Interim Consolidated Financial Summary
for the Fiscal Year Ending March 31, 2008
November 16, 2007
Sony Financial Holdings Inc.
(URL: http://www.sonyfh.co.jp/index_en.html/)
Stock exchange listings: Tokyo Stock Exchange (code number: 8729)
Representative:
Teruhisa Tokunaka, President and Representative Director
For inquiry:
Masaaki Konoo, General Manager – Corporate Communications & Investor Relations Dept.
Company name:1.

(discarding fractional amounts of less than 1 million yen)

Consolidated financial results for the six months ended September 30, 2007
(1) Operating results
Ordinary Revenues
Ordinary Profit
For the six months ended
September 30, 2007
For the six months ended
September 30, 2006
For the year ended
March 31, 2007

For the six months ended
September 30, 2007
For the six months ended
September 30, 2006
For the year ended
March 31, 2007
Note: Equity in earnings of affiliates:

Net Income

millions of yen% changemillions of yen% changemillions of yen% change404,685

14.1

27,551

54.2

16,71051.8

354,728-2.2

17,862-25.8

11,006-20.7

759,280-

18,354-

10,021-Net Income per ShareNet Income per Share(Fully Diluted)

yen

yen

7,957.33-

5,241.05-

4,772.09-

For the six months ended September 30, 2007:
For the six months ended September 30, 2006:
For the year ended March 31, 2007:¥ - million¥ - million¥ - million(2) Financial condition
Total Assets

Total Net Assets

Net Assets Ratio

Net Assets per Sharemillions of yen

millions of yen%yen

As of September 30, 2007

4,650,428

286,030

6.1

134,022.97

As of September 30, 2006

4,019,623

253,372

6.2

118,588.52

As of March 31, 2007

4,323,780

270,179

6.1

126,549.38

Notes: 1. Stockholder’s equity:

As of September 30, 2007:¥ 281,448 million
As of September 30, 2006:¥ 249,035 million
As of March 31, 2007:¥ 265,753 million
Stockholder’s equity is computed by excluding minority interests from total net assets at the end of fiscal period.
2. Net assets ratio is computed by dividing the amount of total net assets excluding minority interests by total assets at the end of
the fiscal period.

(3)

Cash Flows

For the six months ended
September 30, 2007
For the six months ended
September 30, 2006
For the year ended
March 31, 2007

Cash and Cash
Equivalents at end of
the fiscal periodofyenmillionmillion of yen

Cash Flows fromOperating Activities

Cash Flows from
Investing Activities

million of yen

million of yen

119,778(218,733)(6,500)168,345

85,079(37)(6,500)187,813258,171(87,215)(6,500)273,760

1

Cash Flows from
Financing Activities

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

2. Dividends
Fiscal year

Interim dividend

Dividend per Share
Annual dividendyen

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

Total

yen

-

yen

3,095.24

3,095.24

3,000.00
3,000.00

3. Projected consolidated financial results for the year ending March 31, 2008

(percentage figures represent changes from the results of the previous fiscal year)

Ordinary Revenues
For the year ending
March 31, 2008

Ordinary Profit

Net Income

millions of yen % change millions of yen % change millions of yen % change

809,000

6.5

35,00090.7

21,000109.6

Net Income per Shareyen

9,833.05

4. Other Information(1) Significant changes in subsidiaries during the fiscal period
Newly consolidated : Sony Bank Securities Inc.
Excluded: None(Note) Refer to “Status of the Corporate Group”, on page 11, for details.
(2) Changes in significant accounting principles, policies and presentation(a) Changes due to revision of accounting standards: Yes(b) Changes due to other reason: None(Note) Refer to “Summary of Significant Accounting Policies”, on page 20, for details.
(3) Number of shares outstanding(a) Number of shares outstanding (including treasury shares)
As of September 30, 2007:
2,100,000 shares
As of September 30, 2006:
2,100,000 shares
As of March 31, 2007:
2,100,000 shares(b) Number of treasury shares
As of September 30, 2007:- shares
As of September 30, 2006:- shares
As of March 31, 2007:- shares(Note) Refer to “Per Share Information”, on page 24, for number of shares used in calculating net income per share.

2

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

I. Operating Performance
1. Analysis of Operating Performance
Ordinary revenues grew 14.1% during the six months ended September 30, 2007 (April 1, 2007 to September 30,2007) compared with the first half of the prior fiscal year, to ¥404.6 billion, owing to performance increases in all ofour businesses: life insurance, non-life insurance and banking.
In the life insurance business, the amount of insurance in force remained robust, boosting income frominsurance premiums, while general account investment income also increased, resulting in a 14.3% increase inordinary revenues compared with the first half of the prior fiscal year, to ¥365.7 billion. In the non-life insurance
business, net premiums written increased in line with a steady rise in the number of policies, mainly automobile
insurance policies, pushing up ordinary revenues 8.2% compared with the first half of the prior fiscal year, to ¥27.7
billion. In the banking business, higher business volume pushed up interest income, such as interest on loans.
Ordinary revenues consequently increased 20.2% compared with the first half of the prior fiscal year, to ¥11.5
billion.
Ordinary expenses increased 12.0% compared with the first half of the prior fiscal year, to ¥377.1 billion, in linewith increased expenses in all of our businesses.
In the life insurance business, ordinary expenses grew 12.6% compared with the first half of the prior fiscal
year, to ¥341.7 billion, owing to an increase in the provision for policy reserve and others, as well as an increase ininsurance claims and other payments, paralleling the increase in the amount of insurance in force. In the non-life
insurance business, net losses paid increased in line with an increase in the number of policies in force, causing
ordinary expanses to grow 4.1%, to ¥25.7 billion. In the banking business, higher interest expenses pushed up
ordinary expenses 11.6% compared with the first half of the prior fiscal year, to ¥10.1 billion.
Ordinary profit increased 54.2% compared with the first half of the prior fiscal year, to ¥27.5 billion, reflecting
stronger performance in all of our businesses, as described above. Broken down by business, in the life insurance
business ordinary profit was up 47.2% compared with the first half of the prior fiscal year, to ¥24.0 billion; in the
non-life insurance business ordinary profit was up 116.0%, to ¥2.0 billion; and in the banking business ordinary
profit was up 151.5%, to ¥1.4 billion.
Sony Financial Holdings Inc. (“SFH”) posted extraordinary losses of ¥1.6 billion, owing mainly to an increase in
the provision for reserves for price fluctuation in the life insurance business.
Net income rose 51.8% compared with the first half of the prior fiscal year, to ¥16.7 billion , reflecting the increasein ordinary profit, which was partially offset by the extraordinary losses.

