Presentation Material

Consolidated Financial Results
for the Six Months Ended September 30, 2013
andSony Life
Life’ssMarket Consistent Embedded Valueas of September 30, 2013

Sony Financial Holdings Inc.
N
Novemberb 15,
15 2013
Sony Financial Holdings Inc. All Rights Reserved

Content
 Consolidated Operating Results for the Six Months Ended September 30, 2013

P.3

 Consolidated Financial Forecast for the Year Ending March 31, 2014

P.30

 Sony Life’s MCEV and Risk Amount Based on Economic Value

P.32

as of September 30, 2013
 Appendix

P 35
P.35

Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies and beliefs of the Sony Financial
Group. Any statements contained herein that pertain to future operating performance and that are not historic facts are forward-looking
statements . Forward-looking statements may include —but are not limited to—words such as “believe,” “anticipate,” “plan,” “strategy,”p“forecast,” “predict,”pand “possibility”py that describe future operatingpg activities, business p
performance, events or conditions.
“expect,”
Forward-looking statements, whether spoken or written, are based on judgments made by the management of the Sony Financial
Group, based on information that is currently available to it. As such, these forward-looking statements are subject to various risks
and uncertainties, and actual business results may vary substantially from the forecasts 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 or other findings. The
information contained in this presentation does not constitute or form part of any offer for sale or subscription of or solicitation or
invitation of any offer to buy or subscribe for any securities, nor shall it or any part of it from the basis of or be relied on in connection
with any contract or commitment whatsoever.

Sony Financial Holdings Inc. All Rights Reserved2Consolidated Operating Results for the
Six Months Ended September 30, 2013

Sony Financial Holdings Inc. All Rights Reserved

3

Highlights of Consolidated Operating Performancefor the Six Months Ended September 30, 2013 (1)Consolidated ordinary revenues
Consolidated ordinary profitLifeiinsurancebusiness
Non-life
insurancebusiness

610.7
547 0
547.0

+11.7%

Bankingbusiness
Intersegment
adjustments*
adjustments

Consolidated+10.9%

FY12.1H

FY13.1H

Ordinary revenues

489.0

549.2

+60.1

+12.3%

Ordinary profit

30.7

30.2

(0.5)

(1.7%)

Ordinary revenues

42.3

44.9

+2.5

+6.0%

Ordinary profit

0.4

2.8

+2.4

+519.9%Ordinary revenues

16.8

17.9

+1.1

+6.9%

Ordinary profit

1.8

3.5

+1.7

+90.4%

(1.2)

(1.3)

(0.1)

－

00
0.0

01
0.1

+0.0
00

+44.0%
44 0%

Ordinary revenues

547.0

610.7

+63.7

+11.7%

Ordinary profit

33.1

36.8

+3.6

+10.9%Net income

19.7

20.8

+1.1
1.1

+5.9%
5.9%

13.3.3113.9.30

Total assets

8,096.1,

8,361.3,+265.2+3.3%%

Net assets

435.4

438.0

+2.6

+0.6%

(Billions of yen)

36.8

33.1

Ordinary revenues
O diOrdinary
profitfit(Billions of yen)(Billions of yen)

Consolidated

ChangeChange from 13.3.31*Ordinary profit in “Intersegment adjustments” is mainly from SFH.
*Comprehensive income: FY12.1H: ¥32.0 billion, FY13.1H ¥13.5 billion

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

4Highlights of Consolidated Operating Performancefor the Six Months Ended September 30, 2013 (2) Life Insurance Business: Ordinary revenues increased compared with the same period of the previous

fiscal year mainly because an increase in the investment income due to higher gains on separate
accounts, net resulting from the market recovery. Furthermore, an increase in income from insurance
premiums also contributed to the rise in ordinarypy revenues. The rise in income from insurance p
premiums
was associated with steady growth in policy amount in force, despite a decrease in lump-sum payment
insurance premiums affected by the revision of Sony Life’s insurance premium rates on some of its
products. Ordinary profit remained at the same levels as during the same period of the previous fiscal
year. This is because the positive effects stemmingyg from a recovery
y from negativegspread into positive
and a decrease in provision of policy reserves for minimum guarantees for variable life insurance wereoffset by the negative impact from an increase in provision of policy reserves resulting from the revisionof discount rate used for calculating policy reserves.
 Non
Non-life
life Insurance Business：Ordinary revenues increased year on year owing to an increase in net

premiums written primarily for its mainstay automobile insurance. Ordinary profit increased year on year
due to a decline in the loss ratio mainly led by a lower car accident ratio owing to the revision of premium
rates for automobile insurance and the introduction of a new bonus-malus system (non-fleet driver rating
system) in addition to a decline in the expense ratio
system),ratio.
 Banking Business：Ordinary revenues increased year on year due to higher gains on foreign exchangetransactions stemming from customers’ active foreign currency trading and a rise in interest income onloans led by the growing balance of mortgage loans. Ordinary profit expanded year on year owing mainly
to an improvement in net gains on bondbond-dealing
dealing transactions.
transactions
 Consolidated ordinary revenues increased 11.7% year on year, to ¥610.7 billion owing to increases inordinary revenues from all businesses: life insurance, non-life insurance and banking. Consolidated
ordinary profit increased 10.9% year on year, to ¥36.8 billion. By business segment, ordinary profit from
non-life insurance and banking businesses increased, whereas the life insurance remained at the samelevels. Consolidated net income was up 5.9% year on year, to ¥20.8 billion.

