Annual Report
2008

Annual Report

2008

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Sony Financial Holdings

Contents
Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
About the Sony Financial Holdings Group . . . . . . . . . . . . . . . 2
Sony Financial Holdings Group Strengths  . . . . . . . . . . . . . . . 4
Message from the Management  . . . . . . . . . . . . . . . . . . . . . 6
Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Privacy Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Internal Audits  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Social Contribution and Environmental Activities . . . . . . . . . 22
History of the Sony Financial Holdings Group  . . . . . . . . . . . 24
FY2007 Topics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
About Sony Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
About Sony Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
About Sony Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Analysis of Operating Performance for FY2007  . . . . . . . . . 40
Financial Data  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Capital Adequacy Status . . . . . . . . . . . . . . . . . . . . . . . . 66
Risk-Monitored Loans  . . . . . . . . . . . . . . . . . . . . . . . . . . 73
Sony Life’s Financial Data  . . . . . . . . . . . . . . . . . . . . . . . 74
Sony Assurance’s Financial Data  . . . . . . . . . . . . . . . . . . 80
Sony Bank’s Financial Data  . . . . . . . . . . . . . . . . . . . . . . 84
“Lifeplanner” and “Lifeplanner Value” are registeredtrademarks of Sony Life Insurance Co., Ltd.
“MONEYKit”, “MONEYKit-ACTIVE” and “MONEYKit GLOBAL”
are registered trademarks of Sony Bank Inc.
“PostPet” is registered trademark of So-net Entertainment
Corporation.
“RiskGrade” is registered trademark of RiskMetrics Group.

Stock Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Corporate Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Senior Management of the SFH Group Companies  . . . . . . . 91
SFH’s Website Information . . . . . . . . . . . . . . . . . . . . . . . . . 93

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Financial Highlights
Sony Financial Holdings Group(Millions of yen)

			

2004

2005

2006

2007

2008

—
—
—

653,259
12,2696,375

758,71125,377
11,537759,280
18,354
10,021

822,153
44,50024,255——3,282,269
182,817

3,917,048
263,040

4,323,780
270,179

4,977,450
261,627—%

12.17%

9.99%

12.01%

580,972
30,47813,932604,093
17,07010,102

696,426
24,3599,616

689,591
14,895
7,494

741,250
39,29018,514

2,375,828
132,478

2,617,266
141,142

3,103,241
217,833

3,445,970
216,568

3,659,786
182,671

31,066(1,941)(1,330)38,159(2,806)(1,981)45,703(764)(441)

51,0202,044
1,598

55,6492,817
2,185

40,121
14,061

46,68512,086

56,103
11,70967,46813,32078,645
15,385

7,406(2,202)(2,206)

11,353(1,659)(1,663)

17,2252,228
3,258

19,4701,354
1,023

25,9882,746
4,492

489,432
27,111

618,459
35,318754,768
34,715806,848
36,8781,211,000
35,712

10.29%

11.97%

9.24%

11.49%

Sony Financial Holdings (Consolidated)
For the years ended March 31

Ordinary revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary profit. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of March 31

Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated capital adequacy ratio(Domestic criteria) (3). . . . . . . . . . . . . . . . . . . . . . .

14.62%

Sony Life (Non-consolidated)
For the years ended March 31

As of March 31

Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sony Assurance
For the years ended March 31

Ordinary revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary profit (loss). . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . .

Sony Financial Holdings

Ordinary revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary profit. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of March 31

Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sony Bank (Non-consolidated)

Ordinary revenues . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary profit (loss). . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss). . . . . . . . . . . . . . . . . . . . . . . . . .
As of March 31

Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets(2). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-consolidated capital adequacy ratio(Domestic criteria) (4). . . . . . . . . . . . . . . . . . . . . . .

Financial Highlights

For the years ended March 31

9.15%

Notes: 1. All figures above are stated in millions of yen after discarding fractional amounts of less than ¥1 million.
2. From the fiscal year ended March 31, 2007, the “Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Statement No. 5) and the“Implementation Guidance for the Accounting Standard for Presentation of Net Assets in the Balance Sheet” (ASBJ Implementation Official Notification No. 8)
have been applied to the calculation of net assets and total assets.
3. Calculations of SFH’s consolidated capital adequacy ratio for the fiscal years ended March 31, 2007 and 2008, are based on Article 52-25 of the Banking
Law of Japan. The standards used to determine the capital adequacy ratio are based on Financial Services Agency (“FSA”) Public Announcement No. 20 of
2006. SFH has employed Standard 2 (domestic criteria). Calculations for the fiscal year ended March 31, 2006, and prior fiscal years have been made inaccordance with the previous standard, stipulated by Article 52-25 of the Banking Law, Ministry of Finance Public Announcement No. 62 of 1998. For all
periods, insurance subsidiaries are excluded from calculation of the consolidated capital adequacy ratio.
4. Sony Bank’s non-consolidated capital adequacy ratio (domestic criteria) for the fiscal years ended March 31, 2007 and 2008 were calculated based on
the standard stipulated in the FSA public ministerial announcement No. 19 of 2006. Calculations for the fiscal year ended March 31, 2006, and prior fiscal
years have been made in accordance with the standard stipulated in the former public ministerial announcement.

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About the Sony Financial Holdings GroupWe create new financial services by generatingideas from the fundamentals
Founded on April 1, 2004, the Sony Financial Holdings Group (SFH Group) became Japan’s
first financial group to offer life insurance, non-life insurance and banking services
under one umbrella.

About the Sony Financial Holdings GroupSony Financial Holdings

The SFH Group is a financial services group that consists of Sony Financial Holdings Inc. (SFH), Sony Life
Insurance Co., Ltd. (Sony Life), Sony Assurance Inc. (Sony Assurance) and Sony Bank Inc. (Sony Bank), as
well as other group companies.

Corporate Vision
The SFH Group aims to integrate the diverse functions that are inherent to such financial services as savings, investment, borrowing and protection; offer high-value-added products and quality services that meet individual customers’
economic needs; and become one of Japan’s most trusted financial services groups.

Corporate Philosophy
Customer-Oriented
We consider each customer’s input carefully and provide services to their satisfaction, helping them lead lives that areabundant and trouble-free.
Contributing to Society
We understand that financial services businesses have a certain public nature. As we pursue our vision, we contribute tosociety by maintaining high ethical standards and levels of responsibility. We also fulfill our other obligations as a member of society and a good corporate citizen.
Pursuing Originality
We always generate ideas from the fundamentals, and pursue originality and innovation while remaining unfettered by convention.
Corporate Culture with a Spirit of Freedom and Open-Mindedness
Our ideal for the financial services business recognizes the importance of each employee’s contribution. Our corporate
culture features a spirit of freedom and open-mindedness and takes full advantage of individuality and ability.

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Information on the Sony Financial Holdings Group Companies (As of July 1, 2008)
Sony Financial Holdings Inc.
Established
Head officeBusiness
Common stock
Total number of shares outstanding
Major shareholder

April 1, 2004
1-1, Minami Aoyama 1-chome, Minato-ku, Tokyo, Japan
Management control of subsidiaries (life insurance companies, non-life insurance companies, banks and others) specified by the Insurance Business Law
of Japan and the Banking Law of Japan and all duties incidental to that role
¥19,900 million
2,175,000 sharesSony Corporation 60% (see the information on major shareholders on page 89)

Established
Head officeBusiness
Common stock
Total number of shares outstanding
Share ownership

August 10, 1979
1-1, Minami Aoyama 1-chome, Minato-ku, Tokyo, Japan
Life insurance business¥70,000 million
70,000,000 sharesSony Financial Holdings Inc. 100%

Sony Financial Holdings

Sony Life Insurance Co., Ltd.

Sony Assurance Inc.
June 10, 1998
37-1, Kamata 5-chome, Ota-ku, Tokyo, Japan
Non-life insurance business¥20,000 million
400,000 sharesSony Financial Holdings Inc. 100%

Sony Bank Inc.
Established
Head officeBusiness
Common stock
Total number of shares outstanding
Share ownership

April 2, 2001
9-11, Akasaka 2-chome, Minato-ku, Tokyo, Japan
Banking business¥28,000 million
560,000 sharesSony Financial Holdings Inc. 100%

Sony Life Insurance (Philippines) Corporation
Established
Head officeBusiness
Common stock
Total number of shares outstanding
Share ownership

About the Sony Financial Holdings Group

Established
Head officeBusiness
Common stock
Total number of shares outstanding
Share ownership

August 26, 1998
Makati City, Philippines
Life insurance business
937 million Philippine pesos
9,370,000 sharesSony Life Insurance Co., Ltd. 100%

Sony Bank Securities Inc.
Established
Head officeBusiness
Common stock
Total number of shares outstanding
Share ownership

June 19, 200717-22, Akasaka 2-chome, Minato-ku, Tokyo, Japan
Financial products and exchange business¥1,500 million
30,000 sharesSony Bank Inc. 100%308_SFH_E_FH_0805.indd 3

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Sony Financial Holdings Group Strengths

A Business Model Specifically for Individual Customers

Sony Financial Holdings

The Sony Financial Holdings Group uses uniquely differentiated sales channels to provide high-quality
financial services consistently and from the customer’s viewpoint.
While respecting the management independence of the companies under its umbrella, Sony Financial
Holdings (SFH), a holding company which holds Sony Life, Sony Assurance and Sony Bank as its corecompanies, works to design and implement integrated and comprehensive groupwide financial
business strategies, by developing integrated services and products that can be deployed acrossthe SFH Group and promoting functional synergies.

Principal Sales
Channels
Providing high-quality
services via a sales
team with strong
consulting expertiseSony Financial Holdings Group Strengths

Lifeplanner sales
employees
Partners (independentagencies)

Providing high-quality
insurance services
with reasonablepremiums
TelephoneInternet

Providing uniqueproducts andservices that help
customers benefit
from the Internet’s
characteristics
Internet

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SFH Group Growth Strategies
Our group growth strategy is to promote the sustainable and stable expansion of each business, while
ensuring the financial soundness of each group company. In addition to individual company growth, wework to enhance our synergistic effects in the provision of products and services as well as in the
sharing or mutual use of sales channels and infrastructure to offer high-value-added products andservices that traditional financial institutions have not been capable of providing in the past.
We also strive to raise corporate value by aggressively considering new business developments
outside our existing sphere of operations.

Growth Strategies

Death-protection
insurance

Provision of insurance tailored to eachcustomer’s needs through consultations
on customers’ life planning

Focus on the highly profitable death
protection field, in which consulting-based
sales functions most effectively

Extensive after-sale follow-up services
A low lapse and surrender rate andsteadily increasing policy amountin force
Ongoing high levels of customer
satisfaction

Concentrate on the medical and nursing
care fields

Automobile
insurance(risk segmented)

Highly unique insurance products at morereasonable insurance premiums comparedto other insurers

SURE medical andcancer insurance

Able to provide high-quality services while
maintaining price competitiveness against
other insurers
Maintaining a firm leadership position,with a share of more than 30% of thedirect automobile insurance market
Ongoing high levels of customer
satisfaction

Maintain our leading position in the direct
non-life insurance market, aiming to expand
the overall direct non-life insurance market
as well as Sony Assurance’s market share

Deposits (yen,foreign currency)

Low-cost structure as an Internet bankwithout physical branches

Mortgage loans

Provision of a highly advantageous andconvenient product lineup
Stable expansion of deposits and loans
Ongoing high levels of customer
satisfaction

Medicalinsurance, other

Investment trusts,
othersActively develop products in the field ofindividual annuities, through a planningcompany established jointly with the
AEGON Group

Ensure high profitability by setting
reasonable rates and appropriately
controlling operating expenses

Sony Financial Holdings Group Strengths

Strengths

Sony Financial Holdings

Main Products

Diversify our revenue sources and expand
our operations by continuing to introduce
new products and services with special
features
As an asset management bank forindividuals, enhance offerings centeredsecurities and foreign currency related
products

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Sony Financial Holdings

Message from the Management

Teruhisa Tokunaka
President,
Representative Director(Right)Hiromichi Fujikata
Executive Vice President,
Representative Director(Left)

Message from the Management

FY2007 in Review
In FY2007, ended March 31, 2008, Sony Financial
Holdings Inc. (SFH) began a new stage by listing
its shares on the First Section of the Tokyo Stock
Exchange on October 11, 2008.
The SFH Group, with its three subsidiaries—Sony Life,
Sony Assurance and Sony Bank—provides high-quality
financial services taking into consideration the viewpointof individual customers. Our listing is the culmination of
the support from our numerous customers for the products and services that each subsidiary has offered since
its foundation. We continue to aim at being the financialgroup most trusted by its customers. At the same time,
as a listed company we consider the enhancementof returns to shareholders as well as return on equity
among our most important management tasks. To thisend, we are working to strengthen our managementbase and enhance our corporate value.
Turning now to a review of the activities of eachof our principal businesses during FY2007, we begin
with Sony Life. This subsidiary conducts life insurance
business, takes a consulting-based sales approachthrough its Lifeplanner sales employees and Partners(independent agencies) and offers protection tailoredto each individual’s life plan. In addition, Sony Life provides finely tuned after-sales follow-up services. Witha commitment to contribute to customers’ lives, Sony
Life has adhered to its corporate slogan of Lifeplanner
Value and endeavors to provide services that only it candeliver. In FY2007, new policy amount* rose 10.9%
from the previous fiscal year, to ¥3,802.5 billion, andpolicy amount in force* increased 4.1%, to ¥31,497.3
billion, both continuing the steady growth since thecompany’s commencement of operations.
In line with the ongoing aging of Japanese society,demand for annuities is increasing. To meet this demand,in August 2007 Sony Life established AEGON Sony Life
Planning Co., Ltd., as a 50–50 joint venture with the
AEGON Group of the Netherlands. The new company
is preparing the way for us to establish a life insurancecompany that will develop individual annuity products
for sale at the counters of banks and other financial
institutions, as well as through the Lifeplanner sales
channel. The new entity will combine the AEGON Group’s
product development expertise in individual annuities
and Sony Life’s high-quality consulting-based sales todeliver more extensive life planning services to customers and strengthen support for them as they age. We are­currently preparing to start operations in FY2008.
In December 2007, Sony Life obtained permission
to handle banking agency business for Sony Bank.
To this end, Sony Life’s Lifeplanner sales employees,
who have been introducing Sony Bank mortgage loans
since December 2004, will conduct banking agency
business on behalf of the bank from January 2008. Inother words, they are now allowed to provide explanations of Sony Bank’s mortgage loan products, as wellas to deliver applications to customers. At Life Planning
SQUARE, the life planning showroom that Sony Life
operates in the Sony Building in Ginza, Tokyo, Sony
Life has started to set up new Sony Bank accounts for­customers in addition to the bank’s mortgage loans.
* New policy amount and policy amount in force indicate the total of individuallife insurance and individual annuities.

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** This response time is for accident reports received (and confirmed ashaving the information needed for an initial response) and completed
by 8 p.m. for which Sony Assurance is eligible to negotiate an amicablesettlement on accident compensation. (Accident reports received between
8 p.m. and midnight are handled the following day.)*** This response time is in the event of an accident report completed ona weekday, between 9 a.m. and 5 p.m.

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Message from the Management

certification for an information security management
system. This certification represents an objective evaluation and verification of Sony Assurance’s initiatives toappropriately establish and maintain operational andmanagement systems for various information assets.
Operating under the slogan, Feel the Difference—adifference that will change insurance, Sony Assurance
seeks to provide customers with valuable and distinctive products by offering a difference that could only
come from Sony Assurance. Going forward, Sony
Assurance will seek to provide products that meet various customer needs and services based on this deeply
held commitment.
Sony Bank, which conducts the banking business,
provides highly convenient quality financial products andservices to individual customers over the Internet, witha focus on asset management. As of March 31, 2008,
the balance of customer assets (the sum of deposits
and investment trusts) increased dramatically andexceeded ¥1 trillion, rising 46.9% from one year earlier,to ¥1,247.3 billion. Particularly popular were yen time
deposits that offered relatively high interest rates andthese deposits surged 47.7%, compared with their level
on March 31, 2007, to ¥892.6 billion as of March 31,
2008. Foreign currency deposits also increased rapidly,
soaring 70.2% from the end of the previous fiscal year,to ¥251.7 billion, owing to the impact of yen appreciation and the bank’s August 2007 introduction of a preferential system on foreign currency deposits. Mortgage
loans increased 21.9% from the end of the previous
fiscal year, to ¥338.8 billion.
As one of its major initiatives during FY2007, Sony
Bank began in April 2007 to offer an insurance rider tocover the three major diseases on the bank’s mortgage
loan group credit life insurance, which is underwritten
by Sony Life. The bank acted in response to broadbased customer demands.
In June 2007, Sony Bank established a wholly-owned
Internet securities subsidiary, Sony Bank Securities
Inc., to provide the bank’s account holders with securities services, including equities from the standpoint of
medium- to long-term asset management. Sony Bank
Securities commenced operations in October 2007. At
present, via Sony Bank’s MONEYKit site customers canconveniently trade Japanese stocks, exchange tradedfunds (ETFs) and real estate investment trusts (REITs).
To accelerate the growth strategies by strengthening solidarity within the SFH Group, SFH acquired theshares of Sony Bank previously held by Sumitomo
Mitsui Banking Corp., thus converting Sony Bank to awholly-owned subsidiary.
Looking ahead, our growth strategies are to raise
corporate value by providing high-quality financial services, backed by the ongoing business growth of each
SFH Group company; strengthening ties among theseSony Financial Holdings

Sony Life also conducted investigations into thestatus of claims and other payments from FY2001 to
FY2005. Sony Life announced its results publicly, notified all customers to whom the company could havefailed to make proper payment and paid restitution.
To prevent such events in the future, Sony Life has
established a claims payment management system
and regards this as a top management priority. As partof its efforts, in August 2007 Sony Life commencedquarterly disclosure on its website of the status of
insurance claim and benefit payments and the numberof customer complaints. These efforts are an ongoing
initiative to win back the trust of customers, as well as
to prevent similar situation from occurring.
Another subsidiary, Sony Assurance, which handles
non-life insurance, communicates with customers
directly over the telephone and via the Internet andprovides high-quality insurance services with reasonablepremiums. To offer its customers valuable differencesthat only it can provide, Sony Assurance listens carefully to its customers’ opinions to improve communications and develop beneficial services.
On November 1, 2007, Sony Assurance initiated asecond round of revisions to expand the protection
provided by SURE medical and cancer insurance. The
company began offering this product in June 2002.
These recent policy revisions include a new type of protection that deals with risks associated with extended
life spans, by doubling the maximum number of days
per hospitalization for illnesses other than cancer andinjury to 120 days for policyholders aged 60 or older. In
addition, the policy premiums are cut in half comparedwith those applied before the policyholders celebrate
their 60th birthday. Other revisions include a bone marrow donor support rider for SURE policyholders andextension of coverage for illnesses other than cancer
and injury to pay hospital costs even for outpatients.
By expanding the protection of SURE policies, Sony
Assurance has responded to customers’ needs.
As for customer service, in October 2007 Sony
Assurance added the “On the Day, Any Day, Response”
service. This service exemplifies the company’s commitment to making an initial response to accident reports
and conveying its results to policyholders on the day
the reports are received—even on holidays and weekends.** By adding this commitment to existing services
such as accepting accident reports 24 hours a day,365 days a year and a commitment to automobile insurance policyholders to provide an initial response by anappointed staff member within three hours of receiving
an accident report,*** Sony Assurance is determined topromptly ease the anxiety policyholders feel when theyexperience an accident.
In June 2007 Sony Assurance became the firstJapanese non-life insurer to receive ISO 27001

708.8.5 5:33:38 PM

companies; and developing new businesses. We consider FY2007 a year of initiating measures that should
define the growth strategies of the SFH Group.

Message from the Management

Sony Financial Holdings

FY2007 Consolidated Operating Results
As for the SFH Group’s consolidated operating performance during FY2007, ordinary revenues and ordinary
profit increased for all businesses: life insurance,
non-life insurance and banking. Consolidated ordinary
revenues rose 8.3% year on year, to ¥822.1 billion,
while consolidated ordinary profit increased 142.5%, to¥44.5 billion.
In the life insurance business, policy amount in force
remained robust, boosting income from insurance premiums, while general account investment income also
grew, resulting in a 7.5% increase in ordinary revenues
compared with the preceding fiscal year, to ¥741.3
billion. Ordinary profit was up 162.5% from the previous fiscal year, to ¥39.0 billion, even though insurance
claims and other payments rose because the provision
for policy reserve did not expand, as it did in the previous fiscal year.
In the non-life insurance business, net premiums written increased in line with a steady rise in the number ofpolicies, mainly automobile insurance policies, pushingup ordinary revenues 9.1% compared with the preceding
fiscal year, to ¥55.6 billion. Ordinary profit was up 37.8%
year on year, to ¥2.8 billion, even though net losses paid
increased in line with an increased number of policies inforce, because the net loss ratio remained stable.
In the banking business, higher business volume
pushed customer assets above ¥1 trillion, and the balance of mortgage loans grew steadily, leading to higher
interest income. Ordinary revenues expanded 33.4% year
on year, to ¥25.9 billion, and ordinary profit increased
77.4% from the previous fiscal year, to ¥2.4 billion.

SFH Group Growth Strategies
SFH respects the management independence of thecompanies under its umbrella, while it works to design
and implement integrated and comprehensive groupwide financial business strategies by developing integrated services that can be deployed across the Groupto generate functional synergies. With regard to theGroup’s growth strategies, as mentioned earlier we aim
to promote the stable and sustainable growth of eachbusiness while ensuring the sound management of eachcompany. In addition to individual company growth, wework to enhance our synergistic effects in the provisionof products and services as well as in the sharing or
mutual use of sales channels and infrastructure to offer
high-value-added products and services that traditional
financial institutions have not been capable of providingin the past. We also strive to raise corporate value by

aggressively considering new business developments
outside our existing sphere of operations.
In the life insurance business, we have made establishing and strengthening a claims payment management system a top management priority. On the sales
front, we aim to expand our market share in death
protection, which is currently one of our major businessdomains and continue to ensure profits. In addition todeath protection, we will continue to focus on the medical and nursing care fields. As for individual annuities,
we will establish a product development structure andstrengthen this business foundation. In the medium
term, possibly through activities that include mergers and acquisitions we aim to expand our businessdomains by broadening our businesses in Japan, andwe will consider the possibility of making a move into
overseas markets.
In the non-life insurance business, we expect operating expenses to rise in the short term due to thesystem-related investments. However, by continuously
conducting effective advertising activities and enhancing sales channels and productivity, we will maintain our
growth and improve our profitability.
In the banking business, we view FY2008 as the firstyear of the second launch stage, from which we expect
growth to accelerate, thereby expanding business andstrengthening profitability. While maintaining our customer-first management philosophy, our medium-term
strategies focus on enhancing products and services,
improving asset-liability management and raising trustworthiness. We aim to accelerate our rate of growth,establish a firm presence as an asset managementbank, raise operating efficiency another notch, andachieve strong customer satisfaction. Through these
efforts, Sony Bank aims to establish itself as the clear
leader in customer satisfaction.
The SFH Group will work to reinforce its management
structure and expand its operations. We would like tothank all of our stakeholders for their ongoing support
and look forward to their continued cooperation.
July 1, 2008

Teruhisa Tokunaka
President, Representative Director

Hiromichi Fujikata
Executive Vice President, Representative Director

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Corporate Governance(Internal Audits)
SFH has established an Audit Department, which is independentof the Company’s operating divisions and is composed of­dedicated internal audit personnel.
(Accounting Audits)
The Company has appointed PricewaterhouseCoopers Aarata as
its accounting auditor.
Determining Compensation
SFH has formulated Compensation Advisory Committee
Regulations to clarify the policies, systems and the process fordetermining the compensation of the representative directors of
SFH and the companies under SFH’s umbrella: Sony Life
Insurance Co., Ltd., Sony Assurance Inc. and Sony Bank Inc.
(the “subsidiaries”). SFH has established the Compensation
Advisory Committee to deliberate these matters. The committee
consists of a small number of SFH directors, including an outside director. Whenever necessary, the committee receives
advice from the SFH Board of Directors and comparable boards
at its subsidiaries, and reports the results of its deliberations at
each board meeting.
Basic Policy on the Internal Control System
In accordance with the Company Law of Japan and the
Enforcement Regulations of the Company Law of Japan, SFH’s
Board of Directors has implemented the Basic Policy on
Establishing the Internal Control System (described below). In
line with this policy, SFH has established and now operates anappropriate internal control system.

Sony Financial Holdings

Basic Stance on Corporate Governance
The SFH Group’s corporate vision and philosophy is its basis forsetting management strategy and expediting decision-making initiatives. One goal of our corporate vision is to become one ofJapan’s most trusted financial services groups. Although groupsubsidiaries have different histories, scales of operation andbusiness characteristics, SFH works to achieve this goal bymaking the most effective use of the operating characteristics
of, and information available from, each subsidiary. In taking thisapproach, we place the utmost importance on the soundness
and accuracy of our operations. To this end, we have designed amanagement structure to ensure groupwide compliance and risk
management.
SFH’s Board of Directors* has eight members. Of these, two
are SFH’s representative directors, three are representative
directors of subsidiaries within the group and one is an outside
director. This structure is designed to ensure and expand thetrustworthiness of the SFH Group.
The Board of Statutory Auditors* has five members, of whomthree are outside statutory auditors. In line with the audit standards for statutory auditors and based on the audit policies andplans stipulated by the Board of Statutory Auditors, members
are responsible for attending important meetings, including
Board of Directors’ meetings, and for examining the operations
and financial condition of the Company as well as supervising
the duties executed by directors.
We carefully monitor each subsidiary’s management in a
respectful manner and promote management’s control with aview toward maximizing the group’s corporate value.
*As of July 1, 2008

Audits and Supervision(Audits by Statutory Auditors)
SFH has a Board of Statutory Auditors (five auditors, of whomthree are outside auditors).

Basic Policy on Establishing an Internal Control System
1. System to ensure that the execution of duties by directors
and employees are legally compliant and in accordance with
the Articles of Incorporation(1) The Board of Directors has established a code of conduct
as a basic policy for compliance and made this code clear
to SFH’s executives, employees and subsidiaries.
(2) The Board of Directors has created a compliance manualthat provides specific compliance guidelines, and a­compliance program that defines specific plans.
(3) The Board of Directors has created a compliance supervisory department to promote its compliance program. The
compliance supervisory department regularly reports to
the Board of Directors on the progress of the complianceprogram.
(4) The Board of Directors has formulated the Basic Group
Policy on Eradicating Anti-Social Influences. This policy
describes the firm stance the group takes to counter antisocial influences and build the structure necessary to fulfill
this policy.

Corporate GovernanceCorporate Governance Structure
Execution of Operations
The Board of Directors meets monthly, in principal, and is
responsible for deliberating and determining important Company
issues. The Board of Directors delegates to the Executive
Committee the authority to deliberate and determine the execution of certain daily activities. The Executive Committee is composed of standing directors, SFH executives and SFH employees
who are selected by resolution of the Board of Directors. This
committee meets twice a month, in principal, and is attended
by the standing statutory auditors. Non-executive directors may
also attend these meetings.

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Sony Financial Holdings
Corporate Governance(5) The Board of Directors has established an internal hotline
system and informed SFH executives, employees and subsidiaries about the system. This system allows employees
or others who become aware of business policies, operations or other activities that contravene (or are in dangerof contravening) laws and regulations to report directly toa hotline desk. The system prohibits any action frombeing taken against employees or others who provide
such notification.
(6) The Board of Directors has established an internal audit
supervisory department, which is independent from otheroperating departments. This supervisory department
liaises and cooperates with the statutory auditors and theaccounting auditor; monitors and verifies, from an independent and an objective viewpoint, the implementationand operational status of the internal control system; andreports regularly to the Board of Directors on the status
of internal audits.
(7) The Board of Directors has formulated internal audit regulations, which define the basic policy regarding internal
audits, and informed SFH’s executives, employees andsubsidiaries.
2. System for preserving and managing information related tothe execution of duties by directors
SFH has established Record Archive Regulations to ensurethat documents pertaining to the execution of duties by directors, such as at Board of Directors meeting and Executive
Committee meetings. All records of approvals are appropriately preserved and managed in accordance with these laws
and regulations.
3. Systems on regulations related to the management of dangerof loss and other(1) The Board of Directors has formulated the fundamental
principles for risk management activities as basic policy
for group risk management and informed SFH’s executives,
employees and subsidiaries.
(2) The Board of Directors has established a risk management supervisory department to manage risks appropriately for SFH and its subsidiaries, in accordance with each
entity’s scale, characteristics and type of business. This
department reports regularly to the Board of Directors on
the status of risk management.
(3) The Board of Directors evaluates its subsidiaries’ capital
adequacy to ensure that their levels of capitalization are
sufficient in light of the risks directly facing the SFH Groupand to implement appropriate capital allocations. If necessary, the Board of Directors takes measures designed tostrengthen capital bases.
(4) The Board of Directors formulated contingency plans tobuild a system that enables the SFH Group to respondrapidly to a crisis and take measures to minimize theimpact of these risks. The Board of Directors makesthese plans known to SFH’s executives, employees andsubsidiaries.
4. Systems to ensure the efficient execution of duties bydirectors(1) The Board of Directors has formulated approval regulations, organizational and task-sharing regulations andother internal provisions and created an appropriate­structure for the efficient execution of duties.
(2) The Board of Directors has formulated business plan­control regulations, which are employed to control nonconsolidated and consolidated medium-term businessplans and annual business plans.
(3) The department in charge of business planning reports
regularly to the Board of Directors regarding the progressof groupwide plans.

5. System to ensure the appropriateness of operations by SFH
and the corporate group, including SFH’s parent company andsubsidiaries(1) In addition to exercising shareholder rights, as a financial
holding company SFH ensures the appropriateness of its
subsidiaries’ operations by exercising management­control in accordance with the management control­agreements made between SFH and its subsidiaries.
(2) SFH deliberates and examines the appropriateness andcompliance of groupwide transactions, alliances or new
businesses by subsidiaries that have the potential to significantly impact the management of the group, before thecommencement of those transactions. Such issues areresolved at or reported to the Board of Directors.
(3) SFH’s Audit Department takes responsibility for ensuringthat its subsidiaries have appropriate internal control systems in place and monitors and verifies the results ofinternal and third-party audits of subsidiaries.
(4) SFH and its subsidiaries submit management information
about the group as needed to SFH’s parent company andinteract with the parent company’s internal audit
departments.
6. Items pertaining to employees who assist statutory auditors
in their duties
If directors receive requests by statutory auditors for­employees to be allocated to assist them in their duties,
the directors assign such personnel without delay.
7. Independence from directors of employees assigned as­mentioned directly above
Statutory auditors must agree to the appointment, removaland evaluations of employees assigned to assist them intheir duties.
8. System for directors and employees to report to statutory
auditors, and other reporting systems(1) If directors or employees are requested to provide­business reports to statutory auditors, they do so
without delay.
(2) If directors or employees receive notice via the internal
hotline system, they report immediately to the statutory
auditors.
9. Other systems to ensure the effectiveness of audits by statutory auditors
Representative directors endeavor to forge and deepen relationships with statutory auditors based on mutual understanding and trust and foster the environment that is necessary foraudits by statutory auditors.
Basic Policy on Eradicating Anti-Social Influences
SFH has formulated a Basic Group Policy on Eradicating AntiSocial Influences, described below, and has built the structures
to take a firm stance on countering anti-social influences.
Basic Group Policy on Eradicating Anti-Social Influences
1. The SFH Group is keenly aware of the importance of strictly
avoiding any affiliation with anti-social influences, from theviewpoints of social responsibility, compliance and corporate
defense. To this end, the SFH Group has implemented­systems to strictly avoid anti-social influences.
2. The SFH Group strictly rejects undue claims by anti-social
influences. Furthermore, the Group has put in place a system
for taking a firm stance on an organizational basis to counter
undue claims.
3. The SFH Group is strengthening its cooperation with policeand outside specialist organizations, even during the peacetime, to ensure appropriate assistance and cooperation in theevent it receives threats from anti-social influences.

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Compliance

Basic Stance on Compliance

SFH’s Compliance Systems
SFH’s Board of Directors has established a compliancemanual* and compliance program.** SFH mounts­ongoing efforts to ensure the conformance and thestate of progress of compliance and takes the initiativein establishing compliance systems for itself and its
group companies.
Under authority delegated by its Board of Directors,
SFH’s Executive Committee directs each department
to plan and enforce necessary compliance-related
measures.
* Compliance manualThis manual outlines SFH’s compliance system, describes the group’s
corporate philosophy and indicates laws and regulations for conformanceof which executives and employees should be aware. The manual alsoestablishes measures for handling situations discovered to be in conflictwith laws and regulations—non-compliant activities—and for confirming
the compliance status.

Compliance Systems at SFH Group Companies
Group companies are responsible for establishing­effective compliance systems in line with their specificindustry and type of operations.
Compliance Meetings
SFH holds regular Compliance Meetings with group­companies to conduct prior consultation on compliancerelated issues and exchange information regarding thestate of compliance promotion and legal issues. The
Corporate Control Department serves as the secretariat
for these meetings, whose members include SFH andgroup company executives, general managers and otherstaff in charge of compliance, depending on items being
discussed. The results of meeting deliberations arereported to the Board of Directors and at meetings ofother bodies.

Internal Hotline System
An internal hotline system is in place to enable executives
and employees of SFH and the SFH Group companies, aswell as temporary employees and the employees of business partners, to report business policies of the Sony
Group, SFH and the SFH Group or operating or otheractivities that they are convinced contravene (or are indanger of contravening) laws and regulations or the internal regulations of the Sony Group, SFH or SFH Group
companies. Informants may notify any of the hotline
desks that have been established at each SFH Group
company or the Compliance Hotline at Sony Corporation,
which serves as the desk for the Sony Group, as appropriate. SFH is responsible for taking appropriate measures to protect informants and strictly managing andresponding to any information they provide.
SFH communicates with Sony Corporation regarding
appropriate responses to notifications received via theCompliance Hotline at Sony Corporation, as well as about
notifications of issues having the potential to affect Sony
Group companies other than those in the SFH Group.

Compliance

Compliance Systems at SFH and SFH Group
Companies

SFH’s Corporate Control Department takes overall control of compliance planning, proposal creation and promotion. This department also monitors the compliancestatus of group companies.

Sony Financial Holdings

To ensure the ongoing health and appropriateness ofbusiness operations, SFH must encourage all the executives and employees to deepen their understanding of
SFH’s corporate philosophy and the laws and regulations
that pertain to its businesses, foster compliance withthese laws and regulations and manage its operations in
a transparent and appropriate manner based on a strong
sense of ethics. Including all these factors in its definitionof “compliance,” SFH considers compliance one of its
most important management tasks. Accordingly, SFH
has established systems to ensure that all executives
and employees are fully aware of their duties and responsibilities under those laws and regulations.
As a financial holding company with insurance andbanking subsidiaries, SFH is responsible for understanding the state of compliance of its group companies andadvising these companies on compliance issues as it
deems necessary. The first level of compliance-related
responsibility lies with individual group companies, which
are responsible for establishing systems to raise theirlevel of compliance in line with their specific industry,
type of operations and scale of business. SFH, on theother hand, has the role of maintaining an ongoing understanding of and promoting group companies’ compliancefrom the viewpoint of group management.

** Compliance programThis program, conducted annually, in principal, defines a specific set ofactions for confirming the state of compliance, as well as training and otherrelated items.

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Risk Management

One of SFH’s roles as a financial holding company is to concentrate management resources and strengthen group-widerisk management in an integrated manner. The SFH Group’s basic policy on risk management is described below.

