Presentation Material

Consolidated Financial Results for theYear Ended March 31, 2013
andSony Life’s PreliminaryMarket Consistent Embedded Value
As of March 31, 2013
Sony Financial Holdings Inc.
May 20, 20131

Content
 Consolidated Operating Results for the Year Ended March 31, 2013

P.3

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

P.28

 Dividend Policies

P.30

 Sony Life’s Preliminary MCEV as of March 31, 2013 and Risk Amount

Based on Economic Value

P.32

 Sony Life’s ALM and Asset Management

P.34

 Appendix

P37

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

2

Content

Consolidated Operating Results for
the Year Ended March 31, 20133

Management Review
FY2012 Results and FY2013 Forecast (Consolidated)¾ During FY2012, we maintained stable and sustainable business growth in all the businesses: life
insurance, non-life insurance and banking. In addition, thanks to the market recovery, we posted
increases in revenues and profit year on year, which exceeded our previous forecast announced on
February 2013.
¾ For FY2013 forecast, stable and sustainable business growth is expected, however, both revenues
and profit are expected to decrease year on year. This is because we do not expect such increases
in revenues and profit due to the market recovery as recorded in FY2012. We also anticipate anegative impact resulting from the revision of discount rate used for calculating policy reserves.
¾ Without the above mentioned factors, we expect stable increases in revenues and profit in FY2013.

Sony Life’s MCEV
¾ During FY2012, Sony Life’s MCEV steadily increased due to an increase in policies in force, as
well as reducing the impact of lower interest rates, based on Sony Life’s ALM initiatives. Risk
amount is also fully controlled within a low level of MCEV.

Return to Shareholders¾ We plan to pay a year-end dividend of ¥25 per share for FY2012, up ¥5 from FY2011.
We will continue to return profits to shareholders through steadily increasing dividends.
¾ At this moment, we plan to pay a year-end dividend of ¥25 per share for FY2013, unchanged from
FY2012.
4

During FY2012, we maintained stable and sustainable business growth in all thebusinesses: life insurance, non-life insurance and banking. In addition, thanks to themarket recovery, we posted increases in revenues and profit year on year, which
exceeded our previous forecast announced on February 2013.
On the other hand, both revenues and profit for FY2013 are expected to decrease year
on year. This is because we do not expect such increases in revenues and profit due tothe market recovery as recorded in FY2012. We also anticipate a negative impact
resulting from the revision of discount rate used for calculating policy reserves .
Without the above mentioned factors, we expect stable increases in revenues and profit
in FY2013.
During FY2012, Sony Life’s MCEV steadily increased due to an increase in policy
amount in force, as well as reducing the impact of lower interest rates, based on Sony
Life’s ALM initiatives. Risk amount is also fully controlled within a low level of MCEV.
For FY2012, we plan to pay a year-end dividend of ¥25, up ¥5 from FY2011.
We will continue to return profits to shareholders through steadily increasing dividends.
At this moment, we plan to pay a year-end dividend of ¥25 per share for FY2013,
unchanged from FY2012.

Highlights of Consolidated Operating Performancefor the Year Ended March 31, 2013 (1)Ordinary revenues

Ordinary profit

1,259.0
1,078.0+16.8%

6.2%(Billions of yen)

ChangeOrdinary revenues

967.5

1,142.3+174.8+18.1%

Ordinary profit

68.1

72.7

+4.5

+6.7%

Non-life
Insurance
Business

Ordinary revenues

80.0

84.7

+4.6

+5.8%

Ordinary profit

2.8

2.3

(0.4)

(17.1%)

Ordinary revenues

32.5

34.3

+1.7

+5.5%
+14.2%

Intersegment
Adjustments*

74.6

Ordinary profit

3.4

3.9

+0.4

Ordinary revenues

(2.1)

(2.3)

(0.2)

－

Ordinary profit

0.1

0.1

+0.0

+35.0%

1,078.0

1,259.0+180.9+16.8%

Ordinary profit

74.6

79.2

+4.6

+6.2%

Net income

32.8

45.0

+12.2

+37.3%

Ordinary revenues
Consolidated

FY2011FY2012Life
Insurance
Business

Banking
Business

79.2

FY2011FY2012(Billions of yen)(Billions of yen)

Consolidated

12.3.3113.3.31

Change from 12.3.31

Total assets

7,241.4

8,096.1+854.7+11.8%Net assets

347.8

435.4

+87.6

+25.2%*Amounts in ordinary profit in the “Intersegment adjustments” are mainly from SFH.

*Comprehensive income: FY2011: ¥60.3 billion, FY2012: ¥96.2 billion

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

5

During the year ended March 31, 2013, consolidated ordinary revenues grew
16.8% year on year, to ¥1,259.0billion, owing to increases in ordinary revenues
from all the businesses; life insurance, non-life insurance and banking.
Consolidated ordinary profit increased 6.2% year on year, to ¥79.2 billion.
Consolidated net income was up 37.3% year on year, to ¥45.0 billion due to anincrease in consolidated ordinary profit and also reflecting the previous fiscal
year’s increase in deferred income taxes owing to the partial reversal of deferred
tax assets associated with the reduction in the corporate tax rate.

