEV published by the
CFO Forum comprised of CFOs from major insurance companies in Europe.

Consolidated adjusted profit and consolidated adjusted capital take into consideration dividends from the Group subsidiaries
and other special factors.

(3) Medium- to Long-Term Management Strategies
The SFH Group aims to maximize the corporate value of the Group over the medium to long term by implementing themanagement strategies outlined below.
(a) Sustainable and Stable Growth of Group Companies

11Sony Life:

Sony Life provides detailed tailored consulting and follow-up services through life insurance
professionals—Lifeplanner sales employees and Partners (independent agencies)—who havebroad-ranging expertise and extensive experience in such areas as economics, finance and taxation.
Sony Life strives to strengthen its capabilities and hone its competitive edge in the individual life
insurance market by providing value in a way that only Sony Life can.
Sony Assurance: Capitalizing on the strengths of its position as a direct insurance provider that communicates with eachof its customers directly via the Internet and the telephone, Sony Assurance precisely understands
customer opinions and needs, and provides products and services from a customer viewpoint. Sony
Assurance aims to increase its income from insurance premiums by offering reasonably priced
insurance premiums realized by risk-segmented products and operational efficiency.
Sony Bank:
Sony Bank is an Internet bank focused on the needs of individual customers. By maximizing
information technologies, the bank works to provide fair and highly convenient financial products andservices. By ensuring its trustworthiness in such ways, the bank is working to expand its operations
further.

(b) Fostering Synergy among Group Companies
In addition to the growth of each company within the Group, we seek to enhance synergies among the companies of theSFH Group. Such efforts include the joint offering of products and services, the sharing of distribution channels andinfrastructure and other forms of collaboration. By increasing intra-group synergies, SFH aims to offer customers
attractive and high-value-added products and services that are unmatched by conventional financial institutions.
(c) Expanding into New Business Fields, Outside the Existing Framework
Through the growth of Group companies and increased synergies within the Group, we aim to move beyond the existing
framework of the SFH Group. We are examining active advancements into new business fields that will raise ourcorporate value even further.

12(4) Tasks Ahead for the Company
During the year ended March 31, 2010, the Japanese economy showed signs of recovery in capital expenditure andemployment, primarily driven by demand from abroad boosted by the economic stimulus packages around the world.
However, Japanese economy appears unlikely to escape deflation in the short term.
Japanese economy faces continued decline in the birthrate and aging of the population. Furthermore, Japanese customer
needs are growing more diverse. Under these circumstances, Japanese life insurance companies and banks are being required
to execute growth strategies more quickly and efficaciously in the face of fiercer competition.
Under these conditions, SFH Group recognizes that trusts of customers are important, therefore redoubling its internal
control efforts focused on compliance, risk management, eradicating anti-social influences and ensuring the protection of
personal information. At the same time, we are working to realize our vision and achieve ongoing increases in corporate value
by aggressively pursuing the initiatives described below.
(a) Growing the three major businesses
Sony Life, Sony Assurance and Sony Bank have differentiated themselves from their competitors by following
business models that are clearly distinct and providing individual customers with highly rational and convenient
products and services. We will promote the ongoing growth of each of these companies by emphasizing theirindividual advantages, thereby further entrenching their presence in their respective markets.
(b) Fostering cross-selling and other Group synergies
The easing of financial market restrictions has encouraged various companies to forge alliances that aim to market
financial products targeting individuals. In the past, SFH has encouraged intra-Group liaisons, such as through the saleof Sony Assurance’s automobile insurance and Sony Bank’s mortgage loans by Sony Life’s Lifeplanner sales
employees. In the future we will encourage even greater business cooperation by promoting efficient cultivation of
new customers and cross-selling, to enhance the SFH Group’s corporate value.
(c) Enhancing the latest developed business fields, and Expanding into new fields of business
AEGON Sony Life Insurance and Sony Bank Securities strive to steadily expand business operations by extending
their product and service line-ups to meet customer’s expectations continuously. In the event that providing financial
products and services outside our current scope of business proves necessary to realize the SFH Group’s corporate
vision, we will consider aggressive moves to expand into new fields of business. We will pursue such new business todiversify and expand our sources of revenues and profits.

13

IV. Consolidated Financial Statements
1. Consolidated Balance Sheets(Millions of yen)

AssetsCash and due from banks
Call loans and bills bought
Commercial paper and other debt purchased
Monetary trusts
Securities
Loans
Tangible fixed assets
Land
Buildings
Leased assets
Construction in progress
Other tangible fixed assets
Intangible fixed assets
Software
Goodwill
Leased assets
Other intangible fixed assets
Due from agencies
Due from reinsurers
Foreign exchanges
Other assets
Deferred tax assets
Reserve for possible loan losses
Total Assets

As of March 31, 2009

As of March 31, 2010¥¥

42,794
95,70916,163608,846
3,703,062
597,542
83,61933,076
47,790
340
1,179
1,232
18,788
16,710
2,004
0
72
1
144
6,355
91,42449,889(665)¥5,313,677

14

103,649
146,879
3,292
300,7434,488,458
714,486
81,93133,07647,176274—
1,405
20,687
19,120
1,503
0
64
—
205
5,100
101,684
34,987(1,019)¥6,001,088

(Millions of yen)
As of March 31, 2009

As of March 31, 2010

¥3,680,731
34,843
3,643,348
2,539
1,216
1,042
1,325,320
10,0002,000
868,0862,251
13,435
310
3,666
1
0
706

¥4,088,186
39,151
4,043,958
5,076
1,445
853
1,509,295
10,0002,000
2090,6992,496
15,915
360
9,665
2
0
706

5,108,779

5,731,648

Common stock
Capital surplus
Retained earnings (deficits)
Total shareholders’ equity
Net unrealized gains (losses) on other securities, net of taxes
Net deferred losses on hedging instruments, net of taxes
Land revaluation, net of taxes
Foreign currency translation adjustments
Total valuation and translation adjustments

19,900195,277(2,251)
212,925(4,853)(1,449)(1,475)(248)(8,028)19,900195,277
39,350254,527
17,511(960)(1,475)(163)(14,912)

Total Net Assets

204,897

269,439¥5,313,677¥6,001,088

Liabilities
Policy reserve and others
Reserve for outstanding claims
Policy reserve
Reserve for policyholders’ dividends
Due to agencies
Due to reinsurers
Deposits
Call money and bills soldBorrowed money
Foreign exchanges
Other liabilities
Reserve for employees’ bonuses
Reserve for employees’ retirement benefits
Reserve for directors’ retirement benefits
Reserve for price fluctuations
Reserve for financial products transaction liabilities
Deferred tax liabilities
Deferred tax liabilities on land revaluation
Total Liabilities
Net Assets

Total Liabilities and Net Assets

15

2. Consolidated Statements of Income(Millions of yen)
For the year ended
March 31, 2009

For the year ended
March 31, 2010

Ordinary Revenues¥860,323¥978,991

Ordinary Revenues from the Life Insurance Business

765,145

880,353

Income from insurance premiums

661,676

699,459

660,308

697,525

1,368

1,933

99,064

175,374

56,05670,599

Income from monetary trusts, net—

22,887

Income from trading securities, net

1,084

—

Gains on sale of securities

32,14515,153807

3,939

Insurance premiums
Ceded reinsurance commissions
Investment income
Interest income and dividends

Gains on redemption of securities
Gains on derivatives, net

8,937

—

Other investment income

33

37

Gains on separate accounts, net—

62,757

4,404

5,519

61,872

68,172

61,137

67,468

61,10667,440

31

27

718

681

Interest income and dividends

685

688

Gains on sale of securities

61

7

Gains on redemption of securities

3

12

Transfer to interest and dividends on deposits of premiums

(31)

(27)

Other ordinary income

16

22

33,30630,46622,04623,393

Interest income on loans

9,293

11,962

Interest income and dividends on securities

10,452

10,930Interest income on call loans and bills bought

2,021

86

10

53

Other ordinary income
Ordinary Revenues from the Non-life Insurance Business
Underwriting income
Net premiums written
Interest and dividends on deposits of premiums
Investment income

Ordinary Revenues from the Banking Business
Interest income

Interest income on deposits with banks
Interest income on interest rate swaps

10

2

Other interest income

258

358

Fees and commissions

2,106

1,924

Other operating income

9,035

5,122

Gains on foreign exchange transactions, net

7,938

4,723

Others

1,096

398

118

26

Other ordinary income(Continued)

16

(Millions of yen)

Ordinary Expenses
Ordinary Expenses from the Life Insurance Business

For the year ended
March 31, 2009

For the year ended
March 31, 2010

¥826,070¥894,618

733,544801,870

Insurance claims and other payments
Insurance claims
Annuity payments
Insurance benefits
Surrender payments
Other payments
Reinsurance premiums
Provision for policy reserve and others
Provision for reserve for outstanding claims
Provision for policy reserve
Interest portion of reserve for policyholders’ dividends
Investment expenses
Interest expenses
Losses from monetary trusts, net
Losses on sale of securities
Devaluation losses on securities
Losses on redemption of securities
Foreign exchange losses, net
Provision for reserve for possible loan losses
Depreciation of real estate for rent and others
Other investment expenses
Losses on separate accounts, net
Operating expenses

