FY08 3Q Conference Call for Domestic Institutional Investors and Analysts
Q&A (Summary)
Date:February 12, 2009 18:00-18:40
Respondents: Hiromichi Fujikata, Executive Vice President, Representative Director,
Sony Financial Holdings Inc.
Masamitsu Shimaoka, Director, Sony Life Insurance Co., Ltd.
Masayoshi Fukuya, Executive Officer, Sony Assurance Inc.
Hidehiko Nakamura, Director, Chief Financial Officer, Sony Bank Inc.
Q&A (Executive Summary)
Q1) In mid-October you made an announcement regarding Sony Life’s exposure inJapanese stocks (including corporate bonds) in which you stated that about half theexposure was hedged, but after that it appears that there has been a change in yourexposure in Japanese stocks. Currently, what is your hedging ratio?
Also, regarding your presentation material, can we assume that Japanese stock
exposure stated in the notes on page 11 excludes the hedged portion?
A1) (Sony Life) The notes in the presentation material indicate all the Japanese stocks heldby Sony Life. Hedging of Japanese stocks has been reduced in proportion with
reductions in its exposure.
Q2) Is Sony Life’s hedge ratio still approximately half of its exposure in Japanese stocks?
A2) (Sony Life) Because the special quotation (SQ: closing date determined by special
calculation index) date straddles the settlement of accounts, explanation using the bookvalues may be difficult. But based on our internal management basis which includes
those we sold, more than half of our exposure in equity assets is hedged since October
2008.
Q3) Regarding Sony Bank, despite changes in the floating rate JGB marked to market
method, net unrealized losses on other securities, net of taxes, expanded its negative
stated value. Trying to get at the cause of this, what kind of foreign bonds are you
holding? Or, during the three months ended December 31, 2008, was there any
exposure on which you almost recorded an impairment loss? Going forward, is there
any on which you will record an impairment loss?
A3) (Sony Bank) The evaluation of Sony Bank’s floating rate JGB’s are based onreasonably estimated amounts starting in the quarter ended December 31, 2008. As aresult, net unrealized losses on other securities, net of taxes, improved byapproximately ¥3.6 billion. However, the decline in the value of other securities
resulted in the expanded negative value. Most of the declined securities were Japanese
corporate bonds, which Sony Bank started investing in since its commencement ofoperations. The recent worsening credit environment is the factor behind value
depreciation. Regarding impairment loss, there were none in the third quarter. As for1

