2019
Annual Report

April 1, 2018–March 31, 2019

Contents
1 Introduction

52 Corporate Section

1

Sony Financial Groupʼs Mission,

52

Corporate Profile

Vision & Values

53

Profiles of Group Companies

2

History54

Stock Information

4

Financial and Non-financial Highlights

6

Message from the President

11

Sustainability Initiatives

12 Strategy and Review

56 Reference Materials
56

Review of Operations / Organizational

57

Financial Highlights

58

SFH Consolidated Financial Statements

Chart of Business Operations

12

Sony Financial Group

16

Sony Life

66

Segment Information

20

Sony Assurance

68

Other Financial Data

24

Sony Bank

70

28

Nursing Care Business

30 Initiatives to Strengthen

Relationship with Parent Company,
Sony Corporation

71

Financial Data Book Contents

72

Glossary

Our Foundation for Creating Value

30

Corporate Governance48

Human Resources

50

The Environment

51

Communication with Stakeholders

Editorial Policy
SFH refers to “Guidance for Collaborative Value
Creation” published by the Ministry of Economy,
Trade and Industry when organizing and examining
matters to be listed in this report, in order tomake this report a starting point for dialogue withshareholders and investors.

Company Name Abbreviations
The following abbreviations for company names are used in this report.
Sony Financial Group …………………………………… SFG
Sony Financial Holdings Inc. …………………………… SFH
Sony Life Insurance Co., Ltd. ………………………… Sony LifeAEGON Sony Life Insurance Co., Ltd. ……………… AEGON Sony Life Insurance
SA Reinsurance Ltd ……………………………………… SA ReinsuranceSony Life Business Partners Co., Ltd. ……………… Sony Life Business Partners
Sony Assurance Inc. ……………………………………… Sony AssuranceSony Bank Inc. …………………………………………… Sony Bank
Sony Payment Services Inc. …………………………… Sony Payment Services
SmartLink Network Hong Kong Limited …………… SmartLink Network Hong Kong
Sony Lifecare Inc. ………………………………………… Sony Lifecare
Lifecare Design Inc. ……………………………………… Lifecare Design
Proud Life Inc. ……………………………………………… Proud Life
Sony Financial Ventures Inc. …………………………… Sony Financial Ventures
Sony Corporation ………………………………………… Sony Corp.

c

Sony Financial Holdings Inc. Annual Report 2019

Disclaimer
This annual report contains statements concerning the current plans, expectations,strategies and beliefs of the SFG. Any statements contained herein that are not historicalfacts are forward-looking statements or pro forma information. Forward-looking statements
may include̶but are not limited to̶words such as “believe,” “anticipate,” “plan,” “strategy,”“expect,” “assume,” “forecast,” “predict,” “propose,” “intend” and “possibility” that describe
future operating activities, business performance, events or conditions. Forward-looking
statements, whether spoken or written, may also be included in other materials released
to the public. These forward-looking statements and pro forma information are based onassumptions, decisions and judgments made by the management of SFG companies, andare based on information that is currently available to them. As such, they are subject tovarious risks and uncertainties, and actual business results may vary substantially from theforecasts expressed or implied in forward-looking statements. Consequently, investors are
cautioned not to place undue reliance on forward-looking statements. SFG companies areunder no obligation to revise forward-looking statements or pro forma information in lightof new information, future events or other findings. The information contained in this annual
report does not constitute or form part of any offer for sale or subscription of or solicitation
or invitation of any offer to buy or subscribe to any securities, nor shall it or any part of it
form the basis of or be relied on in connection with any contract or commitment whatsoeverin Japan or abroad.

Other Disclaimers
The SFG refers to the financial group that comprises SFH, Sony Life, Sony Assurance,
Sony Bank, Sony Lifecare, Sony Financial Ventures, as well as their subsidiaries andaffiliates.
Unless otherwise indicated, figures less than the indicated unit in this material have beentruncated, while ratios and percentage changes have been rounded off.
“Lifeplanner” and “Karte” are registered trademarks of Sony Life, “SURE” and “ZiPPi” areregistered trademarks of Sony Assurance, “MONEYKit” is a registered trademark of Sony
Bank, and “Sony Bank GATE” is a registered trademark of Sony Corp. Company names
and product names that appear in this report, other than those mentioned above, aretrademarks or registered trademarks of the respective company.
Fiscal 1996–fiscal 2020 represent the fiscal years ended/ending March 31, 1997–2021.

Sony Financial Groupʼs Mission, Vision & Values

MissionCreate a sustainable society where people feel a sense of enrichment

VisionBecome the most trusted ﬁnancial services group by invoking
emotion through the power of technology and high-value-added
products and services that meet every customerʼs needs

ValuesCustomer First:

Provide products and services that satisfy customers
by listening sincerely to their views

Originality:

Work actively and pursue creativity and innovation
within an organization that supports a spirit of freedom
and open-mindedness

Integrity & Fairness: Act fairly with high ethical standards and a sense of
purposeDiversity:

Create new value by harnessing diversity and varying
viewpoints

Sustainability:

Fulﬁll our stakeholder responsibilities throughdisciplined business practices

Sony Financial Group formulated its “Mission, Vision & Values.”
Sony Financial Holdings Inc. formulated a new corporate philosophy named “Mission, Vision & Values” on
April 1, 2019, with the aim of the entire group working together to further enhance corporate value andmake broad-ranging contributions to society.
P6 Message from the President

Sony Financial Holdings Inc. Annual Report 20191

Introduction

History

It all began with the founderʼs dream“for Sony to have a ﬁnancial institution”
Akio Morita, the founder of Sony Corporation, visited Chicago in the late 1950s to open a sales office fortransistor radios. He was shocked to discover that the massive skyscraper towering over the streets was occupied by the largest life insurance company in America at that time. This is said to be the inspiration of his dreamfor Sony Group to have its own financial institution and to build a magnificent skyscraper of its own one day.
His entrepreneurial spirit drove him to adapt to the diversifying needs of customers and solve the problems
facing society himself. The Sony Spirit to “do what has never been done before” has been passed down fromone generation to the next, and the Sony Group has taken advantage of financial liberalization and deregulation
to create a new financial business without being constrained by existing frameworks.

Sony Assurance

Challenge for a new business model for non-life insurance
that “Connects directly with customers”
Backed by the liberalization of the market through deregulation in the late 1990s that came be
known as the “Financial Big Bang,” as well as the spread of the Internet, Sony Assurance
launched a new business that allows customers to apply for insurance directly online or over thephone. Indeed, Sony Assurance has become a leading company in direct automobile insurancewith automobile insurance whose premiums change depending on the customerʼs car life, suchas how far they drive. Furthermore, Sony Assurance has developed other products and services,and continues to grow.

Sony Life

Accompanying and protecting customers all across Japanthrough lifeʼs milestones
Sony Life has created a unique business model in which it provides tailor-made life insurance
customized to each customer ʼs needs through advanced consultation. “Lifeplanner sales
employees” and “Partners” build trust by “Accompanying customers through life ʼs milestones, ”
ensuring steady growth for Sony Life.

1979「ソニー・プルデンシャル生命保険株式会社」
Sony Prudential Life Insurance Co., Ltd.,（ソニー生命）設立
is established(currently Sony Life)

1990

1946
東京通信工業株式会社（ソニー
Tokyo Tsushin Kogyo
K.K. is㈱）設立
established(currently Sony Corporation)

1980

1989
日経平均株価が史上最高値
NikkeiStock Average
38,915reaches円を記録
historic high of¥38,9151970

1977
日本人の平均寿命、男女ともに世界一Japanachieves the longest life expectancy in theworld for both men and women

1940

2

Sony Financial Holdings Inc. Annual Report 2019Sony Financial Holdings

Continuing to change ﬁnance in the futureSony Financial Holdings Inc. is established in 2004 as the first financial holding company in Japan
with insurance companies and a bank among its holdings. In 2007, SFH was listed on the First
Section of the Tokyo Stock Exchange, and since then it has also entered the nursing care andventure capital businesses.
Today, nearly 60 years since Akio Morita first saw his dream, Sony Financial Groupʼs financial
business has become a major contributor to Sony Groupʼs total profits. Sony Financial Group willcontinue to provide high value-added products and services that break down preconceptions in
the finance industry, as a challenger and innovator in the industry that carries on the Sony Spirit.

Sony Bank

Freeing banking transactions from the constraints of timeand spaceSony Bank has launched revolutionary products and services faster than anyone else, including
mortgage loans that can be taken out without going to a bank, and foreign currency deposits thatcan be traded at a reasonable cost from home via the Internet. Sony Bank has also assembled anarray of unique and convenient services, such as the ability to withdraw foreign currency savings
from partner ATMs overseas in cash and use the currency for shopping, and has expanded its
balance of foreign currency deposits closely behind the megabanks.

2014

1998

「ソニー・ライフケア株式会社」設立
Sony Lifecare Inc. is established「ソニーインシュアランスプランニング株式会社」（ソニー損保）設立
Sony Insurance Planning Co., Ltd., is established(currently Sony Assurance)

2018

2001
2001
「ソニー銀行株式会社」設立「ソニーフィナンシャルベンチャーズ
Sony Financial Ventures Inc. is株式会社」設立
establishedSony Bank Inc. is established

2004
2004
「ソニーフィナンシャルホールディングス株式会社」設立
Sony Financial Holdings Inc. is established
is listed on the First Sectionof Tokyo（(2007
東京証券取引所市場第一部上場）
2007SFH

Stock Exchange)

2010
2011
Occurrence of the Great East
Japan Earthquake

2000

2012
Economic policies enacted by thesecond Abe administration (Abenomics)

2007
Enactment of the Financial
Instruments and Exchange Act

Late 1990s Internet spreads with release of Windows 95
Financial Big Bang occurs in Japan

2008

2016

Collapse of Lehman Brothers

2000

1996
Revision to the Insurance Business Act
・Ban removed on mutual entry into lifeand non-life insurance fields
・Reviewed accounting calculation
system・Introduced product/rate notification
system1997
Licensed to offer risk-segmented
automobile insurance

Enactment of the nursing careinsurance system
Removal of ban on companies fromother industries entering the banking
industry

2001

2010
Enactment of the
Insurance Act

Introduction of negative interest
rates
Full enactment of revisions to theInsurance Business Act
・Comparative recommendation
regulations
・Fulfillment of obligation to grasp
intentions

Removal of ban on sales of insurance
products at banks
Revision to the Banking Act (removal of ban
on companies from other industries entering
the banking industry)

1998
Revision to the Act on Non-life Insurance Rating Organizationof Japan (Introduction of reference loss cost rates system)
Sony Financial Holdings Inc. Annual Report 20193

Introduction

Financial and Non-ﬁnancial Highlights

Financial Highlights
Business Volume KPISony Life (non-consolidated)

Sony AssuranceSony Bank (non-consolidated)

Policy amount in force*1

Direct premiums written

Retail balance*2(Trillions of yen)
40.9

43.1

45.3

47.2

49.5

(Billions of yen)

90.4

94.3

112.1

99.0

(Trillions of yen)

107.0

3.6
3.0

2015

2016

2017

2018

2019

2015

2016

2017

2018

2019

2015

*1 Sum of individual life insurance andindividual annuities

4.2

3.2

2016

2017

*For the years ended March 31,*As of March 31,

3.9

2018

2019

*As of March 31,*2 Sum of deposits, investment trusts, andpersonal loans.
Since March 31, 2018, also includes
financial products intermediary services
and mediated discretionary investment
contracts.

Financial Soundness Indicators
Sony Life (non-consolidated)

Sony AssuranceSony Bank (non-consolidated)

Solvency margin ratio

Solvency margin ratio

Capital adequacy ratio(Domestic standard)

2,590.5% 813.0%

9.58%

Proﬁtability Indicators

4

Sony Financial Holdings(consolidated)

Sonly Life
(non-consolidated)

Sony AssuranceSony Bank(consolidated)

Consolidated adjusted ROECore ROEV

Adjusted ROE

ROE

6.7%

6.4%

15.2% 7.3%

Sony Financial Holdings Inc. Annual Report 2019

Credit Ratings
Credit Rating Agencies

Sony Financial Holdings

Sony Life

Sony Bank

Issuer rating
AA-

Insurance claims
paying ability
AAーJapan Credit Rating Agency (JCR)ーーLong-term issuer ratingAA-

S&P Global Ratings (S&P)

ーInsurer financial
strength rating
A+

Counterparty credit rating
Long-term A
Short-term A-1

Rating and Investment Information (R&I)*As of June 25, 2019

Non-ﬁnancial Highlights
Number of Lifeplanner
sales employees

Number of employees

Consolidated

11,055

Life insurance business

8,454

Non-life insurance business

1,303

Banking business

609

Others623

Parent66

Sony Life(non-consolidated)

5,164

Number of MDRT members
Sony Life(non-consolidated)997*As of April 1, 2019Sony Financial Holdings Inc. Annual Report 20195

Message from the President

Shigeru Ishii
President,
Representative Director

6Sony Financial Holdings Inc. Annual Report 2019

Aiming for steady growth of existing businesses
and growth beyond the scope of thesebusinesses, in order to respond to the needs andrising expectations of the people and society, andcontribute to the development of a sustainable
society where people feel a sense of enrichment
Let me express my deepest appreciation to all stakeholders forthe continued support and interest you have extended to the SonyFinancial Group (SFG). Now that we have entered the second yearof our medium-term business plan, I would like to convey again our
thoughts on the medium-term plan, the new corporate philosophy
SFG formulated in April of this year “Mission, Vision & Values”, andthe purpose of renewing our management structure in June.

Environmental changes that reshape
the world
At present, environmental change is accelerating and advancing
dramatically in qualitative aspects, so we expect in another 10 years
the world will be an entirely different place. Looking back at the past
decade, many environmental changes have occurred, for example,
various technological advances have affected our lives, and demographic changes such as family compsition have changed. SFG has
provided new services that take into consideration the diversifying
needs of customers even with the stagnant market. As a result, Sony
Life has steadily increased its policies in force and increased its shareof the life insurance market. Sony Assurance has also continued to
grow as a leader in direct automobile insurance. In addition, Sony
Bank now trails closely behind the megabanks in Japan in the market
for individual foreign currency deposits, and has steadily increased its
number of mortgage loans. Indeed, SFG companies have achieved anadequately strong presence among existing players in these markets.
However, it would be overly optimistic for us to forecast that our
future will remain on the same trajectory of business development
as in the past. Companies will be affected by not only technologicaladvances and changes in population trends, but also changes in theeconomic environment such as continued long-term slow growth.
Changes in expectations for financial services represented by “customer-first business operations” will also challenge the conventional
ways that financial services and companies are managed.

Sony Financial Holdings Inc. Annual Report 20197

Financial services are no longer provided only by traditional financial
institutions, with players other than banks appearing in the field ofsettlements, for example. Providing new value is essential in order tosurvive in the harsh new world where any industry can be disrupted. Providing added value based on technology is the way for us toachieve further growth. In the past, we found a way to provide existing financial services in a more streamlined manner and entered in themarkets for respective businesses. Once more, by providing new value that customers can really feel, we hope to achieve our next great
success and achieve sustainable growth.

Two challenges
Based on this idea, our medium-term business plan foresees changes
in the next 10 years, uses the first three years to prepare, and considers which challenges to take on and how to implement this. We
believe that the hurdles SFG must clear in order to achieve sustainable growth are that we must undertake two challenges of differing
natures. For existing businesses, we must improve our current operations and further refine them so that they are more in line with customersʼ needs. Simultaneously, we will use the assets of our existing
businesses to adapt to environmental changes and provide new valuethat does not lie on an extension of our present trajectory. In essence,
this means accepting and expanding upon divergent ideas.
In order for our existing businesses to continue growth according
to their potential, we must achieve steady growth by increasing thedegree of freedom with which each company may act, and also aim
for growth beyond the scope of our existing businesses in response
to environmental changes. It is our intent to provide services that exceed customersʼ expectations by making full use of the Sony Groupʼstechnology, without confining ourselves to our past achievements.
As a specific move in our medium-term business plan, we haveestablished Sony Financial Ventures in 2018, which will be responsible
for our venture capital business. We will strengthen our existing businesses in SFG companies and create new high value-added financial
services by investing in, and promoting partnership and collaboration
with, venture companies that have unique strengths in new movements in the financial field such as Fintech. By developing our venture
capital business, we will be able to access the frontlines of Fintech,which is a footing we must absolutely hold now as a financial institution. I consider it essential for us to not only have a deep knowledgeof the field on the frontlines, but also be able to act taking into consideration the possibility of collaboration from an early stage.

8

Sony Financial Holdings Inc. Annual Report 2019

Message from the President

Building a stronger foundation for
management
It is also necessary for us to have a solid promotion and management
system in order to carry out the reforms I have described above. To
do so, it is crucial that we strengthen our governance. Our stakeholders are also strongly requesting that we make this change. Therefore, SFG has strengthened its governance system in order to build
a better foundation for taking on the two challenges of “growing ourexisting businesses” and “growing beyond the scope of our existing
businesses” by executing reforms. Specifically, we reviewed structureof SFHʼs Board of Directors with the purpose of separating “supervisionand execution.” We received an approval at our most recent General
Meeting of Shareholders to restructure the Board of Directors so thatit consists of 10 members, four of whom are outside directors, threeof whom are from Sony Corporation which holds approximately 65%
of shares in SFH, and three of whom are executive directors of SFH.
Until June, the presidents of our major subsidiaries have concurrently served as Directors of SFH to ensure efficiency. However, inorder to adapt to the harsh environment we are in, we decided that
it would be better for them to concentrate more on the execution of
their respective businesses.

Sony Financial Holdings Inc. Annual Report 20199

Sustainability and the pursuit of the original
will of SFG
The theme of our current medium-term business plan is to take on
the challenge of new growth. As we aim for the next opportunity
for growth, SFH must create sustainable value in the long term. As
part of that, we returned to the original will and reviewed the positioning of SFG, which now operates a wide range of businesses including
life insurance, non-life insurance, banking, and nursing care. Basedon the desire for our stakeholders to feel a sense of enrichment andcontribute to the creation of a sustainable society, we have identified
the Groupʼs “Mission” and “Vision,” so that all of the Group employees
who are involved in our various businesses can move forward together in a common direction, and have also formulated the Groupʼs“Values,” which are treasured by each employee.
We recognize that SFG is expected to provide high-value-added
products and services, as stated in our Vision. While the urgency ofapplying reforms to our business style is growing, the services wehave provided from our origin, to work “for the customer,” will continue to be in demand as long as people go about their daily lives. We
will contribute to society by providing the best possible services tocustomers, fulfilling the essential needs of people and society, andmeeting their expectations for services that would be nice to have. In
doing so, I believe that we can realize sustainable growth, make our
stakeholders feel a sense of enrichment, and build fruitful win-win relationships with each of our stakeholders. We will do our best to makethis happen.
We look forward to your continued support and interest in ourefforts.

10

Sony Financial Holdings Inc. Annual Report 2019

Sustainability Initiatives
SFG aims to improve its corporate value and contribute to the development of a sustainable society by promoting management from a long-term perspective and continuously producing economic value and social
value through corporate activities that are highly aware of “customer-first” approaches and “response tochanges.” We consider it essential to achieve deeper engagement with customers, employees, shareholders,and other stakeholders.

Contributing toward the development of a sustainable society

Customer-ﬁrst
Response to changes

Corporate activities

Economic
value

Socialvalue

Stakeholders

Enhance corporate value

Based on this idea, we aim to create a value in such forms as “offering lifestyles that feature safety and peaceof mind,” “contributing to a healthy, long-lived society,” and “making lifestyles more convenient,” and we will
strive to strengthen the foundation of our value creation, such as human resource development, respect fordiversity, and strengthening governance.

Initiatives to create value through our businessContribute to peopleʼs lives by offering
appropriate advice
Propose products to match individual needs
Encourage asset creation/investment, andpromote healthContribute to a society featuring nextgeneration mobility
Improve access to financial services
Foster financial innovation
P12 Strategy and Review

Value Creation
Offer lifestyles that feature safety
and peace of mind
Contribute to a healthy,
long-lived society

Initiatives to strengthen our foundation for
creating value
Support challenges oriented toward new
growthCreate an employee-friendly working
environment
Promote empowerment of diverse humanresources
Strengthen governanceOperate environmentally-consideratebusinesses

Make lifestyles more convenient

P30 Initiatives to Strengthen Our Foundation
for Creating ValueP1 Sony Financial Groupʼs Mission, Vision & Values

Sony Financial Holdings Inc. Annual Report 201911

Strategy and Review

Sony Financial GroupSony Financial Group Medium-term Business Plan: Fiscal 2018

Theme

Fiscal 2020

Under the theme of taking on the challenge of new growth:- achieve organic growth from existing business models- make strategic moves from a long-term perspective to secure further growth,

taking full advantage of changes 10 years into the future

Points12

Customer-ﬁrst
Further promote the customer-ﬁrst
business operation

Sony Financial Holdings Inc. Annual Report 2019

Response to Changes
Establish a foundation that allows us to takefull advantage of changes (technologicaladvancements, social or regulatory changes,etc.) to secure further growthGroupʼs Growth Strategy
In our medium-term business plan, in addition to organic growth achievedby strengthening our existing businesses, we will take on new initiatives
such as utilizing Fintech and establishment of investment subsidiary.
Strategy and Review

Organic Growth through Stronger Existing Businesses

Life insurance
business
P16 Sony Life

Non-life
insurancebusiness

Nursing carebusiness

P24 Sony Bank

P28 Nursing
Care Business

Shigeru Ishii
President, Representative Director,
Sony Financial Holdings

New Initiatives Aimed at Further Growth

Utilization of Fintech
With regard to the utilization of Fintech, SFG companies are engaged in development with the aim of providing
higher quality financial services more effectively and efficiently to customers. In addition to services that have already been implemented, SFG as a whole is promoting initiatives to realize more advanced services.
In addition, by further strengthening our collaboration with the Sony Group, SFG will develop better products
and services, from both the business and technical side of our operations, which will lead to an enhancement ofour competitive advantage.