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

5Highlights of Operating PerformanceSony Life (Non-consolidated)
Ordinary revenues

Ordinary profit+12.4%

FY12.1H

FY13.1H

488.9

549.5

+60.5

+12.4%

Income from insurance premiums

428.8

437.9

+9.1

+2.1%

Investment income

56.0

107.6

+51.6

+92.3%

Interest income and dividends

52.1

58.9

+6.7

+13.0%

Income from monetary trusts, net

2.6

2.6

+0.0

+2.0%

Gains on sale of securities

1.1

0.0

(1.1)

(99.9%)

Gains on separate accounts
accounts, net

－

45 8
45.8

+45 8
+45.8

－

457.5

518.2

+60.6

+13.3%

Insurance claims and other payments

135.3

155.0

+19.7

+14.6%

Provision for policy reserves and others

242.0

294.0

+51.9

+21.5%

Investment expenses

18.7

4.0

(14.6)(78.2%)

13.5－(13.5)(100.0%)

53.6

55.8

+2.2

+4.1%

Ordinary expenses

31.3

31.3

(0.0)

(0.3%)Net income

18.4

17.6

(0.7)

(3.8%)

13.3.3113.9.30

Change from 13.3.31

Securities

5,211.5

5,564.7+353.1+6.8%

Policy reserves

5 472 95,472.9

5,766.8

+293
293.9
9

+5
5.4%
4%

Total net assets

342.3

341.1

(1.1)

(0.3%)

80.2

72.5

(7.6)

(9.6%)

5,952.7

6,247.4+294.7

+5.0%

550.6

601.5

+50.9

+9.3%

(Billions of yen)

549.5

Ordinary revenues

488.9

Ordinary expenses

31.3
31.3

(0 3%)(0.3%)(Billions of yen)

◆ Ordinary revenues increased year on year.
Ordinary profit remained at the same levels.
◆ A risei iin iincome ffrom iinsurance premiumsi
was associated
i t dwith steady growth in policy amount in force, despite adecrease in lump-sum payment insurance affected by therevision of Sony Life’s insurance premium rates on some ofits products.
gg
gains on◆ Investment income increased due to higher
separate accounts, net resulting from the market recovery.
◆ Ordinary profit remained at the same levels. This is because
the positive effects stemming from a recovery from negative
spread into positive and a decrease in provision of policy
reserves for minimum guarantees for variable life insurance
were offset by the negative impact from an increase inprovision of policy reserves resulting from the revision of
discount rate used for calculating policy reserves.

Losses on separate accounts, net
Operating expenses(Billions of yen)

Net unrealized gains on other securities,
net of taxes
Total assets
Separate account assets

ChangeLine item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

6Overview of PerformanceSony Life (Non-consolidated)<Reasons for changes>

FY12.1H

FY13.1H

Change2,013.9

1,874.8(6.9%)

Lapse and surrender amount

956.1

876.4

(8.3%)

Lapse and surrender rate

2.65%

2.32%

(0.33pt)

Policy amount in force

36,706.8

38,357.1+4.5%◆ Decreased mainly in family income
insurance. Moreover, new policy
amount decreased mainly in interest
rate-sensitive whole life insurance
insurance,
reflecting the revision of insurance
premium rates.

Annualized premiums from new policies

32.1

30.1

(6.2%)◆ Decreased mainly in term-life insurance.

Of which,hi h third-sectorthi dt products
d t

81
8.1

69
6.9

(14 5%)(14.5%)

648.5

681.4

+5.1%

153.1

165.0

+7.8%

(Billions of yen)

FY12.1H

FY13.1H

ChangeGains from investment, net (General account)

50.7

57.7

+13.7%

Core profit

33.3

33.5

+0.8%

Positive (Negative) spread

(0 4)
(0.4)

33
3.3

－

(Billions of yen)

New policy amount

Annualized premiums from insurance in force
Of which, third-sector products

Non-consolidated solvency margin ratio

13.3.3113.9.30

2,281.8%

2,325.0%

Changefrom 13.3.31+43.2pt◆ Decreased mainly in educational
endowment insurance and interest
rate-sensitive whole life insurance, due
to the revision of insurance premium
rates. In the third-sector insurance
products, sale of lump-sum payment
whole life nursing-care insurance
decreased.
◆ Core profit remained at the same levels.
This is because the positive effects
stemming from a recovery fromnegative spread into positive and adecrease in provision of policy reserves
for minimum guarantees for variable life
insurance were offset by the negative
impact from an increase in provision ofpolicy reserves resulting from therevision of discount rate used for
calculating policy reserves.

Notes:
1. Figures for new policy amount, lapse and surrender amount, lapse and surrender rate, policy amount in force,
annualized premiums from new policies and annualized premiums from insurance in force are calculated as
the total of individual life insurance and individual annuities.
2 . The lapse and surrender rate shows the ratio derived by dividing the amount of lapses and surrenders, notadjusted for policy amount decreases, increases, and reinstatements, by the policy amount in force at the
beginning of the fiscal year.
3. The plus amount in negative spread indicates positive spread.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

7

Operating Performance :Sony Life (Non-consolidated) (1)
Number and Amount of New Policies[ Reference]
4Q(3M) Number and Amount of New Policies(Individual Life Insurance + Individual Annuities)
New policy amount

Number of new policies

New policy amount

Number of new policies(Thousands of policies)(Thousands of policies)((Trillions of yyen)) 283

274

246

3.0

180

(Trillions of yen)

(10 1%)(10.1%)+31.9%
1.5

1.23
137
2.0

2.05

2.01

1.87

1.0

0.96

137
0.97

+26.9%(6.9%)

1.0

0

0.5

0
Line item amounts are truncated below ¥10 billion; numbers of policies aretruncated below 1,000 policies; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

8Operating Performance :Sony Life (Non-consolidated) (2)Quarterly Trend on New Policy Amount(Billions of yen)

New policy amountLine item amounts are truncated below ¥100 million.