Highlights of Consolidated Operating Performancefor the Year Ended March 31, 2013 (2)<YonY comparison> Life insurance business: Ordinary revenues increased year on year due mainly to a significant increase inincome from insurance premiums associated with steady growth in policy amount in force, and anincrease in investment income on separate accounts due to the market recovery. Ordinary profit
increased due primarily to a reversal of policy reserves for minimum guarantees for variable life insurance
and a recovery from negative spread into positive at Sony Life. These positive factors surpassed thecompany’s negative effects stemming from recording higher profit in the previous fiscal year due to thereversal of reserve for outstanding claims related to the Great East Japan Earthquake.

 Non-life insurance business: Ordinary revenues increased year on year, owing to an increase in net

premiums written, as the number of insurance policies in force grew primarily for its mainstay automobile
insurance. Ordinary profit decreased year on year owing mainly to higher provision of reserve foroutstanding losses, although net loss ratio remained at the same levels.

 Banking business: Ordinary revenues increased year on year due to an increase in interest income onloans led by the growing balance of mortgage loans and an increase in net fees and commissions
resulting from Sony Bank’s July 2011 acquisition of SmartLink Network, Inc., which became its
consolidated subsidiary. Ordinary profit increased year on year due mainly to the increase in profit related
to mortgage loan business.

Consolidated ordinary revenues increased 16.8% compared with the previous fiscal year, to ¥1,259.0
billion, owing to increases in ordinary revenues from all the businesses. Consolidated ordinary profit
increased 6.2% year on year, to ¥79.2 billion. By business segment, ordinary profit from the life insurance
business and the banking business increased, whereas ordinary profit from the non-life insurance
business decreased year on year. Consolidated net income increased 37.3% year on year, to ¥45.0
billion, reflecting the previous fiscal year’s increase in deferred income taxes owing to the partial reversalof deferred tax assets associated with the reduction in the corporate tax rate.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

6

Here is highlights of consolidated operating performance.

Highlights of Operating Performance:
Sony Life (Non-consolidated)
Ordinary revenues

FY2011FY2012967.4

1,142.2+174.8

Income from insurance premiums

816.1

925.8

+109.7+13.5%

Investment income

133.9

199.8

+65.8

+49.2%

Interest income and dividends

97.9

108.5

+10.5

+10.8%

Income from monetary trusts, net

5.2

5.2

(0.0)

(0.4%)

Gains on sale of securities

7.5

2.4

(5.1)

(68.0%)(Billions of yen)

Ordinary profit

1,142.2
967.4+18.1%

74.6
69.4

+7.5%

Ordinary revenues

FY2012(Billions of yen)

◆ Ordinary revenues and ordinary profit increased year on year.
◆ Income from insurance premiums significantly increased due
to steady growth in policy amount in force.
◆ Investment income increased year on year, reflecting an
increase in investment income on separate accounts due tothe market recovery .
◆Ordinary profit increased due primarily to a reversal of policy
reserves for minimum guarantees for variable life insurance
and a recovery from negative spread into positive at Sony Life.
These positive factors surpassed the company’s negative
effects stemming from recording higher profit in theprevious fiscal year due to the reversal of reserve foroutstanding claims related to the Great East Japan Earthquake.
Line item amounts are truncated below ¥100 million;
percentage change figures are rounded.

+18.1%

23.1

83.6

+60.4

+261.3%897.9

1,067.6+169.6+18.9%

Insurance claims and other payments

287.4

293.9

+6.4

+2.3%

Provision for policy reserves and others

471.5

630.5

+158.9+33.7%

Investment expenses

14.3

11.6

(2.6)

(18.7%)

2.6

1.5

(1.0)

(39.1%)(80.7%)

Gains on separate accounts, net

Ordinary expenses

Losses on sale of securities

FY2011

ChangeLosses on separate accounts, net

Operating expenses
Ordinary profit
Net income(Billions of yen)

1.6

0.3

(1.3)