274,793
62,102
7,111
32,898168,1372,172
2,371
219,075
1,708
217,327
39
133,54542856
16,15731,899
262
2,382
134
2,932
6,664
72,212
93,883

274,285
64,8597,742
34,670162,697
1,950
2,366
395,5832,311
393,267
4
20,411
29—
10,078
—
361
870
3
2,693
6,373
—
96,777

Other ordinary expenses
Ordinary Expenses from the Non-life Insurance Business

12,24659,257

14,81365,164

Underwriting expenses

43,82948,807Net losses paid
Loss adjustment expenses
Net commission and brokerage fees
Provision for reserve for outstanding claims
Provision for underwriting reserve
Other underwriting expenses
Investment expenses

29,952
3,632
681
1,482
8,079
0
177

34,573
4,009
893
1,996
7,334
0
13

Losses on sale of securities

143

12

Devaluation losses on securities

29—

Losses on redemption of securities

4

1

15,242

16,322

7

20

Operating, general and administrative expenses
Other ordinary expenses(Continued)

17

(Millions of yen)
For the year ended
March 31, 2009

For the year ended
March 31, 2010

¥33,268¥27,583

Interest expenses
Interest expenses on deposits
Interest expenses on call money and bills soldInterest on borrowed money
Interest expenses on interest rate swaps
Other interest expenses

15,394
14,50158
38796
0

10,364
8,535
31
50
1,745
1

Fees and commissions

1,225

1,204

Other operating expenses

5,107

2,986

General and administrative expenses

11,264

12,621

275

407

Ordinary Profit

34,25384,373Extraordinary Gains
Gains on disposal of fixed assets

20,47110
020,470

—

3,917
3,879

7,056
1,051

Impairment losses

20

5Provision for reserve for price fluctuations

—

5,998

Others

16

—

(429)

3,516

Income Before Income Taxes

51,23873,799

Income Taxes

20,51625,673- Current

14,91524,079- Deferred

5,600

1,593

¥30,722

48,126

Ordinary Expenses from the Banking Business

Other ordinary expenses

Reversal of reserve for price fluctuations
Extraordinary Losses
Losses on disposal of fixed assets

Provision for (Reversal of) Reserve for Policyholders’dividends

Net Income183. Consolidated Statements of Changes in Net Assets(Millions of yen)
For the year ended
March 31, 2009

For the year ended
March 31, 2010

¥ 19,900¥ 19,900——

19,90019,900195,277

195,277——

195,277

195,277(26,417)(2,251)Dividends from surplus(6,525)(6,525)

Net income
Decrease resulting from change in scope of applicationof equity method
Total changes during the period

30,722

48,126(31)—

24,166

41,601(2,251)39,350188,759

212,925

Dividends from surplus(6,525)(6,525)

Net income
Decrease resulting from change in scope of applicationof equity method
Total changes during the period

30,722

48,126(31)—

24,166

41,601¥212,925¥254,527

Shareholders’ Equity
Common stock
Balance at the end of the previous period
Changes during the period
Total changes during the period
Balance at the end of the current period
Capital surplus
Balance at the end of the previous period
Changes during the period
Total changes during the period
Balance at the end of the current period
Retained earnings (deficits)
Balance at the end of the previous period
Changes during the period

Balance at the end of the current period
Total shareholders’ equity
Balance at the end of the previous period
Changes during the period

Balance at the end of the current period(Continued)

19

(Millions of yen)
For the year ended
March 31, 2009

For the year ended
March 31, 2010

Valuation and Translation Adjustments
Net unrealized gains (losses) on other securities, net of taxes
Balance at the end of the previous period¥74,902¥(4,853)

Net changes of items other than shareholders’ equity(79,756)

22,365

Total changes during the period(79,756)

22,365

Balance at the end of the current period(4,853)

17,511(1,345)(1,449)Net changes of items other than shareholders’ equity

(104)

489

Total changes during the period

(104)

489

Balance at the end of the current period(1,449)(960)(1,475)(1,475)

Total changes during the period——

Balance at the end of the current period(1,475)(1,475)

786

(248)

Net changes of items other than shareholders’ equity(1,035)85

Total changes during the period(1,035)

85

Balance at the end of the current period

(248)

(163)

72,868(8,028)Net changes of items other than shareholders’ equity(80,896)

22,940Total changes during the period(80,896)

22,940(8,028)¥ 14,912

Changes during the period

Net deferred losses on hedging instruments, net of taxes
Balance at the end of the previous period
Changes during the period

Land revaluation, net of taxes
Balance at the end of the previous period
Changes during the period

Foreign currency translation adjustments
Balance at the end of the previous period
Changes during the period

Total valuation and translation adjustments
Balance at the end of the previous period
Changes during the period

Balance at the end of the current period¥(Continued)

20

(Millions of yen)
For the year ended
March 31, 2009

For the year ended
March 31, 2010

¥261,627¥204,897

Dividends from surplus(6,525)(6,525)

Net income

30,722

48,126

Total Net Assets
Balance at the end of the previous period
Changes during the period

Decrease resulting from change in scope of applicationof equity method
Net changes of items other than shareholders’ equity

(31)

—

(80,896)

22,940Total changes during the period(56,730)

64,541

Balance at the end of the current period¥204,897¥269,439

21

4. Consolidated Statements of Cash Flows(Millions of yen)
For the year ended
March 31, 2009

For the year ended
March 31, 2010

¥ 51,238¥ 73,799

Depreciation of real estate for lease

2,932

2,693

Depreciation and amortization

3,243

3,971

Impairment losses

20

5

Amortization of goodwill

501

501

3,190

4,307

225,407400,601

39

4

(429)

3,516

338

354

Increase in reserve for employees’ retirement benefits

1,936

2,550

Increase in reserve for directors’ retirement benefits

57

50

Increase (decrease) in reserve for price fluctuations(20,470)

5,998

0

1

Interest income and dividends(78,789)(94,681)(Gains) losses on securities

87,400(74,733)

Interest expenses

15,437

10,394

Exchange gains

8,416

2,395

Losses on disposal of tangible fixed assets

68

198

Equity in losses of affiliates

173

307

Net increase in loans(130,007)(109,797)

Net increase in deposits

182,175

183,758

Net (increase) decrease in call loans and bills bought

302,659(5,170)Net (increase) decrease in foreign exchange (assets)(4,671)

1,254

8

11

Others, net

22,823

10,578Subtotal

673,703422,874

Interest and dividends received

81,813

99,486

Interest paid

(14,567)(11,165)

Policyholders’ dividends paid

(1,577)(983)

Income taxes paid

(9,334)(15,985)¥730,038¥494,225

Cash flows from operating activities
Income before income taxes

Increase in reserve for outstanding claims
Increase in policy reserve
Increase in interest portion of reserve for policyholders’dividends
Increase (decrease) in reserve for policyholders’ dividends
Increase in reserve for possible loan losses

Increase in reserve for financial products transaction liabilities

Net increase in foreign exchange (liabilities)

Net cash provided by operating activities(Continued)

22

(Millions of yen)
For the year ended
March 31, 2009

For the year ended
March 31, 2010¥¥

Cash flows from investing activities
Investments in monetary trusts(34,758)

Proceeds from sale of monetary trusts(55,750)

316,794

372,000

Purchases of securities(2,288,460)(1,441,592)

Proceeds from sale and redemption of securities

1,285,092

770,912Investments in loans(47,351)(46,145)

Collections of loans

13,683

17,840

Others, net(2,655)

13,583(757,656)(369,151)(27,618)

125,073(2,413)(2,514)1

0

Purchases of intangible fixed assets(9,745)(6,739)Purchase of securities of a subsidiary

—

(300)

Net cash used in investing activities(769,813)(378,706)

Increase in subordinated borrowings

2,000

—

Cash dividends paid

(6,515)(6,521)

(76)

(59)

Net cash used in financing activities(4,591)(6,580)Effect of exchange rate changes on cash and cash equivalents

(184)

20

Net increase (decrease) in cash and cash equivalents(44,551)

108,959

Cash and cash equivalents at beginning of the fiscal year

136,186

91,634

Total of net cash used in investment transactions
Total of net cash provided by (used in) operating activities
and investment transactions
Purchases of tangible fixed assets
Proceeds from sale of tangible fixed assets

Cash flows from financing activities

OthersCash and cash equivalents at end of the fiscal year¥

91,634

Note: Cash flows from investing activities include cash flows from lending operations of the insurance business.

23¥

200,593

Notes to the Consolidated Financial Statements
1.