3

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

Segment Information by Business
Ordinary Revenues(Millions of yen)
For the six months ended
September 30, 2006
Life insurance business

For the six months ended
September 30, 2007

Change (%)¥ 319,920¥ 365,732+14.3

Non-life insurance business

25,68827,792+8.2

Banking business

9,641

11,584+20.2

355,250

405,109

+14.0

(521)

(424)

－

354,728

404,685+14.1

Subtotal
Corporate and eliminations
Consolidated

Ordinary Profit(Millions of yen)
For the six months ended
September 30, 2006
Life insurance business

For the six months ended
September 30, 2007

Change (%)¥ 16,307¥ 24,010+47.2

Non-life insurance business

933

2,017

+116.0Banking business

590

1,483

+151.5

17,831

27,511

+54.3

31

40

+27.2

17,862

27,551+54.2

Subtotal
Corporate and eliminations
Consolidated(Financial Results Forecast for FY2007)
SFH’s financial results forecast for FY2007 (the fiscal year ending March 31, 2008) is as follows. No changes have been
made to the consolidated results forecast previously announced on October 25, 2007.
Consolidated
Full year

Current forecast announcement(Reference)
Actual financial results forprevious term (FY2006)

Ordinary revenues¥ 809.0

Ordinary profit¥ 35.0

759.2

18.3

4

(Billions of yen)
Net income¥ 21.010.0

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

2. Analysis of Financial Condition(1) Assets, Liabilities and Net Assets
As of September 30, 2007, total assets of ¥4,650.4 billion represented an increase of 15.7% from September 30, 2006
and an increase of 7.6% from March 31, 2007.
The principal reasons for this increase were ¥2,812.7 billion in securities (up 8.9% from September 30, 2006),
mostly Japanese government and corporate bonds, ¥795.1 billion in monetary trusts (up 18.9%), ¥420.2 billion in loans(up 23.3%), ¥391.5 billion in call loans and bills bought (up 83.0%) and ¥85.6 billion in tangible fixed assets (up12.1%).
Total liabilities amounted to ¥4,364.3 billion, up 15.9% from September 30, 2006 and up 7.7% from March 31,
2007. One of the largest components of liabilities, policy reserve and others, increased 12.5% from the end of theprevious fiscal year, to ¥3,326.7 billion.
Total net assets amounted to ¥286.0 billion, up 12.9% from September 30, 2006 and up 5.9% from March 31, 2007.
Of this amount, net unrealized gains on other securities, net of taxes, increased 20.8% from September 30, 2006, to¥130.1 billion.
(2) Cash FlowsNet cash provided by operating activities was ¥119.7 billion, up ¥34.6 billion compared with the first half of the priorfiscal year, despite a net increase in call loans and bills bought, owing mainly to a net increase in call money and bills
sold and a net increase in deposits.
Net cash used in investing activities was up ¥218.6 billion compared with the first half of the prior fiscal year, to¥218.7 billion, owing mainly to an increase in payments for purchases of securities.
Net cash used in financing activities was ¥6.5 billion as a result of cash dividends paid, remaining flat comparedwith the first half of the prior fiscal year.
As a result of the above factors, cash and cash equivalents at September 30, 2007, were ¥168.3 billion, down
¥105.4 billion from March 31, 2007.
(3) Net Assets Ratio and Net Assets Ratio Based on Market Value

Net assets ratio

As of September 30, 2006
6.2%

Net assets ratio based on market value
Notes:

As of September 30, 2007
6.1%

－

－

1. Net assets ratio: stockholder’s equity/total assets x 100
2. Net assets ratio based on market value: total market capitalization/total assets x 100

3. Basic Policy on Returns to Stockholders and Dividends for FY2007
SFH considers the steady increase of returns to its stockholders, as well as an increasing return on equity, among its
most important management tasks.
SFH’s basic policy on returning profits to its stockholders is to promote stable dividends while maintaining thehigh level of financial soundness necessary to acquire and maintain customers’ trust while securing sufficient retained
earnings to enter into and develop businesses in the future.
Although we do not plan to pay an interim dividend for FY2007, in keeping with the basic policy outlined above
we expect to pay an annual dividend of ¥3,000 per share.

4. Information Concerning Significant Subsidiaries
Below, we describe the operating performance for the six months ended September 30, 2007 (April 1, 2007 to
September 30, 2007) of SFH’ significant subsidiaries: Sony Life Insurance Co., Ltd. (Sony Life), Sony Assurance Inc.
(Sony Assurance) and Sony Bank Inc. (Sony Bank). Sony Life, Sony Assurance and Sony Bank each separately
announce their own results; please refer to the individual companies’ websites for more detailed information.

5

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007■ Sony Life (Non-Consolidated)
On a non-consolidated basis, Sony Life posted a 14.4% increase in ordinary revenues compared with the first half ofthe prior fiscal year, to ¥365.6 billion, as the amount of insurance in force remained robust, boosting income frominsurance premiums, while general account investment income also increased. Ordinary profit increased 48.5%
compared with the first half of the prior fiscal year, to ¥24.0 billion, and net income grew 30.8%, to ¥13.0 billion. Core
profit amounted to ¥13.9 billion.
Income from insurance premiums grew 9.7% compared with the first half of the prior fiscal year, to ¥318.5
billion, as the amount of insurance in force increased. Compared with the first half of the prior fiscal year, investment
income increased 55.8%, to ¥44.7 billion, and investment expenses rose 349.4%, to ¥9.0 billion. Consequently, net
investment income grew 33.7%, to ¥35.7 billion. Insurance claims and other payments increased 15.5% compared withthe first half of the prior fiscal year, to ¥117.4 billion. Operating expenses rose 9.0%, to ¥45.6 billion.
Policy amount in force, which is the total policy amount in force for individual life insurance and individual
annuities, grew steadily during the term. Policy amount in force was up 4.1% from September 30, 2006, to ¥30,878.7
billion. The lapse and surrender rate was up 0.20 percentage points compared with the first half of the prior fiscal year,
to 3.01%. Annualized premiums from insurance in force rose 5.9% from September 30, 2006, to ¥517.4 billion. Of thisamount, the amount attributable to third-sector products rose 5.8%, to ¥120.5 billion.
New insurance sales, which is the total policy amount for new sales of individual life insurance and individual
annuities, rose 11.0% compared with the first half of the prior fiscal year, to ¥1,879.3 billion, primarily due to strong
sales of death protection products. Annualized premiums from new insurance sales fell 1.0% compared with the firsthalf of the prior fiscal year, to ¥31.2 billion. For third-sector products, annualized premiums from new insurance sales
fell 4.2%, to ¥6.5 billion.
Net unrealized gains on securities rose 20.2% from September 30, 2006, to ¥206.4 billion.
(1) Principal Income and Expense Items¥ 319,716
16,21013,3589,998¥ 365,658
24,06913,962
13,073(Millions of yen)
Change inamount (%) or change
in percentage (pt)
+14.4
+48.5
+4.5
+30.8

290,258

318,541+9.7

28,72344,742+55.8

101,713

117,476

+15.5

2,010
41,8999,036
45,679+349.4
+9.0

2.81

3.01

+0.20 pt

For the six months ended
September 30, 2007

For the six months ended
September 30, 2006
Ordinary revenues
Ordinary profit
Core profit
Net income
Income from insurance
premiums
Investment income
Insurance claims and otherpayments
Investment expenses
Operating expenses
Lapse and surrender rate (%)(Note)

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

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

As of September 30, 2006
¥ 3,204,385
1,582.8
171,756

As of September 30, 2007
¥ 3,607,135
1,870.0
206,474

6

As of March 31, 2007
¥ 3,445,970
1,852.0
198,259

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007(2) Insurance in Force
Policy Amount Basis(Billions of yen)
Individual insurance
Individual annuity
Total

As of September 30,
2006¥ 29,487.0
187.2
29,674.3

As of September 30,
2007¥ 30,643.7
235.0
30,878.7

Change
(%)
+3.9
+25.5
+4.1

As of March 31, 2007
¥ 30,038.1
206.3
30,244.4

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

Number of Policies Basis(Thousands of policies)
Individual insurance
Individual annuity
Total

As of September 30,
2006
3,959
32
3,991

As of September 30,
2007
4,247
40
4,288

Change
(%)
+7.3
+26.9
+7.4

As of March 31, 2007
4,109
35
4,145

(3) New Insurance Sales
Policy Amount Basis(Billions of yen)

