Consolidated Financial Summary
for the Fiscal Year ended March 31, 2008
May 16, 2008
Company name:Sony Financial Holdings Inc.
(URL: http://www.sonyfh.co.jp/index_en.html/)
Stock exchange listings: Tokyo Stock Exchange (code number: 8729)
Representative:
Teruhisa Tokunaka, President and Representative Director
For inquiry:
Masaaki Konoo, General Manager – Corporate Communications & Investor Relations Dept.
(discarding fractional amounts of less than 1 million yen)

1.

Consolidated financial results for the year ended March 31, 2008
(1) Operating results
Ordinary Revenues
millions of yen

For the year ended
March 31, 2008
For the year ended
March 31, 2007

Net Income

millions of yen% changemillions of yen% change822,153(+8.3 )

44,500( +142.5 )24,255( +142.0 )759,280(+0.1 )

18,354(

10,021(Net Income per
Share
For the year ended
March 31, 2008
For the year ended
March 31, 2007

Ordinary Profit% change-27.7 )

-13.1 )Net Income per
Net Income on Ordinary Profit on Ordinary Profit on
Share
Stockholders’ Equity
Total Assets
Ordinary Revenues(Fully Diluted)

yen

yen

%

%

%

11,357.53

-

9.2

1.0

5.4

4,772.09

-

3.8

0.4

2.4

Note: Equity in earnings of affiliates:

For the year ended March 31, 2008:
For the year ended March 31, 2007:¥ - million¥ - million(2) Financial conditions
Total Assets

Total Net Assets

Net Assets Ratio

Net Assets per Sharemillions of yen

millions of yen%yen

As of March 31, 2008

4,977,450

261,627

5.3

120,288.66

As of March 31, 2007

4,323,780

270,179

6.1

126,549.38

Notes: 1. Stockholders’ equity:

As of March 31, 2008:¥ 261,627 million
As of March 31, 2007:¥ 265,753 million
Stockholders’ equity is computed by excluding minority interests from total net assets at the end of fiscal year.
2. Net assets ratio is computed by dividing the amount of total net assets excluding minority interests by total assets at the end of
the fiscal year.

(3)

Cash flows

For the year ended
March 31, 2008
For the year ended
March 31, 2007

Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

Cash Flows from
Financing Activities

Cash and Cash
Equivalents at end of
fiscal year

millions of yen

millions of yen

millions of yen

millions of yen

445,452(605,280)

22,300136,186

258,171(87,215)(6,500)273,760

12. Dividends
Fiscal year

Interim dividend

Dividend per Share
Annual dividendyen

For the year ended
March 31, 2007
For the year ended
March 31, 2008
For the year ending
March 31, 2009(projection)

Total

yen

yen

-

3,095.24

3,095.24-

3,000.00

3,000.00-

3,000.00

3,000.00

3. Projected consolidated financial results for the year ending March 31, 2009
(percentage figures represent changes from the results of the previous fiscal year)

Ordinary
Revenues

Ordinary Profit

Net Income%%%
millions of yen change millions of yen change millions of yen change

For the six months ending
September 30, 2008
For the year ending
March 31, 2009

Net Income per Shareyen

430,000

6.3

18,000(34.7)

10,000(40.2)

4,597.70

884,000

7.5

37,000(16.9)

21,000(13.4)

9,655.17

4. Other Information(1) Changes in significant subsidiaries during the fiscal year (changes in specified subsidiaries accompanying changes inscope of consolidation): None
(2)

Changes in significant accounting principles, policies and presentation(a) Changes due to revision of accounting standards: Yes(b) Changes due to other reason: None(Note) Refer to “Summary of Significant Accounting Policies”, on page F-5, for details.

(3) Number of shares outstanding(a) Number of shares outstanding (including treasury shares)
As of March 31, 2008:
2,175,000 shares
As of March 31, 2007:
2,100,000 shares(b) Number of treasury shares
As of March 31, 2008:- shares
As of March 31, 2007:- shares(Note) Refer to “Per Share Information”, on page F-9, for number of shares used in calculating net income per share.

2

I. Operating Performance
1. Analysis of Operating Performance
Ordinary revenues grew 8.3% during the fiscal year ended March 31, 2008 (April 1, 2007
through March 31, 2008), to ¥822.1 billion, owing to performance increases in all of ourbusinesses: life insurance, non-life insurance and banking.
In the life insurance business, the amount of insurance in force remained robust, boosting
income from insurance premiums, while general account investment income also increased,
resulting in a 7.5% increase in ordinary revenues compared with the preceding fiscal year, to¥741.3 billion. In the non-life insurance business, net premiums written increased in line witha steady rise in the number of policies, mainly automobile insurance policies, pushing up
ordinary revenues 9.1% compared with the preceding fiscal year, to ¥55.6 billion. In thebanking business, higher business volume boosted interest income, such as interest on loans.
Ordinary revenues consequently increased 33.4% compared with the preceding fiscal year, to¥25.9 billion.
Ordinary expenses increased 5.0% compared with the preceding fiscal year, to ¥777.6
billion, in line with increased expenses in all of our businesses.
In the life insurance business, ordinary expenses grew 4.0% compared with the preceding
fiscal year, to ¥702.2 billion, owing to an increase in insurance claims and other payments,
despite the absence of an increase in the current fiscal year of the provision for policy reserveas was incurred in the preceding fiscal year. In the non-life insurance business, net losses paid
increased in line with an increase in the number of policies in force, causing ordinary
expenses to grow 7.9%, to ¥52.8 billion. In the banking business, higher interest expenses inline with the increase in deposits pushed up ordinary expenses 30.1% compared with thepreceding fiscal year, to ¥23.5 billion.
Ordinary profit increased 142.5% compared with the preceding fiscal year, to ¥44.5
billion, reflecting stronger performance in all of our businesses, as described above. Broken
down by business, in the life insurance business ordinary profit was up 162.5% comparedwith the preceding fiscal year, to ¥39.0 billion; in the non-life insurance business ordinary
profit was up 37.8%, to ¥2.8 billion; and in the banking business ordinary profit was up
77.4%, to ¥2.4 billion.
Sony Financial Holdings Inc. (“SFH”) posted extraordinary losses of ¥3.8 billion, owing
mainly to an increase in the provision for reserves for price fluctuation in the life insurance
business.
Net income rose 142.0% compared with the preceding fiscal year, to ¥24.2 billion,
reflecting the increase in ordinary profit.

3

Segment Information by Business
Ordinary Revenues(Millions of yen)
For the year ended
March 31, 2007
689,871
51,02019,470760,362(1,081)
759,280

Life insurance business
Non-life insurance businessBanking business
Subtotal
Corporate and eliminations
Consolidated

For the year ended
March 31, 2008
741,340
55,64925,979822,969(815)
822,153

Change (%)
+7.5
+9.1
+33.4
+8.2
－
+8.3

Ordinary Profit(Millions of yen)Life insurance business
Non-life insurance businessBanking business
Subtotal
Corporate and eliminations
Consolidated

For the year ended
March 31, 2007
14,8882,044
1,354
18,28667
18,354

For the year ended
March 31, 2008
39,0772,817
2,401
44,296204
44,500Change (%)+162.5+37.8+77.4+142.2－+142.5

Financial Results Forecast for the Fiscal Year Ending March 31, 2009
SFH’s consolidated financial results forecast for the fiscal year ending March 31, 2009 (April 1, 2008
through March 31, 2009) is as follows. No changes have been made to the consolidated results forecasts
previously announced on May 14, 2008.