Summary of Significant Accounting Policies
Principles of Consolidation(1) Scope of consolidation
Number of consolidated subsidiaries:
5
Consolidated subsidiaries: Sony Life Insurance Co., Ltd., Sony Life Insurance (Philippines) Corporation, Sony AssuranceInc., Sony Bank Inc., Sony Bank Securities Inc.
Number of non-consolidated subsidiaries: 1
Non-consolidated subsidiary:
LIPLA Co., Ltd.
LIPLA Co., Ltd., is excluded from the scope of consolidation because its assets, ordinary revenues, net income andretained earnings are so immaterial that its exclusion from the scope of consolidation does not hinder a rational judgment
of SFH’s financial position and results of operations.
(2) Application of the equity method
Number of consolidated subsidiaries and affiliates accounted for by the equity method:2
Consolidated subsidiaries and affiliates accounted for by the equity method: AEGON Sony Life Insurance Co., Ltd.,SA Reinsurance Ltd.
The name of AEGON Sony Life Insurance Co., Ltd., was changed from AEGON Sony Life Planning Co., Ltd. on August,2009,
SA Reinsurance Ltd. newly became an affiliated company accounted for by the equity method due to establishment of thecompany.
Number of non-consolidated subsidiaries and affiliates that are not accounted for by the equity method:1
Non-consolidated subsidiary not accounted for by the equity method:
LIPLA Co., Ltd.
LIPLA Co., Ltd., is not accounted for by the equity method because its net income and retained earnings are so immaterial
that its exclusion does not hinder a rational judgment of SFH’s financial position and results of operations.
(3) Fiscal year-end of consolidated subsidiaries
The financial statements of Sony Life Insurance (Philippines) Corporation are prepared with a fiscal year-end of December
31. Appropriate adjustments are made for material transactions between December 31 and March 31, the date of theconsolidated financial statements of SFH. All other subsidiaries prepare their financial statements as of March 31, thesame date as the consolidated financial statements of SFH.
(4) Valuation of assets and liabilities of consolidated subsidiaries
All assets and liabilities of acquired subsidiaries are stated at fair value as of the date of acquisition of control.
(5) Amortization of goodwill
Goodwill is amortized using the straight-line method over five years.
Securities
Securities are stated in the following manner: Securities held for trading purposes (“trading securities”) are stated at fair value
with unrealized gains and losses charged to income. The cost of such securities sold is determined by the moving-averagemethod. Held-to-maturity securities are stated at amortized cost (straight-line method) using the moving-average method.
Available-for-sale securities whose fair values are readily determinable are stated at fair value in the consolidated balance
sheets based on market prices prevailing at each balance sheet date, with unrealized gains (losses), net of income taxes,
included in net assets and acquisition costs calculated using the moving-average method. Available-for-sale securities whose
fair values are not readily determinable are stated at acquisition cost based on the moving-average method.
Derivative financial instruments
Derivative financial instruments are stated at fair value, with changes in fair value included in income for the period in which
they arise, except for derivatives that are designated by SFH and its domestic subsidiaries (the “Companies”) as “hedging
instruments.”
Hedge accounting
SFH’s banking subsidiary applies either deferred hedge accounting or fair value hedge accounting to account for transactions
it enters into to hedge interest rate risks on financial assets. SFH’s banking subsidiary uses interest rate swaps to offset
fluctuations in interest rates on fixed-rate loans by identifying the hedged items that are grouped based on their maturity, in
accordance with “Accounting and Auditing Treatments on Application of Accounting Standard for Financial Instruments in
the Banking Industry” (Industry Audit Committee of Japanese Institute of Certified Public Accountants No. 24). Interest rate24

swaps and others are used as hedging instruments to offset fluctuations in the fair value of fixed-rate bonds that are classified
as available-for-sale securities. Both of the above-mentioned hedging instruments are identified so that their significant terms
are nearly identical to those of the hedged items. Accordingly, such hedges are considered highly effective, resulting in a
substitution for evaluating the effectiveness of the hedging transactions.
Tangible fixed assets (excluding leased assets)
All tangible fixed assets, including real estate for lease, are initially recorded at cost. Subsequent expenses related to asset
improvements are capitalized or are recognized as separate assets, as appropriate, only when it is probable that future
economic benefits associated with the items will flow to the Companies and the cost of the item can be measured reliably. Allother repairs and maintenance charges are charged to income when incurred.
Depreciation is generally computed by the straight-line method for buildings and by the declining-balance method forother tangible fixed assets over the estimated useful lives of the assets, as follows:
Buildings
2 to 47 years
Other tangible fixed assets
2 to 20 years
Software for internal use (excluding leased assets)
Software for internal use is amortized using the straight-line method mainly over five years, its estimated useful life.
Leased assets
All leased assets with respect to non-ownership-transfer finance leases are amortized by the straight-line method over thelease term, without any residual value.
Reserve for possible loan losses
The reserve for possible loan losses is calculated by the Companies in accordance with self-assessment guidelines andwrite-off and reserve guidelines established at each subsidiary. With respect to loans to borrowers subject to bankruptcy,
court-guided rehabilitation or similar legal or formal proceedings, the Companies provide a specific reserve in the amount of
the loan balance less amounts collectable from collateral, guarantees and other means. For other loans, the Companies
provide a general reserve by applying the historical loan loss ratio determined over certain periods. Each loan is subject toasset assessment by the operational department of the relevant company in accordance with its self-assessment guidelines,
and the results of the assessment are reviewed by the respective internal audit departments, which are independent from theoperational departments, before the amount of reserve is finalized.
Reserve for employees’ bonuses
The reserve for employees’ bonuses is provided for the estimated amount of bonuses the Companies are required to pay forservices provided during the current fiscal year.
Reserve for employees’ retirement benefits
The reserve for employees’ retirement benefits is provided for the payment of retirement benefits to employees, in the amountdeemed accrued at the fiscal year-end, based on the projected retirement benefit obligation and the fair value of plan assets at
the fiscal year-end. Unrecognized prior service cost is amortized using the straight-line method over 10 years within theemployees’ average remaining service period at incurrence. Unrecognized net actuarial gain (loss) is amortized using thestraight-line method over 7 to 10 years within the employees’ average remaining service period, commencing from the fiscal
year immediately following incurrence. Unrecognized net obligation at transition is amortized using the straight-line method
over 15 years.
Reserve for directors’ retirement benefits
The reserve for directors’ and statutory auditors’ retirement benefits is provided based on the internal regulations of SFH and
its domestic subsidiaries and calculated at the amount that would be payable if all eligible directors and statutory auditors
were to resign at the fiscal year-end.
Policy reserve
Pursuant to the Insurance Business Law, SFH’s domestic life insurance subsidiary maintains a policy reserve for thefulfillment of future obligations under life insurance contracts. The policy reserve is established by the net level premium
method, which assumes a constant or level amount of net insurance premiums over the term of the relevant policy incalculating the amount of the reserve required to fund all future policy benefits. The net insurance premium is a portion of thepremium covering insurance underwriting risk, which is estimated based on factors such as mortality rates, investment yield,
surrender rates and other factors. The net level premium reserve for individual insurance contracts underwritten from fiscal

25

year 1996 is calculated using mortality and interest rates set by the Financial Services Agency as a standard policy reserve.
Additionally, the net level premium reserve for individual insurance contracts underwritten before fiscal year 1996 is
calculated using mortality and interest rates approved by the supervisor of insurance business in Japan.
Reserve for price fluctuations
Pursuant to requirements under the Insurance Business Law, the reserve for price fluctuations is provided for pricefluctuations primarily related to stocks, bonds and foreign currency-denominated assets that are exposed to losses due tomarket price fluctuations. This reserve is only used to reduce deficits arising from price fluctuations on those assets.
Translation of foreign currencies
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the exchange rates in effect at eachbalance sheet date, whereas components of net assets denominated in foreign currencies are translated at historical rates. The
current year’s profit and loss accounts are translated into yen using the average exchange rate for the fiscal year.
Land revaluation
On March 31, 2002, SFH’s domestic life insurance subsidiary revalued its land for operating purposes, as permitted by theLand Revaluation Law (Law No. 34, enacted March 31, 1998—the “Law”). The tax effect of the revaluation difference isaccounted for differently, depending on whether there are gains or losses; when there is a loss, a valuation allowance is fully
provided for the tax effect of the loss, and when there is a gain, the tax effect is recorded in “deferred tax liabilities on land
revaluation.” After excluding these amounts, the net revaluation difference is reported as “land revaluation” in net assets. The
revaluation method stipulated by Article 3-3 of the Law was based on the land appraisal in conformity with Article 2-5 of the
Law Enforcement Order related to the Law (Government Ordinance No. 119, effective from March 31, 1998).
Accounting for consumption taxes
The consumption taxes received and paid by SFH and its domestic subsidiaries, excluding loss adjustment expenses andoperating, general and administrative expenses of SFH’s non-life insurance subsidiary, are not included in income andexpenses. Under the Consumption Tax Law of Japan, the consumption taxes paid on property and equipment are notdeductible from the consumption taxes received; they are recorded as “other assets” and amortized on a straight-line basis
over five years. Other non-deductible consumption taxes are charged to income as incurred.
Cash and cash equivalents
Cash equivalents consist of highly liquid investments without significant market risks, such as demand deposits andshort-term investments with an original maturity of three months or less.
Changes in accounting policies, procedures and presentation
Not applicable.