Risk Management

Sony Financial Holdings

SFH’s Basic Policy on Group Risk Management
As a financial holding company, we enhance the corporate value of the Group by aligning risk managementwith group-wide strategic objectives and management policies, while tailoring each operating subsidiary’s risk
management activities to the types of risk inherent in its specific business lines.
We adopt all necessary supplemental measures to ensure effective risk management, while confirming
each operating subsidiary’s responsibility for establishing risk management policies to achieve its own­management objectives.
As a financial holding company, SFH takes steps to eliminate excessive concentrations of risk in specificareas, establish appropriate controls over intra-group transactions and control the spread of risk within
the Group.
SFH’s Board of Directors formulates the fundamental
principles for risk management activities and transmits
these requirements to directors and employees throughout SFH and its subsidiaries. The Board then recognizes
the presence or types of risks that differ according toeach subsidiary’s scale, business and characteristics,
and establishes structures to appropriately manage thevarious risks. SFH’s Executive Committee, delegated by
the Board of Directors, executes daily activities pertaining to group risk management. Specifically, while eachsubsidiary evaluates, monitors and manages each risk,

the Corporate Control Department—which has overall
control of SFH’s risk management—coordinates withthe risk management departments of those subsidiaries.
The department also submits periodic reports to SFH’s
Board of Directors and Executive Committee on the risk
management conditions recognized through monitoring
or by holding Risk Management Meetings.
The Audit Department, on the other hand, conducts internal audits to verify the appropriateness and effectivenessof the overall risk management structure.

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The types of risk that SFH and its subsidiaries manage are indicated below.
Market-related risk

Credit risk

Real estate investment risk

Liquidity risk

Insurance underwriting risk

Administrative risk

Systems risk

Legal risk

Reputational risk

Business continuity risk

The types and definitions of the risks that SFH and its subsidiaries manage are indicated below.
As outlined below, each Group company creates its own risk management system in line with its own scale,­characteristics and type of business, optimizing its system for its own types and definitions of risk.
In accordance with changes in the operating environment and other factors, risk management departments review
the risk types and definitions set forth below, adding to and changing this information as appropriate.

Real estate investment risk, which we define as therisk of loss due to a decline in the market value of ourreal estate or to a decline in the profitability of our realestate because of unfavorable changes in market rents
or other factors.
Liquidity risk includes:• Cash flow risk, which we define as the risk of loss
due to our inability 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 conditions in orderto obtain cash to meet our payment obligations.
• Market liquidity risk, which we define as the risk ofloss due to an inability to conduct market transactions, in particular from an inability to change ourmarket position at a given time, as well as the risk ofloss if we are forced to complete transactions underunfavorable market conditions, in each case due tomarket turmoil or other factors.
Insurance underwriting risk, which we define as therisk of loss due to significant differences between theassumptions we use to establish appropriate premium

Administrative risk, which we define as the risk ofloss due to errors, misconduct, malfunctions andother factors related to problems with our internal­administrative processes.
Systems risk, which we define as the risk of loss
arising from malfunctions, breakdowns, improperuse or information leaks related to problems with ourtechnology and other systems.
Legal risk, which we define as the risk of loss due
to violations of applicable laws, rules and regulations occurring during the course of our business­operations, as well as the risk of loss due to litigation.
In particular, we are exposed to legal risk withrespect to:• the provision of services, including the introductionof new businesses, products and services;• our entry into various legal agreements, as well as
the renewal, amendment, termination or rescissionof such agreements; and• various legal and administrative proceedings.

Risk Management

Credit risk, which we define as the risk of loss due to a
decline in the value of our assets, including off-balancesheet assets such as derivative instruments, as aresult of deterioration in the financial position of theissuers of the debt obligations we hold or the counterparties to the derivatives and other contracts we haveentered into.

levels, including assumptions regarding the expected
frequency and scale of insured events and future
economic conditions.

Sony Financial Holdings

Market-related risk, which we define as the risk of loss
due to changes in the value of our assets, including
off-balance-sheet assets such as derivative instruments, as a result of unfavorable fluctuations in interest rates, the value of securities, exchange rates andother factors.

Reputational risk, which we define as the risk of loss
resulting from harm to our reputation in the market andamong customers as a result of unethical behavior,unfair business practices, improper disclosure or otherfactors.
Business continuity risk, which we define as the risk ofan inability to continue our business operations as theresult of a deterioration in our financial condition, liquidity problems, system failures, scandals, accidents,
natural disasters and other crises.

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Risk management systems at SFH Group companies are as follows.

Risk Management

Sony Financial Holdings

Sony Life’s Risk Management System
Amid the rapid liberalization and internationalization of­financial markets, the activities of life insurance companies are becoming increasingly diverse and complex.
For such companies, the optimal management of various
risks—such as investment risk, insurance underwriting
risk, operational risk, and legal risk—becomes more andmore important every year. The various transactions thatlife insurance companies undertake carry inherent risks
that cannot be completely avoided. Moreover, simply
minimizing such risks is insufficient. Instead, it is necessary to grasp the nature of each type of risk, implement
suitable controls and make preparations to ensure
appropriate returns that are commensurate to the relatedrisks, while also responding flexibly to the evolution ofrisk management techniques.
Sony Life works continuously to enhance its risk management organization. In FY2007 Sony Life reviewed its
risk management policies and undertook an evaluation ofrisks related to new business activities that handle banking agency business. Sony Life has also established theclaims payment management system as a top management priority, and continued its endeavors in this regard.
Furthermore, when necessary Sony Life held meetingsof its Risk Management Committee, which is composedof general managers of the several divisions responsible
for the company’s risk management, to discuss various
company-wide risk management issues.

Sony Life often holds meetings of its Risk Management
Committee, which is composed of general managersof the several divisions responsible for the Company’srisk management, to discuss various company-wide risk­management issues.
Sony Life also conducts stress tests and reports theresults of those tests to its Executive Officers Boardin order to evaluate the possible impact on its financial
soundness of future unprofitability, and takes additional
management and/or financial measures as necessary.
As one aspect of its investment risk management activities, Sony Life conducts stress tests based on a worstcase scenario that exceeds normal market fluctuations,whereby interest rates, share prices and currency
exchange rates all drop to historic lows. As one aspectof its insurance underwriting risk management activities, Sony Life performs stress tests during new productdevelopment that assume fluctuations in income andexpenses.
In its Risk Management Manual, Sony Life sets forth
its fundamental approach to risk management and themethods for applying its risk management policies, withfull consideration of the specific characteristics of eachtype of risk.

Sony Life’s Basic Risk Management Policy
By strengthening its risk management capabilities and executing optimal risk controls, Sony Life aims toensure the soundness and appropriateness of its operations and to protect the interests of policyholders.
In this way, Sony Life will improve its reputation as a trustworthy and credible life insurance company andthus fulfill its responsibility to society.

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Specific Risk Management Procedures

Risk Management

Insurance underwriting risk
With regard to insurance underwriting risk, Sony Life
conducts appropriate insurance portfolio management, such as establishing policy limits as necessaryon each type of insurance in line with accumulated
policy reserves and capital levels. In addition, for eachproduct it sells, the company maintains underwriting
standards, reinsurance standards and reinsurancecompany selection standards, as well as criteria for
the improvement or elimination of these standards.
These internal regulations are clearly established and­periodically reviewed.
		 Concerning reinsurance risk, Sony Life’s policies on
insurance in force and reinsurance provide controls
intended to ensure that, in cases where underwritten
risks exceed limits on insurance in force, excess risk
is adequately managed through the appropriate useof reinsurance.

Operational risk
Operational risk consists of administrative risk, systems
risk and liquidity risk, each of which is described below.
• Administrative risk
Sony Life strives to continually improve its internal
administrative processes to reduce risk by carefully analyzing the underlying causes of failures inadmin­istrative processes, undertaking evaluationsof existing risk management procedures, and developing and communicating to its employees detailed
internal regulations and providing manuals governing
risk management procedures.
Further, as part of its efforts to prevent the recurrence of past failures in administrative processes,
Sony Life has implemented a self-assessment programfor its internal departments and undertakes periodic
audits of its administrative risk management activities.
		 Sony Life has also developed internal ­regulations
regarding the monitoring of third-party service providers as part of its efforts to control ­administrative
risks relating to such providers.
• Systems risk
Sony Life separately manages the systems risk
associated with its operation of existing information
technology and other systems from those associated with the development of new information
technology and other systems. Sony Life analyzes
recent failures, threats and vulnerabilities affecting
its existing systems infrastructure when determining
its future systems needs. Sony Life also undertakes
periodic testing of its systems to ensure appropriate
risk management.
		 With regard to systems risks relating to third-party
service providers, Sony Life has developed internal
regulations regarding the monitoring of third-party
service providers.
		 Sony Life has also developed a contingency plan togovern its response to potential disasters that may
affect its ability to continue its operations.
• Liquidity risk
Sony Life aims to minimize its holding of low-liquidity
assets and to adopt, and periodically review, internal
regulations clarifying the methods for managing,reporting and settling cash payments in light of its
immediate liquidity needs.

Sony Financial Holdings

Investment risks
Investment risks can generally be divided into marketrelated risk, credit risk and real estate investment risk.
With respect to investment risks, Sony Life manages
its asset allocation in accordance with internal regulations established in light of the importance of managing
balance between assets and liabilities comprehensively,
the specific characteristics of its liabilities and the needto maintain appropriate levels of capital. Sony Life
involves its front-office and middle-office personnel in its
risk monitoring activities and revises its risk management policies and procedures in light of evolving risk
management practices in the life i­nsurance industry.
• Market-related risk
Sony Life strives to maintain an investment
portfolio that will provide stable medium- tolong-term returns in light of the specific charac­
teristics of its investment assets, including
stability, liquidity, profitability and other factors.
In addition, Sony Life establishes limits, as it
deems necessary, as a means of controlling themagnitude of potential market-related losses.
• Credit risk
Sony Life exercises care in evaluating the credit
quality of issuers when investing in debt obligations
and strives to diversify its portfolio to avoid risks
associated with concentrating its investments inthe debt obligations of a small number of issuers
or within particular industries. In addition, Sony Life
strives to ensure the stability of its investments
through self-assessment of the credit quality of
its assets in accordance with internal regulations,­establishing reserves and recording write-offs asappropriate.
• Real estate investment risk
In light of the low liquidity and large capital commitments that characterize real estate investments,
Sony Life establishes objective standards to evaluate
real estate investments and takes care to diversify
its real estate investments in terms of timing andgeographical location. In addition, in an effort toensure the quality of its real estate investment portfolio, Sony Life manages each property individuallyand sells off properties that produce investment
returns below minimum pre-determined levels or
for which unrealized losses exceed p­ re-determined“alarm points.”

Other risks
Other risks include legal risks, such as the risk ofloss resulting from Sony Life conducting its operations in a manner that violates applicable laws, rulesor ­regulations, and the risk of loss resulting from Sony
Life’s inability to exercise certain rights as a result of it
conducting its operations in an inappropriate manner,even without any violation of law. Other risks also
include reputational risks, including the risk of loss
resulting from negative media coverage, rumors, defamation and other forms of criticism. Sony Life strives
to establish risk management policies relating to theseand other risks in order to ensure its ability to conduct
its operations in a sound and appropriate manner.
Accumulation of Policy Reserves Related to ThirdSector InsuranceSony Life conducts a stress test and a liability adequacy test when accumulating policy reserves related
to third-sector insurance.

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Sony Financial Holdings
Risk Management• Stress Test and Liability Adequacy Test for ThirdSector Insurance
Using various settings for each product, the stresstest confirms risk coverage given the expected
rate of accident occurrence and computes thecontingency reserve on this basis. The contingency
reserve is calculated for the amount of future benefits (10 years), based the difference between theamount calculated using the insured accident occurrence rate (hazard rate A) to cover risk that exceeds
the normally expected scope and the insured
accident incidence rate (hazard rate B), which covers
the normally expected scope of risk.
		 The liability adequacy test, on the other hand, isused to verify whether other sources of income andprofit are sufficient to cover the amount of future
benefits in the event that the results of the stresstest indicate insufficient coverage of the amountof future benefits (10 years) using hazard rate
B. If there exists a fiscal year when the financial
resources, including additional sources of income
and profit, are insufficient to cover the benefit, thatamount corresponding to that shortfall need be­accumulated as policy reserves.
		 The methods for the stress test and liability test
are stipulated by law, but the hazard rate and otherfactors used in these tests are based on Ministry of
Finance Official Notification No. 231 (June 8, 1998).
Liability adequacy test assumptions are based on
Financial Supervisory Agency, Ministry of Finance
Official Notification No. 22 (June 23, 2000).

• Stress Test and Liability Adequacy Test Results
In preparation for uncertainty related to future
worsening of the insured accident occurrence rate,
Sony Life conducts the stress test and the liability
adequacy test and ensures the appropriateness of
its policy reserves related to third-sector insurance
are sufficient according to these test results.
		 Stress test and liability adequacy test results as ofMarch 31, 2008, are given below.
			(As of March 31, 2008)

		 Stress test (accumulated contingency reserve)
		 Liability adequacy test
(accumulated premium reserve)¥127 million
Not insufficient

Note: Policy reserves are segmented into accumulated premium reserve,
prepaid insurance premiums and contingency reserves.

As part of its business, Sony Life manages personal
information relating to its policyholders over long
periods of time. In June 27, 2003, Sony Life became
the company in Japan’s life insurance industry to receive
certification under information security management
systems of the BS7799 Part 2 and ISMS standard fordivisions conducting life insurance operations. BS7799
Part 2 was absorbed into the ISO certifications, andJapanese ISMS certification standards were revised tomeet ISO standards. Therefore, in June 22, 2006 Sony
Life converted its certifications to ISO/IEC 27001:2005(JIS Q 27001:2006). Going forward, Sony Life will keepenhancing its information security to strengthen protection of the personal information of its customers andits own information assets.

Sony Assurance’s Risk Management System
In recent years, rapid changes in technology, the regulatory environment and the economy have led to rapid
growth in the diversity and complexity of the risks thatface non-life insurance companies like Sony Assurance,
and the importance of developing appropriate risk
management policies and procedures increases eachyear. Sony Assurance regards risk management

activities as one of management’s top priorities. Sony
Assurance undertakes efforts to strengthen its risk
management procedures, including its ability to accurately identify potential risks and adopt appropriate
preventative measures, as well as its ability to employ
appropriate countermeasures with respect to risks thathave actually materialized.

Sony Assurance’s Basic Risk Management Policy

The company identifies the specific risks that it faces in its business and implements appropriate risk
management procedures that address those risks, in an effort to ensure stable long-term profitability.

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Specific Risk Management Procedures
adequacy tests based on the official notifications of
relevant authorities. Insurance actuaries verify theseresults. For the stress text, various settings for the
expected rate of accident occurrence are used toconfirm coverage of risk that exceeds the normally
expected scope. In the event that policy reserves are
insufficient when changing the rate of expected accident occurrence for the stress test, a contingency
reserve is accumulated to prepare for the paymentof claims. For policy categories which the stress test
judges to have an insufficient policy reserve , a liability adequacy test is performed to verify the amountof shortfall based on by an analysis of future cash
flows for all policy categories by taking into accountoperating and other expenses as well as changing
the expected rate of accident occurrence to fallwithin the normally expected scope.

Risk Management

Investment risk
Investment risks can generally be divided into marketrelated risks and credit risk.
As part of its overall risk management activities,
Sony Assurance has established internal regulations
governing risk management procedures related to thespecific investment risks that it faces. These regulations
have been formulated in light of the characteristics andcorresponding risks of the assets in Sony Assurance’s
portfolio, and are designed to assist in the prompt andaccurate measurement, analysis and control of investment risk across that ­portfolio. Sony Assurance is also
exposed to the risk of loss resulting from significant
and unanticipated fluctuations in market conditions. As
part of its efforts to control such risk, Sony Assurance
engages in simulations that assume worst-case scenarios with respect to major market indicators, analyzing
the potential financial and other effects of such market
shifts. Sony Assurance strives to incorporate the results
and lessons of these analyses into its everyday risk
management practices.

Sony Financial Holdings

Insurance underwriting risk
Sony Assurance has established a set of internal
regulations regarding the management of insurance
underwriting risk as one part of its overall efforts
to establish appropriate risk management procedures. These internal regulations establish standards
tailored to the actual underwriting risks faced by Sony
Assurance and procedures regarding the appropriate
use of reinsurance. These regulations also include
provisions relating to risk management procedures tobe implemented with respect to insurance productsthat exhibit higher levels of underwriting risk than was
anticipated at the time of development and sale. Suchprocedures include the establishment of, or changes
to, retention limits, discontinuation of products,
pricing changes and other changes to related underwriting risk guidelines. Sony Assurance also undertakes semi-annual audits of its underwriting practices.
These audits include evaluations of loss ratios withrespect to specific products and, in cases in which
the loss ratios differ significantly from prior expectations, an analysis of the effect of such differences on
its financial condition and results of operations.
• Reinsurance risk management
Sony Assurance’s basic policies regarding policies
in force reinsurance risk management are included
within its policies governing the management of
insurance underwriting risk. Sony Assurance’s
policies governing the management of insurance
underwriting risk have been established, and are
periodically revised, upon the confirmation of its
chief actuary and its Risk Management Division,
with adoption following the subsequent approval of
its Executive Committee and its Board of Directors.
The reinsurance risk management activities of eachdepartment of Sony Assurance are subject to monitoring and approval by chief actuary and the Risk
Management Division, as well as periodic reportingof those activities to Sony Assurance’s Executive
Committee. Request for significant changes to theexisting reinsurance risk management practices bydepartment heads requires the prior approval ofSony Assurance’s Risk Management Division and its
Executive Committee.
• Natural disaster risk
Sony Assurance faces the risk of significant financial
loss related to natural disasters, such as earthquakes
or storms, that affect a wide geographic area, resulting in the occurrence of a large number of insured
events. In an effort to control its exposure to suchrisk, Sony Assurance engages in statistical analysisof the likelihood of such events and their estimatedfinancial impact, obtaining reinsurance as appropriate
in light of the results of its statistical analyses and its
current level of special catastrophe reserve.
• Ensuring Appropriate Accumulation of Policy
Reserves
To ensure the appropriate accumulation of policy
reserves related to the third sector insurance,
Sony Assurance conducts stress tests and liability

Liquidity risk
Sony Assurance sets investment limits on specificassets classes, in light of liquidity, profitability andother characteristics, in an effort to ensure sufficient liquidity of its assets and efficient cash flow
management.
Administrative risk
Sony Assurance has established internal regulations andmanuals governing its administrative risk management
activities. These regulations and manuals are tailoredto the characteristics of its specific business activities
and applicable laws and regulations. Sony Assurance
periodically revises its ­regulations and manuals basedon the results of its internal monitoring of administrativerisk and administrative risk management activities, aswell as in response to the results of internal inspections
and audits, changes in the business and regulatoryenvironment and other factors.

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Systems risk
As part of its efforts to ensure the security of its
information technology and other systems andprevent improper leaks of corporate information andcustomers’ personal information, Sony Assurance
has adopted a number of internal regulations andguidelines. These guidelines include the Information
Security Policy, Basic Regulations Pertaining to the
Safe Management of Personal Information Protection,
Regulations Regarding the Protection of Customer
Information, Regulations Governing the Use of
Employee Information, Regulations Governing the Useof Employee Recruiting Information, an Information
System Security Policy and Standards Governing theUse of Internal Information Systems. In addition, in
June 2007 Sony Assurance received company-wide JIS
Q 27001:2006 (ISO/IEC 27001:2005) certification for
security system management.
Accident, disaster, criminal and legal risk
Other risks that Sony Assurance is exposed to include
the risk of loss resulting from accidents, ­disasters andcriminal activity, including injury, the loss of life and theloss of the trust of its clients. In an effort to m
­ inimize its
exposure to these risks, Sony Assurance has adopted
internal contingency procedures and regulations
governing its response to large-scale disasters.

Sony Bank’s Risk Management System

Sony Bank’s Basic Risk Management Policy

As part of its efforts to ensure the soundness and adequacy of its operations, Sony Bank seeks to increase
profitability through sound risk-taking activities formulated on the basis of appropriate risk management procedures. In order to achieve this goal, Sony Bank believes it must ensure its ability to distribute resources andestablish earnings targets in an appropriate manner. This requires that Sony Bank recognize and specify therisks that should be managed as part of its daily banking operations and quickly identify each type of risk it
faces by engaging in comprehensive risk management activities under the guidance of its Board of Directors.

Risk Management

Sony Financial Holdings

Positioning risk management as an important management issue, Sony Bank employs methods and systems that aredesigned to identify and manage a wide variety of risks from multiple angles.

Specific Risk Management Procedures
Market risks
With regard to market risk, in an effort to establish
mutual supervision, Sony Bank has establishedseparate front-, middle- and back-office divisions. In
analyzing market risk, Sony Bank collectively analyzes
its transactions with market participants, such as
funding transactions, foreign exchange transactions,bond investments and derivatives contracts, as wellas its deposit and lending transactions with retailcustomers on a daily basis to measure its exposure

to transactional gains and losses and market risk. In
measuring and managing its aggregate exposure tomarket-related risks, Sony Bank uses the value-at-risk,
or VaR, method, which measures the maximum amountof losses that could occur within a given period. In
addition, Sony Bank undertakes sensitivity analysesof its exposure to interest rate and exchange rate risks
on a daily basis, and conducts stress tests on
a monthly basis.

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Administrative risk
Sony Bank strives to identify and quantify various
administrative risks through the analysis of internal data
and through revisions to the flow of its business operations. Once specific administrative risks have been
identified, in an effort to minimize the risk of loss fromsuch risks, Sony Bank develops and introduces risk
management procedures tailored to those risks. Sony
Bank also strives to identify the individual administrative risks it faces in its day-to-day operations, promptly
develop and apply effective countermeasures for thoserisks and conduct effective follow-up procedures.
Systems risk
Sony Bank is constantly working to improve its ability
to identify, quantify and evaluate the systems risks
that affect its business operations and transactions.
Sony Bank strives to minimize its exposure to thesetypes of risk by undertaking prompt and appropriate
measures including revisions of its internal businessprocesses and changes to its information technology
and other systems.

Legal risk
Legal risk is the risk of loss due to such factors asillegal actions or contractual issues. Analysis of legalrisks relating to contractual negotiations, business
operations, transactions and products is jointly
conducted by Sony Bank’s compliance department andrelevant department heads.
Reputational risk
Reputational risk describes the risk of loss due todamage to reputation in the marketplace or withclients of Sony Bank that could result from actions that
contravene social mores, improper transactions or
inappropriate information disclosure. Sony Bank strives
to provide prompt and accurate disclosure in an effort toobtain and maintain the trust of its clients and the market.
Parent Company* Business Risk
Parent company business risk is the risk that theworsening of parent company operational performance could propagate outward and affect SonyBank’s performance, as well as the risk that control
by the parent company could affect the independenceof Sony Bank’s management. For this reason, thebank maintains an arm’s length relationship in termsof parent company management conditions and in­transactions with the parent company group.
* “Parent company” used in the context is Sony Bank’s operational parent,Sony Corporation.

Risk Management

Liquidity risk
Sony Bank faces two types of liquidity risk: cash flowrisk and market liquidity risk.
• Cash flow risk
Sony Bank manages its cash flow by classifying
its payment obligations into separate categories
based on the urgency of payment. Sony Bank
monitors and manages its cash flow needs basedon the status of each separate category.
• Market liquidity risk
Sony Bank strives to manage market liquidity
by measuring the market liquidity of each of its­products and, as appropriate, establishing andrevising guidelines governing individual products.

Outsourcing risk
Outsourcing risk is the risk of loss resulting from an
inability to rely on third-party service providers forcontracted services due to problems with such parties’internal controls, information management practices
or other factors. Sony Bank strives to minimize its
exposure to this risk by identifying, quantifying andanalyzing its exposure to specific risks and promptly
adopting effective countermeasures.

Sony Financial Holdings

Credit risk
Sony Bank faces two types of credit risk: individual
credit risk, which relates to loans to individual clients,and market credit risk, which relates to transactions
with market participants.
• Individual credit risk
In extending loans to individuals, including mortgage
loans, card loans and special purpose loans, Sony
Bank conducts credit quality evaluations of the individual’s cashflow characteristics and ability to repay
the borrowed funds. In addition, in the case of mortgage loans the borrowed funds are collateralized by
the underlying home, while in the case of card loans
and special-purpose loans, the borrowed funds areguaranteed by third-party guarantors. These collateral and guarantee arrangements help Sony Bank toensure the soundness of its loan assets and minimize
its exposure to individual credit risk.
• Market credit risk
As a means of controlling its exposure to market
credit risk, Sony Bank generally establishes limits on
its holdings of certain classes of assets, credit limits
and limits on the duration of its lending transactions,
all of which are generally based on the external credit
ratings of the issuers of the debt obligations it holds
and its other counterparties. Sony Bank also maintains
total capital levels based on the Basel II capital
adequacy ratio requirements.

Taking into account the impact on its customer transactions and social and economic activities that could
result from a disaster that would force Sony Bank tosuspend its business activities, the bank has prepared acontingency plan that takes into account the economic
damage it could incur. Because Sony Bank must manage
and maintain highly confidential information relating its
clients, including through open network mediums suchas the Internet, it places great importance on its information security procedures. In May 2002, Sony Bankobtained certification under the global standard for
information management, known as BS7799 Part 2, andin August 2002 it obtained ISMS certification from theJapan Information Processing Development Corporation.
In October 2005, BS7799 Part 2 was absorbed into
the ISO certifications, and in May 2006 ISMS standards
were changed to JIS standards. In April 2006, Sony
Bank received an ISO 27001 certification and shiftedto this international standard for information security
management systems. Sony Bank strives to maintainand improve its information security procedures.

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Privacy Policy

SFH exercises the utmost caution to ensure that this information is managed appropriately and only for the
express purpose for which customers have entrusted it to us. For its basic policy on the handling of personal
information, SFH adheres to the privacy policy established by Sony Corporation.

Privacy Policy

Sony Financial Holdings

Policies regarding Handling of Personal Information(Compliance)
1. SFH will comply with the applicable laws and regulations including “Act on the Protection of Personal
Information,” obligations under the applicable ministerial guidelines and this Privacy Policy in handling
Personal Information (­information which can identify
a specific individual).
(Use within Specific Purpose(s))
2. SFH will use personal information only within thescope necessary for the achievement of the
purpose(s) of use which has been specified inadvance, except for cases in which SFH has
obtained in advance consent from the individual
who provides his/her Personal Information (hereafter “the individual”) and for cases permitted under
the related laws or regulations.
(Obtaining Personal Information)
3. SFH will endeavor to clearly notify necessary­information such as purpose(s) of use, names ofuser(s) as well as contact details and to obtainconsent when asking for Personal Information. SFH
may record in writing or in voice the contents oftransactions and inquiries.
(Personal Information of Customers Under Fifteen (15)Years Old)
4. SFH will make special consideration for the handlingof Personal Information of customers under fifteen(15) years old, e.g., to notify clearly in advance to
ask such a customer to provide Personal
Information only upon guardian's consent.
(Security Control Measures)
5. SFH will endeavor to maintain entrusted Personal
Information to be accurate and updated to theextent necessary for the purpose(s) of its use. SFH
will take necessary and appropriate security control
measures in line with existing technical standards
and will implement corrective actions as needed toprotect entrusted Personal Information from unauthorized access, leakage, m­ odification, loss,
destruction, etc.

(Supervision of Subcontractor(s))
6. SFH may subcontract the processing of entrusted
Personal Information to a third party within thescope necessary for the achievement of the
purpose(s) of use. Such third party will be selected
after confirming sufficient level of information­security, and SFH will exercise necessary andadequate supervision to the party by such means
as making contracts.
(Providing to Third Parties)
7. Without the consent of the individual, SFH will notprovide Personal Information to any third party,
except for cases permitted under the related
laws or regulations. SFH will not provide Personal
Information to any third party, based on the“Opt-Out System” (Article 23.2 of the Act on
the Protection of Personal Information).
(Request(s) for Review, etc.)
8. SFH will, based on the provisions of the related
laws or regulations, properly respond tocomment(s) and request(s) from the individual
regarding handling of Personal Information such as
to review, correct, stop receiving further product orservice information from SFH, or to delete Personal
Information of their own after confirming their­identity. Please contact the appropriate customer
center under the guidance of each company towhich you have provided your Personal Information.
(Continuous Improvement of Internal Systems)
9. SFH will continuously endeavor to improve internal­compliance systems including appointing responsible officers for administration of Personal
Information, updating this Privacy Policy throughestablishment of internal rules, education to directors, officers and employees, and appropriate
internal audit to handle entrusted Personal
Information properly.

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Internal Audits

they face. SFH’s Audit Department remains constantly
aware of its subsidiaries’ internal audit activities bymonitoring their audit plans and audit reports, and SFH’s
Audit Department reports periodically to the president,
representative director and Board of Directors of SFH.
If necessary, SFH’s Audit Department may conduct audit
activities of subsidiaries directly.
The Audit Department also cooperates with SFH’s
statutory auditors, who conduct operational audits basedon the audit standards for statutory auditors. The Audit
Department also maintains reciprocal relationships with
SFH’s statutory auditors and the independent auditor,
while performing audits independently.

Sony Financial Holdings

SFH performs internal audits through its Audit
Department. Reporting directly to the president andrepresentative director, this department operates
outside the other lines of operational reporting and,from an independent and objective position, verifies theappropriateness and effectiveness of internal controls,
including governance processes, compliance and risk
management. This department endeavors to perform
highly effective internal audit activities to contribute to
the sound and appropriate operations of SFH andits subsidiaries.
SFH’s subsidiaries have their own internal audit departments, which perform activities designed to match their
specific industry, scale of business and the types of risk

Internal Audits
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Social Contributions and Environmental Activities

Social Contribution Initiatives

Eye Mate FundThe SFH Group recognizes that its participation in the

Since FY1997, Sony Life has made financial donations tofinancial services business comes with public obliga-

the Eye Mate Fund, established by The Eye Mate, Inc.,

tions. Consequently, we contribute to society with awhich aims to help visually challenged people participate

strong sense of ethics and responsibility and we conduct

in society. Sony Life donates an amount each year thatvarious activities to carry out our responsibilities as amatches the total raised by its employees. In FY2007,

member of society.

Sony Life and its employees gave a total of ¥10.94 million to Eye Mate, bringing its cumulative donations for

Volunteer Activities

training guide dogs to more than ¥120 million.

Sony Financial Holdings

Sony Life has established the Social Contribution
Department to strengthen support and share information

Sony Life Volunteers’ Clubon volunteer activities undertaken by its employees

After the Kobe Earthquake in 1995, a Sony Life volun-

throughout Japan. Along the same lines, Sony Life hasteer group established the Sony Life Volunteers’ Club,

created the Volunteer Coordination Committee.

which provides support to people in areas affected bySony Life has designated the anniversary of its found-earthquakes. The club also cooperates with local organi-ing as Volunteer Day, when all employees arezations to offer a support network for the elderly andencouraged to consider and implement local clean-ups

physically impaired victims of earthquakes. Now, afterand other activities that benefit their community.
To help its employees actively contribute to society,Social Contributions and Environmental Activities

Sony Life has established a volunteer leave program andimplemented a leave program for bone marrow donors.
Sony Life also donates to the Eye Mate Fund, supports
Special Olympics Nippon (Japan) and offers a life-planning course for students who are preparing to maketheir own way in society.
Sony Assurance participates in fundraising activities
for the Japan Committee for UNICEF. Sony Assurance
also collects cancelled stamps to help organizations thatprovide medical care overseas.

Sony Life Volunteers’ Club’s hot springs bus tour

Support for Special Olympics Nippon (Japan)
Since FY1996, Sony Life has offered financial support to Special
Olympics Nippon, an accredited nonprofit organization that helps
people with intellectual disabilities by providing independence andopportunities to participate in the community through sports.
Employees also volunteer to help conduct the events. Sony Life isincreasing awareness and understanding of Special Olympics
Nippon’s activities through regional organizations and, among its
other contributions, by supporting daily activities, charity concertsSony Life volunteer participants in the Special Olympics
Nippon National Winter Games in Yamagata Prefecture

and movie screenings. By supporting Special Olympics Nippon,
Sony Life will continue to facilitate the independence of people withintellectual disabilities and help them participate in their community.

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more than 10 years the club continues to support the

System for Using Green Power

victims by planning and inviting them to bus tours to visit

In April 2005, Sony Life became the first company in the

hot springs and holding events to help them remain

Japanese life insurance industry to employ the Greenactive in their communities. Using this experience, SonyPower Certification System. This system promotes theLife has provided support for people injured in theuse of green power to help protect the environment by

Niigata-Chuetsu Earthquake.

reducing CO2 emissions. At present, Sony AssuranceSony Life also holds events to support youth

and Sony Bank are also participating in this system,­education, encourages bone marrow bank donor

thereby helping to promote geothermal, wind-powered,­registrations and participates in other grass-roots

solar, biomass, and other power generation that uses­community activities.

renewable energy resources.

By trading the natural electric power (green power) generated fromsolar, wind, geothermal, biomass, and other natural energy sources
as a form of certification, companies need not build their own power
generating facilities. Even when distance to a green generation
facility makes direct consumption of green power unfeasible, thissystem includes companies that consume green power indirectly.
Consequently, this system helps companies contribute to theSony Financial Holdings

Green Power Certification Systemproliferation of natural electric power generation and to conserve
energy and protect the environment as part of their voluntarymeasures. For more details on the green power certification system,
please refer to the website of Japan Natural Energy Co., Ltd.

Sony Life Volunteers’ Club: Helping wheelchairbound participants get on and off the bus at the
Hot Springs Bus Tour

Environmental Initiatives
The SFH Group considers preserving the earth’s environment as one of the most important issues facing people
worldwide. We therefore conduct environmentally con-Helping Customers Contribute to Reducing Greenhouse

scious activities and implement appropriate initiatives.

Gas Emissions

Social Contributions and Environmental Activities(http://natural-e.co.jp/english/).

Sony Bank has created a system through which customAcquisition of ISO 14001 Certificationers can contribute to reducing greenhouse gas

Sony Life, Sony Assurance and Sony Bank haveemissions by purchasing emissions rights on behalf ofacquired ISO 14001 certification, the international stan-its customers who invest a certain amount in its eco-

dard for environmental management systems. All threefunds for donation to the Japanese government. Sincecompanies pursue energy-saving activities, such as

Sony Bank purchases emission rights by using a portion

working toward targets for the reduced consumption ofof its commissions on the sales and custodial fees forenergy and photocopier paper and promoting green

the eco-funds, customers can participate in environmen-

procurement to raise the portion of eco-products used

tal preservation activities as they manage their assets.

as office supplies.

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History of the Sony Financial Holdings GroupSony Financial Holdings

Sony Financial Holdings

Sony AssuranceSony Bank

1979 AugustSony Prudential Life Insurance Co., Ltd., (the present Sony Life) is established1981 April

Sony Prudential Life commences operations and introduces the Lifeplanner system

1986 OctoberSony Prudential Life launches sale of variable life insurance (whole-life protection)

1987 July

Sony Prudential Life reaches agreement with Prudential to terminate joint venture contract

SeptemberSony Prudential Life changes corporate name to Sony Pruco Life Insurance Co., Ltd. (thepresent Sony Life)

1989 OctoberSony Pruco Life establishes independent agency system

1991 April

Sony Pruco changes corporate name to Sony Life Insurance Co., Ltd.