Corporate Section

Establishment of investment subsidiarySony Financial Ventures Inc. was established in July 2018, and Sony Financial Ventures jointly launched a ¥5 billion
fund with Global Brain Corporation, one of the largest independent venture capital firms in Japan, in October 2018.
Sony Financial Ventures will invest in venture companies that have strengths in fields such as Fintech and engage incollaboration between venture companies and SFG in order to strengthen SFGʼs existing businesses and create new
businesses.

IInitiatives to Strengthen Our Foundation
for Creating ValueP20 Sony
Assurance

Bankingbusiness

Progress Toward Fiscal 2020 Medium-term Targets
FY2019Forecast

FY2020Medium-term targets*1

Ordinary revenues¥1.62 trillion¥1.69 trillion¥1.76 trillion

Almostin lineOrdinary profit¥93.8 billion¥98 billion¥77 billion

Above initial
targetProfit attributable to ownersof the parent¥62 billion¥65 billion¥50 billion

Above initial
targetUS-GAAP operating income¥161.5 billion¥170 billion¥180 billion

Almostin lineConsolidated adjusted ROE*2

6.7%

Approx. 6%

Approx. 7%

Almostin lineReference Materials

Progress toward
FY2020 Medium-termtargets

FY2018Actual

*1 Medium-term targets announced on May 31, 2018
*2 Fiscal 2018 Actual and fiscal 2019 Forecast are based on interest rate levels as of March 31, 2019
Fiscal 2020 medium-term target is based on interest rate levels as of March 31, 2018

Sony Financial Holdings Inc. Annual Report 201913

Strategy and Review

Sony Financial Group

Consolidated Adjusted ROE
Since each company of SFG differs by industry such as insurance and banking, each Group company calculates
its “Adjusted ROE” based on adjusted profit and adjusted capital to realize its corporate value and capital efficiency. By fiscal 2020, as the medium-term target, Sony Lifeʼs core ROEV to be 6% or more. For Sony Assurance,adjusted ROE to be reach around 13% by that time, while Sony Bank to be show ROE of 6.8%. On a consolidated
basis, achievement of these medium-term targets will lead to a consolidated adjusted ROE of about 7%.
FY2018 Actual

FY2019 Forecast

FY2020 Medium-termtargets*

Consolidated adjusted ROE

6.7%

Approx. 6%

Approx. 7%(Sone Life) Core ROEV

6.4%

5% – 6%

6% or more(Sony Assurance) Adjusted ROE

15.2%

Approx. 14%

Approx. 13%(Sony Bank) ROE

7.3%

6.4%

6.8%

* Medium-term targets announced on May 31, 2018

Calculation of Consolidated Adjusted ROE
Group companiesʼ adjusted ROE and ROE as well as consolidated adjusted ROE are presented below.
Calculation of Sony Lifeʼs core ROEV:
New business value ＋ Expected existing business contribution
MCEV*1 as of the beginning of the fiscal year less dividends paid plus MCEV*1 as of the end of the fiscal year, divided by two
Calculation of Sony Assuranceʼs adjusted ROE:
Net income (loss)＋Provision amount for catastrophe reserve and its provision amount for reserve for price fluctuations, in each case after taxes
The average amount of net assets plus the sum of catastrophe reserve and its reserve for price fluctuations during the fiscal year, in each case after taxes
Calculation of Sony Bankʼs ROE:
Profit (loss) attributable to owners of the parent
The average amount of net assets during the fiscal year
Calculation of Consolidated adjusted ROE for fiscal 2018:
Consolidated adjusted ROE = Consolidated adjusted profit ÷ consolidated adjusted capitalSony Life: New business value + expected existing business contribution + Sony Assurance: Net income (loss) + provision amount for catastrophe
reserve and its provision amount for reserve for price fluctuations, in each case after taxes + Sony Bank: Profit (loss) attributable to owners of the parent
Sony Life: MCEV*1 as of the beginning of the fiscal year less dividends paid plus MCEV*1as of the end of the fiscal year, divided by two+ Sony Assurance: The average amount of net assets plus the sum of catastrophe reserve and its reserve for price fluctuations during the fiscal year,
in each case after taxes + Sony Bank: The average amount of net assets during the fiscal year
*1 Sony Life discloses Market Consistent Embedded Value (“MCEV”). Sony Lifeʼs MCEV is calculated in compliance with the European Insurance CFO
Forum Market Consistent Embedded Value Principles©*2(“MCEV Principles”), the international standard in disclosing MCEV published by the CFO
Forum comprising CFOs from major insurance companies in Europe.
*2 Copyright© Stichting CFO Forum Foundation 2008

Basic Policy on Returning Proﬁts to Shareholders
Medium-term Dividend Policy
SFH aims for steady increases in dividends in line with earnings growth over the medium to long term, while securing sufficient internal reserves to ensure the financial soundness of Group companies and to invest in growth fields.
Management will examine earnings growth over the medium to long term by placing more importance on economic value-based profit indicators that are more suitable for evaluating the growth of the life insurance business,in addition to statutory profit. Furthermore, management will determine specific dividend amounts for each year bytaking into account a comprehensive range of factors surrounding SFG.
Dividend Forecast
With regard to its medium-term dividend policy, SFH places more importance on “consolidated adjusted ROE” as
an indicator for measuring the growth of economic value-based profit that are more suitable for valuing the growthof the life insurance business. If it could be expected this level to be stably at a level of 5% or more over the medium-term, then we will determine the amount of increased dividends, based on a comprehensive judgment.
Consolidated adjusted ROE for fiscal 2018 was 6.7%, and is expected to be approximately 6% in fiscal 2019. For
fiscal 2019, after considering the business environment, the expansion of the Groupʼs business volume, and thelevel of economic value-based profit growth, we forecast dividends of ¥65 per share, an increase of ¥2.5 from
dividends for fiscal 2018.

14

Sony Financial Holdings Inc. Annual Report 2019

Strengthening Group GovernanceIn order to strengthen our governance and improve our sustainable corporate value, we have changed the structure of the Board of Directors of SFH.

Customer-ﬁrst Business Operation Policy (Summary)Group ERM*ERM Diagram

Operation Cycle of Group ERM

Capital policy
Dividend policy

CapitalEstablish business plan (measures andstrategies, revenue plan, stress tests, etc.)

Capital efﬁciency(proﬁtability)

Operate business and execute measures
Manage progress and track status throughmonitoring

Soundness

Risk

Sony Life: Core ROEVSony Assurance: Adjusted ROESony Bank: ROE

Reference Materials

Set risk-taking policy and risk tolerance(risk appetite)

ReturnCapitalefﬁciency(proﬁtability)
indicators

Corporate Section

A group-oriented ERM (Enterprise Risk Management) framework has been introduced into SFG. It aims to balanceand optimize capital, risk and return by extending comprehensive risk management structures already in place ateach company throughout the whole organization and to instill the idea of improved capital efficiency in management across the Group. This ERM framework will help SFG achieve stable growth and maximize medium- to longterm corporate value. The Group is working to build a PDCA cycle through the formulation, implementation andmonitoring of business plans based on risk appetite. Furthermore, we are trying to raise Group ERM even higher
while keeping related regulatory trends in sight.

IInitiatives to Strengthen Our Foundation
for Creating Value

Based on its vision and philosophy, SFG pursues business operations from a customer-first perspective. SFH hasclarified this initiative as its customer-first business operation policy, and Sony Life, Sony Assurance and Sony Bank
will each go further to establish business operation policies fine-tuned to respective activities.
The policy that SFH has set as well as the policies in place at Group companies will be reviewed periodically,taking into account such factors as changes in the operating environment. In addition, SFH, as a financial holding
company, will confirm that the content of the customer-first business operation policy is appropriate, and will monitor the activities at Group companies, based on their policies, to ensure proper business operations. SFH will offer
whatever support and guidance is necessary, as required.
At the same time, Group companies will verify the status of their own initiatives on customer-first business
operations and regularly report to the Board of Directors or other oversight structures and will also provide status
updates on a regular basis.

Strategy and Review

P38 Transition to a New Management Structure (Change in the Composition of the Board of Directors)

Take necessary measures according tochanges in soundness and profitability

Insurance business: Solvency margin ratio
Soundness
indicators

Banking business: Capital adequacy ratio
Management on a regulatory basis and on the basis of economic value

Sony Financial Holdings Inc. Annual Report 201915

Strategy and Review

Sony Life

Life insurance business

Accompanying and protecting customers all across Japan through lifeʼs milestones

Ordinary
Revenues

Composition by Business
Segment

16

Sony Financial Holdings Inc. Annual Report 2019

Approx.

90 %Ordinary Profit
Approx.

83%

Strategy and Review

In August 2019, Sony Life celebrates the 40th anniversary of its establishment. I would like to take this opportunity to express my gratitude to all
the stakeholders including customers who have extended their supportand understanding to us over the years. Since we started operations, wehave advanced various initiatives in order to provide the most suitablecoverage to as many customers as possible via consulting sales and follow-up. Our policy amount in force is approaching ¥50 trillion, which epitomizes our customersʼ collective sentiments, and for Sony Life, a proofof the trust they place in us. Moving forward, we will continue to conductbusiness while putting the customer first, and achieve steady growth.

Tomoo Hagimoto
President, Representative
Director
Sony Life Insurance Co., Ltd.

Traitsance, variable life insurance), living benefit insurance, educational endowment insurance, medical
insurance
Main sales channels: Lifeplanner sales employees, partners (independent agencies)

Tailor-made insurance product design and sales approach that match life planning of eachIInitiatives to Strengthen Our Foundation
for Creating Value

Main products: Death protection insurance (term life insurance, U.S. dollar-denominated insur-

individual customer based on consulting (consulting sales)
Maintaining optimal coverage through inspections of and advice on post-contract life plans andcoverage, adjusted to changes in environment surrounding the customer (consulting follow-up)
Securing financial soundness through ALM operation adjusted to long-term liability characteristics

Corporate Section

Strengths

Policy amount in force*1: Sony Life

: Life insurance industry: Sony Lifeʼs market share

5.2%
Reference Materials¥49.5trillion
CAGR＊2 4〜5%
March 31,
2001

March 31,2019

*1 Sum of individual life insurance and individual annuities*2 CAGR: Compound Annual Growth Rate

Sony Financial Holdings Inc. Annual Report 201917

Strategy and Review

Sony Life

Review of Results for Fiscal 2018
In order to realize our vision to “protect customers all across Japan throughout their lives,” Sony Life has worked
to provide necessary coverage to customers through consulting sales, and inspect and optimize coverage throughconsulting follow-up.

Products
In addition to enhanced protection, launched two new types of medical insurance; one with affordable premiums
and the other with health refund benefit payments, in July 2018
ServiceExpanded the scope of handling simple claims for hospitalization benefits and surgery benefits in December 2018
Other
Started providing Sony Lifeʼs U.S. dollar-denominated insurance through sales staff of Sumitomo Life through business partnership in January 2019
Established Sony Life Business Partners Co., Ltd., a special subsidiary company, as an initiative to promote theemployment of people with disabilities in March 2019
Trends of Key Indicators
Policy Amount in Force*1
Trillions of yen

45

47

49

Number of Lifeplanner
sales employees*2

4,933

5,142

MCEV*3/Core ROEV*4: MCEV (trillions of yen)
: Core ROEV (%)

5,164

5.9

3.6
1.4

March 31, March 31, March 31,
2017
2018
2019

FY2016FY2017FY2018FY2016

Ordinary Proﬁt(Life Insurance Business)
Billions of yen

78.2

6.4

1.6

1.7

FY2017FY201856.8

54.1

FY2016FY2017FY2018*1 Sum of individual life insurance and individual annuities*2 The figure includes the number of contracted Lifeplanner sales employees and those rehired on a fixed-term contract basis after retirement*3 Results for fiscal 2016 exclude impact from revisions in the insurance risk measurement method and others*4 Results for fiscal 2016 and fiscal 2017 exclude impact from revisions in the insurance risk measurement method and others

Examples of Value Creation through BusinessSony Life has worked to provide customers with necessary coverage and keep their coverage in an optimal statethrough consulting sales and follow-up conducted by Lifeplanner sales employees. In order to enhance our provided value in the future, we will improve the quality and proposal skills of our Lifeplanner sales employees, and will
enhance our products and expand the scope of our coverage in anticipation of the increasing diversity and complexity of our customersʼ needs, due to environmental changes such as greater longevity.

Value creation
Offer lifestyles that feature safety and peace of mind

18

Sony Financial Holdings Inc. Annual Report 2019

Contribute to a healthy, long-lived society

Medium-term Business Plan (Fiscal 2018 – Fiscal 2020)

Provide newvalue

Evolve customer-ﬁrst service (Fintech)
We will develop tools that utilize life planning data and AI, and in both the consulting
sales and consulting follow-up phases, we will aim to support objective proposals to
the customers and improve quality of services.
Realize growth in proﬁt on the basis of economic value
We will aim for medium-term profit growth on an economic value basis, while striving
to conduct customer-first business operations and strengthen our compliancesystem.

Corporate Section

Steadily growcorporate
value

Expand coverage
We will promote the enhancement of product capabilities and expand coverage,
centered on death protection products. As our medium-term product strategy, we will
promote new product development in anticipation of environmental changes, such as
greater longevity.

IInitiatives to Strengthen Our Foundation
for Creating Value

Response to Changes

Customer-ﬁrst

Achieve steady recovery in the independent agency channel
In addition to expanding support to fit the characteristics of our partners, we will
strengthen our relationship with high-quality partners by introducing a compensation
system that evaluates the quality of partners.

Strategy and Review

Furtherstrengthen
our businessfoundation

Pursue quality in the Lifeplanner channel
In addition to implementing a strict recruiting process, Sony Life will set a higher standard of service and provided value, and evaluate the behavior (processes) of Lifeplanner sales employees based on that standard from multiple perspectives, in order toimprove quality even further. In addition, we will work to execute deeper consulting
sales and follow-up utilizing tools such as “LiPSS” and “Karte.”
We will further enhance the value provided by Lifeplanner sales employees by pursuing higher quality.

Progress Toward Fiscal 2020 Medium-term Targets
FY2019Forecast

FY2020Mid-term targets*1

Progress toward
FY2020Mid-term targets¥49 trillion¥52 trillion¥55 trillion

Almostin line5,164

Around 5,300

Over 5,700

Below initial
targetMCEV*3
Core ROEV¥1.7 trillion
6.4%¥1.7 trillion
5% - 6%

Over ¥1.8 trillion
Over 6%

Ordinary profit(Life insurance business)¥78.2 billion¥84.2 billion¥62 billion

Policy amount in force
Number of Lifeplanner sales
employees*2

Reference Materials

FY2018ActualAlmostin lineAbove initial
target*1 Medium-term targets announced on May 31, 2018
*2 The figures include the number of contracted Lifeplanner sales employees and those rehired on a fixed-term contract basis after retirement*3 Fiscal 2018 Actual and fiscal 2019 Forecast are based on interest rate levels as of March 31, 2019
Fiscal 2020 medium-term target is based on interest rate levels as of March 31, 2018

Sony Financial Holdings Inc. Annual Report 201919

Strategy and Review

Sony Assurance

Non-life insurance business

Challenge for a new business model for non-life insurance that “connects directly with customers”

Ordinary
Revenues

Composition by Business
Segment

20

Sony Financial Holdings Inc. Annual Report 2019

Approx.

7%

Ordinary Profit
Approx.

7%*1: According to research by Sony Assurance using data officially disclosed by individual non-life insurers*2: According to research by Sony Assurance using automobile insurance premium revenues of non-life
insurers that sell automobile insurance primarily via direct sales channels, since fiscal 2002

Strategy and Review

While our mainstay automobile insurance market remained stable, theshare of direct automobile insurance in the market expanded, reaching
8%*1 of the industry premium income in fiscal 2017. Moving forward, morecustomers will seek reasonable premiums and the convenience of the Internet, so we expect the share of direct automobile insurance to increase
even higher. Since Sony Assurance reached No. 1*2 in sales in direct
automobile insurance in fiscal 2002, we have maintained our position as
the leading company. We will continue our endeavor to maximize customer value through improvements in customer experience (CX) and further
expand our share of the automobile insurance market, while also strengthening various business developments including medical insurance, as well
as overseas travel insurance and fire insurance available exclusively online,with the aim of sustainable growth.

Atsuo Niwa

Direct insurance company for individuals
TraitsMain products: Automobile insurance, medical insurance, overseas travel insurance, fire insurance
Main sales channel: Internet

Strengths

Reasonable premiums according to each customerʼs risk

IInitiatives to Strengthen Our Foundation
for Creating Value

President, Representative Director
Sony Assurance Inc.

High-quality accident response, customer center, and website services

Direct Premiums Written (Automobile Insurance)by Major Direct Non-life Insurers

For the years ended March 31,

For the years ended March 31,: Direct premiums written (total of all non-life insurers and shown as theautomobile insurance market) (left scale: billions of yen)
: Market share of major direct non-life insurers (right scale: %)Billions of yen

5,000

10.0

100

4,000

8.0

80

3,000

6.0

60

2,000

4.0

40

Corporate Section

Automobile Insurance Market and Market Share ofMajor Direct Non-life Insurers

Sony Assurance

B
1,000

2.0

20

0

0.0

0

E

C
D

F

G
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Note: The graph was prepared by Sony Assurance from data officiallydisclosed by individual non-life insurers.

H
98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19

Note: The graph was prepared by Sony Assurance from data officiallydisclosed by individual non-life insurers. Amounts for fiscal 2018 arebased on published data available up to June 26, 2019.

Sony Financial Holdings Inc. Annual Report 2019

Reference Materials

A

21

Strategy and Review

Sony Assurance

Review of Results for Fiscal 2018
In addition to strengthening the product capability of our mainstay automobile insurance and medical insurance,
we have expanded our line of insurance products by starting to sell overseas travel insurance and fire insurance
available exclusively online. We have also worked to improve the quality of our products and service based on
customer feedback, from contract support offered through our website and customer center to accident resolution
services.

Products
Automobile insurance

Established the new ASV (Advanced Safety Vehicle) Discount on premiums for vehicles equipped with automatic
brakes for policies taken out in April 2018 or later.
Established the new Accident-free Discount which gives a ¥2,000 discount on premiums for customers who had no
rating-lowering accidents during their previous contract term, for policies taken out in April 2019 or later.

Medical insurance

Established a new plan with simple coverage to ensure that customers can enroll with affordable premiums in thecancer-focused medical insurance “SURE.”

Expand the insurance lineup
Launched overseas travel insurance and fire insurance as new products available exclusively online.
Service
Implement improvement measures based on customer feedback

Shortened the time required to provide estimates via calls to our customer center.
Alleviated usage limits when customers have a dead battery in our road service.

Improve customer convenience using advanced technology

Started providing simple estimate with a photo automobile insurance service that displays estimated premiums on the
spot based on a photo of other companiesʼ insurance policies.

Trends of Key Indicators
Direct premiums written

Sum of two ratios*1

Billions of yen

%

99.0

107.0

Ordinary proﬁt/Adjusted
ordinary proﬁt*2%: Ordinary profit (billions of yen)
: Adjusted ordinary profit(billions of yen)

112.1
90.6

Adjusted ROE

89.2

89.1

10.0
8.1
6.5

10.5

14.4

16.1

15.2

6.8

4.9

FY2016 FY2017 FY2018

FY2016 FY2017 FY2018

FY2016 FY2017 FY2018

FY2016 FY2017 FY2018*1 Sum of two ratios = E.I. loss ratio + Net expense ratio*2 Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve

Examples of Value Creation through BusinessAs a direct insurance company, Sony Assurance has proposed risk-segmented insurance directly to customers
and provided compensation that meets the needs of each individual customer since its founding. At present, weare developing insurance products that contribute to safe driving support and accident prevention, with a focus on
PHYD-type telematics insurance. In addition, we aim to contribute to the next-generation mobility society throughcontinuous research in anticipation of social changes such as autonomous vehicles and MaaS*.
*MaaS (Mobility as a Service): The concept of a new form of mobility that seamlessly connects various forms of transportation other than theuserʼs personal car as a single service.

Value creation
Offer lifestyles that feature safety and peace of mind

22

Sony Financial Holdings Inc. Annual Report 2019

Make lifestyles more convenientMedium-term Business Plan (Fiscal 2018 – Fiscal 2020)

Accelerate growthby expanding
business
categories

In 2018, we strengthened the product capability of medical insurance andlaunched overseas travel insurance and fire insurance. In these categories, wewill pursue business expansion by utilizing marketing expertise accumulated in
automobile insurance.

Maximizecustomervalue

We will maintain our position as No. 1 non-life insurer for customer satisfaction
by promoting CX improvements and providing high quality service. Furthermore,
we will pursue improved CX by combining service only people can provide withleading-edge technology.

Utilize technology

In the areas of product development, marketing, contract processes, and customer support, we will continue to actively utilize leading-edge technologies suchas Fintech to improve CX and operation efficiency.

IInitiatives to Strengthen Our Foundation
for Creating Value

Response to Changes

While further improving our product capability and service quality, in order tobetter appeal to customers, we will continue our initiatives to build trust and confidence in direct automobile insurance through effective marketing by improving
our brand value.

Strategy and Review

Customer-ﬁrst

Continue to grow,and expand shareof, automobile
insurance

Progress Toward Fiscal 2020 Medium-term Targets
FY2020Medium-term targets*¥112.1 billion¥119 billion¥120 billion

89.1％
61.3％
27.8％

Approx. 89％

89％

Ordinary profit¥6.8 billion¥7 billion¥7 billion

Adjusted ordinary profit¥10.5 billion¥10.9 billion¥11 billion

15.2％

Approx. 14％

Approx. 13％

Direct premiums written
Sum of two ratios(E.I. loss ratio)(Net expense ratio)

Adjusted ROE

Progress to FY2020
Medium-term targets
Above initial
targetAlmostin lineAbove initial
target* Medium-term targets announced on May 31, 2018.

Sony Financial Holdings Inc. Annual Report 2019

Reference Materials

FY2019Forecast

Corporate Section

FY2018Actual23

Strategy and Review

Sony Bank

Banking businessFreeing banking transactions from the constraints of time and space

Ordinary
Revenues

Composition by Business
Segment

24

Sony Financial Holdings Inc. Annual Report 2019

Approx.

3%

Ordinary Profit
Approx.