Additional information(Changes in the method of calculating the fair value of available-for-sale securities)
Following the announcement of Practical Issue Task Force No. 25 “Practical Solution on Measurement of Fair Value of
Financial Assets” (October 28, 2008), SFH’s banking subsidiary examined its accounting treatment of the floating-rate
Japanese government bonds it held within “available-for-sale securities” and determined that the fair market values as ofMarch 31, 2009, could not be deemed fair values. Therefore, SFH had evaluated these bonds based on reasonably
estimated amounts. However, after examining the recent market environment, SFH determined that market values as ofMarch 31, 2010, could be considered fair values. Therefore, the Company evaluated these bonds accordingly, based on
their market values.

26

2.

Segment Information

Life insurance
business

Millions of yen
As of and for the year ended March 31, 2009
Non-life
Banking
Total
Elimination
insurancebusinessbusiness

Consolidated

Ordinary revenues
External customers
Intersegment
Total
Ordinary expenses
Ordinary profit (loss)¥ 765,145
1,100
766,245733,704¥ 32,540¥ 61,872
10
61,88259,704¥ 2,178¥ 33,306
72
33,37833,950¥ (571)¥ 860,323
1,183
861,507827,359¥ 34,147¥ —(1,183)(1,183)(1,289)¥106¥ 860,323—
860,323
826,070¥ 34,253

Assets, depreciation andcapital expenditure
AssetsDepreciation
Capital expenditure¥ 3,810,470
4,775
7,612

¥ 86,698
501
2,176¥ 1,413,034
1,031
2,084

¥ 5,310,202
6,309
11,873¥ 3,474
12
12¥ 5,313,677
6,321
11,885

Life insurance
business
Ordinary revenues:
External customers
Intersegment
Total
Ordinary expenses
Ordinary profit
Assets, depreciation andcapital expenditure:
AssetsDepreciation
Capital expenditure

Millions of yen
As of and for the year ended March 31, 2010
Non-life
Banking
Total
Elimination
insurancebusinessbusiness

Consolidated¥ 880,353
1,692
882,045
802,264¥ 79,781¥ 68,1722
68,17465,609¥ 2,565¥ 30,466
54
30,52028,592¥ 1,928¥ 978,991
1,749
980,740
896,465¥ 84,275¥—(1,749)(1,749)(1,847)¥98¥ 978,991—
978,991
894,618¥ 84,373¥ 4,286,045
5,103
5,049

¥ 98,340
509
1,428¥ 1,613,010
1,227
1,952

¥ 5,997,396
6,840
8,430

¥ 3,691122¥ 6,001,088
6,852
8,432

Notes:
1. The life insurance business consists of Sony Life Insurance Co., Ltd., Sony Life Insurance (Philippines) Corporation, AEGON Sony
Life Insurance Co., Ltd. (Its name was changed from AEGON Sony Life Planning Co., Ltd., in August 2009.) The non-life
insurance business consists of Sony Assurance Inc., and the banking business consists of Sony Bank Inc. and Sony Bank Securities
Inc. In addition to those companies, SA Reinsurance Ltd. was included in the life insurance business in the year ended March 31,
2010.
2. Unallocated ordinary expenses that are included in “elimination” for the years ended March 31, 2009, and 2010 amount to ¥868
million and ¥969 million, most of which are ordinary expenses of SFH. Unallocated corporate assets that are included in“elimination” are ¥3,977 million and ¥4,619 million, most of which are deposits and others of SFH.

27

3.

Related Party Transactions(1) For the year ended March 31, 2009

Transactions between SFH Group and related parties
Since SFH’s initial public offering, Sony Corporation has remained its parent company by holding 60.0% of SFH’s outstanding shares ofcommon stock. The Sony Group conducts business in the electronics, game, pictures, financial services and other fields.
Transactions between SFH and Sony Corporation for the fiscal year ended March 31, 2009, were as follows:z SFH made payments to Sony Corporation for remuneration expenses of employees that it seconded to SFH. For the year
ended March 31, 2009, such payments amounted to ¥32 million, and “accrued expenses” of ¥2 million were outstanding asof March 31, 2009.
Transactions between the subsidiaries of SFH and Sony Corporation for the fiscal year ended March 31, 2009, were as follows:z
The subsidiaries of SFH made payments to Sony Corporation under royalty agreements of ¥1,643 million as compensation
for using the “Sony” trademark and trade name.
zSony Life Insurance Co., Ltd., made lease payments of ¥1,623 million to Sony Corporation for the use of a plot of land.
Sony Corporation made lease payments of ¥8,269 million for the use of Sony City, an office building constructed on thissite, to Sony Life Insurance Co., Ltd., which is the owner of the building.
z
The subsidiaries of SFH made payments of ¥83 million to Sony Corporation for remuneration expenses of employees that it
seconded to subsidiaries of SFH.
z
The subsidiaries of SFH made other payments of ¥96 million in exchange for miscellaneous products and services provided
to subsidiaries of SFH by Sony Corporation.
z
As of March 31, 2009, ¥73 million of “accounts receivable,” ¥764 million of “accrued expenses and others,” ¥712 millionof “unearned revenue” and ¥3,554 million of “guarantee deposits received” were outstanding in relation to transactions
between the subsidiaries of SFH and Sony Corporation.
Transactions between the subsidiaries of SFH and the Sony Group companies for the fiscal year ended March 31, 2009, were as
follows:z
The subsidiaries of SFH entered into a number of lease and service agreements with Sony Finance International Inc. (“SonyFinance”), a wholly-owned subsidiary of Sony Corporation, which engages in the leasing and credit card business in Japan.
The subsidiaries of SFH made payments of ¥314 million for leasing of office space and office equipment, ¥856 million forcollecting services, ¥146 million for individual loan guarantee services, and ¥79 million for agency services provided bySony Finance.
z
As of March 31, 2009, ¥23,130 million of “accounts receivable,” ¥72 million of “accrued expenses and others” and ¥14
million of “lease obligation” were outstanding in relation to transactions between the subsidiaries of SFH and SonyFinance.
z
The subsidiaries of SFH employ the services of Frontage Inc. (“Frontage”), an advertising media purchaser that is a
consolidated subsidiary of Sony Corporation. The subsidiaries of SFH made payments of ¥3,769 million for advertisingprovided by Frontage to the subsidiaries of SFH.
z
As of March 31, 2009, ¥468 million of “accrued expenses and others” was outstanding in relation to transactions between
the subsidiaries of SFH and Frontage.
Notes:
1. The abovementioned transaction amounts during the fiscal year ended March 31, 2009, exclude consumption taxes and others, while
the outstanding amounts as of March 31, 2009, include consumption taxes and others.
2. The SFH Group made payments to Sony Corporation for remuneration expenses of employees that it seconded to the SFH Group
based on the agreements on the secondment of employees.
3. As part of its investment, Sony Life Insurance Co., Ltd., has leased the building to Sony Corporation for use as its corporate
headquarters, starting from October 2006. The rental fee is determined based on the discussions by reference to real estate appraisal.
Sony Life Insurance Co., Ltd., takes the land of this site on lease from Sony Corporation and the rental fee has been determined byreference to the actual transactions of the vicinal land.
4. The “Sony” trademark and trade name, which is used in the trade name of the SFH Group, belongs to Sony Corporation, and each of
the SFH Group companies has entered into royalty agreements with Sony Corporation pursuant to which the SFH Group is permitted
to use the Sony name. Royalty fees are paid to Sony Corporation based on these agreements.
5. Other transactions are determined in the same way as general transactions, taking fair market value into consideration.

28

Notes for parent company and important affiliates Parent company
Sony Corporation lists its shares of common stock on the Tokyo Stock Exchange, Osaka Securities Exchange, New York Stock
Exchange (United States) and London Stock Exchange (United Kingdom).
 Important affiliates
None.