Sony Financial Holdings Inc. All Rights Reserved

9Operating Performance :Sony Life (Non-consolidated) (3)Annualized Premiums from New Policies(Individual Life Insurance + Individual Annuities)
Annualized premiums from new policies

Of which, third-sector(Billions of yen)

[ Reference]
4Q(3M) Annualized Premiums from New Policies
Annualized premiums from new policies
Of which, third-sector(Billions of yen)

22.0
+24.8%

33.2

32.1

30.1

17.2

17.6

(6.2%)+29.1%

81
8.1

81
8.1

(14.5%)

69
6.9

3.9

40
4.0

5.2

Line item amounts are truncated below ¥100milliom; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

10Operating Performance :Sony Life (Non-consolidated) (4)Number and Amount of Policies in Force

Annualized Premiums from Insurance in Force(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)

Policyy amount in force

50

Annualized premiums from insurance in force

+5.9%

6.16

6.04

(Billions of yen)

+2.0%
6

40

36.7

Of which, third-sector
third sector(Millions of policies)(Trillions of yen)

5.82

Number of p
policies in force

+4.5%

648 5
648.5

+5.1%

+1.7%

38.3

37.7

681.4

669.9

5

+1 5%
+1.5%
4

30

3
20
2

+7.8%

10
1

0

153.1

158.6

+4.0%
4 0%

165.0

0

12.9.30

13.3.3113.9.30

Line item amounts are truncated below ¥100 billion; numbers of policies aretruncated below 10,000 policies; percentage change figures are rounded.

Line item amounts are truncated below ¥100 million;
percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

11

Operating Performance :Sony Life (Non-consolidated) (5)Lapse and Surrender Rate*(Individual Life Insurance + Individual Annuities)
Lapse and surrender rate (Annual)

Lapse and surrender rate (1Ｈ)

(%)

5.93

5.31

(0.33ｐｔ)

2.95

2.65

2.32

*The
The lapse and surrender rate shows the ratio derived by dividing the amount oflapses and surrenders, not adjusted for policy amount decreases, increases, andreinstatements, by the policy amount in force at the beginning of the fiscal year.

Sony Financial Holdings Inc. All Rights Reserved

12

Operating Performance :Sony Life (Non-consolidated) (6)Income from Insurance Premiums

428.8 +2.1%

437.9

Interest Income and Dividends(Billions of yen)

58.9

395.7

52 1
52.1

+13.0%

47.4

Line item amounts are truncated below ¥100 million; percentage figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

13

Operating Performance :Sony Life (Non-consolidated) (7)Core Profit

Ordinary Profit(Billions of yen) *Included ¥3.6 billion of reversal ofreserve for outstanding claims related
to the Great East Japan Earthquake.

31.6*

33.3

(Billions of yen)

33.5

+0.8%

31.3

31.3
28 5
28.5

(0.3%)(Reference) Main differences from Core Profit(Reference) Impact on core profit

FY11.1H(Billions of yen)

FY11.1H FY12.1H FY13.1H
(1.9)
(0.4)
3.3

Positive (Negative) spread
Effects by the revision of policy reserve discount rate

－

－

(6.0)

Provision of policy reserves for minimum guarantees forvariable life insurance in the general account assets

(4 8)
(4.8)

(4 0)
(4.0)

(1 2)
(1.2)

*The plus amount in negative spread indicates positive spread.

(Billions of yen)

FY12.1H

FY13.1H

Capital gains (losses)

(1.1)

0.1

(0.0)

Provision of contingency reserve

(1.7)

(1.9)

(2.1)

*“Provision of policy reserves for minimum guarantees for variable life insurance
in the general account assets
assets” and “Provision
Provision of contingency reserve
reserve” aredescribed as negative amount.
Line item amounts are truncated below ¥100 million; percentage figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

14

Operating Performance :Sony Life (Non-consolidated) (8)Number of Lifeplanner Sales Employees+40(Number)

4,125
[110]
(2)

0

Note: Figures in [ ] show the numbers of Lifeplanner sales employees (rehired on a fixed-term contract basis after retirement)
included in the overall numbers,, those who have reached retirement age
g but who continue to work as Lifeplannerpsales
employees that meet certain sales conditions and other requirement.
* “Lifeplanner” is a registered trademark of Sony Life.

Sony Financial Holdings Inc. All Rights Reserved

15

Operating Performance :Sony Life (Non-consolidated) (9)Breakdown of General Account Assets
13.3.3113.9.30

Amount%Amount

%4,561.0

84.4%

4,848.3

85.9%

Japanese stocks

31.1

0.6%

36.0

0.6%

Foreign securities

62.0

1.1%

69.6

1.2%

Foreign stocks

25.4

0.5%

26.3

0.5%

Monetary trusts

306.1

5.7%

302.5

5.4%

(Billions of yen)Japanese governmentpbonds
and corporate<Asset management review>
On the asset side, we lengthened the duration of
securities held to match the liability characteristics
of insurance policies with long-term maturities withthe aim of reducing interest rate risk.
Japanese government and corporate bonds:
Continue to accumulate ultralong-term bonds in FY13.
<Bond duration>
Mar. 31, 2012 19.2 years
Mar. 31, 2013 19.9 years
Sep. 30, 2013

Policy loans

145.0

2.7%

149.7

2.7%

Real estate

70.3

1.3%

67.3

1.2%

C
Cash
and call loans

103 3
103.3

1 9%
1.9%

4 4
45.4

0 8%
0.8%

Others

97.7

1.8%

100.4

1.8%

5 402 1
5,402.1

100 0%
100.0%

5 645 95,645.9

100 0%
100.0%

Total

19.7years■ Investment in the monetary trusts is mainly into Japanese
government and corporate bonds.
■ The holding ratio on the real status, of Japanese
government and corporate bonds including those invested in monetary trusts in the general account assets:
As of Sep. 30, 2013: 91.2%, (As of Mar. 31, 2013: 90.1%)

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

16

Operating Performance :Sony Life (Non-consolidated) (10)Non-consolidated solvency Margin Ratio(%)+43.2pt

2,325.0

2,281.8
1,980.40Sony Financial Holdings Inc. All Rights Reserved

17

Operating Performance:
AEGON Sony Life Insurance*AEGON Sony Life Insurance sells individual variable annuities.

