[Presentation Material]

Sony Financial Group
Corporate Strategy Meetingfor Fiscal Year 2014

Sony Financial Holdings Inc.
June 2, 2014
Sony Financial Holdings Inc. All Rights Reserved

Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies and beliefs of the Sony Financial Group. Anystatements contained herein that pertain to future operating performance and that are not historic facts are forward-looking statements. Forwardlooking statements may include—but are not limited to—words such as “believe,” “anticipate,” “plan,” “strategy,” “expect,” “forecast,” “predict,” and“possibility” that describe future operating activities, business performance, events or conditions. Forward-looking statements, whether spoken or
written are based on judgments made by the management of the Sony Financial Group
written,Group, based on information that is currently available to itit. As
such, these forward-looking statements are subject to various 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. The Sony Financial Group disclaims any obligation to revise forward-looking statements in light of new information, future events orother findings. Sony Financial Holdings disclaims any such obligation. The information contained in this presentation does not constitute or form partof any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for 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 whatsoever.

Sony Financial Holdings Inc. All Rights Reserved2Sony Financial Group

Summary of Mid-term Management Targets for FY14–16
 Continue to steadily expand business volume in each of the Group’s businesses Life Insurance

Re-expand the Lifeplanner channel, achieve ongoing growth in thei dindependentd t agentt channelhl Non-Life Insurance

Improve profitability and achieve ongoing growth in automobile insurance,
focus on medical insurance and new types of policies

 Banking

Further expand the foreign currency and loan businesses Nursing Care

Having established a nursing care holding company in April 2014 and madesteady progress in the startup stage—establish as fourth pillar of business from long-term perspective

 Mid-term management targets:

FY13

FY16

Consolidated ordinary profit¥76.1 billion¥86.0 billion

Consolidated net income¥40.5 billion¥56.0 billion

Consolidated adjusted ROE

14.2%

Approx. 8%*

 Augment returns to shareholders:
For FY14, we expect to increase the dividend per share ¥10 year on year, to ¥40[up for the third consecutive fiscal year]
Our policy is to steadily increase dividends in line with earnings growth over the medium to long term, while taking thep
g environment into ongoingg g consideration
operating* Consolidated adjusted ROE takes into account Sony Life’s assumptions about the economic environment based on
the market environment as of March 31, 2014.

Sony Financial Holdings Inc. All Rights Reserved

3

Sony
y LifeSony Financial Holdings Inc. All Rights Reserved4Sony Life

Achieve Steady GrowthSony Life steadily increases its policy amount in force at approx.
4% per annum.
Trends of Sony Life’s policy amount in force(Individual life insurance and annuities)(Trillions of yen)Over
¥43 trillion
t illi
CAGR

4%

39.0
37 7
37.7

26.2

(FY)

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Sony Financial Holdings Inc. All Rights Reserved

20165Sony Life

Key Messages: Initiatives Toward Growth Reinitiate growth by expanding the scope of the Lifeplanner

Strengthen Sales
Capabilities in theConsulting Channel

channelhl Develop the independent agent channel to uncover diverse

customer needs

Gain
G
i FurtherF thCompetitive
Advantage Strengthen operations further in the highly competitive death

protection segment
 Make further progress on operational reforms

 By acquiring new contracts, ensure increases in corporate

Ensure Stable Growthin Corporate Value

value, as well as financial soundness
 Achieve steady growth in profit through steadily increases in

its policy amount in force
Sony Financial Holdings Inc. All Rights Reserved6Sony Life

Lifeplanner Channel
Reached a 10-year high in recruiting Lifeplanner sales employees,
a key driver of growth(Person)Number of office managers and newly recruited Lifeplanner

439
400

Newly recruited
Lif lLifeplanner

Number of
officeffi Managers
M

Appointing morecompetent Lifeplanner
as office manager
More stringent standards
for recruitment

FY03

FY04

FY05

FY06

FY07

FY08

FY09

Sony Financial Holdings Inc. All Rights Reserved

FY10

FY11

FY12

FY13

7

Sony Life

Lifeplanner Channel
In addition to expanding the channel, profitability increased,putting us back on the track of growth
N b off Lif
Number
Lifeplannerlsales
l employeesl& productivity
d ti it112
Productivity of Lifeplanner(including sales of annuity
products of
AEGON SonyS
Life
Lif insurance)i)(index of annualized premiums
from new policies*)

109
102
101

100

100

Over 4,500

99

Productivity of Lifeplanner(excluding sales of annuity
products
d t off AEGON Sony
S
Life
Lif
insurance)(index of annualized premiums
from new policies*)

4,216

.

4 066
4,066

4,121

4,133
FY15 target,
targetannounced in FY13

Over4,400
Number of Lifeplanner as ofthe end of fiscal year**(Person)

FY10

FY11

FY12

FY13

(FY15)

FY16* Productivity is indexed to FY10 = 100, calculated on the basis of annualized premiums from new policies (managerial accounting basis)** The figure as of the end of fiscal year includes the number of contracted Lifeplanner sales employees and those rehired on a fixed-term contract basis after retirement
included in the overall numbers.