(2) For the year ended March 31, 2010

Transactions between SFH Group and related parties
Since SFH’s initial public offering, Sony Corporation has remained its parent company by holding 60.0% of SFH’s outstanding shares ofcommon stock. The Sony Group conducts business in the electronics, game, pictures, financial services and other fields.
Transactions between SFH and Sony Corporation for the fiscal year ended March 31, 2010, were as follows:z SFH made payments to Sony Corporation for remuneration expenses of employees that it seconded to SFH. For the year
ended March 31, 2010, such payments amounted to ¥37 million, and “accrued expenses” of ¥0 million were outstanding asof March 31, 2010.
Transactions between the subsidiaries of SFH and Sony Corporation for the fiscal year ended March 31, 2010, were as follows:z
The subsidiaries of SFH made payments to Sony Corporation under royalty agreements of ¥1,272 million as compensation
for using the “Sony” trademark and trade name.
zSony Life Insurance Co., Ltd., made lease payments of ¥1,623 million to Sony Corporation for the use of a plot of land.
Sony Corporation made lease payments of ¥8,272 million for the use of Sony City, an office building constructed on thissite, to Sony Life Insurance Co., Ltd., which is the owner of the building.
z
The subsidiaries of SFH made payments of ¥34 million to Sony Corporation for remuneration expenses of employees that it
seconded to subsidiaries of SFH.
z
The subsidiaries of SFH made other payments of ¥81 million in exchange for miscellaneous products and services provided
to the subsidiaries of SFH by Sony Corporation.
z
As of March 31, 2010, ¥198 million of “accrued expenses and others,” ¥714 million of “unearned revenue” and ¥3,554
million of “guarantee deposits received” were outstanding in relation to transactions between the subsidiaries of SFH andSony Corporation.
Transactions between the subsidiaries of SFH and the Sony Group companies for the fiscal year ended March 31, 2010, were as
follows:z
The subsidiaries of SFH entered into a number of lease and service agreements with Sony Finance International Inc. (“SonyFinance”), a wholly-owned subsidiary of Sony Corporation, which engages in the leasing and credit card business in Japan.
The subsidiaries of SFH made payments of ¥305 million for leasing of office space and office equipment, ¥1,115 million
for collecting services, ¥21 million for individual loan guarantee services, ¥122 million for agency services provided bySony Finance.
z
As of March 31, 2010, ¥23,728 million of “accounts receivable,” ¥92 million of “accrued expenses and others” and ¥5
million of “lease obligation” were outstanding in relation to transactions between the subsidiaries of SFH and SonyFinance.
z
The subsidiaries of SFH employ the services of Frontage Inc. (“Frontage”), an advertising media purchaser that is a
consolidated subsidiary of Sony Corporation. The subsidiaries of SFH made payments of ¥3,945 million for advertisingprovided by Frontage to the subsidiaries of SFH.
z
As of March 31, 2010, ¥386 million of “accrued expenses and others” was outstanding in relation to transactions between
the subsidiaries of SFH and Frontage.
Notes:
1. The abovementioned transaction amounts during the fiscal year ended March 31, 2010, exclude consumption taxes and others, while
the outstanding amounts as of March 31, 2010, include consumption taxes and others.
2. The SFH Group made payments to Sony Corporation for remuneration expenses of employees that it has seconded to the SFH Group
based on the agreements on the secondment of employees.
3. As part of its investment, Sony Life Insurance Co., Ltd., has leased the building to Sony Corporation for use as its corporate
headquarters, starting from October 2006. The rental fee is determined based on the discussions by reference to real estate appraisal.
Sony Life Insurance Co., Ltd., takes the land of this site on lease from Sony Corporation and the rental fee has been determined byreference to the actual transactions of the vicinal land.
4. The “Sony” trademark and trade name, which is used in the trade name of the SFH Group, belongs to Sony Corporation and each of29

the SFH Group companies has entered into royalty agreements with Sony Corporation pursuant to which the SFH Group is permitted
to use the Sony name. Royalty fees are paid to Sony Corporation based on these agreements.
5. Other transactions are determined in the same way as general transactions, taking fair market value into consideration.

Notes for parent company and important affiliates Parent company
Sony Corporation lists its shares of common stock on the Tokyo Stock Exchange, Osaka Securities Exchange, New York
Stock Exchange (United States) and London Stock Exchange (United Kingdom).
 Important affiliates
None.

4.

Financial Instruments
As ASBJ Statement No. 10 “Accounting Standard for Financial Instruments” (March 10, 2008) and ASBJ Guidance No. 19“Guidance on Disclosures about Fair Value of Financial Instruments” (March 10, 2008) went into effect for fiscal years
beginning on or after April 1, 2009, SFH applied these guidelines in the fiscal year ended March 31, 2010.
(1) Description of financial instruments(i) Policy on financial instruments
The SFH Group conducts its life insurance, non-life insurance and banking businesses in accordance with the provisions of
the Insurance Business Law of Japan, the Banking Law of Japan and other relevant provisions. With regard to financial assets(except for assets in separate accounts as stipulated in Item 1, Article 118 of the Insurance Business Law of Japan in the life
insurance business), to ensure steady investment income SFH holds various investment assets, including Japanese
government and corporate bonds, foreign government and corporate bonds, Japanese stocks and loans. Deposits fromindividual customers in the banking business account for nearly all of SFH’s financial liabilities. Although SFH holds
financial assets as well as financial liabilities, which are subject to the risk of interest and exchange rate fluctuations, it strives
to protect itself from the negative effects of these fluctuations by maintaining an appropriate balance between assets andliabilities by conducting asset-liability management (ALM) in each of its businesses. In addition, the banking subsidiaryconducted derivatives transactions as one aspect of its ALM.
(ii) Financial instruments and related risk
Securities and loans constitute the majority of the SFH Group’s financial asset holdings. Most of its securities holdings are in
Japanese government and corporate bonds. Other holdings include Japanese stocks, convertible bonds, foreign securities andfunds invested in investment associations. These holdings are intended either for holding to maturity or for purely investment
purposes, and they are subject to various risks, including interest rate fluctuation risk, issuer credit risk, stock pricefluctuation risk and exchange rate fluctuation risk. Furthermore, the Group holds some of its financial assets in the shares ofoverseas unlisted companies, which have limited liquidity.
The majority of loans in the life insurance business are policy loans, and in the banking business, individual mortgage
loans. These loans carry the credit risk of default, as well as interest rate risk. However, policy loans are limited to the amountof surrender payments, and mortgage loans are backed by real estate. Consequently, loan-related risks are relatively low.
Financial liabilities, meanwhile, are mainly deposits from individual customers, which are subject to interest rate risk.
As some of these deposits are denominated in foreign currencies, they are subject to exchange rate fluctuation risk, as well asinterest rate risk.
Derivatives transactions in the banking business are conducted primarily as one aspect of ALM. In this category, weapply hedge accounting. Interest swap transactions are used to hedge against the interest rate risk of fixed-rate loans. When
hedges commence, the banking subsidiary ensures hedge effectiveness by confirming that the finance receivables to behedged and the interest rates swaps (the hedging method used) are grouped to within three months of each other. Interest rate
swaps and others are used as hedging instruments to offset fluctuations in the fair value of fixed-rate bonds classified asavailable-for-sale securities. When the hedge is implemented, the banking subsidiary determines hedge effectiveness byconfirming that the cash flows of the securities to be hedged match those of the hedging method (such as interest-rate swaps).
In addition to hedging purposes, derivatives transactions are conducted within an extremely narrow band, with tradingtransactions based on short-term interest and exchange rate forecasts and used to mitigate interest and exchange rate risk.
Transactions involving financial instruments are subject to liquidity risk. Liquidity risk includes cash flow risk andmarket liquidity risk. Cash flow risk is the risk of loss to our inability to make cash payments when due because of an
inability to maintain sufficient cash reserves, as well as the risk of loss if we are forced to raise funds under unfavorable

30

conditions in order to obtain cash to meet our payment obligations. Market liquidity risk is risk of loss due to an inability to
conduct market transactions, in particular from an inability to change our market position at a given time, as well as the riskof loss if we are forced to complete transactions under unfavorable market conditions, in each case due to market turmoil orother factors.
(iii) Risk assessment of financial instruments
SFH formulates fundamental principles for risk management and manages risks specific to its subsidiaries’ scale, business
content and other attributes. Our Risk Management Guidelines establish specific conditions for managing Group risks, while
each of the Group’s subsidiaries manages risks on its own. SFH’s Corporate Control Department submits periodic reports to
SFH’s Board of Directors and Executive Committee on subsidiaries’ risk management conditions recognized throughmonitoring or by holding Risk Management Meetings.
Credit risk
The SFH Group uses the following methods to manage the credit risk of its principal subsidiaries.
(a) To manage issuer credit risk on securities, at SFH’s life insurance subsidiary, the risk management divisionperiodically obtains credit and market value information.
(b) In line with various provisions for asset management risk, at SFH’s non-life insurance subsidiary, the investment
division is the operating division that determines issuer credit risk and market values on securities. In addition, thisdivision periodically submits reports to the Executive Committee on a monthly basis.
(c) In line with various provisions for managing credit risks, SFH’s banking subsidiary manages risks involving lending
to individual customers. For each loan, the subsidiary conducts credit screenings, manages credit information,
determines collateral and handles problem assets. In this manner, the banking subsidiary operates a system to manage
individual credit.
With regard to lending to corporate customers, for each loan the banking subsidiary performs credit
screenings, sets credit limits, manages credit information such as credit ratings by outside agencies, determines
security and collateral and handles problem assets. In this manner, the banking subsidiary operates a system tomanage risk. The subsidiary manages market credit risk, such as securities issuer credit risk and, on derivatives
transactions, counterparty risk, by periodically determining credit and market value information.
The risk management division manages credit. The division periodically reports risk management conditions
to management via Executive Committee and Board of Directors meetings. In addition, the internal audit division
conducts regular audits.
Market risk
The SFH Group uses the following methods to manage the market risk of its principal subsidiaries.
(a) The life insurance subsidiary manages various market-related risks in the following manner.
 Interest rate risk
Asset management risk management provisions clearly spell out such details as risk management methods andprocedures. Based on ALM policies that are determined through such methods as deliberation by the Executive
Committee, the subsidiary determines and confirms actual risk conditions at Board of Directors meetings. The
subsidiary’s risk management division maintains an overall grasp on the interest rates and durations of financial assets,
and monitors risk through gap analysis and interest rate sensitivity analysis, among other methods. The divisionperiodically reports such information to the Board of Directors and the Executive Committee.
 Exchange rate risk
With regard to the risk of exchange rate fluctuations, in accordance with ALM policy the subsidiary allocates assets toensure the amount of its securities denominated in foreign currencies are remain within a specified percentage of total
assets.
 Price fluctuation risk
The subsidiary’s risk management division periodically analyzes the amount of risk on its securities holdings bydetermining their basis point value. The risk management division reports this information regularly to the Board of
Directors and the Executive Committee.
(b) SFH’s non-life insurance subsidiary manages various market-related risks in the following manner.
 Interest rate risk
Asset management risk provisions clearly spell out such details as risk management methods and procedures, based onrisk management policies determined by the Board of Directors. Accordingly, the investment division manages risk on
an ongoing basis. The risk management division, monitors individual risks and reports to the Executive Committee ona monthly basis.