Individual insurance
Individual annuity
Total

For the six months ended
September 30, 2006
¥ 1,679.9
13.6
1,693.6

For the six months ended
September 30, 2007
¥ 1,849.3
29.9
1,879.3

Change (%)+10.1+119.0+11.0

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

Number of Policies Basis

Individual insurance
Individual annuity
products
Total

For the six months ended
September 30, 2006
248

(Thousands of policies)
For the six months ended
Change (%)
September 30, 2007
+0.8
250

2

5

+106.4

250

255

+1.9

(4) Annualized Premiums
Insurance in Force

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

As of September 30,
2006¥ 482,231
6,958
488,830

As of September 30,
2007¥ 509,465
8,024
517,490

Change
(%)
+5.6
+21.6
+5.9

113,961

120,530+5.8

7(Millions of yen)
As of March 31, 2007
¥ 497,570
7,121
504,691
117,466

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

New Insurance Sales(Millions of yen)

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

For the six months ended
September 30, 2006
¥ 30,965
577
31,543
6,883

For the six months ended
September 30, 2007
¥ 30,067
1,158
31,225
6,593

Change (%)(2.9)+100.5(1.0)(4.2)

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

■ Sony AssuranceSony Assurance posted an 8.2% increase in ordinary revenues compared with the first half of the prior fiscal year, to¥27.7 billion, primarily due to favorable performance in its mainstay automobile insurance, which raised net premiums
written. As a result of the increase in ordinary revenues, together with an improved net expense ratio and a net loss
ratio that remained on a par with the prior fiscal year, ordinary profit rose 116.0% compared with the first half of theprior fiscal year, to ¥2.0 billion. Net income rose 161.8% compared with the first half of the prior fiscal year, to ¥1.9
billion.
In terms of insurance underwriting, direct premiums written grew 8.6% compared with the first half of the priorfiscal year, to ¥27.3 billion, in line with a rise in the number of automobile insurance policies. Net premiums written
grew 8.1% compared with the first half of the prior fiscal year, to ¥27.4 billion. In tandem with the increase in numberof policies, net losses paid increased 7.6%, to ¥12.4 billion. As a result, the net loss ratio improved 0.1 percentage
point compared with the first half of the prior fiscal year, to 51.1%. The net expense ratio improved 0.6 percentage
points, to 25.3%, owing to ongoing increases in operating efficiency. Also, provision for underwriting reserve
decreased ¥0.5 billion compared with the first half of the prior fiscal year, due to a revision in the method of
calculating this reserve for SURE medical and cancer insurance. Consequently, underwriting profits amounted to ¥1.7
billion, and the combined ratio (the sum of the net loss ratio and the net expense ratio) improved 0.7 percentage points
compared with the first half of the prior fiscal year, to 76.4%.
(1) Principal Income and Expense Items
For the six months ended
September 30, 2006
Ordinary revenues
Ordinary profit
Net income
Net loss ratio (%)
Net expense ratio (%)
Underwriting profits
Total assets
Solvency margin ratio (%)

For the six months ended
September 30, 2007

¥ 25,688
933
747
51.2
25.9
677

¥ 27,792
2,017
1,956
51.1
25.3
1,745

As of September 30, 2006
¥ 61,298
971.9

8As of September 30, 2007
¥ 73,498
1,067.7(Millions of yen)
Change in amount (%) orchange inpercentage (pt)
+8.2
+116.0+161.8(0.1) pt(0.6) pt
+157.8
As of March 31, 2007
¥ 67,468
1,009.7

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007(2) Direct Premiums Written(Millions of yen)Type of policy
Fire
MarinePersonal accident
Voluntary automobile
Compulsory automobile
liability
Total

For the six months ended
September 30, 2006
¥
49
－
2,809
22,302For the six months ended
September 30, 2007
¥
132
－
3,116
24,070－25,161－
27,319Change (%)+169.1
－
+10.9
+7.9
－
+8.6

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

For the six months ended
September 30, 2006
¥
4
21
2,876
22,220For the six months ended
September 30, 2007
¥
7
22
3,183
23,966272
25,394284
27,464

Change (%)
+86.7
+4.5
+10.7
+7.9
+4.4
+8.1

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

For the six months ended
September 30, 2006
¥
0
16
443
10,946

For the six months ended
September 30, 2007
¥
0
10
568
11,681

193
11,599217
12,478Change (%)+763.2(34.0)
+28.3
+6.7
+12.5
+7.6

■ Sony Bank (Non-Consolidated)
Sony Bank’s ordinary revenues increased 20.1% compared with the first half of the prior fiscal year, to ¥11.5 billion,
as a higher balance of mortgage loans resulted in increased interest on loans, leading to higher interest income. Owing
to the rise in gross operating profit, ordinary profit increased 167.6% compared with the first half of the prior fiscal
year, to ¥1.5 billion. As a result of the above factors and an increase in deferred income taxes, Sony Bank’s net income
increased substantially, to ¥2.0 billion.
Boosted by such factors as higher net interest income, gross operating profit grew 21.5% compared with the firsthalf of the prior fiscal year, to ¥5.4 billion. Breaking down gross operating profit, net interest income increased 23.6%,
to ¥2.4 billion, as a result of a larger balance of invested assets through the expansion of operations. Net fees andcommissions grew 143.6%, to ¥0.3 billion, as a larger investment trust balance pushed up fees and commissions
received. Net other income increased 13.2%, to ¥2.6 billion, as market investment profit improved.
As of September 30, 2007, the balance of customer assets (the sum of total deposits and total investment trusts)
exceeded ¥1 trillion, largely due to an increase in the balance of yen time deposits. The balance amounted to ¥1,006.0
billion, up ¥157.1 billion, or 18.5%, from March 31, 2007. Total yen and foreign currency deposits grew ¥136.0
billion, or 18.1% compared to March 31, 2007, to ¥888.4 billion. As of September 30, 2007, investment trusts wereup ¥21.0 billion compared with March 31, 2007, or 21.8%, to ¥117.6 billion, and loans were up ¥34.4 billion, or
12.1%, to ¥319.1 billion.
On September 30, 2007, total deposit accounts numbered 532 thousand, up 74 thousand from September 30,
2006 and up 41 thousand from March 31, 2007. As of September 30, 2007, the bank’s capital adequacy ratio, based on
domestic criteria, was 10.94%.

9

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007(1) Principal Income and Expense Items(Millions of yen)
For the six months ended
For the six months ended
Change (%)
September 30, 2006
September 30, 2007
Ordinary revenues¥ 9,641+20.1¥ 11,581
Ordinary profit
590+167.6
1,579
Net income
169+1,109.7
2,045
Gross operating profit
4,506
+21.5
5,474
Net interest income
2,014
+23.6
2,489
Net fees and commissions
125+143.6306
Net other operating income
2,366
2,677
＋13.2
General and administrative
3,878
(0.1)
3,875
expenses
Net operating profit
616+157.4
1,587
Total assets
Capital adequacy ratio(domestic criteria) (%)

As of September 30, 2006
¥ 751,018

As of September 30, 2007
¥ 966,117

10.52

As of March 31, 2007
¥ 806,848
11.49

10.94

Note: Capital adequacy ratios as of March 31, 2007 and September 30, 2007 were calculated based on the standard stipulated in the Financial Services
Agency Public Announcement No. 19 of 2006. The capital adequacy ratio as of September 30, 2006 was calculated based on the standard stipulated in
the former public announcement.