Ordinary revenues

Ordinary profit(Billions of yen)
Net income

For the six months ending September 30, 2008
Current forecast announcement

430

18

10

404.6

27.5

16.7

Current forecast announcement

884

37

21

(Reference)
Actual financial results for previous period(Year ended March 31, 2008)

822.1

44.5

24.2

(Reference)
Actual financial results for previous period(Six months ended September 30, 2007)
For the year ending March 31, 2009

(Reference)
Financial results forecasts (ordinary revenues and ordinary profit) of each business segment for the
fiscal year ending March 31, 2009 (April 1, 2008 through March 31, 2009) are as follows.

4<Life insurance business>
Ordinary revenues(Billions of yen)
Ordinary profit

For the six months ending September 30, 2008
Current forecast announcement

386

17

365.7

24.0

Current forecast announcement

793

34

(Reference)
Actual financial results for previous period(Year ended March 31, 2008)

741.3

39.0

(Reference)
Actual financial results for previous period(Six months ended September 30, 2007)
For the year ending March 31, 2009

<Non-life insurance business>
Ordinary revenues(Billions of yen)
Ordinary profit

For the six months ending September 30, 2008
Current forecast announcement

30.0

0.6

27.7

2.0

Current forecast announcement

59.8

1.3

(Reference)
Actual financial results for previous period(Year ended March 31, 2008)

55.6

2.8

(Reference)
Actual financial results for previous period(Six months ended September 30, 2007)
For the year ending March 31, 2009

<Banking business>
Ordinary revenues(Billions of yen)
Ordinary profit

For the six months ending September 30, 2008
Current forecast announcement

14.4

0.5

11.5

1.4

Current forecast announcement

30.7

1.3

(Reference)
Actual financial results for previous period(Year ended March 31, 2008)

25.9

2.4

(Reference)
Actual financial results for previous period(Six months ended September 30, 2007)
For the year ending March 31, 20095

2. Analysis of Financial Condition(1) Assets, Liabilities and Net Assets
As of March 31, 2008, total assets amounted to ¥4,977.4 billion, up 15.1% from March 31, 2007.
The principal reasons for this rise were increases to ¥2,930.4 billion in securities (up 10.6%
from March 31, 2007), mostly Japanese government bonds, ¥895.6 billion in monetary trusts (up24.7%), ¥424.8 billion in call loans and bills bought (up 27.8%) and ¥455.7 billion in loans (up19.5%).
Total liabilities amounted to ¥4,715.8 billion, up 16.3% from March 31, 2007. One of thelargest components of liabilities, policy reserve and others, increased 9.4% from the end of theprevious fiscal year, to ¥3,454.1 billion. Also, deposits came to ¥1,143.4 billion, up 52.0%.
Total net assets amounted to ¥261.6 billion, down 3.2% from March 31, 2007. Of thisamount, net unrealized gains on other securities, net of taxes, were ¥74.9 billion on March 31,
2008, down ¥50.1 billion from March 31, 2007, owing to a market downturn.
(2) Cash FlowsNet cash provided by operating activities was ¥445.4 billion. Major factors included inflows froma net increase in deposits and, an increase in insurance reserves which exceeded outflows from a netincrease in call loans and bills bought.
Net cash used in investing activities was ¥605.2 billion. The primary reason was an increasein payments for purchases of securities, exceeding proceeds from sale and redemption of securities.
Net cash provided by financing activities was ¥22.3 billion. This amount represents ¥28.8
billion received from the issuance of common stock in line with the October 2007 listing of SFH’s
shares on the Tokyo Stock Exchange, less ¥6.5 billion in cash dividends paid.
As a result of the above factors, cash and cash equivalents at March 31, 2008, were¥136.1billion, down ¥137.5 billion from March 31, 2007.
(3) Net Asset Ratio
As of March 31, 2007

Net asset ratio
Net asset ratio based on market value
Notes:

As of March 31, 2008

6.1％

5.3％

—

17.6％

1. Net asset ratio: stockholder’s equity/total assets x 100
2. Net asset ratio based on market value: total market capitalization/total assets x 100.
This ratio does not apply as of March 31, 2007, as SFH was not listed as of that date.

6

3. Basic Policy on Returns to Stockholders and Dividends for the Fiscal Years to
March 31, 2008 and 2009
SFH considers the steady increase in returns to its stockholders, as well as an increasing return on
equity, among its most important management tasks.
SFH’s basic policy on returning profits to its stockholders is to ensure stable dividends tostockholders while ensuring the high level of financial soundness that is necessary to maintain thetrust of existing customers and attract new ones, as well as securing sufficient retained earnings for
future business development.
In keeping with the basic policy outlined above, we expect to pay an annual dividend of ¥3,000
per share for the fiscal year ended March 31, 2008. We also expect to pay cash dividends of ¥3,000
per share for the fiscal year ending March 31, 2009.
With regard to timing, dividend payment will proceed following resolution of the general
meeting of shareholders, as in the past, with the fiscal year-end as the record date.

4. Information Concerning Significant Subsidiaries
Below, we describe the operating performance for the fiscal year ended March 31, 2008 (April 1,
2007 through March 31, 2008) of SFH’s significant subsidiaries: Sony Life Insurance Co., Ltd.
(Sony Life), Sony Assurance Inc. (Sony Assurance) and Sony Bank Inc. (Sony Bank). Sony Life,
Sony Assurance and Sony Bank each separately announce their own results; please refer to theindividual companies’ websites for more detailed information.

■ Sony Life (Non-Consolidated)
On a non-consolidated basis, Sony Life posted a 7.5% increase in ordinary revenues comparedwith the preceding fiscal year, to ¥741.2 billion, as the amount of insurance in force remainedrobust, boosting income from insurance premiums, and general account investment income also
increased. Ordinary profit increased 163.8% compared with the preceding fiscal year, to ¥39.2
billion, owing to such factors as the absence of an increase in the current fiscal year of theprovision for policy reserve as was incurred in the preceding fiscal year, in addition to anincrease in gains from general account asset investment. Net income grew 147.1%, to ¥18.5
billion. Core profit amounted to ¥23.5 billion, declining 3.3% from the preceding fiscal year,
owing primarily to higher operating expenses.
Income from insurance premiums grew 7.1% compared with the preceding fiscal year, to¥648.4 billion, as the amount of insurance in force increased. Compared with the preceding fiscal
year, investment income increased 11.1%, to ¥87.4 billion. On the other hand, investment
expenses rose 754.0%, to ¥69.8 billion, reflecting deterioration of market environment, owing to
impairment losses in mainly domestic shares in general account and higher investment losses on
assets held in separate accounts such as domestic shares, convertible bonds and foreign currency
denominated marketable securities. Consequently, net investment income—the sum of thegeneral and separate accounts—fell 75.1%, to ¥17.5 billion. Insurance claims and other payments
increased 9.9% compared with the preceding fiscal year, to ¥241.1 billion. Operating expenses
rose 8.1%, to ¥94.3 billion.
Policy amount in force, which is the total policy amount in force for individual life insurance
and individual annuities, grew steadily during the period. Policy amount in force was up 4.1%
from March 31, 2007, to ¥31,497.3 billion. The lapse and surrender rate was up 0.33 percentage
point compared with the preceding fiscal year, to 6.12%. Annualized premiums from insurance
in force rose 5.0% from March 31, 2007, to ¥530.0 billion. Of this amount, the amount7

attributable to third-sector products rose 4.6%, to ¥122.8 billion.
New insurance sales, which is the total policy amount for new sales of individual life
insurance and individual annuities, rose 10.9% compared with the preceding fiscal year, to¥3,802.5 billion. Annualized premiums from new insurance sales fell 3.2% compared with thepreceding fiscal year, to ¥63.4 billion, owing primarily to slower sales of third-sector products.
Of this amount, for third-sector products annualized premiums from new insurance sales fell
7.7%, to ¥13.3 billion.
Net unrealized gains on securities dropped 35.5% from March 31, 2007, to ¥127.8 billion.
(1) Principal Income and Expense Items
For the year ended
March 31, 2007
Ordinary revenues
Ordinary profit
Core profit
Negative spread (Billions of yen)
Net income
Income from insurance premiums
Investment income
Insurance claims and other payments
Investment expenses
Operating expenses
Lapse and surrender rate (%) (Note)