31 Price fluctuation risk
The risk management division sets the risk tolerance limits on available-for-sale securities holdings, monitors theseholdings to ensure that they do not exceed the prescribed risk amount, and reports to the Executive Committee on amonthly basis.
(c) SFH’s banking subsidiary manages various market-related risks in the following manner. The risk management
division handles each of these risks and reports risk management conditions regularly to management via Executive
Committee and Board of Directors meetings. In addition, the internal audit division conducts regular audits.
 Interest and exchange rate risk
In accordance with market risk management provisions, the subsidiary manages the risk of changes in value and losses
in income resulting from changes in the value of assets and liabilities (including off-balance-sheet items), owing tofluctuations in various market risk factors, such as interest rates, exchange rates and stock prices. Market risk
management provisions clearly spell out such details as risk management methods and procedures. Based on ALM
policies that are determined through such methods as deliberation by the Board of Directors, an ALM committee
meets—typically once each month—to understand and confirm actual conditions and deliberate future responses andrisk conditions. On a daily basis, the risk management division maintains an overall understanding of interest andexchange rates on financial assets and liabilities, as well as their durations, conducts monitoring that includes value atrisk (VaR) and interest rate sensitivity analysis, and ensures regulatory conformance. The subsidiary also uses ALM to
conduct interest-rate swaps, currency swaps, foreign exchange and other derivatives transactions to hedge againstinterest and exchange rate fluctuation risks.
 Market price fluctuation risk
The subsidiary manages holdings of investment products, including securities, in accordance with market risk
management provisions. Of these, the investment division, which primarily purchases securities externally, strives toreduce market price fluctuation risk by conducting pre-screening, setting investment limits and monitoring investments
on an ongoing basis. In addition, based on short-term interest and exchange rate forecasts the risk management
division uses VaR to understand the amount of trading-related market risk involved in securities held for trading
purposes, as well as currency- and interest-rate-related derivatives transactions. The division also ensures regulatory
conformance.
 Derivatives transactions
The subsidiary manages derivatives transactions in accordance with market risk and credit risk provisions. The
subsidiary also separates and conducts internal checks of individual departments’ execution of transactions, evaluationof hedge effectiveness and operations management.
Liquidity risk
The SFH Group uses the following methods to manage the liquidity risk of its principal subsidiaries.
(i) At the life insurance subsidiary, in line with liquidity risk management provisions the accounting division preparesand updates cash flow plans in a timely manner based on the reports it receives from individual divisions, and the risk
management division manages on-hand liquidity.
(ii) SFH’s non-life insurance subsidiary establishes provisions related to liquidity risk. Its cash flow management
division handles daily cash flow. The investment division, in addition to understanding these circumstances, works tofacilitate cash flow and ensure cash. The risk management division performs checks to monitor the situation.
(iii) SFH’s banking subsidiary manages cash flow by dividing the situation into phases, depending on the degree ofpressure on cash flow. In addition to establishing reporting methods, the subsidiary establishes and revises guidelines
as necessary. To manage market liquidity risk, the subsidiary works to understand market liquidity conditions thatpertain to the types of products it handles. The subsidiary formulates and revises guidelines on a product by productbasis, as necessary. The risk management division handles the liquidity management mentioned above, and thedivision reports risk management conditions regularly to management via Board of Directors and Executive
Committee meetings. In addition, the internal audit division conducts regular audits.
(iv) Supplementary explanation of the fair value of financial instruments
Market prices of financial instruments are considered to indicate their fair value, unless market prices are not available. In
this case, rational methods are used to calculate their fair values. Although these calculations use assumptions that are
believed to be reasonable under the circumstances, the resulting values may differ if calculated using different assumptions.
Derivatives transaction contact amounts indicated in “(2) Fair value information on financial instruments” do notthemselves indicate market risk related to derivatives transactions.

32

(2) Fair value information on financial instruments
Below is fair value information on financial instruments as of March 31, 2010, excluding securities whose fair values are notreadily determinable.
Financial assets

Cash and due from banks
Call loans and bills bought
Commercial paper and otherdebt purchased
Monetary trusts
Monetary trusts for trading
purposes
Other monetary trusts
Securities
Trading securities
Held-to-maturity securities
Available-for-sale securities
Loans
Reserve for possible loan
losses *Total Financial Assets

Millions of yen
As of March 31, 2010
Consolidated
Fair value
Difference
balance sheet
amount¥ 103,649¥ 103,649—
146,879
146,879
—
3,292

3,292

—

681

681

—

300,061

300,061—

350,255
2,346,789
1,757,936
714,486

350,255
2,327,483
1,757,936—¥(19,305)—

713,678782,898

69,220¥ 5,723,225¥ 5,773,139¥ 49,914(807)* Excludes general and specific reserves for possible loan losses.

Financial liabilities

Deposits
Call money and bills soldTotal Financial Liabilities

Millions of yen
As of March 31, 2010
Consolidated
Fair value
Difference
balance sheet
amount¥ 1,509,295¥ 1,508,525¥ (770)10,00010,000—¥ 1,519,295¥ 1,518,525¥ (770)Derivative financial instruments

Hedge accounting not applied*
Hedge accounting applied
Total Derivative Financial
Instruments

Millions of yen
As of March 31, 2010
Consolidatedbalance sheet
Fair value
Difference
amount¥ 4,740¥ 4,740—(7,525)(7,525)—¥ (2,784)¥ (2,784)—* Figures are totals resulting from derivatives transactions, which are accounted for as other assets and liabilities on the consolidatedbalance sheets. If the total is a debt amount, the above figure is negative.

33

Calculation of the fair value of financial instruments
Financial Assets
Cash and due from banks, call loans and bills bought, and commercial paper and other debt purchased
The fair value is regarded as the carrying amount, as they are approximately equal.
Monetary trusts
In individual monetary trusts mainly for investment purposes, the fair value of stocks is the market price on stock market,
and that of bonds is the market price on financial instrument exchanges or the price indicated by a financial institution.
Please see the “investment in monetary trust,” which indicates fair values by purpose.
Securities
The fair value of stocks is the market price on stock market or financial instrument exchanges. The fair value of bonds
and investment funds is the market price or the price indicated by a financial institution. Please see the “investment insecurities,” which indicates fair values by purpose.
Loans(i) Loans in the banking business
The value of these loans is calculated by estimating their future cash flows and then applying a prescribed discount rate.
The discount rate is determined by adding to the Libor-based yield curve a rate corresponding to a set risk premium.
On loans to individual customers, the risk premium equals the rate used to determine the reserve for possible loan
losses. For loans to corporate customers, the rate equals the cumulative default rate, determined by rating.
(ii) Policy loans in the life insurance business
Policyholder loans are valued by discounting future cash flows to their current value. For automatic premium loans,the book value is used as a near approximation of their fair value.
Financial Liabilities
Deposits
The value of deposits is calculated by type, by estimating their future cash flows and then applying a prescribed discountrate. The discount rate is determined by adding to the Libor-based yield curve a premium corresponding to the banking
subsidiary’s cumulative default rate by rating.
Call money and bills sold
The fair value is regarded as the carrying amount, as they are approximately equal.
Derivative Transactions
Please see “derivative financial instruments,” which indicates calculations of fair value.
Securities whose fair values are not readily determinable
Millions of yen
As of March 31, 2010
Non-consolidated subsidiaries andaffiliates that are unlisted*1
Japanese stocks that are not listed on thestock market*1
Investment in partnership*2, *3
Total¥ 12,236
90
21,151¥ 33,477

Notes:*1. Unlisted stocks have no market prices and fair values are not determinable.
*2. Assets included in “investment in partnership” are stocks in unlisted companies.
*3. Impairment losses of ¥449 million were recorded for the year ended March 31, 2010. Impairment losses are principally recorded
when their fair value as of the end of the fiscal year has declined by 50% or more from the acquisition cost.