(2) Customer Assets (Total of Deposits and Investment Trusts) and Number of Accounts

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

Year-on-yearchange (%)

As of March
31, 2007(Billions of yen)
Change fromMarch 31,2007 (%)
+18.1
+17.3

As of September
30, 2006

As of September
30, 2007¥ 682.7
540.6¥ 888.4
708.8

+30.1
+31.1

¥ 752.3
604.4

142.0

179.6

+26.4

147.8

+21.5

80.0
762.7

117.6
1,006.0

+47.0
+31.9

96.5
848.8

+21.8
+18.5

458

532

+16.1

491

+8.4

(3) Loans

Mortgage loans
Other
Total

As of September
30, 2006

As of September
30, 2007¥ 243.3
5.8
249.1¥ 311.4
7.6
319.1

10

Change from
September 30,
2006 (%)
+28.0
+31.5
+28.1

As of March
31, 2007¥ 278.0
6.6
284.7(Billions of yen)
Change fromMarch 31,2007 (%)
+12.0
+14.2
+12.1

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

II. Status of the Corporate GroupOn April 1, 2004, SFH was established as a financial holding company (an insurance holding company and a bankholding company) through a corporate separation from Sony Corporation.
As of September 30, 2007, the SFH Group includes as direct subsidiaries Sony Life, Sony Assurance and Sony
Bank, and as indirect subsidiaries Sony Life Insurance (Philippines) Corporation, a subsidiary of Sony Life, and Sony
Bank Securities Inc., a subsidiary of Sony Bank.
SFH was a wholly owned subsidiary of Sony Corporation as of September 30, 2007. Following the listing of SFH’
shares on the First Section of the Tokyo Stock Exchange on October 11, 2007, Sony Corporation held 60% of the sharesof SFH as of this announcement (November 16, 2007).
The following is an overview of the operations of the SFH Group:•Sony Financial Holdings Inc. (oversees the operations of its subsidiaries and undertakes related duties)
Directly Held and Indirectly Held Subsidiaries< Life insurance business> Sony Life Insurance Co., Ltd. (Wholly owned by SFH)
 Sony Life Insurance (Philippines) Corporation (Wholly owned by Sony Life)< Non-life insurance business> Sony Assurance Inc. (Wholly owned by SFH)
< Banking business> Sony Bank Inc. (88% owned by SFH)
 Sony Bank Securities Inc. (Wholly owned by Sony Bank)[Organizational chart] (As of September 30, 2007)
Sony Corporation○ Consolidated subsidiarySony Financial Holdings Inc.
88%

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

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

AEGON Sony
Life PlanningCo., Ltd.

＜Banking business＞○ Sony Bank Inc.

○ Sony Bank Securities Inc.

Tradename and trademark license
Sales and referrals of the other’s productsManagement control fee
Shareholding

Note: In August 2007, AEGON Sony Life Planning Co., Ltd. was established as an affiliate of Sony Life. AEGON Sony Life PlanningCo., Ltd. is not included as an equity-method affiliate in the scope of consolidation in the FY2007 interim financial period.

11Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

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

2. Key Management Benchmarks
The SFH Group aims to raise its corporate value by providing optimal products and services that integrate the diverse
functions inherent to such financial services as savings, investment, borrowing and protection. The Group has
designated consolidated ordinary revenues, consolidated ordinary profit, consolidated net income and adjusted ROE as
specific indicators of success in achieving its objective of maintaining soundness as a financial institution. Adjusted
ROE is calculated as follows.
■ Adjusted ROE = adjusted profit ÷ adjusted capital・Adjusted profit is calculated as the sum of the following:1) Life insurance business: The amount of increase in Sony Life’s embedded value (adjusted net worth plus value ofin force business) during the fiscal year plus dividends paid by Sony Life with respect to that fiscal year;
2) Non-life insurance business: The net income of Sony Assurance plus its provision for special catastrophe reserveand its provision for reserve for price fluctuations, in each case after taxes; and
3) Banking Business: Net income of Sony Bank.
・Adjusted capital is calculated as the sum of the following:1) Life insurance business: The embedded value of Sony Life as of the beginning of the fiscal year less dividends
paid by Sony Life with respect to that fiscal year plus the embedded value of Sony Life as of the end of the fiscal
year, divided by two;
2) Non-life insurance business: The net assets of Sony Assurance as of the beginning of the fiscal year plus the sumof its special catastrophe reserve and its reserve for price fluctuations, in each case after taxes, plus the net assetsof Sony Assurance as of the end of the fiscal year plus the sum of its special catastrophe reserve and its reserve forprice fluctuations, in each case after taxes, divided by two; and
3) Banking business: The net assets of Sony Bank as of the beginning of the fiscal year plus the net assets of Sony
Bank as of the end of the fiscal year, divided by two.
Adjusted profit and adjusted capital take into consideration dividends from the group subsidiaries and otherspecial factors.

12Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

3. Medium- to Long-Term Management Strategies
The SFH Group aims to maximize the corporate value of the Group over the medium to long term by implementing themanagement strategies outlined below.
(a) Sustainable and Stable Growth of Group Companies
Sony Life:
Sony Life provides detailed tailored consulting and follow-up services through life
insurance professionals—Lifeplanner (sales employees) and Partner (independentagencies)—who have broad-ranging expertise and extensive experience in such areas as
economics, finance and taxation. Sony Life strives to strengthen its capabilities and honeits competitive edge in the individual life insurance market by providing“LIFEPLANNER VALUE” that goes beyond the traditional boundaries of life insurance
in a way that only Sony Life can.
Sony Assurance: Drawing on the strengths of its position as a direct insurance provider that communicateswith customers primarily via the telephone and the Internet, Sony Assurance strives tointeract directly with each of its customers. By reflecting customer opinions and needs in
its products and services, the company is strengthening its base of operations throughfocused activity and by offering reasonably priced insurance premiums.
Sony Bank:
Sony Bank is an Internet bank focused on the needs of individual customers. By
maximizing information technologies, the bank works to provide fair and highly
convenient financial products and services. By ensuring its trustworthiness in such ways,
the bank is working to expand its operations further.
(b) Fostering Synergy among Group Companies
In addition to the growth of each company within the Group, we seek to enhance synergies among the companiesof the SFH Group. Such efforts include the joint offering of products and services, the sharing of distribution
channels and infrastructure and other forms of collaboration. By increasing intra-group synergies, SFH aims tooffer customers attractive and high-value-added products and services that are unmatched by conventional
financial institutions.
(c) Expanding into New Business Fields, Outside the Existing Framework
Through the growth of Group companies and increased synergies within the Group, we aim to move beyond theexisting framework of the SFH Group. We are examining active advancements into new business fields that willraise our corporate value even further.