105.4

109.0

+3.5

+3.4%

69.4

74.6

+5.2

+7.5%

+11.0

+35.1%

31.4

42.4

12.3.3113.3.31

Change from 12.3.31

Securities

4,545.0

5,211.5+666.5+14.7%

Policy reserves

4,843.0

5,472.9+629.9+13.0%

Total net assets

264.8

342.3

+77.4

+29.3%

34.0

80.2

+46.2

+135.9%5,222.8

5,952.7+729.9+14.0%

444.2

550.6

+106.3+23.9%Net unrealized gains on other securities

Total assets
Separate account assets

7

Highlights of Sony Life’s operating performance (Non-consolidated basis) are shown
here.
Sony Life’s ordinary revenues increased 18.1% year on year, to ¥1,142.2 billion.
Of this amount, income from insurance premiums increased 13.5% year on year, to ¥925.8 billion
due to steady growth in policy amount in force.
Investment income increased 49.2% year on year, to ¥199.8 billion, reflecting an increase ininvestment income on separate accounts due to the market recovery.
Ordinary profit increased 7.5% year on year, ¥74.6 billion, due mainly to a reversal of policy
reserves for minimum guarantees for variable life insurance and a recovery from negative spread
into positive at Sony Life. These positive factors surpassed the company’s negative effects
stemming from recording higher profit in the previous period due to the reversal of reserve foroutstanding claims related to the Great East Japan Earthquake.
Moreover, Sony Life recorded extraordinary losses on sales of shares of subsidiaries and affiliatesof ¥1.0 billion since Sony Life transferred the business of Sony Life insurance (Philippines)
Corporation, wholly owned subsidiary of Sony Life on December 6, 2012.
After accounting for extraordinary losses, provision for reverse for policyholders’ dividends, andincome taxes, net income was up 35.1% year on year, to ¥42.4 billion, reflecting the previous
period’s increase in deferred income taxes owing to the partial reversal of deferred tax assets
associated with the reduction in the corporate tax rate.

Overview of Operating Performance:
Sony Life (Non-consolidated)(Billions of yen)

FY2011FY2012

New policy amount

4,203.3

4,454.6

Change<Reasons for change>+6.0%◆ Increased due to much higher
sales of living benefit insurance
and whole life insurance.

Lapse and surrender amount

2,056.2

1,911.9(7.0%)

Lapse and surrender rate

5.93%

5.31%

(0.62pt)

Policy amount in force

36,077.0

37,779.0+4.7%

Annualized premiums from new policies

70.8

73.2

+3.4%

Of which, third-sector products

17.1

18.3

+7.6%

635.4

669.9

+5.4%

148.9

158.6

+6.5%

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

FY2011FY2012

ChangeGains from investment, net (general account)

96.4

104.5

+8.4%

Core profit

71.6

80.0

+11.7%

Positive (Negative) spread

(1.5)

2.1

－

Non-consolidated solvency margin ratio

12.3.3113.3.31

Changefrom
12.3.311,980.4%

2,281.8%+301.4pt

Notes:*1. Figures for new policy amount, lapse and surrender amount, lapse and surrender rate, policy amount in force, annualized
premiums from new policies and annualized premiums from insurance in force are calculated as the total of individual life
insurance and individual annuities.
*2.The lapse and surrender rate shows the ratio derived by dividing the amount of lapses and surrenders, not adjusted for policy
amount decreases, increases, and reinstatements, by the policy amount in force at the beginning of the fiscal year.
*3. The plus amount in negative spread indicates positive spread.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

◆ Decreased due mainly to term-life
insurance.
◆ Increased due to much higher
sales of living benefit insurance,
whole life insurance and term life
insurance.
◆ Increased due to an increase ininterest income and dividends
despite lower gains on sale ofsecurities.
◆ Increased due primarily to areversal of policy reserves forminimum guarantees for variable
life insurance and a recovery fromnegative spread into positive at
Sony Life.
These positive factors surpassed
the company’s negative effects
stemming from recording higher
profit in the previous fiscal year
due to the reversal of reserve foroutstanding claims related to theGreat East Japan Earthquake.

8

Here is an overview of Sony Life’s operating performance.

Sony Life Operating Performance (1)Annualized Premiums from New Policies

Number and Amount of New Policies(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)
New Policy amount

Number of new policies

Annualized premiums from insurance in force

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

599

591

+4.9%

700

4.19

4.45

4.20

500

+6.0%
400

3.0
300

2.0

(Billions of yen)

80
600

5.0
4.0

620

200

70

71.2

+3.4%

60
50
40
30
+7.6%

20
1.0

100

0

0

FY2010FY2011FY2012

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

73.2

70.8

10
0

16.6

17.1

18.3

FY2010FY2011FY2012

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

9(Left-hand graph)
New policy increased 6.0% year on year, to ¥4.45 trillion, due to much higher
sales of living benefit insurance and whole life insurance.
The number of new policies increased 4.9% year on year, to 620 thousand
policies.
(Right-hand graph)
Annualized premiums from new policies increased 3.4% year on year, to ¥73.2
billion, due to much higher sales of living benefit insurance, whole life insurance
and term life insurance.
Of which, the figure for third-sector insurance products was up 7.6% year on year,to ¥18.3 billion.

Sony Life Operating Performance (2)Annualized Premiums from Insurance in Force

Number and Amount of Policies in Force(Individual Life Insurance + Individual Annuities ）(Individual Life Insurance + Individual Annuities)

Policy amount in force

Number of policies in force

Annualized premiums from insurance in force

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

50

40

5.34

5.67

+6.5%

700

6

36.0

34.7

(Billions of yen)

6.04
37.7

600

4
3

20
2
10

2011.3.31

2012.3.31

+5.4%

5
500

+4.7 %

30

0

604.7

669.9

635.4

2013.3.31

400
300
200

1

100

0

0

140.7

148.9

2011.3.31

2012.3.31

+6.5%

158.6

2013.3.31

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

10

Sony Life’s policy amount in force which reflects new policy amount and lapse
and surrender amount, is shown here.
(Left-hand graph)
Policy amount in force for the total of individual life insurance and individual
annuities increased steadily up 4.7% year on year, to ¥37.7 trillion due to anincrease in new policies and a decline in lapse and surrender rate.
The number of policies in force increased 6.5% year on year, to 6.04 million
policies.
(Right-hand graph)
Annualized premiums from insurance in force increased 5.4% year on year, to¥669.9 billion.
Of this amount, the figure for third-sector products was up 6.5% year on year, to¥158.6 billion.