34

The future redemption schedule of monetary claims and securities with maturities

1 year or less
Cash and due from banks
Call loans and bills bought
Commercial paper and otherdebt purchased
Securities
Held-to-maturity securities
Bonds
Japanese government
and municipal bonds
Japanese corporate
bonds
OthersAvailable-for-sale securities
Bonds
Japanese government
and municipal bonds
Japanese corporate
bonds
OthersLoans*
Total¥ 103,649
146,879

Millions of yen
As of March 31, 2010
More than 1
More than 5
year to 5 years years to 10 years————

Over 10 years
—
—

3,310

—

—

—

7,745

¥ 45,939¥ 9,127¥ 2,298,223

6,103

38,0078,817

2,220,203

1,542

7,232

205

22,928100
218,242700
577,069104
447,802

55,092397,923

67,449140,522400,061

396,083

108,953

227,853

21,821

597

41,8398,500

208,693
22,37425,92022,071

1,242
533,924¥ 488,327¥ 645,383¥ 479,002¥ 3,230,071* This figure excludes loans of ¥127,615 million that have no fixed redemption period such as policyholder loans.

The future return schedule of deposits and other liabilities with interest

Deposits*
Call money and bills
sold
Total

Millions of yen
As of March 31, 2010
More than More than More than More than More than
1 year
1 year
2 years
3 years
4 yearsor less
5 years
to 2 years to 3 years
to 4 years to 5 years¥1,440,003¥26,619¥17,241¥3,307¥2,028¥20,095
10,000

—

—

—

—

—

¥1,450,003¥26,619¥17,241¥3,307¥2,028¥20,095*Demand deposits are included in “1 year or less.”

35

5.

Investments in Securities
Trading securities

Millions of yen
For the year ended March 31,
2009
2010
Valuation gains
Valuation losses
charged to income
charged to income¥ (73,616)¥ 67,293

Held-to-maturity securities

Consolidatedbalance sheet
amount
Bonds
Japanese government
and municipal bonds
Japanese corporate
bonds
Others
Total

Bonds
Japanese government
and municipal bonds
Japanese corporate
bonds
Others
Total

Millions of yen
As of March 31, 2009
Gross
Gross
unrealized unrealized
lossesgains

Fair value¥1,412,868¥29,884¥(2,109)¥1,440,643

10,206120(27)

10,29942,524¥1,465,599

15¥30,020(167)¥(2,304)

42,372¥1,493,315

Fair values exceeding theconsolidated balance sheet amountMillions of yen
As of March 31, 2010
Fair values not exceeding theconsolidated balance sheet amount

Consolidated
Grossbalance sheet unrealized
amountgains

Consolidatedbalance sheet
amount¥278,989¥3,681

11,798150

42,503¥333,291

7,945¥11,777

Total

Fair value

Consolidatedbalance sheet
amountNet
unrealized
lossesFair value¥282,671 ¥1,992,857 ¥(30,756) ¥1,962,100

—

—

—

19,922———50,448399(6)392¥345,068 ¥2,013,498 ¥(31,083) ¥1,982,415—¥2,346,789—¥(19,305)—¥2,327,483

Fair value

11,94820,24136

Grossunrealized
losses(319)

Available-for-sale securities

Consolidatedbalance sheet
amount
Bonds
Japanese government
and municipal bonds
Japanese corporate
bonds
Equity securities
Others
Total

Millions of yen
As of March 31, 2009
Gross
Gross
unrealized unrealized
gains
lossesAcquisition
cost¥1,084,890¥31,493¥(3,640)¥1,057,037

533,679

5,528(17,767)

545,918

47,970298,683¥1,965,222

4,115
790
¥41,928(2,217)(18,105)¥(41,732)

46,072315,998¥1,965,026

Millions of yen
As of March 31, 2010
Fair values not exceeding theconsolidated balance sheet amount

Fair values exceeding theconsolidated balance sheet amountGross
Consolidated
Gross
Consolidated
Acquisition
Acquisition
balance sheet unrealizedbalance sheet unrealized
cost
cost
amountgains
amountlosses

Bonds
Japanesegovernment andmunicipal bonds
Japanese corporate
bonds
Equity securities
OthersTotal¥ 876,312 ¥ 26,636¥ 849,676¥ 152,549

290,987

69,427

51,198
10,95640,242
171,815
5,568
166,246¥1,394,119 ¥ 46,966 ¥ 1,347,153

10,984
134,147¥ 367,109

294,792

3,804

Total
Consolidatedbalance sheet
amountNet
unrealized
gains

Acquisition
cost

—

—

—

70,012

—

—

—

(497)
11,481(2,677)
136,825¥ (7,336) ¥ 374,446——¥ 1,761,229——¥ 39,629——¥ 1,721,599¥ (3,576) ¥ 156,126(584)

Note: This chart as of March 31, 2010, excludes ¥42 million in unlisted stocks and an investment in partnership of ¥21,151 million(consolidated balance sheet amounts).

Available-for-sale securities sold during the period

Sales
Gains on sales
Losses on sales

Millions of yen
For the year ended March 31, 2009
¥861,922
32,45618,024
Millions of yen
For the year ended March 31, 2010
Sales
Gains on sales
Losses on sales

Bonds
Japanese government
and municipal bonds
Japanese corporate
bonds
Equity securities
OthersTotal¥180,599¥4,139138,500

3,972

7,272

32,02848,386¥399,516

6,712
734¥ 15,559

581
2,307¥ 10,438

37

¥

277

Reclassification of debt securities
In accordance with the Practical Issue Task Force No. 26 “Tentative Solution on Reclassification of Debt Securities”(December 5, 2008), some securities(bonds linked to the Nikkei 225 stock index) were reclassified from “available-for-salesecurities” to “held-to-maturity securities” on December 17, 2009.

Market value
Consolidated balance sheet amountNet unrealized losses on othersecurities, net of taxes

Millions of yen
As of March 31,
2010
2009
¥49,832¥41,262¥41,904¥41,426¥(8,658)¥(8,353)

Impairment of available-for-sale securities:
Available-for-sale securities with market value are considered impaired if the market value decreases materially below the acquisition costand such decline is considered non-recoverable. The market value is recognized as the consolidated balance sheet amount and thewrite-down is accounted for as a devaluation loss for the fiscal year.
No impairment loss was recognized for the year ended March 31, 2010, but ¥34,402 million was recognized for the year ended
March 31, 2009.
“Material decline” is indicated when the market value is 30% or less than the acquisition cost.

6.

Investments in Monetary Trusts
Monetary trusts for trading purposes
Millions of yen
As of March 31, 2009
As of March 31, 2010
Consolidated
Consolidated
Valuation losses
Valuation gains
balance sheet
balance sheet
charged to income
charged to income
amountamount¥32,020¥(4,413)¥681¥5,711
Note: Valuation gains or losses charged to income includes reversal of valuation gains or loss recorded at the end of the previous period.

Other monetary trusts

Other monetary trusts

Other monetary trusts

Consolidatedbalance sheet
amount¥576,826

Millions of yen
As of March 31, 2009
Gross
Gross
Acquisition
unrealized unrealized
cost
gains
losses¥17,478¥(9,172)¥568,520

Consolidatedbalance sheet
amount¥300,061

Millions of yen
As of March 31, 2010
Gross
Gross
Acquisition
unrealized unrealized
cost
gains
losses¥2,968¥(453)¥297,546

Note: Jointly invested monetary trusts included in the table above amount to ¥271 million for the years ended March 31, 2009, and 2010.

Impairment of other monetary trusts
Securities with market values that are included in monetary trusts for purposes other than trading, holding to maturity or policy reserve
matching are considered impaired if their market value decreases materially below the acquisition cost and such decline is considered38

non-recoverable. Their market value is recognized as the consolidated balance sheet amount and the write-down is accounted for as adevaluation loss for the fiscal year.
No impairment loss was recognized for the year ended March 31, 2010, but ¥12,605 million was recognized for the year ended
March 31, 2009.
“Material decline” is indicated when the market value is 30% or less than the acquisition cost.

7.