Sony Financial Holdings Inc. All Rights Reserved8Sony Life

Independent Agent Channel
Ensure high and stable growth through diverse independent agent development
PerformancePf
off theh Independent
I d
d
Agent
A
Channel (Index of Annualized Premiums from New
Policies*)

CAGR6%

154

113
Nationwide shop-styleindependent agents

104

Nationwide Shop-Style Independent Agents

 Build training and support systems tohandle increase in number ofcustomers visiting shops

128
100

Key Segment-Specific Measures

Nationwide independent agents run by sales
experts formerly at other life insurers

Nationwide independent
agents run by sales
experts formerly at otherlife insurers

 Boost sales productivity for coreagentst andd strengthentth salesl supporttfor corporate customers

Regional or corporate
independent agents

Regional or Corporate Independent Agents

FY10 FY11 FY12 FY13

FY16

* Annualized premiums from new policies from the independent agent channel (managerial
accounting basis) indexed to FY10 = 100

 Increase collaboration with regional
independent agents and alliancepartners

Sony Financial Holdings Inc. All Rights Reserved

9Sony Life

Strengthen Operations in the Field of Death Protection
Reinforce sales capabilities in the field of death protection, where we enjoy astrong competitive advantage, pushing the new policy amount back toward growth

New Policy Amount (Trillions of yen)
 Enhance education systems
y
4.0

4.2

4.2

4.5
3.9

4.2

Revise our program for educating new Lifeplanner
sales employees, and enhance manager training

 Revise qualification and evaluation systems
Introduce a standard for death protection sales
capabilities into our systems for qualifying andevaluating Lifeplanner sales employees and managers

 Reinforce product development
Augment our product lineup to enhance our ability tomake proposals for death protection, taking a
consulting based approach
consulting-based

FY09 FY10 FY11 FY12 FY13 FY14
*Line item amounts are rounded below ¥100 billion.

Sony Financial Holdings Inc. All Rights Reserved10Sony Life

Operational Reform Joint Strategy ProjectUse industry-leading IT to boost consulting channel sophistication

Up to FY2013

FY2014 Onwardp(Prompt(
p Generation))
C-SAAFC
SAAF Mobile: Smartphone
Smartphone-Based
Based Sales Platform Make New Policies Paperless Give salespeople’s smartphones the samelevel of customer management function as at
customer center Present application assessment
results(underwriting conditions) whenfacing customers
customers, completing entry
procedures on the spot
Make Coverage
g Operations
p
PaperlesspGreatly reduce processing time byeliminating maintenance ledgers
Time until coverage operations are complete(Now)

Around1 weekSony Financial Holdings Inc. All Rights Reserved

As little as
1 business day

11Sony Life

Stable Growth in Corporate Value
Achieve steady growth in corporate value through the steady acquisitionof new policies as well as financial soundness
MCEV
ROEV
7 to 8%＋6.5%(Billions of yen)Over
¥1,400.0

MCEV／risk amount：184%

＋68 7
＋68.7
+55.2 +13.5

Financial soundness based on
economic value+2.7 1,221.3

1,221.3

+85.2
Othe
ers

Exp
pected existing business
con
ntributioncofImpact of a changeinterest ratess, etc.

N
New
Business value

1,064.7

664.3(Billions of yen)

30 yr
40 yr

13.3.31＋156.614.3.31

1.54%
1.64%

＋16bp
＋14bp

1.70%
1.78%

17.3.31Sony Financial Holdings Inc. All Rights Reserved

14.3.31
MCEV
The risk amount based on
economic Value (after tax)

12

Sony Life

Stable Growth in Profit
Ordinary profit for FY14 is expected to be nearly at the same level as in theprevious year. Although, we anticipate steady profit expansion afterwards(Life insurance business)(Billions of yen)

+6.0

72.7

(3.0)

(3.0)

67.2

+0.2

CAGR
approx. 5%

74.0

67.4

OthersTax hike

FY13

olicy reserves
Provision for po
related to minim
mum guaranteessfor variable life insurance

Dissolve of effe
ects related to thherevision of policcy reserve disco
ount
rate

FY12

Negative impacct fromincreasing new policies

Positive impactt fromincreasing policcy inforce

Ordinary profit

FY14Sony Financial Holdings Inc. All Rights Reserved

FY16
13

Sony Life

Sony Life Mid-term Targets
Strive to ensure continuous growth in corporate value while increasing thenumber of Lifeplanner sales employees and business volume

FY13
Number of Lifeplanner

4,216

Approx. 300
increase

Over
4,500

¥3.9
trillion

CAGR
approx. 4%

Over ¥43
O
trillion¥1.2¥12
trillion

ROEV
7 to 8%Over ¥1.4¥1 4
trillion¥67.2
billion(From FY2014)(note 1)

Policy amount in force(Individual insurance and annuities)

MCEV(note 2)

Ordinary profit(Life insurance business)

FY16

CAGR
approx.5%¥74.0
billion(Note1) The figure includes the number of contracted Lifeplanner sales employees and those rehired on a fixed-term contract basis after retirement
included in the overall numbers.
(Note 2) Sony Life’s assumptions about the economic environment based on the market environment as of March 31, 2014 for FY16 target.