Sony Life Operating Performance (3)Lapse and Surrender Rate*

Income from Insurance Premiums(Individual Life Insurance + Individual Annuities)(Billions of yen)

8

800

6.41

5.93

6

(0.62pt)

5.31

400

2

200

FY2010FY2011FY2012*The lapse and surrender rate shows the ratio derived by dividing theamount of lapses and surrenders, not adjusted for policy amount decreases,
increases, and reinstatements, by the policy amount in force at the
beginning of the fiscal year.

770.3

816.1
+13.5 %

600

4

0

925.8

1,000

(％)

0

FY2010FY2011FY2012

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

11(Left-hand graph)
The lapse and surrender rate for the year ended March 31, 2013, decreased 0.62
percentage point year on year, to 5.31%, due to the lowering lapse and surrender
rates primarily for term-life insurance.

Sony Life Operating Performance (4)Core Profit

Ordinary Profit(Billions of yen)

80.0

80

(Billions of yen)

71.6

60

80

+11.7%

56.2

73.1

74.6

69.4
+7.5%

60

40
40

20
20

0

FY2010FY2011FY2012(Reference)
Provision of policy reserves for minimum guarantees for variable life insurance
in the general account assets(Billions of yen)

FY2010FY2012FY2011
5.0

2.8

(1.3)

0

FY2010FY2011FY2012

Y on Y Change(4.1)

Note: Negative amount in provision of policy reserves for minimum guarantees for variable life
insurance indicate reversal of reserve for policy reserves.

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

12(Left-hand graph)Core profit increased 11.7% year on year, to ¥80.0 billion owing primarily to areversal of policy reserves for minimum guarantees for variable life insurance anda recovery from negative spread into positive (positive factors) despite recording
higher profit in the previous period due to the reversal of reserve for outstanding
claims related to the Great East Japan Earthquake(negative factor: ¥3.9billion ).
(Right-hand graph)
Ordinary profit increased year on year as described in the previous pages.

Sony Life Operating Performance (5)Average Assumed Interest Rate andInvestment Yield for Core Profit

Negative Spread(Billions of yen)

3.00%

5
4

Average assumed interest rate
Investment yield for core profit

2.1

3
2

2.43%

1
0
-1
-2

2.26%

(1.5)

-3

2.35%
2.31%

2.31%
2.27%

2.00%

-4
-5
-6
-7
-8

(6.3)

-9
-10
-11
-12

1.00%
FY2010FY2011FY2012FY2010FY2011FY2012* The plus amount in negative spread indicates positive spread.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

13

The previous fiscal year’s ¥1.5 billion of negative spread turned into ¥2.1 billion of
positive spread for the year ended March 31, 2013. This is because the averageassumed interest rate lowered due mainly to an increase in new policies.

Sony Life Operating Performance (6)Number of Lifeplanner Sales Employees(Number)

4,500
4,066
[49]

4,026
[51]

4,023
[62]

4,000

3,996
[66]

4,116
[71]

4,098
[79]

+3

4,071
[82]

4,119
[91]

4,031
[87]
+88

3,500

3,000
0

11.3.3111.6.30

11.9.30

11.12.31

12.3.3112.6.30

12.9.30

12.12.31

13.3.31

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

14

The number of Lifeplanner sales employees (including rehired on a fixed-term contract
basis after retirement) as of March 31, 2013, was 4,119, up 88 from December 31, 2012
and up 3 from March 31, 2012.

Sony Life Operating Performance (7)Breakdown of General Account Assets<Asset management review>

13.3.3112.3.31(Billions of yen)Amount%Japanese governmentand corporate bonds

3,975.7

83.2%

4,561.0

84.4%

Japanese stocks

45.0

0.9%

31.1

0.6%

Foreign securities

59.6

1.2%

62.0

1.1%

Foreign stocks

30.5

0.6%

25.4

0.5%

Monetary trusts

288.2

6.0%

306.1

5.7%

Policy loans

138.7

2.9%

145.0

2.7%

Real estate

72.9

1.5%

70.3

1.3%

Cash and call loans

64.8

1.4%

103.3

1.9%

Others

102.6

2.1%

97.7

1.8%

4,778.5

100.0%

5,402.1

100.0%

Total

Amount%On the asset side, we lengthened theduration of securities held to match theliability characteristics of insurance policies
with long-term maturities with the aim of
reducing interest rate risk.
Japanese government and corporate bonds:
Continue to accumulate ultralong-termbonds in FY12

[Lengthened asset duration]
11.3.31 18.5 year
12. 3.31 19.2 year
13.3.31 19.9 year
■Investment in the monetary trusts is mainly into
Japanese government and corporate bonds.
■The holding ratio on the real status, of Japanese
government and corporate bonds including
those invested in monetary trusts in the generalaccount assets: As of Mar. 31, 2013: 90.1%(As of Mar. 31, 2012: 89.2%)
Line item amounts are truncated below ¥100 million;
percentage change figures are rounded.

