Sony Financial Group

Corporate Strategy Meetingfor Fiscal Year 2017

Sony Financial Holdings Inc.
May 31, 2017

AGENDASony Financial Group
Review of Progress on the Medium-term Plan (Consolidated) for FY16-18
Market Overview and Medium-term Issues
Priority Measures and Issues for Group Companies in FY17

Business Strategies of Each Group Company
Sony Life
Sony AssuranceSony Bank
Sony Lifecare

Sony Financial Group
Changes in Medium-term Dividend Policy and others*Unless otherwise indicated, in these materials figures less than the indicated unit have been truncated, while ratios andpercentage changes have been rounded.
* “Lifeplanner” is a registered trademark of Sony Life.

Key Messages in the Medium-term Plan for FY16–18(Text in blue indicates additions or changes from last fiscal yearʼs medium-term plan for FY16–18.)

Respond to theultralow interest rateenvironment

Achieve ongoinggrowth for the Group
as a wholeWe will respond expeditiously to improve profitability (particularly inthe life insurance business).



We will reinforce our provision of high-quality, highly convenientservices, and continue expanding our business operations bystrengthening our competitive edge.
While monitoring operating expenses closely, we will confidently
make up-front investments aimed for future growth.
We will engage steadily in initiatives targeting new business fields
and new services. At the same time, we will utilize technologies that
contribute to increases in customer value.
We have introduced an ERM framework into Group management, andare strengthening our management platform with a view to improveGroup profitability and capital efficiency.








Capital policies,
shareholder returns



Based on the assumption that we will maintain financial soundness ineach of our businesses, we will aim for steady increases in dividends
in line with earnings growth over the medium to long term.
We will change our medium-term dividend policy in line with growthin the Groupʼs business operations. (When determining dividends, wewill place importance on profit indicators based on economic value.)
Copyright © Sony Financial Holdings Inc. All rights reserved.

3

Review of Progress on the Medium-term Plan
(Consolidated) for FY16–18
 While expeditiously introducing measures to improve profitability in theultralow interest rate environment, each of the Groupʼs three corebusinesses expanded their operations, essentially in line with our
medium-term plan.
Sony Life

Policy amount in force

43.1

FY15

45.3

FY16

CAGR
Approx.
5%

94.3

FY18

Retail balance

Direct premiums written

CAGR
Approx. Mid-term target
Over ¥49 tn
5%

FY17

Sony Bank

Sony Assurance

FY15

99.0

Mid-term target
Approx.
¥110 bn

3.6

CAGR
Approx.
8%

Mid-term
target¥4.1 tn

3.2

FY16

FY17

FY18

FY15

FY16

FY17

FY18

Copyright © Sony Financial Holdings Inc. All rights reserved.

4

Review of Progress on the Medium-term Plan
(Consolidated) for FY16–18<Summary of business conditions in FY16 by Group company>
Sony Life





Sony
Assurance

The company ensured profitability by making expeditious product revisions
and shifting toward such products as US dollar-denominated insurance andterm life insurance.
The company achieved performance on a par with the previous year, withnew policy amount reaching a record high. Recruiting of Lifeplanner sales
employees significantly outpaced plans, accelerating the expansion of thecompanyʼs sales base.
In automobile insurance, the company increased the discount for customers
who conclude contracts on line and achieved a smooth transition of contracts
from former American Home Assurance policyholders.
In January 2017, the company began offering “ZiPPi” medical insurance toindemnify hospital inpatient expenses, expanding offerings outside
automobile insurance.

Sony Bank

Mortgage loans substantially outpaced plans, as the company responded to
re-borrowing demand. Sony Bank WALLET continued to perform favorably.

Sony
Lifecare

The company opened its first home, “SONARE Soshigaya-Okura”, in April
2016, and the second, “SONARE Urawa”, in May 2017.
The company put in place management systems for Yuuai Holdings andannounced its conversion to a subsidiary in April 2017.



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5

Review of Progress on the Medium-term Plan
(Consolidated) for FY16–18
Consolidated financial results for FY16 based on statutory accounting were below ourinitial forecasts.
 Statutory profit is also expected to be below our medium-term targets for FY18, due tothe impact of revision in the standard yields used for calculating policy reserves andanticipated acceleration in new policy acquisition in the life insurance business.
Consolidated ordinary
revenues
Mid-term
Outlooktarget¥1,650 bn ¥1,540 bn
1,362.0

1,381.6

FY15

FY16

1,430

FY17

FY18

Profit attributable toowners of parent

Consolidated ordinary
profit71.1

FY15

Mid-term
Outlooktarget¥80 bn ¥71 bn
66.3

67

FY16

FY17

Mid-term
target Outlook¥51 bn ¥45 bn
43.3

FY18

FY15

41.6

42

FY16

FY17

FY18

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6

Operating Income under US-GAAP [Reference] Partly due to the impact of improved market conditions, FY16 Group operating

income under US-GAAP substantially surpassed our initial forecast.
 Our FY18 operating income is also expected to outpace our Medium-term target.

Operating Income under US-GAAP

156.5

FY15

166.4

FY16

170

FY17

Mid-term
target¥160 bn

Outlook¥180 bn

FY18

 SFHʼs parent company, Sony Corporation, presents its consolidated financial statements in accordance with U.S. GAAP. The financial information for the Sony GroupʼsFinancial 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 Groupʼs Financial Services segment, our Group presents its consolidated financial statements in accordance with Japanese GAAP. Please see page
64 for an explanation of the primary discrepancies and differences in scope between U.S. and Japanese accounting practices.
Copyright © Sony Financial Holdings Inc. All rights reserved.

7

Consolidated Adjusted ROE
 We anticipate an improvement in consolidated adjusted ROE in FY18,

as Sony Lifeʼs profit on the basis of economic value is expected to growbeyond our medium-term target.
Consolidated Adjusted ROE
Consolidated ROE (Statutory accounting basis)

Outlook
7〜8%

5.2%*

7.5%

FY15
FY16

OutlookAround 8%

Mid-term target
4〜5%

3.9%

FY15

6.9%

FY16

FY18

FY18

* From FY16, we have revised the calculation of consolidated adjusted ROE, changing Sony Lifeʼs method of calculating adjusted profit to the total of new businessvalue plus expected existing business contribution. Furthermore, from FY16 Sony Lifeʼs MCEV is calculated by using the ultimate forward rate (UFR). Consolidated
adjusted ROE for FY15 has been recalculated to reflect these changes. (However, simplified calculation of Sony Lifeʼs core ROEV has been used in some places.) See
page 62 for details.
Copyright © Sony Financial Holdings Inc. All rights reserved.

8

Sony Lifeʼs MCEV MCEV increased in FY16, due to business expansion and improved market

conditions.
 The figure is also expected to substantially exceed our FY18 Medium-term target of
more than ¥1.4 trillion.