10%Strategy and Review

As an Internet bank, Sony Bank has made the most of technology to continue growing since its inception. However, as online financial transactions
have become commonplace and more business operators from various
industries have entered the financial industry, our business environment ischanging rapidly. In these circumstances, we will establish a foundation
as a digital bank that has ideas unique to Sony Bank and the latest technology only possible in the Sony Group, and aim to achieve sustainablegrowth by providing new value that meets the needs of each individual
customer.

Yuichiro Sumimoto

Internet bank for individuals
Main products: Mortgage loans with the freedom to change interest rate types and make advanceTraitsrepayments
Foreign currency deposits“Sony Bank WALLET” cash card with Visa debit function in 11 currencies

Main sales channels: Internet and banking agencies

Strengths

Corporate Section

Convenience leveraging the advantages of an Internet bank

IInitiatives to Strengthen Our Foundation
for Creating Value

President, Representative Director
Sony Bank Inc.

Extensive lineup of high-quality products
Business operation with high customer satisfaction

Reference Materials

Sony Financial Holdings Inc. Annual Report 201925

Strategy and Review

Sony Bank

Review of Results for Fiscal 2018
We have focused on growing into a bank that offers financial services that are easier for our customers to use, andin order to meet the diverse asset-building needs of customers, we have strengthened our product marketability
and actively introduced technology to improve convenience.

Strengthen Product Marketability
May 2018: Automated provisional screening for mortgage loans using AI.
August and October 2018: Began offering new group credit life insurance with disease protection rider.
October 2018: Launched “Fixed-rate Select Mortgage Loans.”
Improve Convenience
May 2018: Upgraded the version of “Sony Bank WALLET” app.
February 2019: Launched “Sony Bank app”.
March 2019: Began providing a reference-system API*, with a gradual shift towards an open API.
* API (Application Programming Interface): An interface for one application to use the features of or data managed by another application. An API thatis available for access by third parties is called an “open API.”

Trends of Key Indicators
Retail balance*(non-consolidated)

Gross operating proﬁt(consolidated)

Ordinary proﬁt(consolidated)

Trillions of yen

Billions of yen

Billions of yen

3.6

3.9

24.0

%

9.5

28.3

4.2

ROE (consolidated)

7.1
5.0

March 31, March 31, March 31,
2017
2018
2019

7.3

24.6

FY2016 FY2017 FY2018

FY2016 FY2017 FY2018

5.5
4.1

FY2016 FY2017 FY2018* Sum of deposits, investment trusts andpersonal loans.
Since March 31, 2018, also includes
financial products intermediary services
and mediated discretionary investment
contracts.

Examples of Value Creation through Business
Since its founding, Sony Bank has consistently used IT technology and the Internet with the aim ofmaking banking easier for individual customers. Currently, we are developing digital consulting tools topropose services that closely match the needs of each customer using APIs and data, with the aim ofpromoting asset formation and investment.

Value creation
Contribute to a healthy, long-lived society

26Sony Financial Holdings Inc. Annual Report 2019

Make lifestyles more convenientMedium-term Business Plan (Fiscal 2018 – Fiscal 2020)

Improveproposalmaking
capability

Through marketing, we will propose products that are tailored to individual customers and advertise our convenience, and we will work to provide valuable products
and services from both digital and real perspectives. On the digital side, we aim toprovide customer-first financial advice closely tied to the daily lives of each individual
by developing digital consulting tools. In terms of real contact, we will strengthen oursales structure by enhancing our proposal function in the “CONSULTING PLAZA.”

Progress Toward Fiscal 2020 Medium-term Targets
FY2019Forecast

FY2020Medium-termtargets*1

Retail balance *2(non-consolidated)¥4.2 trillion¥4.5 trillion¥5.0 trillion

Gross operating profit (consolidated)¥28.3 billion¥29.9 billion¥33.5 billion¥9.5 billion¥8.6 billion¥9.7 billion

7.3％

6.4％

6.8％

Sales

¥4.3 billion¥4.6 billion¥5.1 billion

Ordinary Profit¥0.8 billion¥0.9 billion¥1.2 billion

Ordinary profit(consolidated)

ROE (consolidated)

Progress toward
FY2020Medium-term targets

Almostin lineReference Materials

FY2018ActualCorporate Section

Utilize Fintech
and improvebusiness

We will strengthen our foundation as a digital bank by responding to the rapid
advance toward a cashless society, by improving convenience with touch payment
support for “Sony Bank WALLET” and enhancing collaboration with QR payment
players. In order to improve profitability, we will promote streamlining of operation by
expanding the use of AI screening in mortgage loans and introducing electronic
contracts.

IInitiatives to Strengthen Our Foundation
for Creating Value

Response to Changes

Customer-ﬁrst

Foreign Currency Deposits
In order to expand the balance of foreign currency deposits, we will expand ourcustomer base through strengthening of alliances by issuing “Sony Bank WALLET”
tie-up cards.

Strategy and Review

Increaseproduct
strength andimprove service

Mortgage Loans
In fiscal 2018, in order to enhance the marketability of our mortgage loans, we haveworked to improve convenience while maintaining the interest rate competitiveness,and have also enhanced our product lineup and group credit life insurance. In fiscal
2019, we will utilize the measures of the previous fiscal year to aim for stable growth
while addressing productivity.

Reference: Sony Payment Services*1 Medium-term targets announced on May 31, 2018
*2 Sum of yen deposits, foreign currency deposits, investment trusts, financial products intermediary services, mediated discretionary investment
contracts and personal loans

Sony Financial Holdings Inc. Annual Report 201927

Strategy and Review

Nursing Care BusinessResponding to the diversification of demand by developing nursing care homes under twobrands:“SONARE” for the upper/middle zone and “Hanakotoba” for the volume zone.
Establishing new homes in the Tokyo metropolitan area (Tokyo, Chiba, Saitama, Kanagawa),

Traitswhere further market expansion is expected
At SONARE, implementing “lifecare plans” tailored to the needs of each individual
Capture a wide range of needs by expanding our lineup

Strengths

Propose nursing care service suitable for each resident

Examples of Value Creation through BusinessIn order to realize our “Life Focus” concept̶the pursuit of a fulfilling long life, Sony Lifecare provides solutions in
response to diversifying demand for nursing care homes by expanding its lineup with two main brands: SONARE
for the upper/middle zone and Hanakotoba for the volume zone.

Value creation
Offer lifestyles that feature safety and peace of mind

Contribute to a healthy, long-lived society

Market Environment
Sony Lifecare predicts a mid- to long-term increase in the population in need of nursing care in its main area ofdevelopment, the Tokyo metropolitan area. Due to increased needs, the establishment of nursing homes is proceeding steadily, and Sony Lifecare expects demand to grow steadily for the foreseeable future.

Long-term estimates of people in major metro
areas needing nursing care

People requiring long-term care and number ofhomes for the elderly (nationwide)(People 1k)Tokyo Metropolitan Area
(Tokyo, Chiba, Saitama, Kanagawa)

2,383

1,951
1,383

1,243

1,078

868

Kansai region

1,445

Tokai region

1,028

Percentage of homes for the elderly catering topeople requiring long-term care

33%
1,967

34%

2,280

34%

2,604
Homes for the elderly(Homes 1k)

2020

2025

2030

Forecast* Study by Tamura Planning & Operating

28

7,624
6,750

6,036

622

2015

People requiring long-termcare (People 1k)Sony Financial Holdings Inc. Annual Report 2019

2035

2040

2015

2020

2025

Forecast* Homes for the elderly include homes for those who are independentMedium-term Strategy

Lifecare Design (SONARE, etc.)
Our SONARE brand opened its first home three years ago, and now operates three homes in total. Using theexpertise accumulated at existing homes, we will establish the SONARE brand and aim to accelerate the pace of
opening new homes from fiscal 2019 onwards.

Upper/middle zone

Upper

Cultivate the expertise we haveaccumulated over three years to establish the SONARE brand and stepup the pace of building new homes(Operating 196 rooms as of March 31,
2019)

MiddleVolume zone
Broaden our business foundation
with the establishment of new
homes in addition to 26 existing
Hanakotoba series homes(Operating 1,320 rooms as of March
31, 2019)

Create synergy

Hanakotoba Machida Tsurukawa

SONARE Shakujii(Opened: November 2018)

Hanakotoba

Corporate Section

VolumeIInitiatives to Strengthen Our Foundation
for Creating Value

Proud Life (Hanakotoba, etc.)
With Hanakotoba brand, we have improved our business foundation with our 26 existing homes, and plan to restart building new homes from fiscal 2019 onwards in order to achieve new growth.

Strategy and Review

In order to respond to the expansion and diversification of demand for nursing homes, Sony Lifecare will capture
the demand by developing a lineup around two brands: “SONARE” for the upper/middle zone run by Lifecare
Design, and “Hanakotoba” for the volume zone run by Proud Life. In addition, we will work to further improve thequality of management by creating synergy including sharing of knowledge between both series, and effectively
utilizing Group management resources.

Forecast number of Group-operated homes: Lifecare Design (SONARE, others)

Reference Materials: Proud Life (Hanakotoba)
SONARE Hamadayama(Planning to open in
November 2019)

29

30

3

4

26

26

2018

2019

33
6

SONARE Mejiro Otomeyama(Planning to open in
Spring 2020)

27

2020
Forecast

2021
Forecast

2022
Forecast

Hanakotoba Nerima
Nakamura(Planning to open in
December 2019)* As of March 31,

Sony Financial Holdings Inc. Annual Report 201929

Initiatives to Strengthen Our Foundation for Creating Value

Corporate GovernanceCorporate Governance to Achieve
Long-term Sustainable GrowthContents
Corporate Governance30

Proﬁles of Directors and Audit & Supervisory
Board Members

32

Basic Stance on Corporate Governance35

Status of Initiatives by the Board of Directors,
Committees and Audit & Supervisory Board

37

Messages from Outside Directors

40

Risk Governance

43

Compliance

46

Sony Financial Holdings Inc. Annual Report 2019

Governance at a glance
Strategy and Review

Characteristics of Corporate Governance

Company with Board of Directors and Audit &Supervisory Board

Advisory bodies for
the Board of Directors

Nomination Advisory Committee andCompensation Advisory Committee

Characteristics of the Board of Directors and the Audit & Supervisory Board

Board of Directors

Audit & Supervisory Board

Average attendance
rate

Average attendance
rate

95

％

％

Audit & Supervisory
Board Members

Directors

Percentage ofoutside ofﬁcers
and outside audit& supervisoryboard members

40（4/10）

67

％

（2/3）

％

History of Corporate Governance
Establishment of SFH
Establishment of the Compensation
Advisory Committee

2004

2007
Appointment of outside director(one outside director)
Listed on the First Section ofTokyo Stock Exchange

Formulation of independence standard of outside
directors and outside audit & supervisory board members
Formulation and announcement of Basic Policy on
Corporate Governance
Establishment of the Nomination Advisory Committee

2015

Reference Materials* The status of holding of meetings is for fiscal 2018, and the percentages of outside officers and outside audit & supervisory board members are as of the end of the General Meeting of Shareholders held on June 21, 2019.

Corporate Section

93

Status of holdingof meetings

IInitiatives to Strengthen Our Foundation
for Creating Value

Type of structure

2017

Introduction of a restricted stockcompensation system

Sony Financial Holdings Inc. Annual Report 201931

Initiatives to Strengthen Our Foundation for Creating Value Corporate GovernanceProﬁles of Directors andAudit & Supervisory Board Members(As of June 21, 2019)32

Sony Financial Holdings Inc. Annual Report 2019

j

i
h

c
a

d

f
b

e
g

Directorsa.

Shigeru Ishii
President, Representative
Director Executive Duties

Hiroki Totokie.

Independent Ofﬁcer

Independent Ofﬁcer

Main concurrent positions
Board Director and Senior Managing Corporate Executive Officer, Recruit Holdings Co.,Ltd.
Reason for appointment
He has many years of experience in promoting new business development and overseas
expansion at a global company, and has ahigh level of insight on corporate management gained through serving in charge ofSenior Managing Corporate Executive officer
in the areas of corporate planning and humanresources.
Length of service in ofﬁce: ―Director

Main concurrent positions
Executive Vice President, Corporate Executive
Officer, Sony Corporation
Biography
He has taken charge of legal, compliance,
corporate communications and CSR, etc.
of Sony Corporation for many years. He has
been involved in management as Corporate
Executive Officer of Sony Corporation sinceJune 2014 and assumed Office as Director of
SFH, the current position in June 2015.
Status of attendance: Attended 13 out of 17
meetings of the Board of Directors
Length of service in ofﬁce: Four yearsh.

Takatoshi Ito*
Outside Ofﬁcer

Naomi Matsuoka

Independent Ofﬁcer

Main concurrent positions
Professor, School of International and Public
Affairs, Columbia University
Senior Professor, National Graduate Institutefor Policy Studies
Director, Chi-X Japan Limited
Reason for appointment
He possesses extensive knowledge andexperience as an expert on subjects including
macroeconomics, financial policy, international
finance and Japanese economic theory.
Status of attendance: Attended 13 out of 14
meetings of the Board of Directors
Length of service in ofﬁce: One year

Main concurrent positions
Senior Vice President, Sony Corporation
Biography
She has extensive expertise and businessexperience in financial institutions cultivated through serving as Chief Transformation
Officer of a major insurance holding company,and has been involved in management as
Senior Vice President of Sony Corporation
since November 2018.
Length of service in ofﬁce: ―i.

Masashi Oka*
Outside Ofﬁcer

Independent Ofﬁcer

Main concurrent positions
Representative Director, Senior Executive Vice
President & CFO, Nikon Corporation
Reason for appointment
He has many years of business experienceat a major financial institution, and also hasa high level of insight on corporate management gained through serving as CEO for theAmericas of that financial institution and CFOof a global company.
Length of service in ofﬁce: ―Reference Materials

Shogo Ikeuchi*
Outside Ofﬁcer

f.

Corporate Section

Shiro Kuniya*

Main concurrent positions
Managing Partner, Oh-Ebashi LPC & Partners
Director, NEXON Co., Ltd.
Director, Ebara Corporation
Director, Takeda Pharmaceutical Company
Ltd.
Reason for appointment
He has specialized knowledge and experience
as a lawyer and an attorney licensed in the
U.S. state of New York.
Status of attendance: Attended 14 out of 17
meetings of the Board of Directors
Length of service in ofﬁce: Six yearsj.

Main concurrent positions
Director, Sony Life Insurance Co., Ltd.
Director, Sony Assurance Inc.
Director, Sony Lifecare Inc.
Director, Sony Financial Ventures Inc.
Biography
He was involved in management
mainly in the administration departments ofSony Life Insurance Co., Ltd. and SFH, andserved as President, Representative Directorof Sony Bank Inc. from June 2015 to June
2017. He assumed office as Director of SFH,
the current position in June 2015.
Status of attendance: Attended all 17 meetings of the Board of Directors
Length of service in ofﬁce: Five years

Director

Main concurrent positions
Representative Corporate Executive Officer,
Senior EVP, CFO, Sony Corporation
Director, Recruit Holdings Co., Ltd.
Biography
He has experience in executing the development and launch of new businesses asa founding member of Sony Bank Inc. andextensive expertise in finance. He has been
involved in management serving as Corporate
Executive Officer of Sony Corporation sinceApril 2016.
Length of service in ofﬁce: ―Outside Ofﬁcer

Shiro Kambe

Yutaka Ito
Director Executive Duties

Main concurrent positions
Director, Executive Vice President, Sony Life
Insurance Co., Ltd.
Biography
He has taken charge of actuarial affairs, accounting and investment management, etc. atSony Life Insurance Co., Ltd. for many years.
He assumed office as Director of SFH, thecurrent position in June 2015.
Status of attendance: Attended all 17 meetings of the Board of Directors
Length of service in ofﬁce: Four years

Directorg.

c.

IInitiatives to Strengthen Our Foundation
for Creating Valued.

Hiroaki Kiyomiya
Managing Director Executive Duties

Strategy and Review

Main concurrent positions
Director, Sony Life Insurance Co., Ltd.
Director, Sony Assurance Inc.
Director, Sony Bank Inc.
President, Representative Director, SonyFinancial Ventures Inc.
Biography
Since the establishment of Sony Bank Inc.
in April 2001, he had been involved in its
management as President, Representative
Director and concurrently served as SFHʼs
Director since April 2004. He assumed office
as Executive Vice President, Representative
Director of SFH in June 2015 and the current
position in June 2016.
Status of attendance: Attended all 17 meetings of the Board of Directors
Length of service in ofﬁce: 15 yearsb.

* Independent officers as set forth in Article 436-2 of the Securities Listing Regulations of the Tokyo Stock
Exchange.
・The following persons took office as Directors on June 21, 2019: Hiroki Totoki, Naomi Matsuoka,
Masashi Oka and Shogo Ikeuchi.
・The following persons retired as Directors on June 21, 2019: Tomoo Hagimoto, Atsuo Niwa, Yuichiro
Sumimoto and Isao Yamamoto.
・The status of attendance at the meetings of the Board of Directors is the results for fiscal 2018.
・The status of attendance of Takatoshi Ito is for the meetings of the Board of Directors held after his
appointment as SFHʼs Director in June 2018.
・The length of service in office is as of the General Meeting of Shareholders held on June 21, 2019.

Sony Financial Holdings Inc. Annual Report 201933

Initiatives to Strengthen Our Foundation for Creating Value Corporate GovernanceProﬁles of Directors andAudit & Supervisory Board Members(As of June 21, 2019)

l

k

m

Audit & Supervisory
Board Members
k. Yasuyuki Hayase*Standing Audit & Supervisory Board
MemberOutside Ofﬁcer

Independent Ofﬁcer

Main concurrent positions
Audit & Supervisory Board Member, Sony Life
Insurance Co., Ltd.
Audit & Supervisory Board Member, Sony
Assurance Inc.
Audit & Supervisory Board Member, Sony
Bank Inc.
Reason for appointment
He has many years of business experience ata major financial institution.
Status of attendance: Attended all 17
meetings of the Board of Directors and all 14
meetings of the Audit & Supervisory Board
Length of service in ofﬁce: Four yearsl.

Hirotoshi Korenaga
Audit & Supervisory Board Member
Main concurrent positions
Director, Corporate Executive, Senior General
Manager, Global Accounting Division, Sony
Corporate Services (Japan) Corporation
Biography
He has been working in accounting for many
years at Sony Corporation and Sony Corporate Services (Japan) Corporation. He has
concurrently served as SFHʼs Audit & Supervisory Board Member since June 2013.
Status of attendance: Attended 13 out of 17
meetings of the Board of Directors and 13
out of 14 meetings of the Audit & Supervisory
Board
Length of service in ofﬁce: Six years

m. Yoshimichi Makiyama*
Audit & Supervisory Board Member
Outside Ofﬁcer

Independent Ofﬁcer

Main concurrent positions
Partner, Ripple Partners (law office)Director, Filmination Co., Ltd.
Reason for appointment
He has specialized knowledge and experience
as a lawyer and an attorney licensed in the
U.S. state of New York.
Status of attendance: Attended all 17 meetings of the Board of Directors and 13 out of
14 meetings of the Audit & Supervisory Board
Length of service in ofﬁce: Four years* Independent officers as set forth in Article
436-2 of the Securities Listing Regulations of
the Tokyo Stock Exchange.
・The status of attendance at the meetings ofthe Board of Directors and the Audit & Supervisory Board is the results for fiscal 2018.
・The length of service in office is as of theGeneral Meeting of Shareholders held on June21, 2019.

34

Sony Financial Holdings Inc. Annual Report 2019

Basic Stance on Corporate Governance

Basic Policy on Corporate Governance“Basic Policy on Corporate Governance,” “Corporate Governance Report” and “Basic Policy on Establishing an Internal Control Sys-tem” on SFHʼs website,
https://www.sonyfh.co.jp/en/company/governance.html
P1 Sony Financial Groupʼs Mission, Vision & Values
P70 Relationship with Parent Company, Sony Corporation

Corporate Section(Director and Audit & Supervisory Board Member Training)
Upon their appointment, SFH provides opportunities for directors and audit & supervisory board members toacquire knowledge related to laws and regulations, corporate governance and other areas necessary for appropriately fulfilling their roles and responsibilities. In particular, when outside officers and audit & supervisory board
members are newly appointed, SFH creates opportunities to provide the information necessary to promote anunderstanding of SFGʼs businesses, management strategy, management issues and other areas. SFH also createssuch opportunities as necessary following their appointment.

IInitiatives to Strengthen Our Foundation
for Creating Value(Appointment and Dismissal of Directors)
SFH has formulated the Basic Policy on the Selection of Director and Audit & Supervisory Board Member Candidates. Reflecting this policy, SFH selects as director and audit & supervisory board member candidates who
have suitable knowledge, experience, capacity for judgment and other characteristics suiting them to conduct
decision-making and perform management oversight in relation to the overall Group management. To reinforce
the transparency and objectivity of the process of selecting director and audit & supervisory board member candidates, the Nomination Advisory Committee deliberates on candidates in response to inquiries by the Board of
Directors. After receiving the committeeʼs reports, the Board of Directors decides on candidates to propose at
the General Meeting of Shareholders. The Nomination Advisory Committee deliberates on the appointment anddismissal of the president and other executive directors based on the aforementioned policy, an assessment ofcorporate operating performance and other items. The committee then reports to the Board of Directors, whichmakes a decision.

Strategy and Review(Basic Stance on Corporate Governance)
SFH strives to meet the expectations and earn the trust of stakeholders, realize sustainable corporate growth andincrease corporate value over the medium to long term by making effective use of the Groupʼs various management resources and by realizing its corporate philosophy. Furthermore, as a financial holding company, SFH isaware of the highly public nature of its financial business. Accordingly, SFH has in place a governance structurethat emphasizes ensuring of soundness and appropriateness of the Groupʼs management. SFH is a listed subsidiary of Sony Corporation. As such, SFH maintains managerial independence from its parent company and strives
to ensure a highly transparent management.