1992 April

Sony Life commences sales of comprehensive medical insurance

1998 June

Sony Insurance Planning Co., Ltd. (the present Sony Assurance) is established

August1999 April
September			

History of the Sony Financial Holdings GroupSony Life

Sony Life establishes Sony Life Insurance (Philippines) Corporation in the Philippines
Sony Life commences sales of whole-life comprehensive medical insuranceSony Insurance Planning changes corporate nameto Sony Assurance Inc.
Sony Assurance begins writing automobile insurance
policies via the Internet
Sony Assurance’s
transit advertisement
at the commencementof its operations

OctoberSony Assurance begins writing automobile insurance policies over the telephone2001 April
		Sony Bank Inc. is establishedSony Assurance opens Claims Service Center2001 MaySony Life’s Lifeplanner sales employees commence sales of Sony Assurance’s
automobile insurance

2001 June

Sony Bank commences operations(products comprise ordinary yen deposits, yentime deposits, investment trusts and card loans)Sony Bank launches the MONEYKit service site			Sony Bank’s MONEYKit interface
at the time its operations started

2001 SeptemberSony Bank starts handling foreign currency deposits

Sony Bank’s advertisement
on foreign currency deposits

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2002 March
		
June
		
		

Sony Bank starts offering mortgage loans
Sony Life commences underwriting of group credit life insurance for mortgage loans
extended by Sony Bank
Sony Assurance begins offering medical
and cancer insuranceSony Assurance opens Sapporo
Customer CenterSony Bank begins offering
special-purpose loans
Sony Assurance’s
Customer CenterSony Financial Holdings Inc. is establishedSony Life, Sony Assurance and Sony Bank become subsidiaries of Sony Financial Holdings

JuneSony Bank commences sales of individual annuities offered by Sony Life

OctoberSony Assurance begins offering fire insurance to mortgage loan customers of Sony Bank

DecemberSony Life’s Lifeplanner sales employees begin introducing Sony Bank’s mortgage loans
Sony Life registers Lifeplanner Value trademark

December			Sony Bank begins handling credit card settlements
Sony Bank commences financial products intermediary service

2006 April

Sony Assurance launches “Customers and Sony Assurance Communication Site”

June

Sony Bank launches mobile banking service

SeptemberSony Life opens Life Planning SQUARE
showroom in the Sony Building in Ginza, Tokyo
Sony Life ties up with Watami Co., Ltd.
in the nursing care business		Sony Life’sLife Planning SQUARE

October		Sony Bank begins offering new card loans
Sony Life completes construction of Sony City, the new headquarters of Sony Corporation2007 June

Sony Bank establishes a wholly-owned subsidiary, Sony Bank Securities Inc.

AugustOctober		
December
2008 MarchMay

History of the Sony Financial Holdings Group

2005 July

Sony Financial Holdings

2004 April
			Sony Life establishes AEGON Sony Life Planning Co., Ltd.
Sony Bank Securities and Sony Bank to launch securities intermediary services
Sony Financial Holdings is listed on the First Section of the Tokyo Stock ExchangeSony Life receives permission to handle banking agency business for Sony Bank
Sony Bank to become wholly-owned subsidiary of Sony Financial Holdings
Sony Bank begins offering foreign exchange margin transactions

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FY2007 Topics

April 2007
Sony Bank Begins Offering Sony Life Mortgage Loan Group Credit
Life Insurance Rider to Cover Three Major Diseases
Sony Bank began offering an insurance rider for protection against three majordiseases. Sony Life is the life insurance underwriter on this mortgage loan groupcredit life insurance. Under the rider, insured parties who are diagnosed with cancer, myocardial infarctions or cerebral embolisms are entitled to receive claim
payments equivalent to their outstanding mortgage loan balances.

June 2007
Sony Bank Establishes Sony Bank Securities

Sony Financial Holdings

In June 2007, Sony Bank established Sony Bank Securities Inc. as its whollyowned Internet securities subsidiary, and in October began offering securities
intermediary services via this company. By establishing the systems to offer
shares and other marketable securities as well as deposits, investment trusts andother asset management products via its MONEYKit site, Sony Bank aims to offer
unique securities intermediary services. By raising the convenience of cash settlements between banking and securities transactions, as well as enhancing thelineup of products and services, Sony Bank will keep responding to more broadbased customer needs for asset management over the medium to long term.

August 2007

FY2007 Topics

Sony Assurance Revises SURE Medical and Cancer
Insurance Policies

SURE medical and cancer insurance
product pamphlet.

Sony Assurance made the second revision of SURE medical and cancer insurance,
for which the company commenced sales in June 2002. The revision became
available as of November 1, 2007. In preparation for the revision Sony Assurance
began canvassing for applications in August 2007. These policy revisions include
a new type of protection that deals with risks associated with extended life spans,by doubling the maximum number of days per hospitalization for illnesses otherthan cancer and injury to 120 days* for policyholders aged 60 or older. In addition, the policy premiums are half of those applied before the policyholders celebrated their 60th birthday. Other revisions include a bone marrow donor support
rider for SURE policyholders and extension of coverage for illnesses other thancancer and injury to pay hospital costs even for patients undergoing same-day,in-out hospitalization.* By expanding the protection of SURE policies, Sony
Assurance has responded to customers’ needs.
* As in the past, in the event of hospitalization these policies pay an unlimited number of days of hospitalization
claims for same-day, in-out hospitalization, regardless of age.

August 2007
Sony Life Establishes AEGON Sony Life PlanningSony Life established AEGON Sony Life Planning Co., Ltd., as a 50–50 joint venture with the AEGON Group of the Netherlands. AEGON Sony Life Planning is preparing the way to establish a life insurance company that will develop individual
annuity products for sale at the counters of banks and other financial institutions,as well as through the Lifeplanner sales channel. We are currently targeting tocommence operations at the new company within FY2008.

October 2007
SFH Lists Its Shares on the First Section of the Tokyo
Stock Exchange

SFH President and Representative Director
Teruhisa Tokunaka rings the bell at theTokyo Stock Exchange.

On October 11, 2007, SFH listed its shares on the First Section of the Tokyo
Stock Exchange (TSE), with the securities code of 8729. Through this move, we
continue to aim at being the financial group most trusted by its customers for theprovision of better products and services. As a listed company, we will strive tomeet shareholder expectations by strengthening our management base andenhancing our corporate value.

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October 2007
Sony Assurance Launches On the Day, Any Day, Response Service
On October 1, 2007, Sony Assurance added the On the Day, Any Day, Response
service to its accident services. This new service exemplifies the company’s commitment to making an initial response to accident reports and conveying results topolicyholders on the day the reports are received—even on holidays and weekends.* By adding this commitment to existing services, such as accepting accident reports 24 hours a day, 365 days a year, and a commitment to automobile
insurance policyholders to provide an initial response by an appointed staff member within three hours of receiving an accident report,** Sony Assurance is determined to promptly ease the anxiety policyholders feel when they have an accident.
* This response time is for accident reports received (and confirmed as having the information needed for an initial response) and completed by 8 p.m. for which Sony Assurance is eligible to negotiate an amicable settlement on accident compensation. (Accident reports received between 8 p.m. and midnight are handled thefollowing day.)** This response time is in the event of an accident report completed on a weekday, between 9 a.m. and 5 p.m.

Sony Life to Conduct Banking Agency Business on Behalf ofSony Bank
Sony Life received permission from the relevant authorities to conduct banking
agency business on behalf of Sony Bank. Sony Life’s Lifeplanner sales employees
have handled clerical work on Sony Bank’s mortgage loans in the past. This opportunity enables them to also explain Sony Bank’s mortgage loan products, as wellas to deliver applications, from January 2008. At Life Planning SQUARE, the showroom Sony Life operates in the Sony Building in Ginza, Tokyo, and Sony Life begansetting up new accounts at Sony Bank for customers in addition to handling SonyBank’s mortgage loans.

Sony Bank Becomes a Wholly-Owned Subsidiary of SFH
In March 2008, SFH acquired from Sumitomo Mitsui Banking Corp. the remaining
12% of outstanding shares in Sony Bank, converting Sony Bank to a whollyowned subsidiary. This move was designed to accelerate growth strategies bystrengthening solidarity within the SFH Group.

FY2007 Topics

March 2008

Sony Financial Holdings

December 2007

Sony Life Reports Results of Investigations into the Status of
Claims and Other Payments
Sony Life conducted investigations into the status of claims and other payments from FY2001 to FY2005 and publicly reported its results. We offer our
deeply felt apologies for the insufficient claims and other payments that cameto light as a result of this investigation. To prevent such a situation from recurring, Sony Life has established a claims payment management system andregards this as a top management priority. As one aspect of this enhanced
focus, Sony Life established a special project team to strengthen its management structure related to the payment of insurance and other claims. The
team reports directly to Sony Life’s president and representative director. The
company is enhancing its provision to customers of information related to payments and developing large-scale systems to improve payment operations. As
part of this effort to strengthen its management structure related to the payment of insurance and other claims, in August 2007 Sony Life commencedquarterly disclosure on its website on the status of insurance claims and benefit payments and the number of customer complaints.

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About Sony LifeManagement Message

Management Message

Sony LifeURL http://www.sonylife.co.jp/(Japanese only)

28

Sony Life’s mission is to work for customers’ economic
protection and stability by offering reasonable life insurance products and high-quality services. In pursuit of thismission, Sony Life works to provide protection optimally
tailored to each customer, as well as detailed follow-up
services, through consultations conducted by its
Lifeplanner sales employees and Partners (independentagencies).
In FY2007, our new policy amount rose 10.9% fromthe previous fiscal year, to ¥3,802.5 billion. Policy
amount in force* has continued to grow since the startof the Company’s operations, totaling ¥31,497.3 billion
as of March 31, 2008, up 4.1% from a year earlier. The
lapse and surrender rate** (individual life insurance)
remained low, at 6.27%. We are convinced that thesefavorable results reflect customers’ satisfaction with our
method of offering protection based on each customer’slife plan, as well as our detailed follow-up services. For
example, even after a policy is signed, we review customer protection on an ongoing basis as their lifestyles
change. However, we refuse to be content with our current performance. We are pursuing even higher quality
levels to keep meeting customers’ expectations into the
far-distant future.
On the other hand, the situation came to light that we
had inadvertently underpaid or failed to pay certain
claims and, in FY2007, we notified all customers potentially affected and made restitution. To prevent this situation from recurring, we have made the establishment of aclaims payment management system a top priority. In
addition to introducing preventative measures, we haveput ongoing customer follow-up procedures into place.
To win back customers’ trust, we will keep striving toraise our service levels.
In December 2007, we received permission to conduct
banking agency business on behalf of Sony Bank. This
opportunity enabled our Lifeplanner sales employees to
explain Sony Bank’s mortgage loan products, as well as
to deliver applications, starting from January 2008. As aresult, our Lifeplanner sales employees can respond better to specific customer questions on mortgage loans.
We will continue working toward delivering comprehensive consulting services that match customers’ life plansand providing services from a customer-oriented
viewpoint.
Sony Life aims to accompany its customers throughlife’s milestones, helping them reach their dreams. We
chose Lifeplanner Value as our corporate slogan toexpress what we want to provide to customers. By ensuring that all employees pursue these values, we aim toearn and maintain the support and trust of ourcustomers.
July 1, 2008

Taro Okuda
President, Representative Director
Sony Life Insurance Co., Ltd.

* The new policy amount and policy amount in force are the total of individuallife insurance and individual annuities.
** The lapse and surrender rate is expressed as a ratio of cancellations orlapses that is modified due to the reduction, increase and reinstatement of
the total policy amount in force and divided by the total policy amount inforce at the beginning of the fiscal year.

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Industry Trends and Sony Life’s Characteristics
Japanese Life Insurance Industry

Sony Life

The Japanese life insurance market is the second largest in the world, following that of theUnited States. However, as Japan’s macroeconomic climate is characterized by a declining population, new policy amounts and policy amount in force for the Japanese life insurance market
have continued to decline from their peaks in the 1990s.
By product, there is no change in that the death protection field accounts for the majority of
the life insurance market. However, market demand in terms of the functions required for life
insurance is shifting from protection if the unexpected occurs to protection that offers policyholders stability and safety as they pass through life’s milestones. In this environment, the industry is
experiencing growing demand for so-called third-sector products, such as medical and nursing
care insurance, as well as individual annuities.
In FY2007, the industry was marked by various insurers’ efforts to recover the trust of theirpolicyholders by establishing systems to ensure the appropriateness of claims and other payments. Meanwhile, the life insurance market became more competitive, owing to the October2007 privatization of Japan Post and the December 2007 lifting of the ban on sales of insurance
products at bank counters. The overall investment environment also became more difficult, facing
stock market declines in the second half of FY2007 triggered by such crises as the subprime
loan issue in the United States. This situation caused declines in unrealized gains on marketablesecurities held as investment assets in the insurance industry.

Sony Life’s Characteristics
Industry Trends and Sony Life’s Characteristics

Sony Life’s most salient feature is the provision of tailor-made life insurance through a consultingbased sales approach, which uses life planning as the basis. Products are delivered through thecompany’s Lifeplanner sales employees and Partners (independent agencies), who have broadranging expertise and experience. Even after customers purchase policies, the company provides
after-sale follow-up services, reviewing each policyholder’s changing circumstances to ensure
appropriate levels of protection. Customers’ support of this finely tuned approach to providing
services is one reason that Sony Life has expanded its policy amount in force every year since
inception, despite the industry’s overall downward trend.
Sony Life offers an extensive lineup to meet the diverse needs of its customers, with protection-oriented products, such as death protection insurance, accounting for approximately 80%
of its in-force policies. Customer demand for protection-oriented products, however, is generally
latent. Therefore, life planning or consultations that Lifeplanner sales employees and Partners
perform, based on their risk analysis of each customer’s progress along life’s milestones, help
customers uncover the necessity for death protection and other protection-oriented products.
This approach is one reason that death protection products account for such a significant­proportion of in-force policies.
To meet the strong demand for individual annuities, in August 2007 Sony Life, together with
the AEGON Group of the Netherlands, established a preparation company, AEGON Sony Life
Planning Co., Ltd. This new company is preparing the way for the establishment of a life insurance company that will develop individual annuity products for sale at the counters of banks andother financial institutions, as well as through the Lifeplanner sales channel. At present, the­commencement of sales of these products is planned for FY2008.

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Sony Life’s Products and Services

Sony Life’s Major Initiatives in FY2007
Sony Life Receives Permission to Conduct Banking Agency Business on Behalf of Sony BankIn December 2007, Sony Life received permission from the relevant authorities to conduct banking agency business onbehalf of Sony Bank. In addition to introducing Sony Bank’s mortgage loans through its Lifeplanner sales channel, Sony
Life’s permission to conduct banking agency business allowed the company to provide the following services fromJanuary 2008:
Lifeplanner sales employees may explain the details of Sony Bank’s mortgage loans and deliver applications.
At Life Planning SQUARE, the showroom Sony Life operates in the Sony Building in Ginza, Tokyo, Sony Life may
handle Sony Bank’s mortgage loans as well as set up new accounts at Sony Bank for customers.

Products and Services

Sony Life

New Product: Sony Life Offers Whole-Life Cancer Insurance (08) (Non-Profit)
On April 2, 2008, Sony Life commenced sales of a new product, whole-life cancer insurance (08) (non-profit). This
product provides wide-ranging protection over a long period; the policy covers costs associated with diagnosis throughto post-hospitalization due to cancer, in addition to death. Furthermore, introducing a policy structure that features alow surrender payment enabled Sony Life to offer the new product at reasonably priced premiums.
Policy Features
Coverage provides intensive cancer protection
The policy provides lifelong protection that covers hospitalization, surgical procedures and death caused by cancer.
Furthermore, the number of days for which cancer hospitalization benefits are available are not limited, nor are thenumber of times that benefits on surgical procedures may be paid. As a result, policyholders are secure even in theevent of long-term hospitalization.
In-home medical care covered
The policy provides post-hospitalization care benefits for policyholders who are released into medical care from thehospital where they were treated for cancer.
Patients select their own diagnosis benefit, as a multiple of either zero or 100 times the daily cancer
hospitalization benefit
Policyholders can select a diagnosis benefit multiple of 100 or zero. By selecting 100, the policyholder receives a
one-time cancer diagnosis benefit corresponding to 100 times the daily cancer hospitalization benefit. Selecting adiagnosis benefit multiple of zero means that the policyholder will not receive the protection of a cancer diagnosis
benefit, but that policy premiums will be lower.
Low surrender payment rider allows policyholders to pay lower premiums
In case the policyholder chooses to add a low surrender payment rider, no surrender payment is made if the policy iscancelled during the policy payment period but policy premiums are commensurately lower.
Death benefit paid, even if death results from a factor other than cancer

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Television Commercials
Lifeplanner Value
The “Each and every memory” commercial traces
the thoughts of a Lifeplanner as he/she recalls eachof the details his/her customer has shared during
the long times that they have spent together. “Eachand every memory of that family is an important
asset to me,” runs the tagline. The commercial
demonstrates the spirit with which Lifeplanner sales
employees protect their customers, the extensive
time they spend together preparing for the future
and the deep trust-based relationship they have built.

Social Contributions“Talking together about our dreams for the future”
is a documentary commercial with the theme ofthe social contribution activities of Sony Life’s
employees. The ties, dreams and emotions thatemerge through social contribution activities open
up whole new vistas for many employees who
participated. (See pages 22–23 for more details).

Sony Life

Establishment of a Preparation Company: AEGON Sony Life Planning Co., Ltd.

Name:
AEGON Sony Life Planning Co., Ltd.
Head Office:9-11, Akasaka 2-chome, Minato-ku, Tokyo, Japan
Established:
August 29, 2007
Common Stock: ¥2.0 billion
Ownership:
50% Sony Life Insurance Co., Ltd., 50% AEGON International B.V.
Business:
Study, planning, market research, advertising and promotion of life insurance business

Products and Services

Sony Life established AEGON Sony Life Planning Co., Ltd., as a 50–50 joint venture with the AEGON Group. The newcompany is preparing to establish a life insurance company that will develop individual annuity products for sale at thecounters of banks and other financial institutions, as well as through the Lifeplanner sales channel. The start of sales isplanned for FY2008.

(As of July 1, 2008)

Credit Rating(As of July 1, 2008)

Rating Institution

Rating Information

Rating and Investment Information, Inc. (R&I)

Insurance claims paying ability

AA (A very high capacity for payment of insurance
claims)Japan Credit Rating Agency, Ltd. (JCR)

Ability to pay insurance claims

AA (A very high capacity to honor the financial
commitment on the obligation)

Moody’s Investors Service, Inc.

Insurance financial strength rating

Aa3

A.M. Best Company, Inc.

Financial strength rating

A+ (Superior)Standard & Poor’s Corp. (S&P)

Financial strength rating

A+ (Strong)

Note: The above ratings were assigned after Sony Life’s official request for ratings. These ratings are based on the rating agencies’ opinions, and are not a guaranteeof claim payments in the future. These ratings are based on the numbers and information available at a specific point in time, and may be changed in the future.
Please refer to the respective website of each agency for more details.

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About Sony AssuranceManagement Message

Management Message

Sony Assurance

URL http://www.sonysonpo.co.jp/(Japanese only)

In FY2007, the number of policies in force, primarily for
automobile insurance, grew steadily, and the total number of automobile insurance and medical and cancer
insurance policies in force exceeded one million. Net premiums written rose 9.0% year on year, to ¥55.0 billion,
and adding in investment income, ordinary revenues
increased 9.1% from the previous fiscal year, to a record¥55.6 billion. Although the efficiency of operating
expense declined due to an increase of system-related
expenses, the increase in ordinary revenues as well as astable amount of claims paid resulted in higher ordinary
profit, up 37.8% from the preceding fiscal year, to arecord ¥2.8 billion. Net income grew 36.7%, to ¥2.1 billion. We also achieved a sufficient solvency margin ratioof 1,073.9% as of March 31, 2008.
These year-on-year increases in revenues and profits in
FY2007 resulted in record levels of financial performancefor the company.
Sony Assurance, under the slogan Feel the Difference,
endeavors to continuously improve its services anddeliver more value to customers. In FY2007, we revised
our SURE medical and cancer insurance by reducing thepremiums while expanding protection for policyholders
after they reach their 60th birthday. We also added toour product lineup by offering policies related to longevity. Regarding our accident response service for automobile insurance, we added the “On the Day Safe 365”service to the services that we began offering in October
2006. Our dedication to creating value that customers
can feel and our attitude of moving forward in step withour customers are expressed clearly on the Customers

and Sony Assurance Communication Site on our website.
The Customers site introduces our initiatives toward creating differences that customers can intuitively know. As
another step in this direction, in FY2007 we created theCustomer Response Promotion Division to enhance our
response to customer feedback and reflect their comments in product and service improvements.
FY2007 was also significant for us in that our holding
company, Sony Financial Holdings, listed its shares on
the First Section of the Tokyo Stock Exchange. We
believe that this represents a major step toward enhancing our corporate value. Although we are convinced thatthe overall market for direct insurance will continue toexpand, we will continue to augment our services andmarketing, raise operational efficiency, strengthen ourorganizational base, and enhance our competitiveness inour drive to grow as the leading provider of direct
insurance.
July 1, 2008

Shinichi Yamamoto
President, Representative Director
Sony Assurance, Inc.

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Industry Trends and Sony Assurance’s Characteristics
Japan’s Non-Life Insurance Industry

Sony Assurance’s Characteristics* The share is for direct premiums written on automobile insurance in FY2007.
** This response time is for accident reports received (and confirmed as having the information needed for an initial response) and completed by 8 p.m. for which Sony Assurance is eligible to negotiate an amicable settlement on accident compensation. (Accident reports
received between 8 p.m. and midnight are handled the following day.)Industry Trends and Sony Assurance’s Characteristics

Sony Assurance entered the non-life insurance market in October 1999 as a direct insurance
provider. Since that time, the company has concentrated on maintaining direct relationships witheach customer and continuously providing new value for them. Sony Assurance offers automobile
insurance, which is risk-segmented to offer extensive coverage with reasonable premiums, andmedical insurance featuring wide-ranging protection for reasonable premiums. Automobile insurance
policies account for approximately 90% of Sony Assurance’s policies in force. Furthermore, Sony
Assurance has maintained a leading position among Japan’s six direct insurance providers, withapproximately a 30% share* of the domestic direct insurance market.
As for customer service, Sony Assurance added the On the Day, Any Day, Response service
to its existing commitment to its automobile insurance policyholders. This service is a guarantee
to provide an initial response by an appointed staff member within three hours of receiving an
accident report. The new service exemplifies the company’s commitment to making a rapid initial
response to accident reports and conveying the results to policyholders on the day the reports
are received—even on holidays and weekends.** Sony Assurance operates under the slogan, Feelthe Difference—a difference that will change insurance. The company maintains high levels ofcustomer satisfaction by enhancing service levels to provide customers with valuable products witha difference that could only come from Sony Assurance. This customer satisfaction has resulted inenhanced profitability, enabling the company to steadily increase its profits in FY2007, following theprevious fiscal year when the company moved into the black.

Sony Assurance

Japan’s non-life insurers have placed top priority on strengthening internal controls and various
operational improvements to recover customers’ trust and to prevent the recurrence of such issues
as the inadvertent nonpayment of claims on insurance coverage additional to automobile insurance,
inappropriate claims payments on medical insurance and other third-sector products and mistaken
premiums on fire insurance.
In FY2007, the industry was affected by only a few natural disasters, but the environment
surrounding the sales of fire insurance continued to be severe, owing to a decline in housing starts.
In automobile insurance, premium income fell marketwide, in line with declines in the number of newvehicle sold, the shift toward mini-vehicles and a trend in which insured parties with good driving
records become eligible for preferential premium rates upon renewal of their policies. The outlook forthe automobile insurance market is particularly severe as the number of vehicles owned is unlikely toincrease significantly, partially influenced by sharply higher crude oil prices.

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Sony Assurance’s Products and Services

Providing Valuable Differences to Customers
To provide customers with valuable differences that could only come from Sony Assurance, the company aims tofacilitate better communications with customers by placing a high value on customer input and providing services thatmeet their needs.

Developing Sony Assurance’s Original Products
Owing to its focus on providing products that customers value, Sony Assurance has created a number of original
products. For automobile insurance, these include the Kurikoshi discount system and the Oritemo coverage policy rider.
For medical and cancer insurance, the company offers a half-price policy structure for policyholders from age 60. Goingforward, the company will continue developing products to provide value that could only come from Sony Assurance.

Sony Assurance

Customer Centers
Staff at customer centers respond to inquiries via telephone and e-mail, and are on hand to help with contract procedures and to help customers after they have signed contracts. Trained to facilitate smooth communications and ensure
optimal solutions, each staff member at customer centers tries their best to provide quick and easy-to-understandanswers to customers’ questions.

Customer Consultation OfficeSony Assurance, to enhance the value of its products and services and ensure better value, stores all of its customer
comments and requests in a common database, so each department can respond appropriately.

Products and Services

Service Centers
For automobile insurance, service center staff members are on hand 24 hours a day, 365 days a year to respond totraffic accidents via toll-free telephone numbers. After receiving an accident report, a staff member is appointed tocommunicate directly with the customer and provide support until the issue is resolved.
For medical and cancer insurance or fire insurance, a staff member is also appointed to provide beginning-to-end
support, carefully counseling and responding to various questions all the way through to claim payment.

one-on-one club Support Desk
To support customers’ with automobile insurance, Sony Assurance provides one-on-one club service, which includes
free roadside assistance,* and assistance in times of trouble, such as mechanical failure or an accident.*
The one-on-one club support desk provides quick and appropriate responses to customers regarding breakdowns andaccidents, providing them with a sense of security while on the road.
* Customers may be charged in certain cases, depending on the extent of the work required.

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Sony Assurance’s Initiatives in FY2007
Revision of SURE Medical and Cancer Insurance Products

SURE medical and cancer insurance
product pamphlet.

On November 1, 2007, Sony Assurance initiated a revision of its SURE medical
and cancer insurance, one of its core products which the company began offeringin June 2002. While maintaining the features of SURE medical and cancer
insurance, these recent policy revisions, incorporated SURE Smart Fit, which
includes a new type of protection that deals with risks associated with extended
life spans, by doubling the maximum number of days per hospitalization for
illnesses other than cancer and injury for policyholders 60 and older, comparedwith those applied before the policyholders celebrate their 60th birthday.* Other
revisions include a bone marrow donor support rider available for all SURE medical
and cancer insurance policies, which reduces the economic burden for policyholders who are hospitalized as they can donate stem cells from bone marrow.
Furthermore, the recent revision extended coverage for illnesses other thancancer and injury to pay hospital costs even for outpatients.*

On the Day, Any Day, Response Service Offering Begins
In addition to Sony Assurance’s commitment to automobile insurance policyholders to provide an initial response by an appointed staff member within threehours of receiving an accident report,* on October 1, 2007, the company introduced the On the Day, Any Day, Response accident response service. In thisservice Sony Assurance commits to make an initial response to accident reports
and convey its results to policyholders on the day the reports are received—even
on holidays and weekends.** Through this service Sony Assurance seeks topromptly ease the anxiety policyholders feel when they experience an accident.

Companywide ISO 27001 Certification for Information Security Management

Certification mark, BSI mark.

Sony Assurance has always been keenly aware of the importance of strictly
managing the various information assets that it handles, such as customers’
personal information. Accordingly, the company has been aggressive in its efforts
to create security management systems. On June 20, 2007, Sony Assurance
became the first Japanese non-life insurer to receive ISO 27001 certification for
an information security management system.* This certification represents anobjective evaluation and verification of Sony Assurance’s initiatives to appropriately
establish and maintain operational and management systems for its information
assets.

Products and Services

Website page introducing the On theDay, Any Day, Response service.

* This commitment is in the event of an accident reported on a weekday, between 9 a.m. and 5 p.m.
** This response time is for accident reports received by telephone (and confirmed as having the informationneeded for an initial response) and completed by 8 p.m. for which Sony Assurance is eligible to negotiate anamicable settlement on accident compensation. (Accident reports received between 8 p.m. and midnight arehandled the following day.)Sony Assurance* As in the past, in the event of hospitalization caused by cancer, these policies pay an unlimited number of daysof hospitalization claims even for day case, regardless of age.

* Based on Sony Assurance’s findings as of June 20, 2007. The search excludes insurers that do not disclose
their receipt of certification.

Expanded Website Contents on Accident Response Services

Website page introducing Sony
Assurance’s accident resolution
capabilities.

On October 17, 2007, Sony Assurance introduced content on its website outlining
the company’s accident resolution capabilities. This addition provides security toSony Assurances’ policyholders as well as people who are considering thepurchase of Sony Assurance’s automobile insurance by explaining the status of its
accident response services in a concrete and easy-to-understand manner as wellthe quality of its accident response services. The content includes comments of
employees who are in charge of providing Sony Assurance’s accident response
services, as well as input from 10,000 customers who have used these services.
The content also explains the points that many people may be uncertain about
concerning direct insurers’ accident response services.

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About Sony BankManagement Message

Management Message

Sony Bank

URL http://sonybank.net/(Japanese only)

In FY2007, Sony Bank on a non-consolidated basis
posted ordinary profit of ¥2.7 billion. Since moving into
the black in FY2005, we have consistently made profits
even on a quarterly basis.
The fundamental reason for our increase in profits is ahigher retail balance (the balance of customer transactions). Since our commencement of operations in
FY2001, we have concentrated on being an asset management bank for independent individuals. In FY2007,
deposits reached ¥1 trillion. Viewed in more detail,strong performance on yen time deposits pushed the balance of yen deposits to ¥892.6 billion as of March 31,
2008, up ¥288.2 billion from the end of previous fiscal
year. We attribute this performance to the trust we haveearned with our customers, and believe we are benefitingfrom a broader-based customer understanding of our policies on providing products and services.
FY2007 also marked a major qualitative turning point
in profitability. On an internal management basis, net
interest income, a stable income driver, exceeded general and administrative expenses. In other words, despite
major upheaval in the financial environment we succeeded in ensuring our profits and raising the profit level.
We believe these results demonstrate that Sony Bank’s
growth has now moved on from the foundation-building
phase to a “second launch” phase. As the banking business largely depends on economies of scale, over the
medium term we aim to enhance win–win relationships
with our customers by accelerating our growth and raising our efficiency. Through these efforts, we will strive toestablish ourselves as the clear leader in customer
satisfaction.
We consider FY2008 the first year of our second
launch, and we plan to focus on enhancing products andservices that will propel our medium-term growth. In May
2008, in response to customer demand we introduced
foreign exchange margin transactions. Going forward, weplan to strengthen our lineup of securities management
services via our subsidiary, Sony Bank Securities.
“Being fair” is Sony Bank’s corporate philosophy, andwe aim to conduct all our corporate activities in line withthis philosophy. In FY2008, we switched to green electricity as the source of power we use at headquarters.
Also, as a customer service initiative we started offering
products on which we purchase emission rights on behalfof customers when they invest. As these examples show,
we intend to conduct our environmental activities in amanner that is fair to the environment, as we contributeto society as a corporate citizen.
Sony Bank is making a new leap forward.
July 1, 2008

Shigeru Ishii
President, Representative Director and CEO
Sony Bank Inc.

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Industry Trends and Sony Bank’s Characteristics
The Japanese Banking Industry

Sony Bank

In the Japanese banking industry, the September 2007 introduction of the Financial Products
Exchange Law created a framework to protect users of a broad range of financial products. In
addition, the lifting of the ban on banks offering securities intermediary business, as well as salesof insurance products at bank counters, opened the door to a host of additional service offerings.
Furthermore, the privatization of postal services and the entry into the banking industry of retailcompanies, Internet-related firms and other companies from other industries has significantly
reshaped the management environment. Banking institutions have also begun reinforcing theirofferings of financial products and services targeting individuals. As a result, Sony Bank faces anincreasingly competitive environment in its main market of providing banking services targeting
individuals and must provide products and services of higher quality in order to compete.
Triggered by such crises as the U.S. subprime loan issue, the Japanese stock market wasaffected in the second half of 2007 by concerns over U.S. economic deceleration and a lack oftransparency about the financial circumstances of leading European and U.S. financial institutions.
Following a drop, the Japanese stock markets began moving into an adjustment phase. In thebanking industry, certain banks suffered investment losses in relation to the subprime loan issue.

Sony Bank’s Characteristics

Industry Trends and Sony Bank’s Characteristics

Sony Bank provides highly convenient, quality financial products and services to individual customers
over the Internet, with a focus on customers’ asset management. By differentiating itself frombrick-and-mortar banks that offer full-fledged services and from other new entrants that focus on
settlement services, Sony Bank has maintained a unique position by concentrating on providing retailasset management products such as yen deposits, foreign currency deposits and investment trusts,
as well as mortgage loans and other loan products, via the Internet at reasonable rates closely linked
with market conditions. Demonstrating customers’ high regard for this independent positioning andunique business development, the number of accounts at Sony Bank exceeded 600,000 in March
2008 and average customer assets (deposits and investment trusts) per account exceeded ¥2.0
million as of March 31, 2008, indicating that customers were taking advantage of the characteristics
of Internet banking to support their asset management needs.
In FY2007, Sony Bank demonstrated its competitive advantage. The bank introduced a number of
initiatives, positioning the year as a period of building the foundations for growth. In April 2007, Sony
Bank renewed the post-login screens on its service sites to increased usability, and in May 2007
the bank also commenced operations during the Japanese Golden Week holidays with the aim ofproviding even more convenient, high-quality financial services. In August 2007, the bank introduced
a preferential system for foreign currency deposits, offering several preferential interest rates on
foreign currency time deposits, reduced exchange fees and commissions on limit orders, depending
on customer’s balance of foreign currency deposits. In October 2007, Sony Bank Securities, SonyBank’s wholly-owned subsidiary, commenced operations. Offering intermediary services throughSony Bank Securities, Sony Bank began offering transactions, ranging from deposits to stocks,
on its MONEYKit service website. In January 2008, Sony Life began conducting banking agency
business on behalf of Sony Bank, starting with an offering of mortgage loans via Sony Life’s
Lifeplanner sales employees.

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Sony Bank’s Products and Services

Sony Bank’s Products and Services
Service Sites
As an Internet bank without any physical branches, Sony Bank conducts its operations through websites. These include
a corporate site that disseminates information about the bank and service sites that customers use for their banking
transactions.

Customer

Disclosure

Corporate site

(Japanese only)

An overview of Sony Bank, the bank’s
corporate philosophy and other disclosurematerials are available.

Transactions and communications
Service sites

Internet Banking Site
http://moneykit.net/

Mobile Banking Site
http://mb.moneykit.net/(Japanese only)

Sony Bank

http://sonybank.net/(Japanese only)

Note: After logging in, users can move freely among the different interfaces.

Before login

After login
MONEYKit

Products and Services

MONEYKit-ACTIVE

In addition to logging
in to the service site,
the user can view thelist of products thebank handles.

MONEYKit-PostPet

Based on the concept of the bank thatyou carry with you, this mobile banking
site aims to provide highly convenientbanking services.
Note: Sample screen.

Main Products and Services
Products • Yen deposits (ordinary yen deposits, yen time deposits, thrift saving deposits)• Foreign currency deposits (ordinary foreign currency deposits, foreign currency time deposits, foreign
currency time deposits with special terms)• Foreign exchange margin transactions• MONEYKit GLOBAL (Cash card service settled in U.S. dollars)• Investment trusts (62 funds by 26 companies, as of July 1, 2008)• Card loans   • Special-purpose loans (educational loans, new-vehicle loans, general-purpose loans)• Mortgage loans   • Insurance   • Securities intermediation   • Credit card
Services • Life Passbook (includes portfolio analysis and a life plan simulator)• Foreign exchange chart (shows exchange rates from yen into eight currencies and from U.S. dollars into
seven currencies)• Market news and reports (continuously updated financial market information delivered in real time)• RiskGrade (indicator for determining risk of financial assets)• Stock Gear (tool for understanding stock market movements and to help pick stocks)

Customer Center
Customer center staff members with specialized knowledge communicate with customers via telephone and e-mail,answering their questions.