Sony Lifeʼs MCEV
Mid-term target*1
Over ¥1.4 tn

1.3

FY15

Outlook*2
Over ¥1.6 tn

1.4

FY16

FY17

*1 Interest rate levels as of March 31, 2016. The medium-term target wasrevaluated in line with the adoption of UFR for calculating MCEV in the firstquarter of FY16
*2 Forecast based on interest rate levels as of March 31, 2017

FY18

Copyright © Sony Financial Holdings Inc. All rights reserved.

9Market Overview and Medium-term Issues

We expect the market environment to continue staying stringent as we move toward FY18.
Even taking these changes in the medium- to long-term environment into account, our
medium-term policy has been unchanged in our effort to continuously grow through businessexpansion based on the provision of high-quality services from a customer perspective.

<Medium- to long-term market overview>
Economic
environment• 超低⾦利の継続
Continued ultralow interest rates
Growing geopolitical risk
• 地政学リスクの⾼まり

Regulatoryenvironment•• 標準利率および標準⽣命表の改定
Revisions in the standard yields used for calculating
policy reserves and in standard life tables• 参考純率の引き下げ
Reduction in the reference-loss-cost rates•• フィデューシャリー・デューティの強化

Socialenvironment• Reinforcement of fiduciary duty
• Continued falling birthrate and aging society• Widening income gap• Uncertainty about social security systems

Technologica
l innovation• Advances in AI and self-driving technologies• Sophistication and application of Fintech
Copyright © Sony Financial Holdings Inc. All rights reserved.

10

Priority Measures and Issues for Group Companies in FY17
Sony Life

Sony
Assurance









Sony Bank

Sony
Lifecare

In the Lifeplanner channel, the company will aim for steady growth byaccelerating expansion and by maintaining or increasing productivity. In the
independent agency channel, the company will expand businesses of large
corporate agencies and of agencies with close ties to their local community.
Revisions in the standard yields used for calculating policy reserves andaccelerated business expansion will put downward pressure on profits based on
statutory accounting, but we expect MCEV to outpace our medium-term target.
In automobile insurance, the company will work to achieve further growth by
pursuing initiatives to reinforce product strength, enhancing customer satisfactionand employing advanced technologies.
The company will also work to expand its operations in insurance categories otherthan automobile insurance.
By leveraging Sony Bank WALLET, the company will pursue measures aimed at
positioning itself as the bank that easily deals with foreign currency transactions.
The company will expand its customer base by forming alliances with othercompanies in the foreign currency and mortgage loan businesses.
The company will seek to realize higher profitability through business expansion.
The company will work to establish the SONARE brand and open new homes torealize its “Life Focus” concept.
The company aims to expand its scale by converting Yuuai Holdings to a
subsidiary and improve management efficiency from a Group perspective.

Copyright © Sony Financial Holdings Inc. All rights reserved.

11

Sony Life

FY17 Key Messages
Lifeplanner Channel

Expansion in thenumber of sales
personnel to drive
stable growth

Independent Agency
ChannelRealize growth

Solid growth ofcorporate value

 Enhancing recruitment process and initialtraining Further strengthening the provision of value(corporate market/”Karte” cunstomer
database) Achieving steady business growth in large

corporate independent agencies
 Expanding independent agencies with close
ties to their local community throughestablishing solid structure of sales operation

 Realizing profit growth exceeding medium-

term targets based on economic value

Copyright © Sony Financial Holdings Inc. All rights reserved.

13

Japanʼs Life Insurance Market and Sony Lifeʼs Market Share
Trend of year-end policy amount in force
Sony Life（Individual insurance）

Life insurance market

Share

4.9%

¥42 tnCAGR 4〜5%
81

85

90

95

00

05

10

15

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14

Expansion of New Policies
 Maintain high level of new policies on a par with the historical high in theprevious year despite the challenging ultralow interest rate environment
 Further accelerate growth of new policies aimed at achieving medium-termtargets
New policy amount(Individual Life Insurance + Individual Annuities)■ Lifeplanner channel

Mid-term target¥5.8 tn■ Independent agency channels

4.7

5.1

4.9

FY15

FY16

3.8

FY13

FY14

FY17

FY18

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15

Expansion in the Number of Sales Personnel to Drive
Stable Growth in the Lifeplanner ChannelExpand number of Lifeplanner sales employees as of the end of fiscal year at a pace exceeding
medium-term targets through strong recruitment
Aim for further growth by accelerating sales force expansion and maintaining/increasing highproductivity

Number of Lifeplanner*1 / productivity*2■ Number of Lifeplanner
as of the end of fiscal year

■ Productivity

122
Mid-term target

100
4,216

4,329

FY13

FY14

4,612

FY15

Over

4,933

FY16

FY17

5,200

FY18

*1︓The figure includes the number of contracted Lifeplanner sales employees and those rehired on a fixed-term contract basis after retirement.
*2︓Productivity is indexed to FY13 = 100, calculated on the basis of new policy amount.
Copyright © Sony Financial Holdings Inc. All rights reserved.

16

Enhancing Recruitment Process and Initial Training
In addition to steadily increasing recruitment numbers, we will strengthen the recruitment
process to further improve the quality of recruitment
 We will thoroughly enhance the ability of the newly hired to provide initial protection andachieve a sound startNumber of newly hired Lifeplanners■ Productivity■ Newly hired Lifeplanners

685

100
439

117

/ productivity*1

 Further Enhancing Quality Recruitment
 Stringent candidate selection criteriaOver Enhance interview process

700

577

 Promotion of introduction by Lifeplanner sales

employees
 Strengthening Initial Training419

 Strengthen ability to provide protection

thorough LiPSS and “Karte” customer
database Provide regular individual support and follow-

ups Expand manager training to strengthen

FY13 FY14 FY15 FY16 FY17 FY18

*1: The new policy amount productivity of Lifeplanners who joined thecompany in the past three years in FY13 is indexed as 100.

training capabilities
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17

Further Increasing the Provision of Value(Corporate Market Initiatives)
 Full-fledged development from last fiscal year has led new policies in thecorporate market to exceed plans In addition to expanding new products and services, we aim to achieve further
growth through the enhancement of training and sales support systems
Break down of new policy amount（JPY tn）■ Individual■ Corporate

5.1

5.8

 New Products and Services

with Strong Appeal

 Sales of non-participating group welfare

term life insurance

 Sales of corporate variable term-life

4.9

insurance Launch of ES Solution Service

4.1

 Further Enhancement of

3.5

Training and Support Systems

CAGR
Over

1.0
FY15

10%

 Expanding the range of Lifeplanner sales

employees handling corporate customers
through enhanced corporate training

1.4
FY16

 Expansion of corporate sales support

FY17

FY18

system by headquarters

Copyright © Sony Financial Holdings Inc. All rights reserved.