Sony Financial Holdings Inc. All Rights Reserved

14ソニー銀行Sonyy AssuranceSony Financial Holdings Inc. All Rights Reserved15Sony Assurance

Key Messages
 Substantial improvement in the loss ratio in FY13

Recover profitability
andd ensure sounddprofitability

Maintain growth
and achieve stableprofits over thelong term

Maximize customer
satisfaction, theengine of growth Address the cause of increases in the loss ratio as andwhen appropriate, thereby ensuring stable and increasinglevels of profitability

 Firmly maintain its leading position in the direct insurance

market in our mainstay automobile insurance Accelerate expansion into areas other than automobile

insurance—shift away from a structure with a unipolar
focus on automobile insurance

 By
B making
ki ffurther
th iimprovementst iin service
i quality,
lit earncustomer trust and maintain their support of the brand.

Sony Financial Holdings Inc. All Rights Reserved16Sony Assurance

Direct Automobile Insurance Market
・ The automobile insurance market is generally flat; the market is seeing only gradual expansion as individual companies
raise their premium rates to improve profitability
・ Our rate of growth outpaces that of the direct insurance market as a whole, so our share of the direct market is increasing
year on year
・ Against this backdrop,
backdrop the company has remained No
No. 1 in sales of direct automobile insurance over the past 11 years
years, andthe gap between us and the No. 2 insurer has widened
Direct premiums written by major direct
insurers(Automobile insurance)

Automobile Insurance market and market
share of major direct non-life insurers(Billi(Billions
off yen))(Billions of yen)

4,000.0+3%

10.0% 80.0
9.0%

3,500.0

Sony Assurance

70.0

8 0%
8.0%
3,000.02,500.0

Total automobile insurance market(Total direct premium written)

7.0%
7.0%
6.6%
7.0%
6.2%
5.8%

60.0
50.0

6.0%

A

5.2%
4.7%

2,000.0

4.3%
3.9%
3.7%
3.3%

1,500.0

5.0%

40.0

4.0%

30.0

B
C

2.8%

1,000.0
500.0

1.7%
1.0%
0.7%
0.3%
0.0%

D

3.0%

2.3%

Market share ofMajor direct insurers

G

20 0
20.0

E

2.0%
H

10.0
1.0%

0

0 0%
0.0%

Source: Statistics of Life Insurance Business in Japan.

F0

Source: Materials officially disclosed by individual insurers.

Sony Financial Holdings Inc. All Rights Reserved17Sony Assurance

Improve Profitability and Maintain Financial Soundness
In FY13, the loss ratio on automobile insurance fell, substantially improving
profitability. Going forward, we will maintain sound profitability through initiatives toimprove the loss ratio
Earned/Incurred Loss ratio(Automobile Insurance)
74.3%

Actual＋Forecast

73.4%

Adjusted Ordinary Profit(Billions of yen)

5.0

Actual＋Former forecast

4.2
Increasesignificantly
i ifi
l

3.9
70.9%

Around 71%

Around 70%
69.3%

2.1
To around67%

Achieve further improvingpg
profitability over medium term

67.1%

0.3

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Earned/Incurred loss ratio = (Net losses paid + Provision for reserve for outstanding
losses + Loss adjustment expenses) / Earned premiums

0.1

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16
Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve

Sony Financial Holdings Inc. All Rights Reserved18Sony Assurance

Medium-to Long-term Product and Growth Strategies
In addition to maintaining our growth in mainstay automobile insurance andremaining firmly No. 1 in direct insurance, accelerate expansion into areas
other than automobile insurance to ensure stable, long-termlong term profits

Automobile

Expand customer base by augmenting our product capabilities
・Pursue rationality, progressiveness and uniquenessConducting various marketing

・Promote risk segmentation, increasing sophistication

Launch new products featuring progressive risk
segmentation that competitors do not offer
Concentrate on introducing new products and riders
・Solicit insurance policies and complete all processes via
Internet

Medical

向きあう
向きあう力～プロのカタチ～・Provide our own unique types of protection and services

Accelerate expansion of our product lineup
in the medical fieldNewbusiness
fieldsMeet diverse customer needs by increasing productcategories
・Introduce new products that leverage our strength indirect insurance
・Develop businesses which enhance mutual complementwith our mainstay products

Shift away from a structure with a unipolar focus on automobile insuranceSony Financial Holdings Inc. All Rights Reserved19Sony Assurance