Affiliated ATMs
Customers can withdraw and deposit cash or transfer funds through ATMs operated by the following organizations
affiliated with Sony Bank.
• ATMs operated by Sumitomo Mitsui Banking Corporation• “@B NK” ATMs at the am/pm convenience store chain (except those in Fukuoka Prefecture)• ATMs operated by the Bank of Tokyo–Mitsubishi UFJ, Ltd. (except some ATMs located in hospitals and schools)• Nationwide ATMs operated by Japan Post Bank
• Seven Bank ATMs
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Sony Bank’s Major Initiatives in FY2007
In FY2007, Sony Bank demonstrated its competitive advantage. The bank introduced a number of initiatives, positioning
FY2007 as a period of building the foundations for growth.

April 2007

Sony Bank Begins Offering Mortgage Loan with Sony Life’s Group Credit Life
Insurance Rider to Cover Three Major Diseases

Sony Bank began offering an insurance rider for protection against three major diseases on the bank’s mortgage loangroup credit life insurance, which is underwritten by Sony Life. Under the rider, insured people who are diagnosed
with cancer, myocardial infarctions or cerebral embolisms are entitled to receive claim payments equivalent to theiroutstanding mortgage loan balances.

June 2007

Sony Bank Establishes Sony Bank Securities and Launches Securities­Intermediary ­Services via Sony Bank Securities in October

August 2007

Introduction of Preferential System on Foreign Currency Deposits

January 2008

Elimination of All Fees for Accelerating Mortgage Loan Payments

March 2008

Sony Bank Begins Offering “Life Passbook,”a New Money Management Tool

The bank introduced a preferential system for foreign currency deposits. Depending on the three levels set based on
the yen equivalent amount of a customer’s foreign currency deposit balance at the end of each month, Sony Bank offers
preferential interest rates on foreign currency time deposits for the second following month, reduced exchange feesand reduced commissions on limit orders.

Sony Bank

In June 2007, Sony Bank established Sony Bank Securities Inc. as a wholly-owned specialized Internet securities
subsidiary, and in October 2007 began offering securities intermediary services through this company. By adding
securities offered through highly convenient Sony Bank Securities to Sony Bank’s offerings and using MONEYKit, the“money toolbox,” Sony Bank is working aggressively to meet broad-based customer needs for asset management.

From the standpoint of raising its level of service on mortgage loans, Sony Bank has eliminated all fees previously
associated with changing the type of interest and accelerating mortgage loan payments.
Products and Services

To bring financial products even closer to customers’ daily lives, Sony Bank
introduced Life Passbook, a money management support tool with five functions,
including portfolio analysis and a life plan simulator.

Foreign Exchange Margin Transactions—Facilitating Trades That Are Closer to the Market—
To meet its customers’ broad-ranging foreign
currency investment needs, in May 2008
Sony Bank began handling foreign exchange
margin transactions. This new service facilitates trades that are closer to market essentially 24 hours a day, 365 days a year. This
service is featured as it forges a stronger
link between margin money and deposits
and allows smooth transfers even in foreign
currencies. In addition, delivery (settlementon spot) is also available.

Life Passbook Money Map
This analysis chart helps customers visualizebalance information from the standpoint of
profitability and risks

Credit Rating(As of July 1, 2008)

Rating Institution

Standard & Poor’s (S&P)

Rating Information

Long-term credit ratingA–

Short-term credit rating

A–2

Note: The above ratings were assigned on Sony Bank’s official request for ratings. These ratings are based on the rating agency’s opinions, based on the numbers
and information available at a specific point in time, and may be changed in the future. Please refer to Standard & Poor’s website for more details.

39

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Analysis of Operating Performance for FY2007

Operating Results

Analysis of Operating Performance for FY2007 (SFH)

Sony Financial Holdings

SFH

SFH’s consolidated ordinary revenues grew 8.3% during FY2007, to ¥822.1
billion, owing to better performances in all businesses: life insurance, non-life
insurance and banking. In the life insurance business, the policy amount in force
remained robust, boosting income from insurance premiums, while generalaccount investment income also rose, resulting in a 7.5% increase in ordinary
revenues, to ¥741.3 billion. In the non-life insurance business, net premiums
written increased in line with a steady rise in the number of policies, mainly for
automobile insurance, pushing up ordinary revenues 9.1%, to ¥55.6 billion. In thebanking business, higher business volume boosted interest income, such as
interest on loans. Ordinary revenues from the banking business consequently
increased 33.4%, to ¥25.9 billion.
Consolidated ordinary expenses rose 5.0% compared with the previous fiscal
year, to ¥777.6 billion, in line with higher expenses in all businesses. In the life
insurance business, ordinary expenses grew 4.0%, to ¥702.2 billion, owing tohigher insurance claims and other payments, despite the absence of an increase
in FY2007 of the provision for policy reserve as was incurred in FY2006. In the
non-life insurance business, net losses paid rose on an increase in the number ofpolicies in force, helping ordinary expenses to grow 7.9%, to ¥52.8 billion. In thebanking business, higher interest expenses and the increase in deposits pushed
up ordinary expenses 30.1%, to ¥23.5 billion.
Consolidated ordinary profit increased 142.5% compared with the previous
fiscal year, to ¥44.5 billion, reflecting stronger performance in all businesses, as
described above. Specifically by business, in the life insurance business ordinary
profit was up 162.5%, to ¥39.0 billion; in the non-life insurance business, ordinary
profit rose 37.8%, to ¥2.8 billion; and in the banking business, ordinary profit
soared 77.4%, to ¥2.4 billion.
SFH posted extraordinary losses of ¥3.8 billion, mainly owing to an increase in
the provision for reserves for price fluctuations in the life insurance business.
Consolidated net income rose 142.0% compared with the previous fiscal year,to ¥24.2 billion, reflecting the increase in ordinary profit.

Financial Condition

As of March 31, 2008, total assets amounted to ¥4,977.4 billion, up 15.1% fromMarch 31, 2007. The principal reasons for this rise were increases to ¥2,930.4
billion in securities (up 10.6%), most of which were Japanese government bonds;¥895.6 billion in monetary trusts (up 24.7%); ¥424.8 billion in call loans and bills
bought (up 27.8%); and ¥455.7 billion in loans (up 19.5%).
Total liabilities amounted to ¥4,715.8 billion, up 16.3% from March 31, 2007.
One of the largest components of liabilities, policy reserve and others, increased
9.4%, to ¥3,454.1 billion. Deposits came to ¥1,143.4 billion, up 52.0%.
Total net assets amounted to ¥261.6 billion, down 3.2% from March 31, 2007.
Of this amount, net unrealized gains on other securities, net of taxes, were ¥74.9
billion on March 31, 2008, down ¥50.1 billion, owing to a market downturn.
The SFH Group has no subprime loan related investments.

Cash FlowsNet cash provided by operating activities was ¥445.4 billion. Major factors
included inflows from a net increase in deposits and higher insurance reserves
that exceeded outflows from a net increase in call loans and bills bought.
Net cash used in investing activities was ¥605.2 billion. The primary reason
was an increase in payments for purchases of securities that surpassed proceedsfrom sales and redemption of securities.
Net cash provided by financing activities was ¥22.3 billion. This amount represents ¥28.8 billion received from the issuance of common stock in line with the
October 2007 listing of SFH’s shares on the Tokyo Stock Exchange, minus ¥6.5
billion in cash dividends paid.
As a result of the above factors, cash and cash equivalents at March 31, 2008,
were ¥136.1billion, down ¥137.5 billion from March 31, 2007.

40

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SFH’s consolidated operating results are composed of the life insurance, non-life insurance and banking
businesses. In this section, we review the operating performance in FY2007 in each business segment.
Operations in the life insurance business include thebusinesses of Sony Life, a wholly-owned subsidiary ofSFH, and Sony Life’s wholly-owned subsidiary, Sony
Life Insurance (Philippines) Corporation.
In FY2007, ordinary revenues in the life insurance
business increased 7.5%, compared with the previous
fiscal year, to ¥741.3 billion, as the policy amount inforce remained robust, boosting income frominsurance premiums, and general account investment
income also rose. Ordinary profit jumped 162.5%, to ¥39.0 billion.

Life
Insurance
Business* In August 2007, Sony Life established an affiliated company, AEGON Sony Life Planning Co., Ltd., but this company
is not included as an affiliate accounted for under the equity method in FY2007.

Sony Financial Holdings

Below, we review the operating performance of Sony Life, excluding Sony Life Insurance (Philippines) Corporation.
Sony Life accounts for the majority of the life insurance business in SFH’s consolidated financial statements.

New Policy Amount

Policy Amount in Force
Policy amount in force is the total coverage that Sony Life’s policies provide forpolicyholders. As of March 31, 2008, total policy amount in force for individuallife insurance and individual annuities increased 4.1% from the end of the previous
fiscal year, to ¥31,497.3 billion. The number of policies in force for individual life
insurance and individual annuities grew 7.1% year on year, to 4,438 thousand.
We believe these figures reflect a high level of satisfaction from policyholders, aswell as high acclaim for Sony Life’s after-sale follow-up services. Although policy
amount in force for the total Japanese life insurance industry has been on a
downward trend since 1996, Sony Life’s policy amount in force—the total ofindividual life insurance and individual annuities—increased ¥1,252.8 billion for
FY2007, continuing its steady growth for each of the 27 years since the company
commenced operations.
Policy amount of individual life insurance in force increased 4.0% from the endof the previous fiscal year, to ¥31,237.0 billion, and individual annuities in force
rose 26.1%, to ¥260.2 billion. In addition, policy amount of group life insurance inforce amounted to ¥937.2 billion, up 3.2%, and group annuities in force totaled
to ¥73.3 billion, up 0.9%.

Analysis of Operating Performance for FY2007 (Life Insurance Business)

In FY2007, Sony Life’s new policy amount—the total policy amount of new
insurance policies sold—for individual life insurance and individual annuities
increased 10.9% from the previous fiscal year, to ¥3,802.5 billion. The number of
new policies for individual life insurance and individual annuities edged up 1.4%,
to ¥524 thousand. Sales of family income insurance and variable life insurance
were robust in FY2007.
Within the new policy amount, individual life insurance amounted to ¥3,744.6
billion, up 10.2% year on year, and individual annuities amounted to ¥57.9 billion,
up 77.7%. Group life insurance amounted to ¥5.9 billion, down 23.3%.
Annualized premiums for new policies for the total of individual life insurance
and individual annuities in FY2007 decreased 3.2% year on year, to ¥63.4 billion.
Of this amount, annualized premiums for medical protection and living benefit
protection products amounted to ¥13.3 billion, down 7.7%.

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Annualized premiums from insurance in force for the total of individual life
insurance and individual annuities as of March 31, 2008, increased 5.0% year
on year, to ¥530.0 billion. Of this amount, annualized premiums for medical
protection and living benefit protection products were ¥122.8 billion, up 4.6%.

Analysis of Operating Performance for FY2007 (Life Insurance Business)

Sony Financial Holdings

Sales of Products
In FY2007, on a policy amount basis, more than 80% of the new policy amount
was death protection-type products. Of the total new policy amount, whole life
insurance accounted for 10.1%, term life insurance for 58.4%, endowment andeducational insurance for 10.0%, variable life insurance for 17.4%, and other for
4.1%. Of all products, sales of family income insurance and other limited-term
insurance products, as well as variable life insurance for individuals, were robust
in FY2007. These results owe mainly to Sony Life’s advantages in providing
reasonable protection at relatively low premiums.

Lapse and Surrender Rate and Persistency Rates
In FY2007, Sony Life’s lapse and surrender rate* for individual life insurance, ona policy amount basis, rose 0.37 percentage point, but remained at the low levelof 6.27%. Persistency rates for individual life insurance, on a policy amountbasis, remained high. The 13-month persistency rate remained flat comparedwith the previous fiscal year, at 95.5%, and the 25-month persistency rate fell
0.2 percentage point, to 90.5%. We believe the low lapse and surrender rate
and the high persistency rates are a result of policyholders’ satisfaction with theway Lifeplanner sales employees and Partners (independent agencies) tailor
products to each customer’s life plan through careful consulting and after-salefollow-up services.
* The lapse and surrender rate is expressed as a ratio of cancellations or lapses modified due to the reduction,
increase and reinstatement of the total policy amount in force.

Income from Insurance Premiums and Insurance Claims andOther Payments
Owing to growth in the policy amount in force, insurance premiums received frompolicyholders in FY2007 rose steadily to ¥646.9 billion, from ¥603.6 billion in theprevious fiscal year. In FY2007, income from insurance premiums increased
7.1%, to ¥648.4 billion, owing to the increase in policy amount in force. On theother hand, insurance claims, benefits and annuities that Sony Life paid to policyholders in FY2007 amounted to ¥60.0 billion (¥59.0 billion in FY2006), ¥28.4
billion (¥25.7 billion in FY2006) and ¥6.3 billion (¥5.1 billion in FY2006), respectively. Insurance claims and other payments, including surrender payments, for
FY2007 amounted to ¥241.1 billion, compared with ¥219.3 billion in the previous
fiscal year. We believe that in FY2007, as in past years, Sony Life was able tocontinue to serve the needs of its policyholders.

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Asset Management

Analysis of Operating Performance for FY2007 (Life Insurance Business)

Unrealized Gains and Losses on Securities
Unrealized gains and losses refer to the differences between the book values andfair values of assets. If fair value exceeds book value, a gain on sales of assets
would be realized by liquidating them at market prices. For this reason, suchunrealized gains act as a provision against various risks. Part of the unrealized
gains and losses on securities and real estate is included in the total solvency
margin—the numerator of the formula—for calculating the solvency margin ratio.
(See page 46.)
Unrealized gains on securities in the general account stood at ¥127.8 billion asof March 31, 2008, down 35.5% from the end of the previous fiscal year. Of thisamount, unrealized gains on Japanese stocks were ¥50.8 billion (compared with
¥130.0 billion one year earlier) and ¥83.4 billion on Japanese bonds (versus¥57.1 billion). Unrealized losses on foreign securities were ¥9.5 billion, whereas
unrealized gains were ¥4.2 billion a year ago.

Sony Financial Holdings

Sony Life’s fundamental investment policy for its general account assets is tobuild a portfolio capable of ensuring stable mid- to long-term returns throughthe efficient investment of funds, taking into account expected returns andinvestment risks and responding flexibly to changes in financial conditions andthe investment environment, while maintaining a sound asset base. We are also
working to ensure stable revenue by taking a strict approach toward risk.
In FY2007, Sony Life followed its strategy of responding flexibly to changes
in the investment environment. In the first half of FY2007, when interest rates
in Japan trended upward, Sony Life invested mainly in long-term Japanese
government bonds. For its investments in convertible bonds, Sony Life concentrated on convertible bonds for which prices had declined due to the issuers’
falling stock prices.
As of March 31, 2008, general account assets totaled ¥3,337.9 billion,
up 6.9%, or ¥214.6 billion, from the end of the previous fiscal year. Within thegeneral account, Japanese government and corporate bond investments totaled¥1,722.8 billion (accounting for 51.6% of total general account assets), Japanesestocks ¥172.9 billion (5.2%), foreign government and corporate bonds ¥154.1
billion (4.6%), foreign stocks ¥24.5 billion (0.7%), other securities ¥12.0 billion(0.4%), monetary trusts ¥893.9 billion (26.8%), policyholder loans ¥108.6 billion(3.3%), real estate ¥82.8 billion (2.5%), and cash and call loans ¥82.1 billion(2.5%). Sony Life holds monetary trusts for accounting classification purposes.
Of these, Japanese government and corporate bonds were ¥778.9 billion andJapanese stocks were ¥33.3 billion, as of March 31, 2008.
Convertible bonds as of March 31, 2008, amounted to ¥427.0 billion (of which,¥139.4 billion were held as monetary trusts), accounting for 12.8% of total
general account assets.

* As of March 31, 2008, Sony Life assumed unrealized gains on Japanese stocks to be zero when the Nikkei
Stock Average is ¥9,489 and the TOPIX index is 919 points.

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Core Profit

Analysis of Operating Performance for FY2007 (Life Insurance Business)

Sony Financial HoldingsCore profit is an indicator of the profit-earning capacity of the primary insurance
business over a one-year period. Primary insurance business refers to the
management of insurance premiums received from policyholders, along withinvestment income to pay insurance claims, annuities and benefits and to makepolicy reserve provisions for future payments. Adding capital gains or losses,
such as gains/losses on sales of securities, and one-time gains and losses tocore profit produces ordinary profit, which appears on the statements of income.
In FY2007, Sony Life’s core profit decreased 3.3% year on year, to ¥23.5
billion, owing to an increase in operating expenses.
Note: Like most life insurers that are organized as joint stock corporations, Sony Life sells non-participating life
insurance. Mutual corporations, in contrast, typically offer participating policies, and their insurance
premiums include a portion of financial resources for policyholder dividends. These amounts are counted
as core profits and losses, and the financial resources for policyholder dividends are included in coreprofits. For this reason, mutual corporations tend to show higher core profits than joint stock corporations
that operate on the same scale.

Core Profit
Years ended March 31(Millions of yen)

Item		

Core profit[A]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Capital gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Gains on monetary trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Gains on investments in trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Gains on sales of securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Gains from derivatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Foreign exchange gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other capital gains. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Capital losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Losses on monetary trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Losses on investments in trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Losses on sales of securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Devaluation losses on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Losses from derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Foreign exchange losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other capital losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net capital gains[B]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Core profit plus net capital gains[A]+[B]. . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other one-time gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Gain from reinsurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Reversal of contingency reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other one-time losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Losses from reinsurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Provision for contingency reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Provision for reserve for specific problem loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Provision for reserve for specific overseas receivable assets. . . . . . . . . . . . . . . . . . . . . . . . 
Loans amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total other one-time losses[C]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Ordinary profit[A]+[B]+[C]. . . . . . . . . . . . . . . . . . . . . . . . 

2007

2008

24,366
22,5715,814
1,708
11,887
3,061
99
—
215
—
—
148
66
—
—
—
22,356
46,722
1,849
—
—
1,849
33,676
—
2,488
24
—
—
31,162(31,827)
14,89523,571
29,963
5,304
324
24,023—310—
13,119
—
—
1,563
6,697
4,858
—
—
16,84440,416
1,662
—
—
1,662
2,787
—
2,776
10
—
—
—
(1,125)39,290Notes: 1. Core profit for the fiscal year ended March 31, 2008, included gains on monetary trusts resulting from income gains equal to ¥9,471 million. “Other” inother one-time losses consisted of a one-time ¥1,662 million provision for policy reserves, which were increased to maintain future financial soundness forsome insurance policies.
2. Core profit for the fiscal year ended March 31, 2007, included gains on monetary trusts resulting from income gains equal to ¥6,355 million. “Other”
in other one-time gains, consisted of a ¥1,849 million reversal of policy reserve with respect to reserves previously established for future liabilities
for certain insurance policies. “Other” in other one-time losses consisted of a one-time provision of ¥31,162 million for policy reserve. This provision
related to certain insurance policies for which Sony Life had identified a risk that policyholder premiums (calculated based on then-applicable assumed
rates of return and assumed mortality rates) could be insufficient to cover future payments. This provision also relates to all future liabilities forpayment under the relevant policies.

44

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Negative Spread
Life insurance companies retain a portion of premiums received from policyholders as policy reserves in anticipationof future payments. These policy reserves are calculated under the assumption that they will yield a certain rate ofinterest every year. This interest rate is called the “assumed interest rate.” Negative spread arises when, owing to
the deterioration of the investment environment or other factors, the actual investment yield falls below the assumed
interest rate for some policies.
Sony Life’s negative spread in FY2007 was ¥26.7 billion, compared with ¥37.3 billion in the previous fiscal year.
Going forward, Sony Life will strive to raise management efficiency and continue to maintain ample profits to cover its
negative spread.

Formula for Calculating Negative Spread

Policy reserve in
the general account *3

Average assumed
interest rate *2

NegativespreadNotes: 1. “Investment yield for core profit” is the investment income from the general account that is included in core profit, less the provision for policyholder
dividend reserves, divided by policy reserve in the general account.
2. The “average assumed interest rate” is the assumed yield on the policy reserve in the general account.
3. “Policy reserve in the general account” is policy reserve in the general account, excluding the contingency reserve, calculated as follows:		 (Policy reserves at beginning of term + Policy reserves at end of term – Expected interest) x 1/2

Sony Financial Holdings

Investment yieldfor core profit *1

Non-Performing Assets* Some life insurance companies engage in commercial lending as a part of their asset management for the purpose of generating interest income. Loans are­categorized as policyholder loans, which are a form of customer service, and commercial loans. The balance of loans represents the sum of these categories.

Loans by Borrower Category

Risk-Monitored Loans
As of March 31

Category

Bankrupt loans. . . . . . . . . . . . . .
Non-accrual delinquent loans. . . .
Past-due loans(three months or more). . . . . . .
Restructured loans. . . . . . . . . . .
			 Total. . . . . . . . . . . . . . . .

(Millions of yen)

2007

2008

—
—

—
—

—
—
—

—
—
—

As of March 31

Category

Bankrupt andquasi-bankrupt loans. . . . . . . . . 
Doubtful loans. . . . . . . . . . . . . . 
Sub-standard loans. . . . . . . . . . . 
Normal loans. . . . . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . 

(Millions of yen)

2007

2008

—
—
—
98,601
98,601———
110,662
110,662

Analysis of Operating Performance for FY2007 (Life Insurance Business)

As the table below shows, Sony Life has no risk-monitored loans (loans for which repayment circumstances are notordinary). Moreover, all figures listed in the loans by borrower category are classified as normal loans.
Sony Life’s loan balance as of March 31, 2008, was ¥108.6 billion. As Sony Life does not engage in commercial
lending,* its loan balance is derived solely from policyholder loans, which are recoverable and limited to the value ofsurrender payments.

45

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Solvency Margin Ratio
The solvency margin ratio indicates an insurance company’s ability to pay. Life insurance companies accumulate policy
reserves against the future payment of insurance claims so they can respond sufficiently to ordinarily anticipated events.
However, unforeseen events occur as a result of changes in the environment, such as a major disaster or a cataclysmic
fall in the stock market. The solvency margin ratio is one administrative control indicator used to judge if an insurer has
the ability to pay in response to such unpredictable events.
As of March 31, 2008, Sony Life had a high solvency margin ratio of 1,747.9%, down 104.1 percentage points fromthe end of the previous fiscal year.
As of March 31(Millions of yen)

Analysis of Operating Performance for FY2007 (Life Insurance Business)

Sony Financial Holdings

Item		

Total solvency margin[A] . . . . . . . . . . . . . . . . . . . . . . 
Total capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Reserve for price fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Contingency reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Reserve for possible loan losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net unrealized gains on other securities x 90%(100% in the event of an unrealized loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net unrealized gains on real estate x 85%(100% in the event of an unrealized loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Excess of the amount equivalent to policy reserve under Zillmerized method. . . . . . . . . . . . . 
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Deductible items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
[B] . . . . . . . . . . . . . . . . . . . . . . 
Total risk R12+(R2+R3+R7)2+R4
Insurance risks
R1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Assumed interest rate risks R2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Asset management risks
R3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Business management risks R4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Minimum guarantee risks
R7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Third-sector insurance risks R8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Solvency margin ratio { [A] / ([B] x 1/2) } x 100 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2007

2008

625,097
82,893
20,88259,0310

604,078
94,40724,09961,807
0

181,510

116,735

3,790
—
—
—
276,989
67,501
23,892
10,79846,977
1,703
3,530
—
1,852.0%

5,172
287,332——
14,523
69,11917,989
11,09545,376
1,750
6,120
6,926
1,747.9%

Notes: 1. Calculations employed in the chart above apply the methods provided for under Articles 86 and 87 of the Insurance Business Law of Japan enforcement
regulations, as stipulated in 1996 by the Ministry of Finance Official Notification No. 50. Any excess of the amount equivalent to policy reserve under Zillmer
method is calculated as stipulated by Article 1–3 of Ministry of Finance Official Notification No. 50. As of March 31, 2007, excess of the amount equivalent
to policy reserve under Zillmer method was included in “other.”
2. From March 31, 2008, the third-sector insurance risks item is included in the calculation. (Figures for March 31, 2007, are based on the former standard.)
3. A standard method is used to calculate minimum guarantee risks.

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Embedded Value
Embedded value (“EV”) is calculated as the sum of the value of in-force business andadjusted net worth. In Europe and Canada, EV is regarded as one of indices used forassessing the corporate value of a life insurance company. Sony Life discloses EV at
the end of each fiscal year as one of the indices used to evaluate the corporate valueof its life insurance business within the Sony Financial Holdings Group.
Sony Life’s EV
The Embedded Value of Sony Life was as follows:
As of March 31(Billions of yen)

Category		

492.0
381.7
110.2
38.9

2005

2006

2007

2008

539.3 776.1 900.5 833.8
409.6 499.8 638.8 638.9
129.7 276.3 261.7 194.8
38.1
34.2
36.7
28.9

Note: Different calculation methods and assumptions are used for EV results as of March 31, 2004, 2005, 2006,
2007 and 2008.

* “Total net assets in the balance sheets” excludes net unrealized gains on bonds except for convertible and certain other bonds.

Under the accounting principles and practices generally accepted in Japan (“Japanese GAAP”), which applies to life
insurance companies in Japan like Sony Life, the balance sheets do not indicate the present value of future profits on
in-force business, while EV indicates the present value of future profits on in-force business, together with the company’s
adjusted net worth. For this reason, we believe EV serves as a supplement to the financial information provided underJapanese GAAP and is a helpful indicator used to evaluate corporate value. However, EV covers only existing in-force
business as of the date of valuation, and does not include the potential value of future new business, which is also
generally considered a constituent of the economic value of an insurance company.
Breakdown of Adjusted Net Worth
As of March 31

Adjusted net worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net assets*. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for price fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingency reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for possible loan losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains on land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unfunded employees’ retirement benefits liability. . . . . . . . . . . . . . . . . . . . .
Deferred tax assets corresponding to preceding five items . . . . . . . . . . . . .

(Billions of yen)

2007

2008

Change

261.7
207.6
20.9
59.0
0
6.8
(1.9)
(30.7)

194.8
136.9
24.1
61.8
0
8.4
(3.5)
(32.9)(66.9)(70.7)
3.2
2.8
0
1.6
(1.6)
(2.2)

Analysis of Operating Performance for FY2007 (Life Insurance Business)

The value of in-force business is calculated as follows:
Value of in-force business = Present value of future after-tax profits on in-force business – Present value of cost of capital*.
“Cost of capital” is the spread between the investment yield and the discount rate applied
to the amounts of capital and surplus that will be required to maintain the assumed level ofsolvency margin ratio.
Adjusted net worth is calculated as follows:
Adjusted net worth = (a) Total net assets in the balance sheets* + (b) Reserve for price fluctuations +(c) Contingency reserve + (d) Reserve for possible loan losses +(e) Net unrealized gains on land – (f) Unfunded employees’ retirement benefits liability –(g) Deferred tax assets for (b), (c), (d), (e) and (f).

Sony Financial Holdings

EV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Value of in-force business . . . . . . . . . . . .
Adjusted net worth . . . . . . . . . . . . . . . . .
Value of new business in the fiscal year . . . .

2004* Excluding net unrealized gain on bonds except for convertible and certain other bonds.

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Major Assumptions
The major assumptions employed in the calculation of EV at March 31, 2008 were as follows. Note that different major
assumptions are used in calculating EV results as of March 31, 2004, 2005, 2006 and 2007.
Item

Assumptions

Discount rate
Investment yield on new investments

6.0%
Investment yield on new investments is based on implied forward rates, assuming Sony
Life makes all new investments only in Japanese government bonds.
Based on Sony Life’s experience over the three most recent fiscal years(FY2005–FY2007)
Based on Sony Life’s experience over the three most recent fiscal years(FY2005–FY2007)
Calculated using the cost for the maintenance and administration of policies and for
payments of claims is based on Sony Life’s experience during the most recent fiscal
year (FY2007)
Based on the most recent effective tax rate (based on the rate for FY2007)
For the purpose of calculating the cost of capital, maintenance of a solvency margin
ratio of 600% was assumed.

Mortality and morbidity rates
Lapse and surrender rate

Analysis of Operating Performance for FY2007 (Life Insurance Business)

Sony Financial Holdings

Operating expenses

Effective tax rate
Solvency margin ratio

1. Discount rate
The discount rate assumption was set by adding Sony Life’s assumed risk premium (4.5%) to the risk-free rate (theyield on 10-year Japanese government bonds: 1.28%), as of the end of the fiscal year.
2. Investment yield(1) Investment yield on new investments:
		 The investment yield on new investments assumption was calculated based on the implied forward rates computedfrom the yield curve of Japanese government bonds as of March 31, 2008, and assuming that Sony Life invests
only in Japanese government bonds every year.
			 Sony Life sets the assumed investment yield on new investments using neutral assumptions set in light of themarket environment at the end of each fiscal year. Neutral assumptions are made to avoid potential complications
arising from the fact that the more Sony Life invests in assets with higher expected rates of return, the higher the
calculated EV. Sony Life believes that assets with higher expected rates of return have higher risks and should be
adjusted by discount rates when calculating EV.
			 The implied forward rates that were used are as follows.
FY

2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2027. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2032. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2037. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Investment Yield

0.57%
0.61%
0.81%
0.98%
0.98%
2.78%
3.18%
3.50%
3.40%
3.51%

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FY

Investment Yield

1.92%
1.88%
1.89%
1.91%
1.88%
2.90%
3.24%
3.66%
3.63%
3.77%

Movement analysis of EV from March 31, 2007
The change in EV from March 31, 2007 to March 31, 2008 is split into the following components.
(Billions of yen)

Item		

Amount(1) EV as of March 31, 2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(2) Shareholder dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(3) Release from the value of in-force business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(4) EV of new policies for FY2007. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(5) Difference between assumptions and actual results for the year ended March 31, 2008. . . . . . . . . 
(6) Difference from changes in the assumptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(7) EV as of March 31, 2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

900.5
(6.5)
38.1
28.9
(113.2)(14.1)
833.8

Note: Item (3) corresponds to unwinding of the amount of discount for one year made as of March 31, 2007 on the value of in-force business.

Analysis of Operating Performance for FY2007 (Life Insurance Business)

2008. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2009. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2010. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2017. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2022. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2027. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2032. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2037. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Sony Financial Holdings(2) Investment yield on existing assets:
		 The investment yield on existing assets assumption was calculated separately for each asset, based on thefollowing assumptions:• For existing bonds other than convertible and certain other bonds, Sony Life assumed that it would hold them tomaturity.
• For convertible and certain other bonds, Sony Life’s calculations assumed that it would conduct rebalancing asof the date of evaluation as follows:			 After reflecting the unrealized gains from convertible bonds into its adjusted net worth, Sony Life immediately
reinvests the remaining amount into Japanese government bonds.
• For stocks and other assets (policyholder loans, real estate, private equity funds, etc.), Sony Life assumed that
it would maintain a balance at the end of the fiscal year within its own established internal limits for holdings ofsuch assets.
			 Interest, dividends and proceeds from redemptions are calculated with the assumption that Sony Life would
reinvest these proceeds into Japanese government bonds.
			 The weighted average investment yields on new investments and existing assets that were used are as follows

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Impact of Changing Assumptions (Sensitivities)
The impact of changing the underlying assumptions on EV at March 31, 2008 would be as follows:(Billions of yen)

Analysis of Operating Performance for FY2007 (Life Insurance Business)

Sony Financial Holdings					Discount rate. . . . . . . . . . . . . . . 
. . . . . . . . . . . . . . . . . . . . . . . 
Solvency margin ratio. . . . . . . . . 
. . . . . . . . . . . . . . . . . . . . . . . 
Investment yield: +0.25%*. . . . . 
. . . . . . . . . . . . . . . . . . . . . . . 
Investment yield: –0.25%* . . . . . 
. . . . . . . . . . . . . . . . . . . . . . . 
Mortality and morbidity. . . . . . . . 
Lapse and surrender rate. . . . . . 
Operating expenses. . . . . . . . . . 

From 6.0% to 5.0%. . . . . . . . . . . . . . . . 
From 6.0% to 7.0% . . . . . . . . . . . . . . . .
From 600% to 500%. . . . . . . . . . . . . . . 
From 600% to 700%. . . . . . . . . . . . . . . 
On total investments . . . . . . . . . . . . . . . 
On new investments. . . . . . . . . . . . . . . . 
On total investments . . . . . . . . . . . . . . . 
On new investments. . . . . . . . . . . . . . . . 
Assumption x 1.1 . . . . . . . . . . . . . . . . . 
Assumption x 1.1 . . . . . . . . . . . . . . . . . 
Assumption x 1.1 . . . . . . . . . . . . . . . . . 

Amount of Increase (Decrease)

EV Amount

83.1(67.5)
7.7
(8.6)
59.1
34.8
(61.2)(35.0)(65.3)(16.1)
(6.5)

916.9
766.3
841.5
825.2
892.8
868.6
772.5
798.7
768.5
817.7
827.2

* The impact of changes in investment yield assumptions is shown after taking into account the impact on policyholders’ dividends.

Notes
Regulations require that certain reserves be set aside for payments to be made under variable life insurance and annuity
contracts with minimum guaranteed benefits issued in FY2005 and thereafter. In calculating EV as of March 31, 2008,
while setting aside the reserve for guaranteed minimum death benefits (“GMDB”) based on Japanese GAAP, Sony Lifeevaluated the future cash flows on GMDB for all existing variable life insurance policies using the stochastic method.
This evaluation reduced EV as of March 31, 2008 by ¥13.4 billion and reduced EV as of March 31, 2007 by ¥4.3 billion.
Opinion of Outside Specialist
Sony Life has obtained an opinion letter from Milliman, Inc., an independent actuarial firm that possesses insurance
actuarial expertise, as attached.
This opinion letter can be found on SFH’s website, at http://www.sonyfh.co.jp/index_en.html.
Disclaimer
Statements made in this annual report contain calculations based on assumptions regarding future projections that are
subject to risks and uncertainties. Actual future results might differ significantly from the assumptions used in the EV
calculations. Therefore readers are advised to be cautious and not place undue reliance on these EV calculations inassessing the corporate value of Sony Life.

50

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Non-life
Insurance
Business

The non-life insurance business is conducted bySony Assurance, a wholly-owned subsidiary of SFH.
In FY2007, ordinary revenues from the non-life
insurance business increased 9.1% year on year,
to ¥55.6 billion, as a result of an increase in net
premiums written associated with steady growth in
the number of policies, primarily automobile insurance
policies. Ordinary profit grew 37.8%, to ¥2.8 billion,
owing to higher ordinary revenues and the stable net
loss ratio, which remained in line with that of theprevious year.

Sony Financial Holdings

Below, we review the operating performance of Sony Assurance, which conducts SFH’s non-life insurance business.

Policies in ForceNet Premiums Written
Net premiums written at non-life insurance companies, which corresponds withsales in other industries, are the premiums received from policyholders (i.e.,
direct premiums written) plus or minus reinsurance premiums (adding directreinsurance premiums received and subtracting direct reinsurance premiumspaid). In FY2007, Sony Assurance’s net premiums written increased 9.0% year on
year, to ¥55.0 billion. By type of insurance, net premiums written for voluntary
automobile insurance increased 8.9%, to ¥47.8 billion, accounting for 87.0% of
total net premiums written. Net premiums written for personal accident insurance,
which comprises mainly medical and cancer insurance, grew 9.3%, to ¥6.5 billion,
accounting for 11.8% of total net premiums written. For types of insurance
other than voluntary automobile and personal accident insurance, such as fire
insurance, marine insurance and compulsory automobile liability insurance, net
premiums written increased 11.2%, to ¥0.6 billion.

Analysis of Operating Performance for FY2007 (Non-life Insurance Business)

In FY2007, the number of policyholders of Sony Assurance’s mainstay automobile
insurance and medical and cancer insurance continued to grow steadily. As aresult, insurance policies in force—the sum of automobile insurance and medical
and cancer insurance policies—as of March 31, 2008, increased 90 thousand
from the end of the previous fiscal year to 1.02 million.