18

Further Increasing the Provision of Value(Use of “Karte” customer database )To augment the strength of LiPSS, we will introduce “Karte” customer database to record
information gained through interviews We will bolster consulting sales and follow-ups by utilizing “Karte”. We will attempt to further
strengthen relationships with customers by increasing customer assent and satisfaction

LiPSS + Charts
LiPSS
・Life plan
・Dreams
・Concerns
NEW“Karte” customer database
・Negotiation history
・Recommendation reasons・Contact history
・Next interview schedule Data Collection, Updates and Sharing In addition to our strength in LiPSS data, we will

chronologically record and update various information
during interviews

 Information will be transferred with customer consent

via chart sharing Proposals and Follow-ups Based on

Evidence In addition to life-planning based on LiPSS data, provide

proposals based on the demonstrable reasons forrecommendations

 Solid follow-ups via recording of next interview schedule Optimize protection in light of past negotiation details
Copyright © Sony Financial Holdings Inc. All rights reserved.

19

Independent Agency Channel Growth Aiming for further growth by building a robust sales foundation to expand

independent agencies with close ties to their local communities while
ensuring the stable performance of large corporate agencies
New policy amount index *1■ Large corporate agencies■ Close ties to local communities

104

116

96

*1: FY13 new policies indexed as 100

Close ties to local
communities

FY13 FY14 FY15 FY16 FY17 FY18

Large corporate
agencies

100

113

In FY16, our market share declined mainly
in large corporate agencies as we revised
insurance premium rates ahead of othercompanies
 Ensuring Stable Performance Stronger support corresponding to partner

characteristics

 Considering alliances with compatible

companies Robust Sales Foundation for

Growth Promoting development and enhancing

initial training Expanding management support targeting

agencies not handling our products Alliances with personnel possessing

expertise and skills

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20

Enhancing Independent Agency Development and Training We will promote development to increase partners who share ourphilosophy and further enhance our strength in training to realize quick
start-ups and improve performance
Number of New Developments

Over
150

 Accelerating Development
 Strengthen activities management and follow-

up with each staff member through visualizationof development activities Create development approach tools customized

for partner characteristics
97

87
68
56

 Further Enhancement of Initial

Training

 Reestablish training structures and systems

corresponding to partner growth phase Conduct agency training on sales methods, etc.,

utilizing Company know-how

FY13 FY14 FY15 FY16 FY17 FY18
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21

Realizing Profit Growth Exceeding Medium-Term Targets
on an Economic Value Basis We developed a strategy for realizing growth over the medium-term on an

economic value basis
 While MCEV is expected to exceed the medium-term target, ordinary profit isexpected to fall short of the medium-term target due to the impact of the revision instandard yields used for calculating policy reserves*3
Ordinary profit *3

MCEV
Outlook *2

Core ROEV
7%

1.3

FY15

1.4

FY16

Mid-term targetOver¥1.6 tn

Mid-term target *1

60.2

Over ¥1.4 tn

FY17

FY18

*1: Based on interest rate level at the end of March 2016. With the
adoption of UFR for MCEV in the first quarter of FY16, mediumterm targets were reevaluated.
*2: Based on interest rate level at end of March 2017.

FY15¥66 bn

56.8

56.4

FY16

FY17

*3: Ordinary profit in life insurance business.

Outlook¥58 bnFY18

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22

Sony Life Progress toward FY18 Medium-Term Targets

Policy amount inforce
Number of
Lifeplanners *1
MCEV

*2

Core
ROEV
Ordinary profit（consolidated）

FY16
ActualProgress toward
Mid-term target(outlook)

FY18
Mid-term target¥45.3 tn

In lineOver ¥49 tn

4,933

Exceedinginitial targets

Over 5,200¥1.4 tn

Over ¥1.6 tn

Over 1.4 tn

3.6%

7%

4-5%

¥56.8 bn¥58.0 bn¥66.0 bn

*1︓The figure includes the number of contracted Lifeplanner sales employees and those rehired on a fixed-term contract basis after retirement.
*2︓Figures in “FY18 Mid-tem target” are based on interest rate levels at the end of March 2016, and others are based on those at the end of
March 2017. With the adoption of UFR for MCEV in the first quarter of FY16, medium-term targets were reevaluated.

Copyright © Sony Financial Holdings Inc. All rights reserved.

23

Sony Assurance

FY17 Key Messages
Sustain growth inautomobile
insurance
Expand businesscategories otherthan automobile
insurance
Maximizecustomer value

Work to maintain leading position in the direct automobile insurance market
and respond to future changes in the operating environment Provide products that are rational, progressive and unique. Focus on the telematics field.
 Apply progressive technologies to increase sophistication of marketing and services.
 Improve the operating expense ratio in preparation for future reductions in insurance

premium rates

By expanding business categories other than automobile insurance, moving
away from a structure heavily relied on automobile and ensure a stable, longterm earnings base Accelerate expansion in area of medical insurance by introducing new products andenhancing existing products.
 Consider expansion of new categories within fire and casualty insurance, the businessdomains that we can leverage the companyʼs strengths.

As a source of growth, enhance the customer experience, as well as productand service specifications

 Enhance the customer experience through customer contact points, thereby raising NPS*

and augmenting customer retention.

 Increase perceived quality by raising product and service specifications, sweeping away

uncertainties about direct insurance and strengthening the ability to acquire new contracts.

Renovatebusiness systems
and reform
operations

Conduct large-scale renovation of core business systems and enact
operational reforms

 Improve system development and maintenance efficiency by renovating system

configurations.
 Along with system reconfiguration, enhance services, improve the customer experienceand conduct operational reforms, aiming to improve operating efficiencies.
*NPS stands for Net Promotor Score.
Copyright © Sony Financial Holdings Inc. All rights reserved.

25

Domestic Automobile Insurance Industry＜JPY tn＞

Auto insurance market and share of direct

Direct premiums written by Major direct insures（Automobile insurance）

7.7%
7.4%
7.1%
6.9%
6.6%
6.2%
5.8%

4.0

Total auto insurance market(Total direct premiums written)

3.0

5.2%
4.7%
4.3%
3.9%
3.6%
3.3%
2.8%
Market share of
2.3%
1.7%

2.0

1.0

1.1%
0.7%
0.3%
0.0%

<JPY bn>

1000

Sony Assurance

900

Major direct insurers

800
700

0.0

600
A

500

Trend of net loss ratio for industry（Auto insurance）

400

70%

C

300
65%

200
60%

55%

50%

Net loss ratio =(Net losses paid +Loss adjustment expenses) divided by
Net premiums written

Continuous insurance
premium revisions
Introduction of new
non-fleet grade rating

Spread of ASV
technologies

100

B

D

H
G

E
F

0

Copyright © Sony Financial Holdings Inc. All rights reserved.

26

Progress of Operating Performance in FY16–FY17
Continued Growth and Maintained Sound ProfitabilitySony Assurance became the first direct insurer to record ¥100 billion in net premiums written. We aim to maintaingrowth also in medical insurance and other areas in addition to automobile insurance.

(The transitioning of automobile insurance policies from American Home Assurance from 2H of FY16 progressed favorably,
contributing to top-line growth.)Through higher sales and by maintaining an appropriate level in the sum of the net expense and E.I. loss ratios, income
rose for the fourth consecutive fiscal year, reaching a record high. We aim to maintain higher earnings going forward.