Number and Amount of Policies in Force

Number and Amount of New Policies
New policy amount

Number of new policies[ ](Hundreds of policies)(Billions of yen)

P li amountt iin fforce
PolicyNumber of policies in force[ ](Hundreds of policies)(Billions of yen)

*AEGON Sony Life Insurance is an equity method company, 50-50 joint venture established by Sony Life and AEGON Group.
(Billions of yen)

FY12.1H

FY13.1H

Change(Reference) FY12

Ordinary revenues

18.3

85.9

+67.5

+368.4%

58.6

Ordinary profit (losses)

(1.1)

(1.6)

(0.5)

－

(2.4)

Net income (losses)

(1.2)

(1.7)

(0.5)

－

(2.5)

Sony Financial Holdings Inc. All Rights Reserved

Line item amounts are truncated below ¥ 100 million;
numbers of policies are truncated below 100 policies;
percentage change figures are rounded.

18

Highlights of Operating PerformanceSony Assurance
Ordinary revenues

Ordinary profit

FY12.1H

FY13.1H

42.3

44.9

+2.5

+6.0%

Underwriting income

41.8

44.2

+2.4

+5.8%

Investment income

0.4

0.5

+0.1

+22.7%

41.9

42.0

+0.1

+0.3%

Underwriting expenses

31.7

31.7

+0.0

+0.0%

Investment expenses

0.0

0.0

(0.0)

(81.4%)

Operating, general andOperatingadministrative expenses

10.0

10.2

+0.1

+1.3%

Ordinary profit

0.4

2.8

+2.4

+520.0%Net income

0.2

1.8

+1.6

+669.8%13.3.3113.9.30

Underwriting reserves

70.6

74.6

+4.0

+5.8%

Total net assets

19.9

21.8

+1.9

+9.7%

Total assets

127.4

134.4

+7.0

+5.5%

(Billions of yen)

42.3

+6.0%

44.9

Ordinary revenues

Ordinaryy expenses
p

2.8+520.0%0.4(Billions of yen)

◆ Ordinary revenues and ordinary profit increased
year on year.
◆ Ordinary revenues increased year on year, due
to an increase in net premiums written for its
mainstay automobile insurance.
insurance◆ Ordinary profit increased due to a decline in theloss ratio mainly led by a lower car accident
ratio owing to the revision of premium rates forautomobile insurance and the introduction of a
new bonus
bonus-malus
malus system (non-fleet(non fleet driver
rating system), in addition to a decline in the
expense ratio.

(Billions of yen)

ChangeChange from
13.3.31

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

19Overview of Performance:
Sony Assurance<Reasons for changes>(Billions of yen)

FY12.1H

ChangeFY13.1H

Direct premiums written

41.3

43.6

+5.6%

Net premiums written

41.8

44.2

+5.8%

Net losses paid

23.1

23.2

+0.7%

Underwriting profit

0.0

2.3

－

Net loss ratio

62.0%

59.6%

(2.4pt)Net expense ratio

25.7%

24.6%

(1.1pt)Combined ratio

87.7%

84.2%

(3.5pt)◆ Increased mainly in its mainstay
automobile insurance.
◆ Decreased owing to the revision ofpremium
i
rates
t for
f automobiletbilinsurance and the introduction of a
new bonus-malus system.
◆Declined due to a p
properp control of
insurance acquisition cost, in
addition to a rise in automobile
insurance premiums.

Notes:Net loss ratio = (Net losses paid + Loss adjustment expenses ) / Net premiums written.
pratio = Expensesprelated to underwritingg / Net p
premiums written
Net expense

Number of policies in force
Non-consolidated
Solvency margin ratio

13.3.3113.9.30

1.55 million

1.57 million

504.2％

547.2%

Change from 13.3.31+0.02 million+1.5%+43.0pt

Note: The number of policies in force is the total of automobile insurance and medical and cancer insurance,
which accounts for 99% of net premiums written.
Line item amounts are truncated below ¥ 100 million;
numbers of policies are truncated below 10,000 policies;
percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved20Sony Assurance’s Underwriting Performanceby Type of Policy
Direct Premiums Written

Net Premiums Written

FY12.1H

FY13.1H

Change

Fire

111

115

+3.5%

Marine－－－Personal accident*

3,895

4,124

+5.9%

Voluntary automobile

37,29339,391

+5.6%

－

－

－

41 30041,30043 632
43,632

+5 6%
+5.6%

(Millions of yen)Compulsory
automobile liability
Total

Net losses paid
FY13.1H

Change
g

Fire

0

0

+1.3%

Marine14277(45.8%)

P
Personall accident*
id t*

941

1 010
1,010

7 2%
7.2%

Voluntary automobile

21,562

21,667+0.5%

Compulsory
automobile liabilityy

489

544

+11.1%

23,13723,299

+0.7%

Total

FY13.1H

Change

Fire

73

82

+12.4%

Marine74

68(7.0%)

Personal accident*

4,009

4,254

+6.1%

Voluntary automobile

37,15539,264+5.7%

Compulsory
automobile liability

532

608

+14.3%

41 84541,84544 27944,279

+5 8%
+5.8%

Total

*SURE, medical and cancer insurance is included in personal accident.

