Q&A (Summary) on the Corporate Strategy Meeting of the Sony Financial Holdings Groupfor Fiscal Year 2009 (for Domestic Institutional Investors and Analysts)

Date:
June 4, 2009, 15: 00–16: 30
Respondents: Teruhisa Tokunaka President and Representative Director ofSony Financial Holdings Inc.
Hiromichi Fujikata Executive Vice President and Representative Director ofSony Financial Holdings Inc.
Taro Okuda
President and Representative Director ofSony Life Insurance Co., Ltd.
Shinichi Yamamoto President and Representative Director of Sony Assurance Inc.
Shigeru Ishii
President, CEO and Representative Director of Sony Bank Inc.
Q&A (Summary)Some modifications and alterations have been made to the original content to ease understanding.

Life Insurance BusinessQ1. Regarding the method of disclosing MCEV for Sony Life, I would like to ask you toprovide follow-up information on sensitivity after standardizing them within the life
insurance industry. Can we ask you to provide such information for MCEV as of March
31, 2009, by the time you announce MCEV as of March 31, 2010?
A1. (Sony Life) We are aware that it is essential for us to promote your understanding of MCEV,
and we are looking into ways of disclosing MCEV information in way that is more easily
understandable to investors and analysts. The CFO Forum (a forum formed and attended by theChief Financial Officers (CFOs) of major European life insurance companies) is working tocreate uniform standards for EV, and Sony Life’s policy is to follow these standards. To theextent possible, we plan to disclose supplementary information until the standardization iscomplete. Also please note that in our recent announcement, we disclosed sensitivity
information about adjusted net worth, a component of MCEV, as well as about overall MCEV.

Q2. (In the process of calculating MCEV for Sony Life), in what cases would the time value ofoptions and guarantees have an increasingly negative impact?
A2. (Sony Life) In the current environment of low interest rates, as the forward rates on interest
swap rates approach the assumed interest rate, volatility is high, which makes the impact on
MCEV large.

Q3. (When calculating MCEV for Sony Life), could you provide interest rate and otherinformation that you use to determine duration on liabilities?
Q4. (Sony Life) To some degree, would it be possible to forecast Sony Life’s recent MCEV in1

comparison with the figure as of March 31, 2009, by considering the impact of changes inforward rates on interest swap rates in light of the sensitivity to increases in interest rates?
A3,4. (Sony Life) Let me provide some additional information on liability cash flows, as many
investors and analysts have requested such information. As Sony Life does not have a long
history as a life insurance company, a closed block (situation in which no new policies arebeing sold) approach to calculate future revenues and expenses suggests that excessive cash
inflows will continue for approximately the next 8–10 years, causing assets to increase. After
increasing to its peak point, the asset balance will decrease for a period of around 60 years. Ourcurrent asset balance is ¥3.5 trillion. We expect assets to increase by about another ¥1 trillion, to¥4.5 trillion, by the time our asset balance reaches its peak. Insurance policies completely zeroout at the 100th year, but the asset balance is expected to be zero by around the 90th year. Webelieve it is possible to estimate interest rate sensitivity of MCEV by multiplying forecast asset
balances at the end of each fiscal year with the corresponding forward rates on interest swap
rates, discounting them back to the present value and adding up all the figures. You cancalculate the difference between this total determined using current forward rates and the one
calculated by using forward rates as of March 31, 2009, and estimate the interest rate sensitivityof MCEV in comparison with the change in forward rates.

Q5. Sony Life’s MCEV calculation showed a deficit in required capital (free surplus) as
stipulated by EU Solvency II. Is your current capital sufficient to do such things as enter
the Asian life insurance market and build a variable annuities business? How will thiscapital shortfall be reflected in your future capital policies, as indicated by the MCEV
calculations?
A5. (Sony Life) We consider the fact that our required capital from the standpoint of MCEV
calculation (free surplus) is negative important in terms of risk management, but we also
recognize that there is no capital sufficiency issue in terms of Japanese statutory accounting
requirements.
From our perspective, EU Solvency II is not a standard that we need to respond toimmediately. Rather, it indicates the calculation results of events that have a 0.5% probability ofcausing a negative impact continuously in the future. We believe that we have a relatively large
amount of leeway in terms of time to resolve this situation. The CFO Forum is currently
deliberating with regard to applying MCEV principles (European Insurance CFO Forum Market
Consistent Embedded Value Principles©). Therefore, we do not believe it is necessary torespond immediately by taking the negative free surplus amount to be an absolute figure. To thequestion of launching a new business and entering overseas markets, currently we see neither ofthese as requiring large amounts of capital in the short term.
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Q6. Sony Life has indicated that it will review its products from a standpoint that includes
future risk management. What considerations will you use to conduct this review?
A6. (Sony Life) There are two major considerations to product development. The first is increasing
new business value by raising profitability. The second is preventing variations in profitability.
In general, interest rate fluctuations have a major impact on some savings-oriented products thathave option values. Therefore, we consider it important to strike a balance on such products thatare highly sensitive to interest rate fluctuations. Compared to savings-oriented products,
protection-oriented products are relatively more profitable and less susceptible to pricecompetition. In addition, as such products are highly compatible with Sony Life’s Lifeplanner
sales channel, we plan to enhance these offerings further.

Q7. In its mid-term targets for MCEV, Sony Life indicated a growth rate of 7–8%. Is thisfigure calculated by discounting back to the present value or by setting assumed
investment returns to the risk-free rate?
A7. (Sony Life) We forecast a growth rate of 7–8% by taking economic assumptions that are neutral
from March 31, 2009. This growth rate is obtained by assuming the same rate of increase in
MCEV, mainly through the accumulation in new business value and the release of the expected
existing business contributions. We set the interest swap rate as the risk-free rate. Under aprojection using the Japanese government bond (JGB) yields as the risk-free rate, however, thevalue of new business would increase further, and a significant divergence would be caused byfluctuations in the market environment or changes in assumptions.