Trends of ordinary revenues andsum of two ratio
Sum of 98.9%
two ratio

93.8%

＋0.4

＋6.4％

＋6.1％

84.7

MedicalNet
premiums
writtenAutomobile

7.8

83.5

74.1

＋3.5％

89.8

8.3
88.6

78.4

＋4.2％

93.0

8.5
91.7

81.3

＋5.6％

96.9

8.6
95.5

85.1

＋0.5

（JPY bn）

91.0% 90.4% 90.6%（JPY bn）
Ordinary
revenues

Ordinary profit /Adjusted ordinary profit

108.8

＋2.8

Adjustedordinary profit

102.3

8.7
＋4.1

100.2

Ordinary profit

1

89.7

＋1.2

＋0.4

＋0.3

4.6

＋0.6

FY12

FY13

FY14

FY15

FY16

FY17

FY16

FY17

Copyright © Sony Financial Holdings Inc. All rights reserved.

27

Maintaining Growth in Automobile Insurance
Establish reliable brand strength through products that are unique and advanced, service
expansion and quality enhancements, and effective communications.
 Augment the sense of security and satisfaction from direct insurance, thereby expanding thedirect insurance market and maintaining the companyʼs leading position in direct automobile
insurance.
 By ensuring cost advantages and price competitiveness, we will aim to maintain favorable
profitability despite expected future reductions in insurance premium rates.

■ Alliance with Yahoo! JAPAN to develop next-generation telematics products We are accumulating Pay-How-You-Drive (PHYD) information through the“Gentle Driving Cash-Back Plan,” measuring a substantial decline in the loss ratio
compared with conventional products.
 Through alliances with Yahoo! JAPAN and the Sony Group, we have begun joint
research with a view to developing advanced PHYD-type telematics products using
Yahoo! Car Navigation on smartphones .
 We are considering the development of services that will support safe driving behavior
and help avoid accidents, as well as higher-value-added insurance products.

■ Initiatives in the FinTech field By collaborating with the Sony Group and FinTech ventures, we will employ AI and otherleading-edge technologies to enhance the sophistication of marketing and services.
・ Marketing: Employ marketing automation tools and deep learning technologies to approach customers effectively
and efficiently.
・ Services: By using these technologies in call center operations (call center management, response support),
enable automated Web-based response.

■ Ensuring price competitiveness and favorable profitability through improved
operating efficiency

 Through large-scale renovation of our core business systems, we will increase operating efficiency and promote

BPR, thereby ensuring cost advantages.

Copyright © Sony Financial Holdings Inc. All rights reserved.

28

Maximizing Customer Value as a Driver of Growth(Enhancing the Customer Experience and Product and Service Specifications) Enhance the customer experience through customer contact points, thereby raising NPS and augmenting
customer retention.
 Strengthen the ability to acquire new contracts by raising product and service specifications, enhancing
their evident appeal and helping customers understand their attractiveness.
Customer satisfaction surveys

Enhance the customer experience・At various customer contact points, including our website, policy procedures,
accident response services and documentations, increase our NPS and work to
optimize the overall customer journey, thereby bolstering customer retention.
Documentations andinformation services

WebsitePolicy procedures

Accident response

・Smartphones first・LINE, SMS, etc.

・Enhance telephone
reception system
・Increase operating hours

・Resolve in accordance withcustomer wishes
・Respond swiftly, informschedules

・Easy to see and understand・Personalization

Satisfaction Survey

Strengthen product and service specifications (augment perceived quality)

SECOM personnel hurry to the
scene

Sony

A

50

B

50

C

In addition to receiving accident
reports on holidays and at night,
accident response includes
following case progress andnegotiating settlements

HDI-JAPAN☆ Total support rating☆ Help desk rating

3 stars
3 stars

NTTCom Research NPS Benchmark
Survey☆ Automobile Insurance Division

100
35

No. 1

No. 1

Enhanced accident response on
holidays and at night

Extended our free-of-chargetransport distance to 150km,
the industryʼs longest
150☆ Accident response satisfaction☆ Call center satisfaction

・Enhance evident appeal, so that customers who have no experience with Sony
Assurance will gain a sense of trust and attractiveness・In particular, sweep away concerns about direct insurance by cultivating an
understanding of our accident response quality and high specifications
Roadside wrecker transportdistance

External rating agencies
have ranked Sony Assurance
at the top level in theindustry in customer
satisfaction for many years
J.D. Power Automobile Insurance

Optimize the overall customer journey

On-site rush service

in FY16

D

60

No. 1

E
Copyright © Sony Financial Holdings Inc. All rights reserved.

29

Expanding in Categories Other than Automobile Insurance
Expand the area of medical insuranceSony Assurance revised “SURE” medical and cancer insurance and commenced sale of “ZiPPi” medical insurance toprovide protection for actual expenses.
→ Reinforce the companyʼs presence by offering easy-to-understand, rational and unique products and leveraging
our strength in direct insurance.
In a crowded but stable market, we are enhancing
product competitiveness and convenience.
Insurance period: Whole life

Insurance period: Term

このイメージは、現在表示できません。

Fixed-rate
protection
Protection
for actual
expenses

Half of medical insurance policyholders feel that fixed-rate protection
is insufficient due to shortened hospital stays and rising inpatient
expenses.
⇒ Rational medical insurance that just covers the actual costs
 Examples of target customers
・ 20s-30s: For now, reasonable premiums to cover just the actualcosts
・ 40s-50s: Easily augment current insurance with insurance thatcovers just the actual costs
 Internet-only provision means lower costs and higher convenience Option: Differences in costs to stay hospitals, advanced medical care,
miscellaneous expenses while hospitalized

このイメージは、現在表示できません。

Cultivating the market by introducing a new product that provides
indemnification for actual expenses, an area of anticipated growth.

Expand other categories to create third and fourth pillars of businessSony Assurance will consider expansion of new categories within fire and casualty insurance, thebusiness domains that we can leverage the companyʼs strengths.

→ Consider new development categories that leverage the companyʼs strengths: product uniqueness and enhanced
compensation; pursuit of rational pricing and customer convenience through the Internet/direct model; and expanded crossselling among categories, including automobile and medical insurance
Copyright © Sony Financial Holdings Inc. All rights reserved.

30

Sony Assurance Progress toward FY18 Medium-Term Targets
 Steady progress in line with medium-term plan Maintaining firm top-line growth (CAGR: +5% to +6%)
 Increase profits revenue by maintaining or improving the sound earnings

structure; aiming to meet targets for FY18FY16
ActualProgress toward
Mid-term target(outlook)

FY18
Mid-term target

Direct premiums written¥99.0 bn

In Line¥110.0 bn

Net expense ratio

28.3%

E.I. loss ratio

62.3%

In LineSum of two ratios

90.6％

Sum of two
ratioOver 90%

Ordinary profit¥4.9 bn

In Line¥5.2 bn

Adjusted ordinary
profit *¥8.1 bn

In Line¥8.7 bn

Adjusted ROE

14.4%

In Line13%* Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve
Copyright © Sony Financial Holdings Inc. All rights reserved.