FY12.1H(Millions of yen)

FY12.1H(Millions of yen)Sony Financial Holdings Inc. All Rights Reserved

Line item amounts are truncated below ¥ 1 million;
percentage change figures are rounded.

21

Operating Performance:
Sony Assurance (1)Ordinary Profit andAdjusted Ordinary Profit

Net Premiums Written andNumber of Policies in Force
Voluntary automobile insurance
Others

Personal accident insurance(Billions of yen)

Ordinary profit

Adjusted ordinary profit

Number of policies in force

3.3(Millions of policies)(Billions of yen)

1.53

+2.8%

1.57

+5.8%

44.2 0.7

2.8

1.44
39 4
0.4
0
4 39.4
3.7
35.2

0.6

41.8
4.0

37.1

+520.0%

42
4.2

39.2

0.7

0.7
04
0.4
(0.1)

*Adjusted ordinary profit =Ordinary profit - Provision (Reversal) for
catastrophe reserve, net(Reference) Provision (Reversal) for catastrophe reserve, net

The number of policies in force is the total of automobile insurance and medical
and cancer insurance policies, which account for 99% of net premiums written.
More than 90% of personal accident insurance is medical and cancer insurance.

Provision (Reversal) for catastrophe reserve, net(Billions of yen)

FY11.1H

FY12.1H

FY13.1H

+0.0

+0.6

(0.4)

*Provision for catastrophe reserve is described as negative amount.
Line item amounts are truncated below ¥100 million; numbers of policies aretruncated below 10,000 policies; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

22

Operating Performance:
Sony Assurance (2)Earned/Incurred Loss Ratio +Net Expense Ratio
Earned/Incurred loss ratio

(%)

98.1

98.9

(Reference) Combined Ratio(Net Loss Ratio+ Net Expense Ratio)
Net loss ratio

Net expense ratio

96.1

Net expense ratio

(%)

99.0
90.5
(8.5pt)

89 0
89.0

89 2
89.2

85.7

87.7

84.2
(3.5pt)(7.4pt)(2.4pt)(1.1pt)(1.1pt)Notes:
Earned/Inc rred loss ratio = (Net losses paid + Provision
Earned/Incurred
Pro ision for reserve
reser e for outstandingo tstanding losses+ Loss adjustment expenses) / Earned premiums[Earthquake insurance and compulsory automobile liability insurance are excluded
from the above calculation.]

Notes:Net loss ratio = (Net losses paid + Loss adjustment expenses ) / Net premiums written
Net expense ratio = Expenses related to underwriting / Net premiums writtenSony Financial Holdings Inc. All Rights Reserved

23

Operating Performance:
Sony Assurance (3)Non-consolidated solvency Margin Ratio(%)

557.8%

504 2%
504.2%

547.2%+43.0pt

Sony Financial Holdings Inc. All Rights Reserved

24Highlights of Operating Performance:
Sony Bank (Consolidated/Non-consolidated)
Consolidated ordinary revenues
Consolidated ordinary profit

+6.9%

16 8
16.8

<Consolidated>

17.9(Billions of yen)

FY12.1H

FY13.1H

ChangeConsolidated ordinary revenues

16.8

17.9

+1.1

+6.9%

Consolidated ordinaryyp
profit

2.1

3.5

+1.4

+68.1%

Consolidated net income

1.8

2.2

+0.3

+21.4%

FY12.1H

FY13.1HO diOrdinary
revenues

15 2
15.2

16 7
16.7

+1.5
15

+10.2%
10 2%

Gross operating profit

8.9

11.0

+2.0

+22.6%Net interest income

8.3

9.9

+1.5

+18.5%Net fees and commissions

0.0

(0.1)

(0.1)

―

Net other operating income

0.5

1.2

+0.6

+117.7%

General and administrative
expenses

6.9

7.2

+0.3

+4.4%

p
g profitp
Net operating

2.0

3.7

+1.7

+81.7%

Ordinary profit

1.9

3.6

+1.7

+89.6%Net income (loss)

(0.5)

2.3

+2.8

―

13 3 3113.3.31

13 9 30
13.9.30

67.8

70.3

+2.5

+3.8%

6.5

6.2

(0.2)

(4.0%)

2,005.0

1,966.2(38.8)(1.9%)<Non-consolidated>(Billions of yen)35
3.5
+68.1%

2.1(Billions of yen)<Consolidated>◆ Ordinary profit increased year on year due to higher gains
on foreign exchange transactions stemming from customers’
customers
active foreign currency trading and a rise in interest income onloans led by the growing balance of mortgage loans.
<Non-consolidated>◆ Both gross operating profit and net operating profit
increased yyear on year.
y-Net interest income increased owing to a rise in interest
income on loans led by a growing balance of mortgage loans,
and a decrease in interest expenses.
-Net other operating income increased due mainly to an
improvement in net gains on bond-dealing transactions, inaddition to higher gains on foreign exchange transactions
stemming from customers’ active foreign currency trading.