15

Here is a breakdown of Sony Life’s general account assets as of March 31,
2013, compared with March 31, 2012.
As Sony Life continued its investment in ultralong-term bonds, mainly Japanese
government and corporate bonds, their ratio rose to 90.1% as of March 31, 2013.
Going forward, Sony Life will invest most of new money acquired from income
from insurance premiums in ultralong-term bonds in order to properly control
interest rate risk on insurance liabilities.

Sony Life Operating Performance (8)Non-consolidated Solvency Margin Ratio
(%)

3,000
+301.4pt

2,500
2,000

1,720.0

2,281.8

1,980.4

1,500
1,000
500
0

11.3.3112.3.3113.3.31

Note: The non-consolidated solvency margin ratios are calculated based on the current
standards applied from the end of fiscal 2011 (March 31, 2012).

16

As of March 31, 2013, Sony Life’s non-consolidated solvency margin ratio
was 2,281.8%, up 301.4 percentage points from March 31, 2012.

Highlights of Operating Performance:
Sony Assurance
Ordinary revenues

Ordinary profit(Billions of yen)

84.7

80.0
+5.8%

2.8
FY2011(17.1%)FY2012(Billions of yen)

◆ Ordinary revenues increased but ordinary profit
decreased year on year.
◆ Ordinary revenues increased year on year,
owing to an increase in net premiums written, as
the number of insurance policies in force grew
primarily for automobile insurance.
◆ Ordinary profit decreased year on year owing
mainly to higher provision of reserve foroutstanding losses, although net loss ratio
remained at the same levels.

Change84.7+4.6

Underwriting income

79.1

83.6

+4.4

+5.6%

Investment income

0.8

1.0

+0.1

+17.0%

77.2

82.3

+5.1

+6.6%

Underwriting expenses

58.0

61.8

+3.7

+6.5%

Investment expenses

0.0

0.0

+0.0

+70.6%

Operating, general andadministrative expenses

19.0

20.4

+1.4

+7.3%

Ordinary profit

2.8

2.3

(0.4)

(17.1%)Net income

1.2

1.4

+0.1

+11.9%

Ordinary expenses

2.3

FY2012FY201180.0

Ordinary revenues(Billions of yen)

Underwriting reserves

13.3.3112.3.31

67.3

+5.8%

Change from
12.3.31

70.6

+3.2

+4.8%

Total net assets

18.0

19.9

+1.9

+10.7%

Total assets

118.6

127.4

+8.8

+7.4%

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

17

Sony Assurance’s ordinary revenues increased 5.8% year on year, to ¥84.7
billion, owing to an increase in net premiums written, as the number of insurance
in force grew primarily for automobile insurance.
Ordinary profit decreased 17.1% year on year , to ¥2.3 billion, owing mainly tohigher provision of reserve for outstanding losses, although net loss ratio
remained at the same levels.
Net income was up 11.9% year on year, to ¥1.4 billion, reflecting the previous
fiscal year’s increase in deferred income taxes owing to the partial reversal ofdeferred tax assets associated with the reduction in the corporate tax rate.

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

FY2011FY2012

ChangeDirect premiums written

78.3

82.5

+5.4%

Net premiums written

79.1

83.5

+5.6%

Net losses paid

45.0

47.1

+4.7%

Underwriting profit

2.1

1.3

(33.7%)Net loss ratio

63.3%

63.2%

(0.1pt)Net expense ratio

25.7%

26.0%

+0.3ptCombines ratio

89.0%

89.2%

+0.2pt◆ Increased owing to an increase in thenumber of policies in force for
automobile insurance.
◆ Increased owing mainly to anincrease in the number of insurance
payments due to the higher numberof policies in force for automobile
insurance.
◆ Increased owing mainly to increases
in the system-related expenses,
personnel expenses and insurance
acquisition cost for new policies.

Notes:Net loss ratio = (Net losses paid ＋Loss adjustment expenses) / Net premiums written
Net expense ratio = Expenses related to underwriting / Net premiums written

12.3.3113.3.31

Change from 12.3.31

Number of policies in force

1.49 million

1.55 million+0.05 million

Non-consolidated solvency
margin ratio

557.8%

504.2%(53.6pt)+4.0%◆ Increased due to an increase in
the number of policies in force
for automobile insurance.

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

18

Here is an overview of Sony Assurance’s operating performance.

Sony Assurance’s Underwriting Performanceby Type of Policy
Direct Premiums Written

Net Premiums Written

FY2011FY2012

Change

Fire

176

236

+34.1%

Marine－－－Personal accident*

7,424

7,898

+6.4%

Voluntary automobile

70,712

74,406

+5.2%

－

－

－

78,31382,541+5.4%(Millions of yen)Compulsory
automobile liability
Total

Net Losses paid
(Millions of yen)

FY2011FY2012

Change

Fire

72

86

+19.3%

Marine90142+56.9%

Personal accident*

7,626

8,138

+6.7%

Voluntary automobile

70,457

74,140

+5.2%

893

1,075

+20.3%

79,141

83,582+5.6%

Compulsory
automobile liability
Total*SURE, medical and cancer insurance is included in personal accident

FY2011FY2012

Change

Fire

40

1

(97.3%)

Marine138

185+33.8%

Personal accident*

1,796

1,957

+9.0%

Voluntary automobile

42,19344,004

+4.3%

862

1,004

+16.5%

45,03247,153+4.7%

Compulsory
automobile liability
Total(Millions of yen)Line item amounts are truncated below ¥1 million;
percentage change figures are rounded.