689,591
14,89524,36637.3
7,494
605,561
78,722
219,347
8,184
87,328
5.79(Millions of yen, unless otherwise indicated)
For the year ended
Change in amount (%) or
March 31, 2008change in percentage (pt)741,250
39,29023,571
26.7
18,514648,406
87,493
241,106
69,89594,3676.12+7.5+163.8(3.3)(28.4)+147.1
+7.1
+11.1
+9.9
+754.0+8.1+0.33pt

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

Total assets
Real net worth
Solvency margin ratio (%)
Net unrealized gains on securities

As of March 31, 2007

As of March 31, 2008

3,445,970
645,550
1,852.0
198,259

3,659,786
612,079
1,747.9
127,858

As of March 31, 2007
30,038.1

As of March 31, 2008
31,237.0(Millions of yen)
Change in amount (%) orchange in percentage (pt)
+6.2
(5.2)
(104.1)pt(35.5)(2) Insurance in Force
Based on Policy AmountIndividual insurance products
Individual annuity products
Total(Billions of yen)
Change (%)
+4.0

206.3

260.2

+26.1

30,244.4

31,497.3+4.1

Note: Total policy amount in force is equal to the sum of (a) the funds to be held at the time annuity payments are to commence forpolicies for which annuity payments have not yet commenced and (b) the amount of policy reserve for policies for which
payments have commenced.

8

Based on Number of Policies

Individual insurance products

As of March 31, 2007
4,109

Individual annuity products
Total

As of March 31, 2008
4,392

(Thousands of policies)
Change (%)
+6.9

35

45

+26.8

4,145

4,438

+7.4

(3) New Insurance Sales
Based on Policy Amount(Billions of yen)
For the year ended
March 31, 2007
Individual insurance products
Individual annuity products
Total

3,396.8
32.5
3,429.4

For the year ended
March 31, 2008

Change (%)
+10.2
+77.7
+10.9

3,744.6
57.9
3,802.5

Note: Amounts for individual annuity products indicate the funds to be held at the time annuity payments are to commence.

Based on Number of Policies(Thousands of policies)
For the year ended
March 31, 2007
Individual insurance products
Individual annuity products
Total

510
6
517

For the year ended
March 31, 2008
514
10
524

Change (%)
+0.6
+65.8
+1.4

(4) Annualized Premiums
Insurance in Force

Individual insurance products
Individual annuity products
Total
Of which, medical protection, living
benefit protection, etc.

As of March 31, 2007
497,570
7,121
504,691
117,466

As of March 31, 2008
521,197
8,814
530,011
122,854(Millions of yen)
Change (%)
+4.7
+23.8
+5.0
+4.6

New Insurance Sales(Millions of yen)
For the year ended
March 31, 2007
Individual insurance products
Individual annuity products
Total
Of which, medical protection, living
benefit protection, etc.

For the year ended
March 31, 2008

Change (%)

64,204
1,337
65,541

61,2502,225
63,475

(4.6)
+66.4
(3.2)

14,47913,358(7.7)

Notes: 1. Annualized premiums refer to an amount that is calculated by multiplying individual premium amounts by a coefficientthat differs depending on the premium payment methods, thereby converting the figure to a per-year premium. (Forsingle-payment policies, premiums are divided by the coverage period.)92. Medical protection and living benefit protection products include products with medical protection benefits(hospitalization benefits, surgical procedure benefits, etc.) and products with living benefit protection (benefits for specificillnesses, nursing care benefits, etc.).

■ Sony AssuranceSony Assurance posted a 9.1% increase in ordinary revenues compared with the preceding fiscal
year, to ¥55.6 billion, primarily due to favorable performance in its mainstay automobile insurance,
which raised net premiums written. As a result of the increase in ordinary revenues, together with
an improved net loss ratio compared with the preceding fiscal year, ordinary profit rose37.8%
compared with the preceding fiscal year, to ¥2.8 billion. Net income rose 36.7% compared with thepreceding fiscal year, to ¥2.1 billion.
In terms of insurance underwriting, direct premiums written grew 9.0% compared with thepreceding fiscal year, to ¥54.6 billion, in line with a rise in the number of automobile insurance
policies. Net premiums written grew 9.0% compared with the preceding fiscal year, to ¥55.0 billion.
In tandem with the increase in number of policies, net losses paid increased 8.6%, to ¥26.2 billion.
As a result, the net loss ratio improved 0.1 percentage point compared with the preceding fiscal
year, to 53.5%. The net expense ratio worsened 0.4 percentage point, to 26.7%, owing to increases
in system-related expenses. Consequently, underwriting profits amounted to ¥2.2 billion, and the
combined ratio (the sum of the net loss ratio and the net expense ratio) worsened 0.4 percentage
point compared with the preceding fiscal year, to 80.3%.
(1) Principal Income and Expense Items(Millions of yen)
For the year ended
March 31, 2007
Ordinary revenues
Ordinary profit
Net income
Net loss ratio (%)
Net expense ratio (%)
Underwriting profits

51,020
2,044
1,598
53.6
26.3
1,610

As of March 31, 2007
Total assets
Solvency margin ratio (%)

67,4681,009.7

10

For the year ended
March 31, 2008
55,649
2,817
2,185
53.5
26.7
2,277

As of March 31, 2008
78,645
1,073.9

Change in amount (%) orchange in percentage (pt)
+9.1
+37.8
+36.7
(0.1)pt+0.4pt+41.4(Millions of yen)
Change in amount (%) orchange in percentage (pt)
+16.6
+64.2pt

(2) Direct Premiums Written(Millions of yen)Type of policy
Fire
MarinePersonal accident
Voluntary automobile
Compulsory automobile liability
Total

For the year ended
March 31, 2007
174
－
5,812
44,126－50,112For the year ended
March 31, 2008
273
－
6,315
48,053－54,642For the year ended
March 31, 2007
12
43
5,947
43,931
532
50,467For the year ended
March 31, 2008
16
52
6,501
47,845585
55,001For the year ended
March 31, 2007
021
928
22,802399
24,151For the year ended
March 31, 2008
0
25
1,205
24,546447
26,225

Change (%)
+56.9
－
+8.7
+8.9
－
+9.0

(3) Net Premiums Written(Millions of yen)Type of policy
Fire
MarinePersonal accident
Voluntary automobile
Compulsory automobile liability
Total

Change (%)
+35.1
+20.3
+9.3
+8.9
+9.9
+9.0

(4) Net Losses Paid
(Millions of yen)Type of policy
Fire
MarinePersonal accident
Voluntary automobile
Compulsory automobile liability
Total