Reference Materials

Sony Financial Holdings Inc. Annual Report 201935

Initiatives to Strengthen Our Foundation for Creating Value Corporate Governance

Basic Stance on Corporate GovernanceCorporate Governance Structure Chart (As of July 1, 2019): Inside Director/Inside Audit & Supervisory Board Member：Outside Director/Outside Audit & Supervisory Board Member (marks indicate chairpersons)General Meeting of
Shareholders

SFH

Nomination Advisory
Committee*3

Audit & Supervisory Board*2 ★
Audit & Supervisory Board
Members★

★

Board ofDirectors*2

Compensation
Advisory Committee*4

Independent
Auditors*1★

Executive Committee

Business Execution Departments

Serve concurrently as
directors and audit& supervisory board
members

Share and confirm
information

Report andconfirm

Discuss inadvance

Audit Department

Convey Group policies

Manage and advise
MonitorSubsidiaries, etc.

*1 Compensation, etc. for independent auditors: ¥120 million, including ¥28 million for statutory audits.
*2 SFH provides the independence standard for appointment of outside officers and outside audit & supervisory board members in the Basic Policyon the Selection of Director and Audit & Supervisory Board Member Candidates.
*3 The Nomination Advisory Committee members: Shiro Kuniya (Chairperson), Shogo Ikeuchi, Shigeru Ishii and Shiro Kambe*4 The Compensation Advisory Committee members: Masashi Oka (Chairperson), Shiro Kuniya and Shigeru Ishii“The Basic Policy on the Selection of Director and Audit & Supervisory Board Member Candidates” on SFHʼs website,
https://www.sonyfh.co.jp/en/company/data/nomination_policy.pdf

36Sony Financial Holdings Inc. Annual Report 2019

Status of Initiatives by the Board of Directors,
Committees and Audit & Supervisory Board
Board of Directors

Main roles

The Board of Directors recognizes the responsibility it has been entrusted with and strives to realize sustainable growth of SFG and increase corporate value over the medium to long term. In addition to items
stipulated in laws and regulations and the Articles of Incorporation, the Board of Directors makes important
decisions regarding management of SFG such as formulation of SFGʼs management policies and management plans; appointment and dismissal of directors, Audit & Supervisory Board members and otherexecutives of subsidiaries in which SFH holds shares directly; entry into new businesses and withdrawal
from businesses; and organizational restructuring. The Board of Directors also supervises the overall Groupmanagement.

Composition

The ratio of outside directors: 40%

Operational status,
topics(FY2018)

The Board of Directors continued to conduct deep deliberations centering on overall Group governance,
Group growth strategies, business plans, sustainability and important matters related to Group subsidiaries.
The board also received periodic reports concerning the state of progress of SFHʼs non-consolidated andconsolidated business plans, as well as the status of compliance activities, risk management and internal
audits. In these ways, the board conducted appropriate supervision of overall Group management.

Meetings held and theaverage attendance rate
(FY2018)

17 times
93%

Nomination Advisory Committee
Shiro Kuniya (Outside Director)

Main roles

The Nomination Advisory Committee deliberates and reports on the appointment and dismissal of SFHʼs
directors, audit & supervisory board members and the Group companiesʼ presidents, as well as the succession planning of SFH and the Group companiesʼ presidents.

Composition

Half are outside directors

Operational status, topics(FY2018)

The Nomination Advisory Committee decided on director candidates for SFH and made approvals regarding
the appointment of directors and the selection of representative directors for the Groupʼs three main companies.

Meetings held and theaverage attendance rate
(FY2018)

Five times
95%

Corporate Section

Chairperson

IInitiatives to Strengthen Our Foundation
for Creating Value

Shigeru Ishii

Strategy and Review

Chairperson

Compensation Advisory Committee
Masashi Oka (Outside Director)

Main roles

The Compensation Advisory Committee deliberates the policy and total amount of compensation for SFHʼs
directors and the Group companiesʼ representative directors who are to be proposed at a General Meetingof Shareholders. The committee also deliberates the amount of compensation for individual directors andthe Group companiesʼ representative directors, within the limits set by a resolution at a General Meeting of
Shareholders. It reports the results of its deliberations to the Board of Directors. Members of this committee
do not participate in deliberations on their own compensation.

Composition

Majority are outside directors

Operational status, topics(FY2018)

The Compensation Advisory Committee decided on individual levels of compensation for SFHʼs directors
and executive officers, and approved the levels of individual compensation for the Groupʼs three main companiesʼ directors.

Meetings held and theaverage attendance rate
(FY2018)

One time
100%

Reference Materials

Chairperson

Audit & Supervisory Board
Chairperson

Yasuyuki Hayase (Outside Audit & Supervisory Board Member)

Main roles

The Audit & Supervisory Board, an organization independent from the Board of Directors, audits the suitability and appropriateness of directorsʼ performance of their duties by calling for business reports of the Group
companies based on laws and regulations, surveying their operational and financial status, and exercising
their right to appoint and dismiss the independent auditors.

Composition

Majority are outside audit & supervisory board members

Operational status, topics(FY2018)

The Audit & Supervisory Board received reports on directorsʼ and corporate executive officersʼ performanceof their duties, including their business management of the Group companies. Primarily, they confirmed theeffectiveness of systems to ensure the appropriateness of operations (internal systems) and made suggestions, as appropriate.

Meetings held and theaverage attendance rate
(FY2018)

14 times
95%
Sony Financial Holdings Inc. Annual Report 201937

Initiatives to Strengthen Our Foundation for Creating Value Corporate GovernanceStatus of Initiatives by the Board of Directors, Committees and Audit & Supervisory Board

New Management Team
(Change in the Composition of the Board of Directors)

Board of Directors
Nomination Advisory Committee

In order to reinforce SFGʼs management structure to enhance the sustainable corporate value, SFH has changed
the composition of its Board of Directors. The Board of Directors under the new management structure consists ofoutside directors, members of Sony Corporationʼs management team, and people from SFHʼs management, andis designed to further strengthen the governance from the perspective of shareholders and stakeholders. Meanwhile, the presidents of three main subsidiaries, who had served concurrently as SFHʼs directors, will concentrate
more on the sound growth and enhancing the competitiveness of their own businesses under the governance ofSFHʼs Board of Directors. Under the new management team, SFH will promote the further growth of each business and manifest synergies across SFG.
Through the change in management team, we increased the number of independent outside directors* by one
to four (one-third or more of the Board of Directors) and appointed a female director, thereby increasing the diversity of the Board of Directors and further enhancing its effectiveness.
Regarding the Boards of Directors of the Groupʼs subsidiaries, SFHʼs President, Representative Director, executive directors and executive officers will continue to serve concurrently as directors of the Groupʼs subsidiaries,
with the aim of increasing the effectiveness of the Groupʼs governance and ensuring the sound business management of each company.
* SFH designates outside directors as independent officers, whose placements are required by the Tokyo Stock Exchange, for the protection of general shareholders.

P70 Relationship with Parent Company, Sony Corporation

Evaluation of Effectiveness of the Board of Directors (Fiscal 2018)

Board of Directors

SFHʼs Board of Directors conducts self-evaluations, evaluating the effectiveness of its own decision-making andoversight, as well as its operation of meetings at least once a year.
Evaluation outline and process

Outline: An independent third-party evaluation company assessed the effectiveness of the Board of Directors with a questionnaire given to all directors and audit & supervisory board members.
Question items: “Composition and operation of the Board of Directors,” “Management and business strategies,” “Corporate
ethics and risk management,” “Evaluation and compensation of management,” “Matters related organizational and businessrestructuring,” “Dialogue with shareholders, etc.,” and “Self-evaluations.” In addition, an evaluation was conducted regarding
responses to items that were raised as issues in the previous yearʼs evaluation of effectiveness.

The results of the assessment by the third-party evaluation company
1) Evaluation Results of the Overall Board of Directors
As in fiscal 2017, a high level of effectiveness has been achieved.
The size of the Board of Directors is appropriate, for the business size and field of the Group.
There is a free and active atmosphere in which all members proactively contribute to the meetings. There is also appropriate
decision-making and supervision under the leadership of the chairperson.
As SFH is a listed subsidiary, the Board of Directors recognizes minority shareholder protection and armʼs-length rules. In decision-making and information management, the board seeks to ensure management independence from Sony Corporation andconduct sufficient management with a high degree of fairness and transparency.
The Board of Directors endeavors to obtain and understand the details of its meeting agenda and other information in advance.
The Board of Directors strives to contribute to its own decision-making and supervision. Furthermore, the Board of Directors has
sufficient knowledge regarding the various laws, regulations and rules related to SFG, SFH responsibilities and duties as a listedcompany, and corporate governance.
The member composition of the Compensation Advisory Committee and the Nomination Advisory Committee is appropriate.

2) Evaluation Results and Opinions Regarding fiscal 2017 Issues

While various improvements have been made on issues raised in the fiscal 2017 evaluation of effectiveness,
the following opinions were received:
Discussions on the Groupʼs growth strategies need to be continued, considering the Groupʼs overall optimization and lessons
learned from the past.
More opportunities for study or training related to the Groupʼs management and businesses are needed.
Although incentive compensation plans for management have been expanded with a new restricted stock compensation plan,a desire for continuous consideration of expanding the scope of coverage, changing its proportions and other issues were expressed.
Just the right amount of Board of Directors details and deliberation results are reflected in the minutes. However, further improvements are necessary on the operational front (including presentations, meeting frequency, allocation of time and the timing
for distributing materials in advance).

38

Sony Financial Holdings Inc. Annual Report 2019

Policy for Determining Compensation

Board of Directors

Compensation Advisory Committee

SFH sets the Policy for Determining the Compensation of Directors and the Policy for Determining the Compensation of Audit & Supervisory Board Members. SFH has also created the Compensation Advisory Committee Regulations and established the Compensation Advisory Committee (please see page 37) as its deliberative body.
Compensation of executive directors is determined according to the position, in consideration of the balance between a fixed
portion, results-linked portion, and medium- to long-term incentive portion, to ensure that compensation serves as an effective
incentive for improving the business performance of the entire Group.
In principle, directors with no executive duties, excluding outside directors, are paid no compensation.
Outside directors are paid fixed compensation according to their roles. Audit & supervisory board members are paid fixed compensation according to their respective roles of standing audit & supervisory board members and non-standing audit & supervisory board members.

Process

For the amount of compensation of individual executive directors and outside directors, the Compensation Advisory Committee
chaired by an outside director carries out deliberations in response to the Board of Directors, and directors who are entrusted
by the Board of Directors decides the amount based on a report from the Compensation Advisory Committee.
The amount of compensation for individual audit & supervisory board members is determined by deliberation of audit & supervisory board members.

Graphs representing the compensation structure: Fixed portion: Results-linked portion: Medium- to long-term incentive portion

President, Representative Director

Compensation for SFHʼs Directors and Audit &Supervisory Board Members for Fiscal 2018
(Millions of yen)

5

3

2

Directors (excluding Representative Director)

5.5

2.5

2

Outside Directors

10“Corporate Governance Report” on SFHʼs website,

https://www.sonyfh.co.jp/en/company/data/governance_report.pdf

Directors (internal)
Directors (outside)
Audit & Supervisory
Board Members(internal)
Audit & Supervisory
Board Members(outside)
Total

Reference Materials

Executive directors: Compensation comprises a fixed portion depending on the position, a results-linked portion depending on
the entire SFGʼs performance and individual responsibilities, and a medium- to long-term incentive portion in the form of a stockcompensation.
〈Fixed portion〉As an executiveʼs level of seniority increases, the fixed portion decreases as a percentage of annual compensation, while the results-linked portion makes up a growing percentage. (Fixed portion: 62%-71%; Results-linked portion: 38%29%)〈Results-linked portion〉The results-linked portion can range from 0% to 200% of the standard amount (100%) (The result for
fiscal 2018: 109%). Indicators for the results-linked portion include meeting expectations and earning the trust of all stakeholders by realizing sustainable growth of SFG and increasing corporate value over the medium to long term, as measured by key
performance amounts at the Group companies compared with planned levels and the previous fiscal year. The Compensation
Advisory Committee confirms the calculation results of the results-linked portion based on indicators, and reports the amount ofcompensation for individual executive directors to the Board of Directors.
〈Medium- to long-term incentive portion〉The medium- to long-term incentive portion, which accounts for approximately 20%
of total annual compensation, comprises restricted stock compensation, which has a restriction on transfer for a certain period
following acquisition, and stock-type compensation stock options, which can be exercised following retirement.
Outside directors: A fixed amount is paid according to the role.
Audit & supervisory board members: A fixed amount is paid according to the role of standing audit & supervisory board members and non-standing audit & supervisory board members.

Corporate Section

Compensation structure

IInitiatives to Strengthen Our Foundation
for Creating Value

Basic policy

Strategy and Review

Future Responses
From the results of this evaluation, SFHʼs Board of Directors judges itself to be wholly effective at this time. That said, theBoard will strive to further enhance its effectiveness by continuously discussing the Groupʼs growth strategies, improving
understanding of the Groupʼs management and business, and enhancing systems such as compliance and monitoring.
First, the new management team after the General Meeting of Shareholders in June 2019 clarifies the roles of theholding company and the operating companies, and the Board of Directors composition has been changed to reinforce
Group governance. Specifically, the number of outside directors has been increased to one third or more, and diversity
has been increased, such as through the inclusion of a female director.

Total amount by compensation category
Restricted Number
Total amount of Fixed com- Results-linked Stock stockcom- of payees
compensation pensation compensation options pensation

182
27

93
27

49

32

̶

̶

6

3
3

̶

̶

̶

̶

̶

̶

30

30

̶

̶

̶

2

240

152

49

32

6

8

̶

Notes: 1. Compensation refers to compensation, bonuses and other financial benefits received from SFH in
consideration of execution of duties.
2. Compensation categories refer to fixed compensation, results-linked compensation, stock options,
restricted stock compensation, and bonuses and others. SFH did not pay bonuses as compensation
for directors and audit & supervisory board members prior to and including fiscal 2018.

Sony Financial Holdings Inc. Annual Report 201939

Initiatives to Strengthen Our Foundation for Creating Value Corporate Governance

Messages from Outside Directors

Shiro Kuniya Outside Director

Expectations for the New
Management Structure
Following the General Meeting of Shareholders heldin June 2019, the composition of SFHʼs Board of
Directors has changed dramatically. The Nomination
Advisory Committee has deliberated the importanceof active cooperative efforts with the Sony Group
while retaining SFHʼs independence, particularly in
relation to obtaining technological and other typesof cooperation from the Sony Group in the utilizationof blockchains and other forms of Fintech, as well
as exchanges of personnel and development of new
products and services, from the perspective of integration of new technologies and financial services
under the Sony Brand. I believe that the addition to
the Board of Directors of new members from Sony
Corporation (Mr. Totoki and Ms. Matsuoka, who havebroad experience in the financial and insurance fields)
and from outside (Mr. Oka, who has a wealth of practical experience working at major banks, both domestically and overseas, as well as Mr. Ikeuchi, who has
experience in various types of business planning andexecution, including overseas business) is consistent
with our discussion thus far at the Nomination Advisory Committee, and is of significant importance for
SFHʼs growth strategies, going forward. Meanwhile,
the presidents of the Groupʼs three primary subsidiaries in the life insurance, non-life insurance and banking businesses retired as SFHʼs directors. I hope thatthey will continue to actively exchange opinions andinformation with SFHʼs directors through occasions
such as the Group companiesʼ Executive Committees
while concentrating on their own businesses, towardmaximization of synergies for the entire Group.

40

Sony Financial Holdings Inc. Annual Report 2019

Initiatives for Human Resource
Development and Succession Planning
In view of the challenging business environment
surrounding financial institutions and the significanceof growth strategies for the future, it is importantfor SFH to develop human resources and cultivate
successors, capable of adequately adopting new
business models and financial techniques, as well as
implementing both domestic and overseas strategies
in their own initiatives. Along with the developmentof human resources over the medium to long term,
SFH also needs to hire talented people from outside
the Group as necessary. To that end, it is essential
for SFH to duly consider a compensation structurethat allows prospective candidates to perform at theirfull potential at SFH, from the viewpoint of enhancing
domestic and global competitiveness. I believe it isunavoidable to create a competitive compensation
structure according to each role, while paying due
consideration to domestic and overseas regional
characteristics. SFH has already in place a compensation structure that incorporates a results-linked
incentive element to a certain degree, but it also
needs to continue considering appropriate alterations
to the compensation system as necessary in light ofthe domestic and overseas situations.

Issues and Expectations for the Future
Looking ahead to business development in fiscal
2019 and beyond, what is expected of SFH is to haveout-of-the-box ideas, acquire and cultivate diverse
human resources who can make such ideas possible, and swiftly consider and execute flexible strategic
business alliances and other actions. I am hoping for
SFHʼs members to make united efforts in conducting
flexible and diverse business activities from the perspective not only of SFG but also of the broader Sony
Group as a whole.

Strategy and Review

Takatoshi Ito Outside Director

Reference Materials

SFGʼs Issues for the Future from a
Global Perspective

Corporate Section

I assumed the office of SFHʼs outside director a year
ago. Macro-finance and international finance areamong my specialized areas of research, but closely
examining the statements of income, balance sheets,and business plans of individual companies was notat the center of my research activities. Although I had
to put in some time to brush up on this area rightafter assuming the office as outside director, to myrelief, I think I have managed to become sufficiently familiar with the finances of the Company. SFHʼs
Board of Directors is operating efficiently with active
discussion taking place, and has an atmosphere thatallows outside directors to openly make comments. I
feel that corporate governance in SFH is improving.
The Sony Groupʼs financial business comprises life insurance, non-life insurance, and banking
businesses, and these businesses have issues andchallenges, or opportunities for a dramatic growth,that are specific to each business category. Considering this, I find my duties very rewarding. I have been
continuously giving consideration to the very important issue of what roles SFH should play as a holdings
company that manages three financial companies.
It is essential that SFH establish a framework forcreating synergies among the companies. I believe
SFH has a potential for a dramatic growth if it can get
synergies to work. That is the reason I accepted theoffer to serve as its outside director.

businesses in the U.S. and Japan have developed
from quite different institutional backgrounds. However, the differences between the banking businessesof the two countries have been diminishing in recent
years and they are in the process of converging into
the global standards that have been established.
Internet banking, or more generally speaking,Fintech, has spread rapidly in the U.S., and people
seldom visit a bank branch physically nowadays. All
financial transactions are now completed online. It
looks as though internet banking has yet to become
widespread in Japan, but it is certain that Japan will
experience a shift towards internet banking and cashless settlements going forward.
Turning to the insurance business, insurance
products with specialized coverage, or the so-calledrisk-segmented insurance products, have become
available, and has gained popularity through online sales. In the U.S., applications for life and nonlife insurance policies, credit examinations, and risk
assessments are conducted without any face-to-facecommunication involved. In the future, the use of AI
is expected to allow faster and more accurate risk
screening and assessment of accident situations inJapan, as well.
The SFGʼs financial businesses have their own
characteristics: Sony Life sells insurance products,
mainly through Lifeplanner sales employees; Sony
Assurance sells non-life insurance products, mainly
online; and Sony Bank specializes in internet banking.
A major issue for the Board of Directors of SFH is toconsider how the Group can take advantage of thesecharacteristics of its financial arms, in the course of
future development of Fintech. I will continue providing comments from a broad perspective with the“independent, outsiderʼs eyes.”

IInitiatives to Strengthen Our Foundation
for Creating Value

Reﬂecting on My First Year as
Outside Director

I have had dealings with the financial industry (notablybanks) in the U.S. and Japan as research subjects oras their customer for more than 40 years. The banking

Sony Financial Holdings Inc. Annual Report 201941

Initiatives to Strengthen Our Foundation for Creating Value Corporate GovernanceDialogue with Shareholders and Other Investors
For constructive dialogue with shareholders and other investors, SFH has formulated the Investor Relations (IR) Policy,established the department in charge of IR activities and assigned a corporate executive to oversee IR activities.
The department in charge of IR strives to provide information related to the assessment of corporate value in atimely, accurate and fair manner to shareholders and other investors,as well as to facilitate sufficient dialogue withthem, while sharing information appropriately with SFHʼs business execution departments and Group companies.
“IR Policy” on SFHʼs website,

https://www.sonyfh.co.jp/en/financial_info/ir_policy.html

Investor Relations (IR) Initiatives in Fiscal 2018
Earnings briefings (teleconferences with domestic institutional
investors and analysts)
Corporate strategy meeting

Four times
One time

Individual meetings with institutional investors and analysts

Approx. 190

Overseas IR meetings (UK, USA, Hong Kong, Singapore)

Total
Four times

Briefings for individual investors

Nine times

Small meetings for domestic institutional investors and analysts

Two times

In January 2019, a small meeting with outside
directors themed on governance was held fordomestic institutional investors and analysts.

Facilitating the Exercise of Voting Rights
Early dispatch of the Notice of Convocation for the General Meeting of
Shareholders
Setting the date of the General Meeting of Shareholders to avoid dates on
which other companiesʼ General Meetings of Shareholders are concentrated
Use of an electronic voting platform
Providing a partial translation of the Notice of Convocation in English
Utilizing SFHʼs website to disclose the Notice of Convocation for General
Meeting of Shareholders and final shareholder voting results“A Small Meeting Between SFHʼs Outside Directors, Investors and Analysts” on SFHʼs website,

https://www.sonyfh.co.jp/en/financial_info/
management_vision/190121_01.pdf

Policy on Business-related Shareholdings
SFH and its Group companies do not hold shares for the purpose of business-related investment (hereinafter, “business-related shareholdings”). However, this excludes investments having a recognized strategic significance, suchas business tie-ups, that contribute to enhancing the corporate value of SFG.
In the event that SFH and its Group companies hold business-related shareholdings, they regularly consider
the objectives of such holdings and the effect of investment, and report these results to their respective Boards of
Directors. Based on these reports, the companiesʼ Boards of Directors consider the liquidation of such holdings
through such methods as sale or transfer in the event the significance of holding them has been lost.
With regard to the exercise of voting rights in relation to business-related shareholdings, SFH and its Group
companies make comprehensive decisions to vote for or against individual proposals from the perspective ofwhether appropriate governance structures are in place at investee companies, whether appropriate decisions arebeing made to enhance corporate value over the medium to long term, and from the perspective of enhancing thecorporate value of individual Group companies.
SFG held shares in three listed companies (balance sheet amount of ¥8.2 billion) as business-related shareholdings as of March 31, 2019. The Group periodically confirms the investment impact of such shareholdings.
“Corporate Governance Report” on SFHʼs website,
https://www.sonyfh.co.jp/en/company/governance.html

Adoption of Japanʼs Stewardship Code (Sony Life)As an institutional investor, Sony Life has announced its adoption of Japanʼs Stewardship Code ̶ a set of principles guiding the responsibilities of institutional investors. Sony Life discloses the basic policy and process for the
exercise of voting rights of domestic listed shares, as well as final shareholder voting results, etc.
Please see “Basic Stance on Japanʼs Stewardship Code” and “Exercise of Voting Rights by Sony Life” on Sony Lifeʼs website.
(Japanese only):https://www.sonylife.co.jp/company/management/jsc/

42

Sony Financial Holdings Inc. Annual Report 2019

Risk GovernanceOne of SFHʼs roles as a financial holding company is to further enhance and integrate Groupwide risk management by centralizing the Groupʼs management resources. SFH has formulated the Basic Policy on Group Risk
Management and develops a risk management structure by aligning it with Groupwide strategic objectives andmanagement policies. In addition, SFH seeks to enhance the corporate value of the Group by tailoring operating
subsidiariesʼ risk management to the types of risks inherent in their respective lines of business.