19This slide show direct premiums written, net premiums written and net losses
paid by type of policy.

Sony Assurance Operating Performance (1)Net Premiums Written andNumber of Policies in Force
Voluntary automobile insurance
Others

100

1.38
80

Personal accident insurance

Number of policies in force(Billions of yen)

73.3

Ordinary Profit

1.49

+4.0%

1.55

(Millions of policies)(Billions of yen)

83.5

79.1

1.6 3.0

2.3
2.1

1.2

+5.6 %

1

60

2.8

1.4
(17.1%)

2.0

0.8
40

0.6

1.0

0.4

20

0.2
0

FY2010FY2011FY20120

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

0.0

FY2010FY2011FY2012

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

20(Left-hand graph)
Number of policies in force for the total of automobile insurance and medical andcancer insurance increased, up 4.0% year on year, to 1.55 million policies.
Net premiums written posted a 5.6% year-on-year increase, to ¥83.5 billion.
(Right-hand graph)
Ordinary profit decreased year on year, owing mainly to higher provision ofreserve for outstanding losses, although net loss ratio remained at the samelevels, as described in the previous pages.

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

100

95.2

Combines Ratio(Net Loss Ratio + Net Expense Ratio)<Reference>

Net expense ratio

Net loss ratio

98.9

98.1

(%)

100

85.6

+0.8pt

69.7

72.4

72.9
+0.5pt

60

89.2

89.0
+0.2pt80

80

60

Net expense ratio

60.0

63.3

63.2
(0.1pt)

40

40

20

0

25.5

25.7

FY2010FY2011+0.3pt26.0

FY2012

Notes:
Earned/Incurred loss ratio = (Net losses paid + Provision for reserve for outstanding
losses + Loss adjustment expenses) / Earned premiums.
[Earthquake insurance and compulsory automobile liability insurance are excluded
from the above calculation.]

20

0

25.5

25.7

FY2010FY2011+0.3pt26.0

FY2012

Notes:Net loss ratio= (Net losses paid + Loss adjustment expenses) / Net premiums written
Net expense ratio= Expenses related to underwriting / Net premiums written

21(Left-hand graph)
To help you understand the actual condition of Sony Assurance, which is in a
growth phase, we show the earned/incurred loss ratio, which is the accrual-basis
loss ratio.
For the year ended March 31, 2013, the E.I. loss ratio increased 0.5 percentage
point year on year, to 72.9%, due mainly to higher insurance payments per claim
for automobile insurance.
The net expense ratio increased 0.3 percentage point year on year, to 26.0%,
owing mainly to increases in the system-related expenses and insurance
acquisition cost for new policies.
Consequently, the sum of the E.I. loss ratio and the net expense ratio increased
0.8 percentage point year on year, to 98.9%.
(Right-hand graph)
The net loss ratio down 0.1 percentage point compared with the same period of
the previous fiscal year, to 63.2%.
This is different from the E.I. loss ratio, which reflects an increase or a decreasein provision for reserve for outstanding losses.
The combined ratio (the sum of the net loss ratio and the net expense ratio) rose
0.2 percentage point year on year, to 89.2%.

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

800

631.0%

557.8%

504.2%( 53.6pt)

400

011.3.3112.3.3113.3.31

Note: The non-consolidated solvency margin ratios are calculated based on the current
standards applied from the end of fiscal 2011 (March 31, 2012).

22

As of March 31, 2013, Sony Assurance’s non-consolidated solvency margin
ratio was 504.2%, down 53.6 percentage points from March 31, 2012.

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

32.5

+5.5%

+12.4%<Consolidated>

4.4

FY2012

32.5

34.3

+1.7

+5.5%

Consolidated ordinary profit

3.9

4.4

+0.4

+12.4%

Consolidated net income

1.7

3.2

+1.5

+87.6%FY2011FY2012

Ordinary revenues

30.0

31.3

+1.2

Gross operating profit

18.3

18.5

+0.1

+1.0%

Net interest income

16.1

18.1

+2.0

+12.5%Net fees and commissions

0.1

0.1

(0.0)

(38.1%)Net other operating income

2.0

0.2

(1.7)

(86.2%)

General and administrative
expenses

13.8

13.9

+0.1

+1.1%

Net operating profit

4.3

4.5

+0.1

+4.5%

Ordinary profit

4.0

4.2

+0.2

+6.2%

Net income

2.3

0.8

(1.4)

(62.4%)

12.3.3113.3.31(Billions of yen)

FY2012

Change<Non-consolidated>

3.9

FY2011FY2011

Consolidated ordinary revenues(Billions of yen)