Change (%)(29.2)
+16.2
+29.7
+7.7
+12.3
+8.6

■ Sony Bank (Non-Consolidated)
Sony Bank’s ordinary revenues increased 33.5% compared with the preceding fiscal year, to¥25.9 billion, as a higher balance of mortgage loans resulted in increased interest on loans,leading to higher interest income, and a higher balance of deposits led to greater investment
income. Owing to the rise in gross operating profit, ordinary profit increased 102.8% comparedwith the preceding fiscal year, to ¥2.7 billion. As a result of the above factors and an increase indeferred income taxes, Sony Bank’s net income increased substantially, to ¥4.4 billion.
Boosted by improvements in such factors as other banking activities and higher net interest
income, gross operating profit grew 21.2% compared with the preceding fiscal year, to ¥10.9
billion. Breaking down gross operating profit, net interest income increased 11.3%, to ¥5.1 billion,
as a result of a higher balance of invested assets through the expansion of operations. Net fees andcommissions fell 27.8%, to ¥0.3 billion, owing to higher ATM fees and other service costs. Net
other income increased 39.8%, to ¥5.4 billion, as market investment profit improved.
As of March 31, 2008, the balance of customer assets (the sum of total deposits and total
investment trusts) was ¥1,247.3 billion, up ¥398.4 billion, or 46.9%, from March 31, 2007,11

largely due to an increase in the balance of yen time deposits. Total yen and foreign currency
deposits grew ¥392.0 billion, or 52.1% compared to March 31, 2007, to ¥1,144.3 billion. As of
March 31, 2008, investment trusts were up ¥6.4 billion compared with March 31, 2007, or 6.7%,
to ¥102.9 billion, and loans were up ¥62.3 billion, or 21.9%, to ¥347.0 billion.
On March 31, 2008, total deposit accounts numbered 610 thousand, up 118 thousand fromMarch 31, 2007. As of March 31, 2008, the bank’s capital adequacy ratio, based on domestic
criteria, was 9.15%.
(1) Principal Income and Expense Items(Millions of yen)

Ordinary revenues
Ordinary profit
Net income
Gross operating profit
Net interest income
Net fees and commissions
Net other operating income
General and administrative
expenses
Net operating profit

For the year ended
March 31, 2007
19,470
1,354
1,023
9,056
4,588
551
3,916

Change (%)+33.5+102.8+338.9+21.2+11.3(27.8)
+39.8

7,665

8,145

+6.3

1,366

2,826

+106.8

As of March 31, 2007
Total assets
Capital adequacy ratio(domestic criteria) (%)

For the year ended
March 31, 2008
25,9882,746
4,492
10,980
5,105
398
5,476

As of March 31, 2008

806,848

1,211,000

11.49

9.15

Change inamount (%) or change
in percentage (pt)+50.1
(2.34) pt(2) Customer Assets (Total of Deposits and Investment Trusts) and Number of Accounts

Deposits
Yen deposits
Foreign currency deposits
Investment trusts
Customer assets
Number of accounts (thousands)

As of March 31, 2007
752.3
604.4
147.8
96.5
848.8
491

As of March 31, 2008
1,144.3
892.6
251.7
102.9
1,247.3
610(Billions of yen)
Change(%)
+52.1
+47.7
+70.2
+6.7
+46.9
+24.2

As of March 31, 2007
278.0
6.6
284.7

As of March 31, 2008
338.8
8.1
347.0

(Billions of yen)
Change (%)
+21.9
+22.1
+21.9

(3) Loans

Mortgage loans
Other
Total

12

II. Status of the Corporate GroupOn April 1, 2004, SFH was established as a financial holding company (an insurance holding company
and a bank holding company) through a corporate separation from Sony Corporation. On October 11,
2007, SFH listed its common stock on the First Section of the Tokyo Stock Exchange, soliciting sharepurchases from Japanese and overseas investors. As of March 31, 2008, Sony Corporation owned 60%
of SFH’s shares.
As of March 31, 2008, the SFH Group included as direct subsidiaries Sony Life, Sony Assurance
and Sony Bank, and as indirect subsidiaries Sony Life Insurance (Philippines) Corporation, a subsidiaryof Sony Life, and Sony Bank Securities Inc., a subsidiary of Sony Bank. In addition, SFH acquired from
Sumitomo Mitsui Banking Corporation its 12% holding of Sony Bank shares. These shares weretransferred in March 2008, making SFH the sole owner of Sony Bank and turning Sony Bank into awholly owned subsidiary of SFH.
•
Sony Financial Holdings Inc. (oversees the operations of its subsidiaries and undertakes related
duties)Directly Held and Indirectly Held Subsidiaries<Life insurance business> Sony Life Insurance Co., Ltd. (Wholly owned by SFH)
 Sony Life Insurance (Philippines) Corporation (Wholly owned by Sony Life)<Non-life insurance business> Sony Assurance Inc. (Wholly owned by SFH)
<Banking business> Sony Bank Inc. (Wholly owned by SFH)
 Sony Bank Securities Inc. (Wholly owned by Sony Bank)[Organizational chart] (As of March 31, 2008)
Sony Corporation○ SFH Consolidated subsidiarySony Financial Holdings Inc.
88%

＜Life insurance business＞○
Sony Life Insurance Co., Ltd.

＜Life insurance
business＞○
Sony Life Insurance（Philippines）
Corporation＜Non-life insurance business＞○Sony Assurance Inc.

＜Banking business＞○Sony Bank Inc.

＜Banking business＞○
Sony Bank Securities Inc.

AEGON Sony
Life Planning
Co. Ltd,

Tradename and trademark License
Sales and referrals of the other’s productsManagement control fee
Shareholdings

Note: In August 2007, AEGON Sony Life Planning Co., Ltd. was established as an affiliate of Sony Life (a fifty-fifty joint venture by
Sony Life of Japan and AEGON INTERNATIONAL B.V. of the Netherlands). AEGON Sony Life Planning Co., Ltd. is notincluded as an equity-method affiliate in the scope of consolidation in the fiscal year ended March 31, 2008.

13

III. Management Policies
1. Company’s Basic Management Policies
Basic Management Policies
The SFH Group positions its corporate vision and philosophy as the basic policy for setting
management strategy and expediting management decision-making. The Group’s corporate visionand philosophies are described below.
a. Corporate Vision
The SFH Group aims to integrate the diverse functions that are inherent to financial services,offer high-value-added products and quality services that meet individual customers’ economic
needs, and become one of Japan’s most trusted financial services groups.
b. Corporate Philosophy(Customer-Oriented)
We consider each customer’s input carefully and provide services to their satisfaction, striving tohelp them lead lives that are abundant and trouble-free.
(Contributing to Society)We understand that financial services businesses have a certain public nature. As we pursue ourvision, we contribute to society by maintaining high ethical standards and levels of responsibility.
We also fulfill our other obligations as a member of society and a good corporate citizen.
(Pursuing Originality)
We always generate ideas from the fundamentals, and pursue originality and innovation whileremaining unfettered by convention.
(Corporate Culture with a Spirit of Freedom and Open-Mindedness)
Our ideal for the financial services business recognizes the importance of each employee’s
contribution. Our corporate culture features a spirit of freedom and open-mindedness and takes
full advantage of individuality and ability.