31

Sony Bank

FY17 Key Messages

Enhancing andexpanding
product services
Expandingcustomer basethrough tie-ups
Improving
management
efficiency

 Establish Sony Bank as a bank that easily

deals with foreign currency transactions
 Expand apps to increase convenience Diversify loan products for individual
customers

 Strengthen tie-up channels with realtors, etc.
 Expand introduction of Sony Bank WALLET

affiliated card
 Expand real channels for Lifeplanner sales
employees, etc.
 Realize profit growth through improved

profitability and efficiency
 Achieve 6% ROE

Copyright © Sony Financial Holdings Inc. All rights reserved.

33

Market Overview
Foreign currency deposit share currently 7%. Significant room for expansion.
 Debit card market will experience rapid growth from now. Profit from Sony Bank WALLET is
also expected to expand.
 Mortgage loan market is contracting. Loan product diversification is necessary.
Foreign currency deposit share(End Mar. 2017)（JPY tn）

Sony Bank¥348.0 bn
Share
7.0%
Total domestic
individual
foreign currency
deposits
approx. ¥5 tn

New housing starts

Debit card transaction volume
3.1（100mn houses）
1.4

Shrinking
trend

25

Expected to grow intoa market worth of ¥3 tn(domestic market)

1.2
1

20

0.8
15

1.5
0.9

（JPY tn）
30

0.6
10

1.1

0.4

5

0.2

0

FY15

FY16

Actual Forecast
Source: Statistics of Bank of Japan (Individual foreign
currency deposit balance)

FY17

FY21
Outlook

Source: Debit Card Market 2016; Yano Research Institute
Ltd.

FY20

FY18

FY16

FY14

FY12

FY10

FY08

FY06

FY04

FY02

FY00

0

New mortage loan (left)
New housing starts (right)
Sources: Nomura Research Institute, Ltd.: Estimated for Market
Size of New Housing Starts in FY16-FY30. Japan Housing FinanceAgency: New Housing Loan Amounts and Lending Balances
Copyright © Sony Financial Holdings Inc. All rights reserved.

34

Retail Balance Operations are expanding steadily Further expanding business centered on foreign currency deposits

and mortgage loans

Trends of retail balance
4.1(JPY tn)

3.0

3.2

3.6
1.6
0.1
0.5

1.8

FY14

FY15

FY16

FY17

Actual
Yen deposits

Foreign currency deposits

FY18
Outlook

Investment trusts※Retail balance︓
Sum of yen deposits, foreign currency deposits, investment trusts and personal loans.

Personal loans

Copyright © Sony Financial Holdings Inc. All rights reserved.

35

Establishing Sony Bank as a Bank That
Easily Deals with Foreign Currency Transactions


Increase number of accounts and balance of foreign currency deposits by enhancing convenienceof foreign currency settlement and diversification of foreign currency investment products
Sony Bank WALLET issued
Sony Bank WALLET(thousands)

240

Foreigncurrency
expansion

90

Mar. 16Mar. 17

Increase convenience of foreign
currency settlement
App convenience

Online foreign currency
remittances

Sony Bank “Foreign Currency World®”

Preferential systemrevision

Diversification of foreign currency
investment products

Foreigncurrency
deposits

FX margin

Structured
deposits

Investment
trusts/NISA

Copyright © Sony Financial Holdings Inc. All rights reserved.

36

Diversifying Loan Products for Individual Customers
Expand mortgage loans focused on the further strengthening of banking agency and realtor
tie-up channels
 Expand condominium loans for investment through stronger relationships with tie-ups withpartner agencies
Trend of loan outstanding for individual(JPY tn)

1.0

FY14

1.2

FY15
Actual

1.6

1.4

FY16

FY17

FY18
Outlook

Other personal loans
Loans for condominiums purchased as investment
Mortgage loans
Copyright © Sony Financial Holdings Inc. All rights reserved.

37

Expanding Sony Bank WALLET Tie-ups
 Supplement through tie-ups with customer segments that wereunreachable up to now

Customer baseSony Interactive
Entertainment

Sony Life

Sony Bank
April 2017
Lifeplanner sales employees
commenced the promotion ofSony Bank WALLET
and sales of foreign
currencies transactions

March 2017
Sony Bank WALLET“PlayStation” design card issued
Company X

Company Y

Planning tie-ups with highly compatible companies（Distributors, travel agencies, study abroad agencies, etc.）

Copyright © Sony Financial Holdings Inc. All rights reserved.

38

Improving Management Efficiency (1) Enhance high-yield foreign currency investment and maintain current

margin levels
 Enhance fee business including fees associated with Sony Bank WALLET
Investment yields
Investment yields (yen)Investment yields (foreign currency)
Investment yields for loans （yen）

Breakdown of ordinary revenues

Interest spread
Interest spread
Yield on investment
Yield on financing
1.19%

1.19%

(JPY bn)
Net fees and comissions
1.27%

Other revenues
4.1

3.28%
2.89%

+20％

2.93%

0.94%

0.94%

1.08%

1.06%

0.42%

0.31%

0.26%

0.25%

0.25%

FY16

FY17

FY18

FY16

FY17

Outlook※Managerial accounting basis

3.4
36.6

1.05%

Actual

0.94%

Actual0.32%
FY18

Outlook

31.7

ActualOutlook

FY16

FY18

※Managerial accounting basis
Copyright © Sony Financial Holdings Inc. All rights reserved.

39

Improving Management Efficiency (2) Profit growth and ROE increase through efficiency improvements

OHR

Consolidated ordinary profit

Consolidated ROE(JPY bn)

78%

6.0%

7.2
70%
5.0

FY16
ActualFY17

FY18

Outlook

FY16

4.1%

FY17

Actual

FY18

Outlook

FY16
ActualFY17

FY18

Outlook※OHR= Operating expenses divided by gross operating profit

Copyright © Sony Financial Holdings Inc. All rights reserved.

40

Sony Payment Services （SPSv）
Business Overview

EC Settlement Service Market Scaleand SPSv Handling Volume Share Main business is credit card settlement

agency supporting international fiveleading card brands

Participating
merchants(EC site)
Affiliatedagents

SPSv

Card
companies

Credit card settlement
agency(JPY tn)
16.0
14.0

Spread income(A-B)%

Merchant
fee
B%

6.3%

6.5%

6.8%

7.0%

12.0

7.4

8.3

9.0

10.0

Authorization
sales data relay

Fees corresponding
to number oftransactions
processed

Data
processing
feerevenue

Fees corresponding
to number oftransactions
processed

5.0%
4.0%

6.0

3.0%

4.0

2.0%

2.0

1.0%

0.0
Information
processors

7.0%
6.0%

10.0
8.0

Merchant
fee
A%

8.0%

0.0%
FY13

FY14

FY15

EC
settlement service market scale (left)
EC決済サービス市場規模(左軸)

FY16
SPSv
share (right)
SPSvシェア(右軸)*Ecommerce settlement service market size
Source: Yano Research Institute Ltd.; e-commerce settlement service market
size research (2016); estimates for FY15 and onwards based on Yano
research InstituteCopyright © Sony Financial Holdings Inc. All rights reserved.