34.3

(Billions of yen)<Consolidated>◆ Consolidated ordinary revenues increased year on year due toan increase in interest income on loans led by the growing
balance of mortgage loans and an increase in net fees andcommissions resulting from Sony Bank’s acquisition of SmartLink
Network, Inc., which became its consolidated subsidiary.
Consolidated ordinary profit increased year on year due mainly to
an increase in profit related to mortgage loan business.
Consolidated net income increased due to recording deferred tax
assets on the sale of Sony Bank Securities on August 1, 2012.
<Non-consolidated>◆ Gross operating profit slightly increased year on year.
-Net interest income increased owing to an increase in interest
income on loans led by a growing balance of mortgage loans
and a decrease in interest expenses.
-Net fees and commissions slightly decreased as Sony Bank
stopped charging FX transaction, despite higher gains on fees
and commissions related to mortgage loan business.
-Net other operating income decreased reflecting lower gains
on bond dealing transactions.
◆ Net income decreased owing to recording extraordinary losses(¥2.7 billion) on the sale of Sony Bank Securities Inc.

(Billions of yen)

Total net assets
Net unrealized gains on othersecurities (net of taxes)

Total assets

62.7

67.8

Change+4.2%

Change from
12.3.31
+5.0

+8.0%

1.7

6.5

+4.7

+269.9%1,890.5

2,005.0+114.5+6.1%

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

23

Sony Bank’s consolidated ordinary revenues increased 5.5% year on year due to anincrease in interest income on loans led by the growing balance of mortgage loans andan increase in net fees and commissions resulting from Sony Bank’s acquisition of
SmartLink Network, Inc., which became its consolidated subsidiary.
Consolidated ordinary profit increased 12.4% year on year due mainly to anincrease in profit related to mortgage loan business.
Consolidated net income increased 87.6% year on year, to ¥3.2 billion, due torecording deferred tax assets on the sale of Sony Bank Securities on August 1, 2012.
On a non-consolidated basis, Sony Bank’s gross operating profit increased 1.0% from ayear earlier, to ¥18.5 billion, because higher income in profit related to mortgage loans
business was offset by a decrease in profit related to foreign currency transactions.
Net operating profit increased 4.5% year on year, to ¥4.5 billion, as gross operating profit
increased. Ordinary income increased 6.2% year on year, to ¥4.2 billion.
Sony Bank’s net income was ¥0.8 billion, owing to recording extraordinary losses(¥2.7 billion) on the sale of Sony Bank Securities Inc.

Overview of Operating Performance:
Sony Bank (Non-consolidated) (1)<Reasons for changes>
Change from
12.3.3112.3.3113.3.31

Customer assets

1,864.3

1,974.3+110.0+5.9%

Deposits

1,762.2

1,857.4

+95.1

+5.4%

Yen

1,390.5

1,467.2

+76.6

+5.5%

371.7

390.2

+18.5

+5.0%

102.0

116.9

+14.9

+14.6%

Loans outstanding

835.5

970.2

+134.6+16.1%

Mortgage loans

749.6

860.3

+110.6+14.8%

Others

85.9

109.8

+23.9

+27.9%

89

92

+2

+3.3%

0.44%

0.41%

(0.03pt)

11.58%

11.98%+0.40pt

9.63%

8.85%

(0.78pt)(Billions of yen)

Foreign currency
Investment trusts

Number of accounts(10 thousand)Non-performing assets
ratio(Based on Financial *2
Reconstruction Law)

Capital adequacy ratio *3(domestic criteria)
Tier 1 ratio*1*1 Loans in others include corporate loans of ¥103.3 billion.
*2 Balance of problem assets based on the Financial Reconstruction Law / Total credit exposure*3 Please refer to the graph of the non-consolidated capital adequacy ratio (domestic criteria) on P27.

◆ Yen deposits increased due to thepositive effect of special offer forsummer 2012 bonus season, andshifting customer assets from foreign
currencies to yen deposits backed byyen depreciation after the end of
December 2012.
◆ Foreign currency deposits increased
reflecting a positive impact from foreignexchange conversion (+ ¥50.1 billion),
despite a negative impact fromconverting more foreign currencies into
yen led by yen depreciation after theend of December 2012.
◆ Loan balance increased due to a
growing balance of mortgage loans, inaddition to a higher corporate loanbalance centered on syndicated loans.
◆ Non-performing assets ratio was kept
at an extremely low level.
◆ In February 2013, Sony Bank borrowed
funds from SFH as subordinated loan
to reinforce its financial base. The Tier
1 ratio was also kept at a high level.
Line item amounts are truncated below ¥100 million;
numbers of accounts are truncated below 10 thousands accounts;
percentage change figures are rounded.

24

Here is an overview of Sony Bank’s operating performance.