2. Key Management Benchmarks
In addition to such key accounting indicators as consolidated ordinary revenues, consolidated
ordinary profit and consolidated net income, SFH closely follows consolidated adjusted ROE as oneof its management benchmarks.
SFH’s consolidated adjusted ROE for the year ended March 31, 2008, was -5.7%, down 20.9
percentage points from the preceding fiscal year.
(Reference)
Adjusted ROE for SFH’s principal subsidiaries were as follows.
Adjusted ROE for Sony Life (non-consolidated):-6.9% (down 22.6 percentage points from the preceding fiscal year)
Adjusted ROE for Sony Assurance:
17.2% (up 1.1 percentage points from the preceding fiscal year)
ROE for Sony Bank (non-consolidated):
12.4% (up 9.5 percentage points from the preceding fiscal year)
Consolidated adjusted ROE is calculated as follows.
■ Consolidated adjusted ROE = consolidated adjusted profit ÷ consolidated adjusted capital

14

Consolidated adjusted profit is calculated as the sum of the following:
1) Sony Life: The amount of increase in Sony Life’s embedded value (adjusted net worth plus
value of in force business) during the fiscal year plus dividends paid by Sony Life
with respect to that fiscal year;
2) Sony Assurance: The net income of Sony Assurance plus its provision for special catastrophe
reserve and its provision for reserve for price fluctuations, in each case after taxes;
and3) Sony Bank: Net income of Sony Bank.
Consolidated adjusted capital is calculated as the sum of the following:
1) Sony Life: The embedded value of Sony Life as of the beginning of the fiscal year lessdividends paid by Sony Life with respect to that fiscal year plus the embedded
value of Sony Life as of the end of the fiscal year, divided by two;
2) Sony Assurance: The net assets of Sony Assurance as of the beginning of the fiscal year plus
the sum of its special catastrophe reserve and its reserve for price fluctuations, ineach case after taxes, plus the net assets of Sony Assurance as of the end of the
fiscal year plus the sum of its special catastrophe reserve and its reserve for pricefluctuations, in each case after taxes, divided by two; and3) Sony Bank: The net assets of Sony Bank as of the beginning of the fiscal year plus the net
assets of Sony Bank as of the end of the fiscal year, divided by two.
Consolidated adjusted profit and consolidated adjusted capital take into consideration dividends
from the group subsidiaries and other special factors.

3. Medium- to Long-Term Management Strategies
The SFH Group aims to maximize the corporate value of the Group over the medium to long term byimplementing the management strategies outlined below.
(a) Sustainable and Stable Growth of Group Companies
Sony Life:
Sony Life provides detailed tailored consulting and follow-up services
through life insurance professionals—Lifeplanner sales employees andPartners (independent agencies)—who have broad-ranging expertise andextensive experience in such areas as economics, finance and taxation. Sony
Life strives to strengthen its capabilities and hone its competitive edge in theindividual life insurance market by providing value in a way that only Sony
Life can.
Sony Assurance: Drawing on the strengths of its position as a direct insurance provider that
communicates with customers primarily via the telephone and the Internet,
Sony Assurance strives to interact directly with each of its customers. By
precisely understanding customer opinions and needs, and providing
products and services from a customer from a customer viewpoint, thecompany is increasing its income from insurance premiums through focused
activity and by offering reasonably priced insurance premiums.
Sony Bank: Sony Bank is an Internet bank focused on the needs of individual customers.
By maximizing information technologies, the bank works to provide fair andhighly convenient financial products and services. By ensuring its
trustworthiness in such ways, the bank is working to expand its operations

15

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

4. Tasks Ahead for the Company
The SFH Group aims to realize its corporate vision and ensure stable growth in corporate value by
aggressively addressing the following issues.
(a) Growing the three major businesses
Sony Life, Sony Assurance and Sony Bank have differentiated themselves from theircompetitors by following business models that are clearly distinct and providing individual
customers with highly rational and convenient products and services. We will promote theongoing growth of each of these companies by emphasizing their individual advantages,
thereby further entrenching their presence in their respective markets.
(b) Fostering cross-selling and other Group synergies
The easing of financial market restrictions has encouraged various companies to forge
alliances that aim to market financial products targeting individuals. In the past, SFH has
encouraged intra-Group liaisons, such as through the sale of Sony Assurance’s automobile
insurance and Sony Bank’s mortgage loans by Sony Life’s Lifeplanner sales employees. In
the future we will encourage even greater business cooperation by promoting efficient
cultivation of new customers and cross-selling, to enhance the SFH Group’s corporate value.
(c) Expanding into new fields of businessIn the event that providing financial products and services outside our current scope ofbusiness proves necessary to realize the SFH Group’s corporate vision, we will consider
aggressive moves to expand into new fields of business. We will pursue such new business todiversify and expand our sources of revenues and profits, as well as to heighten the SFH
Group’s market presence.

16

Consolidated Financial Statements
1. Consolidated Balance Sheets(Yen in millions)
As of March 31, 2007

As of March 31, 2008

Increase(Decrease)

Assets:Cash and due from banks

40,99660,05819,062

Call loans and bills bought

332,459

424,868

92,409

Monetary trusts

718,492

895,672

177,179

Securities

2,649,768

2,930,441

280,673Loans

381,522455,763

74,240

Tangible fixed assets

88,57484,451(4,122)Intangible fixed assets

8,593

16,412

7,818

0

-

(0)

Due from agencies
Due from reinsurers

496

256

(239)

Foreign exchanges

4,156

1,683

(2,472)Other assets

95,351

101,229

5,878

Deferred tax assets

3,599

6,937

3,338

Reserve for possible loan losses

(230)

(327)

(96)

4,323,780

4,977,450

653,669

29,92031,653

1,733

Total assets
Liabilities:
Reserve for outstanding claims
Policy reserve

3,125,118

3,418,006

292,888

Reserve for policyholders’ dividends

2,597

4,506

1,909

Due to agencies

1,415

1,308

(106)

Due to reinsurers

934

926

(8)

Deposits

752,366

1,143,476

391,110Call money and bills sold

10,00010,000-0

0

0

Other liabilities

75,36762,530(12,837)

Reserve for employees’ bonuses

1,906

2,240

333

Reserve for employees’ retirement benefits

11,212

11,920708

Reserve for directors’ retirement benefits

241

252

10

Reserve for price fluctuations and others

20,90824,136

3,228

Deferred tax liabilities

20,904

4,156(16,748)

706

706

-

4,053,601

4,715,822

662,221

Foreign exchanges

Deferred tax liabilities on land revaluation
Total liabilities
Net assets:
Common stock

5,500

19,90014,400Capital surplus

180,877

195,277

14,400Retained deficits(44,173)(26,417)

17,755

Total shareholders’ equity

142,203

188,759

46,555Net unrealized gains on other securities, net of taxes

125,043

74,902(50,140)(408)(1,345)(937)(1,475)(1,475)-Net deferred losses on hedging instruments, net of taxes
Land revaluation, net of taxes
Foreign currency translation adjustments
Total valuation and translation adjustments
Minority interests
Total net assets
Total liabilities and net assets

F-1

390

786

396

123,549

72,868(50,681)

4,425-(4,425)

270,179

261,627(8,551)

4,323,780

4,977,450

653,669

2. Consolidated Statements of Income(Yen in millions)
For the year ended
March 31, 2007

For the year ended
March 31, 2008

Increase(Decrease)759,280

822,153

62,872

Income from insurance premiums

605,051

648,178

43,126

Investment income

78,92887,542

8,613

Other ordinary income

4,874

4,875

1

Underwriting income

50,49555,036

4,540

Investment income

464

572

107

Other ordinary income

27

16

(11)

Interest income

12,763

17,162

4,398

Fees and commissions

1,587

1,753

166

Other operating income

5,065

7,001

1,935

Ordinary revenues
Ordinary revenues from the life insurance business:

Ordinary revenues from the non-life insurance business:

Ordinary revenues from the banking business:

Other ordinary income

21

15

(6)