expected impairment loss, as explained in the earnings forecast for the year ending inMarch 31, 2009, the ordinary profit (loss) forecast for our banking business wasrevised downward to ¥0.4 billion of ordinary loss, primarily due to expected
impairment loss on securities of ¥1.9 billion. Expected impairment losses on securities
are for TOPIX-linked investment funds. Since we do not expect the current stock
market conditions to recover by March 31, 2009, we included the expected impairment
losses from these funds in our full-year forecast.
Q4) Are you going to disclose the amount of Sony Life’s market consistent embedded
value (MCEV)-based adjusted net assets as of December 31, 2008?
A4) (Sony Life) Regarding Sony Life’s embedded value (EV), as we switched fromtraditional embedded value (TEV) to MCEV, we believe disclosing data only on theasset side is misleading, therefore we don’t disclose these figures.
Q5) Regarding Sony Life’s reclassification of debt securities to held-to-maturity securities,
this change caused a ¥0.3 billion decline in net unrealized gains on other securities, netof taxes resulting in a decrease in net assets. Why did you decide to make changes that
reduced your net assets?
A5) (Sony Life) (Rather than saying we reduced net assets) Comparing the market value asof the date we reclassified to held-to-maturity securities, the market value as ofDecember 31, 2008 rose, which resulted in a decrease in unrealized gains on othersecurities as of December 31, 2008.
Q6) In Sony Corporation’s earnings announcement based on U.S. GAAP, there was anexplanation on the minimum guaranteed costs associated with the decline in the valueof Sony Life’s variable life insurance investment assets. Under Japanese GAAP, do
you anticipate a need for additional provisions for policy reserves, according to thefuture income analysis, etc., which you conduct at fiscal year-end?
Furthermore, how will the MCEV calculation be affected by the declining accountvalue of separate accounts?
A6) (Sony Life) Under Japanese GAAP, we also accumulate provisions for policy reserves
for the minimum guarantee portion of variable life insurance, but that amount issmaller compared to those on U.S. GAAP. In addition, this amount has already been
included in the third quarter financial results.
Regarding the effect to MCEV due to deterioration in separate account assets, thefuture costs for the minimum guarantee portion are reflected in MCEV. If the volatility
increases, there might be some impact on MCEV, but at present we cannot provide youwith a definitive answer.
Q7) Regarding Sony Life’s adjusted net assets to calculate EV, when you were using theTEV calculation your disclosure of adjusted net assets at the end of each quarter helped
us to estimate your current EV. Now on MCEV-basis, is it difficult for you to disclose
adjusted net assets each quarter?
2A7) (Sony Life) As we switched to MCEV, which considers marked-to-market changes onthe liabilities side, we believe disclosing adjusted net assets which is only on the asset
side of the balance sheet may be misleading. Furthermore, we believe it is possible toestimate adjusted net assets from unrealized gains and other data we already disclosed.
Q8) In the event that Sony Life’s account value drastically deteriorated, am I correct in mythinking that the composition of MCEV option costs would increase?
A8) (Sony Life) At present, I can’t estimate precisely, but you are headed in the rightdirection.
Q9) The number of Sony Life’s Lifeplanner sales employees as of December 31, 2008 was3,812 people; please tell us the current status of your recruitment and what yourestimated numbers of Lifeplanner sales employees are for the next fiscal year.
A9) (Sony Life) There is significant seasonal variation in the number of our Lifeplanner
sales employees. One month after the figure you quoted, our sales force grew to morethan 3,870 people, and although we do not increase the number of people drastically,
there is a trend to continue steadily increasing its size. We expect the pace of increasein the number during the next fiscal year will follow the current trend. Our target is toamass 4,000 Lifeplanner sales employees in fiscal year 2010.
Q10) Looking at the current domestic employment environment, there seems to be mobilityof human resources with sales experience in the financial and manufacturingindustries, do you have a sense that you will be able to achieve the 4,000 Lifeplanner
sales employees target ahead of schedule? Do you see an increase in the number ofcandidates you interview, or are there any other concrete changes you are aware of?
A10) (Sony Life) As a general rule of thumb, a weak economy is not the only factor toincreased recruitment due to mobility of human resources, but it will also tend to
make experienced people hesitant to switch jobs. As there is a great deal of prudence
when it comes to switching jobs, I would say that overall the effect is neutral. We see
no significant changes in our recent recruitment activities, and our target isunchanged from the original one.
Q11) Regarding Sony Life’s MCEV, I would like to confirm the reason behind yourdecision not to disclose only adjusted net assets in an attempt to avoid misleading
information. According to your disclosure of sensitivity analysis of interest rates,
asset values change with fluctuations in the interest rate, as do liabilities. As you
show the sensitivity analysis which has considered fluctuation of such bonds portfolio
value, while unrealized gains on bonds are included in adjusted net assets underMCEV, am I correct to understand that disclosing only adjusted net assets ismisleading since it is just one side of the balance sheets?
A11) (Sony Life) Yes, your understanding is correct.

3Q12) My impression is that Sony Life’s core profit during the three months ended
December 31, 2008 was smaller. Analyzing data to determine the cause of this, suchas looking at interest and dividends income, am I correct in thinking that the reason
for this is related to policy reserves for variable life insurance?
A12) (Sony Life) First let me say that, basically, the cause is indicative of seasonal
fluctuations in policies, asset management, dividends, etc., respectively. In addition,
the minimum guarantee portion of variable life insurance has influenced provisions
for policy reserves to increase under Japanese GAAP. These two reasons, more
specifically the effects of seasonality and variable life insurance, can be thought of as
the main factors in smaller core profit in the three months ended December 31, 2008.
Q13) As interest rate volatility increases, MCEV is negatively affected, but at the CFO
Forum in Europe there was apparently some discussion as to whether this might not
be misleading, and it was suggested that flexible management might be the proper
approach. At present, what do you see might happen? At SFH, how do you approach
this, while heading into the fiscal year-end in March 2009?
A13) (Sony Life) We are still discussing the latest turn of events internally and nothing has
been decided yet. We will work out the details going forward.

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