(Billi(Billions
off yen))Total net assets
Net unrealized gains onother securities, net of taxes
Total assets

ChangeChange from 13
13.3.313 31Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved25Overview of Performance:
Sony Bank (Non-consolidated) (1)12.9.30

13.3.3113.9.30

Change from
13.3.31

Customer assets

1,921.5

1,974.3

1,930.7(43.6)(2.2%)

Deposits

1,819.3

1,857.4

1,813.0(44.3)(2.4%)

Yen

1,456.0

1,467.2

1,435.1(32.1)(2.2%)

363 3
363.3

390 2
390.2

377 9
377.9

(12 2)(12.2)(3 1%)(3.1%)

Investment trusts

102.1

116.9

117.6

+0.7

+0.6%

Loans outstanding

898.6

970.2

1,009.5

+39.3

+4.1%

Mortgage loans

802.9

860.3

899.6

+39.2

+4.6%

Others

95.6

109.8

109.9

+0.0

+0.1%

91

92

94

Non-performing assets Ratio(Based on Financial
Reconstruction Law) *2

0.44%

0.41%

0.39%

Capital adequacy ratio(d(domesticti criteria)
it i ) *3

11.18%

11.98%

11.99%+0.01pt
0.01pt

9.30%

8.85%

9.14%

+0.29pt(Billions of yen)

Foreign currency

Number of accounts((10 thousand))Tier 1 ratio*1+1<Reasons for changes>◆ Yen deposit balance decreased
g to lower interest rates
owing
offered by Sony Bank thaninvestment return of other financial
products.
◆ Foreign currency deposit balance
decreased due to an increase in
selling to lock in profits led byyen depreciation.

◆ Loan balance increased due an
increase in the balance ofmortgage loans(0.02pt)◆ Non-performing assets ratio was
kept at an extremely low level.

*1 Loans in others include corporate loans of ¥103.8 billion.
*2 Balance of p
problem assets based on the Financial Reconstruction Law / Total credit exposurep*3 Please refer to the graph of the non-consolidated capital adequacy ratio (domestic criteria) on P29.

Line item amounts are truncated below ¥100 million;
numbers of accounts are truncated below 10 thousands accounts;
percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved26

Overview of Performance:
Sony Bank (Non-consolidated) (2)<Reference> On Managerial Accounting Basis<Reference> Interest Spread(Managerial Accounting Basis)

FY12.1H

FY13.1H

8.9

10.9

+2.0

+22.7%

①

8.5

9.1

+0.5

+6.8%

②

0.2

0.4

+0.2

+81.2%Net other operating income*3

0.1

1.3

+1.2

－

Gross operating profit (core profit)(A)＝①＋②

8.8

9.6

+0.8

+9.1%

Operating expenses and otherexpenses ③

6.8

7.2

+0.3

+4.8%

Net operating profit (core profit)＝(A)－③

1.9

2.4

+0.4

+24.2%(Billions of yen)
Gross operating profit
Net interest income*1
Net fees and commissions*2

Change■ Managerial accounting basis
The following
g adjustmentsjare made to the figuresgon a financial accounting
g basis toaccount for profits and losses more appropriately.
*1: Net interest income: Includes profits and losses associated with fund investment
recorded in net other operating income, including gains or losses from currency
swap transactions.
*2: Net fees and commissions: Includes profits and losses for customer dealings inforeign currency transactions recorded in net other operating income.
*3: Net other operating income: After the above adjustments (*1 and *2), consists ofprofits and losses for bond and derivative dealing transactions.
■ Core profit
Profits and losses exclude net other operating income, which includes those on
b d andbond
dd
derivative
i ti ddealingli ttransactions,ti
andd stands
t d ffor S
Sony BBank’sk’ b
basic
i profits.
fit

Yield on investment
Interest spread

Yield on financing(%)+0.03pt

0.93

Note: Interest spread=(Yield on investment)-(Yield on financing)Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

27

Operating Performance:
Sony Bank (Non-consolidated) (1)Loans

Deposits
Yen depositspForeigng currency
y depositspMortgageg g loans

Others(Billions of yen)(Billions of yen)

1,762.2

1,857.4

970.2

1,813.0+39.3

1 009 5
1,009.5
109.9*Corporate*Corporateloans
loans
ofof¥103.8¥103.8billion.
billion.

835.5(44.3)
377.9

899.6

1,435.1

Line item amounts are truncated below ¥100 million.

Sony Financial Holdings Inc. All Rights Reserved

28

Operating Performance:
Sony Bank (Non-consolidated) (2)Balance of Securities by Credit Rating
AAA
BBB

Non-Consolidated Capital Adequacy Ratio(Domestic Criteria)
Capital adequacy ratio

AA
A
OthersTier1 ratio(%)(Billions of yen)

11.98
11.58
912.9

11.99

908.8

+0.29 pt

784.9
(123.8)+0.01pt
0.01pt

9.63

9 14
9.14
8.85

*Calculated based on the standard FSA Notification No. 19 (2006), which
establishes standards based on Article 14-2 of the Banking Act of Japan for
determining the capital adequacy of a bank in light of the assets held by thebank.
Amounts are truncated below ¥100 million.

Sony Financial Holdings Inc. All Rights Reserved29Consolidated Financial Forecast
for the Year Ending March 31, 2014

Sony Financial Holdings Inc. All Rights Reserved30Consolidated Financial Forecast
for the Year Ending March 31, 2014
SFH’s forecast of consolidated financial results for FY2013 is unchanged from the forecast announced on May 9, 2013,
while forecasts of the non-life insurance and banking businesses are revised upward.
(Billions of yen)

FY2012(Actual)

FY2013(Forecast)

ChangeConsolidated ordinary revenues

1,259.0

1,222.0(2.9%)

Life insurance business

1,142.3
84.7
34.3

1,099.988.5⇒89.5
34.0⇒34.9(3.7%)

Consolidated ordinary profit

79.2

69.0

(12.9%)

Life insurance businessBanking business

72.7
2.3
39
3.9

61.4
3.0⇒3.8
4 3⇒5 2
4.3⇒5.2(15.5%)+30.4%⇒+60.2%+10 3%⇒+31 5%+10.3%⇒+31.5%

Consolidated net income

45.0

37.0

(17.9%)