4. Tasks Ahead for the Company
In addition to changes in the macroeconomic environment, such as a society characterized by a declining population,competition in the life insurance industry is becoming more stringent owing to several factors: the liberalization of
additional policy premiums, the market entry of Japan Post Insurance Co., Ltd., following the October 2007 privatizationof Japan Post, and the expected December 2007 lifting of the ban on bank sales of insurance products. Amid suchchanges, the function of life insurance is increasingly shifting from lifestyle protection in response to crisis events in thelife of the insured to the protection of the insured’s lifestyle security and peace of mind. As the phrase “from life
insurance to living standard insurance” suggests, in the future we expect life insurance to evolve from being a productthat provides economic protection to an all-around lifestyle service vehicle that includes financial service and lifestylesupport service components. Sony Life has positioned the major markets of both death protection and endowment
insurance as key areas, from which it should maintain a firm base of operations. For example, by providing health andpreventive healthcare services, comprehensive financial services, aging lifestyle and other services, the company willaddress the major management task of helping customers maintain their peace of mind as they pass through life’s
milestones.
In the non-life insurance industry, such factors as a declining birthrate and an aging population are not expected tohave any positive impact on the size of the market for individual non-life insurance. However, such factors as theincreasing prevalence of broadband access, the complete lifting of bans on the sale of insurance at bank branches, themarket entry of Japan Post Network Co., Ltd. and a growing number of insurance sales stores are creating changes within
the industry and diversifying distribution channels. These changes are expected to lead to more fierce competition among
these channels. Sony Assurance seeks to sustain high levels of customer satisfaction by providing customers with higher
quality products and services. While maintaining its leadership position in the Japanese market for the direct marketing of
automobile insurance, Sony Assurance recognizes the importance of responding to these changes in its operating
environment.
In the Group’s life insurance and non-life insurance businesses, Sony Life and Sony Assurance are applying their full13

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007
energies to recover customer trust and prevent the recurrence of incidents that came to light involving their inadvertent
underpayment and nonpayment of insurance and other claims, insufficient guidance for making payment claims, andincorrect charging for premium payments.
Recent banking industry deregulation measures include a lifting of the ban on banks offering securities products andthe complete lifting of bans on the bank sale of insurance products. This deregulation has extended the range ofpossibilities within the financial service domain. Other factors leading to major changes in the management environment
include the privatization of Japan Post, the consolidation of major banks and the recent entry into the banking business ofretailers, internet companies, foreign financial institutions and other entities. These changes highlight the need forbanking services that focus on individuals and offer high-quality products and services. As Sony Bank provides fair andhighly convenient products and services to individual customers over the Internet, with a focus on retail asset
management, we recognize business expansion while maintaining high levels of customer satisfaction as a major
management task for Sony Bank.
As a Group that consists of operating companies with different distribution channels, each focused on individual
customers, we recognize that financial industry deregulation presents opportunities to enhance product sales synergies
among Group companies. Already, Sony Life’s Lifeplanner sales employees sell Sony Assurance’s automobile insurance
and refer their customers to Sony Bank’s mortgage loans. In the future, we will forge stronger alliances among businesses,
as we recognize the importance of raising corporate value by enhancing the efficiency of identifying new customers andcross-selling. Furthermore, we recognize the need to diversify revenue sources, as well as expand overall revenues, bydeveloping reasonably priced and convenient new products and services for individuals.

14

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

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

As of September
30, 2006

As of September
30, 2007

60,453
213,981668,599
2,582,798
340,740
76,413
7,192
128
2,309
64,1553,098(247)

44,075391,537
795,1092,812,707
420,22985,657
10,7610392
2,565
82,683
4,972(266)

40,996
332,459
718,492
2,649,768
381,52288,574
8,593
0
496
4,156
95,351
3,599(230)

4,019,623

4,650,428

4,323,780

29,9682,926,038
1,970
1,148
607
682,717
23,000644,338
1,698
11,139178
19,90622,825706

30,162
3,293,393
3,186
1,234
662
888,442
24,00010
64,243
1,866
11,144214
22,44922,677706

29,9203,125,118
2,597
1,415
934
752,366
10,000075,367
1,906
11,212
241
20,90820,904706

3,766,250

4,364,397

4,053,601

5,500
180,877(43,188)
143,188
107,743(456)(1,475)
36
105,847
4,336
253,372
4,019,623

5,500
180,877(33,962)
152,414130,169(360)(1,475)700
129,034
4,582
286,030
4,650,428

5,500
180,877(44,173)
142,203
125,043(408)(1,475)
390
123,549
4,425
270,179
4,323,780

Assets:Cash and due from banks
Call loans and bills bought
Monetary trusts
Securities
Loans
Tangible fixed assets
Intangible fixed assets
Due from agencies
Due from reinsurers
Foreign exchanges
Other assets
Deferred tax assets
Reserve for possible loan losses
Total assets
Liabilities:
Reserve for outstanding claims
Policy reserve
Reserve for policyholders’ dividends
Due to agencies
Due to reinsurers
Deposits
Call money and bills sold
Foreign exchanges
Other liabilities
Reserve for employees’ bonuses
Reserve for employees’ retirement benefits
Reserve for directors’ retirement benefits
Reserve for price fluctuations
Deferred tax liabilities
Deferred tax liabilities on land revaluation
Total liabilities
Net assets:
Common stock
Capital surplus
Retained deficits
Total shareholder’s equity
Net unrealized gains on other securities, net of taxes
Net deferred losses on hedging instruments, net of taxes
Land revaluation, net of taxes
Foreign currency translation adjustments
Total valuation and translation adjustments
Minority interests
Total net assets
Total liabilities and net assets

15

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

2. Consolidated Statements of Income(Yen in millions)
For the six months
ended September
30, 2006

For the six months
ended September
30, 2007For the year ended
March 31, 2007

Ordinary revenues

354,728

404,685759,280

Ordinary revenues from the life insurance business:
Income from insurance premiums
Investment income
Other ordinary income

290,003
28,900522

318,426
44,7782,140

605,051
78,9284,874

Ordinary revenues from the non-life insurance business:
Underwriting income
Investment income
Other ordinary income

25,406238
25

27,479286
1150,495464
27

Ordinary revenues from the banking business:
Interest income
Fees and commissions
Other operating income
Other ordinary income

5,991
657
2,979
4

7,447
949
3,157
6

12,763
1,587
5,065
21

Ordinary expenses

336,865

377,133

740,926

Ordinary expenses from the life insurance business:
Insurance claims and other payments
Provision for policy reserve and others
Investment expenses
Operating expenses
Other ordinary expenses

101,716
153,3142,011
41,865
4,625

117,482
164,683
9,036
45,660
4,775

219,352
349,666
8,231
87,27010,300Ordinary expenses from the non-life insurance business:
Underwriting expenses
Investment losses
Operating, general and administrative expenses
Other ordinary expenses

18,463
3
6,110
319,0793
6,482
1236,166
3
12,39248

Ordinary expenses from the banking business:
Interest expenses
Fees and commissions
Other operating expenses
General and administrative expenses
Other ordinary expenses

3,976
242
612
3,876
42

4,954
486
479
3,927
70

8,174
445
1,149
7,665
58

Ordinary profit
Extraordinary gains
Extraordinary losses
Provision for reserve for policyholders’ dividends

17,862241
17
627

27,5511
1,689
966

18,354
334
1,146
2,057

Income before income taxes
Income taxes - Current- Deferred
Minority interests

17,4599,175(2,742)(20)

24,896
10,835(2,883)(233)

15,485
20,270(14,929)(123)

Net income

11,006

16,71010,02116

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

3. Consolidated Statements of Changes in Net Assets
For the six months ended September 30, 2006

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

Capital surplus

Retained deficits

5,500

180,877(47,694)-

138,682

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

11,006-

11,006

Net changes other than shareholder’s equity

-

-

-

-

-

-

-

4,506

-

4,506

5,500

180,877(43,188)-

143,188

Minority
interests

Total net assets

Balance as of March 31, 2006

Treasury stock

Changes during the period

Total changes during the period
Balance as of September 30, 2006

Valuation and translation adjustments
Net deferred
Net unrealized
Foreign
Total valuation
losses on
Landgains on othercurrency
hedging
revaluation,net
securities, net instruments,
translation and translation
adjustmentsof taxesof taxes
adjustments
net of taxes
Balance as of March 31, 2006