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Net Loss Ratio

Analysis of Operating Performance for FY2007 (Non-life Insurance Business)

Sony Financial Holdings

The net loss ratio describes the ratio of the total amount of net losses paid andloss adjustment expenses, such as expenses incurred in surveying damages, to
net premiums written. In FY2007, Sony Assurance’s net loss ratio improved 0.1
percentage point, to 53.5%, from 53.6% in FY2006. By type of insurance, the net
loss ratio on voluntary automobile insurance improved 0.6 percentage point, from
58.2% to 57.6%, while for personal accident insurance, including medical andcancer insurance, the ratio rose 3.5 percentage points, from 17.5% to 21.0%.

Net Expense Ratio
The net expense ratio is the ratio of the total of costs to market and performongoing maintenance to net premiums written. This ratio includes the company’sbusiness expense and development costs for new products. In FY2007, Sony
Assurance’s net expense ratio rose 0.4 percentage point from the previous fiscal
year to 26.7%, due to an increase of system-related expenses despite theimproved efficiency of operations. The combined ratio—the sum of the net loss
ratio and the net expense ratio—was up 0.4 percentage point from 79.9%
to 80.3%.

Underwriting Profits
Underwriting profits describe the level of profits that a company generates by
underwriting insurance. Underwriting profits are calculated by subtracting fromunderwriting income (net premiums written, etc.); the underwriting expenses (netlosses paid, loss adjustment expenses, etc.); and the operating, general andadministrative expenses associated with underwriting, as well as the net amountsof various other income and expenses (such as corporate taxes associated withcompulsory automobile liability insurance). In FY2007, Sony Assurance’s underwriting profits increased ¥0.6 billion compared with the previous fiscal year, to¥2.2 billion, owing to an increase in net premiums written and the stable net loss
ratio, which remained essentially unchanged. By type of insurance, underwriting
profits on voluntary automobile insurance rose ¥0.4 billion, to ¥1.1 billion. For
personal accident insurance, including medical and cancer insurance, underwriting
profits increased ¥0.2 billion, to ¥0.9 billion.

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Total Asset Composition and Investment Policy

Composition of Total Assets

As of March 31, 2008, Sony Assurance’s total assets increased 16.6% from theend of the previous fiscal year, to ¥78.6 billion. Of total assets, cash and deposits
amounted to ¥2.9 billion (accounting for 3.7% of the total); securities ¥56.2 billion(accounting for 71.5%); tangible fixed assets ¥0.2 billion (accounting for 0.3%);
intangible fixed assets ¥4.0 billion (accounting for 5.2%); other assets ¥10.7
billion (accounting for 13.7% ); and deferred tax assets ¥4.4 billion (accountingfor 5.6%). Sony Assurance’s investment policy is to ensure stable investment
returns over the medium to long term by investing primarily in yen-denominatedbonds and taking into account the market environment and investment risks.

Cash and deposits
Deferred tax assets 3.7%
5.6%
Intangible
fixed assets
5.2%
Tangible
fixed asset
0.3%

Other assets
13.7%
As of March 31,
2008¥78.6 billion
Securities
71.5%

Solvency Margin Ratio(Millions of yen)

As of March 31

Total solvency margin[A] . . . . . . . . . . . . . . . . . . . . . .

2008

20,18623,977

Capital or treasury amount (net assets, excluding the amount of expected outflow fromthe company and the amount of valuation and exchange differences and deferred assets) . . . .
Reserve for price fluctuations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contingency reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special catastrophe reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for possible loan losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains on other securities x 90%(100% in the event of an unrealized loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains on real estate x 85%(100% in the event of an unrealized loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Refund reserve premium. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subordinated debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deductible items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

13,222
25
—
6,800
—

15,408
36
2
8,553
—

137

(23)

—
—
—
—
—

—
—
—
—
—

Total risk

[B] . . . . . . . . . . . . . . . . . . . . . .

3,998

4,465

R1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R2. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R3. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R5. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
R6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,408
—
—
231
122
458

3,701
0
6
306
138
611

1,009.7%

1,073.9%(R1+R2)2+(R3+R4)2+R5+R6

Ordinary insurance risks
Third-sector insurance risks
Assumed interest rate risks
Asset management risks
Business management risks
Major catastrophe risks

Solvency margin ratio {[A]/([B] x 1/2)} x 100. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Note: Calculations and figures included in the chart above apply the methods provided for under Articles 86 and 87 of the Insurance Business Law of Japan
enforcement regulations, as stipulated in 1996 by Ministry of Finance Official Notification No. 50. The method of computing the solvency margin ratio waschanged in accordance with revisions to the Insurance Business Law of Japan enforcement regulations made during the fiscal year ended March 31, 2008.
Consequently, the basis of calculation differs for figures as of March 31, 2007, and March 31, 2008.

Non-Performing Assets
Sony Assurance’s self-assessment of assets is outlined below. As stated, there were no loans.
Risk-Monitored Loans

Loans by Borrower Category

As of March 31

Category

Bankrupt loans. . . . . . . . . . . . . . 
Non-accrual delinquent loans. . . . 
Past-due loans(three months or more). . . . . . . 
Restructured loans. . . . . . . . . . . 
			 Total. . . . . . . . . . . . . . . . 

Analysis of Operating Performance for FY2007 (Non-life Insurance Business)

2007

Item		

Sony Financial Holdings

For non-life insurers, the solvency margin ratio is an important indicator of the ability to pay claims. As of March 31,
2008, Sony Assurance maintained a sound solvency margin ratio of 1,073.9%.

(Millions of yen)

2007

2008

—
—

—
—

—
—
—

—
—
—

As of March 31

Category

Bankrupt andquasi-bankrupt loans. . . . . . . . . .
Doubtful loans. . . . . . . . . . . . . . .
Sub-standard loans. . . . . . . . . . . .
Normal loans. . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . .

(Millions of yen)

2007

2008

—
—
—
—
—

—
—
—
—
—

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Operations in the banking business include thoseof Sony Bank, a wholly-owned subsidiary of SFH, andSony Bank Securities, a wholly-owned subsidiaryof Sony Bank.
In FY2007, ordinary revenues from the banking
business rose 33.4% year on year, to ¥25.9 billion,
mainly due to higher interest income, which resulted
from increased loans led by a rise in mortgage loans
and greater investment income from higher deposits.
Owing to a rise in gross operating profit, ordinary profit soared 77.4%, to ¥2.4 billion.

Banking
BusinessSony Financial Holdings* SFH’s ownership in Sony Bank was 88.0% through FY2006, but changed to 100% in March 2008.
** Sony Bank Securities was established in June 2007 and commenced operations in October 2007.

Below, we review the operating performance of Sony Bank, which accounts for the majority of the banking business in
SFH’s consolidated financial statements.

Analysis of Operating Performance for FY2007 (Banking Business)

Gross Operating Profit
In FY2007, Sony Bank’s gross operating profit increased 21.2% year on year,to ¥10.9 billion, owing to higher net interest income. The bank derives grossoperating profit from net interest income, net fees and commissions and net
other income.
Sony Bank uses the funds that its customers have deposited to invest in
securities, provide mortgage loans and offer loans to individuals. Net interest
income refers to the spread between funding costs, such as interest paid on
deposits, and interest received on securities, loans and other items. In FY2007,
net interest income increased 11.3% year on year, to ¥5.1 billion, mainly as theresult of a higher balance of invested assets led by the expansion of business.
Net fees and commissions refers to the spread between the fees and commissions received on securities-related business as well as on remittances andtransfers and the fees and commissions paid for ATM use and for remittances
and transfers. In FY2007, net fees and commissions decreased 27.8% from theprevious fiscal year to ¥0.3 billion, owing to higher fees and commissions paid
mainly for the use of ATMs.
Net other income refers to services not included in net interest income or net
fees and commissions. These include gains and losses associated with foreignexchange transactions, sales of bonds and others and derivatives (gains or losses
on derivative products, including swaps held to hedge securities and other investments). In FY2007, net other income increased 39.8% year on year, to ¥5.4
billion, due to an improvement in profit and losses on market investments.

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General and Administrative Expenses
General and administrative expenses increased 6.3% from the previous fiscal
year, to ¥8.1 billion, owing to greater personnel expenses associated with the
expansion of business.

Ordinary Profit
Due to higher gross operating profit, Sony Bank’s non-consolidated ordinary profit
jumped 102.8% year on year, to ¥2.7 billion. Net income increased substantially,
from ¥1.0 billion to ¥4.4 billion because of the above-mentioned factors andcorporate taxes associated with a deferred tax liability.

Analysis of Operating Performance for FY2007 (Banking Business)

Customer Assets (Total of Deposits and Investment Trusts)
Customer assets (total of deposits and investment trusts) as of March 31, 2008,
were ¥1,247.3 billion, up 46.9% from the end of the previous fiscal year. Of thisfigure, yen deposits accounted for 71.6% and amounted to ¥892.6 billion, foreign
currency deposits accounted for 20.2% and came to ¥251.7 billion, resulting in
total deposits constituting 91.7% of total customer assets at ¥1,144.3 billion.
Investment trusts accounted for 8.3% of total customer assets, with a balanceof ¥102.9 billion.
Of yen deposits, growing interest in Internet banking and time deposits and theeffect of special interest rate offerings during the Japanese bonus period caused
the pace of yen deposit increases to rise substantially. Consequently, the balanceof yen deposits amounted to ¥892.6 billion as of March 31, 2008, up 47.7% fromone year earlier. The balance of foreign currency deposits also rose significantly,
owing to ongoing yen appreciation throughout the fiscal year, resulting in more
foreign currency deposits, especially those in U.S. dollars, being purchased. Asof March 31, 2008, foreign currency deposits were up 70.2%, to ¥251.7 billion,
accounting for 22.0% of total deposits. Despite a worsening market environmentthat caused base values to decline, investment trusts increased 6.7% year on
year, to ¥102.9 billion as of March 31, 2008.

Sony Financial Holdings

Number of Accounts
Throughout FY2007, Sony Bank endeavored to acquire new customers by
expanding its product and service offerings and raising its brand awareness. As
a result, the number of accounts increased steadily throughout the year, growing
24.2%, or 118 thousand, to 610 thousand as of March 31, 2008.

55

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LoansAnalysis of Operating Performance for FY2007 (Banking Business)

Sony Financial Holdings

Loans as of March 31, 2008, were up 21.9% from the end of the previous fiscal
year, to ¥347.0 billion. Of this figure, mortgage loans accounted for 97.6%.
Besides mortgage loans, Sony Bank offers card loans and special-purpose loans.
As of March 31, 2008, the balance of mortgage loans was up 21.9% from theend of the previous fiscal year, to ¥338.8 billion. In FY2007, Sony Bank expanded
its mortgage loan tie-ups and in January 2008 completely eliminated commissions
on accelerated mortgage loan payments. In addition, Sony Life began handlingbanking agency business on behalf of Sony Bank, enabling Sony Life’s Lifeplanner
sales employees to explain Sony Bank’s mortgage loan products, as well as todeliver applications to customers. Thus, Sony Bank has enhanced its services.

Securities
Sony Bank’s principal investments are in securities, and as of March 31, 2008,
the balance of securities was ¥488.7 billion, up 28.2% from the end of theprevious fiscal year. Of this amount, Japanese government bonds represented¥171.1 billion, up ¥40.1 billion; corporate bonds were ¥152.1 billion, up ¥77.3
billion; and other securities amounted to ¥162.5 billion, up ¥8.0 billion. Securities
rated AA or above accounted for 72.5% of the total.
Sony Bank’s investment in Sony Bank Securities of ¥3.0 billion (¥1.5 billion incommon stock and ¥1.5 billion in capital surplus) was recorded as stock.
Note: Sony Bank classifies its securities according to the Basel II standardized approach, by referring to theratings of five rating agencies: Moody’s Investors Service, Inc.; Standard & Poor’s; Rating and Investment
Information, Inc.; Japan Credit Rating Agency, Ltd.; and Fitch Ratings, Ltd.

Total Assets
Sony Bank’s total assets as of March 31, 2008, increased 50.1% from the end of
the previous fiscal year, to ¥1,211.0 billion. Of this figure, securities were ¥488.7
billion (accounting for 40.4% of the total), loans were ¥347.0 billion (28.7%), callloans were ¥352.5 billion (29.1%), cash and due from banks were ¥7.3 billion(0.6%), and other items were ¥15.2 billion (1.3%).

56

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Capital Adequacy Ratio (Domestic Criteria)
The capital adequacy ratio indicates a bank’s financial stability. As of March 31,
2008, Sony Bank’s capital adequacy ratio (domestic criteria) was 9.15%. Thislevel is significantly higher than the 4.0% capital adequacy ratio required underthe Banking Law of Japan as a minimum standard for banks that operate onlyin Japan.

As of March 31(Millions of yen)

Tier I capital[A]		
(Core capital)		
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
			 Of which, noncumulative perpetual preferred stock. . . . 
		Capital surplus. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		Other retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . 
		Unrealized losses on other securities . . . . . . . . . . . . . . . 
Tier II capital[B]		
(Supplementary capital)
General reserve for possible loan losses. . . . . . . . . . . . . 
Deductions[C]		
Total capital[A+B–C] [D]		
Risk-adjusted assets[E]		
		On-balance items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		Off-balance items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		Result of dividing operational risk by 8% . . . . . . . . . . . . . 
Capital adequacy ratio [D/E]		

2008

37,34225,000—15,000
—
1,804
4,462
152
152
—
37,494
326,318
306,833
1,120
18,364
11.49%

37,241
25,000—15,000
—
6,296
9,055
161
161
—
37,402408,710386,395
312
22,002
9.15%

Note: The non-consolidated capital adequacy ratio (domestic criteria) was calculated based on the standard stipulated in the FSA public m­ inisterial announcement
No. 19 of 2006.

Non-Performing Assets
Sony Bank does not engage in commercial lending to corporate borrowers, and its lending to individual customers isdispersed among many borrowers. The bank conducts credit screening according to industry standards and manages
loans carefully. Consequently, non-performing assets are low in every category (see tables), enabling the bank tomaintain a healthy composition of assets.
Risk-Monitored Loans

Problem Loans based on
the Financial Reconstruction Law

As of March 31(Millions of yen)

2007

2008

Bankrupt loans. . . . . . . . . . . . . . . 
Non-accrual delinquent loans . . . . 

—
24

15
227

Past-due loans(three months or more). . . . . . . . 
Restructured loans. . . . . . . . . . . . 
			 Total . . . . . . . . . . . . . . . . . 

—
252
277

—
244
487

Category

As of March 31

Category

Bankrupt andquasi-bankrupt loans. . . . . . . . . . 
Doubtful loans. . . . . . . . . . . . . . . . 
Sub-standard loans. . . . . . . . . . . . 
Normal loans . . . . . . . . . . . . . . . . 
Total . . . . . . . . . . . . . . . . . 

(Millions of yen)

2007

2008

24
0
252
291,082
291,359152
90
244
350,854351,342

Analysis of Operating Performance for FY2007 (Banking Business)

2007

Category

Sony Financial Holdings

Sony Bank’s Capital Adequacy Ratio (Domestic Criteria)

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Financial Data (Unaudited)Sony Financial Holdings Inc. (SFH)

The Company’s consolidated financial statements (consolidated balance sheets, consolidated statements ofincome, consolidated statements of changes in net assets and the consolidated statements of cash flows)
have received a certificate of audit from PricewaterhouseCoopers Aarata in accordance with Article 193-2
of the Financial Products Exchange Law or the Article 193-2-1 of the Securities and Exchange Law.

Consolidated Balance Sheets
As of March 31,

Sony Financial Holdings
Financial Data

(Millions of yen)

2007

2008

Assets:Cash and due from banks  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Call loans and bills bought  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Monetary trusts  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Securities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Loans  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Tangible fixed assets   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Intangible fixed assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Due from agencies  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Due from reinsurers  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Foreign exchanges  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Other assets   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deferred tax assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Reserve for possible loan losses  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

40,996
332,459
718,492
2,649,768
381,52288,574
8,593
0
496
4,156
95,351
3,599(230)

60,058424,868
895,672
2,930,441
455,763
84,451
16,412—
256
1,683
101,229
6,937
(327)

Total Assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

4,323,780

4,977,450

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 sold  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Foreign exchanges  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Other liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Reserve for employees’ bonuses .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Reserve for employees’ retirement benefits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Reserve for directors’ retirement benefits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Reserve for price fluctuations and others  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deferred tax liabilities  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Deferred tax liabilities on land revaluation  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

3,157,636
29,9203,125,118
2,597
1,415
934
752,366
10,000075,367
1,906
11,212
241
20,90820,904706

3,454,167
31,653
3,418,006
4,506
1,308
926
1,143,476
10,000062,5302,240
11,920252
24,136
4,156
706

Total Liabilities   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

4,053,601

4,715,822

Net Assets:
Common stock   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Capital surplus  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
Retained deficits  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .
		 Total shareholders’ equity  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Net unrealized gains 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 .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 
Minority interests   .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  . 

5,500
180,877(44,173)
142,203
125,043(408)(1,475)
390
123,549
4,425

19,900195,277(26,417)
188,759
74,902(1,345)(1,475)786
72,868—		Total Net Assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

270,179

261,627

Total Liabilities and Net Assets  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .

4,323,780

4,977,450

The accompanying notes are an integral part of these financial statements.

58

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Consolidated Statements of Income
For the years ended March 31,

		822,153
740,596648,178
87,542
4,875
55,62555,036572
1625,931
17,162
1,753
7,001
15
777,653702,056
241,114286,271
69,903
94,18910,57852,42038,634
5
13,76316
23,175
12,045
1,049
1,524
8,411
144
44,500
2
3,820
3,159
37,522
6,690
6,078
497
24,255

Financial Data

2008

759,280
688,854605,051
78,9284,874
50,98850,495464
27
19,437
12,763
1,587
5,065
21
740,926
674,822219,352
349,666
8,231
87,27010,30048,61036,166
3
12,39248
17,493
8,174
445
1,149
7,665
58
18,354
334
1,146
2,057
15,485
20,270(14,929)123
10,021

Sony Financial Holdings

Ordinary Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary Revenues from the Life Insurance Business: . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Income from insurance premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Other ordinary income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary Revenues from the Non-life Insurance Business:. . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Underwriting income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Other ordinary income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary Revenues from the Banking Business:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Other operating income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Other ordinary income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary Expenses from the Life Insurance Business: . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Insurance claims and other payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Provision for policy reserve and others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Investment expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Operating expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary Expenses from the Non-life Insurance Business:. . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Underwriting expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Investment losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Operating, general and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary Expenses from the Banking Business:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Interest expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 General and administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Other ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary Profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary Gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Extraordinary Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for Reserve for Policyholders’ Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes—Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes—Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(Millions of yen)

2007

The accompanying notes are an integral part of these financial statements.

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

2007
Shareholder’s Equity
					Common stock
Capital surplus
Retained deficits
Treasury stock

Financial Data

Sony Financial Holdings

Balance as of March 31, 2006 . . 
Changes during the period:
Dividends from surplus. . . . . . . . 
Net income . . . . . . . . . . . . . . . . 
Net changes of items otherthan shareholder’s equity. . . . . . 
Total changes during the period . . . 
Balance as of March 31, 2007 . . 

Total shareholder’sequity5,500

180,877(47,694)—

138,682————(6,500)10,021——(6,500)10,021

—
—
5,500

—
—
180,877—
3,521(44,173)

—
—
—

—
3,521
142,203

Valuation and Translation Adjustments
			Net deferred
Net unrealized			
losses on
Landgains on other			
hedging
revaluation,
securities,			
instruments, net of taxes
net of taxes
			
net of taxes		

Balance as of March 31, 2006 . . 
Changes during the period:
Dividends from surplus. . . . . . . . 
Net income . . . . . . . . . . . . . . . . 
Net changes of items otherthan shareholder’s equity. . . . . . 
Total changes during the period . . . 
Balance as of March 31, 2007 . . 

Foreigncurrencytranslation
adjustments

Totalvaluation andtranslation
adjustments

Minority
Interests

Total
Net Assets

125,720—(1,475)

113

124,358

4,165

267,206

—
—

—
—

—
—

—
—

—
—

—
—

(6,500)10,021(676)(676)
125,043

(408)
(408)
(408)

—
—
(1,475)

276
276
390

(808)
(808)
123,549

259
259
4,425

(548)
2,972
270,179

The accompanying notes are an integral part of these financial statements.
For the year ended March 31,(Millions of yen)

2008
Shareholders’ Equity
					Common stock
Capital surplus
Retained deficits
Treasury stock

Balance as of March 31, 2007 . . 
Changes during the period:
Issuance common stock. . . . . . . 
Dividends from surplus. . . . . . . . 
Net income . . . . . . . . . . . . . . . . 
Net changes of items otherthan shareholders’ equity. . . . . . 
Total changes during the period . . . 
Balance as of March 31, 2008 . . 

Total shareholders’equity5,500

180,877(44,173)—

142,203

14,400——14,400———(6,500)24,255———28,800(6,500)24,255—
14,40019,900—14,400195,277—
17,755(26,417)————46,555
188,759

Valuation and Translation Adjustments
			Net deferred
Net unrealized			
losses on
Landgains on other			
hedging
revaluation,
securities,			
instruments, net of taxes
net of taxes
			
net of taxes		

Balance as of March 31, 2007 . . 
Changes during the period:
Issuance common stock. . . . . . . 
Dividends from surplus. . . . . . . . 
Net income . . . . . . . . . . . . . . . . 
Net changes of items otherthan shareholders’ equity. . . . . . 
Total changes during the period . . . 
Balance as of March 31, 2008 . . 

Foreigncurrencytranslation
adjustments

Totalvaluation andtranslation
adjustments

Minority
Interests

Total
Net Assets

125,043(408)(1,475)

390

123,549

4,425

270,179

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

—
—
—

28,800(6,500)24,255(50,140)(50,140)
74,902(937)(937)(1,345)——(1,475)

396
396
786

(50,681)(50,681)
72,868(4,425)(4,425)—(55,106)(8,551)
261,627

The accompanying notes are an integral part of these financial statements.

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Consolidated Statements of Cash Flows
For the years ended March 31,

		15,4854,683
0359,544(47,714)(31,972)8,182(45,245)
152,587(82,885)(100,700)(1,653)
230,31252,737(7,105)(1,048)(16,724)
258,171

37,5225,512
125297,771(65,973)
31,615
12,061(62,352)
390,559(249,509)—
14,076
411,41064,653(9,947)(1,264)(19,398)
445,452(127,015)
61,700(659,994)
661,927(49,602)
40,002(500)(73,482)(10,148)
1(3,586)—(87,215)(177,263)—(1,544,414)
1,152,322(44,140)
32,673(6,364)(587,187)(4,981)
0(6,361)(6,750)(605,280)—(6,500)(6,500)41
164,496
109,263273,760

28,800(6,500)22,300(45)(137,573)
273,760
136,186

Financial Data

2008

Sony Financial Holdings

I
Cash flows from operating activities:
		 Income before income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Impairment losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Increase in policy reserve and others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Interest income and dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 (Gains) losses on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Interest expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Net (increase) decrease in loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Net increase (decrease) in deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Net (increase) decrease in call loans and bills bought. . . . . . . . . . . . . . . . . . . . . . . . . .
		 Net increase (decrease) in call money and bills sold. . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Others, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
				 Subtotal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Interest and dividends received. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Policyholders’ dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
II Cash flows from investing activities:
		 Investments in monetary trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Proceeds from sale of monetary trusts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Purchases of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Proceeds from sale and redemption of securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Investments in loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Collections of loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Others, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
				 Subtotal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Purchases of tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Proceeds from sale of tangible fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Purchases of intangible fixed assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Purchase of securities of a consolidated subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in investing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
III Cash flows from financing activities:
		 Proceeds from issuance of stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Cash dividends paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) financing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
IV Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . .
V Net increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . .
VI Cash and cash equivalents at beginning of the fiscal year . . . . . . . . . . . . . . . . . . . .
VII Cash and cash equivalents at end of the fiscal year . . . . . . . . . . . . . . . . . . . . . . . . .

(Millions of yen)

2007

The accompanying notes are an integral part of these financial statements.

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Notes to the Consolidated Financial Statements For the year ended March 31, 2007
For the year ended March 31, 2008

Financial Data

Sony Financial Holdings

1. Basis of Presenting Consolidated Financial Statements
Sony Financial Holdings Inc. (“SFH”) and its domestic subsidiaries maintain their accounting records and prepare their financial statements inJapanese yen in accordance with the provisions set forth in the Company Law of Japan, the Insurance Business Law of Japan and the Banking
Law of Japan and in conformity with generally accepted accounting principles and practices in Japan, which differ in certain respects fromthe application and disclosure requirements of generally accepted accounting principles and practices under the International Financial
Reporting Standards. SFH’s overseas subsidiary, located in the Philippines, maintains its accounting records and prepares its fi­ nancial­statements in conformity with generally accepted accounting principles and practices prevailing in the Philippines.
2. 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 Assurance Inc., Sony Bank
Inc., Sony Bank Securities Inc.
			 As Sony Bank Securities Inc., which was newly established during FY2007, is included in the scope of consolidation.
			 No subsidiaries are excluded from the scope of consolidation.
(2) Application of the equity method		
Number of affiliated companies accounted for under the equity method: Not applicable		Affiliated company not accounted for under the equity method:
			 AEGON Sony Life Planning is excluded from the scope of equity method because its net income and retained earnings are so immaterial that excluding it from the scope of equity method does not hinder a rational judgement of SFH’s financial position and results ofoperations.
(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 the consolidated financial statements of SFH. All other subsidiaries prepare their respective financial statements as of March 31, the same date as the consolidated
financial statements of SFH.
(4) Valuation of assets and liabilities of consolidated subsidiaries
		
Certain assets and liabilities of consolidated subsidiaries are computed at fair value as of the respective dates when the subsidiaries
were initially consolidated.
(5) Amortization of goodwill
		Goodwill is amortized using the straight-line method over five years.
3. Summary of Significant Accounting Policies(1) 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-average method. Held-to-maturity securities are stated at amortized cost(straight-line method) using the moving-average method. Investment in affiliates that are not accounted for by the equity method arestated at acquisition cost, calculated using the moving-average method. Other securities designated as available-for-sale securities
whose fair value is readily determinable are stated at fair value in the consolidated balance sheets based on market prices prevailingat each balance sheet date, with unrealized gains (losses), net of income taxes, included in net assets and acquisition costs calculatedusing the moving-average method. Other securities designated as available-for-sale securities whose fair value is not readily determinable are stated at amortized cost (straight-line method) or at acquisition cost based on the moving-average method.
(2) 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.”(3) Tangible fixed 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 a separate asset, as appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Companies and the cost of the item can be measured reliably. All other repairs and maintenancecharges are charged to income when incurred.
			 Depreciation is generally computed by the straight-line method for buildings and by the declining-balance method for other property
and equipment over the estimated useful lives of the assets, as follows:		
Buildings
4 to 45 years
		
Other property and equipment
2 to 20 years
			 In accordance with revisions to the Japanese corporation tax law, the depreciation method for tangible fixed assets has been changed.
Starting from April 1, 2007, tangible fixed assets acquired on and after April 1, 2007 are depreciated fully to their memorandum values,or ¥1. This change has had only a minor impact on SFH’s results of operations.
			 In accordance with the revised Japanese corporation tax law, depreciation of the remaining book value of tangible fixed assets
acquired on and before March 31, 2007 and depreciated up to the depreciable amount is computed using the straight-line method
over a period of 5 years. This change has had only a minor impact on SFH’s results of operations.
(4) Intangible fixed assets
		Intangible fixed assets are amortized using the straight-line method. Software for internal use is amortized using the straight-line
method mainly over 5 years, its estimated useful life.

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(5)
		

Sony Financial Holdings
Financial Data

Reserve for possible loan losses
The reserve for possible loan losses is calculated by the Companies in accordance with self-assessment guidelines and write-off andreserve guidelines established at each subsidiary. With respect to loans to borrowers subject to bankruptcy, court-guided rehabilitation orsimilar 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 historicalloan loss ratio determined over certain periods. Each loan is subject to asset 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 the operational departments, before the amount of reserve is finalized.
(6) Reserve for employees’ bonuses		The reserve for employees’ bonuses is provided for the estimated amount of bonuses the Companies are required to pay for services
provided during the current fiscal year.
(7) 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 the­fiscal year-end. Unrecognized prior service cost is amortized using the straight-line method over 10 years within the employees’ average remaining service period at incurrence. Unrecognized net actuarial gain (loss) is amortized using the straight-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.
(8) 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.
(9) Reserve for price fluctuations
		Pursuant to requirements under the Insurance Business Law, the reserve for price fluctuations is provided for price fluctuations­primarily related to stocks, bonds and foreign currency-denominated assets which are exposed to losses due to market price­fluctuations. This reserve may only be used to reduce deficits arising from price fluctuations on those assets.
(10) Translation of foreign currencies
		
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the foreign exchange rates in effect ateach balance 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.
(11) Leases transactions
		Finance leases that do not transfer ownership of the leased property to the lessee are accounted for as operating leases.
(12) 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 and liabilities. 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 rate swaps and others are used as hedging instruments to offset fluctuations in the fair value of fixed-rate bonds which are classified as other 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, suchhedges are considered as highly effective, resulting in a substitution for evaluating the effectiveness of the hedging transactions.
(13) Accounting for consumption taxes		The consumption taxes received and paid by SFH and its domestic subsidiaries, excluding loss adjustment expenses and operating, general and administrative expenses of SFH’s non-life insurance subsidiary, are not included in income and expenses. Under theConsumption Tax Law of Japan, the consumption taxes paid on property and equipment are not deductible from the consumption taxes
received; they are recorded as “other assets” and amortized on a straight-line basis over 5 years. Other non-deductible consumption
taxes are charged to income as incurred.
(14) Policy reserve		
Pursuant to the Insurance Business Law, SFH’s domestic life insurance subsidiary maintains a policy reserve for the fulfillment 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 in calculating the amount of the reserve required
to fund all future policy benefits. The net insurance premium is a portion of the premium covering insurance underwriting risk, which isestimated based on factors such as mortality rates, investment yield, surrender rates and other factors. The net level premium reservefor individual insurance contracts underwritten from fiscal year 1996 is calculated using mortality and interest rates set by the Financial
Services Agency as 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.
(15) Application of consolidated tax provision		
Prior to the listing of SFH’s shares on the Tokyo Stock Exchange, the consolidated tax provision, under which Sony Corporation is theparent company, was applied to SFH and its domestic subsidiaries wholly owned by Sony Corporation. As a listing of SFH’s shares on
the Tokyo Stock Exchange, SFH and its domestic subsidiaries ceased to be wholly-owned subsidiaries of Sony Corporation. As a result,
starting from April 1, 2007, SFH and its domestic subsidiaries calculate their tax provision (benefit) based on the assumption that they
are excluded from the consolidated tax system.
(16) Scope of funds in the consolidated statements of cash flows		
Funds included within this scope include cash on hand, demand deposits and other funds that are easily convertible to cash, as well as
short-term instruments that mature within three months and have a negligible risk of value fluctuation.
4. Notes to the Consolidated Balance Sheets(1) The balance of loans includes ¥15 million in loans to debtors in bankruptcy (before deductions for reserve for possible loan losses)¥227 million in “non-accrual delinquent loans” (before deductions for reserve for possible loan losses). Loans to debtors in bankruptcy
include debtors that have been in arrears on principal or interest payments for a considerably long period of time or loans (before
deductions for reserve for possible loan losses) on which principal or interest payments are considered unlikely to occur in the futurefor other reasons and on which interest income is not recognized. These loans with reasons defined under Article 96-1-3, i through iv of
the Corporate Income Tax Law Enforcement Guidelines (Enforcement Order 97 of 1965), or 96-1-3 or Item 4 of the same guidelines.
“Non-accrual delinquent loans” are loans on which accrued interest income is not recognized, excluding “bankrupt loans” and loans on
which interest payments are deferred in order to support the borrowers’ recovery from financial difficulties.

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Sony Financial Holdings(2) The balance of loans includes ¥244 million in “restructured loans” (before deductions for reserve for possible loan losses).
			 “Restructured loans” are loans on which terms and conditions have been amended in favor of the borrowers (e.g., reduction of theoriginal interest rate, deferral of interest payments, extension of principal repayments or debt forgiveness) in order to support theborrowers’ recovery from financial difficulties, excluding “bankrupt loans”, “non-accrual delinquent loans” and “past due loans (threemonths or more)”.
(3) On March 31, 2002, SFH’s domestic life insurance subsidiary revalued its land for operating purposes, as permitted by the Land
­Revaluation Law (Law No. 34, enacted March 31, 1998—the “Law”). The tax effect of the revaluation difference is accounted for differently, depending on whether there are gains or losses; when there is a loss, a valuation allowance is fully provided for the tax effectof the loss, and when there is a gain, the tax effect is recorded in “deferred tax liabilities on land revaluation”. After excluding theseamounts, the net revaluation difference is reported as “land revaluation” in net assets. The revaluation method stipulated by Article 3-3of 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) .
(4) Accumulated depreciation of tangible fixed assets as of March 31, 2007 was ¥10,926 million.
(5) The balance sheet includes ¥321,789 million of assets and liabilities in equal amounts related to separate accounts as of March 31,
2007, as stipulated in Article 118 of the Insurance Business Law.
(6) Securities includes ¥1,000 million of shares in affiliated companies.
(7) Changes in the reserve for policyholders’ dividends at SFH’s domestic life insurance subsidiary for the fiscal year ended March 31,
2008, are as follows:		Balance at beginning of the fiscal year:¥2,597 million
		
Policyholders’ dividends during the fiscal year:¥1,264 million		
Increase in interest:¥ 13 million
		Provision for reserve for policyholders’ dividends:¥3,159 million
		Balance at end of the fiscal year:¥4,506 million(8) Securities with a book value of ¥10,306 million were pledged as collateral for ¥10,000 million of call money and bills sold at March
31, 2008. In addition to the assets described above, securities with a book value of ¥60,165 million were pledged as collateral for
cash settlements, variation margins of futures markets and certain other purposes at March 31, 2008.
(9) Net assets per share amounted to ¥120,288.66.
(10) The following provides fair value information on securities as of March 31, 2008:
Trading securities(Millions of yen)
Net valuation gains recorded in income

Consolidated balance sheet amount

302,375(55,462)

Financial Data

Held-to-maturity securities with fair values
					
					
			

Bonds
Japanese government and municipal bonds
Japanese corporate bonds
Others		 Total

Consolidated		balance sheet
Fair value
amount		55,92950,932
4,996
807
56,73756,63451,5555,079
841
57,476

Other securities with fair values						
Acquisition
					
cost
			

Bonds
Japanese government and municipal bonds
Japanese corporate bonds
Equity securities
Others		 Total

Consolidatedbalance sheet
amount1,987,538
1,511,519
476,018
126,286
335,423
2,449,248

2,041,742
1,555,557
486,184
171,906
326,480
2,540,128(Millions of yen)
Net			
unrealized
Unrealized
Unrealized
gains/losses
gains
losses

705
622
82
33
739

742
659
83
33
776

37
36
0
—
37

(Millions of yen)
Net			
unrealized
Unrealized
Unrealized
gains/losses
gains
losses54,20344,037
10,16645,620(8,943)90,88068,29851,13017,16849,364
5,676
123,339

14,094
7,092
7,001
3,744
14,62032,459		Sale of bonds held to security disposed of during the fiscal year under review
			 Nothing to report.
				