Approach to Risk Management by SFH and Group Companies

Contingency Management System

Corporate Section

SFH has established a contingency plan as part of the Groupʼs comprehensive policy on business continuity fortimes when ordinary business operations of SFH or Group companies are at risk due to accidents, system failures
or other factors. Group companies have developed regulations, manuals and other guidelines reflecting their respective business volume and nature of business activities. SFH has a system in place whereby Group companies
report to SFH when they are unable to continue ordinary business operations. If SFH determines that a reported
situation is difficult to address under the risk management system set forth in the Fundamental Principles for Risk
Management, among other guidelines, SFH shall establish a contingency response headquarters led by the President, Representative Director of SFH and execute business continuity measures aimed at the full restoration of all
operations.

IInitiatives to Strengthen Our Foundation
for Creating ValueSFH has formulated the Fundamental Principles for Risk Management and communicates them to directors,
employees, and throughout the SFG. It also identifies the scope and types of risks of the Group companies, andestablishes structures designed to manage such risks effectively. SFHʼs department in charge of risk management
controls risks through monitoring and holding Risk Management Meetings with the subsidiariesʼ risk management
divisions. It also reports its findings on the state of risk management regularly to SFHʼs Board of Directors andExecutive Committee.
The Group companies optimize types and definitions of their risks according to scale, characteristics and business model. They have established risk management frameworks, with the aim of autonomously assessing, monitoring, and managing these risks.

Strategy and Review“Risk Management” on SFHʼs website,
https://www.sonyfh.co.jp/en/company/risk_management.html

Group ERM
Reference Materials

SFG has introduced its ERM framework.
P15 Strategy and Review, Sony Financial GroupSony Financial Holdings Inc. Annual Report 201943

Initiatives to Strengthen Our Foundation for Creating Value Corporate GovernanceRisk GovernanceRisk Management Structure of SFG (As of July 1, 2019)
SFH

Board of Directors

ReportReportAudit & Supervisory
Board

Audit
Department

Executive Committee

Audit

Audit

Risk Management Department(Centralized Risk Management)

Supervisory Department: Risk Management Department
Investment Risks
Market-related
Risk
Credit Risk
Real Estate
Investment Risk

Liquidity Risk

Administrative Risk

Insurance
Underwriting Risk

Systems Risk

Confirm ReportSupervisory Department:
Compliance Department

Supervisory Department: Corporate
Communications Department

Legal Risk

Reputational Risk

Business
Continuity Risk

Risk Management Meetings

Manage, advise, monitor

Present risk management
policies

Subsidiaries, etc.
Each company autonomously puts risk management into practiceTypes and Deﬁnitions of Risks
Type
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

Definition
Risks associated with losses due to changes in the value of assets and liabilities, including off-balance-sheet items, as a result of unfavorable
fluctuations in interest rates, the value of securities held, exchange rates and other factors.
Risks associated with losses due to declines or losses in the value of assets, including off-balance-sheet items, resulting from deterioration in
the financial position of retail and corporate customers and other contracts entered into.
Risks associated with losses due to declines in the market value of owned real estate or in the profitability of real estate holdings on account of
unfavorable trends in prices and rents, respectively.
Risks associated with losses are as follows:
Cash Flow Risk: Risks associated with losses due to our inability to make cash payments because of failure to maintain sufficient cash
reserves at settlement, as well as risks associated with losses if SFH and Group companies are forced to raise funds under unfavorable
conditions in order to fulfill cash payment obligations
Market Liquidity Risk: Risks associated with losses due to the Groupʼs inability to conduct market transactions, in particular from an inability
to unwind the Groupʼs market position at a given time, as well as risks associated with losses if the Group is forced to complete transactions
under unfavorable market conditions, in each case due to market turmoil or other factors.
Risks affecting the Group due to significant differences between the assumptions SFH and Group companies use to establish appropriate insurance premium levels, including assumptions regarding the expected frequency and scale of insured events and future economic conditions.
Material and immaterial risks affecting the Group due to errors, misconduct, malfunction and other factors related to problems with theGroupʼs internal administrative processes.
Material and immaterial risks affecting the Group due to IT-system malfunction or breakdown, and improper use or leakage of confidential
information stemming from IT-system problems.
Risks affecting the Group due to violations of applicable laws, rules and regulations occurring during the course of business operations, as wellas the risk of loss due to litigation or infringements of rights.
Material and immaterial risks associated with losses resulting from harm to the Groupʼs reputation in the market and among customers as aresult of unethical behavior, unfair business practices, improper disclosure or other factors.
The risk that SFH and Group companies will be unable to continue operations as a result of a deterioration in financial position, liquidity problems,
system failures, scandals, disaster, accidents or other crises.

Note: As the operating and business environment changes, the Group companiesʼ risk management departments review the risk types and definitions, amending them as appropriate for new conditions.

44

Sony Financial Holdings Inc. Annual Report 2019

Initiatives on Cyber Security

SFG has diverse functions, and each Group company has a different business model according to its businesscategory. The IT-system of each Group company has established an independent optimal environment, in accordance with its business model.
This ensures that even if a Group company experienced a website attack, unauthorized login, or virus or malware infection, the IT-systems of other Group companies would not be affected.

IInitiatives to Strengthen Our Foundation
for Creating Value

Characteristics of the IT Environment

Strategy and Review

SFG regards an IT-system as critical infrastructure and resources to achieve its corporate vision, to provide
high-value-added products and services. It is thus essential to stably maintain and provide this IT-system at all
times. SFG has positioned dealing with the threat of cyber-attacks and appropriately managing information assets
as a priority issue that top management should take the lead in addressing, and the entire Group has been working on information security measures.
The policy and details of information security measures are periodically reported at meetings of the Executive
Committee and the Board of Directors of SFH or each of its subsidiaries, and SFH monitors the status of responses to information security threats and development of personal information management system, etc. of eachcompany and confirms the appropriateness of such measures.
SFG has established an information security policy and various related regulations according to each companyʼs businesses, and makes necessary revisions according to changes in the operating environment and otherfactors. SFG also provides necessary training on information security matters that all executives and employees
should be aware of to ensure a thorough dissemination of such matters.

Development of Cyber Security System –CSIRT*SFG companies

SFH

Information provision
Implementation of joint training,etc.
Proactive involvement of top
management
Establishment of a cyber security
framework
Establishment of a multi-layered
protection
Responses to security incidents
Security assessment
Establishment of regulations,training, etc.
Monitoring
Information sharing, etc.

Privacy Policy
SFH has formulated a Privacy Policy governing the handling of personal information. It sets out SFHʼs policies on
the acquisition and use of personal information for specific purposes. SFH has also established Rules Concerning
Protection of Personal Information, which set out specific security control protocols. SFH monitors the effectiveness of each Group companiesʼ security control protocols.

Reference Materials* Computer Security Incident Response Team

External information security
organization

Corporate Section

CSIRT members of Sony Life, Sony
Assurance, and Sony Bank, which are
SFGʼs primary companies, are working
to implement various measures to tackle
cyber-attacks, and the entire Group,
centering on SFH, is actively sharing
information. In addition, the Group has
continuously been developing systems
to counter threats through collaboration
with an external information security
organization.

“Privacy Policy” on SFHʼs website,

https://www.sonyfh.co.jp/en/notice/privacy_policy/

Sony Financial Holdings Inc. Annual Report 201945

Initiatives to Strengthen Our Foundation for Creating Value Corporate GovernanceCompliance

Basic Stance on Compliance
SFHʼs broad definition of compliance is that it enforces compliance with the laws, regulations and social norms
and manages business operations transparently and properly based on a strong sense of ethics. SFH considers
compliance one of its top management priorities and, accordingly, it has systems in place to ensure that all executives and employees are fully aware of their duties and responsibilities.
While Group companies are responsible for establishing systems to enhance the effectiveness of complianceaccording to their specific industry and scale of business operations, SFH, as a financial holding company, undertakes the ongoing monitoring and promotion of the Group companiesʼ compliance by providing advice, as needed,from the viewpoint of Group management.
“Compliance” on SFHʼs website,
https://www.sonyfh.co.jp/en/company/compliance.html

Compliance System of SFG
SFH
Audit & Supervisory
Board

Board of Directors

Audit

Executive Committee
ReportDirect andadviceReportDirector in Charge
ReportDirect andadviceCompliance Department
Control over the planning and implementation of compliance measures

ReportCompliance Meetings

Internal
audit

Audit Department

Advise and monitor

Subsidiaries, etc.

Compliance Activities at SFG
SFH has established the Sony Financial Group Code of Conduct (hereinafter referred to as the “SFG Code of
Conduct”) that all executives and employees must observe. In addition, SFHʼs Board of Directors is responsible forestablishing and maintaining SFHʼs compliance system by formulating a Compliance Manual* and a Compliance
Program**, as well as working proactively to ensure its proper operation.
Group companies have also adopted their Code of Conducts based on the SFG Code of Conduct, while putting in place and developing their compliance systems on their own. SFH provides guidance and support to ensure
proper operation of the compliance systems at Group companies.
* The Compliance Manual outlines SFHʼs compliance system, as well as the Groupʼs corporate philosophy, which executives and employees must
understand. The manual also establishes measures for handling behavior that conflicts with laws and regulations or behavior that raises complianceissues, and for confirming compliance status.
** The Compliance Program is drafted annually, in principle, and defines a specific action plan for confirming compliance status, conducting training
and for other related items.
“Sony Financial Group Code of Conduct” on SFHʼs website,

https://www.sonyfh.co.jp/en/company/data/code_of_conduct.pdf

46

Sony Financial Holdings Inc. Annual Report 2019

Speciﬁc Initiatives for Thorough ComplianceFostering an ethical corporate culture
Internal hotline system
Prevention of bribery
Personal information protection

Information security
Anti-money laundering and countering
financing of terrorism
Eradication of anti-social forces
Prevention of insider trading

Internal Hotline System“Basic Group Policy on Eradicating Anti-social Forces” on
SFHʼs website,

https://www.sonyfh.co.jp/en/company/compliance.html

Prevention of Insider Trading
SFH has established the Basic Group Policy on thePrevention of Insider Trading, whereby a structure forthe prevention of insider trading has been developed
at SFH and Group companies. SFH monitors whether
such a framework is adequately in place and working
effectively in the prevention of insider trading at Group
companies, and takes actions as necessary.

Reference Materials

SFG gives high priority to anti-money laundering andcountering financing of terrorism as an importantmanagement, and has formulated the Basic Group
Policy on Anti-money Laundering and Countering
Financing of Terrorism. SFG gives the necessary
authorization and allocates resources in a top-downmanner, and proactively instills an awareness regarding anti-money laundering and countering financing ofterrorism among all executives and employees.

SFH has formulated the “Basic Group Policy on
Eradicating Anti-social Forces,” whereby SFH andGroup companies include setting up an organizational unit responsible for dealing with anti-social
forces, appointing a person responsible for refusing
unreasonable demands and gathering information on
anti-social forces in collaboration with external specialized agencies. The Group works uniformly in its
effort to eradicate anti-social forces.

Corporate Section

Anti-money Laundering andCountering Financing of Terrorism

Basic Group Policy on Eradicating
Anti-social Forces

IInitiatives to Strengthen Our Foundation
for Creating Value

If executives and employees of SFG, as well as temporary employees and the employees of business
partners, think that business policies, operating activities or other activities of the companies breach (orcould breach) applicable laws and regulations, they
can report their concerns by choosing and notifying
either hotline desk at SFH or at their own Sony Financial Group company, or the Sony Group hotline desk.
A total of approximately 70 reports were received
by the hotline desk at SFH and Group companies infiscal 2018, the majority of them related to the workplace environment, the organizationʼs management
and the course of business operations. SFH implements appropriate measures to protect those who
contact these desks, while strictly managing andresponding to the information provided.

Proper conduct in the workplace(Prevention of harassment, respect forhuman rights, etc.)
Fair competition

Strategy and Review

SFG strives to ensure thorough implementation of compliance measures through regular dissemination of messages from top management, and works on various measures to promote compliance, including training for all executives and employees.
Primary domains of focus of compliance initiatives

Conﬂicts of Interest Policy (Summary)SFH formulated the Conflicts of Interest Policy* to ensure that customersʼ interests are not harmed by Group companies. The director in charge of the Compliance Department, as the manager responsible for managing conflicts ofinterest, shall require Group companies to take the following actions when he/she deems them necessary based onreports from Group companies, customer complaints or other sources.
Sever the flow of information between divisions that havepotential conflicts of interest
Suspend the transaction concerned, or change the terms
and conditions or method of the transaction

Disclose the fact or the possibilities of a conflict of interest to
customers
Take other actions deemed necessary

SFH shall retain records that specify transactions to be managed and that are associated with actions taken to
properly protect customers, for five years.
“Conﬂicts of Interest Policy” on SFHʼs website,
https://www.sonyfh.co.jp/en/company/data/conﬂicts_of_interest_policy.pdf

Sony Financial Holdings Inc. Annual Report 201947

Initiatives to Strengthen Our Foundation for Creating Value

Human Resources

Approach to Human Resources Management
SFG strives to foster an organizational culture that supports a spirit of freedom and open-mindednes and createa workplace where diverse, self-disciplined employees can actively work with motivation. In addition, SFG, with abelief that personal growth of employees will lead to contributions to customers and sustainable corporate growth,
makes active efforts to develop human resources. Further, SFG facilitates personnel exchanges and joint training
among Group companies to create synergies for the Group.

Initiative1

Diversity

Policy on Diversity
SFG places significant emphasis on a spirit of diversity, to better address various changes in the environment
surrounding customers and their diverse value perceptions and to generate new value. Based on this approach,
SFG strives to develop an environment in which diversity is respected and every employee can actively work withmotivation, as well as to create opportunities for employeesʼ personal growth.

Speciﬁc Measures
SFG implements various initiatives to allow diverse human resources, including female and disabled employees
and employees who are dealing with a range of situations, including childcare and nursing care, to work actively
and demonstrate their individual abilities.

Support for employees to continue working
SFG has established in-house systems designed to support employees who are raising children to continue working, such as childcare leave, special leave, and reduced work hour system. Sony Life provides various types of
support to its employees, such as working primarily by telecommuting, depending on the job characteristics andindividual situations of each employee, and allowing employees to take a leave of absence when it becomes difficult to continue working due to the need to provide nursing care for a family member, or transfer of their spouseto a remote location. In addition, even in cases where employees leave work due to uncontrollable circumstances,
SFG has a re-employment system in place to support a career restart, according to a change of life plans.
Promotion of womenʼs empowerment
SFG provides career-design training for young female employees, discussion sessions on returning to work andorientation sessions for employees returning from childcare leave, and leadership training for female leaders/managers. We also provide management training for the superiors of female employees, with the aim of improving
awareness and enhancing their understanding regarding the career development of female employees.
Employment of people with disabilities
SFG has been actively promoting the employment of people with disabilities, and such employees are actively
working in various fields within the Group. Sony Life has established an in-house health care room (a massageroom) since fiscal 1996, and persons with vision impairment are now working actively across the country and contributing to the promotion of employeesʼ health. In addition, Sony Life has many people with physical disabilities
assigned to each department, and they are working actively by capitalizing on their individual strengths. Sony Lifealso launched an Office Support Team in April 2018 and started hiring people with mental disabilities and intellectual impairment, and established Sony Life Business Partners Co., Ltd., a special subsidiary, in March 2019. Sony
Life Business Partners handles operations contracted out by each department of Sony Life, such as printing, filing,
and data entry, contributing to the productivity improvement of the entire company.
Percentage of females in management positions*

FY201848

Sony Financial Holdings Inc. Annual Report 2019

12.4

％

Initiative2

Work-life Balance

Policy on Work-life Balance

Speciﬁc Measures

Expanding ﬂexible workstyles and vacation leaves, and promoting the acquisition of vacation leaves
SFH and Sony Life have placed emphasis on self-discipline of employees since their founding, and introduced
flexible hours whereby employees set their own start and finish times. Each Group company actively promotes theacquisition of vacation leaves, expanding vacation leave programs by providing accumulated vacation leave andspecial vacation leave programs, in addition to an annual vacation leave program, and urging the acquisition ofannual vacation leave for a five-day continuous period.
Telecommuting
The Group companies are promoting the introduction and expansion of telecommuting and mobile work systems,
and supporting their employees to secure the time to enrich their lives while improving their work productivity,
through diversification of work locations and efficient allocation of time.

FY2018Initiative3

21.12

Percentage of annual vacation leave acquired*hours

FY201864.2％

Corporate Section

Average monthly overtime per employee*

IInitiatives to Strengthen Our Foundation
for Creating Value

Initiatives for reducing overtime work
Each Group company monitors overtime work each month, and encourages departments with heavy workloads toreview allocation of work and checks the adequate staff levels. Sony Life has designated no-overtime days twice amonth (once a week from May 2019), ensuring that employees leave work on time through announcements froman executive to encourage going home, and turning off floor lights to make it customary to finish work on time.
Sony Life and Sony Bank are also making efforts to reduce the work hours of managers and supervisors.

Strategy and Review

With an eye toward promoting corporate growth, as well as developing an environment in which employees canfeel job satisfaction and experience personal growth through their work, while also leading fulfilling lives, SFG promotes productivity and efficiency improvement through the promotion of workstyle reform.

Initiatives for Human Resource Development

Reference Materials

SFG has more than 11,000 employees who are actively working in various business domains such as life insurance, non-life insurance, banking, and nursing care. Each Group company has established an education and training system from a medium- to long-term perspective, in order to support employee personal growth and careerdevelopment, and provides compulsory training programs according to job type and position level, as well as
elective training programs for skills enhancement and personal development, etc. In addition, SFG focuses effortson the training of management-level employees, who play the primary role in the cultivation of employees, and iscontinuously strengthening human resource development through the expansion of training programs, etc. In addition, SFG participate in the leader training programs and female leader training programs provided for the Sony
Groupʼs employees by Sony Corp. In this manner, SFG works on human resource development through collaboration with the Sony Group.
Lifeplanner sales employees at Sony Life, who account for nearly half of the employees of SFG, take a threeyear B.T.P. (Basic Training Program) to develop the customer-first attitude and knowledge, skills and conduct
required of a professional Lifeplanner sales employee. This B.T.P. is designed to nurture Lifeplanner sales employees to listen to their customersʼ cherished thoughts, propose reasonable life insurance to safely protect them at all
times, and provide life-long support through high-quality services, even after the contract has been executed.
* The average figures for employees of SFH, three financial subsidiaries and three nursing care business companies. For Sony Life, only head office
employees are included.

Sony Financial Holdings Inc. Annual Report 201949

Initiatives to Strengthen Our Foundation for Creating ValueThe Environment

SFG recognizes that humankind faces a critical challenge in protecting the global environment. The major subsidiaries have each established environmental policies, and through everyday business activities, they carry out
initiatives that give due consideration to environmental protection.

SFGʼs Policy on Environmental Initiatives
SFG strives to provide value to stakeholders through its business activities, and to take actions in considerationof protecting the global environment, in all aspects of its corporate activities as a member of the Sony Group, byobserving the Sony Group Environmental Vision for realizing a sustainable society.

Use of Green PowerSony Life became the first Japanese life insurance company to introduce a Green Power Certification System,
which enables companies to use green power in their business activities and thus reduce CO2 emissions. Sony Assurance and Sony Bank adopt the Green Heat Certification System* to help reduce
CO2 emissions. Sony Bank offsets 100% of CO2 emissions caused by its power usage (excluding
the portion of power usage in outsourced operations) as a “Carbon Offset Bank.”
In this way, each Group company contributes to the wider use of natural sources of power suchas solar and wind power, geothermal power, and biomass. In fiscal 2018, SFG as a whole purchased
green power certificates and green heat certificates equivalent to 1,160 MWh.
* The Green Heat Certification System is a system certified by the government whereby a company can issue certificates for the environmental value of heat generated from renewable energy with the approval of a third-party institution (Green Energy Certification Center),and trade these as “green heat certificates.”

Acquisition of ISO14001 Certification
Sony Life, Sony Assurance and Sony Bank* have acquired ISO14001 certification, the international standard forenvironmental management systems. All three companies promote energy-saving and natural resource-saving
activities such as targets for reduced energy and photocopier paper usage, and green procurement to raise thepercentage of eco-products used in office supplies.
* Includes the head offices of Sony Life and Sony Assurance, along with Sony Bankʼs head office and CONSULTING PLAZA. They conducts regular internal environmental audits of ISO14001-certified offices, and the audit results are reported to top management.

Reducing CO2 Emissions by Switching to Paperless Contract Proceduresand Electronic Issuance of Documents
SFG has been striving to conserve paper resources and cut down on CO2 emissions related to postal mailings byshifting to paperless documentation for certain contract procedures and transactions.
Sony Life has adopted paperless application procedures that enable customers to use electronic signatures
to complete new contract application procedures as well as various post-contract procedures, such as changing
contract contents. As a result, Sony Life has reduced the use of copier paper.
Sony Assurance has made it possible to apply for automobile insurance policies, medical insurance policies,
fire insurance policies and overseas travel insurance policies online, thereby avoiding the need for printing andmailing of insurance application forms and other documents. Also of note, Sony Assurance promotes reduction in
the use of paper resources, exemplified by a paperless insurance certificate discount of up to ¥500 on automobileand fire insurance premiums when customers who buy a policy online opt not to have certificates of insurance andother documents printed and mailed.
As an Internet bank, Sony Bank promotes paperless transactions by principally providing information on web
pages and using electronic document delivery for delivering transaction slips, passbooks, explanations of products
and delivery of forms to customers.
For reference: SFGʼs electricity consumption and CO₂ emissions* for fiscal 2018
Total electricity consumption
Total CO2 emissions(equivalent value)

3,173.5
1,574

MWh

t-CO2

* Includes the head offices of Sony Life and Sony Assurance, along with Sony Bankʼs head office and CONSULTING PLAZA.