Maximize Customer Satisfaction, the Engine of Growth
Making further service quality enhancements foremost, we are providing
Web/smartphone services that are unique and leverage advantages of adirect insurer
Customer satisfaction surveys in 2013
Consistently high appraisal from the thirdparty assessments of customer satisfaction
Nikkei Business, August 5, 2013, edition2013 After-Sales Service Customer Satisfaction
Ranking, Automobile Insurance Division
No. 1 (third straight year)
Oricon Fiscal 2013 Automobile Insurance with HighLevel of Customer Satisfaction, Overall Automobile
Insurance
No. 1
Association of Service Industry Productivity,
Fiscal 2013 Customer Satisfaction*
Satisfaction for
Non-Life Insurance
No. 1
HDI-Japan Fiscal 2013 Help Desk Rating Survey“Total Support Rating” Three stars (fourth straight year)“Help Desk Rating”
Three stars (second straight year)

Service quality enhancement initiativespand satisfaction
Accident responsepservice Pursue speed Reinforce Web/smartphone communication for accident response Adjust system and respondent training according to case characteristics
and customer needs

Customer center

Enhance Web support

 Enhance call support system for Web/smartphone users
 Provide consulting and customer care services by specialists.

Web/smartphone service

Become the overwhelming favorite as a
Web/smartphone non-life
non life insurer Augment Web site functionality, further enhancing usability
 Enhance services by providing unique smartphone applications[Th[Threestars
tis
i a top-levelt ll evaluation.]l ti ]

J.D. Power, 2013 Call Center Satisfaction Survey,
Non-Life Insurance Companies
Top three (second straight year)* Source: Fiscal 2013 Japanese Customer Satisfaction Index, results of fourth survey

Sony Financial Holdings Inc. All Rights Reserved20Sony AssuranceSony Assurance Mid-term Targets
Maintain increases in revenue and profits through topline expansion andprofitability improvements

FY13

FY16

Direct premiums
written¥87.3
billion

CAGR
approx. 5%¥ 100.0
billionNet Expense ratio
E. I. loss ratio (*1)
Sum of two ratios

25.6%
68.2%
93.8%

Sum of two
ratio improve

Sum of two
ratiosApprox. 93%

Ordinary profit¥ 3.0
billion

CAGR
approx. 12%¥ 4.2 billion

Adjusted ordinary
profit (*2)

¥ 4.2
billion

CAGR
approx. 5%¥ 5.0 billion* 1 Including all type of policy and loss adjustment expenses.
* 2 Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve

Sony Financial Holdings Inc. All Rights Reserved21

ソニー銀行Sonyy BankSony Financial Holdings Inc. All Rights Reserved22Sony Bank

Key Messages
Increase Business Volume
based on High Customer
Satisfaction

 Make additional efforts to sophisticate customer support,

product capabilities and website usability
 Bolster recognition and steadily increase businessvolume Enhance loans centering on mortgage loans to individual

Strengthen
St
th St
Strategict iProducts

customerst Further expand foreign currency business Secure g
growth in revenues and p
profits throughgEnsure Steady Profitgenerating Capacity

appropriate ALM operations
 Maintain a stable interest spread

Sony Financial Holdings Inc. All Rights Reserved23Sony Bank

Maximize Customer Satisfaction Levels
Continue to enhance recognition and steadily expand business operations
with high levels of customer satisfaction as the driving force
Nikkei’s financial
institution customer
satisfaction rankings
Announced in January 2014

No.

1

Ranked 1st for the seventh
consecutive year

HDI-Japan sponsored
Retail balance
ratings for support portals[Sum of deposits, investment trusts, personal loan balance]
and inquiry desks
Announced in October 2013★★★★★

(Billions of yen)

Other personal loans
Mortgage loans
Investment trusts
Foreign currency deposits
Yen deposits

Five-star rating – highest
in the banking industry

Over
3,800.0

2,962.6
2,841.2
2,621.1
2,419.6

FY2013 after-sales
after sales service
Oricon’s customer
customer satisfaction
satisfaction rankings, rankings, banking divisionmortgage loans division(Excluding regional banks)
Announced in July 2013

No.

1

Announced in August 2013

No.

106.4
359.2

1,289.8

RankedR
k d1
1stt ffor th
the seconddconsecutive year

(FY2011–FY2013)(FY2012–FY2013)

949 3
949.3

116.9

117.4

390.2

363.5

1,467.2

1,526.4

656.0
102.0
371.7

1

RankedR
k d1
1stt ffor th
the thithirddconsecutive year

860.3
749.6

1,390.5

March 31, March 31, March 31, March 31,
2011
2012
2013
2014

Sony Financial Holdings Inc. All Rights Reserved

March 31,201724

Sony Bank

Loans to Individual Customers
Increase loan balances by strengthening product value and face-to-face sales
channels to meet customers’ needs for funding throughout their lives
Mortgage loan balance
and loan-deposit rate

Strengthen and diversify
product value

All banks *Six months ended Septemberp30,, 2013
Sony Bank (based on yen deposits)