Other securities sold in the year ended March 31, 2008, are as follows:		
Sales amount

Gains on sales

672,761

24,826(Millions of yen)
Losses on sales

2,765Overview of securities without market value are as follows:			

Shares of affiliated company
Other securities
		 Stocks
Others		 Total(Millions of yen)
Consolidated balance sheet amount

1,000
30,199430,19531,19964

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The future redemption schedule of other securities with maturities and held-to-maturity securities is as follows:						

1 yearor less

Bonds
		 Japanese government and municipal bonds
		 Japanese corporate bonds
Others		 Total

123,728
38,79784,93048,958
172,687

More than 1 year
to 5 years(Millions of yen)Over
10 yearsMore than 5 years
to 10 years

442,309138,283
304,025
149,190591,500

1,067,760
992,668
75,091
88,047
1,155,807

463,872
436,739
27,13247,250511,123(11) The fair value information on monetary trusts as of March 31, 2008, is as follows:(Millions of yen)
Monetary trusts for trading purposes
Consolidated balance sheet amount

Net valuation losses recorded in income

63,203(2,831)Other monetary trusts(Millions of yen)
Consolidatedbalance sheet
amountNet			
unrealized
Unrealized
gains/losses
gains

Unrealized
lossesOther monetary trusts

832,469

28,063

3,926

804,405

31,990Note: Jointly invested monetary trusts of ¥50 million are included in the above table.

(12) Commitments to provide credit line contracts on overdrafts of the banking subsidiary and loans are agreements to lend to customers,
up to a prescribed amount, as long as there is no violation of any condition established in the contracts. The amount of unused commitments at March 31, 2008 was ¥10,669 million and the amount of unused commitments whose original contract terms are within one
year at March 31, 2008 was ¥10,669 million.
(13) Expected future losses of the domestic life insurance subsidiary under the life insurance policyholder protection structure stipulated
under Article 259 of the Insurance Business Law amounted to ¥6,920 million. Such losses are recognized as expenses during the fiscal year in which they are defined.
(14) All figures in the consolidated financial statements and notes are stated in millions of yen and fractional amounts of less than ¥1 million
are discarded. As a result, the total shown in the consolidated financial statements and notes thereto do not necessarily agree with thesum of the individual account balances.

Financial Data

5. Notes to the Consolidated Statements of Income(1) Net income per share is calculated based on the weighted-average number of shares of common stock outstanding during the fiscal
year. For the year ended March 31, 2008, the net income per share was ¥11,357.53. There were no potential dilutive securities.
			 The basis for this calculation is net income of ¥24,255 million, of which the entire portion is applicable to common shares. The
weighted-average number of shares outstanding for the fiscal year ended March 31, 2008, was 2,135,655.
(2) All figures in the consolidated financial statements and notes are stated in millions of yen and fractional amounts of less than ¥1 million
are discarded. As a result, the total shown in the consolidated financial statements and notes thereto do not necessarily agree with thesum of the individual account balances.

Sony Financial Holdings				
Acquisition
			
cost
			

6. Notes to the Consolidated Statement of Changes in Net Assets(1) Types and numbers of shares issued are as follows:				
Numbers of shares			as of March 31, 2006			Common stock		(2)

2,100,000

Numbers of shares
decreased during
the period

Numbers of shares
as of March 31, 2007

75,000—2,175,000

Information on dividends is as follows:a. Dividends paid			Date of resolution
Type of shares

Ordinary General Meeting of Shareholder
held on June 29, 2007
		Numbers of shares
increased during
the period

Aggregate amountof dividends

Cash dividends
per share

Record date

Effective dateCommon			¥6,500 million¥3,095.24
stock

March 31,2007

June 30,
2007

b. Dividends to be paid in the next fiscal year			Date of resolution
Type of shares

Source ofdividends

Cash dividends
per share

Record date

Effective dateOrdinary General Meeting of Shareholders
held on June 26, 2008

Retained			¥6,525 million ¥3,000.00
earnings

March 31,2008

June 27,
2008

Commonstock

Aggregate amountof dividends

7. Notes to the Consolidated Statements of Cash Flows(1) The reconciliation of cash and cash equivalents in the statements of cash flows to cash and cash deposits as stated in the consolidatedbalance sheets as of March 31, 2008, is as follows:
				

		
		
		
		
(2)

(Millions of yen)

Cash and due from banks¥ 60,058
Call loans of domestic life insurance subsidiary
72,300
Securities of the non-life insurance subsidiary maturing
within three months of the acquisition date
3,828
Cash and cash equivalents¥136,186
Cash flows from investing activities include cash flows from lending operations of the insurance business.

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Capital Adequacy Status

Financial Data

Sony Financial Holdings

Qualitative Disclosure
1. Scope of Consolidation
The Company’s consolidated capital adequacy ratio is the basis used to determine the capital adequacy reflected by bank holding company
assets held in the bank holding company, as well as in the bank holding company’s subsidiary, in accordance with Article 52-25 of the ­Banking
Law of Japan. The standards used to determine the capital adequacy ratio are based on the March 27, 2006 Financial Services Agency
Public Announcement No. 20 of 2006 (hereinafter, the “Consolidated Capital Adequacy Ratio Public Announcement”). The corporate groupfor which the consolidated capital adequacy ratio is calculated (hereinafter, the “Holding Company Group”) excludes from its scope of
consolidation the insurance subsidiaries Sony Life, Sony Life Insurance (Philippines) Corporation and Sony Assurance. Furthermore, in
accordance with Item 2 (c), Paragraph 1, Article 20 of this Public Announcement (insurance subsidiaries, etc.), items pertaining to the three
insurance subsidiaries are deducted from the Company’s capital. However, five subsidiaries are included in the scope of consolidation as
determined by regulations for purpose of consolidated financial statements: Sony Life, Sony Life Insurance (Philippines) Corporation, Sony
Assurance, Sony Bank and Sony Bank Securities.
		 For details on the operations of Sony Life, Sony Life Insurance (Philippines) Corporation, Sony Assurance, Sony Bank and Sony Bank
Securities, please refer to pages 28 to 39 of this report.
		 We have no affiliated companies which conduct financial business to which Article 21 of the Consolidated Capital Adequacy Ratio Public
Announcement applies; we have no companies subject to deduction items under Item 2 (a) and (b), Paragraph 1, Article 20 of this Public
Announcement; and we have no companies conduct business in accordance with (a) of Item 10, Paragraph 1, Article 52-23 of the Banking
Law of Japan or in accordance with Item 11 which of this Paragraph that do not belong to the Holding Company Group.
		 As is described above, only SFH, Sony Bank and Sony Bank Securities are included in the Holding Company Group from the standpoint of
the Consolidated Capital Adequacy Ratio Public Announcement. No particular restrictions are in place to limit the movement of assets orcapital between SFH and Sony Bank or Sony Bank Securities, but no monetary transactions take place between the companies. Furthermore,
SFH considers the soundness of Sony Bank important and strives to ensure that Sony Bank retains an appropriate level of capital.
2. Overview of Fund-Raising Methods
All capital is funded through the issuance of common stock. Of SFH’s common stock, 60% is owned by Sony Corporation, and the remaining
40% by other general shareholders.
3. Overview of Method for Evaluating the Degree of Capital Adequacy of the Holding Company Group According to the Consolidated Capital Adequacy Ratio Public Announcement
As of March 31, 2008, the Company maintained a consolidated capital adequacy ratio of 14.62% (of which Tier I capital ratio constitutes
48.85%), calculated in accordance with the Consolidated Capital Adequacy Ratio Public Announcement. This level is substantially higher
than the 4% Capital Adequacy Ratio required as a minimum standard for banks that operate only in Japan, and indicates sufficient management soundness and stability. In calculating this consolidated capital adequacy ratio, credit risk was calculated by using the standard
method and operational risk by using the basic method.
		 In accordance with the Consolidated Capital Adequacy Ratio Public Announcement, to manage and evaluate the capital adequacy ratioof Sony Bank as the core operating company in the Holding Company Group and to ensure soundness while adopting an adequate balance between risk and return, Sony Bank allocates capital, employing the Risk Management Guidelines that serve as one risk management
method for the SFH Group. To allocate capital, the amounts of various risks—including credit risk, market risk and operational risk—aremeasured in accordance with the characteristics of each risk type, and capital is allocated for each risk within the scope of Sony Bank’s
management strength (capital adequacy). In line with its Risk Management Guidelines, the Company monitors and conducts other checks
on Sony Bank’s method of allocating capital, level of capital allocation, amount of capital actually used as a portion of the capital allocatedand others. This approach enables the Company to view and to ensure capital adequacy of the stand-alone capital of Sony Bank and theconsolidated capital of the Holding Company Group from an overall perspective.
		 The Company will continue to prepare capital adequacy measures each fiscal year in line with its operating plans and to pursue thesemeasures in tandem with those of each Group company, including Sony Bank. In addition to accumulating its income from operations
into capital, the Company will increase its own capital, as well as that of Sony Bank as needed, or employ other measures to counter theincrease in risk that accompanies an expanded scale of operations.
The consolidated risk assets of the Holding Company Group, which according to the Consolidated Capital Adequacy Ratio P­ ublic
Announcement consist of the Company and Sony Bank, are subject to the various risks described below. As a bank holding company, the risk assets that SFH holds on its own constitute a small ratio. Furthermore, as SFH makes no investments in marketablesecurities, loans, financial derivatives or other products except for its holdings of shares in subsidiaries, the following discussion
centers on the risk management of Sony Bank.
As a bank holding company, SFH monitors the overall risk management preparations described below for Sony Bank. Throughthe Risk Management Guidelines it has established and the risk management conferences it holds, as well as through other measures, the Company promotes risk management for the entire SFH Group. For information concerning the overall risk management
preparations of the SFH Group, please refer to the Risk Management section on pages 12–19 of this report.
4. Credit Risk(a) Overview of Risk Management Policies and Procedures
		 (1) Individual Credit Risk
			 Individual credit risk refers to the risk of loss resulting from the decline in or disappearance of the value of credit assets as a resultof the worsening credit standing of individual creditors. The centralized risk management section at Sony Bank has the role ofpreparing measures pertaining to risk measurement, monitoring and management. The Bank’s Board of Directors establishes basic
policies on individual risk management and creates appropriate credit risk management systems based on its recognition of theexistence, characteristics and methods of measuring and managing individual credit risk.
				 Managing individual credit risk requires the management of customer transactions, such as mortgages, special-purpose and cardloans, and other transactions involving individual credit risk. The department in charge of individual credit risk establishes screening standards for such loans, and the department in charge conducts screening. After loans have been extended, the department
in charge of individual credit risk monitors the default status of these loans on a daily basis, periodically reporting the results of its
monitoring to the Board of Directors.
				 An allowance for doubtful accounts is prepared in line with amortization and reserve criteria, and is calculated as described below.
Normal loans and potential problem loans are divided into specific categories, and reserves are set aside for each category basedon the actual percentage of bad debt historically experienced in each category over a specific period of time. For loans to customers

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facing potential bankruptcy, an allowance is established by subtracting from the amount of exposure the estimated amount recoverable from disposal of collateral and the estimated recoverable guarantee amount. A reserve for all effectively ­bankrupt loans is established by subtracting from the amount of exposure the estimated amount recoverable from disposal of c
­ ollateral and the estimatedrecoverable guarantee amount. For all loans, certain sections perform asset assessments based on asset self-­assessment standards
and with the cooperation of related departments, and an allowance is created based on these self-assessment results.

(b) Rating Institutions Eligible to Weight Risks
		 SFH and Sony Bank use the five rating institutions indicated bellow to determine risk weight. Rating institution eligibility is not selected
depending on the type of exposure.
			 The rating institutions are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency, Ltd. (JCR), Moody’s InvestorsService, Inc. (Moody’s), Standard & Poor’s Corp. (S&P) and Fitch Ratings, Ltd. (Fitch).

Financial Data

5. Overview of Risk Management Policies and Procedures for Reducing Credit Risk
Sony Bank’s loan exposure is solely on loans to individuals, such as mortgage, special-purpose and card loans, so risk is adequately
dispersed in small batches. Furthermore, guarantees from surety companies are acquired on all special-purpose and card loans. On
mortgage loans, real estate serves as collateral, and the Bank outsources its problem asset collection activities to credit management andcollection companies (servicers) to raise collection efficiency. Furthermore, the Bank reappraises the value of real estate used as collateralon an annual basis.
		 On mortgage loans, in some cases collateral provided by a business alliance partner is partial collateral in place of the real estate forwhich the mortgage loan has been secured. In such cases, Sony Corporation is the only party to which the Basel II credit risk reduction
method is applied. Loan exposure using Sony Corporation’s collateral amounts to only 1.22% of total loan exposure, which does not­represent an undue concentration of exposure.
		 Certain credit derivatives are used as a method of reducing credit risk on marketable securities. For such credit derivative activities,
transaction limits are set according to the rating of the party providing the protection, and limits are in place to prevent such protection
from being skewed toward specific providers. On such derivative product transactions, legally valid netting contracts are used, based on
the conclusion of ISDA master contracts, and the legal validity of such contracts is confirmed.

Sony Financial Holdings		 (2) Market Credit Risk
			 Market credit risk describes the risk of loss resulting from changes in the market value of marketable securities as a consequenceof deterioration in the credit condition of the issuer of owned marketable securities, as well as the risk that the financial conditionsof contractual counterparties to market transactions will worsen and they will thereby become unable to fulfill their contractual
obligations. Sections in charge of market credit risk at Sony Bank prepare measures pertaining to market credit risk measurement,
monitoring and management. The Bank’s Board of Directors establishes basic policies on market credit risk management and creates appropriate market credit risk management systems based on its recognition of the existence, characteristics and methods ofmeasuring and managing market credit risk.
				 With regard to market credit risk, this is managed on market transactions, such as marketable securities transactions, yen andforeign currency monetary transactions, foreign exchange transactions, financial derivative product transactions (derivatives) andother transactions for which risk management is considered necessary. In terms of managing market credit risk, a capital-at-risk
ceiling and other credit limits are established, based in principle on the ratings accorded by external rating institutions. Various
other guidelines and credit monitoring stages are also established, and conformance with pre-established credit ceilings and guidelines is monitored and reported. In the event that credit ceilings and other credit limits are exceeded, this situation is reported to
management and necessary countermeasures are considered. Also, risk management status is periodically reported to the Boardof Directors.
				 Owned marketable securities are classified according to the self-assessment standards and classification standards established bySony Bank, and problem assets are managed.

6. Overview of Risk Management Policies and Procedures Related to Risk Involving Counterparties in Derivative Product—Transactions and Transactions with Long Settlement Periods
Sony Bank’s primary objective for using derivative product transactions is to manage market risk appropriately. These derivative producttransactions involve the market risk of potential loss due to market fluctuations and the credit risk of potential losses due to transaction
counterparties becoming unable to meet payment obligations.
		 In response to market risk, the bank performs valuations of transaction gains or losses and calculates market risk amounts on a daily
basis. Sony Bank uses maximum expected loss (value at risk) as an overarching measure of its total market risk amount. By establishinga ceiling for this risk amount, the Bank is able to manage risk appropriately within these risk parameters. In response to credit risk, theBank sets credit limits based on transaction counterparties’ ratings and transaction periods. These credit limits establish the scope ofmanagement strength, based on the allocation of capital. Calculations exclude collateral coverage and reserves. In the event that SonyBank’s creditworthiness should worsen, even in the event that transaction counterparties require the Bank to supply additional collateral,
the impact on the Bank would be limited because the Bank holds sufficient assets to allay this situation.
		 The Bank does not engage in transactions with long settlement periods.
7. Securitization Exposure(a) Overview of Risk Management Policies and Procedures
		 Our investments in marketable securities include some securitized products. To recognize the risks that such products entail, we
strive to conduct appropriate risk management through such methods as obtaining information on market movements, the state ofunderlying assets, market valuations and ratings provided by eligible rating institutions. Our risk management also includes the settingof transaction limits in line with ratings and the period remaining to maturity.
(b) Methods Used to Calculate Credit Risk Asset Amount of Securitization Exposure
		 We employ standard methods for these calculations.
(c) Method of Accounting for Securitization Transactions
		 As its accounting method for these transactions, we follow the Practical Guidelines for Accounting for Financial Instruments establishedby the Japan Institute of Certified Public Accountants.

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(d) Rating Institutions Eligible to Weight Risks by Type of Securitization Exposure
		 We use the five rating institutions indicated bellow to determine risk weight. Eligible rating institutions are not selected according toinvestment type.
			 The rating institutions are Rating and Investment Information, Inc. (R&I), Japan Credit Rating Agency, Ltd. (JCR), Moody’s InvestorsService, Inc. (Moody’s), Standard & Poor’s Corp. (S&P) and Fitch Ratings, Ltd. (Fitch).

Sony Financial Holdings

8. Market Risk
In accordance with Article 16 of the Consolidated Capital Adequacy Ratio Public Announcement, SFH includes in its calculation method
according to Article 14 of this Public Announcement no market risk equivalent amount. Consequently, this topic is not applicable.
9. Operational risk(a) Overview of Risk Management Policies and Procedures
		 Sony Bank faces a number of operational risks. Administrative risk is the risk of loss due to errors, misconduct, malfunctions andother factors related to problems with our internal administrative processes. Systems risk is the risk of loss arising from malfunctions,breakdowns, improper use or information leaks related to problems with our information technology systems. Outsourcing risk is therisk of loss resulting from the difficulty of third-party service providers to continue providing contracted services or problems withsuch parties’ operational management, information management practices or other factors. Legal risk is a risk of loss due to legal
contraventions or contractual issues. Reputational risk is the risk of the Bank’s reputation suffering damage or loss from activities
that contravene social mores and issues arising in the marketplace or with customers stemming from inappropriate information
disclosure. Departments responsible for managing these operational risks undertake the role of preparing measures pertaining torisk measurement, monitoring and management. The Bank’s Board of Directors establishes basic policies and measures and creates
appropriate risk management systems based on its recognition of the existence, characteristics and methods of measuring andmanaging of risk.
			 Departments responsible for managing these operational risks monitor the risk for which they are responsible. If a significant riskmaterializes, the department reports this situation to management, and together they consider necessary measures. Also, departments
periodically report risk management conditions to the Board of Directors.
(b) Method Used to Calculate Operational Risk Equivalent Amount
		 SFH and Sony Bank use the basic method to calculate operational risk.

Financial Data

10. Overview of Risk Management Policies and Procedures Regarding Equity Exposure in the Banking AccountSony Bank and Sony Bank Securities, the consolidated group that conducts the banking business of the Holding Company Group as stipulated in the Consolidated Capital Adequacy Ratio Public Announcement, has no such exposure on shares and other equity investments andcapital injections.
11. Interest Rate Risk in the Banking Account(a) Overview of Risk Management Policies and Procedures
		 Interest rate risk is the risk of loss arising from fluctuations in market interest rates. Sony Bank regularly evaluates and measures thisrisk and develops appropriate countermeasures.
			 Specifically, in addition to managing and evaluating the interest rate risk as measured by Basel II, the Bank periodically measuresinterest rate risk (basis point value) assuming a given interest rate shock and the maximum expected loss (value at risk) to the banking
account. This information is reported to management and considered with the ALM committee, as the Bank strives to control risk
through asset and liability optimization.
(b) Overview of Method for Calculating Interest Rate Risk Used for Internal Control
		 Interest rate risk in the banking account is considered as the amount of risk that would arise from an interest rate shock through theimpact of market interest rates on certain assets and liabilities (such as loans, deposits and marketable securities) held by financial
institutions. Demand deposits generally have no clear interest rate revision interval and may be withdrawn by depositors at any time.
The Bank defines “core deposits” as that part of demand deposits that have not been withdrawn for a long period of time, and applies
assumptions as to the balance and maturities. The bank measures the interest rate risk on liquid deposits based on their actual
balances and maturities and the bank’s core deposit assumptions.
			 Sony Bank calculates the interest rate risk in its banking account for Basel II based on the definitions below.
• Measurement method					 GPS calculation method• Interest rate sensitive assets and liabilities					 Deposits, loans, foreign exchange, marketable securities, monetary transactions, financial derivative products• Core deposits					 Target: Yen liquid deposits (ordinary deposits)					 Calculation method:
Use the lowest of (1) the smallest balance during the past five years, (2) the balance after
subtracting the largest outflow during the past five years or (3) an amount equivalent to 50% of the current balance.
					 Term: Five years or less (average of 2.5 years)• Repayment prior to maturity					 For mortgage loans, calculate the rate of repayment prior to maturity based on past experience, and include the additional cash
flow generated by this repayment.
• Interest rate shock margin					 Using a five-year measurement period, take either the 99th percentile or the 1st percentile for interest rate fluctuations on
products held for a one-year period.
• Risk measurement frequency					 Quarterly (based on the end of the preceding month)

Quantitative Disclosure
1. Of companies covered under the exclusion items provided by Article 8, Paragraph 1, Item 2 (a) to (c) or by Article 20,
Paragraph 1, Item 2 (a) to (c) of the Consolidated Capital Adequacy Ratio Public Announcement, names of companies
that fall below legislatively required capital adequacy and the total amount by which they fail to meet the required
capital adequacy.
Not applicable.

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2. Items Constituting Capital Adequacy(As of March 31)(Millions of yen)
Item

2008

186,245

207,970—
5,500
180,877
(682)
3,874
4,425
—
152
152
—
186,398
145,881—
19,900195,277
3,087
7,788
—
2,505
161
161
—
208,131
145,881

145,881
40,516

145,881
62,249337,505
308,794
1,120
27,591
13,500425,705
389,532
312
35,861
17,02814.62%

55.18%

48.85%

Notes: 1. In accordance with Article 52-25 of the Banking Law, the bank holding company has determined the appropriateness of disclosure of assets held by it and its
subsidiary for capital adequacy status, in accordance with the standard calculations (stipulated in March 27, 2006, Financial Services Agency Public Announcement
No. 20). The Company has employed Standard 2 (domestic criteria).
2. The amount of equivalent goodwill is in accordance with Article 17, Paragraph 1, Items 1 through 4 of the Consolidated Capital Adequacy Ratio Public Announcement.

Financial Data

12.01%

Sony Financial Holdings

CapitalTier I capital (core capital)[A]			
		 Of which, preferential equity issues
		 with step-up interest rate conditions						Common stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 
			Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
			Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . 
			Unrealized losses on other securities. . . . . . . . . . . . 
			Minority interests in consolidated subsidiaries. . . . . . 
			Goodwill equivalents . . . . . . . . . . . . . . . . . . . . . . . . 
Tier II capital (supplementary capital) [B]			General reserve for possible loan losses. . . . . . . . . . 
Sub-supplementary capital[C]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Capital subtotal [A+B+C][D]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Deductions[E]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
			Fund-raising procedures by financial subsidiaries,			subsidiary companies conducting financial business			
and insurance subsidiaries that are not included			in the scope of consolidation, and by affiliated			
companies conducting financial business . . . . . . . . . 
Total capital [D] – [E][F]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Risk-adjusted assets
Total risk assets[G]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
			Balance sheet items . . . . . . . . . . . . . . . . . . . . . . . . 
			Off-balance-sheet items. . . . . . . . . . . . . . . . . . . . . . 
			Result of dividing operational risk by 8%. . . . . . . . . . 
Consolidated total of required capital [G] x 4% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Consolidated capital adequacy ratio(domestic criteria)[F] / [G] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Reference: Tier I ratio(domestic criteria)[A] / [G] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2007

3. Items Related to Capital Adequacy Level(As of March 31)(Millions of yen)
2008

2007

(a) Total credit risk assets and required capital. . . . . . . . . . . . . . . 
(1) Exposure by portfolio to which standardized method		applied. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 (i) Sovereigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 (ii) Financial institutions . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 (iii) Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 (iv) Small and medium-sized businesses, individuals. . . . . . 
		 (v) Collateralized mortgage loans. . . . . . . . . . . . . . . . . . . 
		 (vi) Business involving real estate transactions. . . . . . . . . . 
		 (vii) Exposure to items past due by three months or more. . 
		 (viii) Others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(2) Securitization risk exposure. . . . . . . . . . . . . . . . . . . . . . . . 
(b) Operational risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(c) Consolidated total of required capital (a + b) . . . . . . . . . . . . . . 

Risk Assets

Required Capital

Risk Assets

Required Capital

309,914

12,396

389,844

15,593309,889
3,990
95,30363,56079,492
61,945—1
5,597
24
27,591
337,505

12,395
159
3,812
2,542
3,179
2,477
—
0
223
0
1,103
13,500389,844
5,697
142,21771,74579,06383,997—39
7,083—
35,861
425,705

15,593
227
5,688
2,869
3,162
3,359
—
1
283
—
1,434
17,028Notes: 1. Required capital = risk assets x 4%.
2. “Exposure” consists of the credit equivalent amount of assets (excluding assets resulting from derivative product transactions), off-balance-sheet transactions andderivative product transactions.
3. “Sovereigns” refers to central governments, central banks, local public entities, Japanese government-affiliated institutions, overseas public sector bodies other thancentral banks, international development banks and international settlement banks.
4. “Exposure to items past due by three months or more” refers to exposure to debtors whose principal or interest payments are past due by three months or morefrom the day following the contract payment date.
5. SFH and Sony Bank employ the basic method for operational risk.

			 Method of calculating operational risk (basic method):			Gross profit (total of positive values for the most recent three years) x 15%
÷ 8%
			 Number of years in the most recent three in which gross profit has been positive
6. Consolidated total of required capital = Denominator of the consolidated capital adequacy ratio × 4%

69

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4. Items Related to Credit Risk (Excluding Securitization Exposure)(a) Fiscal year-end credit risk exposure and breakdown by principal categories:
Year-End Balance of Exposure by Industries or Counterparties(As of March 31)(Millions of yen)
Credit Risk Exposure at Year-End

Sony Financial Holdings

			
			

Sovereigns. . . . . . . . . . . . . . . 
Financial institutions. . . . . . . . . 
Corporations. . . . . . . . . . . . . . 
Small and medium-sizedbusinesses, individuals. . . . . . 
Collateralized mortgage loans. . . 
Business involving realestate transactions . . . . . . . . 
Others . . . . . . . . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . 

Of which,Marketable Securities

2007

2008

2007

2008

2007

2008

2007

2008

175,696236,935
106,895

297,415
479,031104,283

—
—
—

—
—
—

170,829
103,478
106,801

295,404
86,604
103,769

—
—
—

—
—
—

107,736
176,987

106,874
239,991

107,725
176,987

106,964
239,991

—
—

—
—

0
—

39
—

—
—
5,704
7,653
809,955 1,235,250——
284,712—
109
347,065——
381,109——
485,777

—
—
0

—
—
39

Notes: 1. “Exposure to items past due by three months or more” refers to exposure to debtors whose principal or interest payments are past due by three months or morefrom the day following the contract payment date.
2. Please refer to the financial data (pages 87 and 88) for year-end exposure amounts of loans and marketable securities by remaining term. Note that securitization
exposure balances in the financial data includes marketable securities balances. (Refer to quantitative disclosure item 7, Securitization Exposure, in the quantitative
disclosure.)

Year-End Balance of Loans by Type and Department(As of March 31)(Millions of yen)		2007			

Domestic

Loans on deeds. . . . . . . . . . . .
Overdrafts. . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . .

Financial Data

Of which,
Loans

Of which, Exposure to Items
Past Due by
Three Months or MoreInternational

278,338
6,050
284,389

323
—
323

2008

Total

Domestic

278,662
6,050
284,712

339,088
7,498
346,586

International

478
—
478

Total

339,566
7,498
347,065

Year-End Balance of Marketable Securities by Type and Department(As of March 31)(Millions of yen)		

JGBs. . . . . . . . . . . . . . . . . . . .
Short-term corporate bonds. . .
Corporate bonds. . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . .
Other securities. . . . . . . . . . . .
Of which, foreign. . . . . . . . .
Of which, others . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . .

2007			

2008

Domestic

International

Total

Domestic

International

Total

131,025
20,98474,720
—
7,031
—
7,031
233,761————
147,473
147,473—
147,473

131,025
20,98474,720—154,504
147,473
7,031
381,234

171,157—
152,107
3,000
9,705
—
9,705
335,971————
152,806
152,806—
152,806

171,157—
152,107
3,000
162,512
152,806
9,705
488,777(b) Year-end balance and change during year of general allowance for doubtful accounts, and individual allowance for doubtful accounts:(For the years ended March 31)(Millions of yen)
Beginning Balance		
General allowance for
doubtful accounts

2008

Individual allowance for
doubtful accounts

2008

128
152
33
9
161
162

2007
2007
2007

Total

2008

Increase

152
161
9
91
162
253

Decrease		
Used for Objective

—
—
15
—
15
—

Other

128
152
17
9
145
162

Ending Balance

152
161
9
91
162
253

Note: Allowances for doubtful accounts are all for individual accounts.

(c) Amortization of loan amounts by industry:(For the years ended March 31)(Millions of yen)
2008

2007

Individuals

0

0

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(d) Exposure by risk weight:(As of March 31)(Millions of yen)
Exposure
2008

2007

Risk Weight Defined by Directive
Rated

0%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
10%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
20%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
35%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
50%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
75%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
100%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
150%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
350%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Capital exclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Not Rated

143,208
30,196
192,386—
64,758—88,977———
519,527——
133
176,987
5,238
102,4965,570
0——290,427

Rated

Not Rated

241,336
55,185434,110—45,558—96,834———873,024——713
239,991
4,248
102,585
14,6860——362,225

Notes: 1. Ratings are only those provided by eligible rating institutions.
2. Exposure is separated by risk weight after the application of credit reduction methods.

Exposure to Items to which Effect of Credit Risk Reduction Methods Applied(As of March 31)(Millions of yen)
Eligible Financial Asset Guarantees
2008

2007

Credit Derivatives
2008

2007

2008

2007

—
—
—
—

—
—
—
—

5,238
—
—
—

4,248
—
—
—

—
—
—
—

15,997
—
8,760
7,237

—

—

5,238

4,248

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

—

Financial Data

Exposure to which effect ofcredit risk reduction
methods applied . . . . . . . . . .
(i) Sovereigns . . . . . . . . .
(ii) Financial institutions. . .
(iii) Corporations. . . . . . . .
(iv) Small and medium		
sized businesses,		
individuals. . . . . . . . .
(v) Collaterialized		
mortgage loans. . . . .
(vi) Business involving		
real estate		transactions . . . . . . .
(vii) Exposure to items
		past due by three		months or more. . . . .

Guarantees

Sony Financial Holdings

5. Items Related to the Effect of Credit Risk Reduction Methods

6. Counterparties’ Risk on Derivative Transactions and Transactions with Long Settlement Periods(As of March 31)(Millions of yen)
2008

2007

Equivalent credit calculation method. . . . . . . . . . . . . . . . . . . . . . . 
Gross restructuring cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Current Exposure Method

Current Exposure Method

Equivalent credit amount before
accounting for effect of credit risk
reduction method using collateral

Equivalent credit amount after
accounting for effect of credit risk
reduction method using collateral

4,172

2007

(1) Total derivative transactions. . . . . . . . . . . . . . . . . . . . . . . . . . 
(i) Foreign exchange transactions. . . . . . . . . . . . . . . . . . . . . 
(ii) Interest rate transactions. . . . . . . . . . . . . . . . . . . . . . . . . 
(iii) Gold transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(iv) Stock transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(v) Precious metal (except gold) transactions. . . . . . . . . . . . . 
(vi) Other commodity transactions . . . . . . . . . . . . . . . . . . . . . 
(vii) Credit derivatives. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Effective credit reduction from close-out netting contracts. . . . . 
(2) Transactions with long settlement terms . . . . . . . . . . . . . . . . . 
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

5,545
5,507
2,000
—
—
—
—
—
1,962
—
5,545

2008

1,557
1,715
1,557
—
—
—
—
—
1,715
—
1,557

2007

5,545
5,507
2,000
—
—
—
—
—
1,962
—
5,545

600

2008

1,557
1,715
1,557
—
—
—
—
—
1,715
—
1,557

Notes: 1. Gross restructuring cost is limited to items that do not fall below zero.
2. The amount of total gross restructuring cost and total gross add-ons less the equivalent credit amount before accounting for the effect of credit risk reduction
method using collateral is expressed in the table above as the amount of effective credit reduction from close-out netting contracts.
3. The credit risk reduction method using collateral is not employed on derivative product transactions.
4. No credit derivative transactions exist that require the calculation of an equivalent credit amount.

71

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7. Securitization Exposure(a) Securitization exposure in which the Holding Company Group is the originator
		 Not applicable.
(b) Securitization exposure in which the Holding Company Group is an investor
		 (1)		Retained securitization exposure amount and breakdown by major underlying asset type(As of March 31)(Millions of yen)
2008

2007

Securitization Exposure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(i) Card loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(ii) Mortgage loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(iii) Automobile loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		(2)		Balance of retained securitization exposure by risk weight and required capital amounts(As of March 31)

Sony Financial Holdings

Risk Weight Established by Directive

Financial Data

—
—
—
—

124
124
—
—

20% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
50% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
100% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
350% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Deductions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(i) Card loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
(ii) Collateralized mortgage loans. . . . . . . . . . . . . . . . . 
(iii) Automobile loans . . . . . . . . . . . . . . . . . . . . . . . . . . 

(Millions of yen)
Exposure Balance
2007

124
—
—
—
—
—
—
—

Required Capital

2008

2008

2007

—
—
—
—
—
—
—
—

—
—
—
—
—
—
—
—

0
—
—
—
—
—
—
—

Note: Required capital = exposure x risk weight x 4%.

		(3) Amount of credit risk assets calculated with application of Article 15 of the Supplementary Measure (Interim Measure for­Securitization Exposure) to the Consolidated Capital Adequacy Ratio Public Announcement
			 Not applicable.
8. Items Related to Market Risk
In accordance with Article 16 of the Consolidated Capital Adequacy Ratio Public Announcement, SFH includes in its calculation method
according to Article 14 of this Public Announcement no market risk equivalent amount. Consequently, this item is not applicable.
9. Items Related to Equity Exposure in the Banking AccountSony Bank and Sony Bank Securities, the consolidated group that conducts the banking business within the Holding Company Group as
defined by the Consolidated Capital Adequacy Ratio Public Announcement, has no capital injection or stock exposure.
10. Exposure to which the Deemed Calculation of Credit Risk Assets is Applied
As SFH and Sony Bank employ the standard method for calculating credit risk, this item does not apply.
11. Interest Rate Risk in the Banking Account(As of March 31)(Millions of yen)Interest Rate Risk
2007

Decrease in economic value resulting from interest rate shock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Japanese yen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
U.S. dollars. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Outliers ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

4,742
4,077
516
148
12.6%

2008

3,447
3,056
185
204
9.2%

Notes: 1. The decrease in economic value resulting from interest rate shock is calculated according to the method shown on page 68 under “11. Interest Rate Risk in the
Banking Account” in the qualitative disclosure items.
2. These figures are managed for Sony Bank on a non-consolidated basis.