50

Sony Financial Holdings Inc. Annual Report 2019Communication with Stakeholders

P15 Customer-ﬁrst Business Operation Policy (Summary)

Customers

We strive to contribute torealizing a sustainable society
and environment through ourbusiness activities and social
contribution activities.

Local
communities/
Environment

Shareholders
and investors

Sony Financial GroupWe share opinions obtained
through dialogue with shareholders and other investors with
top management and utilize
them in developing management strategies. Top management also participates actively
in dialogue with shareholders
and other investors in an effort
to further enhance corporate
value.

Business
partners

Employees

By creating workplaces that allow
employees to work comfortably andproviding training, we generate newvalue from diverse perspectives andimprove productivity toward achieving enhancement of corporate value.

P48 Initiatives to Strengthen Our Foundation for
Creating Value, Human Resources

Reference Materials

We seek to promote fair andequitable transactions with business partners, including insurance
agencies and alliance partners. We
also provide education programs for
insurance agencies. Through these
activities, we aim to achieve corporate value enhancement for both
SFG and its business partners.

Corporate Section

P42
Dialogue with Shareholders
and Investors

IInitiatives to Strengthen Our Foundation
for Creating ValueAt SFG, feedback received from its customers in various situations iscompiled and analyzed by divisions in charge of promoting customer satisfaction and raising quality. This feedback is shared with eachdivision within the Group and reported to management, and used tomake recommendations on operational improvements and productand service enhancements.

Strategy and Review

With the highest level of ethics and a strong sense of purpose, SFG seeks to become the most trusted financial services group by invoking emotion through the power of technology and high-value-added products and services thatmeet every customerʼs needs. SFG reflects opinions obtained through communication with stakeholders in operational improvement and quality enhancement of products and services to achieve sustainable growth and corporate
value improvement.

“Initiatives for Stakeholders” on SFHʼs website,

https://www.sonyfh.co.jp/en/csr/

Sony Financial Holdings Inc. Annual Report 201951

Corporate Section

Corporate Profile(As of March 31, 2019)

Name

Sony Financial Holdings Inc.

Established

April 1, 2004

Head office

1-9-2, Otemachi, Chiyoda-ku, Tokyo, Japan

Business

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

Number of employees
SFH: 82(Consolidated: 11,055, Life insurance business: 8,454, Non-life insurance business: 1,303,
Banking business: 609, Others: 623, Parent: 66)
Common stock ¥19,963 million
Notes: 1. The number of employees of SFH includes 8 belonging to the life insurance business, 1 belonging to the non-life insurance business,
7 belonging to the banking business, and 66 belonging to the parent.
2. The number of employees stated in “Others” is the number of employees belonging to the nursing care business and venture capitalbusiness at subsidiaries.

Organizational Chart(As of July 1, 2019)Sony Financial Holdings

General Meeting of Shareholders
Audit & Supervisory Board
Board of Directors
Audit Department
Executive Committee

Business Execution Departments

Sony Life

Sony AssuranceSony Bankand other Group subsidiaries

52

Sony Financial Holdings Inc. Annual Report 2019Sony Lifecare

Sony Financial
VenturesProfiles of Group Companies (Main subsidiaries)(As of June 28, 2019)■ Life Insurance Business
Name

EstablishedSony Life Insurance Co., Ltd. August 10,
1979

Commonstock

Share ownership

Life insurance business¥70,000
millionSony Financial Holdings Inc.
100%

Head officeBusiness

Chiyoda-ku,
Tokyo, Japan

August 29,
2007

Shibuya-ku,
Tokyo, Japan

Life insurance business¥21,500
millionSony Life Insurance Co., Ltd.
50%
AEGON International B.V.
50%

SA Reinsurance Ltd.

October 29,
2009

British Bermuda

Reinsurance business¥15,900
millionSony Life Insurance Co., Ltd.
50%
AEGON International B.V.
50%

Note: As of June 28, 2019, Sony Life entered into the final agreement to acquire the remaining 50% of the issued shares in each of AEGONSony Life Insurance and SA Reinsurance and convert both companies into wholly-owned subsidiaries.

Established

Head officeBusiness

Commonstock

Share ownershipSony Assurance Inc.

June 10,1998

Ota-ku,Tokyo, Japan

Non-life insurance
business¥20,000
millionSony Financial Holdings Inc.
100%

Name

Established

Head officeBusiness

Commonstock

Share ownershipSony Bank Inc.

April 2,
2001

Chiyoda-ku,
Tokyo, Japan

Banking business¥31,000
millionSony Financial Holdings Inc.
100%

September 1,
2006

Minato-ku,
Tokyo, Japan

Credit card settlement
services¥488
millionSony Bank Inc. 57%,
Four other companies

SmartLink Network February 27,
Hong Kong Limited 2013

Hong Kong,
China

Credit card settlement
services¥13
millionSony Payment Services Inc.
100%

Commonstock

Share ownership■ Banking BusinessSony Payment
Services Inc.

Corporate Section

Name

IInitiatives to Strengthen Our Foundation
for Creating Value■ Non-life Insurance Business

Strategy and Review

AEGON Sony Life
Insurance Co., Ltd.

■ Other (Nursing Care Business)
Established

Head officeBusinessSony Lifecare Inc.

April 1,
2014

Shibuya-ku,
Tokyo, Japan

Management control ofcompanies handling thenursing care business,and other duties
incidental to that role

¥2,625
millionSony Financial Holdings Inc.
100%

Lifecare Design Inc.

October 5,
1999

Shibuya-ku,
Tokyo, Japan

Planning, development
and operation of nursing
care homes¥1,695
millionSony Lifecare Inc.
100%

Proud Life Inc.

July 3,
2006

Yokohama,
Kanagawa
Prefecture, Japan

Planning, development
and operation of nursing
care homes¥3
millionSony Lifecare Inc.
100%

Reference

Name■ Other (Venture Capital Business)
Name

EstablishedSony Financial Ventures Inc. July 10,
2018

Head officeBusiness

Chiyoda-ku,
Tokyo, Japan

Venture capital businessCommonstock

Share ownership¥10
millionSony Financial Holdings Inc.
100%

Sony Financial Holdings Inc. Annual Report 201953

Corporate Section

Stock Information

Information on Common Stock, Shares Outstanding
Increase in
Increase in Issued Total Number of Common Stock Common Stock
SharesShares Issued (Millions of yen) (Millions of yen)

Date

April 1, 2018 – March 31, 201935,470435,062,983

35

Increase in
Capital Surplus(Millions of yen)

Capital Surplus(Millions of yen)35

195,340

19,963

Notes: 1. Increases due to the exercise of subscription rights to shares are as follows:
Increase in Issued Shares: 7,700 shares
Increase in Common Stock: ¥6 million
Increase in Capital Surplus: ¥6 million
2. Increases due to issued new shares as restricted stock compensation (third-party allocation) are as follows:
Increase in Issued Shares: 27,770 shares
Increase in Common Stock: ¥29 million
Increase in Capital Surplus: ¥29 million
The issue price and the amount added to common stock pertaining to the said issuance were as follows:
Issue price: ¥2,091 per share
Amount added to common stock: ¥1,045.5 per share

Stock Exchange Listing(As of July 1, 2019)

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

Major Shareholders(As of March 31, 2019)

Number of
Shares Held

Percentage ofOwnership (excluding
treasury stocks)

Sony Corporation

283,050,000

65.06

The Master Trust Bank of Japan, Ltd. (Trust Account)

14,041,400

3.22Japan Trustee Services Bank, Ltd. (Trust Account)

10,030,200

2.30

SSBTC CLIENT OMNIBUS ACCOUNT

9,432,717

2.16

BNPP NY/US RESIDENTS 705012

5,711,900

1.31

GOLDMAN, SACHS & CO. REG

4,786,330

1.10Japan Trustee Services Bank, Ltd. (Trust Account 5)

3,178,000

0.73Japan Trustee Services Bank, Ltd. (Trust Account 9)2,777,100

0.63

JP MORGAN CHASE BANK 385151

2,749,319

0.63

SAJAP

2,664,400

0.61

Name

Shareholding by Shareholder Type (As of March 31, 2019)
1.08%
Financial instruments firms

Total number of shares issued

9.98%

435,062,983

Financial institutions

65.21%
Corporations

54

21.40%
Foreign investors

Sony Financial Holdings Inc. Annual Report 20192.33%
Individuals and others

Dividend Policy
Dividends
Dividend per Share
62.5

60.0
55.0

FY2015FY2016Strategy and Review

55.0

65.0 yen

40.0
30.0
25.0
20.0

FY2009FY2010FY2011FY2012FY2013

FY2014FY2017FY2018FY2019(Forecast)

Note: Although a stock split was conducted during fiscal 2011, the dividend per share figures are calculated assuming that the stock split was
conducted at the beginning of fiscal 2009.

Total Shareholder Return%
FY2014FY2015FY2016FY2017FY2018

SFH

116.7

90.7

114.7

127.0

139.7

<Comparative indicator: TOPIX><130.5><116.7><133.0><152.9><145.6>

IInitiatives to Strengthen Our Foundation
for Creating Value

20.0
15.0

Corporate Section

Share Price
Yen
2,500

2,000

1,500

1,000

1

2

3

4

5

6

7

2017

8

9

10

11

12

1

2

3

4

5

6

7

2018

8

9

10

11

12

1

2

3

4

5

6

Reference0

2019Sony Financial Holdings Inc. Annual Report 201955

Reference

Review of Operations / Organizational Chart of Business Operations

Review of Operations
On a consolidated basis, Ordinary revenues increased 8.3% year on year, to ¥1,629.1 billion, owing to increases in ordinary
revenues from all the businesses: life insurance, non-life insurance and banking businesses. Ordinary profit increased
40.4% year on year, to ¥93.8 billion, owing to increases in ordinary profit from all the above businesses. Profit attributableto owners of the parent was up 19.6% year on year, to ¥62.0 billion. Note that a ¥13.2 billion gain on disposal of fixed
assets from a sale of the real estate held for investment in the life insurance business, which was recorded in extraordinary
gains in the fiscal year ended March 31, 2018.
Segment results are described below.
1) Life Insurance Business
Ordinary revenues grew 8.4% year on year, to ¥1,464.3 billion, due to higher insurance premiums due to a steady rise in
the policy amount in force. Ordinary profit increased 44.4% year on year, to ¥78.2 billion, due to an increase in profit on
higher policy amount in force, a recording of gains on sale of securities in the general account, a decline in provision ofpolicy reserves for products with higher surrenders, and an improvement in net gains (losses) on derivative transactions
to hedge market risks for available-for-sale securities in the general account, which more than offset the effect of an
impairment loss relating to available-for-sale securities in the general account.
2) Non-life Insurance Business
Ordinary revenues rose 4.6% year on year, to ¥115.1 billion, due to an increase in net premiums written for mainstay
automobile insurance. Ordinary profit increased 4.9% year on year, to ¥6.8 billion, due to a lower expense ratio andhigher revenues, despite a rise in the loss ratio stemming from natural disaster damage and the recording of additional
policy reserves for a certain product.
3) Banking Business
Ordinary revenues rose 15.2% year on year, to ¥46.0 billion and ordinary profit grew 34.3% year on year, to ¥9.5 billion,
due mainly to increases in interest income on investment securities and on loans in line with a growing balance of mortgage loans.

Sony Financial Group Organizational Chart of Business Operations(As of July 1, 2019)

Life Insurance BusinessSony Life Insurance Co., Ltd.

Life Insurance Business
AEGON Sony Life Insurance Co., Ltd.
Life Insurance Business
SA Reinsurance Ltd.

Non-life Insurance BusinessSony Assurance Inc.

Sony Corporation

Sony Financial
Holdings Inc.

Consolidated subsidiaries

Banking BusinessSony Bank Inc.

Nursing Care BusinessSony Lifecare Inc.

Affiliated companies accounted for

Banking BusinessSony Payment
Services Inc.

Banking Business
SmartLink Network
Hong Kong Limited

Nursing Care Business
Lifecare Design Inc.
Nursing Care Business
Proud Life Inc.

under the equity method
Sales and referrals of the others’ products
Shareholding

56

Sony Financial Holdings Inc. Annual Report 2019

Venture Capital BusinessSony Financial Ventures Inc.

Venture Capital Business
SFV · GB L.P.

Financial Highlights■ Sony Financial Holdings (Consolidated)
Millions of yen

2015

2016

2017

2018

2019

1,362,044

1,381,667

1,503,630

1,629,182

90,062

71,103

66,326

66,84393,856

Proﬁt attributable to owners of the parent

54,41943,355

41,621

51,89562,074Comprehensive income

90,707

71,10521,43352,20757,415

Total assets

9,545,868

10,352,114

11,471,845

12,401,446

13,468,215

Net assets

550,672

604,377

601,139

625,406

656,846

Consolidated capital adequacy ratio(Domestic standard) (Note 1) (Note 2)

10.70%

14.39%

18.58%
7.1

6 50
18.11%

1,637.1%

1,632.9%

1,748.7%

1,726.3%

2015

2016

2017

2018

2019

1,223,827

1,230,141

1,243,739

1,351,076

1,464,218

Ordinary proﬁt

79,66560,79260,18056,33879,812

Net income

42,52437,09635,18545,13449,602

Total assets

7,301,350

8,035,408

8,873,613

9,567,689

10,380,148■ Sony Life (Non-consolidated)
Millions of yen

Ordinary revenues

Net assets

432,526

482,195

473,589

492,787

513,930

Non-consolidated solvency margin ratio (Note 1)

2,555.0%

2,722.8%

2,568.8%

2,624.3%

2,590.5%

Millions of yen

2015

2016

2017

2018

2019

Ordinary revenues

93,022

96,905102,333

110,092

115,102

Ordinary proﬁt

4,209

4,680

4,996

6,574

6,897

Net income

2,233

2,586

3,515

4,821

4,999

Total assets

157,919

172,323

186,537

204,362

219,643

Net assets

24,741

28,30529,40933,18934,798Non-consolidated solvency margin ratio (Note 1)

629.6%

693.5%

730.8%

782.1%

813.0%

Corporate Section■ Sony Assurance

IInitiatives to Strengthen Our Foundation
for Creating Value

11.91%
1,634.9%

Consolidated solvency margin ratio (Note 1)

Strategy and Review

1,352,325

Ordinary proﬁt

Ordinary revenues

Reference■ Sony Bank (Non-consolidated)
Millions of yen

2015

2016

2017

2018

2019

Ordinary revenues

35,71434,89235,10536,27041,707

Ordinary proﬁt

7,298

5,857

4,634

6,557

8,698

Net income

4,634

3,912

3,176

4,474

6,025

Total assets

2,062,525

2,126,564

2,424,236

2,635,028

2,860,925

Net assets

77,06477,42881,33285,72987,279Non-consolidated capital adequacy ratio(Domestic standard) (Note 1) (Note 2)

10.65%

9.89%

9.75%

10.45%

9.58%

Notes: 1. Calculated based on rules in force at the respective dates.
2. Capital adequacy ratio has been calculated by applying foundation internal ratings-based (FIRB) approach from March 31, 2017.

Sony Financial Holdings Inc. Annual Report 201957

Reference

SFH Consolidated Financial Statements

Consolidated Balance Sheets
Sony Financial Holdings Inc.
As of March 31, 2018 and 2019
Millions of yen

2019

2018

AssetsCash and due from banks

327,633

415,894

Call loans and bills bought

65,50093,700

Monetary claims purchased

5,378

4,916

291,582

291,324

Securities

9,581,206

10,373,188

Loans

1,785,877

1,942,546

106,051

104,128

Land

63,106

63,106

Buildings

32,46830,899Leased assets

6,074

6,536

5

77

4,397

3,508

35,68443,909Software35,05943,327

Goodwill

583

551

Leased assets0̶

Other intangible ﬁxed assets

40

30

Due from reinsurers

934

1,341

Foreign exchanges

9,346

8,471

168,736

159,361

Net deﬁned beneﬁt asset

3,426

3,476

Deferred tax assets

21,242

27,556

Reserve for possible loan losses(1,152)(1,602)

12,401,446

13,468,215

Money held in trust

Tangible ﬁxed assets

Construction in progress
Other tangible ﬁxed assets
Intangible ﬁxed assets

Other assets

Total Assets

58

Sony Financial Holdings Inc. Annual Report 2019

Millions of yen

2019

2018

Policy reserves and others
Reserve for outstanding claims
Policy reserves
Reserve for policyholdersʼ dividends

8,763,349
74,712
8,683,153
5,484

Due to agencies

1,873

Due to reinsurers

5,563
2,159,246

Call money and bills sold

96,000Borrowed money

173,944

Foreign exchanges

228

Bonds payable

20,000

Other liabilities

470,501

Reserve for employeesʼ bonuses

3,906

Net deﬁned beneﬁt liability

33,179Reserve under the special laws

48,135Reserve for price ﬂuctuations

48,135

Deferred tax liabilities
Total Liabilities

0
109
11,776,039

Net Assets
Shareholdersʼ equity
Common stock

19,927

Capital surplus

191,157

Retained earnings

283,911

Treasury stock
Total shareholdersʼ equity(55)

Accumulated other comprehensive income
Net unrealized gains (losses) on available-for-sale securities, net of taxes
Net deferred gains (losses) on hedging instruments, net of taxes

133,991(902)

Land revaluation, net of taxes(2,439)Remeasurements of deﬁned beneﬁt plans, net of taxes(1,929)Total accumulated other comprehensive income
Subscription rights to shares
Non-controlling interests
Total Net Assets
Total Liabilities and Net Assets

128,719
97
1,648
625,406
12,401,446

128,800(1,077)(2,439)(1,470)123,812149
1,896
656,846
13,468,215

Sony Financial Holdings Inc. Annual Report 2019

Reference

494,941

19,963
191,193
319,886(55)
530,987

Corporate Section

Deferred tax liabilities on land revaluation

IInitiatives to Strengthen Our Foundation
for Creating Value

Deposits

9,479,071
78,2859,396,241
4,544
2,073
5,769
2,302,313
130,611
203,871244
20,000578,477
4,377
34,081
50,34350,34324
109
12,811,368

Strategy and Review

Liabilities

59Reference

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
Sony Financial Holdings Inc.
For the years ended March 31, 2018 and 2019
Millions of yen(1) Consolidated Statements of Income

2018

2019

Ordinary Revenues

1,503,630

1,629,182

1,347,762

1,461,632

1,057,411

1,134,048

1,054,867

1,130,676

2,544

3,372

242,703

278,950

157,276

166,953

4,490

4,490

Ordinary Revenues from the Life Insurance Business
Income from insurance premiums
Insurance premiums
Ceded reinsurance commissions

Investment income
Interest income and dividends
Income from money held in trust, net
Gains on trading securities, net

2̶

Gains on sale of securities

0

6,107

Gains on redemption of securities

1̶Foreign exchange gains, net

̶13,455

Other investment income1̶

80,931

87,943

Gains on separate accounts, net

47,646

48,633110,091

115,101

Underwriting income

108,316

113,173

Net premiums written

108,253

113,101

Other ordinary income
Ordinary Revenues from the Non-life Insurance Business

Interest and dividends on deposits of premiums

Investment income

72

1,731

1,857

1,324

1,372

Gains on sale of securities

470

557

Transfer to interest and dividends on deposits of premiums

(62)

(72)

43

69

39,71245,76628,34431,926

Interest income on loans

17,064

17,473

Interest income and dividends on securities

Interest income and dividends

Other ordinary income
Ordinary Revenues from the Banking Business
Interest income

11,204

14,382

Interest income on call loans and bills bought

2

1Interest income on deposits with banks

63

62

9

7

Fees and commissions

6,751

9,398

Other operating income

3,823

3,926

3,456

3,599

366

326

794

515

6,064

6,681

6,064

6,681

Other interest income

Gains on foreign exchange transactions, net
OthersOther ordinary income
Other
Other ordinary income

60

62Sony Financial Holdings Inc. Annual Report 2019

Millions of yen

Ordinary Expenses from the Life Insurance BusinessInsurance claims and other payments
Insurance claims

2019

1,436,787
1,296,417

1,535,325
1,386,074

436,538

457,252

92,342

92,997

12,566

13,489Insurance beneﬁts

119,294

131,824

Surrender payments

199,263

204,351

3,314

3,659

Other payments

9,756

10,929Provision for policy reserves and others

638,343704,780

Provision for reserve for outstanding claims

2,211

2,433

636,131702,3460032,88924,650

Reinsurance premiums

Provision for policy reserves
Interest portion of reserve for policyholdersʼ dividends

Investment expenses

1,604

̶

126

Losses on sale of securities

034

Losses on valuation of securities

̶

4,026

Losses on redemption of securities

2̶

Losses on derivatives, net

11,403

13,925

Foreign exchange losses, net

15,280̶Provision for reserve for possible loan losses

23

329

Depreciation of real estate for rent and others

1,680

1,599

4,346

3,003

Operating expenses

139,420

146,776

Other ordinary expenses

49,226

52,614

102,798

107,413

Other investment expenses

Ordinary Expenses from the Non-life Insurance Business

77,92552,48256,608Loss adjustment expenses

8,067

8,220

Net commission and brokerage fees

1,295

1,214

Provision for reserve for outstanding losses and claims

1,194

1,139

Provision for underwriting reserves

10,903

10,7412

1

Losses on sale of securities

̶0

Other investment expenses

2

1

28,84829,4824

4

Investment expenses

Operating, general and administrative expenses
Other ordinary expenses

Reference

73,943Net losses paid

Underwriting expenses

Corporate Section

151

Losses on trading securities, net

Interest expenses

IInitiatives to Strengthen Our Foundation
for Creating Value

Annuity payments

Strategy and Review

Ordinary Expenses

2018(Continued on next page)