740,926

777,653

36,726

Insurance claims and other payments

219,352

241,114

21,761

Provision for policy reserve and others

349,666

286,271(63,395)

Investment expenses

8,231

69,903

61,671

Operating expenses

87,27094,189

6,919

Other ordinary expenses

10,300

10,578277

36,166

38,634

2,468

3

5

2

12,392

13,763

1,371

48

16

(31)

8,174

12,045

3,870

Ordinary expenses
Ordinary expenses from the life insurance business:

Ordinary expenses from the non-life insurance business:
Underwriting expenses
Investment losses
Operating, general and administrative expenses
Other ordinary expenses
Ordinary expenses from the banking business:
Interest expenses
Fees and commissions

445

1,049

603

Other operating expenses

1,149

1,524

375

General and administrative expenses

7,665

8,411

746

58

144

85

18,35444,50026,146Extraordinary gains

334

2

(332)

Extraordinary losses

1,146

3,820

2,674

Provision for reserve for policyholders’ dividends

2,057

3,159

1,102

Income before income taxes

15,48537,522

22,037

Other ordinary expenses
Ordinary profit

Income taxes- Current

20,270

6,690(13,579)- Deferred(14,929)

6,078

21,007

(123)

(497)

(374)

10,021

24,255

14,234

Minority interests
Net income

F-2

3. Consolidated Statements of Changes in Net Assets
For the year ended March 31, 2007

(Yen in millions)Shareholder’s equity
Total shareholder’sequityCommon stock

Capital surplus

Retained deficits

Treasury stock

5,500

180,877(47,694)-

Dividends from surplus--(6,500)-(6,500)Net income--

10,021-

10,021

Net changes other than shareholder’s equity

-

-

-

-

-

Total changes during the period

-

-

3,521

-

3,521

Balance as of March 31, 2007

5,500

180,877(44,173)-

142,203

Balance as of March 31, 2006

138,682

Changes during the period

Valuation and translation adjustments
Net deferred
Net unrealized
Foreignlosses on
Total valuationLand
gains on otherand translation
revaluation, net currency
hedgingsecurities, net instruments,
translation
adjustmentsof taxesof taxes
adjustments
net of taxes
Balance as of March 31, 2006

Minority
interests

Total net assets

125,720-(1,475)

113

124,358

4,165

267,206

Dividends from surplus

-

-

-

-

-

-

(6,500)Net income

-

-

-

-

-

-

10,021

(676)

(408)

-

276

(808)

259

(548)

Changes during the period

Net changes other than shareholder’s equity
Total changes during the period

(676)

(408)

-

276

(808)

259

2,972

Balance as of March 31, 2007

125,043(408)(1,475)

390

123,549

4,425

270,179

For the year ended March 31, 2008

(Yen in millions)Shareholders’ equity

Balance as of March 31, 2007

Total shareholders’equityCommon stock

Capital surplus

Retained deficits

Treasury stock

5,500

180,877(44,173)-

142,203

14,40014,400--28,800--(6,500)-(6,500)Changes during the period
Issuance of common stock
Dividends from surplus
Net income--

24,255-24,255

Net changes other than shareholders’ equity

-

-

-

-

-

Total changes during the period

14,40014,40017,755-46,555

Balance as of March 31, 2008

19,900195,277(26,417)-

188,759

Valuation and translation adjustments
Net deferred
Net unrealized
Foreignlosses on
Landgains on othercurrency Total valuation
hedging
revaluation,net
securities, nettranslation and translation
adjustments
instruments,of taxesof taxes
adjustments
net of taxes
Balance as of March 31, 2007

Minority
interests

Total net assets

125,043(408)(1,475)

390

123,549

4,425

270,179

Issuance of common stock

-

-

-

-

-

-

28,800

Dividends from surplus

-

-

-

-

-

-

(6,500)Net income

-

-

-

-

-

-

24,255(50,140)

(937)

-

396

(50,681)(4,425)(55,106)

Total changes during the period(50,140)

(937)

-

396

(50,681)(4,425)(8,551)

Balance as of March 31, 2008

74,902(1,345)(1,475)786

72,868-261,627

Changes during the period

Net changes other than shareholders’ equity

F-3

4. Consolidated Statements of Cash Flows(Yen in millions)
For the year ended
March 31, 2007

For the year ended
March 31, 2008

Income before income taxes

15,48537,522

22,037

Depreciation and amortization

4,683

5,512

829

0

125

125

Increase in policy reserve and others

359,544297,771(61,772)

Interest income and dividends(47,714)(65,973)(18,259)(Gains) losses on securities(31,972)

31,61563,588

8,182

12,061

3,879

Net (increase) decrease in loans(45,245)(62,352)(17,107)

Net increase (decrease) in deposits

152,587

390,559

237,972

Net (increase) decrease in call loans and bills bought(82,885)(249,509)(166,624)

Net increase (decrease) in call money and bills sold(100,700)-

100,700

Others, net(1,653)

14,076

15,729Subtotal

230,312411,410

181,097

Interest and dividends received

52,73764,653

11,915Interest paid

(7,105)(9,947)(2,841)

Policyholders’ dividends paid

(1,048)(1,264)(215)

Income taxes paid

(16,724)(19,398)(2,674)

Net cash provided by operating activities

258,171445,452

187,281(127,015)(177,263)(50,248)

61,700-(61,700)

Purchases of securities(659,994)(1,544,414)(884,420)

Proceeds from sale and redemption of securities

661,927

1,152,322

490,394

Investments in loans(49,602)(44,140)

5,461

Collections of loans

40,002

32,673(7,329)Others, net(500)(6,364)(5,864)

Subtotal(73,482)(587,187)(513,705)

Purchases of tangible fixed assets(10,148)(4,981)

5,166

1

0

(0)

(3,586)(6,361)(2,774)-(6,750)(6,750)(87,215)(605,280)(518,064)-

28,80028,800Cash dividends paid

(6,500)(6,500)-Net cash provided by (used in) financing activities(6,500)22,30028,800

41

(45)

(87)

Net increase (decrease) in cash and cash equivalents

164,496(137,573)(302,070)

Cash and cash equivalents at beginning of the fiscal year

109,263273,760

164,496

Cash and cash equivalents at end of the fiscal year

273,760

136,186(137,573)

Increase(Decrease)

Cash flows from operating activities:

Impairment losses

Interest expenses

Cash flows from investing activities:
Investments in monetary trusts
Proceeds from sale of monetary trusts

Proceeds from sale of tangible fixed assets
Purchases of intangible fixed assets
Purchase of securities of a consolidated subsidiary
Net cash used in investing activities
Cash flows from financing activities:
Proceeds from issuance of stock

Effect of exchange rate changes on cash and cash equivalents

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

F-4

Notes to the Consolidated Financial Statements
1.