72

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Risk-Monitored Loans

Risk-Monitored Loans
As of March 31,(Millions of yen)

		

2007

2008

Bankrupt loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-accrual delinquent loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Past due loans (three months or more) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restructured loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
		 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

—
24
—
252
277

15
227
—
244
487

Sony Financial Holdings
Financial Data
73

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Sony Life’s Financial Data
Condensed Financial Statements

Non-consolidated Statements of Income
For the years ended March 31,

Financial Data

Sony Life		

Ordinary revenues . . . . . . . . . . . . . . . . . . . . . 
Income from insurance premiums . . . . . . . . 
		 Insurance premiums. . . . . . . . . . . . . . . . . 
Investment income. . . . . . . . . . . . . . . . . . . 
		 Interest and dividends . . . . . . . . . . . . . . . 
		 Income from monetary trusts, net. . . . . . . 
		 Income from trading securities, net. . . . . . 
		 Gains on sale of securities. . . . . . . . . . . . 
		 Gains on redemption of securities. . . . . . . 
		 Gains from derivatives, net. . . . . . . . . . . . 
		 Gains on separate accounts, net. . . . . . . . 
Other ordinary income. . . . . . . . . . . . . . . . . 
		 Reversal of reserves for outstanding
		 claims. . . . . . . . . . . . . . . . . . . . . . . . . . 
Ordinary expenses. . . . . . . . . . . . . . . . . . . . . 
Insurance claims and other payments. . . . . . 
		 Insurance claims, annuity payments
		 and insurance benefits. . . . . . . . . . . . . . 
		 Surrender payments . . . . . . . . . . . . . . . . 
Provision for policy reserve and others. . . . . 
		 Provision for reserve for outstanding
		 claims. . . . . . . . . . . . . . . . . . . . . . . . . . 
		 Provision for policy reserve . . . . . . . . . . . 
Investment expenses. . . . . . . . . . . . . . . . . .
		 Losses on trading securities, net . . . . . . . 
		 Losses on sale of securities. . . . . . . . . . . 
		 Devaluation losses on securities. . . . . . . . 
		 Losses on redemption of securities. . . . . . 
		 Losses from derivatives, net. . . . . . . . . . . 
		 Losses on separate accounts, net . . . . . . 
Operating expenses . . . . . . . . . . . . . . . . . . 
Other ordinary expenses. . . . . . . . . . . . . . . 
Ordinary profit. . . . . . . . . . . . . . . . . . . . . . . . 
Extraordinary gains (losses), net. . . . . . . . . . . 
		 Provision for reserve for price		 fluctuations. . . . . . . . . . . . . . . . . . . . . . 
Provision for reserve for policyholders’dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . 
Income before income taxes. . . . . . . . . . . . . . 
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . 

(Millions of yen)

2004

2005

2006

2007

2008

580,972
514,825
512,700
64,767
24,377
7,951
154
2,343
3,991
2,245
23,702
1,379

604,093551,610550,304
50,08925,595
7,170
3,962
3,339
2,393
—
7,623
2,392

696,426
580,516579,267
108,438
26,581
19,558
—
6,546
5,342
825
49,524
7,471

689,591
605,561
603,61178,722
34,267
12,1691,708
11,887542
3,061
14,985
5,307

741,250
648,406
646,976
87,493
47,913
14,776324
24,023
145
—
—
5,350

—
550,493
191,542207
587,023
194,141—
672,067
231,881732
674,696219,347277
701,959
241,106

81,481
105,227
269,11788,008
101,649
299,494

114,497
113,637
344,915

89,911
125,262
349,629

94,859141,842286,215

4,652
264,464
3,605
—
928
—
704
—
—
78,254
7,973
30,478(6,330)—299,494
5,116
—
330
217
1,146
342
—
79,7298,541
17,070(515)

709
344,204
4,561
647
267
—
212
—
—
82,0408,668
24,359(7,520)—349,624
8,184
—
148
66
601
—
—
87,328
10,206
14,895(801)—
286,20269,895
—
1,563
6,697
21
4,858
48,31594,367
10,37539,290(3,406)(6,264)(441)(7,442)(773)(3,216)644
23,504
9,571
13,932519
16,035
5,933
10,102

1,491
15,347
5,730
9,616

2,057
12,036
4,542
7,494

3,159
32,725
14,21018,51474

08_SFH_E_BH_0805.indd 74

08.8.5 5:07:47 PM

Non-consolidated Balance Sheets
As of March 31,

		

2006

2007

2008

66,381
175,000
419,224
1,563,605
71,62946,444——33,542
2,375,828

51,611
176,100
515,229
1,704,663
79,91450,763——38,983
2,617,266

31,43355,900658,351
2,132,216
86,91875,739——62,6803,103,241

28,502228,000
718,492
2,217,902
96,804—87,883
5,263
63,1203,445,970

22,99972,300893,952
2,388,932
108,688—
83,651
8,095
81,166
3,659,786

2,114,262
17,913
2,095,565
12,225
105,928
10,933—2,243,350

2,413,501
17,7052,395,060
12,66644,1385,817—
2,476,124

2,759,264
18,4152,739,264
20,10968,642
36,685706
2,885,408

3,109,169
17,683
3,088,888
20,88277,73920,903706
3,229,401

3,397,003
17,405
3,375,090
24,09951,1494,155
706
3,477,115

65,000865
15,814(768)

65,000865
19,417(768)

65,000865
22,533(1,475)

—
—
—
—

—
—
—
—

51,567
132,478
2,375,828

56,629141,1422,617,266

130,909
217,833
3,103,241

—
—
—

—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

65,000865
23,52889,39365,000865
35,542
101,407

—
—

—
—

—
—

128,650(1,475)82,739(1,475)

—
—
—

—
—
—

—
—
—

127,175
216,568
3,445,970

81,263
182,6713,659,786

2004

2005

2006

2007

2008

252,012(266,488)(9,391)
241,381292,485(299,655)(6,500)227,711

282,009(415,887)(6,500)87,333

327,479(151,810)(6,500)256,502334,751(489,454)(6,500)95,299

2004

2005

2006

2007

2008

—

63,851

61,79165,541

63,475——

16,179450,874

14,543474,296

14,479504,691

13,358530,011—
1,453.3
4,700
4,217

102,8211,317.1
4,652
4,170

109,432
1,547.0
4,293
3,825

117,466
1,852.0
4,239
3,776

122,854
1,747.9
4,248
3,779

Financial Data

2005

Sony Life

Assets:Cash and deposits . . . . . . . . . . . . . . . . . . . 
Call loans. . . . . . . . . . . . . . . . . . . . . . . . . . 
Monetary trusts . . . . . . . . . . . . . . . . . . . . . 
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Property and equipment . . . . . . . . . . . . . . . 
Tangible fixed assets . . . . . . . . . . . . . . . . . 
Intangible fixed assets. . . . . . . . . . . . . . . . . 
Other assets . . . . . . . . . . . . . . . . . . . . . . . 
		 Total assets. . . . . . . . . . . . . . . . . . . . . . 
Liabilities:
Policy reserve and others:. . . . . . . . . . . . . . 
		 Reserve for outstanding claims. . . . . . . . .
		 Policy reserve. . . . . . . . . . . . . . . . . . . . . 
Reserve for price fluctuations . . . . . . . . . . . 
Other liabilities. . . . . . . . . . . . . . . . . . . . . . 
Deferred tax liabilities. . . . . . . . . . . . . . . . . 
Deferred tax liabilities on land revaluation. . . 
		 Total liabilities. . . . . . . . . . . . . . . . . . . . . 
Stockholder’s Equity:
Common stock. . . . . . . . . . . . . . . . . . . . . . 
Capital surplus. . . . . . . . . . . . . . . . . . . . . . 
Retained earnings. . . . . . . . . . . . . . . . . . . . 
Land revaluation. . . . . . . . . . . . . . . . . . . . . 
Net unrealized gains on other securities,
net of taxes. . . . . . . . . . . . . . . . . . . . . . . 
		 Total stockholder’s equity . . . . . . . . . . . . 
		 Total liabilities and stockholder’s equity. . . 
Net Assets:
Common stock. . . . . . . . . . . . . . . . . . . . . . 
Capital surplus. . . . . . . . . . . . . . . . . . . . . . 
Retained earnings. . . . . . . . . . . . . . . . . . . . 
		 Total shareholder’s equity . . . . . . . . . . . . 
Net unrealized gains on other securities,
net of taxes. . . . . . . . . . . . . . . . . . . . . . . 
Land revaluation, net of taxes . . . . . . . . . . . 
		 Total valuation and translation		 adjustments . . . . . . . . . . . . . . . . . . . . . 
Total net assets. . . . . . . . . . . . . . . . . . . . . 
Total liabilities and net assets . . . . . . . . . . . 

(Millions of yen)

2004

Non-consolidated Statements of Cash Flows
For the years ended March 31,

		Net cash provided by operating activities. . . . . .
Net cash used in investing activities. . . . . . . . . .
Net cash used in financing activities. . . . . . . . . .
Cash and cash equivalents at end of year. . . . . . .

(Millions of yen)

Other Key Indicators
As of March 31, (Items marked with an asterisk (*) are for the years ended March 31.)		

Annualized premiums from new policies*. . . . . . 
Medical protection, living benefit
protection, etc*. . . . . . . . . . . . . . . . . . . . 
Annualized premiums from insurance in force. . . 
Medical protection, living benefit
protection, etc. . . . . . . . . . . . . . . . . . . . . 
Solvency margin ratio (%). . . . . . . . . . . . . . . . 
Number of sales employees. . . . . . . . . . . . . . 
Lifeplanner sales employees. . . . . . . . . . . . 

(Millions of yen)

Notes: 1. Annualized premiums for new policies and for policy amount in force are for individual life insurance and individual annuities. Annualized premiums refer toan amount that is calculated by multiplying individual premium amounts by a coefficient that differs depending on the premium payment methods, thereby
converting the figure to a per-year premium. (For single-payment policies, premiums are divided by the coverage period.)
2. Medical protection and living benefit protection products include products with medical protection benefits (hospitalization benefit, surgical procedure­benefit, etc.) and products with living benefit protection (benefits for specific illnesses, nursing care benefits, etc.)75

08_SFH_E_BH_0805.indd 75

08.8.5 5:07:48 PM

Policies and Policy Amount in Force by ProductAs of March 31,

Financial Data

Sony Life

Category		

76

Individual insurance products:
Pure death-protection insurance:
		 Variable life insurance (whole life type)
		 Modified payment whole life insurance
		 Limited payment whole life insurance		 Family insurance
		 Interest rate-sensitive whole life insurance		 Whole life insurance (no selection type)
		 Living benefit insurance (whole life type)		 Variable life insurance (term type)		 Family income insurance
		 Living standard insurance		 Level premium plan term life insurance
		 Decreasing term life insurance
		 Living benefit insurance (term type)		 Level premium plan term life insurance
		 (non-smoker preferred risk)
		 Decreasing term life insurance
		 (non-smoker preferred risk)
		 Family income insurance
		 (non-smoker preferred risk)
		 Increasing term life insurance		 Long-term level premium plan term life
		 insurance (with disability benefit)
		 Increasing term life insurance
		 (reduced surrender value)
		 Income protection insurance to		 cover three major diseases
		 Semi-participating whole life		 nursing-care insurance
		 Cancer insurance		 Comprehensive medical insurance		 Long-term comprehensive medical
		 insurance		 Semi-participating living standard
		 insurance (joint type)		 Term riders and others (1)Mixed insurance:
		 Variable life insurance (limited term type)		 Endowment insurance (without dividend)		 Semi-participating endowment insurance
Pure endowment insurance: (2)		 Semi-participating educational
		 endowment insurance
		 Living benefit rider
Total individual insurance products
Individual annuity products: (3)Semi-participating individual annuity
Variable individual annuity
Others (4)Total individual annuity productsGroup insurance products: (5)Group term life insuranceGroup welfare term life insuranceGroup credit life insurance
Annuity payment rider (3)Total group insurance productsGroup annuity products: (5) (6)New-type corporate annuities
Defined contribution corporate annuities
Total group annuity products
Medical protection insurance (group-type) (5) (7)
Reinsurance recipients (5)(Policies, Millions of yen)

2004
Number ofpolicies in force

2005

Policy amountin force

Number ofpolicies in force

2006

Policy amountin force

Number ofpolicies in force

2008

2007

Policy amountin force

Number ofpolicies in force

Policy amountin force

Number ofpolicies in force

Policy amountin force

2,734,111 24,662,320 2,962,469 26,098,319 3,153,386 27,206,759 3,348,853 28,186,554 3,518,724 29,200,551
237,476 1,643,713 293,793 1,945,301 324,850 2,153,449 375,485 2,401,057 439,536 2,676,664
22,467249,128
21,470235,603
20,687
223,442
19,850210,663
18,935
195,705439,231 3,904,987 421,314 3,723,988 406,440 3,568,366 392,351 3,421,896 379,324 3,283,197
1,639
15,556
1,596
15,081
1,555
14,6701,504
14,1791,463
13,784
239,839 1,576,930 283,279 1,839,295 331,104 2,082,704 362,574 2,232,768 383,156 2,321,783
4,515
8,959
5,170
10,135
5,680
11,100
5,973
11,655
6,043
11,800172,921571,277 175,420
573,296 180,039
583,565 186,678
599,740 195,059
622,043692
18,064917
26,521
1,021
29,8591,190
37,194
1,637
58,037
66,478 1,803,151
75,642 2,003,784
84,512 2,191,617
92,010 2,330,577 100,082 2,502,290
8,307
215,420
7,810
194,719
7,293
173,661
6,825
154,646
6,280
135,298
147,146 3,556,690 147,891 3,568,211 145,315 3,460,570 140,402 3,247,398 134,679 3,025,559
41,611 1,092,092
46,213 1,148,290
49,709 1,174,038
52,119 1,160,784
54,161 1,135,066
8,929
66,825
9,703
74,384
10,94785,703
12,494
100,353
15,121
125,898
16,972796,211

19,839919,283

22,116 1,005,160

23,024 1,011,544

23,926

1,025,575

16,510610,159

20,132

709,554

23,686

26,760859,392

29,859914,151

21,845566

857,168
32,55328,008 1,086,569
859
49,13934,672 1,333,192
980
55,071

41,274 1,566,775
819
45,63948,287634

1,817,702
35,216

—

—

—

—

2,141

100,452

5,897

272,353

10,971

520,162

—

—

—

—

344

12,741

4,368

152,801

4,343

151,776

—

—

—

—

—

—

956

944

1,834

1,772

24,334
14,807
41,479 263,880
756,682 1,367,047

59,97040,421
772,695

17,5806,962—
236,867
1,029,923
20,093——
41,665 246,170
691,334 1,137,346
7,953

84
2,532
317,151 6,899,943
295,179 1,137,740
5,582
26,445248,919
982,596
40,678
128,699
204,091
322,794

19,814——42,276 252,864
708,160 1,228,154
7,804

83
2,006
341,448 7,214,910
293,715 1,131,065
6,446
30,570245,274
965,255
41,995
135,239
279,320450,875

19,194

795,007—
6,218
41,313 262,765
730,324 1,308,781
7,548

83
2,034
358,749 7,371,162
283,814 1,086,324
8,761
40,374
232,319
910,590
42,734
135,358
378,325
615,719

18,453

7,260

83
1,916
377,745 7,522,513
287,034 1,080,848
17,33264,954
227,071882,094
42,631
133,798
474,051
770,71680
1,712(399,102) 7,745,300
300,383 1,111,545
34,579111,047
222,620
864,458
43,184136,039573,731924,980

204,091
322,660 279,320
450,803 378,325
615,715 474,051
770,716 573,731
924,980
1,234
134
658
71
41
4
—
—
—
—
3,233,381 26,122,855 3,535,504 27,680,259 3,815,525 28,908,802 4,109,938 30,038,118 4,392,838 31,237,078
11,805
7,445
968
20,218118,465
116,151
3,925,398
168
4,160,182
20,772
345,414366,186—
25,952

61,57740,995
17,210119,783

13,1409,594
1,343
24,07768,657
52,823
21,743
143,225

14,226
13,3052,446
29,97773,67772,01330,044
175,735

15,083
17,471
3,383
35,937

77,187
93,93435,251
206,374

16,25325,136
4,179
45,56882,670137,53140,065260,268

253,655 103,113
103,281 151,701
470,276 3,662,246
214
179
827,428 3,917,239

245,560 107,065
88,649 156,414
481,585 3,386,294
208
188
816,003 3,649,961

259,141
98,35092,360 127,639
571,583 3,139,548
204
182
923,289 3,365,719

237,699 101,028
92,699 130,083
577,602 2,930,154
178
169
908,179 3,161,434

237,81393,789605,492144
937,241

5,436
61,67067,107—
22,276

6,759
62,25769,017
0
19,257

6,656
64,744
71,400014,396

6,391
66,242
72,6330
23,022

39,209354,177
393,386
130
—

6,225
67,08173,307
0—36,671
347,560
384,231253
24,111

36,699358,552
395,251
126
20,40032,376355,665
388,041
126
13,159Notes: 1. This category includes, in addition to term riders, living benefit whole life policy riders and semi-participating lump sum nursing-care riders every five years.
2. Total number of policies in force for pure endowment insurance does not include number of policies listed under living benefit riders.
3. Total policy amount in force for individual annuity products and annuity payment riders is equal to the sum of (a) the funds to be held at the time annuity
payments are to commence for policies for which annuity payments have not yet commenced and (b) the amount of policy reserve for policies for which
payments have commenced.
4. Others under individual annuity products include semi-participating lump-sum nursing-care riders, semi-participating fixed individual annuity riders, and theamount of policy reserve for policies for which payments have commenced.
5. The number of policies for group insurance products, group annuity products, medical protection insurance (group-type) and reinsurance recipients reflect
the total number of insured parties.
6. For group annuity products, total policy amounts in force are equal to the amount of policy reserve under the relevant policies.
7. The amount of medical protection insurance (group-type) is equal to the daily claims for hospitalization.

08_SFH_E_BH_0805.indd 76

08.8.5 5:07:48 PM

New Policies and New Policy Amount by ProductFor the years ended March 31,
Category		

Number of
new policies

2005

New policy
amount406,033 3,469,531
51,096
290,576
630
8,830
1
5
20
163
60,751
390,461
1,270
2,493
9,669
29,268282
6,514
11,858345,564
1,157
33,496
20,162432,865
9,143
243,673
1,495
11,839Number of
new policies

2006

New policy
amount420,044 3,428,165
65,862376,682
380
5,816
5
12
14
119
57,431
370,107
1,206
2,333
9,745
29,101274
9,172
13,132
377,024
93
2,674
17,464
380,010
7,857
198,039
1,675
14,483

Number of
new policies

2008

2007

New policy
amount373,081 3,065,555
40,698239,471
314
5,190
(1)
(238)
5
38
62,927357,793
1,075
2,062
11,33635,059171
5,451
13,061
375,198——
12,981
257,373
6,987
174,041
2,115
18,030

Number of
new policies

New policy
amount375,185 3,106,503
61,401
319,567
206
3,283
(6)
(65)
8
60
49,188286,385920
1,851
13,17140,422
226
8,592
12,366
351,713——
9,570
152,738
6,024
140,2392,528
22,189Number of
new policies

New policy
amount360,931
77,834136
2
939,882832
15,206533
14,609
—
9,278
6,217
3,676

3,409,641
414,304
1,919
7
59
233,913
1,668
47,87424,018432,944—
158,777
140,035
34,233

194,990

3,786

173,808

3,313

144,940

2,241

78,8972,376

93,9794,590

177,144

4,234

155,909

4,260

150,773

3,918

137,2394,251

143,4535,558
452

231,815
25,4886,789
326

285,020
18,4737,401
214

314,593
10,381

7,608—

321,091—

8,583—

372,796
—

—

—

—

—

2,145

100,695

3,887

177,328

5,467

263,328

—

—

—

—

344

12,741

4,053

141,092

185

5,150

—

—

—

—

—

—

959

947

944

890

—
23,265
195,757—
3,650
93,554—24,442203,853—
3,992
85,744—24,875
177,972—
3,683
81,034

6,250
24,221
165,810

24,486
3,513
81,086

8,982
16,690144,536

37,752
2,664
69,953

4,360

1,241

1,469

637

878

401

629

291

699

300

10
43,431
34,588894
26,012
7,682
61,681

795
945,097
144,965
4,382
115,169
25,41398,893

7
43,32331,712
1,459
25,152
5,101
78,648129
938,873
138,338
7,022
111,285
20,031
133,287

10
35,73630,3882,753
23,0694,566
103,578255
776,584
123,782
11,08397,744
14,954
171,932

7
39,02033,8009,302
21,085
3,413
102,004

183
813,366
125,320
27,49485,187
12,638165,0434(43,502)45,19818,30822,232
4,658
108,15787
929,528
166,828
52,69997,73816,391
168,210102,004
165,043——
510,989 3,396,867

108,157—
514,286

168,210—3,744,680

61,681
98,893——502,302 3,713,390

78,648133,287——
530,404 3,699,791

103,578
171,932——
507,047 3,361,271

1,807
1,621
—
3,428

10,032
8,632—
18,665

1,927
2,555
—
4,482

10,53013,890—24,421

1,734
4,166
—
5,900

9,408
21,455—30,864

1,555
4,768
—
6,323

7,534
25,056—32,590

2,069
8,412
—
10,481

10,14447,763—57,90813,176
8,886——
22,062

9,304
7,280
—
—
16,584963
37,857——38,820

385
6,999
—
—
7,384

13,363
7,300——
20,663

2,058
7,032
—
—
9,090

—
14,492——
14,492

—
7,757
—
—
7,757

—
3,470
—
—
3,470

—
5,953
—
—
5,953

—
2,187
2,187
—
—

—
2,520
2,520
—
—

—
—
—
259
348

—
—
—
0
259

805
20,08520,890
128
—

15
1,732
1,748
0
—

196
—
196
—
—

44
—
44
—
—

—
—
—
—
—

—
—
—
—
—

Financial Data

4,507Sony Life

Individual insurance products:
Pure death-protection insurance:
		 Variable life insurance (whole life type)
		 Modified payment whole life insurance
		 Limited payment whole life insurance		 Family insurance
		 Interest rate-sensitive whole life insurance		 Whole life insurance (no selection type)
		 Living benefit insurance (whole life type)		 Variable life insurance (term type)		 Family income insurance
		 Living standard insurance		 Level premium plan term life insurance
		 Decreasing term life insurance
		 Living benefit insurance (term type)		 Level premium plan term life insurance
		 (non-smoker preferred risk)
		 Decreasing term life insurance
		 (non-smoker preferred risk)
		 Family income insurance
		 (non-smoker preferred risk)
		 Increasing term life insurance		 Long-term level premium plan term
		 life insurance (with disability benefit)
		 Increasing term life insurance
		 (reduced surrender value)
		 Income protection insurance to cover		 three major diseases
		 Semi-participating whole life nursing-care		 insurance
		 Cancer insurance		 Comprehensive medical insurance		 Long-term comprehensive medical
		 insurance		 Semi-participating living
		 standard insurance (joint type)		 Term riders and others (1) (2)Mixed insurance:
		 Variable life insurance (limited term type)		 Endowment insurance (without dividend)		 Semi-participating endowment insurance
Pure endowment insurance:
		 Semi-participating educational
		 endowment insurance
		 Living benefit rider
Total individual insurance products
Individual annuity products: (3)Semi-participating individual annuity
Variable individual annuity
OthersTotal individual annuity productsGroup insurance products: (4)Group term life insuranceGroup welfare term life insuranceGroup credit life insurance
Annuity payment rider
Total group insurance productsGroup annuity products: (5)New-type corporate annuities
Defined contribution corporate annuities
Total group annuity products
Medical protection insurance (group-type) (6)Reinsurance recipients(Policies, Millions of yen)

2004

Notes: 1. This category includes, in addition to term riders, living benefit whole life policy riders and semi-participating lump sum nursing-care riders every five years.
2. The number of new policies for term riders and others is excluded from total individual insurance products.
3. The new policy amount for individual annuity insurance indicates pension resources at the time annuity payments begin.
4. The number of new policies for group insurance products, group annuity products, medical protection insurance (group-type) and reinsurance recipientsreflect the total number of insured parties.
5. For group annuity products, new policy amounts are equal to the sum of the initial premium payments under the relevant policies.
6. The amount of medical protection insurance (group-type) is equal to the daily claims for hospitalization.

77

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General Account Assets
As of March 31,(Millions of yen, %)Financial Data

Sony Life

Category

2004
Amount2005% of total

Amount2006% of total

Amount2008

2007% of total

Amount% of total

Amount% of total

Cash, deposits andcall loans. . . . . . . . . . . 232,112 10.5
214,266
8.9
71,5982.5
237,496
7.6
82,106
2.5
Monetary trusts. . . . . . . 419,224 19.0
515,229 21.3
658,351 23.3
718,492 23.0 893,952 26.8
Securities . . . . . . . . . . . 1,409,077 63.7 1,517,858 62.8 1,870,288 66.3 1,917,154 61.4 2,086,557 62.5
Japanesegovernment andcorporate bonds . . . 1,158,430 52.4 1,321,447 54.7 1,499,591 53.1 1,535,634 49.2 1,722,804 51.6
Japanese stocks . . . .
38,761
1.8
53,2482.2
250,718
8.9
244,379
7.8 172,911
5.2
Foreign securities. . . . 199,708
9.0
131,068
5.4
102,720
3.6
121,617
3.9 178,795
5.4
		 Foreign		 government
		 and corporate		 bonds . . . . . . . . . 193,864
8.8
122,782
5.1
89,095
3.2
100,730
3.2 154,195
4.6
		 Foreign stocks. . . .
5,844
0.3
8,285
0.3
13,6240.5
20,8870.7
24,5990.7
Other securities. . . . .
12,1760.6
12,093
0.5
17,2570.6
15,522
0.5
12,0460.4
Loans. . . . . . . . . . . . . .
71,6293.2
79,914
3.3
86,9183.1
96,804
3.1 108,688
3.3
Policyholder loans . . .
71,6293.2
79,914
3.3
86,9183.1
96,804
3.1 108,688
3.3
Commercial loans. . .
—
—
—
—
—
—
—
—
—
—
Real estate . . . . . . . . . .
46,2822.1
50,602
2.1
75,5792.7
87,025
2.8
82,867
2.5
Deferred tax assets. . . .
—
—
—
—
—
—
—
—
—
—
Other . . . . . . . . . . . . . .
33,146
1.5
38,541
1.6
59,866
2.1
66,392
2.1
83,8982.5
Provision for possible
loan losses . . . . . . . . .
(107) (0.0)(142) (0.0)(44) (0.0)(68) (0.0)(74) (0.0)
Total. . . . . . . . . . . . . . . 2,211,367 100.0 2,416,269 100.0 2,822,559 100.0 3,123,298 100.0 3,337,997 100.0
		 Foreign currency		 denominated		 assets. . . . . . . . .
41,972
1.9
46,2401.9
46,973
1.7
51,486
1.6 106,361
3.2

Increase (Decrease) of General Account Assets
For the years ended March 31,
CategoryCash, deposits and call loans . . . . . . . . . . . . . 
Monetary trusts. . . . . . . . . . . . . . . . . . . . . . . 
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Japanese government and corporate bonds . . 
Japanese stocks. . . . . . . . . . . . . . . . . . . . . 
Foreign securities . . . . . . . . . . . . . . . . . . . . 
		 Foreign government and corporate bonds. . 
		 Foreign stocks. . . . . . . . . . . . . . . . . . . . . 
Other securities . . . . . . . . . . . . . . . . . . . . . 
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Policyholder loans. . . . . . . . . . . . . . . . . . . . 
Commercial loans. . . . . . . . . . . . . . . . . . . . 
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . 
Deferred tax assets. . . . . . . . . . . . . . . . . . . . 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for possible loan losses . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 Foreign currency denominated assets. . . . 

(Millions of yen)

2004

2005

2006

2007

2008

(25,922)
98,282
253,567
214,614
23,945
11,297
7,762
3,534
3,709
6,055
6,055
—
182
(2,330)17,775
46
347,659
25,091(17,845)
96,005
108,780
163,017
14,486(68,640)(71,081)
2,441
(83)
8,284
8,284
—
4,319
—
5,395
(35)
204,902
4,268(142,668)
143,121352,430
178,143
197,470(28,347)(33,686)
5,339
5,164
7,004
7,004
—
24,977—
21,32598
406,289733

165,897
60,141
46,86636,043(6,339)18,897
11,634
7,263(1,735)
9,885
9,885
—
11,446—6,526(24)
300,7394,512(155,389)
175,459
169,402
187,169(71,468)
57,17753,465
3,711(3,475)
11,884
11,884—(4,158)—17,506(5)
214,699
54,87478

08_SFH_E_BH_0805.indd 78

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Investment Yield by Assets (General Account)
For the years ended March 31,
CategoryCash, deposits and call loans . . . . . . . . . . . . . . . 
Monetary trusts. . . . . . . . . . . . . . . . . . . . . . . . . 
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Japanese government and corporate bonds. . . . .
Japanese stocks. . . . . . . . . . . . . . . . . . . . . . . 
Foreign securities. . . . . . . . . . . . . . . . . . . . . . 
Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Total general account assets . . . . . . . . . . . . . . . 

(%)

2004

2005

2006

2007

2008

0.02
2.19
2.03
1.75
7.59
2.85
4.54
4.84
1.92

0.01
1.59
1.87
1.31
17.57
3.14
4.43
0.39
1.70

0.01
3.51
1.97
1.19
11.05
5.67
4.39
0.33
2.22

0.21
1.92
2.03
1.18
9.49
3.66
4.32
(1.10)
2.02

0.47
1.93
2.43
1.90
6.66
4.33
4.25
5.09
2.17

Sony Life

Notes: 1. The denominator of yield calculations is the daily average balance on a book value basis. The numerator is the yield calculated by subtracting investment
expenses from investment income in ordinary profit.
2. The above yield calculations do not include valuation gains in accordance with Article 112 of the Insurance Business Law of Japan.
3. Real estate in the year ended in March 31, 2007 includes one-time factors such as tax expenses in relation to acquisition of real estate, the new building
completed in October 2006 (Sony City).

Yield on Overseas Investments (General Account)
For the years ended March 31,
Category

Yield on overseas investments . . . . . . . . . . . . . . 

(%)

2004

2005

2006

2007

2008

2.85

3.13

5.67

3.66

4.33

Note: Overseas investment is the total of yen- and foreign currency-denominated assets.

Financial Data
79

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Sony Assurance’s Financial Data
Condensed Financial Statements

Non-consolidated Statements of Income
For the years ended March 31,

Financial Data

Sony Assurance		Ordinary revenues . . . . . . . . . . . . . . . . . . . . . 
Underwriting income. . . . . . . . . . . . . . . . . . 
		 Net premiums written . . . . . . . . . . . . . . . 
Investment income. . . . . . . . . . . . . . . . . . . 
		 Interest and dividends. . . . . . . . . . . . . . . 
Other ordinary income. . . . . . . . . . . . . . . . . 
Ordinary expenses. . . . . . . . . . . . . . . . . . . . . 
Underwriting expenses . . . . . . . . . . . . . . . . 
		 Net losses paid. . . . . . . . . . . . . . . . . . . . 
		 Loss adjustment expenses. . . . . . . . . . . . 
		 Net commissions and brokerage fees. . . . 
		 Provision for reserve for outstanding
		 losses . . . . . . . . . . . . . . . . . . . . . . . . . 
		 Provision for underwriting reserve. . . . . . .
Investment expenses. . . . . . . . . . . . . . . . . .
Operating, general and administrative
expenses. . . . . . . . . . . . . . . . . . . . . . . . . 
Other ordinary expenses. . . . . . . . . . . . . . . 
Ordinary profit (loss). . . . . . . . . . . . . . . . . . . . 
Extraordinary gains (losses), net. . . . . . . . . . . 
Income (loss) before income taxes . . . . . . . . . 
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 
Net income (loss). . . . . . . . . . . . . . . . . . . . . . 

(Millions of yen)

2004

2005

2006

2007

2008

31,06630,79330,785212
215
60
33,00721,097
13,101
2,022
625

38,15937,862
37,849275274
2140,96628,606
17,4632,191
784

45,70345,29845,278349
298
55
46,46733,477
21,1242,535
780

51,02050,49550,467464
442
60
48,97536,465
24,151
2,894
865

55,64955,03655,001567
578
4452,831
38,97026,225
3,204
922

881
4,463
31

1,967
6,198
21

2,345
6,691
8

2,235
6,318
3

2,010
6,607
5

11,85424(1,941)3(1,937)(606)(1,330)12,3380(2,806)(1)(2,807)(826)(1,981)

12,966
15
(764)
(35)
(799)
(358)
(441)

12,458
48
2,044
(10)
2,034
435
1,598

13,838
16
2,817
(413)
2,403
217
2,185

80

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Non-consolidated Balance Sheets
As of March 31,

		

2006

2007

2008

4,512
—
27,747
—
—
6,584
1,277
40,121

4,036—
32,932
—
—
8,020
1,696
46,685

1,470—
44,067
—
—
8,381
2,184
56,1031,977
1,400
51,155
165
2,119
7,728
2,922
67,4682,929—
56,237231
4,075
10,736
4,434
78,645

22,583
5,688
16,895
3,475
26,05930,7507,655
23,094
3,847
34,59839,786
10,001
29,785
4,606
44,393

48,34012,236
36,104
5,807
54,14756,95814,24642,711
6,301
63,26020,00020,000(25,953)

20,00020,000(27,934)

20,00020,000(28,376)

—
—
—

—
—
—

15
14,061
40,12121
12,086
46,68586
11,70956,103

—
—
—

—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

20,00020,000(26,777)
13,22220,00020,000(24,591)
15,408

—

—

—

97

(23)

—
—
—

—
—
—

—
—
—

97
13,32067,468(23)
15,38578,645

2004

2005

2006

2007

2008

2,733

5,081

8,784

9,242

7,554

(10,350)
10,0006,569(5,557)—
6,094(11,350)—3,528(6,030)—6,740(7,537)—
6,757

Financial Data

2005

Sony Assurance

Assets:Cash and deposits . . . . . . . . . . . . . . . . . . . .
Call loans. . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible fixed assets . . . . . . . . . . . . . . . . . .
Intangible fixed assets. . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . .
		 Total assets. . . . . . . . . . . . . . . . . . . . . . .
Liabilities:
Policy reserves . . . . . . . . . . . . . . . . . . . . . .
		 Reserves for outstanding losses. . . . . . . . .
		 Underwriting reserves. . . . . . . . . . . . . . . .
Other liabilities. . . . . . . . . . . . . . . . . . . . . . .
		 Total liabilities. . . . . . . . . . . . . . . . . . . . . .
Stockholder’s Equity:
Common stock. . . . . . . . . . . . . . . . . . . . . . .
Capital surplus. . . . . . . . . . . . . . . . . . . . . . .
Retained deficits. . . . . . . . . . . . . . . . . . . . . .
Net unrealized gains (losses) on othersecurities, net of taxes. . . . . . . . . . . . . . . .
		 Total stockholder’s equity . . . . . . . . . . . . .
		 Total liabilities and stockholder’s equity. . . .
Net Assets:
Common stock. . . . . . . . . . . . . . . . . . . . . . .
Capital surplus. . . . . . . . . . . . . . . . . . . . . . .
Retained deficits. . . . . . . . . . . . . . . . . . . . . .
		 Total shareholder’s equity . . . . . . . . . . . . .
Net unrealized gains on other securities,
net of taxes. . . . . . . . . . . . . . . . . . . . . . . .
		 Total valuation and translation		 adjustments . . . . . . . . . . . . . . . . . . . . . .
Total net assets. . . . . . . . . . . . . . . . . . . . . .
Total liabilities and net assets . . . . . . . . . . . .

(Millions of yen)

2004

Non-consolidated Statements of Cash Flows
For the years ended March 31,

		Net cash provided by operating activities. . . . . . 
Net cash provided by (used in) investing
activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Net cash provided by financing activities . . . . . . 
Cash and cash equivalents at end of year. . . . . . . 

(Millions of yen)

Other Key Indicators
As of March 31, (Items marked with an asterisk (*) are for the years ended March 31.)		

Underwriting profits (losses)* (millions of yen) . . 
Net loss ratio* (%) . . . . . . . . . . . . . . . . . . . . . . 
Net expense ratio* (%). . . . . . . . . . . . . . . . . . . 
Solvency margin ratio (%). . . . . . . . . . . . . . . . . 
Number of employees . . . . . . . . . . . . . . . . . . . 