Non-life insurance businessBanking business

Non-life insurance business+4.5%⇒+5.7%(0.9%)(0.9%)⇒+1.7%
1.7%■Life insurance business
The forecast of ordinary revenues and ordinary profit remains unchanged because the actual results for the first half of the fiscal year were close to theamounts we had expected.
p■Non-life insurance businessWe have revised our forecast for ordinary revenues for the full fiscal year because the net premiums written in its mainstay automobile insurance
during the first half were higher than we had expected, and we expect this trend will continue in the second half. We have also revised ordinary
profit for the full fiscal year because the loss ratio for the first half was significantly lower than we had expected, in addition to the increase in ordinary
revenues.
■Banking businessWe have revised our forecast for ordinary revenues for the full fiscal year because of higher-than expected income from gains related to foreignexchange transactions during the first half. We have also revised our forecast for ordinary profit for the full fiscal year because of better-than-expected
first-half performance due to an improvement in net gains on bond-dealing transactions.
As for Sony Life’s calculation policy of the reserve for price fluctuations, Sony Life accumulate reserve in excess of a required level in line with its policyin this fiscal year ending March 31, 2014. However, Sony Life will change its policy to accumulate reserve up to a required level from the next fiscal year
ending March 31, 2015.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved31Sony Life
Life’ss MCEV and
Risk Amount Based on Economic Valueas of September 30, 2013

Sony Financial Holdings Inc. All Rights Reserved32Sony Life’s MCEV as of September 30, 2013
13.3.3113.6.30

13.9.30

Change from
13.3.31

Change from
13.6.30

1,064.7

1,149.9

1,158.2

+93.5
93.5

+8.2
8.2

Adjusted net worth

770.8

572.5

682.1

(88.7)+109.6

Value of existing business

293.9

577.4

476.1

+182.2(101.3)(Billions of yen)

MCEV

Notes:
1. Calculated MCEV for policies in force as of June 30 and September 30, 2013 by using updated lapse and surrender rate and economic assumptions.
2. Adopted simplified method for a part of MCEV calculations as of June 30 and September 30, 2013.

13.3.3141.6(12M)
3.5%(Billions of yen)

New business value
New business margin13.6.3017.1(3M)
6.5%

13.9.30
29.7(6M)
6.3%(*) New business margin equals new business value divided by present value of premium income.

 MCEV as of September 30
30, 2013 increased ¥8.2
¥8 2 billion dduee mainl
mainly to a stead
steady acq
acquisition
isition of ne
new policies despite
lower interest rates in the ultra-long term than as of June 30, 2013.
 New business margin as of September 30, 2013 was up from March 31, 2013, due mainly to higher interest rates in
the ultra-long term and the revision of Sony Life’s insurance premium rates on some of its products from April
2013 onward.
onward New business margin was down from June 30,
30 2013 due mainly to lower interest rates in the ultraultra
long term.
*Please see page 43 for trend on JGB yields.

* Please keep in mind that the validity of these calculations has not been verified by outside specialists.
Sony Financial Holdings Inc. All Rights Reserved33Sony Life’s Risk Amount Based on Economic Valueas of September 30, 2013
(Billions of yen)

13.3.3113.6.30

13.9.30

Insurance risk

605.6

597.2

610.4

Market-related risk

289.9

234.5

260.1

234.2

175.4

201.0

Operational risk

26 0
26.0

25 0
25.0

25 2
25.2

Counter party risk

2.3

1.7

1.5

Variance effect(262.5)(241.3)(253.7)

The risk amount based on economic value

661.3

617.0

643.5

Of which, interest rate risk*(Billions of yen)

MCEV

13.3.311,064.7

13.6.30
1,149.9

13.9.30
1,158.2(*) Interest amount excluding the variance effect within market-related risk.

 Maintained capital adequacy by controlling market-related risk.
Notes
1. The risk amount based on economic value refers to the total amount of Sony Life’s risks, comprehensively examined and including insurance risk
and market-related risk.
2. The solvency risk capital on an economic value basis is calibrated at VaR (99.5) over one year and based on the internal model, which is a similar
but modified model based on the EU Solvency II (QIS5) standard method.

* Please keep in mind that the validity of these calculations has not been verified by outside specialists.

Sony Financial Holdings Inc. All Rights Reserved34

Appendix

Sony Financial Holdings Inc. All Rights Reserved35

Recent Topics 1
AEGON Sony Life Insurance
Launch of sales: December 1, 2009
Common stock: ¥22 billion (including capital surplus of ¥11 billion)
Equity ownership: Sony Life insurance Co., Ltd. 50%, AEGON international B.V. 50%
Marketing products: Individual Variable Annuities
Sales Channels: Lifeplanner sales employees and partner Banks (13*) *As of Nov. 15, 2013
SA Reinsurance
Reins rance Ltd
Ltd.
Established： October 29, 2009
Common stock: ¥8 billion
Equity ownership: Sony Life insurance Co., Ltd. 50%, AEGON international B.V. 50%
Business： Reinsurance business* AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint ventures established by Sony Life and AEGON Group.

Sony Bank’s Mortgage Loans through Sony Life
■Sony Life accounts for 25% of the balance of mortgage loans as of September 30, 2013
Sony Life accounts for 20% of the amount of new mortgage loans for FY13.1H*Sony Life started handling banking agency business in January 2008.

Sony Assurance’s Auto Insurance Sold by Sony Life
■Sony Life accounts for approx. 5% of new automobile policies for FY13.1H*Sonyy Life started handlingg automobile insurance in May
y 2001.

“Lifeplanner” is a registered trademark of Sony Life Insurance Co., Ltd.

Sony Financial Holdings Inc. All Rights Reserved36

Recent Topics 2<Highlight for FY2013.1H>
2013-7-25

SA Reinsurance increased its capital to ¥8 billion form ¥5 billion*

2013-8-1

Sony Assurance enhanced special benefit service for its policyholders with renewal contract.