Over 80%*
Over1,300■ Mortgage loan balance(Billions of yen)

(1) Set interest rates in line with creditworthiness(2) Enhance content and information tools forgroup credit life insurance(3) Respond to customers’ needs for funding
throughout their lives－Card loans (FY14)－Loan products for seniors

949.3

Invigorate face-to-face sales channels
860.3
749.6

(1) Enhance collaboration with Sony Life’s
Lifeplanner sales employees(2) Strengthen collaboration and expand relations
with the allied real estate agents

656.0

March 31, March 31, March 31, March 31,
2011
2012
2013
2014

March 31,2017

Source: Nationwide Bank Financial Statement Analysis, Japanese Bankers Association

Sony Financial Holdings Inc. All Rights Reserved25Sony Bank

Foreign Currency Business
Push our share of individual foreign currency deposit balances to a leadership position
among Japanese banks by reinforcing the “usage” services as well as enhancing the“savings and investment” services of Sony Bank’s “Foreign Currency World®”

Market share of foreign
currency deposits
Megabank A
17%
M
Megabankb kB
10%
Megabank C
Others7%59%Sony Bank
7%
Notes: As of March 31, 2014; source for share information: Bankof Japan statistics (individual deposit balances)[Key measures for enhancing competitiveness(introduced in FY13)](1) Launched automatic savings plans for foreign currency
deposits
October 2013
(2) Provide tool to show the profitability of foreign currency
deposits
March 2014

Introduce and promote products andservices that meet customers’
customers needs◆Enhance the “usage” services
・Settlement service with multiple-currencypyfunctionality
・Web-based service for transferring foreign
currency overseas◆Expand lineup of investment products
・Provide new-type structural deposits◆Appealpp
to ppeoplep who are foreign
g currencyynovices・Appeal foreign currency accumulation andother existing products in an easier-tounderstand mannerSony Financial Holdings Inc. All Rights Reserved26Sony Bank

Maintain and Increase Profitability
Boost profitability by strategically changing the deposit structure, ensuring astable interest spread even in a low-interest-rate environment
Boost profitability throughchanges in the deposit structure
Increase the relative weight of foreign
currency deposits among total deposits

Maintain a stable interest spread
Interest
spreadRegional
banks* As of September 30, 2013¥2.3 trillion*¥1.8 trillion

Approx.
0 9%
0.9%Foreign currency
deposits
Yen ordinary
deposits
Yen time deposits

March 31,2014

March 31,2017

Source: Financial announcements by banks throughout Japan,
Japanese Bankers Association

Sony Financial Holdings Inc. All Rights Reserved27Sony Bank

Sony Bank: Mid-term Targets
By increasing added value to customers and conducting enhanced ALM operations,Sony Bank aims to achieve sustained business expansion and a robust financial
footing that is impervious to changes in the operating environment

FY13
Retail balance[Sum of deposits, investment trusts
and personal loan balance]

Gross Operating Profit(Sony Bank consolidated)

Operating Profit(Sony Bank consolidated)¥2.9
trillion¥22.9
billion¥5.6
billionFY16
CAGR
Over Approx. 9%

CAGR
Over 6%
CAGR
Over 11%

Sony Financial Holdings Inc. All Rights Reserved

Over¥3.8 trillion¥27 7 billion
¥27.7
O e
Over
¥7.0 billion28ソニーフィナンシャルグループ
Sony Financial GroupSony Financial Holdings Inc. All Rights Reserved29Sony Financial Group

Growth in Each of the Group’s Businesses
Maintain top-line growth through the steady expansion of our three core businesses

S
Sony
Lif
Life

S
Sony
Assurance
A

S
Sony
B
Bankk

Policy amount in force

Direct premiums written

Retail balance(Trillions of yen)Morethan ¥43
trillion

More than¥100 billion(Billions of yen)(Trillions Yen and foreign currency
deposits + investmentof yen)en)trusts + personal loans

Morethan ¥3.8¥3 8
trillion

100

80

60

40

20

0
FY12
Previous Current
mid-term mid-term
plan
plan

FY13

FY14

FY15

FY16

Previous Current
mid-term mid-term
plan
plan

Sony Financial Holdings Inc. All Rights Reserved

Previous Current
mid-term mid-term
plan
plan

30

Sony Financial Group

Consolidated Ordinary Revenues and Profit
 We expect consolidated ordinary revenues to reach approximately ¥1,360.0 billion by FY16
 By FY16, we are targeting consolidated ordinary profit of ¥86 billion, exceeding the pace ofour previous medium-term
medium term plan
Consolidated Ordinary Profit

Consolidated Ordinary Revenues
Changes during FY13 included
temporary factors in the life
insurance business, such as
income from separate accounts
and up-front lump payments onsome products(Billions of yen)Life iinsurance
Lifbusiness

B ki bBankingbusinessi(Billions of yen)