Summary of Significant Accounting Policies
Principles of Consolidation (1) Scope of consolidation
Number of consolidated subsidiaries:
5
Consolidated subsidiaries: Sony Life Insurance Co., Ltd., Sony Life Insurance (Philippines) Corporation, Sony
Assurance Inc., Sony Bank Inc., Sony Bank Securities Inc.
(2) Application of the equity method
Unconsolidated subsidiaries and affiliates accounted for by the equity method: Not applicable
Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method:
AEGON Sony Life Planning Co., Ltd. is excluded from the scope of equity method because its net income and retained
earnings are so immaterial that excluding it from the scope of equity method does not hinder a rational judgment of
SFH’s financial position and results of operations.
(3) Fiscal year-end of consolidated subsidiaries
The financial statements of Sony Life Insurance (Philippines) Corporation are prepared with a fiscal year-end of
December 31. Appropriate adjustments are made for material transactions between December 31 and March 31, thedate of the consolidated financial statements of SFH. All other subsidiaries prepare their respective financial
statements as of March 31, the same date as the consolidated financial statements of SFH.
(4) Valuation of assets and liabilities of consolidated subsidiaries
Certain assets and liabilities of consolidated subsidiaries are computed at fair value as of the respective dates when thesubsidiaries were initially consolidated.
(5) Amortization of goodwill
Goodwill is amortized using the straight-line method over five years.
Securities Securities are stated in the following manner: Securities held for trading purposes (”trading securities”) are stated at fair value
with unrealized gains and losses charged to income. The cost of such securities sold is determined by the moving-averagemethod. Held-to-maturity securities are stated at amortized cost (straight-line method) using the moving-average method.
Investment in affiliates that are not accounted for by the equity method are stated at acquisition cost calculated using themoving-average method. Other securities designated as available-for-sale securities whose fair value is readily determinable
are stated at fair value in the consolidated balance sheets based on market prices prevailing at each balance sheet date, withunrealized gains (losses), net of income taxes, included in net assets and acquisition costs calculated using themoving-average method. Other securities designated as available-for-sale securities whose fair value is not readily
determinable are stated at amortized cost (straight-line method) or at acquisition cost based on the moving-average method.
Derivative financial instruments Derivative financial instruments are stated at fair value, with changes in fair value included in income for the period in which
they arise, except for derivatives that are designated by SFH and its domestic subsidiaries (the “Companies”) as “hedging
instruments”.
Hedge accounting SFH’s banking subsidiary applies either deferred hedge accounting or fair value hedge accounting to account for transactions
it enters into to hedge interest rate risks on financial assets and liabilities. SFH’s banking subsidiary uses interest rate swaps
to offset fluctuations in interest rates on fixed-rate loans by identifying the hedged items that are grouped based on theirmaturity, in accordance with “Accounting and Auditing Treatments on Application of Accounting Standard for Financial
Instruments in the Banking Industry” (Industry Audit Committee of Japanese Institute of Certified Public Accountants No.
24). Interest rate swaps and others are used as hedging instruments to offset fluctuations in the fair value of fixed-rate bonds
which are classified as other securities. Both of the above-mentioned hedging instruments are identified so that theirsignificant terms are nearly identical to those of the hedged items. Accordingly, such hedges are considered as highly
effective, resulting in a substitution for evaluating the effectiveness of the hedging transactions.
Tangible fixed assets All tangible fixed assets, including real estate for lease, are initially recorded at cost. Subsequent expenses related to asset
improvements are capitalized or are recognized as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Companies and the cost of the item can be measured reliably.

F-5

All other repairs and maintenance charges are charged to income when incurred.
Depreciation is generally computed by the straight-line method for buildings and by the declining-balance method for otherproperty and equipment over the estimated useful lives of the assets, as follows:
Buildings
4 to 45 years
Other property and equipment
2 to 20 years
In accordance with revisions to the Japanese corporation tax law, the depreciation method for tangible fixed assets has beenchanged. Starting from April 1, 2007, tangible fixed assets acquired on and after April 1, 2007 are depreciated fully to theirmemorandum values, or ¥1. This change has had only a minor impact on SFH’s results of operations.
In accordance with the revised Japanese corporation tax law, depreciation of the remaining book value of tangible fixed assets
acquired on and before March 31, 2007 and depreciated up to the depreciable amount is computed using the straight-line
method over a period of 5 years. This change has had only a minor impact on SFH’s results of operations.
Software for internal use Software for internal use is amortized using the straight-line method mainly over 5 years, its estimated useful life.

Reserve for possible loan losses The reserve for possible loan losses is calculated by the Companies in accordance with self-assessment guidelines andwrite-off and reserve guidelines established at each subsidiary. With respect to loans to borrowers subject to bankruptcy,
court-guided rehabilitation or similar legal or formal proceedings, the Companies provide a specific reserve in the amount of
the loan balance less amounts collectable from collateral, guarantees and other means. For other loans, the Companies
provide a general reserve by applying the historical loan loss ratio determined over certain periods. Each loan is subject toasset assessment by the operational department of the relevant company in accordance with its self-assessment guidelines,
and the results of the assessment are reviewed by the respective internal audit departments, which are independent from theoperational departments, before the amount of reserve is finalized.
Reserve for employees’ bonuses The reserve for employees’ bonuses is provided for the estimated amount of bonuses the Companies are required to pay forservices provided during the current fiscal year.
Reserve for employees’ retirement benefits The reserve for employees’ retirement benefits is provided for the payment of retirement benefits to employees, in the amountdeemed accrued at the fiscal year-end, based on the projected retirement benefit obligation and the fair value of plan assets at
the fiscal year-end. Unrecognized prior service cost is amortized using the straight-line method over 10 years within theemployees’ average remaining service period at incurrence. Unrecognized net actuarial gain (loss) is amortized using thestraight-line method over 7 to 10 years within the employees’ average remaining service period, commencing from the fiscal
year immediately following incurrence. Unrecognized net obligation at transition is amortized using the straight-line
method over 15 years.
Reserve for directors’ retirement benefits The reserve for directors’ and statutory auditors’ retirement benefits is provided based on the internal regulations of SFH and
its domestic subsidiaries and calculated at the amount that would be payable if all eligible directors and statutory auditors
were to resign at the fiscal year-end.
Policy reserve Pursuant to the Insurance Business Law, SFH’s domestic life insurance subsidiary maintains a policy reserve for thefulfillment of future obligations under life insurance contracts. The policy reserve is established by the net level premium
method, which assumes a constant or level amount of net insurance premiums over the term of the relevant policy incalculating the amount of the reserve required to fund all future policy benefits. The net insurance premium is a portion of
the premium covering insurance underwriting risk, which is estimated based on factors such as mortality rates, investment
yield, surrender rates and other factors. The net level premium reserve for individual insurance contracts underwritten fromfiscal year 1996 is calculated using mortality and interest rates set by the Financial Services Agency as standard policy
reserve. Additionally, the net level premium reserve for individual insurance contracts underwritten before fiscal year 1996
is calculated using mortality and interest rates approved by the supervisor of insurance business in Japan.

F-6

Reserve for price fluctuations Pursuant to requirements under the Insurance Business Law, the reserve for price fluctuations is provided for pricefluctuations primarily related to stocks, bonds and foreign currency-denominated assets which are exposed to losses due tomarket price fluctuations. This reserve may only be used to reduce deficits arising from price fluctuations on those assets.
Translation of foreign currencies Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the foreign exchange rates in effectat each balance sheet date, whereas components of net assets denominated in foreign currencies are translated at historicalrates. The current year’s profit and loss accounts are translated into yen using the average exchange rate for the fiscal year.
Lease transactions Finance leases that do not transfer ownership of the leased property to the lessee are accounted for as operating leases.