125,720-(1,475)

113

124,358

4,165

267,206

Dividends from surplus

-

-

-

-

-

-

(6,500)Net income

-

-

-

-

-

-

11,006

Changes during the period(17,976)

(456)

-

(77)

(18,511)171(18,339)

Total changes during the period(17,976)

(456)

-

(77)

(18,511)171(13,833)

Balance as of September 30, 2006

107,743(456)(1,475)

36

105,847

4,336

253,372

Net changes other than shareholder’s equity

For the six months ended September 30, 2007

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

Capital surplus

Retained deficits

5,500

180,877(44,173)-

142,203--(6,500)-(6,500)

Balance as of March 31, 2007

Treasury stock

Changes during the period
Dividends from surplus
Net income--

16,710-16,710Net changes other than shareholder’s equity

-

-

-

-

-

-

-

10,210-10,2105,500

180,877(33,962)-

152,414

Minority
interests

Total net assets

Total changes during the period
Balance as of September 30, 2007

Valuation and translation adjustments
Net deferred
Net unrealized
Foreignlosses on
Land
Total valuation
gains on otherrevaluation, net currency
and translation
hedgingsecurities, net instruments,
translationof taxes
adjustmentsof taxes
adjustments
net of taxes
Balance as of March 31, 2007

125,043(408)(1,475)

390

123,549

4,425

270,179

-

-

-

-

-

-

(6,500)Changes during the period
Dividends from surplus
Net income

-

-

-

-

-

-

16,710

5,125

48

-

310

5,484

157

5,641

Total changes during the period

5,125

48

-

310

5,484

157

15,851

Balance as of September 30, 2007

130,169(360)(1,475)700

129,034

4,582

286,030

Net changes other than shareholder’s equity

17

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007
For the year ended March 31, 2007

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

Capital surplus

Retained deficits

5,500

180,877(47,694)-

138,682

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

10,021-

10,021

Net changes other than shareholder’s equity

-

-

-

-

-

Balance as of March 31, 2006

Treasury stock

Changes during the period

Total changes during the period

-

-

3,521

-

3,521

Balance as of March 31, 2007

5,500

180,877(44,173)-

142,203

Minority
interests

Total net assets

Valuation and translation adjustments
Net deferred
Net unrealized
Foreign
Total valuationLand
losses on
gains on othercurrency
hedging
and translation
revaluation, net
securities, net instruments,
translation
adjustmentsof taxesof taxes
adjustments
net of taxes
Balance as of March 31, 2006

125,720-(1,475)

113

124,358

4,165

267,206

Dividends from surplus

-

-

-

-

-

-

(6,500)Net income

-

-

-

-

-

-

10,021

Changes during the period

(676)

(408)

-

276

(808)

259

(548)

Total changes during the period

(676)

(408)

-

276

(808)

259

2,972

Balance as of March 31, 2007

125,043(408)(1,475)

390

123,549

4,425

270,179

Net changes other than shareholder’s equity

18

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

4. Consolidated Statements of Cash Flows(Yen in millions)
For the six months For the six months
ended September ended September For the year ended
March 31, 2006
30, 2006
30, 2007

Cash flows from operating activities:
Income before income taxes

17,45924,896

15,485

Depreciation and amortization

1,626

2,726

4,683

0

125

0

Increase in policy reserve and others

159,094

169,476

359,544

Interest income and dividends(21,788)(30,729)(47,714)

Gains on securities(8,503)(10,384)(31,972)

Interest expenses

3,979

4,963

8,182

Net (increase) decrease in loans(9,675)(34,415)(45,245)

Net increase (decrease) in deposits

82,904

136,145

152,587

Net (increase) decrease in call loans and bills bought(69,306)(168,578)(82,885)

Net increase (decrease) in call money and bills sold(87,700)

14,000(100,700)

Others, net

9,835(7,762)(1,653)

Subtotal

77,923

100,464

230,312Interest and dividends received

24,67631,31952,737

Interest paid

(3,479)(4,364)(7,105)

(243)

(384)

(1,048)

Income taxes paid

(13,797)(7,257)(16,724)

Net cash provided by operating activities

85,079119,778

258,171

Investments in monetary trusts(63,871)(66,577)(127,015)

Proceeds from sale of monetary trusts

41,700-61,700Purchases of securities(345,580)(574,990)(659,994)

Proceeds from sale and redemption of securities

375,381438,839

661,927

Investments in loans(21,032)(20,120)(49,602)

Collections of loans

16,15015,52840,002Others, net(300)(3,286)(500)

Subtotal

2,447(210,607)(73,482)

Purchases of tangible fixed assets(930)(4,350)(10,148)-

0

1

Purchases of intangible fixed assets(1,554)(3,776)(3,586)

Net cash used in investing activities(37)(218,733)(87,215)

Cash dividends paid

(6,500)(6,500)(6,500)Net cash used in financing activities(6,500)(6,500)(6,500)8

41

41

Net increase (decrease) in cash and cash equivalents

78,550(105,414)

164,496

Cash and cash equivalents at beginning of the fiscal period

109,263273,760

109,263

Cash and cash equivalents at end of the fiscal period

187,813

168,345

273,760

Impairment losses

Policyholders’ dividends paid

Cash flows from investing activities:

Proceeds from sale of tangible fixed assets

Cash flows from financing activities:

Effect of exchange rate changes on cash and cash equivalents

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

19

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

5. Notes to the Consolidated Financial Statements(1)

Summary of Significant Accounting Policies

Principles of Consolidation (1) Scope of consolidation
Number of consolidated subsidiaries:
5
Consolidated subsidiaries: Sony Life Insurance Co., Ltd., Sony Life Insurance (Philippines) Corporation, Sony
Assurance Inc., Sony Bank Inc., Sony Bank Securities Inc.
(2) Application of the equity method
Unconsolidated subsidiaries and affiliates accounted for by the equity method: Not applicable
Unconsolidated subsidiaries and affiliates that are not accounted for by the equity method:
AEGON Sony Life Planning Co., Ltd. is excluded from the scope of equity method because its net income and retained
earnings are so immaterial that excluding it from the scope of equity method does not hinder a rational judgment of
SFH’s financial position and results of operations.
(3) Fiscal year-end of consolidated subsidiaries
The financial statements of Sony Life Insurance (Philippines) Corporation are prepared with a fiscal year-end of
December 31. Appropriate adjustments are made for material transactions between June 30 and September 30, the dateof the consolidated financial statements of SFH. All other subsidiaries prepare their respective financial statements asof September 30, the same date as the consolidated financial statements of SFH.
(4) Valuation of assets and liabilities of consolidated subsidiaries
Certain assets and liabilities of consolidated subsidiaries are computed at fair value as of the respective dates when thesubsidiaries were initially consolidated.
Securities Securities are stated in the following manner: Securities held for trading purposes (”trading securities”) are stated at fair value
with unrealized gains and losses charged to income. The cost of such securities sold is determined by the moving-averagemethod. Held-to-maturity securities are stated at amortized cost (straight-line method) using the moving-average method.
Investment in affiliates that are not accounted for by the equity method are stated at acquisition cost calculated using themoving-average method. Other securities designated as available-for-sale securities whose fair value is readily determinable
are stated at fair value in the consolidated balance sheets based on market prices prevailing at each balance sheet date, withunrealized gains (losses), net of income taxes, included in net assets and acquisition costs calculated using themoving-average method. Other securities designated as available-for-sale securities whose fair value is not readily
determinable are stated at amortized cost (straight-line method) or at acquisition cost based on the moving-average method.
Derivative financial instruments Derivative financial instruments are stated at fair value, with changes in fair value included in income for the period in which
they arise, except for derivatives that are designated by SFH and its domestic subsidiaries (the “Companies”) as “hedging
instruments”.
Hedge accounting SFH’s banking subsidiary applies either deferred hedge accounting or fair value hedge accounting to account for transactions
it enters into to hedge interest rate risks on financial assets and liabilities. SFH’s banking subsidiary uses interest rate swaps
to offset fluctuations in interest rates on fixed-rate loans by identifying the hedged items that are grouped based on theirmaturity, in accordance with “Accounting and Auditing Treatments on Application of Accounting Standard for Financial
Instruments in the Banking Industry” (Industry Audit Committee of Japanese Institute of Certified Public Accountants No.
24). Interest rate swaps and others are used as hedging instruments to offset fluctuations in the fair value of fixed-rate bonds
which are classified as other securities. Both of the above-mentioned hedging instruments are identified so that theirsignificant terms are nearly identical to those of the hedged items. Accordingly, such hedges are considered as highly
effective, resulting in a substitution for evaluating the effectiveness of the hedging transactions.
Tangible fixed assets All tangible fixed assets, including real estate for lease, are initially recorded at cost. Subsequent expenses related to asset
improvements are capitalized or are recognized as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Companies and the cost of the item can be measured reliably.
All other repairs and maintenance charges are charged to income when incurred.
Depreciation is generally computed by the straight-line method for buildings and by the declining-balance method for otherproperty and equipment over the estimated useful lives of the assets, as follows:
Buildings
4 to 43 years
Other property and equipment
2 to 20 years

20Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007
In accordance with revisions to the Japanese corporation tax law, the depreciation method for tangible fixed assets has beenchanged. Starting from April 1, 2007, tangible fixed assets acquired on and after April 1, 2007 are depreciated fully to theirmemorandum values, or ¥1. This change has had only a minor impact on SFH’s results of operations.
In accordance with the revised Japanese corporation tax law, depreciation of the remaining book value of tangible fixed assets
acquired on and before March 31, 2007 and depreciated up to the depreciable amount is computed using the straight-line
method over a period of 5 years. This change has had only a minor impact on SFH’s results of operations.
Software for internal use Software for internal use is amortized using the straight-line method mainly over 5 years, its estimated useful life.
Reserve for possible loan losses The reserve for possible loan losses is calculated by the Companies in accordance with self-assessment guidelines andwrite-off and reserve guidelines established at each subsidiary. With respect to loans to borrowers subject to bankruptcy,
court-guided rehabilitation or similar legal or formal proceedings, the Companies provide a specific reserve in the amount of
the loan balance less amounts collectable from collateral, guarantees and other means. For other loans, the Companies
provide a general reserve by applying the historical loan loss ratio determined over certain periods. Each loan is subject toasset assessment by the operational department of the relevant company in accordance with its self-assessment guidelines,
and the results of the assessment are reviewed by the respective internal audit departments, which are independent from theoperational departments, before the amount of reserve is finalized.
Reserve for employees’ bonuses The reserve for employees’ bonuses is provided for the estimated amount of bonuses the Companies are required to pay forservices provided during the current fiscal year.
Reserve for employees’ retirement benefits The reserve for employees’ retirement benefits is provided for the payment of retirement benefits to employees, in the amountdeemed accrued at the fiscal year-end, based on the projected retirement benefit obligation and the fair value of plan assets at
the fiscal year-end. Unrecognized prior service cost is amortized using the straight-line method over 10 years within theemployees’ average remaining service period at incurrence. Unrecognized net actuarial gain (loss) is amortized using thestraight-line method over 7 to 10 years within the employees’ average remaining service period, commencing from the fiscal
year immediately following incurrence. Unrecognized net obligation at transition is amortized using the straight-line
method over 15 years.
Reserve for directors’ retirement benefits The reserve for directors’ and statutory auditors’ retirement benefits is provided based on the internal regulations of SFH and
its domestic subsidiaries and calculated at the amount that would be payable if all eligible directors and statutory auditors
were to resign at the fiscal year-end.
Policy reserve Pursuant to the Insurance Business Law, SFH’s domestic life insurance subsidiary maintains a policy reserve for thefulfillment of future obligations under life insurance contracts. The policy reserve is established by the net level premium
method, which assumes a constant or level amount of net insurance premiums over the term of the relevant policy incalculating the amount of the reserve required to fund all future policy benefits. The net insurance premium is a portion of
the premium covering insurance underwriting risk, which is estimated based on factors such as mortality rates, investment
yield, surrender rates and other factors. The net level premium reserve for individual insurance contracts underwritten fromfiscal year 1996 is calculated using mortality and interest rates set by the Financial Services Agency as standard policy
reserve. Additionally, the net level premium reserve for individual insurance contracts underwritten before fiscal year 1996
is calculated using mortality and interest rates approved by the supervisor of insurance business in Japan.
Reserve for price fluctuations Pursuant to requirements under the Insurance Business Law, the reserve for price fluctuations is provided for pricefluctuations primarily related to stocks, bonds and foreign currency-denominated assets which are exposed to losses due tomarket price fluctuations. This reserve may only be used to reduce deficits arising from price fluctuations on those assets.
Translation of foreign currencies Assets and liabilities denominated in foreign currencies are translated into Japanese yen at the foreign exchange rates in effectat each balance sheet date, whereas components of net assets denominated in foreign currencies are translated at historicalrates. The current year’s profit and loss accounts are translated into yen using the average exchange rate for the fiscal year.
Lease transactions Finance leases that do not transfer ownership of the leased property to the lessee are accounted for as operating leases.

21

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007
Land revaluation On March 31, 2002, SFH’s domestic life insurance subsidiary revalued its land for operating purposes, as permitted by theLand Revaluation Law (Law No. 34, enacted March 31, 1998—the “Law”). The tax effect of the revaluation difference isaccounted for differently, depending on whether there are gains or losses; when there is a loss, a valuation allowance is fully
provided for the tax effect of the loss, and when there is a gain, the tax effect is recorded in “deferred tax liabilities on land
revaluation.” After excluding these amounts, the net revaluation difference is reported as “land revaluation” in net assets.
The revaluation method stipulated by Article 3-3 of the Law was based on the land appraisal in conformity with Article 2-5 of
the Law Enforcement Order related to the Law (Government Ordinance No. 119, effective from March 31, 1998).
Accounting for consumption taxes The consumption taxes received and paid by SFH and its domestic subsidiaries, excluding loss adjustment expenses andoperating, general and administrative expenses of SFH’s non-life insurance subsidiary, are not included in income andexpenses. Under the Consumption Tax Law of Japan, the consumption taxes paid on property and equipment are notdeductible from the consumption taxes received; they are recorded as “other assets” and amortized on a straight-line basis
over 5 years. Other non-deductible consumption taxes are charged to income as incurred.
Application of consolidated tax provision Prior to the listing of SFH’s shares on the Tokyo Stock Exchange, the consolidated tax provision, under which Sony
Corporation is the parent company, was applied to SFH and its domestic subsidiaries wholly owned by Sony Corporation.
As a listing of SFH’s shares on the Tokyo Stock Exchange, SFH and its domestic subsidiaries ceased to be wholly-owned
subsidiaries of Sony Corporation. As a result, starting from April 1, 2007, SFH and its domestic subsidiaries calculate theirtax provision (benefit) based on the assumption that they are excluded from the consolidated tax system.
Cash and cash equivalents Cash equivalents consist of highly liquid investments without significant market risks, such as demand deposits andshort-term investments with an original maturity of three months or less.