1 360 01,360.0

1,319.7

1,259.0

N lif iinsurance
Non-life
business

79.2

86.0
76.1

1,191.0

Last year’s midterm plan called
for approximately¥1,400 billion in
FY15

FY12

77.0

FY13

FY14(F)

Last year’s midterm plan called
for approximately¥80 billion in
FY15

FY16(F)
Previous
mid-term
plan

FY12

FY13 FY14(F)Current
mid-term
planSony Financial Holdings Inc. All Rights Reserved

FY16(F)
Previous
mid-term
plan

Current
mid-term
plan

31Sony Financial Group

Consolidated Net Income
 By FY16, we revise upward growth in consolidated net income from our previous
medium-term plan, due to Sony Life’s change in its calculation policy of reserve
for pprice fluctuations and the business expansionpof individual companies.
p
Consolidated Net Income
Life insurance
business

Non-life insurance
business

Banking business

56.0(Billions of yen)

49.0

45.0
40.5

Last year’s midterm plan called
for approximately¥37.0 billion in
FY15

FY12

FY13

FY14(F)( )FY16(F)( )Previous
mid-term
plan

Current midterm plan

Sony Financial Holdings Inc. All Rights Reserved32Sony Financial GroupOperating Income under US-GAAP [Reference]
The Sony Financial Group’s operating income under generally accepted accounting principles
and practices in the United States continues to grow steadily. We aim for this figure tosurpass ¥180.0 billion in FY16.
(Billions of yen)More than¥180.0 billion
200
Pushed up by
market factors

160

170.3

142.2

120

80

40

 SFH
SFH’s
s parent company,
company Sony Corporation,
Corporation presents its consolidated financial statements in accordance with U
U.S.
S GAAP
GAAP. The financial information for the Sony Group’sGroup sFinancial Services segment, which includes the Sony Financial Group, is presented in accordance with U.S. GAAP. Although the Sony Financial Group constitutes the
majority of the Sony Group’s Financial Services segment, our Group presents its consolidated financial statements in accordance with Japanese GAAP.
 Please see slide 40 for an explanation of the primary discrepancies and differences in scope between U.S. and Japanese accounting practices.

Sony Financial Holdings Inc. All Rights Reserved33Sony Financial Group

Enhance Shareholder Returns
 We plan to expand the dividend range in FY2014, raising dividends to ¥10 per share.
 This increase amounts to the third consecutive year of increases, from FY12 throughFY14 W
FY14.
We aimi tto augmentt shareholderhh ld returns,
t
b
based
d on our policy
li off steadilyt dilincreasing dividends in line with earnings growth over the medium to long term.

＜Trends of dividend after IPO＞
32.2

(Billions of yen)

25

26 2
26.2

26.5
21.2

20

20.9

24 1
24.1

13.6

15

Increased
Dividend

Increasedc easedDividend

10

Mid-term target for the
35.5 dividend payout ratio
30% to 40%
IIncreaseddDividend

Increased
Dividend

17.39913 04913.04910.875

8.7

8.7

6.525

6.525

6.525

FY07

FY08

FY09

FY10

FY11

FY12

¥15

¥15

¥15

¥20

¥20

¥25

5
0
Dividend per share

FY13

FY14(F)¥30¥40(Planned) (Forecast)Sony Financial Holdings Inc. All Rights Reserved34Sony Financial Group

Summary of Mid-term Group Corporate Strategy
Basic Mid-Term Management Policies
 Achieve sustained growth for the Group by further enhancing
customer satisfaction
 M
Maintaini t i a robustb t revenue bbase ththatt iis iimperviousitto changeshiin
the operating environment
 Augment shareholder returns on the basis of a stable revenue
platform and high degree of soundness

We are positioning the current and following two fiscal years as atransitional phase during which to shore up our foundation toprepare for a new stage of growth that will deliver dramaticadvances for each our Group companies over the next decadeSony Financial Holdings Inc. All Rights Reserved

35

End

Sony Financial Holdings Inc. All Rights Reserved

36Appendix

Sony Financial Holdings Inc. All Rights Reserved37Sony Financial Group (Reference 1)

Consolidated Financial Forecast for FY2014
Consolidated ordinary revenues are expected to decrease, ordinary profit is expected to remain at the same levels,and net income is expected to grow significantly.
(Billions of yen)
Consolidated ordinary revenues

FY2013(Actual)

FY2014(Forecast)

Change1,319.7

1,191.0(9.8%)

1,196.6
89.8
35.7

1,061.9
92.4
36.6(11.3%)
+2.8%
+2.2%

Consolidated ordinary profit

76.1

77.0

+1.1%

Life insurance businessBanking business

67.2
3.0
5.6

67.4
3.9
5.3

+0.2%
+29.8%(6.0%)