Sony Financial Holdings Inc. Annual Report 201961

Reference

Consolidated Statements of Income (Continued)

Millions of yen

2019

2018

Ordinary Expenses from the Banking Business
Interest expenses
Interest expenses on deposits
Interest expenses on call money and bills soldInterest on payables under repurchase agreements
Interest on borrowed money
Interest expenses on bonds
Interest expenses on interest rate swaps
Other interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other ordinary expenses
Other
Other ordinary expenses
Ordinary Profit
Extraordinary Gains
Gains on disposal of ﬁxed assets
Extraordinary Losses
Losses on disposal of ﬁxed assets
Impairment losses
Provision for reserve under the special laws
Provision for reserve for price ﬂuctuations
OthersProvision for Reserve for Policyholdersʼ Dividends
Income Before Income Taxes
Income Taxes-Current
Income Taxes-Deferred
Total Income Taxes
ProfitProfit Attributable to Non-controlling Interests
Profit Attributable to Owners of the Parent

30,428
7,656
5,320
(73)
̶

0
40
2,360
8
4,676
105
17,733
257
7,141
7,141
66,843
13,25813,258
2,180
187
2
1,953
1,953
36
3,271
74,65029,008(6,344)
22,664
51,98590
51,895

34,135
8,566
6,744
88
312
0
12
1,400
7
5,883
485
18,786
414
7,702
7,702
93,856
0
0
2,367
92
67
2,207
2,207
̶

2,146
89,34331,871(4,853)27,01862,325250
62,074
Millions of yen(2) Consolidated Statements of Comprehensive Income
Proﬁt
Other Comprehensive Income
Net unrealized gains (losses) on available-for-sale securities, net of taxes
Net deferred gains (losses) on hedging instruments, net of taxes
Remeasurements of deﬁned beneﬁt plans, net of taxes
Share of other comprehensive income of afﬁliates accounted for using equity method
Total other comprehensive income
Comprehensive Income
Details:
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests

62

Sony Financial Holdings Inc. Annual Report 2019

2019

2018

51,98562,325

(857)
251
827
221
52,207(5,215)
(174)
456
23
(4,909)57,415

52,11691

57,167248

̶Consolidated Statements of Changes in Net Assets
Sony Financial Holdings Inc.
For the years ended March 31, 2018 and 2019
Millions of yen
2018

Retainedearnings

19,900195,277

255,062

Issuance of new shares

27

27

̶

̶

Dividends from surplus
Proﬁt attributable to ownersof the parent
Disposal of treasury shares
Transfer of loss on disposalof treasury shares
Reversal of land revaluation
Adjustments due to changeof scope of consolidation
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes of items otherthan shareholdersʼ equity
Total changes during the period̶̶(23,922)̶

55(23,922)̶̶

51,895

̶

51,895

̶

(5)

̶

26

21

̶

5

(5)

̶

̶

̶

̶

973

̶

973

̶

̶

(92)

̶

(92)

̶

(4,147)̶̶

(4,147)

̶

̶

̶

̶

̶

(4,119) 28,849
191,157 283,911

26
24,784(55) 494,941
Millions of yen

2018
Accumulated other comprehensive income
Net unrealized
Total
gains (losses) Net deferred
Remeasureaccumulated
on available- gains (losses)
ments ofSubscriptionotherfor-saleon hedging
Land
deﬁnedsecurities, instruments, revaluation, beneﬁt plans, comprehensive rights tosharesincomenet of taxes net of taxes net of taxes net of taxes

Balance at the beginning of
the period

134,849(1,154)(1,465)(2,756) 129,472

Issuance of new shares

̶

̶

̶

̶

Dividends from surplus

̶

̶

̶

̶

Proﬁt attributable to ownersof the parent

̶

̶

̶

Disposal of treasury shares̶̶Transfer of loss on disposalof treasury shares̶

Reversal of land revaluation
Adjustments due to changeof scope of consolidation
Change in ownershipinterest of parent due totransactions with noncontrolling interests
Net changes of items otherthan shareholdersʼ equity

Noncontrollinginterests

Corporate Section

27
19,927

Balance at the end of the period(81) 470,157

IInitiatives to Strengthen Our Foundation
for Creating Value

Capitalsurplus

Balance at the beginning of
the period
Changes during the period

Treasury
stock

Total
shareholdersʼ
equityCommonstock

Strategy and Review

Shareholdersʼ equity

Total net
assets49

1,460

601,139

̶

̶

̶

55

̶

̶

̶

(23,922)

̶

̶

̶

̶

51,895

̶

̶

̶

̶

̶

21

̶

̶

̶

̶

̶

̶

̶

̶

̶

̶

̶

̶

̶

̶

973

̶

̶

̶

̶

̶

̶

̶

(92)

̶

̶

̶

̶

̶

̶

̶

(4,147)

(857)

251

(973)

827

(752)

48

187

(516)

Total changes during the period

(857)

251

(973)

827

(752)

48

187

24,267

Balance at the end of the period

133,991(902)(2,439)(1,929) 128,719

97

1,648

625,406

Changes during the period
Reference(Continued on next page)
Sony Financial Holdings Inc. Annual Report 201963

Reference

Consolidated Statements of Changes in Net Assets (Continued)

Millions of yen

2019
Shareholdersʼ equity
Commonstock

Balance at the beginning of
the period

CapitalsurplusRetainedearnings

19,927 191,157 283,911

Treasury
stock

Total
shareholdersʼ
equity(55) 494,941

Changes during the period
Issuance of new shares

35

35

̶

̶

71

Dividends from surplus̶̶

(26,099)

̶

(26,099)

Proﬁt attributable to ownersof the parent̶̶

62,074

̶

62,074

Net changes of items otherthan shareholdersʼ equity

̶

̶

̶

̶

̶

Total changes during the period

35

35

35,975

̶

36,046

19,963 191,193 319,886

Balance at the end of the period(55) 530,987
Millions of yen

2019
Accumulated other comprehensive income
Net unrealized
Total
gains (losses) Net deferred
Remeasureaccumulated
on available- gains (losses)
ments ofSubscriptionotherfor-saleon hedging
Land
deﬁnedsecurities, instruments, revaluation, beneﬁt plans, comprehensive rights tosharesincomenet of taxes net of taxes net of taxes net of taxes

Balance at the beginning of
the period(1,929) 128,719

97

Noncontrollinginterests

Total net
assets133,991(902)(2,439)1,648 625,406

Issuance of new shares

̶

̶

̶

̶

̶

̶

̶

71

Dividends from surplus

̶

̶

̶

̶

̶

̶

̶

(26,099)

Proﬁt attributable to ownersof the parent

̶

̶

̶

̶

̶

̶

̶

62,074

Net changes of items otherthan shareholdersʼ equity(5,191)

(174)

̶

458

(4,907)52

248(4,606)

Total changes during the period(5,191)

(174)

̶

458

(4,907)52

248

31,439Balance at the end of the period

128,800(1,077)(2,439)(1,470) 123,812

149

Changes during the period

64Sony Financial Holdings Inc. Annual Report 2019

1,896 656,846

Consolidated Statements of Cash Flows
Sony Financial Holdings Inc.
For the years ended March 31, 2018 and 2019
Millions of yen
2018

89,343
1,599
11,29767
32
3,573
713,088
0
2,146
449
1,630

(1,044)
4,522(1,219,208)
526,015(63,716)
30,341
7,389
27,16648,264(640,270)
162,651(1,255)
1(17,794)
(50)
(300)
(147)
(659,815)

5,266(5,133)(23,921)
19,938(10,000)
(171)
(474)
(14,496)(2)
124,377373
268,381393,133

̶

Reference

5
(101)
6,532
(1,104,737)
427,925(60,315)
28,761(22,997)(6,719)32,553(699,092)
120,629(2,049)36,700(12,481)(339)(3,450)(132)(680,845)

̶Corporate Section

2,207(200,253)(94,790)
10,69813,925(17,258)
78
1,748(147,727)
143,031
30,00054,902461
874
1621,467642,611
205,869(10,221)(3,086)(32,251)
802,921

IInitiatives to Strengthen Our Foundation
for Creating Value

74,6501,680
11,8282
323,405
647,035
0
3,271
(140)
2,363
(176)
1,953
(186,943)(80,057)
8,327
11,40323,489(13,283)
2,338(56,745)
87,98780,00026,000(4,805)(2,077)119
15,506657,168
197,007(8,484)(3,517)(22,451)
819,721

Strategy and Review

Cash ﬂows from operating activities
Income before income taxes
Depreciation of real estate for rent and others
Depreciation and amortization
Impairment losses
Amortization of goodwill
Increase (decrease) in reserve for outstanding claims
Increase (decrease) in policy reserve
Interest portion of reserve for policyholdersʼ dividends
Provision for (reversal of) reserve for policyholdersʼ dividends
Increase (decrease) in reserve for possible loan losses
Increase (decrease) in net deﬁned beneﬁt liability
Increase (decrease) in reserve for directorsʼ retirement beneﬁts
Increase (decrease) in reserve for price ﬂuctuations
Interest income and dividends(Gains) losses on securities
Interest expenses
Losses (gains) on derivatives
Exchange (gains) losses(Gains) losses on disposal of tangible ﬁxed assets
Equity in (gains) losses of afﬁliates
Net (increase) decrease in loans
Net increase (decrease) in deposits
Net increase (decrease) in borrowed money (excluding subordinated borrowings)
Net increase (decrease) in call money and bills soldNet (increase) decrease in call loans and bills bought
Net (increase) decrease in foreign exchange (assets)
Net increase (decrease) in foreign exchange (liabilities)
Others, net
SubtotalInterest and dividends received
Interest paid
Policyholdersʼ dividends paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash ﬂows from investing activities
Net (increase) decrease in deposits
Investments in money held in trust
Proceeds from money held in trust
Purchases of securities
Proceeds from sale and redemption of securities
Investments in loans
Collections of loans
Net gains (losses) from the settlement of derivative ﬁnancial instruments
Net increase (decrease) in collateral for securities lending transactions
Others, net
Total of net cash provided by (used in) investment transactions
Total of net cash provided by (used in) operating activities and investment transactions
Purchases of tangible ﬁxed assets
Proceeds from sales of tangible ﬁxed assets
Purchases of intangible ﬁxed assets
Purchase of securities of non-consolidated subsidiaries
Purchase of securities of afﬁliates
Others, net
Net cash provided by (used in) investing activities
Cash ﬂows from ﬁnancing activities
Proceeds from debt borrowing
Repayments of debt
Cash dividends paid
Proceeds from issuance of bonds
Payments for redemption of bonds
Payments from changes in ownership interests in subsidiaries that do not result in change in scope of consolidation
Others, net
Net cash provided by (used in) ﬁnancing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Increase (decrease) in cash and cash equivalents resulting from change of scope of consolidation
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period

2019

4,640
(4,712)(26,095)
̶
̶
̶

(476)
(26,645)0
116,461̶393,133
509,594

Note: The above Consolidated Statements of Cash Flows have been prepared based on Article 210-10 of Ordinance for Enforcement of
the Insurance Business Act of Japan.
Sony Financial Holdings Inc. Annual Report 201965

Reference

Segment Information

1 Outline of Reportable Segments
The Sony Financial Groupʼs reportable segments are components of the Group whose operating results are regularly reviewed
by the Board of Directors to make decisions about resources to be allocated to the segments and assess their performance,
for which discrete ﬁnancial information is available.
SFH is the ﬁnancial holding company of Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank Inc., Sony Lifecare
Inc., and Sony Financial Ventures Inc., and pursues ﬁnancial group strategies. The subsidiaries make their own business plans
and engage in business activities from which they may earn revenues and incur expenses, under the Insurance Business Law
of Japan, the Banking Law of Japan, and other regulations.
The Sony Financial Group consists of three reportable segments: the life insurance business, the non-life insurance businessand the banking business.
The life insurance business consists of Sony Life Insurance Co., Ltd., AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd.
The non-life insurance business consists of Sony Assurance Inc.
The banking business consists of Sony Bank Inc., Sony Payment Services Inc. and SmartLink Network Hong Kong
Limited.

2 Calculation Method for Amounts of Ordinary Revenues, Profit, Assets, Liabilities andOther Items by Each Reportable Segment

Accounting of reported business segments is roughly the same as described in page 10 through page 12 “(Notes to theConsolidated Financial Statements)” of the Financial Data Book.
Intersegment ordinary revenues are based on third-party transaction prices.

3 Information on Amounts of Ordinary Revenues, Profit, Assets, Liabilities and Other

Items by Each Reportable Segment

Millions of yen
2018Life Insurance
Business

Ordinary revenues (Note 2)(1) External customers(2) Intersegment
Total
Segment proﬁt
Segment assets
Other
Depreciation (Note 3)
Interest income and dividends
Interest expenses
Equity in earnings (losses) of afﬁliates
Investments in equity-method afﬁliates
Increase in tangible ﬁxed assets
and intangible ﬁxed assets (Note 4)
Notes:

Reportable Segments
Non-life InsuranceBanking
Business
Business

Total

Other
(Note 1)

Total

1,347,762
3,462
1,351,225
54,1489,566,063

110,0911
110,092
6,574
204,395

39,712
221
39,9347,146
2,651,162

1,497,566
3,685
1,501,251
67,86912,421,622

7,147
157,743
151(2,338)12,245

3,927
1,324

2,458
28,3447,731
̶
̶

13,532
187,411
7,883(2,338)12,245

616
0
516

̶
̶

14,148
187,4118,400(2,338)12,245

9,511

2,660

4,709

16,882930

17,812

̶
̶
̶

6,064

̶

6,064
(1,077)
13,532

1,503,630
3,685
1,507,316
66,792
12,435,155

1. “Other” represents the nursing care business, which is a business segment not included in reportable segments.

2. Ordinary revenues stated herein are equivalent to net sales of a regular entity.
3. Depreciation includes amortization of long-term prepaid expenses, etc.
4. Increase in tangible ﬁxed assets and intangible ﬁxed assets includes an increase in long-term prepaid expenses, etc.

Millions of yen

2019Life Insurance
Business

Ordinary revenues (Note 2)(1) External customers
1,461,632(2) Intersegment
2,735
Total
1,464,367
Segment proﬁt
78,213
Segment assets
10,380,274
Other
Depreciation (Note 3)
7,847Interest income and dividends
166,953
Interest expenses
1,604
Equity in earnings (losses) of afﬁliates(1,748)Investments in equity-method afﬁliates
10,969
Increase in tangible ﬁxed assets
9,496
and intangible ﬁxed assets (Note 4)
Notes:

66

Reportable Segments
Non-life InsuranceBanking
Business
Business

Total

Other
(Note 1)

Total

115,1011
115,102
6,897
219,672

45,766
252
46,0189,597
2,878,879

1,622,500
2,988
1,625,488
94,70813,478,825

2,457
1,372

2,489
31,9268,643
̶
̶

12,794200,252
10,248(1,748)
10,969

631
2
507

̶
̶

13,425200,255
10,755(1,748)
10,9693,977

19,264

1,141

20,406

̶
̶
̶

5,790

6,681

1,629,182
2,988
6,681
1,632,170(1,021)
93,687
22,636 13,501,462
̶

1. “Other” represents the nursing care business and the venture capital business, which are business segments not included in reportable segments.
2. Ordinary revenues stated herein are equivalent to net sales of a regular entity.
3. Depreciation includes amortization of long-term prepaid expenses, etc.
4. Increase in tangible ﬁxed assets and intangible ﬁxed assets includes an increase in long-term prepaid expenses, etc.

Sony Financial Holdings Inc. Annual Report 2019

4 Differences between the Reportable Segments Total and the Amount in the Consolidated

Financial Statements, and the Main Components of Such Differences (Matters Related toReconciliation)

Millions of yen

Totals of reportable segments

2018

2019

1,501,251

1,625,488

6,064

6,681

Other
Adjustments for intersegment transactions(3,685)(2,988)

Ordinary revenues in statement of income

1,503,630

1,629,182

Strategy and Review

1 Total ordinary revenues of reportable segments and ordinary revenues in the consolidated
statements of income

2 Total profit of reportable segments and ordinary profit in the consolidated statements of income
2019

Totals of reportable segments

67,86994,708

Other(1,077)(1,021)(133)

̶Adjustments for intersegment transactions

185

169

66,84393,856

Amount not allocated to reportable segments
Ordinary proﬁt in statement of income

3 Total assets of reportable segments and the amount of assets in the consolidated balance sheets
Millions of yen

Totals of reportable segments

2018

2019

12,421,622

13,478,825

13,532

22,636

Adjustments for intersegment transactions(70,927)(66,653)

37,21833,406

12,401,446

13,468,215

Amount not allocated to reportable segments
Assets in balance sheets

4 Total other items of reportable segments and the amount of the items equivalent thereto in the
consolidated financial statements

Corporate Section

Other

IInitiatives to Strengthen Our Foundation
for Creating Value

Millions of yen
2018

Millions of yen
Reportable Segments
Total
2018

2019

Other

Reconciliation

2019

2018

Amounts in theConsolidated Financial
Statements

2019

2018

2019

14,187

13,466

Depreciation

13,532

12,794

616

631

38

Interest income and dividends

187,411200,252

0

2

(467)

(0) 186,944 200,255

Interest expenses

7,883

10,248

516

507

(74)

(77)

Equity in earnings (losses) of
afﬁliates(2,338)(1,748)

̶

̶

̶

̶

(2,338)(1,748)Investments in afﬁliates

12,245

10,969̶̶̶̶

12,245

10,969

Increase in tangible ﬁxed assets
and intangible ﬁxed assets

16,882

19,264

930

1,141

10

69

17,822

20,475

8,325

10,678Sony Financial Holdings Inc. Annual Report 2019

Reference

40

2018

67

Reference

Other Financial Data
■ SFH
Risk-monitored Loans
Millions of yen
As of March 31,

2019

2018

Category
91

180

1,075

1,220

̶

̶

842

800

2,009

2,201

Bankrupt loans
Non-accrual delinquent loans
Past-due loans (3 months or more)
Restructured loans
Total

Consolidated Solvency Margin Ratio
Millions of yen
2018

2019

1,381,575

1,481,117

Common stock, etc.

470,030

505,148

Reserve for price fluctuations

48,13550,343

Contingency reserve

90,02598,736

Catastrophe reserve

20,97024,636416

483

Net unrealized gains on available-for-sale securities and net deferred gains or losses on
hedging instruments, net of taxes (before tax deductions) x 90% (100% if losses)

163,989

157,692

Net unrealized gains on real estate x 85% (100% if losses)

30,02351,154

Total amount of unrecognized net actuarial gain (loss) and unrecognized prior service cost(before subtracting tax effects)(2,724)(2,090)̶̶

Unallotted portion of reserve for policyholdersʼ dividends

377

245

Deferred tax assets (after deducting amount excluded)

90,35995,400Subordinated debt and surplus components of premium reserve482,261

510,406̶̶

12,29011,040

158,006

171,586

Insurance risk (R1)

24,337

24,574

Ordinary insurance risk (R5)12,395

13,181

Major catastrophe risk (R6)

1,036

1,105

Third-sector insurance risk (R8)

8,587

8,527

̶

̶

Assumed interest rate risk (R2)

32,56634,186

Minimum guarantee risk (R7)

20,137

22,141

Asset management risk (R3)

93,730103,438

Business management risk (R4)

6,199

6,618

1,748.7%

1,726.3%

As of March 31,(A) Total consolidated solvency margin

General reserve for possible loan losses

Amount excluded from deferred tax assets

Total solvency margin of small-amount short-term insurers
Deductible items(B) Total consolidated risk

2

2

2

2

[{(R1 +R5 )+R8+R9} +(R2+R3+R7) ]+R4+R6

Insurance risk of small-amount short-term insurers (R9)

Consolidated solvency margin ratio (A)/{(1/2)x(B)} x 100

Notes: 1. Figures are calculated in accordance with Article 210, Paragraph 11-3 and Paragraph 11-4 of the Ordinance of Enforcement of the
Insurance Business Act of Japan, and FSA Notification No. 23 (2011).
2. Minimum guarantee risk is calculated based on the standardized method.

68

Sony Financial Holdings Inc. Annual Report 2019

■ Sony Life (Non-consolidated)
Risk-monitored Loans
Billions of yen
2018

2019

Bankrupt loans̶̶

Non-accrual delinquent loans̶

0.0

Past-due loans (3 months or more)̶̶

Restructured loans

̶

̶

̶

0.0

As of March 31,

Category
Strategy and Review

Total

Risk-monitored Loans
The company does not have any risk-monitored loans (loans for which repayment conditions are not ordinary).

IInitiatives to Strengthen Our Foundation
for Creating Value■ Sony Assurance■ Sony Bank (Non-consolidated)
Corporate Section

Risk-monitored Loans
Billions of yen
2018

2019

Bankrupt loans

0.0

0.1

Non-accrual delinquent loans

1.0

1.2

Past-due loans (3 months or more)̶―

Restructured loans

0.8

0.8

1.9

2.2

As of March 31,

Category

Total

ReferenceSony Financial Holdings Inc. Annual Report 201969

Reference

Relationship with Parent Company, Sony Corporation(As of July 1, 2019)

As described in the Basic Policy on Corporate Governance (please see page 35), SFH is a listed subsidiary ofSony Corporation. Accordingly, SFH maintains managerial independence from its parent company and strives toensure highly transparent management.

● Capital Relationship
SFH is a financial holding company, established in
April 2004 as a corporate spin-off from Sony Corporation. In October 2007, SFH ʼs shares were listed on
the First Section of the Tokyo Stock Exchange with
the initial public offering conducted in Japan andoverseas. Sony Corporation later made additionalpurchases of SFH shares, bringing its shareholding
to 65.06% (excluding treasury stocks) as of March
31, 2019. As a result, regardless of the intentions
and interests of other shareholders, Sony Corporation may have an impact on all matters requiring
shareholder approval such as the appointment anddismissal of SFH directors and audit & supervisoryboard members, mergers and other organizational
restructuring, material asset and business transfers,
amendments to the Articles of Incorporation and thepayment of dividends.
● Ensuring Independence in Business

Activities

Because SFGʼs business operations have a tenuous
connection with the Sony Group ʼs business domains
except for Financial Services, and because SFG
operates its business primarily in accordance with
the Insurance Business Act and the Banking Act ofJapan, under the supervision of the Financial Services Agency (FSA) of Japan, SFH believes that SFG
conducts its business with a certain degree of independence from the Sony Group. In addition, Sony
Corporation, which has obtained approval from FSA
to remain a major SFH shareholder, recognizes andrespects SFH ʼs corporate philosophy.