2004

2005

2006

2007

2008

(2,129)49.1
40.4
1,383.5423(3,048)51.9
34.6
1,095.2
480(1,108)
52.3
30.3
976.1
532

1,610
53.6
26.3
1,009.7
593

2,277
53.5
26.7
1,073.9651

81

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Net premiums written by type of policy
For the years ended March 31,(Millions of yen)

2004

2005

2006

2007

2008

—
32
1,427
28,964360
30,785

4
22
3,13134,222469
37,84921
38
4,827
39,858533
45,27812
43
5,947
43,931
532
50,46716
52
6,501
47,845585
55,001

2004

2005

2006

2007

2008

—
—
1,284
29,105—30,389102—
2,989
34,372—
37,464279—
4,681
40,039—44,999174—
5,812
44,126—50,112273—
6,315
48,053—54,642

2004

2005

2006

2007

2008

30,79321,09737,86228,60645,29833,47750,49536,46555,03638,97011,825(0)(2,129)12,304(0)(3,048)12,928(0)(1,108)12,418(0)
1,610

13,787(1)2,277Type of policyFire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Marine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Personal accident. . . . . . . . . . . . . . . . . . . . . . 
Voluntary automobile . . . . . . . . . . . . . . . . . . . 
Compulsory automobile liability. . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Direct premiums written by type of policy
For the years ended March 31,

Sony Assurance

Type of policyFire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Marine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Personal accident. . . . . . . . . . . . . . . . . . . . . . 
Voluntary automobile . . . . . . . . . . . . . . . . . . . 
Compulsory automobile liability. . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

(Millions of yen)

Underwriting profits (losses)
For the years ended March 31,

Financial Data

Category

Underwriting income. . . . . . . . . . . . . . . . . . . . 
Underwriting expenses. . . . . . . . . . . . . . . . . . 
Operating, general and administrative
expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Underwriting profits (losses). . . . . . . . . . . . . . 

(Millions of yen)

Note: Operating, general and administrative expenses are those underwriting expenses included in the statements of income as operating, general and administrative
expenses.

Underwriting profits (losses) by type of policy
For the years ended March 31,
Type of policyFire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Marine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Personal accident. . . . . . . . . . . . . . . . . . . . . . 
Voluntary automobile . . . . . . . . . . . . . . . . . . . 
Compulsory automobile liability. . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

(Millions of yen)

2004

2005

2006

2007

2008

—
139
(1,344)(924)—(2,129)

(1)
166
(919)
(2,293)—(3,048)

8
123
(253)
(987)
—
(1,108)

36
142
724
707
—
1,610

10
197
931
1,138
—
2,277

82

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Net losses paid by type of policy
For the years ended March 31,(Millions of yen)Type of policyFire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Marine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Personal accident. . . . . . . . . . . . . . . . . . . . . . 
Voluntary automobile . . . . . . . . . . . . . . . . . . . 
Compulsory automobile liability. . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2004

2005

2006

2007

2008

—
28
186
12,770115
13,101—9427
16,801
224
17,4630
5724
20,073
321
21,124021
928
22,802399
24,151025
1,205
24,546447
26,225

2004

2005

2006

2007

2008

—
—
145
12,790—12,935——387
16,842—
17,2290—685
20,245—20,931

1—889
22,950—23,8411—
1,165
24,543—25,710

2004

2005

2006

2007

2008

12,451

13,08813,70913,284

14,70911,825625
40.4

12,304784
34.6

12,928780
30.3

12,418865
26.3

13,787922
26.7

Direct losses paid by type of policy
For the years ended March 31,(Millions of yen)Type of policy

Sony Assurance

Fire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Marine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Personal accident. . . . . . . . . . . . . . . . . . . . . . 
Voluntary automobile . . . . . . . . . . . . . . . . . . . 
Compulsory automobile liability. . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Underwriting expenses and net expense ratio
For the years ended March 31,(Millions of yen)

Category

Financial Data

Underwriting expenses. . . . . . . . . . . . . . . . . . 
Operating, general and administrative
expenses for underwriting. . . . . . . . . . . . . 
Net commissions and brokerage fees . . . . . 
Net expense ratio (%). . . . . . . . . . . . . . . . . . . 

Net loss ratio, net expense ratio and combined ratio by type of policy
For the years ended March 31,

(%)

			
Type of policy
Net loss
		
ratio
		

Fire. . . . . . . . . . . . . . . . . . . . 
Marine. . . . . . . . . . . . . . . . . . 
Personal accident. . . . . . . . . . 
Voluntary automobile . . . . . . . 
Compulsory automobile
liability. . . . . . . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . 

2004

2005

2006

Net			
Combined
Net loss
expense
ratio
ratio
ratio

Net			
Combined
Net loss
expense
ratio
ratio
ratio

Net
expenseratio

Combined
ratio

—			
87.3			17.1			50.9			

—			43.5			15.8			55.3			

22.3
13.6
17.1
56.5

(160.8)(353.7)30.3
31.2(138.6)(340.1)
47.4
87.6

32.2			
49.1
40.4
89.6

47.8			
51.9
34.6
86.5

60.2
52.3

—
30.3

60.2
82.5

Net loss
ratio

Net			
Combined
Net loss
expense
ratio
ratio
ratio

Net
expense
ratio

45.8
49.6
17.5
58.2

(55.9)(390.4)17.3
28.3(10.1)(340.8)
34.8
86.5

63.1
47.9
21.0
57.6

74.9
53.6

—
26.3

74.9
79.9

76.5
53.5

2008

2007
		
Type of policy				Fire. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marine. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Personal accident. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voluntary automobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compulsory automobile
liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Combinedratio(214.8) (151.6)(371.8) (323.9)
19.6
40.6
28.6
86.2
—
26.7

76.5
80.3

83

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Sony Bank’s Financial Data
Condensed Financial Statements

Non-consolidated Statements of Income
For the years ended March 31,

Financial Data

Sony Bank		

Ordinary revenues . . . . . . . . . . . . . . . . . . . . . 
Interest income. . . . . . . . . . . . . . . . . . . . . . 
		 Interest on loans. . . . . . . . . . . . . . . . . . . 
		 Interest and dividends on securities . . . . . 
Fees and commissions. . . . . . . . . . . . . . . . 
Other operating income. . . . . . . . . . . . . . . . 
		 Income from foreign exchange		 transactions. . . . . . . . . . . . . . . . . . . . . 
		 Gains on sale of bonds and others. . . . . . 
		 Gains from derivatives, net. . . . . . . . . . . . 
Other ordinary income. . . . . . . . . . . . . . . . . 
Ordinary expenses. . . . . . . . . . . . . . . . . . . . . 
Interest expenses. . . . . . . . . . . . . . . . . . . . 
		 Interest on deposits. . . . . . . . . . . . . . . . . 
Fees and commissions. . . . . . . . . . . . . . . . 
Other operating expenses. . . . . . . . . . . . . . 
		 Losses on sale of bonds and others. . . . . 
		 Losses from derivatives, net . . . . . . . . . . 
		 Other operating expenses . . . . . . . . . . . . 
General and administrative expenses. . . . . . 
Other ordinary expenses. . . . . . . . . . . . . . . 
		 Provision for reserve for specific		 problem loans. . . . . . . . . . . . . . . . . . . . 
		 Amortization of loan . . . . . . . . . . . . . . . . 
Ordinary profit (loss). . . . . . . . . . . . . . . . . . . . 
Extraordinary gains (losses), net. . . . . . . . . . . 
Income (loss) before income taxes . . . . . . . . . 
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . . 
Net income (loss). . . . . . . . . . . . . . . . . . . . . . 

(Millions of yen)

2004

2005

2006

2007

2008

7,406
4,520
990
3,237
524
2,357

11,353
6,563
1,560
4,416
817
3,946

17,225
9,472
2,721
6,414
1,686
6,039

19,47012,763
4,580
7,208
1,619
5,065

25,98817,152
7,045
7,320
1,823
7,001

1,439
324
590
4
9,608
1,136
1,001
521
1,988
1,942
—
45
5,823
139

3,212
732
—
25
13,013
2,855
2,559
677
2,452
1,882
451
117
6,905
123

4,449
231
1,353
26
14,997
4,672
4,365
1,215
1,890
1,528
—
361
7,091
127

4,339
682
—
21
18,116
8,174
7,380
1,067
1,149
845
303
—
7,665
58

5,773
734
492
11
23,242
12,046
11,380
1,424
1,524
1,319
—
205
8,145
100

40
—
(2,202)—(2,202)3(2,206)—0(1,659)—(1,659)3(1,663)

116
—
2,228
—
2,228
(1,029)
3,258

33
0
1,354
—
1,354
330
1,023

90
0
2,746
—
2,746
(1,745)4,492

84

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Non-consolidated Balance Sheets
As of March 31,

		

2006

2007

2008

14,13940,966
333,421110,324—
33,591—
189,504
63,02360,9032,120
37,883—
489,432

19,773
127,696
321,600
120,486—
21,978—179,135
126,385
123,317
3,068
23,005—
618,459

26,186
20,174
449,549
179,746—
58,411—
211,391
239,467
235,002
4,465
18,3591,033
754,768

7,977
103,059
381,234
131,025
20,98474,720—154,504
284,712278,662
6,050
29,232634
806,848

7,346
352,568
488,777
171,157—
152,107
3,000
162,512
347,065
339,566
7,498
12,8082,433
1,211,000

378,850
103,943
167,678
107,228
65,00018,180291
462,321546,717
190,327
197,217
159,172
24,60011,621
202
583,140599,952
221,622229,147
149,182
110,700
9,400—
720,052

752,366
235,997
368,034
148,334
10,0007,604—
769,970

1,144,398
216,677
675,445
252,276
10,00020,889—1,175,288

18,75018,750(10,813)23,75013,750(2,477)25,00015,000
781

—
—
—

—
—
—

424
27,111
489,432295
35,318618,459(6,065)34,715754,768

—
—
—

—
—
—

—
—
—
—

—
—
—
—

—
—
—
—

25,00015,0001,804
41,80425,00015,0006,296
46,296———(4,462)(9,055)

—

—

—

(464)

(1,529)

—
—
—

—
—
—

—
—
—

(4,926)36,878806,848(10,584)
35,712
1,211,000

2004

2005

2006

2007

2008

116,319(23,493)

135,772(78,756)

101,999(110,450)—
14,13919,127
10,00019,773(141,859)
2,500
16,18670,547—
7,977(102,630)—
7,346

Financial Data

2005

Sony Bank

Assets:Cash and due from banks. . . . . . . . . . . . . . . 
Call loans and bills bought. . . . . . . . . . . . . . . 
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 Japanese government bonds. . . . . . . . . . . 
		 Short-term corporate bonds. . . . . . . . . . . . 
		 Corporate bonds. . . . . . . . . . . . . . . . . . . . 
		 Stocks. . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 Other securities. . . . . . . . . . . . . . . . . . . . . 
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 Loans on deeds . . . . . . . . . . . . . . . . . . . . 
		 Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . 
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 
Deferred tax assets . . . . . . . . . . . . . . . . . . . 
		 Total assets. . . . . . . . . . . . . . . . . . . . . . . 
Liabilities:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . 
		 Ordinary deposits . . . . . . . . . . . . . . . . . . . 
		 Time deposits. . . . . . . . . . . . . . . . . . . . . . 
		 Other deposits . . . . . . . . . . . . . . . . . . . . . 
Call money and bills sold. . . . . . . . . . . . . . . . 
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . 
Deferred tax liabilities. . . . . . . . . . . . . . . . . . 
		 Total liabilities. . . . . . . . . . . . . . . . . . . . . . 
Stockholder’s Equity:
Common stock. . . . . . . . . . . . . . . . . . . . . . . 
Capital surplus. . . . . . . . . . . . . . . . . . . . . . . 
Retained earnings (deficits). . . . . . . . . . . . . . 
Net unrealized gains (losses) on othersecurities, net of taxes. . . . . . . . . . . . . . . . 
		 Total stockholder’s equity . . . . . . . . . . . . . 
		 Total liabilities and stockholder’s equity. . . . 
Net Assets:
Common stock. . . . . . . . . . . . . . . . . . . . . . . 
Capital surplus. . . . . . . . . . . . . . . . . . . . . . . 
Retained earnings. . . . . . . . . . . . . . . . . . . . . 
		 Total shareholder’s equity . . . . . . . . . . . . . 
Net unrealized gains (losses) on othersecurities, net of taxes. . . . . . . . . . . . . . . . 
Net deferred losses on hedging instruments,
net of taxes. . . . . . . . . . . . . . . . . . . . . . . . 
		 Total valuation and translation		 adjustments . . . . . . . . . . . . . . . . . . . . . . 
Total net assets. . . . . . . . . . . . . . . . . . . . . . 
Total liabilities and net assets . . . . . . . . . . . . 

(Millions of yen)

2004

Non-consolidated Statements of Cash Flows
For the years ended March 31,

		Net cash provided by (used in) operating
activities. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) investing
activities. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by financing activities . . . . . .
Cash and cash equivalents at end of year. . . . . . .

(Millions of yen)

Other Key Indicators
As of March 31, (Items marked with an asterisk (*) are for the years ended March 31.)		

Gross operating profit* (millions of yen). . . . . . .
Net operating profit* (millions of yen). . . . . . . . .
Non-consolidated capital adequacy ratio(domestic criteria) (%). . . . . . . . . . . . . . . . . . .
Number of employees . . . . . . . . . . . . . . . . . . .

2004

2005

2006

2007

2008

3,756
(2,107)

5,343(1,562)

9,420
2,245

9,056
1,366

10,980
2,826

10.29
78

11.97
100

9.24
120

11.49
152

9.15
1.65

Notes: 1. Net operating profit is calculated by subtracting provision for possible loan losses and general and administrative expenses from gross operating profit.
2. Sony Bank’s non-consolidated capital adequacy ratio (domestic criteria) for the fiscal years ended March 31, 2007 and 2008 were calculated based on
the standard stipulated in the FSA public ministerial announcement No. 19 of 2006. Calculations for the fiscal year ended March 31, 2006, and prior fiscal
years have been made in accordance with the standard stipulated in the former public ministerial announcement.

85

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Breakdown of gross operating profit
For the years ended March 31,(Millions of yen)

2004

2005

2006

2007

2008

3,383
4,520
1,136
3
524
521
369
2,357
1,988
3,756
0.96

3,708
6,563
2,855
140
817
677
1,494
3,946
2,452
5,343
0.92

4,800
9,472
4,672
471
1,686
1,215
4,149
6,039
1,890
9,420
1.38

4,588
12,763
8,174
551
1,619
1,067
3,916
5,065
1,149
9,056
1.19

5,105
17,152
12,046
398
1,823
1,424
5,476
7,001
1,524
10,9801.13		Sony Bank

Net interest income . . . . . . . . . . . . . . . . . . . . 
Interest income. . . . . . . . . . . . . . . . . . . . . . 
Interest expenses. . . . . . . . . . . . . . . . . . . . 
Net fees and commissions. . . . . . . . . . . . . . . 
Fees and commissions received . . . . . . . . . 
Fees and commissions paid. . . . . . . . . . . . . 
Net other operating income. . . . . . . . . . . . . . .
Other operating income. . . . . . . . . . . . . . . . 
Other operating expenses. . . . . . . . . . . . . . 
Gross operating profit. . . . . . . . . . . . . . . . . . .
Gross operating profit ratio* (%). . . . . . . . . . . 
*Gross operating profit ratio =Gross operating profit
× 100
Average balance of investment account

Average balance, interest, yield, and interest spread of major investment and financing accounts
For the years ended March 31,

		Financial Data		

Investment account . . . . 
Loan . . . . . . . . . . . . . 
Securities. . . . . . . . . . 
Call loans. . . . . . . . . . 
Monetary claimsbought. . . . . . . . . . . 
Financing account . . . . . 
Deposits . . . . . . . . . . 
Call money. . . . . . . . . 

(Millions of yen)

2004

2005

Average			Interest Yield (%)
balance

Average			Interest
Yield (%)
balance

Averagebalance

Interest

Yield (%)

2006

390,015 4,520
49,265990
280,299 3,237
34,207
258

1.15
2.01
1.15
0.75

576,486
82,692432,202
43,038

6,563
1,560
4,416
539

1.13
1.88
1.02
1.25

680,004
170,342462,060
31,393

9,472
2,721
6,414
243

1.39
1.59
1.38
0.77

15,49932
368,096 1,136
318,947 1,001
49,147
14

0.21
0.30
0.31
0.03

9,090
553,480
459,783
65,383

39
2,855
2,559
7

0.43
0.51
0.55
0.01

2,000
652,516
583,968
25,986

54
4,672
4,365
1

2.74
0.71
0.74
0.00

(Millions of yen)

2008

2007
		
		

			

Average			Interest
Yield (%)
balance			Investment account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Call loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Monetary claimsbought. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Financing account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
Call money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

Averagebalance

Interest

Yield (%)

757,007 12,763
252,760 4,580
423,502 7,208
72,361
910

1.68
1.81
1.70
1.25

963,579 17,152
315,0887,045
417,805
7,320
222,742
2,647

1.78
2.23
1.75
1.18

109
721,520
676,716
28,813

2.74
1.13
1.09
0.20

448
36
923,439 12,046
900,015 11,380
23,415
133

8.23
1.30
1.26
0.56

3
8,174
7,380
59

(%)

		

2004

2005

2006

2007

2008

Yield on investment . . . . . . . . . . . . . . . . . . . . 
Yield on financing. . . . . . . . . . . . . . . . . . . . . . 
Interest spread. . . . . . . . . . . . . . . . . . . . . . . .

1.15
0.30
0.85

1.13
0.51
0.62

1.39
0.71
0.67

1.68
1.13
0.55

1.78
1.30
0.47

2004

2005

2006

2007

2008

822
4,737
1,544
703
263
5,823

958
5,692
1,553
894
253
6,905

1,195
5,625
1,590
538
270
7,091

1,376
5,968
1,049
777
320
7,665

1,776
6,004
637
574
364
8,145

Breakdown of general and administrative expenses
For the years ended March 31,		Personnel expenses. . . . . . . . . . . . . . . . . . . . 
Non-personnel expenses. . . . . . . . . . . . . . . . . 
Depreciation and amortization. . . . . . . . . . . 
Advertisement expenses. . . . . . . . . . . . . . . 
Taxes and public dues . . . . . . . . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

(Millions of yen)

86

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Balance of time deposits by remaining period
As of March 31,(Millions of yen)		Less than 3 months. . . . . . . . . . . . . . . . . . . . 
3 months or more and less than 6 months. . . . 
6 months or more and less than 1 year. . . . . . 
1 year or more and less than 2 years . . . . . . . 
2 years or more and less than 3 years. . . . . . . 
3 years or more. . . . . . . . . . . . . . . . . . . . . . . 
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

2004

2005

2006

2007

2008

92,06036,17539,71923,951
22,19984
214,390134,953
47,71351,51625,747
23,823
86
283,840

159,856
47,751
47,24330,56820,657
15,831
321,907

196,893
127,724
80,19425,29615,143
19,917465,169

278,346
191,077
300,241
28,842
16,324
19,520834,353

Note: The deposit balances indicated above exclude thrift savings deposits.

Balance of loans by remaining period(Millions of yen)

2004
		
		
		

Fixed
interest
rate

Floating		interest
Total
rate		

Fixedinterest
rate

2006

Floating		interest
Total
rate		

Fixedinterest
rate

Floating
interest
rate

Total

13

23

36

16

32

49

195

194

390

257

279

537

482

464

946

488

665

1,153

1,040
900
75,091 156,229—
4,465
76,894 162,573

1,940
231,320
4,465
239,467640
41,509—42,841679
1,320
79,113 120,623
3,068
3,068
83,544 126,385(Millions of yen)

2008

2007
					
			
		
			
		

Fixed
interest
rate

1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25
More than 1 year and3 years or less. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
249
More than 3 years and5 years or less. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
625
More than 5 years and7 years or less. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,843
More than 7 years . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,499
Unspecified term. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101,243

Floating		interest
Total
rate		

Fixedinterest
rate

Floating
interest
rate

Total

30

55

26

46

72

383

632

300

349

650

613

1,238

892

849

1,741

1,455
3,289
174,945 273,445
6,050
6,050
183,469 284,712

Financial Data

1 year or less . . . . . . . 
3
1216
More than 1 year and3 years or less. . . . . . 
105
131
236
More than 3 years and5 years or less. . . . . . 
436
312
748
More than 5 years and7 years or less. . . . . . 
586
429 1,016
More than 7 years . . . .  28,780 30,104 58,885
Unspecified term. . . . . . 
— 2,120 2,120
Total. . . . . . . . . . . . . .  29,912 33,111 63,023

2005

Sony Bank

As of March 31,

1,969
1,958
3,927
156,284 176,890 333,174
—
7,498
7,498
159,473 187,592 347,065

Deposit-loan ratio and deposit-securities ratio
As of March 31 or for the years ended March 31,

		

Deposit-loan ratio
At fiscal year-end . . . . . . . . . . . . . . . . . . . . 
Average. . . . . . . . . . . . . . . . . . . . . . . . . . . 
Deposit-securities ratio
At fiscal year-end . . . . . . . . . . . . . . . . . . . . 
Average. . . . . . . . . . . . . . . . . . . . . . . . . . . 

(%)

2004

2005

2006

2007

2008

16.63
15.44

23.11
17.98

39.91
26.16

37.84
37.35

30.32
35.00

88.00
87.88

58.82
94.00

74.93
79.12

50.67
62.58

42.71
46.42

Notes: 1. Deposit-loan ratio is calculated by the dividing loan balance at the fiscal year-end (or average during the fiscal year) by the deposit balance at the fiscal year
end (or average during the fiscal year) and multiplying by 100.
2. Deposit-securities ratio is calculated by dividing the securities balance at the fiscal year-end (or average during the fiscal year) by the deposit balance at the
fiscal year end (or average during the fiscal year) and multiplying by 100.

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Balance of securities by category and remaining period
As of March 31,(Millions of yen)

2004
			
1 year				

or less			More than
1 year and3 yearsor less

Japanese government bonds . . . . .
Local government bonds . . . . . . .
Corporate bonds  . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .

66,517—
6,916
61,388134,82227,009—9,701
92,679129,390

More than
3 years and5 yearsor lessMore than
5 years and7 yearsor lessMore than
7 years andMore than
10 years
10 yearsor less		

107
—
2,631
44,18646,925

14,648
—
5,059
8,915
28,623

2,042
—
7,623
1,285
10,950

—
—
1,658
—
1,658

Unspecified
term

Total

—
—
—
2,000
2,000

110,324—
33,591
210,454354,370

Sony Bank

As of March 31,(Millions of yen)

2005
			
1 year				

or less			More than
1 year and3 yearsor less

Japanese government bonds . . . . .
Local government bonds . . . . . . .
Corporate bonds  . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .

97,552—
2,554
33,954
134,061

6,558
—
6,877
67,973
81,409More than
3 years and5 yearsor lessMore than
5 years and7 yearsor less

2,125
—
5,440
38,49546,061

4,236
—
3,173
7,073
14,484More than
7 years andMore than
10 years
10 yearsor less		

—
—
2,456
3,247
5,703

10,013—
1,476—
11,490

Unspecified
term

Total

—
—
—
30,38930,389120,486—
21,978181,133
323,599

As of March 31,(Millions of yen)

Financial Data

2006
			
1 year				

or less			More than
1 year and3 yearsor less

Japanese government bonds . . . . .
Local government bonds . . . . . . .
Corporate bonds  . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .

75,317—3,430
43,971
122,719

3,279—
33,63592,532
129,447

More than
3 years and5 yearsor lessMore than
5 years and7 yearsor less

13,471—
15,14865,871
94,492

988
—
4,922
2,676
8,587

More than
7 years andMore than
10 years
10 yearsor less		

—
—
—
8,555
8,555

86,689—1,274
789
88,752

Unspecified
term

Total

—
—
—
8,994
8,994

179,746—
58,411
223,391
461,550

As of March 31,(Millions of yen)

2007
			
1 year				

or less			More than
1 year and3 yearsor less

Japanese government bonds . . . . .
Local government bonds . . . . . . .
Short-term corporate bonds  . . . . .
Corporate bonds  . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .

7,725—
20,984
26,17344,47999,362

19,417——30,98365,375
115,776

More than
3 years and5 yearsor lessMore than
5 years and7 yearsor less

9,616——
14,04829,75353,418

590
—
—
2,402
4,445
7,439

More than
7 years andMore than
10 years
10 yearsor less		

8,246
—
—
—
2,577
10,82485,428
—
—
1,112
840
87,381

Unspecified
term

Total

—
—
—
—
7,031
7,031

131,025—
20,98474,720154,504
381,234

As of March 31,(Millions of yen)

2008
			
1 year				

or less			Japanese government bonds . . . . .
Local government bonds . . . . . . .
Corporate bonds  . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .

More than
1 year and3 yearsor lessMore than
3 years and5 yearsor less

13,315 17,993 24,722———
18,575 62,443 69,051———
27,360 68,964 46,522
59,251 149,401 140,296

More than
5 years and7 yearsor lessMore than
7 years andMore than
10 years
10 yearsor less		Unspecified
term

Total

—
—
1,032
—
9,959
10,992

4,002 111,123
—
—
—
1,003
—
—
—
—
4,002 112,126

—
—
—
3,000
9,705
12,705

171,157—
152,107
3,000
162,512488,77788

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Stock Information
Sony Financial Holdings Inc. (SFH)

Information on Common Stock, Shares Outstanding
Historical Data on Common Stock and Total Number of Shares Outstanding
Common Stock (millions of yen)

Total Number of Shares Outstanding

500
5,500
19,9002,000,000 shares
2,100,000 shares
2,175,000 shares

April 1, 2004
June 25, 2004
October 10, 2007

Information on Major Shareholders (As of March 31, 2008)
Number of Shares Held

Percentage of Ownership

1,305,000 shares
48,603
48,341
42,66638,50935,482
34,773
31,11530,75921,953
1,637,201

60.00%
2.23
2.22
1.96
1.77
1.63
1.59
1.43
1.41
1.00
75.27

Sony Financial Holdings

Sony Corporation
Japan Trustee Services Bank, Ltd. (Trust Account)
The Master Trust Bank of Japan, Ltd. (Trust Account)
State Street Bank and Trust Company 505103
The Chase Manhattan Bank 385036
BBH for VIP Contrafund Financials Sub
Morgan Stanley & Co. Inc
CBNY-Orbis SICAVState Street Bank and Trust Company
Goldman Sachs and Company Regular Account
Total

Stock Exchange Listing (As of March 31, 2008)

Dividend Policy
Dividends
		

FY2006

FY2007

Stock Information

The First Section of the Tokyo Stock Exchange (Securities Code: 8729)

Dividend per Share

Year-end . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
¥3,095.24¥3,000.00
Annual. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
¥3,095.24¥3,000.00
Annual Dividend Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
¥6,500 million¥6,525 million
Dividend Payout Ratio (Consolidated). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
64.9%
26.4%
Dividend on Net Assets (Consolidated). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 
2.4%
2.5%
SFH considers the steady increase in returns to its stockholders, as well as an increasing return on equity, among its mostimportant management tasks.
SFH’s basic policy on returning profits to its stockholders is to ensure stable dividends to stockholders while ensuring thehigh level of financial soundness that is necessary to maintain the trust of existing customers and attract new ones, as well as
securing sufficient retained earnings for future business development.
In keeping with the basic policy outlined above, we paid an annual dividend of ¥3,000 per share for the fiscal year ended
March 31, 2008.

Share Price
(Yen)

High
Low

October 2007

November 2007

December 2007

January 2008

February 2008

March 2008

440,000
403,000

425,000
384,000

451,000
412,000

426,000
375,000

427,000
396,000

427,000
395,000

Note: Data on share prices (high and low) is from the First Section of the Tokyo Stock Exchange.

89

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Corporate Information
Sony Financial Holdings Inc. (SFH)

Business (As of July 1, 2008)
Management control of subsidiaries (life insurance companies, non-life insurance companies, banks and others) specified by
the Insurance Business Law of Japan and the Banking Law of Japan and all duties incidental to that role

Organizational Chart (As of July 1, 2008)
Shareholders’ Meeting
Board of Statutory Auditors
Statutory Auditors

Board of Directors

Audit Department
Executive Committee
Corporate Planning Department
Corporate Control Department
Accounting Department

Sony Financial Holdings

Corporate Communications & Investor Relations Department

Organizational Chart of Business Operations (As of March 31, 2008)
Consolidated subsidiarySony Corporation

Management
control fee
Shareholding

Sony Financial Holdings Inc.

<Life insurance business><Non-life insurance business>

Sony Life Insurance Co., Ltd.

Corporate Information

Tradename and trademark license
Sales and referrals of
the other’s products<Life insurance business>

Sony Life（Philippines) Corporation<Banking business>

Sony Assurance Inc.

Sony Bank Inc.

<Banking business>

AEGON Sony Life Planning Co., Ltd.

Sony Bank Securities Inc.

Note: In August 2007, AEGON Sony Life Planning Co., Ltd. was established as an affiliate of Sony Life (a 50–50 joint venture by Sony Life Insurance Co., Ltd. and
AEGON Group of the Netherlands). AEGON Sony Life Planning Co., Ltd. is not included as an equity-method affiliate in the scope of consolidation in the fiscal
year ended March 31, 2008.

Senior Management (As of July 1, 2008)
Directors and Statutory Auditors
Title

Name

Other Concurrent Responsibilities

President, Representative Director Teruhisa Tokunaka Director of Sony Bank Inc.
Executive Vice President,
Hiromichi Fujikata Director of Sony Life Insurance Co., Ltd.
Representative Director
Director of Sony Assurance Inc.
Director
Taro Okuda
President and Representative Director of Sony Life Insurance Co., Ltd.
Director
Shinichi Yamamoto President and Representative Director of Sony Assurance Inc.
Director
Shigeru Ishii
President & CEO, Representative Director of Sony Bank Inc.
Director
Nobuyuki Oneda
Executive Vice President, Chief Financial Officer, and		
Corporate Executive Officer of Sony Corporation
Director
Yasushi Ikeda
Director
Ryuji Yasuda
Director and Member of Audit Committee of Sony Corporation
Standing Statutory Auditor
Hiroshi Sano
Statutory Auditor of Sony Life Insurance Co., Ltd.
		
Statutory Auditor of Sony Assurance Inc.
Statutory Auditor
Takemi Nagasaka Senior General Manager, Accounting Division of Sony Corporation
Statutory Auditor
Hiroshi Ueda
Standing Statutory Auditor of Sony Bank Inc.
Statutory Auditor
So SatoStanding Statutory Auditor of Sony Life Insurance Co., Ltd.
Statutory Auditor
Takatoshi Yajima
Standing Statutory Auditor of Sony Assurance Inc.
		
Statutory Auditor of Sony Life Insurance Co., Ltd.
*Yasushi Ikeda is an outside director.

Number of Employees (As of March 31, 2008)
					
SFH

Life Insurance Business

Non-Life Insurance BusinessBanking Business

20

5,412

651

170

SFH Group

6,253

Note: SFH employees include personnel on loan from Sony Corporation, Sony Life Insurance Co., Ltd., Sony Assurance Inc., and Sony Bank Inc.

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Senior Management of the SFH Group Companies

Sony Life (As of July 1, 2008)
Directors and Statutory Auditors
Title

Name

Chairman, Director
Kunitake Ando
President, Representative Director
Taro Okuda
Director
Masamitsu Shimaoka
Director
Mitsuhiro Koizumi
Director
Hiromichi Fujikata				Standing Statutory Auditor
So SatoStatutory Auditor
Hiroshi Sano		

Statutory Auditor
Takatoshi Yajima
		Other Concurrent Responsibilities

Director of AEGON Sony Life Planning Co., Ltd.
Director of Sony Financial Holdings Inc.
Executive Vice President and Representative Director ofSony Financial Holdings Inc.
Director of Sony Assurance Inc.
Statutory Auditor of Sony Financial Holdings Inc.
Standing Statutory Auditor of Sony Financial Holdings Inc.
Statutory Auditor of Sony Assurance Inc.
Standing Statutory Auditor of Sony Assurance Inc.
Statutory Auditor of Sony Financial Holdings Inc.

Directors and Statutory Auditors
Title

Name

		

Statutory Auditor
Yoshiki Matsuyama
		

Other Concurrent Responsibilities

Director of Sony Financial Holdings Inc.
Executive Vice President and Representative Director ofSony Financial Holdings Inc.
Director of Sony Life Insurance Co., Ltd.
General Manager, Corporate Communications & Investor
Relations Department of Sony Financial Holdings Inc.
Statutory Auditor of Sony Financial Holdings Inc.
Statutory Auditor of Sony Life Insurance Co., Ltd.
Standing Statutory Auditor of Sony Financial Holdings Inc.
Statutory Auditor of Sony Life Insurance Co., Ltd.
General Manager, Accounting Department,
Accounting Division of Sony Corporation

Sony Bank (As of July 1, 2008)
Directors and Statutory Auditors
Title

Name

President, Representative Director
Shigeru Ishii
Director
Hidehiko Nakamura
Director
Masahiko Tokuyama
Director
Teruhisa Tokunaka		Director
Hiroki Totoki		Director
Manabu Idei
		
Director*
Tohru Nakajima
Standing Statutory Auditor
Hiroshi Ueda
Statutory Auditor
Hidemichi Takenaka		Statutory Auditor
Junichi Yoshikawa

Other Concurrent Responsibilities

Director of Sony Financial Holdings Inc.
President and Representative Director ofSony Financial Holdings Inc.
Executive Vice President and Director of
So-net Entertainment Corporation
General Manager, Corporate Planning Department ofSony Financial Holdings Inc.
Partner, Nagashima Ohno & Tsunematsu
Statutory Auditor of Sony Financial Holdings Inc.
Manager, Planning Section, Accounting Division ofSony Corporation
Manager, Accounting Department of Sony Financial Holdings Inc.

Senior Management of the SFH Group Companies

President, Representative Director
Shinichi Yamamoto
Director
Yuro Fujiyama
Director
Hiromichi Fujikata				
Director
Masaaki Konoo
		Standing Statutory Auditor
Takatoshi Yajima		Statutory Auditor
Hiroshi SanoSony Financial Holdings

Sony Assurance (As of July 1, 2008)*Tohru Nakajima is an outside director.

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Head Office: 1-1, Minami Aoyama 1-chome, Minato-ku, Tokyo 107-0062, Japan
Tel: +81-(0)3-5785-1070
URL: http://www.sonyfh.co.jp/index_en.html/
Published in July 2008 by Corporate Communications & Investor Relations Department of SFH

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SFH’s Website Information

SFH regularly updates its website in a proactive attempt to encourage understanding and disclose information
about SFH and the SFH Group. Please visit website to look at a variety of information.

http://www.sonyfh.co.jp/index_en.html
E-mail Alert

This section includes
corporate information,
messages from management, corporate governance, group informationand corporate strategy.

Our e-mail alert service
ensures timely disclosure by alerting subscribers via e-mail about
press releases and otherbreaking information.

Press Releases
This section contains
press releases
announced by SFH
Group companies.

Investor Relations
This section is designed to conveniently provide investors,
analysts and shareholders with a host of timely and appropriate information over the Internet. This section contains SFH
Group earnings releases, stock prices, information on IR
events, IR presentations and financial highlights.

These icons link to the
top pages of SFH Group
companies’ websites,
which are available onlyin Japanese. The sites
provide overviews anddetailed information
about the products andservices that eachcompany provides.

Sony Life InsuranceSony AssuranceSony Bank

Sony Bank Securities

http://www.sonylife.co.jp/

http://www.sonysonpo.co.jp/

http://sonybank.net/

http://sonybank-sec.net/(Japanese only)(Japanese only)(Japanese only)

SFH’s Website Information

Links to Group
Company Sites

Sony Financial Holdings

About Us

(Japanese only)

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Annual Report
2008This annual report is printed on waterless. We use non-VOC ink and FSC-certified paper.
Printed in Japan

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