41

Operating Performance of Sony Payment Services（SPSv）
 In line with e-commerce market expansion, we expect increases in sales

and ordinary profit

Consolidated ordinary profit

Consolidated sales
4.4(JPY bn）

1.2(JPY bn)

3.4

0.4

FY16
ActualFY17

FY18
Outlook

FY16
ActualFY17

FY18
Outlook

Copyright © Sony Financial Holdings Inc. All rights reserved.

42

Sony Bank Progress toward FY18 Medium-term Targets

FY16
ActualProgress toward
Mid-term target(outlook)

FY18
Mid-term target

Retail Balance *1¥3.6 tn

In Line¥4.1 tn

Gross Operating
Profit *2¥24.0 bn

In Line¥27.6 bn

Ordinary Profit *2¥5.0 bn

In Line¥7.2 bn

4%

In LineAround 6%

ROE *2*1︓Sum of yen deposits, foreign currency deposits, investment trusts and personal loans.
*2︓Consolidated base

Copyright © Sony Financial Holdings Inc. All rights reserved.

43

Sony Lifecare

FY17 Key Messages
To realize the “Life Focus” business concept,
establish the SONARE brand of high-quality nursing
care homes.
 Leverage the knowhow accumulated through thefirst and second homes to develop the third andfuture homes.


Establish the
SONARE brand andopen new homes

Acquire scale
through alliances

By converting Yuuai Holdings to a subsidiary,acquire business management know-how and scalein the volume zone.

Prepare to launch
new brands



Make effective use of management resources in theSony Lifecare Group, and begin preparations tolaunch a new brand.

Copyright © Sony Financial Holdings Inc. All rights reserved.

45

An Expanding Market for the Nursing Care Business

In 2025, the baby boomer generation will be aged 75 or older, causing a sharp increase in thenumber of seniors requiring long-term care.
The number of seniors is forecast to continue rising until 2040, when the number will peak out.
As needs grow, the number of nursing care homes opening is steadily rising across all price ranges.

Senior population

Accumulated number of rooms in nursing care homes
by price range% of the population
aged 65 and older(ml people)
4,000
40

(％)
40

30
3,000

30

50,000Note: Indicates rooms forpeople requiring long-termcare in the Tokyo
metropolitan area

40,000Monthly fee of ¥150,000
to ¥250,000

30,000Population
aged 75 and
older

20
2,000

(Rooms)Monthly fee of ¥250,000
to ¥350,000

20

20,000Source: Annual Report on the Aging Society: Fiscal 2016

Monthly fee of lessthan ¥150,000

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

0
2002

0

10,000

2001

2060

2055

2050

2045

2040

2035

2030

2025

2020

2015

2010

2005

2000

1995

1990

1985

1980

1975

0

1970

Population aged 65 to 74

2000

10

〜1999

10
1,000

Monthly fee of¥350,000 or more

Source: Study by Tamura Planning & Operating
Note: Amounts are average monthly fees for people residing for 60 months.
Copyright © Sony Financial Holdings Inc. All rights reserved.

46

Initiative to Realize “Life Focus” = Rolling out SONARE
Pursuing “the real long life” in our “Life Focus” concept<Product aspects of the SONARE series>
High-quality soft services basedon a “life care plan”＋“Hard” design to provide an
ultimate dwelling from theperspective of residents andemployees

Life care assessment
Life careplanning forindividual
residents

Home life intune withindividual
residentsʼ
valuesLifestyleproposals
including ample
offerings ofrecreation,
events and foods

Lifestylerehabilitation tomaintain or
improve ADL

By opening the first and second homes, promote standardization of “soft” services and “hard”
specifications.
While continuing to refine standard specifications, open homes at the rate of one or more per
year for the foreseeable future.
Copyright © Sony Financial Holdings Inc. All rights reserved.

47

Overview of Yuuai Holdings

 The companyʼs philosophy of “aiming to be a company that customers and staff

can be proud of” is in common with the business concept of the Sony Lifecare
Groupʼs “Life Focus.”
 Under the Hanakotoba brand, the company is developing business in the volume
zone in locations centering on the Tokyo metropolitan area.
 Provides quality services at a reasonable price.
Yokohama/Yokosuka area
12 facilities(Group totals, as of March 31, 2017)

Kanagawa/Tokyo area
6 facilities

Shikoku area
1 facility

Kitakanto/Shinetsu/Tohoku area
9 facilities

Business
locations

Approximately 1,400 rooms in 28 operating
locations (of which, 18 nursing care homes
and 10 residential-type and other homes)

Business area

Kanagawa (17), Tokyo (1), Niigata (5), Miyagi
and Yamagata (2), Gunma (2), Kochi (1)Representative

Hiroshi Sonoda, President and Representative
Director, Yuuai Holdings Co., Ltd.

Established

April 2012

Consolidated
sales¥5.5 billion (forecast for the year ended March
31, 2017)

Employees

Approximately 900
Copyright © Sony Financial Holdings Inc. All rights reserved.

48

Medium-Term Strategy for Developing the
Nursing Care Home Lineup
 Upper/middle zone: Create added value through the SONARE brand Volume zone: Develop business through Hanakotoba (Yuuai Holdings)

 By leveraging Group resources, create business foundation and consider

launching a new brand

Upper<Newly built homes>
Establish the SONARE brandas creating and pursuing“quality” ― core businessvalue

MiddleConsider launchinga new brand<Alliances>Gain presence by having as a
subsidiary Yuuai Holdings, whichshares our philosophy and has
operational know-how in multiple
locations

VolumeSONARE
Soshigaya-Okura,
Tokyo

Development oflocations

Hanakotoba Machida Tsurukawa,Tokyo

SONARE Urawa,
Saitama

High-quality
nursing careservices,planning

Hanakotoba

Facility
design,planning

Combination ofmanagement
resources

Operationatmultiplelocations

Sales
force

Recruiting
and training

Copyright © Sony Financial Holdings Inc. All rights reserved.

49

Sony Financial GroupFintech Initiatives
In addition to initiatives by individual companies, we have launched the groupwide SFG
Fintech Forum.
 Through the forum, we aim to accumulate and study information related toFintech/InsurTech, foster collaboration with outside companies, including the Sony
Group, and build an ecosystem.
Groupwide initiatives

Sony Group

Outsidecompanies andorganizations

SFG Fintech Forum

Key individual company initiatives

SFH• Investing in Fintech ventures throughFintech funds• Participating in the Hitotsubashi University
Graduate School Fintech Research ForumSony Life• Formed business alliance with Sony Group
company P5 and has begun introducing
P5ʼs service of providing genomic
information• Considering the use of AI in back office
operations and lifeplanning

Sony
Assurance• Considering the development of new
telematics products in collaboration with
Yahoo! and Sony Group companies.
• Achieving further sophistication in direct
marketing through deep learning and othertechnologies

Sony Bank• Utilizing AI in mortgage loan screenings• Introducing chat bots in customer service
Copyright © Sony Financial Holdings Inc. All rights reserved.