(2)

Segment InformationLife
insurancebusiness

Yen in millions
For the six months ended September 30, 2007
Non-life
insurance
Bankingbusinessbusiness
Total
Elimination

Consolidated

Ordinary revenues:
External customers
Intersegment
Total
Ordinary expenses

365,346386
365,732
341,721

27,777
14
27,792
25,775

11,561
23
11,584
10,100404,685424
405,109377,597

(424)
(424)
(464)

404,685404,685
377,133

Ordinary profit

24,010

2,017

1,483

27,511

40

27,551The life insurance business consists of Sony Life Insurance Co., Ltd. and Sony Life Insurance (Philippines) Corporation, thenon-life insurance business consists of Sony Assurance Inc., and the banking business consists of Sony Bank Inc. and Sony
Bank Securities Inc.
The amount of unallocated ordinary expenses included in “elimination” for the six months ended September 30, 2007 is ¥399
million, most of which are ordinary expenses of SFH.

(3)

Investments in Securities

The following provides fair value information on securities.
Trading securities:
Yen in millions
September 30, 2007
Net valuation losses
Consolidated balance sheet amountrecorded in income
327,864(5,186)22

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007
Held-to-maturity securities with fair values:
Consolidatedbalance sheet
amountBonds:
Japanese government and municipal bonds
Japanese corporate bonds
OthersTotal

Yen in millions
September 30, 2007
Gross unrealized
gains

Gross unrealized
losses41,209
4,805
808

196
24
31

(114)
(10)
(1)

41,2904,820
839

46,823252(126)

46,949Acquisition cost

Gross unrealized
gains

Gross unrealized
lossesConsolidatedbalance sheet
amount

1,443,959
376,351
135,883
284,981

15,03540,201
111,739
12,696(7,437)(1,133)(1,857)(3,610)1,451,557
415,420
245,766
294,067

2,241,177

179,673(14,038)

2,406,811

Fair value

Other securities with fair values:
Yen in millions
September 30, 2007

Bonds:
Japanese government and municipal bonds
Japanese corporate bonds
Equity securities
Others
Total
Other securities sold during the period:

Yen in millions
For the six months ended
September 30, 2007
Sales
Gains on sales
Losses on sales

153,164
11,888(568)

Other securities with no available fair values:
Yen in millions
September 30, 2007
Investment in affiates
Equity securities
Others1,000
530,202

Total

31,207

The future redemption schedule of other securities with maturities and held-to-maturity securities as of September 30, 2007 is
as follows:
Yen in millions
More than 1
More than 5
1 year or lessyear to 5 years
years to 10 years Over 10 years
Bonds
Japanese government and municipal bonds
Japanese corporate bonds
OthersTotal

33,561
62,947
63,781

347,385
249,340
127,792

1,001,031
79,53653,273

110,787
28,40155,042160,290

724,519

1,133,841

194,23123

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007(4)

Investments in Monetary Trusts

The fair value information on monetary trusts is as follows:
Monetary trusts for trading purposes:
Yen in millions
September 30, 2007
Net valuation gains recorded in
Consolidated balance sheet amountincome66,486(175)
Other monetary trusts:
Yen in millions
September 30, 2007
Gross unrealized
Acquisition cost
gains
Other monetary trusts
693,718
36,351
Note: Jointly invested monetary trusts of ¥50 million are included in the table above.

(5)

Gross unrealized
losses(1,446)

Consolidatedbalance sheet
amount728,623

Per Share Information

Net income per share is calculated based on the weighted-average number of shares of common stock outstanding
during the fiscal period. For the six months ended September 2007, the net income per share was 7,957.33 yen.
There were no potential dilutive securities. Net assets per share, calculated based on the number of shares of common
stock outstanding as of September 30, 2007, were 134,022.97 yen.
The basis for this calculation is net income of 16,710 million yen, of which the entire portion is applicable to commonshares. The weighted-average number of shares outstanding for the six months ended September 30, 2007 was
2,100,000.
(6)

Subsequent Events

SFH issued new shares of its common stock and offered those new shares in a domestic public offering, as part of a
global offering of its shares, simultaneously with the listing of its shares on the Tokyo Stock Exchange, on October 10,
2007. As a result of the domestic public offering, the amount of common stock increased to ¥19,900 million and thenumber of shares outstanding increased to 2,175,000.
1. Method of subscription for the new shares: Domestic public offering (bookbuilding formula)
2. Types and numbers of shares issued: Common stock 75,000 shares
3. Offer price per share:¥400,000 per share
4. Subscription price:¥384,000 per share
5. Total amount of subscription price: ¥28,800 million
6. Amount capitalized per share: ¥192,000 per share
7. Total amount capitalized:¥14,400 million
8. Use of proceeds:
SFH intends to use approximately ¥16.5 billion of the net proceeds of the sale ofthe new shares to fund investments associated with Sony Life’s planned joint
venture with AEGON N.V. to market individual annuity products developed for theJapanese market. SFH intends to use the remainder of the net proceeds mainly tofund improvements to the information technology systems of its main operating
subsidiaries.

24

Sony Financial Holdings Inc.（8729）Interim Consolidated Financial Results for FY2007

SFH’s consolidated results* are prepared in accordance with accounting principles and practices generally accepted inJapan. As such, these figures differ in significant respects from financial information reported by SFH’s parent company,
Sony Corporation, which prepares its financial statements in accordance with accounting principles and practices
generally accepted in the United States.
*The scope of SFH’s consolidated results for the fiscal year ended March 31, 2007 includes Sony Financial Holdings, Sony Life Insurance Co., Ltd., Sony
Assurance Inc., Sony Bank Inc., and Sony Life Insurance (Philippines) Corporation. SFH’s interim consolidated financial results for six months ended
September 30, 2007 and consolidated forecast for the fiscal year ending March 31, 2008 also include Sony Bank Securities Inc. within the scope of
consolidation.

On October 25, 2007, Sony Corporation announced its consolidated financial results for the second quarter ended
September 30, 2007. SFH Group companies constitute the majority of Sony Group’s Financial Services segment.
However, the scope of Sony Group’s Financial Services segment differs from the scope of SFH’s consolidated results.
For the scope of Sony Group’s Financial Services segment, please refer to the October 25, 2007, news release by Sony
Corporation.
1. Forward-looking statements may include—but are not limited to—statements using words such as “believe,”“anticipate,” “plan,” “strategy,” “expect,” “forecast,” “predict,” “possibility” and similar words that describe future
operating activities, financial performance, events or conditions. Forward-looking statements, whether spoken or written,
are based on judgments made by the management of the SFH Group based on information that is currently available to it.
As such, forward-looking statements are subject to various risks and uncertainties, and actual results may vary
substantially from those expressed or implied in forward-looking statements. Consequently, investors are cautioned not
to place undue reliance on forward-looking statements. The SFH Group disclaims any obligation to revise
forward-looking statements in light of new information, future events or other findings.
2. The information contained in this press release does not constitute or form part of any offer for sale or subscription of orsolicitation or invitation of any offer to buy or subscribe for any securities, nor shall it or any part of it form the basis ofor be relied upon in connection with any contract or commitment whatsoever.

25