Consolidated net income

40.5

49.0

+21.0%

Life insurance business
Non-life insurance businessBanking business

Non-life insurance business<Segment information for ordinary revenues and ordinary profit>■ Life Insurance Business
Ordinary revenues are expected to decrease because we do not expect such an increase in lump-sum payment insurance premiums and investment income on separate
accountt due
d tot marketk t recovery as recorded
d d iin th
the previousififiscall year. H
However, we expectt steadyt d growthth iin policy
li amountt iin force.
f
O diOrdinary
profitfit isi expectedt d tto bebnearly at the same level as in the previous fiscal year. This is because we expect a higher provision for policy reserves related to minimum guarantees for variable life
insurance policies, as well as an increase in operating expenses due to the consumption tax rate rise. We do not expect any negative impact from a rise in provision ofpolicy reserves resulting from the revision of the discount rate used for calculating policy reserves in the previous fiscal year.
■ Non-life Insurance Business
Ordinary revenues are expected to increase in line with growth in net premiums written, primarily for mainstay automobile insurance. Ordinary profit is expected to risestemming from the rise in ordinary revenues and a decline in the loss ratio
ratio.
■ Banking Business
Ordinary revenues are expected to rise year on year, because we regard to stable and sustainable business growth even in an environment characterized by persistently
low interest rates. Ordinary profit is expected to decrease because we do not believe that foreign exchange transactions will be as vigorous as in the previous fiscal year,
and we expect higher operating expenses as we pursue initiatives designed to strengthen our settlement function with an eye to future growth, while we expect higher
ordinary revenues to lead to an increase in gross operating profit.
<Consolidated
Consolidated net income
income>Net income is expected to grow significantly year on year. This is because Sony Life has changed its calculation policy of the reserve for price fluctuations to accumulate
reserves up to required levels from this fiscal year while it had accumulated reserves in excess of the required levels until the previous fiscal year.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved38Sony Financial Group (Reference 2)

Adjusted ROE
 In FY13, the substantial improvement in Sony Life’s adjusted ROE (rate ofincrease in MCEV) contributed to this rise Based on interest rate assumptions as of March 31, 2014, we expect to maintainconsolidated adjusted ROE of approximately 8%

FY13Consolidated
adjusted ROE
Of whichhi hSony Life (non-consolidated)
Sony AssuranceSony Bank (consolidated)

FY16

Approx.
8%

14.2%

14.9%

7 to 8%

9.8%

Approx. 10%

4.8%

Approx. 6%

Note: Calculation of consolidated adjusted ROE is as follows.

*Sony Life’s assumptions about the economic environment based on themarket environment as of March 31, 2014 for FY16 target.

Numerator
Sony Life(non-consolidated)
Sony AssuranceSony Bank(consolidated)

Denominator

Net increase in MCEV plus dividends

The average of (MCEV at previous fiscal year-end minus
dividends plus MCEV at current fiscal year-end)

Net income+ increase in provision for catastrophe
reserve (after tax)+ increase in reserve for pricefluctuations (after tax)

The average of (net assets + catastrophe reserve (after-tax) andreserve for price fluctuations (after-tax)) as of the previous fiscal
year-end and the current fiscal year-end

Net income

The average of net assets as of the previous fiscal year-end andthe current fiscal year-end

Sony Financial Holdings Inc. All Rights Reserved39Sony Life (Reference 3)

U.S. GAAP-based Operating Income
As for profit of an insurer with growing policies in force, the following two reasons increase
profit for U.S. GAAP-based operating income of the Sony Group’s financial services segmentcomparedpwith Japanesep
GAAP-based ordinaryy p
profit of the Sonyy Financial Group:p Different accounting treatment for policy reserves (future insurance policy benefits) Accounting treatment of deferred insurance acquisition costs (recorded in U.S. GAAP only)

SFH’s consolidated results* are prepared in accordance with Japanese GAAP. As such, these figures differ in significant respects from the financial information
reported by Sony, the SFH’s parent company, which prepares its financial statements in accordance with U.S. GAAP.
Sony Financial Group’s scope of consolidation and that of Sony Group’s Financial Services segment are described below.
< Sony Financial Group’s scope of consolidation under Japanese GAAP>*SFH’s scope of consolidation includes Sony Financial Holdings Inc., Sony Life Insurance Co. Ltd., Sony Assurance Inc., Sony Bank Inc., Sony Life Insurance(Philippines) Corporation, Sony Bank Securities Inc., SmartLink Network, Inc, and SmartLink Network Hong Kong Limited It also includes AEGON Sony Life
Insurance Co., Ltd. and SA Reinsurance Ltd., as affiliated companies accounted for under the equity method. Smart Link Network, Inc. and SmartLink Network
Hong Kong Limited were included in the scope of consolidation from the second quarter ended March 31, 2012 and the fourth quarter ended March 31, 2014,
respectively Sony Bank Securities Inc
respectively.
Inc. and Sony Life Insurance (Philippines) Corporation were out of the scope of consolidation from the second quarter of theyear ended March 31, 2013 and the third quarter of the year ended March 31, 2013, respectively and thereafter.
<Scope of consolidation of the Sony Group’s Financial Services segment under U.S. GAAP>
Sony Group’s Financial Services segment includes Sony Financial Holdings Inc., Sony Life Insurance Co. Ltd., Sony Assurance Inc., Sony Bank Inc., Sony Bank
Securities Inc., SmartLink Network, Inc., and SmartLink Network Hong Kong Limited. and Sony Finance International, Inc. It also includes AEGON Sony Life
Insurance Co
Co., Ltd
Ltd., SA Reinsurance Ltd
Ltd., and SFI Leasing Company,
Company Limited as affiliated companies accounted for under the equity method.
method However
However, from thefiscal year ended March 31, 2013, Sony Finance International, Inc., and the equity results of SFI Leasing Company, Limited, are not included in the Sony
Group’s Financial Services segment. Sony Bank Securities Inc. was out of the scope of consolidation from the second quarter of the year ended March 31, 2013
and thereafter.