● Personnel Relationship
SFHʼs three directors and one audit & supervisoryboard member serve concurrently as executives /employees of the Sony Group. Moreover, Sony
Corporation has seconded five employees to SFH.
Based on the above-stated Ensuring Independence
in Business Activities, SFH believes that concurrent
directors and audit & supervisory board member are
positioned to make independent management decisions. From the standpoint of further enhancing independence from the parent company, SFH has
appointed four outside directors and two outside
audit & supervisory board members who have no
special relationship with the Sony Group and designated them as independent directors and/or independent audit & supervisory board members basedon rules set forth by the Tokyo Stock Exchange regulations, respectively.

70

Sony Financial Holdings Inc. Annual Report 2019

● Using the “Sony ” Trade Name andTrademarkSFH and Group companies have entered into royalty
agreements with Sony Corporation for the use of the“Sony ” trade name and trademark. However, these
agreements can be rescinded by Sony Corporation
under certain conditions, such as its share of voting
rights in SFH falling below a majority, or SFH ʼspercentage ownership of the voting rights of SFG
companies dropping. Furthermore, Sony Financial
Group companies pay royalty fees to Sony Corporation based on these agreements. The amount paid infiscal 2018 was ¥2,862 million and the amount ofthese royalty fees has no material impact on the
management base of SFG.
SFG believes that the use of the “Sony” tradename and trademark confers certain advantages,
including stronger brand recognition, enhanced
trustworthiness and higher employee motivation andawareness.

● Transactions with Sony Corporation
SFH is a listed subsidiary of Sony Corporation. For
this reason, SFH has set out a Policy Concerning
Measures to Protect Minority Shareholders in Transactions with the Controlling Shareholder to protect
the interests of minority shareholders.
Policy Concerning Measures to Protect Minority
Shareholders in Transactions with Sony Corporation (Controlling Shareholder) can be viewed at thefollowing SFH ʼs website:
https://www.sonyfh.co.jp/en/company/
management.html

Financial Data Book Contents

March 31, 2019https://www.sonyfh.co.jp/en/financial_info/annualreport005_0344787451908.indd

2

2019/08/22

15:44:55

Sony Assurance Financial Data

Principal Indicators of Operating Performance

Balance Sheets

Consolidated Balance Sheets

Statements of Income

Consolidated Statements of Income andConsolidated Statements of Comprehensive Income

Statements of Changes in Net Assets

Consolidated Statements of Changes in Net Assets

1. Loans by Borrower Category

Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements

Sony Life Financial Data (Non-consolidated)
Balance Sheets
Statements of Income
Statements of Changes in Net Assets
Statements of Cash Flows
1. Loans by Borrower Category
2. Risk-monitored Loans
4. Reconciliation to Core Proﬁt andNon-consolidated Ordinary Proﬁt
5. Fair Value Information on Securities (General Account)
6. Fair Value Information on Securities (Company Total)

Sony Life Performance Indicators(Non-consolidated)
1. Key Performance Indicators for Past Five Years
2. Key Performance Indicators
3. Indicators for Insurance Policies

3. Assets and Liabilities
4. Proﬁt and Loss
5. Fair Value Information, etc.

Sony Assurance Performance Indicators
1. Principal Indicators of Operating Performance
2. Underwriting Performance
3. Asset Management
4. Non-consolidated Solvency Margin Ratio

Sony Bank Financial Data (Consolidated)
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Net Assets
Consolidated Statements of Cash Flows

Sony Bank Financial Data (Non-consolidated)
Balance Sheets
Statements of Income
Statements of Changes in Net Assets

5. Status of Insurance Claims Paying Ability

1. Loans by Borrower Category

6. Balance of Separate Account Assets

2. Risk-monitored Loans

7. Investment Progress of Separate Account Assets in
Individual Variable Life Insurance and Individual Variable
Annuities

3. Proﬁt and Loss

8. Status of Individual Variable Life Insurance and Individual
Variable Annuities

Sony Bank Performance Indicators(Non-consolidated)

9. Number of Agencies
10. Number of Employees and Recruits
11. Average Salary

Reference

4. Indicators Related to Asset Management(General Account)

2. Risk-monitored Loans

Corporate Section

3. Accounting Indicators

Statements of Cash Flows

IInitiatives to Strengthen Our Foundation
for Creating ValueSFH Financial Data (Consolidated)

Strategy and Review

Please visit SFH ʼ s website to view the Financial Data Book.
Detailed financial data for each operating company is presented in
the Financial Data Book and it is only disclosed on the website.

2019

Financial Data Book
April 1, 2018

4. Fair Value Information

1. Key Performance Indicators
2. Status of Operations (Deposits)
3. Status of Operations (Loans)
4. Status of Operations (Securities)

MCEV Results for Sony LifeMCEV Results for Sony Life as of March 31, 2019Sony Financial Holdings Inc. Annual Report 201971

Reference

Glossary (in Alphabetical Order)A
ALM (asset liability management)

A method for maximizing and stabilizing
net asset value, which is calculated bydeducting the value of liabilities from thevalue of assets, through the comprehensive grasp and management of assets
and liabilities in consideration of their
special characteristics.

Annualized insurance premiums
An indicator of the approximate annual
premium income from existing policies,
which is used as a performance indicator. Annualized insurance premiums arecalculated by adjusting differences in thepayment methods since insurance
premiums can be paid monthly, annuallyor in a lump sum, and by assuming that
average payments will be made over theterm of the policy.

Assumed interest rate

Insurance companies anticipate a certain
return on invested assets in advanceand discount insurance premiums onlyby this amount.
This discount rate is called theassumed interest rate.

A type of policy reserve, under which,pursuant to the provisions of the Insurance Business Act of Japan, non-life
insurance companies are required toaccumulate each ﬁscal year as an
amount calculated based on premiumincome to cover losses due to catastrophic events.
In consideration of the special needfor the non-life insurance business tocover a wide range of risks, the catastrophe reserve acts as a provision against
the risk of large insurance claims resulting from earthquakes, typhoons andother catastrophic events. It is structured
to be accumulated over the course ofmultiple ﬁscal years, and reversed during
the ﬁscal year in which a disaster occurs.

Combined ratio

The sum of a net loss ratio and net
expense ratio. Indicates an insurancecompanyʼs proﬁtability in the primarybusiness operations.

Compulsory automobile liability
insurance

The mortality rate is the percentage of
people who die in a single year for agiven large population. The assumed
mortality rate is the mortality rate used
when calculating the amount of insurance premiums needed to cover future
beneﬁt payments, and represents a
projection of the number of deaths bygender and age based on past statistics.

Compulsory automobile liability insurance is legally required for all vehicles
and provides protection for victims of
trafﬁc accidents resulting in injury or
death. Compulsory automobile liability
mutual aid is similar. With compulsory
automobile liability insurance (mutualaid), indemnity payments per person per
accident are capped at ¥30 million fordeath, ¥40 million for serious residual
disability and ¥1.2 million for injury.
Beneﬁts are not paid for vehicle orproperty damage.

Assumed rate of expense

Contingency reserve

Assumed mortality rate

In operating their businesses, insurancecompanies forecast their expenses, andthen incorporate this amount in theirinsurance premiums. This expense rateis called the assumed rate of expense.

C
Capital adequacy ratio

The ratio of capital to total assets. An
indicator of whether a bank has enoughcapital, including common stock, versus
credit risk assets (of total assets, thosewhich could become non-performing). If
a bank is unable to recover a large
amount of loans, it can draw on capitaland write off these loans. A sharp
decrease in capital creates difﬁculties inbank management.
Capital adequacy ratio regulations
ensure that banks are soundly managed
by keeping the capital adequacy ratio
above a certain level. This ratio istherefore an important indicator to show
ﬁnancial soundness. For banks possessing business bases overseas, theinternationally standardized regulations
to preserve ﬁnancial soundness are acapital adequacy ratio of over 8%, andfor banks not possessing businessbases overseas, in Japan a capital
adequacy ratio of 4% is required.

72

Catastrophe reserve

Sony Financial Holdings Inc. Annual Report 2019

Reserve to prepare for possible contingencies, including insurance risk andassumed interest rate risk.

Core profit

An indicator of proﬁts (losses) in the
primary insurance business over a
one-year period.
It is derived by subtracting fromordinary proﬁt any proﬁts earned fromoperations other than the primary
insurance business. Proﬁt categories
subtracted from ordinary proﬁt include
gains and losses on the sale of securities
and one-time gains and losses, such as
proﬁts from the sale of assets owned by
the insurance company.

D
Direct premiums written

Premiums received from policyholders,
calculated by subtracting direct surrender payments and other direct paymentsfrom direct premiums.

Duration

A sensitivity index indicating the extent
to which the present value of future cash
ﬂow (interest income, repayment ofprincipal, receipt of premiums, payment
of insurance beneﬁts and dividends, etc.)from eligible assets (managed assets)
and liabilities (policy liabilities) will beaffected by interest rate ﬂuctuations.
While a variety of types and methods forcalculating duration exists, a method
expressing the weighted average
maturity of the cash ﬂow in question isrelatively widely used.

E
Earned/incurred (E.I.) loss ratio

An indicator that represents the loss ratio
incurred during the current period thattakes into account the provision andreversal of reserve for outstanding losses
and ordinary underwriting reservescalculated using the following formula:
Earned/incurred (E.I.) loss ratio = (Netlosses paid + Provision for reserve foroutstanding losses + Loss adjustment
expenses) / Earned premiums (excluding
earthquake insurance and compulsory
automobile liability insurance) × 100.

Endowment insurance

Endowment insurance entitles a beneﬁciary to receive death or serious disability
beneﬁts upon the death or serious
disability of the insured within an insurance period speciﬁed when the policy ispurchased, or to receive maturity
beneﬁts upon policy maturity.

ERM (enterprise risk management)

An approach to accomplishing corporate
strategic goals and sustainable growth incorporate value by conducting integrated recognition and control of all risks acompany faces and seeking to optimize
the risk from a company-wide perspective.

ESR (economic solvency ratio)

ESR is one of the ﬁnancial soundness
indicators, which measures whether anorganization possesses sufﬁcient capitalin relation to its risks.
Sony Life computes its ESR by
dividing MCEV by the risk amount basedon economic value. For details on MCEV
and the risk amount based on economic
value, please see “MCEV Results forSony Life” in the Financial Data Book.

EV (embedded value)

An indicator of the corporate value of alife insurance company. Sony Life
discloses MCEV (market consistentembedded value) in conformity with the
MCEV Principles. For details on MCEV,
please see “MCEV Results for Sony Life”
in the Financial Data Book.

Expense ratio

The ratio of expenses to insurance
premiums. Used as an indicator of
business efﬁciency at insurance companies. Expenses are used for soliciting,
maintaining and managing insurance aswell as for payment of insurance claims.

F
Foreign currency-denominatedinsurance

Insurance product in which insurance
premiums are invested in foreign currency. Sony Life sells U.S.

dollar-denominated insurance, in which
policyholders pay the Japanese yen
equivalent of the U.S. dollar-denominated insurance premiums and select theJapanese yen or U.S. dollar when theyreceive insurance claims.

G
General accounts

Gross operating profit

The total income from the four components of banking services income: net
interest income, net fees and commissions, net trading income and net otheroperating income. Equivalent to grossproﬁt (sales minus purchases) and an
indicator of the amount of proﬁts a bankgenerates from its main services.

I
Individual annuities

Individual variable annuities

Individual annuity product in whichassets are invested mainly in stocks andbonds, and annuity and surrender
payments increase or decrease depending on investment returns. The individual
policyholder bears the asset management risk.

Insurance premiums

Money paid by policyholders to an
insurance company based on theinsurance policy.

Lapse and surrender rate

Surrender refers to the cancellation of an
insurance policy at some point in the
future. Upon surrender, the policy isterminated, and from that point protection or coverage is lost. On the other
hand, a lapse is when a policyholder fails
to pay premiums within the payment
grace period, causing the policy to lapse,
from which point the policy will no longer
provide protection.
The lapse and surrender rate is theratio of lapses and surrenders to policies
in force at the beginning of the ﬁscal
year. It is calculated by adding the totalof lapses and surrenders for the year inquestion, and then dividing by theamount of policies in force at the beginning of the ﬁscal year.

Living benefit insuranceThis insurance provides a lump-sum
beneﬁt payment when the insured isdiagnosed with a disease such as one of
the three major diseases (cancer, heart
attack or stroke).

Loss adjustment expenses

Expenses incurred by an insurance company in examining an insured event.
These include personnel and non-personnel expenses.

Loss ratio

The ratio of insurance claims paid to premium income. Used in analyzing thebusiness of an insurance company andin calculating insurance premium rates.
The net loss ratio is the ratio derived byadding loss adjustment expenses to net
losses paid, then dividing by net premiums written.

M
MDRT (Million Dollar Round Table)

A global, independent association of theworldʼs leading life insurance andﬁnancial services professionals with
66,000 members from 72 countries andterritories (as of August 2018). MDRT
members demonstrate exceptional
professional knowledge and strict ethicalNet fees and commissions

Fees and commissions charged forproviding services. These refer to income
generated by providing services, such asbank transfer fees and investment trust
sales commissions, less the costs
associated with providing these services.

Net interest income

Net interest income accounts for thelargest percentage of the four income
components of gross operating proﬁt.
Banks generally use the deposits
received from individuals and the funds
raised in interbank markets to provide
loans to individuals and companies andto invest in securities. Net interest
income is the difference between the
total interest received from loans andother items (interest income) and thetotal interest paid for deposits and otheritems (interest expenses). Net interest
income is affected by changes in interest
rates (e.g., if deposit interest rates rise
while loan interest rates stay at the samelevels, net interest income will decrease),and by deposit and loan balances.

Net other operating income

Net other operating income is derived
from services other than the primarybanking services income categories of
net interest income, net fees andcommissions, and net trading income.
One example is buying and selling in dollars and other foreign currencies. In thiscase, after purchasing foreign currency
at a certain price, any gain from a subsequent sale at a price higher than thepurchase price would be recorded inother operating income, and any loss
from a subsequent sale at a price lower
than the purchase price would berecorded in other operating expenses.

Net premiums written

Premiums received directly from policyholders (direct premiums written),adjusting for reinsurance premiums (subtracting reinsurance premiums paid andadding direct reinsurance premiums
received).

Reference

Policyholders are eligible for receiving
annuity payments from funds accumulated by paid insurance premiums at a
certain age prescribed in the policy.
There are a variety of types dependingon the period for receiving the annuity,
structure of the annuity, method forpaying premiums and death protection
prior to receiving the annuity.

L

N

Corporate Section

Accounts for managing ﬁnancial assets
not included in separate accounts. Thisaccount guarantees policyholders acertain assumed interest rate, while thelife insurance company bears the asset
management risk.

Investment crowd funding is an arrangement that uses the Internet to linkventure companiesʼ fund-raising needs
for their projects with investorsʼ money
management needs. Unlike donation-type and purchase-type crowd
funding, which do not involve monetary
return, investors can receive dividends.
Meanwhile, investment crowd funding
has the feature of investment products
associated with risks, whereby dividends
may not be paid or the investment value
may fall below the amount invested dueto the performance of venture companies, etc.

IInitiatives to Strengthen Our Foundation
for Creating Value

The amount of credit risk assets is calculated mainly by the standard approachor internal rating based approach forcomputing the capital adequacy ratio.
The standard approach calculates theamount of credit risk assets by using therisk weight set by authorities. On theother hand, the internal rating based
approach calculates the amount of credit
risk assets by using the default rate, etc.
as estimated internally by ﬁnancial
institutions that practice advanced risk
management. This approach includes afundamental internal rating based
approach that partly uses the values set
by authorities for loss rates at the time ofdefault, and an advanced internal ratingbased approach that uses the values
estimated internally by ﬁnancial institutions in every situation.

Investment crowd funding

conduct. Through their outstanding
client services, MDRT members arerecognized as leaders of the businessand local communities. They are alsointernationally recognized as professionals in the life insurance and ﬁnancial
services business.
Strategy and Review

Foundation internal ratingsbased approach

Even after submitting an insurance
policy application, no protection orcompensation is provided unlesspremiums are paid.

Non-performing assets

Non-performing assets are claims
against parties in bankruptcy, claims
against parties in effective bankruptcy
due to poor business or other reasons,and claims against parties at risk ofbankruptcy. Non-performing assets also
include loans for which principal orinterest payments are past due by threemonths or more, and loans for which
repayment on initial terms is impossible
and interest has been reduced or
exempted and the repayment of principal has been extended.

Sony Financial Holdings Inc. Annual Report 201973

ReferenceO

rates as the basis for calculating theirown insurance premium rates.

Over-the-counter (OTC) sales of
insurance products at banks

Reinsurance

A bank serves as an insurance agency
to solicit insurance.

P
Policy amount in force

Total amount of protection provided bylife insurance companies to individual
policyholders. This is different from thetotal amount of premiums paid by policyholders (premium income).

Policy reserves(Underwriting reserves)

Reserve for outstanding claims(Reserve for outstanding losses)
Reserve for the estimated amount of
unﬁxed insurance payments and unpaid
insurance claims at the end of the ﬁscal
year, among payment obligations for
insurance claims, surrender value andother beneﬁts.

The Institute of Actuaries of Japan
prepares a table that compiles data
including mortality rates and average life
expectancies by gender and age. Of
these data, mortality rates are veriﬁed by
the Commissioner of Financial Services
Agency of Japan, and then used as theassumed mortality rates in calculating
standard policy reserves required underthe Insurance Business Act of Japan.

Standard yield

The standard yield is the calculating rateinsurance companies are required to use
when accumulating policy reserves for
future insurance payments.

Surrender payments

Money refunded to the policyholder inthe event that the insurance policy issurrendered or cancelled. Surrender
payment amounts vary depending on
several factors, including the type of
insurance, insurance period and years
elapsed.

Reserves that insurance companies
accumulate in advance, funded bypremiums, investment income, and othersources, to prepare for future liabilities
resulting from insurance policies, including payments of claims, annuities andbeneﬁts.

Reserve for price fluctuations

Policy reserves and others(Underwriting reserves)

Riders can enlarge the scope of protection in the primary policy by adding
provisions to the primary coverage.
Riders do not constitute a policy bythemselves. Multiple riders can be added
to the primary policy. Riders are canceled when the primary policy is canceled due to maturity, surrender or otherreasons.

T

ROEV (return on embedded value)U

Reserves recorded in the liabilities
section of the balance sheets for which
insurance companies are required in the
Insurance Business Act of Japan toaccumulate to prepare for the paymentof future claims and other items to fulﬁll
their obligations for paying claims andother actions based on insurance
policies. Policy reserves and others
include “reserve for outstanding claims”
and “policy reserves.”

Policyholder loans

As one of the asset management
operations of life insurance companies,
loans provided up to a certain level ofthe surrender payment on life insurance
policies. In general, policyholders retain
insurance protection and rights toreceive dividends during the period of
the policyholder loan. However, policyholder loans may not be available
depending on the type of insurance.

Policyholdersʼ dividend reserve
A reserve accumulated to fund dividend
payments to policyholders pursuant to
the provisions of the Insurance BusinessAct of Japan.

Positive spread

The amount by which the actual investment income is higher than the expected
investment income from the assumed
interest rate.

R
Reference loss cost rates

Non-life insurance premium rates
comprise net insurance premium rates
used for paying insurance claims andloading insurance premium rates used
for operating insurance businesses. Net
insurance premium rates calculated by
the General Insurance Rating
Organization of Japan are calledreference loss cost rates. Member
insurers of the organization can use the74

The insurance agreement that insurancecompanies conclude with domestic andoverseas reinsurance companies forsome of the insurance policies they
underwrite in order to diversify risks on
insurance policies.

Standard Mortality Table

Sony Financial Holdings Inc. Annual Report 2019

This reserve is set aside to prepare forlosses caused by price ﬂuctuations instocks, bonds and other assets held byan insurance company.

RidersROEV is an indicator that refers to thegrowth potential of corporate value. The
amount of increase of EV (embedded
value), an indicator of a life insurancecompanyʼs corporate value, is deemed
to be proﬁt that takes into account theunique aspects of life insurance accounting.
Core ROEV is the growth rate of EV
that excludes any ﬂuctuation effects of
the investment yield and discounted
rate.

S
Separate accounts

Separate accounts are used for variable
life insurance, variable annuities andother insurance products to invest
assets separately from the other ﬁnancial
assets owned by an insurance company
in order to pay investment returns
directly to policyholders.

Solvency margin

The solvency margin indicates payment
ability. Insurance companies accumulate
policy reserves to prepare for thepayment of future claims, allowing themto adequately respond to risks within anormally anticipated range.
However, unforeseen events canoccur due to changes in the environment
such as major disasters and substantial
declines in stock prices. The solvency
margin ratio is one measure used byregulatory authorities to determine howmuch an insurance company is able topay in response to the risk of such
unpredictable events.

Term insurance

Term insurance entitles a beneﬁciary toreceive beneﬁts in the event of death orserious disability of the insured within an
insurance period speciﬁed when thepolicy is purchased.

Underwriting profit

Underwriting proﬁt is calculated bysubtracting any underwriting expenses(net losses paid and loss adjustment
expenses, etc.) and operating, generaland administrative expenses associatedwith underwriting from underwriting
income (net premiums written, etc.), thenadding or subtracting other income andexpenses (income taxes associated withcompulsory automobile liability insurance, etc.)

V
Variable life insurance

Insurance product in which assets areinvested mainly in stocks and bonds,
and claims and surrender payments
increase or decrease depending on
investment returns. The individual
policyholder bears the asset management risk. The minimum insurance
payment is guaranteed, regardless ofinvestment performance.

W
Whole life insurance

Insurance that pays beneﬁts in the eventthe insured dies or is disabled. Unlike
term life insurance, protection continues
for an entire life.

Sony Financial Group