2013-8-12

SFH announced the revision of dividend forecast for the year ending March 31, 2014.

2013- 8-30

AEGON Sony Life Insurance increased its capital to ¥22 billion from ¥20 billion*(including capital surplus)

2013-10-28 Sonyy Bank launched new service: automatic saving
gpplans for foreign
g currency
y deposits.
p
2013-10-31 Sony Bank closed its representative office in Sydney.
2013 11 11
2013-11-11

Sonyy Financial Group entered nursing
g care business.
―Acquired Senior Enterprise Corporation as a wholly owned subsidiary of SFH―

2013-11-15

Sony Life starts selling a new educational endowment insurance (non-participating type)from Jan. 2, 2014.

*AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint ventures established by Sony Life and AEGON Group.
Half of the above mentioned capital increases was executed by Sony Life.

Sony Financial Holdings Inc. All Rights Reserved37Sony Life: Fair Value Information on Securities(General Account Assets)
Fair Value Information on Securities
Fair Value Information on Securities(Billions of yen)

Valuation gains (losses) on trading-purpose securities(Billions of yen)

Notes: 1) Line item amounts are truncated below ¥100 million. 2) Amounts above include those categorized as “monetary trusts.”

Sony Financial Holdings Inc. All Rights Reserved38Sony Life’s Interest Income and Dividends (Details)(Millions of yen)

FY12.1H

ChangeFY13.1H

Cash and deposits
Japanese governmentand corporate bonds
Japanese stocks

00(52.8%)

42,35347,874+13.0%

295

198(32.9%)

Foreign securities

1,255

2,868

+128.5%

Other securities

143

47

(67.2%)

Loans

2 705
2,705

2 820
2,820

+4 2%
+4.2%

Real estate

5,431

5,145

(5.3%)

14

17+20.5%

52,19958,971+13.0%

Others
Total

Line item amounts are truncated below ¥1 million

Sony Financial Holdings Inc. All Rights Reserved39Sony Life’s Quarterly Trend on
Annualized Premiums from New Policies
Quarterly trend on Annualized Premiums from New Policies
Annualized premiums from new policies

Of which, third-sector(Billions of yen)Line item amounts are truncated below ¥100 million.

Sony Financial Holdings Inc. All Rights Reserved

40

Method of Measuring Risk Amount
Based on Economic Value (1) Market-related Risk

Interest rate risk
Fluctuations in net asset
value based on economic
value in response to theshocks in the right columns.
The same applies below

Equity risk

Sony Life(Reference) EU Solvency II (QIS5)-For each currency, uses whatever interest rateincrease or decrease generates the largest loss
- Percentage increases or decreases differ for eachcurrency and term (example: yen 10-year, 49%
decrease)
However, a minimum decrease of 1% with minimum
interest rate of 0%-For each currency, uses whatever interest rateincrease or decrease generates the largest loss
-Percentage increases or decreases differ foreach currency and term
(example, yen 10-year, 31% decrease)
However, a minimum decrease of 1% withminimum interest rate of 0%-Listed equities and REIT 45% decline-Global 30%-Unlisted equities 55%-Others 40% (Note 2)-Other securities 70%-Subsidiaries, affiliated companies and strategic
investment 100%
Real estate risk

Actual real estate 25%

Same as on the left

Credit risk

Credit risk = (market value) x (risk coefficient foreach credit rating) x adjusted duration
Note that adjusted durations have caps and floors,
depending on credit ratings.
(Example)
Rating A: Risk coefficient (1.4%),(1 4%) cap (23),(23) floor (1)Same as on the left

Currency risk

30% downside fluctuation

25% downside fluctuation

Notes
1. Principal items as of September 30, 2013. Market-related risk quantification follows the QIS5 approach in principle. However, Sony Life modified it to make it moresuitable to Japanese market by adapting the past and latest data of the market which is different from the method prescribed in QIS5.
2. Standard risk coefficients are global: 39%/other: 49%. Symmetric adjustment (an adjustment of ±10% of the average value of the stock price index during a defined
period in the past) is applied; as of the QIS5 trial introduction (December 31, 2009), these were 30%/40%.

Sony Financial Holdings Inc. All Rights Reserved

41

Method of Measuring Risk Amount
Based on Economic Value (2) Insurance Risk

Sony Life
Mortality risk

Mortality rate increases by 15% for each year

(Reference) EU Solvency II (QIS5)Same as on the left

elapsedLongevity risk

Mortality rate decreases by 20% for each year

Same as on the left

elapsed
Lapse risk

Expense risk

The largest amount of these*;
these ;The largest amount of these;-Lapse rate increases by 50% for each year

-Increase by 50% in the assumed rates of

elapsedlapsation for Life module, 20% for Health module-Lapse rate decreases by 50% for each year

-Decrease by 50% in the assumed rates of

elapsedlapsation for Life module, 20% for Health module-30% of policies on which surrender value is inexcess of best estimate liability are immediately
surrendered-30% of policies (70% for group annuities, etc.) on
which surrender value is in excess of best
estimate liability are immediately surrendered

Operating expenses increase by 10% for eachSame as on the left

year elapsed
Rate of inflation rises by 1%
Disability risk

Rate of occurrence increases by 35% in the firstfiscal year, rising by 25% for each year thereafter

Rate of occurrence increases by 35% in thefirst fiscal year, rising by 25% for each year
thereafter. Recovery rate decreases by 20%.

* At Sony Life,
Life lapse risk is calculated by computing and adding together the largest amount of three options for each insurance policy.
policySony Financial Holdings Inc. All Rights Reserved

42Appendix：JGB Yields

Sony Financial Holdings Inc. All Rights Reserved

43

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

Sony Financial Holdings Inc. All Rights Reserved

44