SFH announced [Reference Disclosure] Key Performance Figures Based on U.S. GAAP on May 14, 2014. Please refer the announcement.
http://www.sonyfh.co.jp/en/financial_info_/results_/sfh_fy2013_4q_02.pdf

Sony Financial Holdings Inc. All Rights Reserved40Sony Financial Group (Reference 4)

Financial Soundness

2014.3.31 (Actual)
Solvency margin
ratio

2,358.7%
 Conduct ongoingg g risk managementgwhichSony Life(non-consolidated)

Sony
A
Assurance

Risk amountbased oneconomic value

Solvency margin
ratio

Mid-term Policy184%

has been incorporating possible tighteningof capital requirements based on economic
value in future.
 Sony Life ensures financial soundness bykeeping its risks within a proper level of
MCEV, which is capital based on economic
value.

527.6%
 In preparation for future growth of businessSony Bank(non-consolidated)

CapitalC
it l adequacydratio

11.72%

volume and risk assets, ensure soundness
which is consistent with levels ultimately
required by Basel III.

Sony Financial Holdings Inc. All Rights Reserved41Sony Life (Reference 5)

The Risk Amount Based on Economic Value (after tax)

2014.3.31

Sony Life’s Basic Policy on
Ri k P
Risk
Preferencesf(Billi(Billions
off yen))
1,221.3
Counter party risk

(257.8)Operational risk

240.0

Marketrelated risk

variance
effect

664.3

1.3
26.3

654.5

MCEV

Insurance
risk(Break down)

The Risk Amount Based on Economic Value Aims for stable and sustainablebusiness growth in corporate value
by aggressively increasing policies
in force and underwriting insurance
risk, while maintaining sufficientsolvency based on economic
value
value.
 Prioritizes investment in assets thatmatch insurance liability
characteristics to reduce interest
rate risk pertaining to liabilities of
insurance policies with long-term
maturities, with the aim of stably
growing corporate value of life
insurance business.
*Interest rate risk amounted to ¥180.9 billion,
excluding the variance effect within marketrelated risk
risk.

Sony Financial Holdings Inc. All Rights Reserved42Sony Assurance (Reference 6)

Automobile Insurance
40%

Combined Ratio(Net Expense Ratio + Net Loss Ratio)

Net Expense Ratio
110%

35%

D
C
B
E
A

30%

105%

100%

25%
Sony Assurance

E
D

20%
FY08

FY09

FY10

FY11

FY12

Net Loss Ratio

95%

FY13

C

Sony Assurance
E.I. Loss Ratio

75%

B

70%

Sony Assurance
Net Expense Ratio+ E.I. Loss Ratio

90%

ASony Assurance
Combined Ratio

85%
E
B
C
A
D

65%

Sony Assurance
Net Loss Ratio

60%

55%
FY08

FY09

FY10

FY11

FY12

FY13

80%
FY08

FY09

FY10

FY11

FY12

FY13

Notes: Sony Assurance
Earned/Incurred loss ratio = (Net losses paid + Provision for reserve for outstanding
losses + Loss adjustment expenses) / Earned premiums.
[Earthquake insurance and compulsory automobile liability insurance are excluded
from the above calculation.]
Net loss ratio= (Net losses paid + Loss adjustment expenses) / Net premiums written
Net expense ratio= Expenses related to underwriting / Net premiums written
Source: Disclosure from each insurer

Sony Financial Holdings Inc. All Rights Reserved43Sony Bank (Reference 7)Interest Rate Assumptions by Currency* Solid lines show the assumption as of end of Jan. 2014, while dotted lines show those set as of the end of Jan. 2013
* Implied forward rates are used for the future assumption.

Sony Bank: Assumption on interest rates of each currency as of Feb. 2014.

FY2009FY2010FY2011FY2012FY2013

FY2014

Sony Financial Holdings Inc. All Rights Reserved

FY2015FY201644

Contact:
Corporate Communications & Investor Relations Department
Sony Financial Holdings Inc.
TEL： +81-3-5785-1074
Sony Financial Holdings Inc. All Rights Reserved

45