Land revaluation On March 31, 2002, SFH’s domestic life insurance subsidiary revalued its land for operating purposes, as permitted by theLand Revaluation Law (Law No. 34, enacted March 31, 1998—the “Law”). The tax effect of the revaluation difference isaccounted for differently, depending on whether there are gains or losses; when there is a loss, a valuation allowance is fully
provided for the tax effect of the loss, and when there is a gain, the tax effect is recorded in “deferred tax liabilities on land
revaluation.” After excluding these amounts, the net revaluation difference is reported as “land revaluation” in net assets.
The revaluation method stipulated by Article 3-3 of the Law was based on the land appraisal in conformity with Article 2-5 of
the Law Enforcement Order related to the Law (Government Ordinance No. 119, effective from March 31, 1998).
Accounting for consumption taxes The consumption taxes received and paid by SFH and its domestic subsidiaries, excluding loss adjustment expenses andoperating, general and administrative expenses of SFH’s non-life insurance subsidiary, are not included in income andexpenses. Under the Consumption Tax Law of Japan, the consumption taxes paid on property and equipment are notdeductible from the consumption taxes received; they are recorded as “other assets” and amortized on a straight-line basis
over 5 years. Other non-deductible consumption taxes are charged to income as incurred.
Application of consolidated tax provision Prior to the listing of SFH’s shares on the Tokyo Stock Exchange, the consolidated tax provision, under which Sony
Corporation is the parent company, was applied to SFH and its domestic subsidiaries wholly owned by Sony Corporation.
As a listing of SFH’s shares on the Tokyo Stock Exchange, SFH and its domestic subsidiaries ceased to be wholly-owned
subsidiaries of Sony Corporation. As a result, starting from April 1, 2007, SFH and its domestic subsidiaries calculate theirtax provision (benefit) based on the assumption that they are excluded from the consolidated tax system.
Cash and cash equivalents Cash equivalents consist of highly liquid investments without significant market risks, such as demand deposits andshort-term investments with an original maturity of three months or less.

F-7

2.

Segment InformationLife
insurancebusiness
Ordinary revenues:
External customers
Intersegment
Total
Ordinary expenses

Yen in millions
As of for the year ended March 31, 2008
Non-life
insurance
Bankingbusinessbusiness
Total
Elimination

Consolidated

740,596744
741,340
702,263

55,62523
55,64952,83125,931
47
25,97923,577822,153815
822,969
778,673

(815)
(815)
(1,020)822,153
822,153
777,653

Ordinary profit
39,077
Assets, depreciation and capital
expenditure:
Assets3,660,554
Depreciation
4,195
Capital expenditure
4,223

2,817

2,401

44,296204

44,50078,645576
2,599

1,210,555
672
1,234

4,949,755
5,444
8,057

27,6958
27

4,977,450
5,452
8,085

The life insurance business consists of Sony Life Insurance Co., Ltd. and Sony Life Insurance (Philippines) Corporation, thenon-life insurance business consists of Sony Assurance Inc., and the banking business consists of Sony Bank Inc. and Sony
Bank Securities Inc.
The amount of unallocated ordinary expenses that are included in “elimination” for the year ended March 31, 2008 is ¥1,297
million, most of which are ordinary expenses of SFH.
The amount of unallocated corporate assets that are included in “elimination” for the year ended March 31, 2008 is ¥25,473
million, most of which are deposits of SFH.
3.

Investments in Securities
The following provides fair value information on securities.
Trading securities:
Yen in millions
March 31, 2008
Net valuation losses
Consolidated balance sheet amountrecorded in income
302,375(55,462)
Held-to-maturity securities with fair values:
Yen in millions
March 31, 2008
Consolidatedbalance sheet
amountBonds:
Japanese government and municipal bonds
Japanese corporate bonds
Others
Total

Gross unrealized
gains

Gross unrealized
losses50,932
4,996
807

659
83
33

(36)
(0)
-

51,5555,079
841

56,737776(37)

57,476

Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesConsolidatedbalance sheet
amount

1,511,519
476,018
126,286
335,423

51,13017,16849,364
5,676(7,092)(7,001)(3,744)(14,620)

1,555,557
486,184
171,906
326,480

2,449,248

123,339(32,459)

2,540,128

Fair value

Other securities with fair values:
Yen in millions
March 31, 2008

Bonds:
Japanese government and municipal bonds
Japanese corporate bonds
Equity securities
OthersTotal

F-8

Other securities sold during the period:

Sales
Gains on sales
Losses on sales

Yen in millions
For the year ended
March 31, 2008
672,761
24,826(2,765)

Other securities with no available fair values:

Investment in affiates
Equity securities
OthersYen in millions
March 31, 2008
1,000
4
30,195

Total

31,199The future redemption schedule of other securities with maturities and held-to-maturity securities as of March 31, 2008 is asfollows:
Yen in millions
More than 1
More than 5
1 year or lessyear to 5 years
years to 10 years Over 10 years
Bonds
Japanese government and municipal bonds
38,797138,283
992,668
436,739
84,930304,025
75,091
27,132
Japanese corporate bonds
Others48,958149,19088,04747,250Total
4.

172,687

591,500

1,155,807

511,123

Investments in Monetary Trusts
The fair value information on monetary trusts is as follows:
Monetary trusts for trading purposes:
Yen in millions
March 31, 2008
Net valuation gains recorded in
Consolidated balance sheet amountincome63,203(2,831)Other monetary trusts:
Yen in millions
March 31, 2008

Other monetary trusts

Acquisition cost
804,405

Gross unrealized
gains
31,990Gross unrealized
losses(3,926)

Consolidatedbalance sheet
amount832,469

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

5.

Per Share Information

Net income per share is calculated based on the weighted-average number of shares of common stock outstanding
during the fiscal year. For the year ended March 31, 2008, the net income per share was 11,357.53 yen. There wereno potential dilutive securities. Net assets per share, calculated based on the number of shares of common stock
outstanding as of March 31, 2008, was 120,288.66 yen.
The basis for this calculation is net income of 24,255 million yen, of which the entire portion is applicable to commonshares. The weighted-average number of shares outstanding for the year ended March 31, 2008 was 2,135,655.

F-9

SFH’s consolidated results* are prepared in accordance with accounting principles and practices generally accepted in Japan.
As such, these figures differ in significant respects from financial information reported by SFH’s parent company, Sony
Corporation, which prepares its financial statements in accordance with accounting principles and practices generally acceptedin the United States.
* The scope of consolidation for SFH’s consolidated results for the fiscal year ended March 31, 2007 includes Sony Financial Holdings, Sony
Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank Inc., and Sony Life Insurance (Philippines) Corporation. The scope of consolidationfor SFH’s consolidated results for the fiscal year ended March 31, 2008 also includes Sony Bank Securities Inc.

On May 14, 2008, Sony Corporation announced its consolidated financial results for the fiscal year ended March 31, 2008.
SFH Group companies constitute the majority of Sony Group’s Financial Services segment. However, the scope of Sony
Group’s Financial Services segment differs from the scope of SFH’s consolidated results. For the scope of Sony Group’s
Financial Services segment, please refer to the May 14, 2008, news release by Sony Corporation.
Forward-looking statements may include—but are not limited to—statements using words such as “believe,”“anticipate,” “plan,” “strategy,” “expect,” “forecast,” “predict,” “possibility” and similar words that describe future
operating activities, financial performance, events or conditions. Forward-looking statements, whether spoken or written,
are based on judgments made by the management of the SFH Group based on information that is currently available to it.
As such, forward-looking statements are subject to various risks and uncertainties, and actual results may vary
substantially from those expressed or implied in forward-looking statements. Consequently, investors are cautioned not toplace undue reliance on forward-looking statements. The SFH Group disclaims any obligation to revise forward-looking
statements in light of new information, future events or other findings.

For inquiries:
Masaaki Konoo or Hirokazu Takahashi
Corporate Communications & Investor Relations Dept.
Sony Financial Holdings Inc.
Telephone: +81-3-5785-1074

E-mail: press@sonyfh.co.jp
Website of Sony Financial Holdings Inc.

http://www.sonyfh.co.jp/index_en.html