51

Strengthening and enhancing corporate governanceInitiatives for FY16 and FY17
 Response to the Corporate Governance Code(adoption of all principles) Established the Nomination Advisory Committee Abolished the system of providing retirement bonuses for directors andintroduced stock options
 Performed third-party evaluations of Board of Directors effectiveness Disclosed Basic Policy on Selection of Director Candidates, including
independence criteria
 Increased the number of independent directors
 Enhanced the stock incentive system Introduced a stock-based compensation system (Scheduled for resolution
at the General Meeting of Shareholders on June 21, 2017)
 Expanded applicability to include Group management team

Copyright © Sony Financial Holdings Inc. All rights reserved.

52

Introducing a Group ERM framework(Objective)
In the aim of maximizing the corporate value of the Group, achieve abalance and optimization among capital, risk and returns.
At the same time, instill capital-efficient management across theGroup through an awareness of costs and returns on invested capital.
Capital efficiency(profitability) indicators

Return• Sony Life: Core ROEV
• Sony Assurance: Adjusted ROE• Sony Bank: ROE

Capital efficiency(profitability)

Soundness indicators

Capital policy
Dividend policy

CapitalSoundness

Risk• Insurance business: Solvency margin
ratio• Banking business: Capital adequacy ratio• Management on a regulatory basis andon the basis of economic value

Copyright © Sony Financial Holdings Inc. All rights reserved.

53

Changes in Medium-term Dividend Policy
Medium-term dividend policy<In line with our policy to date> We aim for steady increases in dividends in line with earnings growth over the
medium and long terms, based on stable dividend policy.
<Current revisions> When determining future dividends, we will place more importance on factorsthat more closely track growth in the life insurance business, such as MCEV
and profit indicators on the basis of economic value.
 We will discontinue our medium-term target dividend payout ratio based on
profit on a statutory accounting basis.

<Background for the revisions indicated above> Although we anticipate that the Groupʼs business operations will grow steadily over the
medium term, profit on a statutory accounting basis is not expected to growcommensurately with this expansion and is expected to be lower than the mediumterm target. We, however, forecast growth in MCEV and other profit indicators on thebasis of economic value, which more closely track expansion in the life insurance
business.
 Based on the above situations, in order to continue enhancing shareholder returns bysteadily increasing dividends, we have decided to place greater importance on profit
growth on the basis of economic value going forward when determining dividends.
Copyright © Sony Financial Holdings Inc. All rights reserved.

54

Dividend Forecast for FY17

 We expect a dividend of ¥55 per share for FY17, unchanged from FY16.

<Reasons for maintaining the dividend unchanged>

 We consider it necessary to monitor trends in the market and competitiveenvironment.
 Meanwhile, in line with our new dividend policy, we will reconsider dividend levels
going forward ̶including for FY17̶while taking into account the stability of theexternal environment, business expansion, and growth in profit on the basis of
economic value.
History of dividend payouts

23.9

23.9

23.9

FY16

FY17

17.3
Annual dividend amount (JPY bn)

Dividend
per share

8.7

8.7

10.8

13.0

6.5

6.5

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY15

¥15

¥15

¥20

¥20

¥25

¥30

¥40

¥55

¥55

(Planned)¥55（forecast）

Copyright © Sony Financial Holdings Inc. All rights reserved.

55

Appendix

Forecast of Consolidated Financial Results for FY17
Consolidated ordinary revenues are expected to increase, consolidated ordinary profit andprofit attributable to owners of the parent are expected to be essentially flat.
（JPY bn）
Consolidated ordinary revenues
Life insurance business
Non-life insurance businessBanking business
Consolidated ordinary profit
Life insurance business
Non-life insurance businessBanking businessProfit attributable to owners of the parent

FY16 (Actual)

FY17 (Forecast)

Change1,381.6

1,430.0+3.5%

1,243.9
102.3
38.5

1,276.1
108.9
40.6

+2.6%
+6.4%
+5.4%

66.3

67.0

+1.0%

56.8
5.0
5.0

56.4
4.6
6.6

(0.7%)(8.0%)+30.6%

41.6

42.0

+0.9%

For FY17, stable business growth is expected to continue in all the businesses.
Consolidated ordinary revenues are expected to increase, while consolidated ordinary profit and profit attributable to owners of the parent are expected to be
essentially flat.
<Segment information for ordinary revenues and ordinary profit＞■Life insurance business
Ordinary revenues are expected to increase year on year because we anticipate stable increases in insurance premium revenues.
Ordinary profit is expected to be almost flat because we expect the provision of policy reserves to rise in line with revision in standard yields used for calculating
policy reserves even though we expect an improvement in net gains/losses on derivative transactions to hedge market risks related to minimum guarantee forvariable life insurance as well as an increase in profit from accumulated policies in force.
■Non-life insurance business
Ordinary revenues are expected to increase year on year, in line with growth in net premiums written, primarily for automobile insurance.
Ordinary profit is expected to decrease year on year because we expect the loss ratio to be higher due to higher provision for reserve for outstanding losses
than in FY16.
■Banking business
Ordinary revenues are expected to increase year on year, due to stable business growth, reflecting a growing balance of mortgage loans and strengthened
foreign currency business
Ordinary profit is expected to increase year on year, due mainly to efforts to appropriately control operating expenses and the increase in ordinary revenues.

Copyright © Sony Financial Holdings Inc. All rights reserved.

58

Purchase Ratio of Securities within General Account AssetsPromoting investment asset diversification, while maintaining the principle of investing inassets matching liability characteristics, based on ALM approach
Expanding investments in ultralong-term Japanese corporate bonds (including FILP agency
bonds) and significantly increasing investments in U.S. dollar bonds, responding to higher
sales of U.S. dollar denominated insurance policies

FY15（12M）
Foreignbonds
2.3%

Japanese stocks
0.5%

Japanese
Corporate
bonds
11.9%

JGBs
85.3%

FY16（12M）
Japanese stocks
0.5%

Foreign
bonds
28.3%

Japanese local
government bonds
0.1%

JGBs
42.5%

Japanese
Corporate
bonds
28.6%
Copyright © Sony Financial Holdings Inc. All rights reserved.

59

Investment in ClearView
 We will steadily seize growth opportunities overseas to expand businessover the medium- to long-term*1

Overview of ClearView

 Listed on the Australian Securities Exchange*2 Premium income: AUD140 million(Approx. ¥11.4 billion)*3

 Total assets: AUD2.04 billion(Approx. ¥168.0 billion) Market cap: AUD941.1 million（Approx. ¥77.5 billion, as of close on May 29, 2017, AUD1.43 ）*4

 Industry rank: 11th out of 13 companies（Individual premium income basis）

 CEO: Simon Swanson Growth Expectations in theAustralian Life Insurance Market
 Stable growth in the Australian life insurance

market driven by solid economic growth andpopulation expansion
 Ideal demographics, low life insurance

penetration rate

 Highly Compatible Partner
 Similar corporate philosophy
 Synergies between life insurance and wealth/FA

businesses
 Stable topline growth exceeding an annual rateof 30%*1︓Figures in Japanese yen in ( ) are calculated based on a conversion rate as of May 30, 2017
*2︓Premiums income for FY16
*3︓Total assets as of the end of December, 2016
*4︓Ranked as of the end of March 2016
Copyright © Sony Financial Holdings Inc. All rights reserved.