Derivative financial instruments(1) Hedge accounting not applied
Below is a summary of contractual or notional amounts, current market or fair values, valuation gains or losses, and themethod of calculating the fair values of derivatives, classified by transaction, to which hedge accounting is not applied.
Notional amounts do not indicate exposure to credit loss.
(i) Interest rate derivatives
Millions of yen
As of March 31, 2009
Notional amount
Over
Total
Fair value
1 yearOver-the-counter transactions
Interest rate swaps
Total¥169,864—¥151,640—¥ (4,738)¥ (4,738)

Millions of yen
As of March 31, 2010
Notional amount
Over
Total
Fair value
1 yearOver-the-counter transactions
Interest rate swaps
Total¥52,820—¥52,820—

Valuation
losses¥ (4,738)¥ (4,738)

Valuation
losses¥ (200)¥ (200)¥ (200)¥ (200)Notes:
1. The above transactions are valued at market, and valuation losses are recorded in the consolidated statements of income.
2. Market values of over-the-counter transactions are calculated mainly using discounted present value and other methods.

(ii) Currency derivatives
Millions of yen
As of March 31, 2009
Notional amount
Over
Total
Fair value
1 yearOver-the-counter transactions
Currency swaps
Forward foreign exchange
Sold
BoughtForeign exchange margintransactions
Sold
BoughtCurrency options
Sold
Total

¥ 1,791—

115,880
268,513——(1,053)
4,716(1,053)
4,716

15,66814,009

—
—

451
393

451
393

404
—

—
—

(13)
¥ (4,482)(5)¥ (4,490)

39

¥

(11)

Valuation
gains (losses)¥(11)Millions of yen
As of March 31, 2010
Notional amount
Over
Total
Fair value
1 yearOver-the-counter transactions:
Forward foreign exchanges:
Sold
BoughtForeign exchange margintransactions
Sold
BoughtCurrency options
Sold
Total

Valuation
gains (losses)¥ 58,692
170,793——¥ (62)
4,197¥ (62)
4,197

32,68013,818

—
—

503
346

503
346

406
—

—
—

(10)
¥ 4,974(5)¥ 4,980

Notes:
1. The above transactions are valued at market, and valuation losses are recorded in the consolidated statements of income.
2. Market values of over-the-counter transactions are calculated mainly using discounted present value and other methods.

(iii) Credit derivatives transactions
Millions of yen
As of March 31, 2009
Notional amount
Over
Total
Fair value
1 yearOver-the-counter transactions
Credit default options
Sold
Bought
Total

¥

981
10,837
—

¥ 981
9,837
—

¥ (223)
1,135
¥ 912

Millions of yen
As of March 31, 2010
Notional amount
Over
Total
Fair value
1 yearOver-the-counter transactions
Credit default options
Sold
Bought
Total

¥ 932
9,564
—

¥ 932
6,138
—

¥ (100)66¥ (33)

Valuation
gains (losses)¥ (223)
1,135
¥ 912

Valuation
gains (losses)¥ (100)66¥ (33)

Notes:
1. The above transactions are valued at market, and valuation gains (losses) are recorded in the consolidated statements of income.
2. Market values are calculated based on factors such as the values of underlying assets and contract terms.
3. “Sold” represents transactions in which the credit risk is accepted; “Bought” represents transactions in which the credit risk istransferred.

(2) Hedge accounting applied
The following provides a summary of contractual or notional amounts, current market or fair values, valuation gains or losses,
and the method of calculating the fair values of derivatives, classified by transactions, to which hedge accounting is applied.
Notional amounts do not indicate exposure to credit loss.

40

(i) Interest rate derivatives
Millions of yen
As of March 31, 2010
Notional amount
Over
Total
1 yearDeferred hedge accounting
Interest rate swaps
Fair value hedge accounting
Interest rate swaps
Total¥ 164,970¥ 164,592

160,791—

140,398—

Fair value

Hedged item

¥ (2,301) Loans(7,121) Available-for-sale securities (bonds)¥ (9,422)

Notes:
1. SFH applies deferred hedge accounting and fair value hedge accounting in accordance with “Accounting and Auditing Treatments on
Application of Accounting Standard for Financial Instruments in the Banking Industry” (Industry Audit Committee of Japanese Instituteof Certified Public Accountants No. 24).
2. Market value is calculated using discounted present value.

(ii) Currency derivatives
Millions of yen
As of March 31, 2010
Notional amount
Over
Total
1 yearFair value hedge accounting
Currency swaps
Total¥ 45,651—

Fair value¥ 32,300—

Hedged item

¥ 1,897 Available-for-sale securities (bonds)¥ 1,897

Notes:
1. SFH applies mainly fair value hedge accounting.
2. Market value is calculated mainly using discounted present value and other methods.

8.

Real estate for lease
As ASBJ Statement No. 20 “Accounting Standard for Disclosures about Fair Value of Investment and Rental Property”(November 28, 2008) and ASBJ Guidance No. 23 “Guidance on Accounting Standard for Disclosures about Fair Value ofInvestment and Rental Property” (November 28, 2008) became effective for fiscal years beginning on or after April 1, 2009,
SFH applied them from the fiscal year ended March 31, 2010.
SFH’s domestic life insurance subsidiary owns rental office buildings in Tokyo and other cities. Income related to investment
and rental property of ¥3,641 million for the year ended March 31, 2010. Its main revenues were accounted for in the life
insurance business’s “interest income and dividends,” and its main expenses were accounted for in the life insurance
business’s “depreciation of real estate for rent and others” and “other investment expenses.”
Below is the consolidated balance sheet amount, net of changes, and the fair value. The fair value is calculated by a licensed
third-party real estate appraisal agent.
Millions of yen
As of March 31, 2010
Consolidated balance sheet amount*1
Beginning
Net decrease*2
EndingFair value¥ 79,111¥ (6,910)¥ 72,200¥ 82,973
Notes:*1. The consolidated balance sheet amount is the acquisition cost less accumulated depreciation and impairment losses.

41

*2. The gross decrease is due mainly to the change in purpose, banking subsidiary use of the property, the amount due to this change is¥4,575 million.

9.

Per Share Information
Net income per share is based on the weighted-average number of shares of common stock outstanding during the period.
For the year ended March 31, 2009 and 2010, net income per share was ¥14,125.14 and ¥22,127.13. There were no potential
dilutive securities. Net assets per share, based on the number of shares of common stock outstanding as of March 31, 2009,
and 2010, were ¥94,205.75 and ¥123,880.11.
The basis for this calculation for the years ended March 31, 2009, and 2010 is net income of ¥30,722 million and¥48,126 million, the entire amounts of which are applicable to common stock. The weighted-average number of shares
outstanding for the years ended March 31, 2009, and 2010, was 2,175 thousand.

10. Subsequent Events
There were no applicable subsequent events.

V. Other Information
1. Changes in Executive Management(1) Changes in Representative Directors
Please refer to our press release, “Announcement of Changes in Representative Directors and New Management Team”
announced today, May 20, 2010, for details.

(2) Other Information
None

SFH’s consolidated results* are prepared in accordance with accounting principles and practices generally
accepted in Japan. As such, these figures differ in significant respects from financial information reported by
SFH’s parent company, Sony Corporation, which prepares its financial statements in accordance with accounting
principles and practices generally accepted in the United States.
*SFH’s scope of consolidation includes Sony Financial Holdings Inc., Sony Life Insurance Co. Ltd., Sony Life Insurance (Philippines)
Corporation, Sony Assurance Inc., Sony Bank Inc. and Sony Bank Securities Inc. It also includes AEGON Sony Life Insurance Co., Ltd.
(previously: AEGON Sony Life Planning Co., Ltd) and SA Reinsurance Ltd., as affiliated companies accounted for under the equity method.

On May 13, 2010, Sony Corporation announced its consolidated financial results for the fiscal year ended March 31, 2010.
SFH Group companies constitute the majority of Sony Group’s Financial Services segment. However, the scope of Sony
Group’s Financial Services segment differs from the scope of SFH’s consolidated results. For the scope of Sony Group’s
Financial Services segment, please refer to the May 13, 2010, news release by Sony Corporation.
This Consolidated Financial Summary contains statements concerning the current plans, expectations, strategies and beliefs of the SonyFinancial Holdings Group (“SFH Group”). Any statements contained herein that pertain to future operating performance and that are not historicfacts are forward-looking statements. Forward-looking statements may include—but are not limited to—statements using words such as“believe,” “anticipate,” “plan,” “strategy,” “expect,” “forecast,” “predict,” “possibility” that describe future operating activities, financial
performance, events or conditions. Forward-looking statements, whether spoken or written, are based on judgments made by the management of
SFH Group based on information that is currently available to it. As such, forward-looking statements are subject to various risks anduncertainties, and actual results may vary substantially from those expressed or implied in forward-looking statements. Consequently, investors
are cautioned not to place undue reliance on forward-looking statements. SFH Group disclaims any obligation to revise forward-looking
statements in light of new information, future events or other findings.

42

For inquiries: Masaaki Konoo or Hiroko Hanakura
Corporate Communications & Investor Relations Dept. Sony Financial Holdings Inc.
E-mail: press@sonyfh.co.jp
Telephone: +81-3-5785-1074
Website of Sony Financial Holdings Inc. http://www.sonyfh.co.jp/index_en.html

43