Q8. Given that Sony Life’s MCEV has decreased, what are your strategies for surplus-oriented
risk management from an ALM standpoint if lapses increase as a result of interest rateincreases?
A8. (Sony Life) Sony Life will have an excessive cash inflow for some time. For that reason, even if
lapses do increase, to some degree we should be able to handle liquidity problems without
having to take such actions as selling bonds. An increase in lapses could shorten the duration on
liabilities, but given the current variance in durations we should see no major effects in the shortterm. Meanwhile, we intend to review our product details to avoid the future effects of interest
rate risks.

Non-Life Insurance BusinessQ9. Right now, the major non-life insurers are studying the possibilities of entering theInternet-based direct insurance market. What do you consider to be the positive andnegative aspects of this situation for Sony Assurance?
3A9. (Sony Assurance) At the present stage, we do not know exactly what the impact of the major
non-life insurers entering the direct market might be, but we are looking into the situation
without preconceptions. Important to business over the Internet is whether a company is able toacquire new policies through a pull type of approach. To achieve this, we believe products thathave highly attractive and appealing pricing and characteristics are important.
In the case of the major non-life insurers, we believe their impact will depend largely on
the level of products they introduce, given their existing agency relationships. Consequently, atthis stage Sony Assurance is watching the developments calmly and without preconceptions, sothat we can respond appropriately.

Q10. Specifically, what new product categories is Sony Assurance considering?
A10. (Sony Assurance) As the handout materials indicate, as early as 2002 we introduced SURE
medical and cancer insurance to our lineup of products outside automobile insurance. The
growth of this product has already contributed to our rise in profitability, as this type of
insurance tends to deliver profits in a more stable manner, compared to automobile insurance.
Next, we have already started selling overseas travel personal insurance over the Internet. We
have also commenced Internet-based agency sales through tie-ups with other companies on suchproducts as pet insurance, as well as a cancer treatment insurance policy, MEDCOM, through analliance with SECOM General Insurance Co., Ltd.
Because sales of these new products are relatively small and niche, we aim to expand ourcustomer base by offering such products with special characteristics, and to link these offerings
with new automobile insurance contracts. We are also looking at other product possibilities, but
none that are ready to be announced at this stage.

Q11. During Sony Assurance’s forecast business expansion, won’t the earned/incurred loss
ratio increase? Also, won’t the company incur additional costs to set up a network of bases
for loss adjustments, as well as infrastructure costs?
A11. (Sony Assurance) Looking at our actual loss ratio, at present even though our premiums arearound 15% lower than those of the major non-life insurers, on an accrual basis our loss ratio islower. The major reasons are that our customers are limited to individual customers, and ourpolicies are risk segmented by distance driven, which we believe are the reasons ourpolicyholders have a lower-than-average loss ratio. Furthermore, we do not believe that thisstructure will break down easily, so we should retain this advantage of low loss ratios. However,
we believe unit prices will fall over time as the number of policies increases, as is the case forlarge non-life insurers. But if our pricing is set appropriately, the decline in unit prices should
not cause the loss ratio to increase significantly, because the accident ratio will fall in parallel4with the drop in unit prices. As a result, we do not believe there are any factors that would cause
the loss ratio to worsen suddenly.
With regard to loss adjustment expenses, compared to the major non-life insurers ourpersonnel distributions to service depots are highly concentrated. Also, we handle some types ofaccident at a completely integrated service center, which gives us a degree of advantage in termsof our cost structure. However, because adjusting losses is personnel-intensive, the need foradditional personnel grows as our number of policies in force increases. Accordingly, we arelikely to feel cost pressure, owing to such factors as rising personnel expenses. Therefore, we
consider improving operating efficiencies to be a major management issue that we must address
over the medium to long term. Although we cannot discuss specific initiatives at this point, wewill do later when the timing is appropriate.

Banking BusinessQ12. How has Sony Bank been able to increase its balance of mortgage loans? Also, it is hardto understand how the bank can raise its profitability simply by increasing its mortgage
loans. What is your strategy?
A12. (Sony Bank) Sony Bank’s mortgage loans still account for a small share of the market. As themarket challenger, we believe the bank can continue to acquire new customers. Even thoughhousing market conditions are poor, our loan balance is steadily increasing, with refinancing
accounting for more than half of this demand. We believe this situation indicates customer
support of Sony Bank’s product characteristics. In terms of sales channels, our real channel (thebanking agency channel operated by Sony Life and Seven Bank) is functioning relatively
steadily and is playing a major role in promoting an understanding of product characteristics. Byenhancing the functionality of our real channel, we believe that we can gain a larger market
share.
Next, in terms of profitability, the customers who take advantage of Sony Bank’s mortgage
loans tend to be a relatively higher class of customer, as is the case for Sony Assurance. SonyBank has offered mortgage loans from the moment it commenced operations. Although ourportfolio is growing more seasoned (meaning that more time has elapsed since contracts began),our default level is extremely low. As long as we continue to maintain a high-quality customer
base, we should have no concerns from a profitability standpoint. In terms of our cost structure,
we are not yet able to benefit from economies of scale, but by reviewing our operations weshould be able to benefit from the cost advantages of being an Internet bank. By also reviewing
our portfolio with an eye to profitability-enhancement measures, we should be able to ensurehigh levels of profitability.

5Q13. To maintain a highly profitable portfolio, what other options do you have than sellingsuch products as investment trusts?
A13. (Sony Bank) Specifically, we plan to expand our fee-based business. We believe that expandingthe services offered by Sony Bank Securities, our subsidiary, will contribute to profits.

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