60

Individual Variable Annuity Business
Number and Amount of Policies in Force

Number and Amount of New Policies

Policy amount in force
Number of policy in force (thousands)

New policy amount
Number of new policy (thousands)（JPY bn）（JPY bn）

26.8

73.4

85.9

63.5

11.8

163.2

14.2
390.4

FY14

71.5

70.8

FY15

FY16

Mar. 15444.2

Mar. 16501.7

Mar. 17

Net income (losses) for AEGON Sony Life Insurance and SA Reinsurance（JPY bn）
AEGON Sony Life Insurance
SA Reinsurance

FY15

FY16

Change

(3.2)

(4.4)

(1.2)

1.8

(2.6)

(4.4)

AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint venture established by Sony Life and AEGON Group.
SA Reinsurance prepares its financial statements in accordance with U.S. GAAP. 50% of the net income (losses) for AEGON Sony Life Insurance andSA Reinsurance are recognized as investment profit (losses) on equity method in the SFHʼs consolidated net income.
Copyright © Sony Financial Holdings Inc. All rights reserved.

61

Definition of Adjusted ROE
Calculation of Adjusted ROE

Since each company of Sony Financial Group differs by industry such as insurance andbanking, each group company calculate its “Adjusted ROE” based on adjusted profit andadjusted capital to realize its corporate value and capital efficiency.
Sony Financial GroupSony Life *2
Core ROEV*1

Sony Assurance
Adjusted ROE

Numerator(Adjusted
profit)New business value plus
expected existing business
contribution (risk-free rate)

Denominator(Adjusted
capital)MCEV as of the beginning of
the fiscal year less dividends
paid plus MCEV as of the endof the fiscal year, divided by
two.

＋
①

④

＋

Sony BankROE

Net income plus provision
amount for catastrophe
reserve and its provision
amount for reserve for pricefluctuations, in each case aftertaxes②
The average amount of net
assets plus the sum ofcatastrophe reserve and its
reserve for price fluctuations
during the fiscal year, in eachcase after taxes⑤＋

Profit attributable to ownersof the parent③＋

The average amount of net
assets during the fiscal year⑥

*1 Consolidated Adjusted ROE= Consolidated Adjusted Profit divided by Consolidated Adjusted Capital
Consolidated Adjusted Profit＝ ①＋②＋③
Consolidated Adjusted Capital＝ ④＋⑤＋⑥*2 Sony Life change its calculation methods for adjusted ROE, a change in numerator (adjusted profit) from FY16 as follow.
Previous: The amount of increase in Embedded Value (EV) during the fiscal year plus dividends paid
Current: New business value plus expected existing business contribution (risk-free rate)
Copyright © Sony Financial Holdings Inc. All rights reserved.

62

Assumptions
FY16

FY17

At the time offormulated
Mid-term
targetAs of
End Mar. 17
ActualOutlook

YEN

0.10%

(0.05%)(0.05%)

USD

0.50%

1.00%

1.25%

EUR
Policyinterest rate AUD

0.05%

0.00%

0.00%

2.00%

1.50%

1.50%

NZD

2.50%

1.75%

1.75%

10yr

(0.05%)

0.07%

20yr

0.44%

0.64%

40yr

0.63%

0.96%

Nikkei Average¥16,758¥18,909

Dow Jones$17,685$20,663

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End Mar. 2017

Copyright © Sony Financial Holdings Inc. All rights reserved.

63

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 Groupʼs financial services segment compared with Japanese
GAAP-based ordinary profit of the Sony Financial Group: Different accounting treatment for policy reserves (future insurance policy benefits) Accounting treatment of deferred insurance acquisition costs (recorded in U.S. GAAP only)
SFHʼs consolidated results* are prepared in accordance with Japanese GAAP. As such, these figures differ in significant
respects from the financial information reported by Sony, SFHʼs parent company, which prepares its financial statementsin accordance with U.S. GAAP.
Sony Financial Groupʼs scope of consolidation and that of Sony Groupʼs Financial Services segment are described below.
< Sony Financial Groupʼs scope of consolidation under Japanese GAAP>*SFHʼs scope of consolidation includes Sony Financial Holdings Inc., Sony Life Insurance Co. Ltd., Sony Assurance Inc.,
Sony Bank Inc., Sony Payment Services Inc., and SmartLink Network Hong Kong Limited, Sony Lifecare Inc. and Lifecare
Design Inc. It also includes AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd., as affiliated companies
accounted for under the equity method. Sony Lifecare Inc. and Lifecare Design Inc. are included in the scope of
consolidation from the first quarter of the year ended March 31, 2017, respectively.
<Scope of consolidation of the Sony Groupʼs Financial Services segment under U.S. GAAP>
Sony Groupʼs Financial Services segment includes Sony Financial Holdings Inc., Sony Life Insurance Co. Ltd., Sony
Assurance Inc., Sony Bank Inc., Sony Payment Services Inc., SmartLink Network Hong Kong Limited, Sony Lifecare Inc.
and Lifecare Design Inc. as consolidated subsidiaries. It also includes AEGON Sony Life Insurance Co., Ltd., and SA
Reinsurance Ltd. as affiliated companies accounted for under the equity method. Sony Lifecare Inc. and Lifecare Design
Inc. are included in the scope of consolidation from the first quarter of the year ended March 31, 2017, respectively.

SFH announced [Reference Disclosure] Key Performance Figures Based on U.S. GAAP on Apr. 28, 2017.
http://www.sonyfh.co.jp/en/financial_info/results/sfh_FY16_4q_02.pdf

Please refer the announcement.

Copyright © Sony Financial Holdings Inc. All rights reserved.

64

Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies andbeliefs of the Sony Financial Group. Any statements contained herein that are not historical facts are forwardlooking statements or pro forma information. Forward-looking statements may include̶but are not limited to̶words such as “believe,” “anticipate,” “plan,” “strategy,” “expect,” “assume,” “forecast,” “predict,” “propose,”“intend” and “possibility” that describe future operating activities, business performance, events or conditions.
Forward-looking statements, whether spoken or written, may also be included in other materials released tothe public. These forward-looking statements and pro forma information are based on assumptions, decisions
and judgments made by the management of Sony Financial Group companies, and are based on informationthat is currently available to them. As such, they 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. SonyFinancial Group companies are under no obligation to revise forward-looking statements or pro forma
information in light of new information, future events or other findings. The information contained in thispresentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitationof any offer to buy or subscribe to any securities, nor shall it or any part of it form the basis of or be relied on inconnection with any contract or commitment whatsoever in Japan or abroad.

For inquiries:
Corporate Communications & Investor Relations Dept.
Sony Financial Holdings Inc.
Telephone: +81-3-5290-6500
E-mail: press@sonyfh.co.jp
http://www.sonyfh.co.jp/index_en.html