Overview of Operating Performance:
Sony Bank (Non-consolidated) (2)<Reference> On Managerial Accounting Basis(Billions of yen)

Gross operating profit
Net interest income*1①

FY2011FY2012

18.3

18.5

+0.1

+1.0%

16.9

17.6

+0.6

+4.1%

<Reference> Interest Spread(Managerial Accounting Basis)

ChangeNet fees and commissions*2 ②

1.1

1.0

(0.1)

(14.2%)Net other operating income*3

0.1

(0.1)

(0.3)

―

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

18.1

18.6

+0.5

+2.9%

Operating expenses and otherexpenses ③

13.9

13.9

(0.0)

(0.1%)Net operating profit (core profit)＝(A)－③

4.1

4.6

+0.5

+13.0%■ Managerial accounting basis
The following adjustments are made to the figures on a financial accounting basis toaccount for profits and losses more appropriately.
*1: Net interest income: Includes profits and losses associated with fund investment
recorded in net other operating income, including gains or losses from currency
swap transactions.
*2: Net fees and commissions: Includes profits and losses for customer dealings inforeign currency transactions recorded in net other operating income.
3: Net other operating income: After the above adjustments (*1 and *2), consists ofprofits and losses for bond and derivative dealing transactions.

Yield on investment

Yield on financing

Interest spread

(%)

2

1.5

1.36

1

0.94

0.5

0.41

0.35

FY2011FY20120

1.27(0.02pt)

0.92

Note: Interest spread=(Yield on investment)-(Yield on financing)■ Core basis
Profits and losses exclude net other operating income, which includes those on bondand derivative dealing transactions, and stands for Sony Bank’s basic profits.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.
The calculation method on a managerial accounting basis was partly changed from this fiscal year . Accordingly, the figures for FY2011 were retroactively calculated.

25

We break down gross operating profit on a managerial accounting basis to facilitate anunderstanding of operational sources of revenues and profits.
(Left-hand table)
Net interest income on a managerial accounting basis amounted to ¥17.6 billion, ¥0.6
billion up year on year, due to business expansion, mainly in its mortgage loan business,
which offset a decrease in profit related to foreign currency transactions.
Net fees and commissions amounted to ¥1.0 billion, ¥0.1 billion down year on year,
owing mainly to a decrease in gains on customer dealings in foreign currencytransactions influenced by the movements of foreign exchange market, despite higher
gains on fees and commissions related to mortgage loan business.
Consequently, gross operating profit on a core profit basis increased ¥0.5 billion year on
year, to ¥18.6 billion, and net operating profit on a core profit basis increased ¥0.5 billion
year on year, to ¥ 4.6 billion.
(Right-hand graph)
The yield on investment for FY2012 was 1.27%.
The yield on financing for FY2012 was 0.35%.
Consequently, interest spread for FY2012 was 0.92%.

Operating Performance:
Sony Bank (Non-consolidated) (1)
Deposits
Yen deposits

Loans
Mortgage loans

Foreign currency deposits

Others970.2(Billions of yen)

1,000(Billions of yen)

*Corporate loans

1,857.4

2,000

1,649.1

1,762.2+95.1

109.8 of ¥103.3 billion.

835.5
800

+134.6

722.4

390.2

1,500

600

860.3
1,000

400

500

0

1,467.2

200

011.3.3112.3.3113.3.3111.3.3112.3.3113.3.31

Line item amounts are truncated below ¥100 million

26(Left-hand graph)
As of March 31, 2013, deposits (the sum of Japanese yen and foreign currency
deposits) amounted to ¥1,857.4 billion, up ¥95.1 billion from March 31, 2012.
Of which, yen deposits increased ¥76.6billion, to 1,467.2 billion, due to thepositive effect of special offer for summer 2012 bonus season, and shifting
customer assets from foreign currencies to yen deposits backed by yen
depreciation after the end of December 2012.
Foreign currency deposits increased ¥18.5billion, to ¥390.2 billion, reflecting a
positive impact from foreign exchange conversion, despite a negative impact
from converting more foreign currencies into yen led by yen depreciation.
(Right-hand graph)
Loans expanded to ¥970.2 billion, up ¥134.6 billion, from March 31, 2012, due toa growing balance of mortgage loans, in addition to a higher corporate loanbalance centered on syndicated loans.

Operating Performance:
Sony Bank (Non-consolidated) (2)Non-consolidated Capital Adequacy Ratio

Balance of Securities by Credit ratingsAAA
BBB

Tier1 ratio

(%)

15

(Billions of yen)

1,200
1,000

(Domestic criteria)

Capital adequacy ratio

AA
A
Others

940.1

912.9

10.84

908.8
10
(4.0)

800
600

5

400

11.58

10.41

9.63

+0.40 pt

11.98

8.85
(0.78 pt)

<Reference>
In February 2013
Sony Bank borrowed funds (¥10.0 billion)
from SFH as subordinated loan to reinforce
its financial base.

200
0

0

11.3.3112.3.3113.3.3111.3.3112.3.3113.3.31*Calculated based on the standard FSA Notification No. 19 2006), which establishes
standards based on Article 14-2 of the banking Act of Japan for determining the capital
adequacy of a bank in light of the assets held by the bank.

Line item amounts are truncated below ¥100 million.

27(Left-hand graph)
As of March 31, 2013, the balance of securities decreased ¥4.0 billion, to ¥908.8
billion from March 31, 2012.
Sony Bank continuously invests in highly rated bonds.
(Right-hand graph)
As of March 31, 2013, Sony bank’s non-consolidated capital adequacy ratio(domestic criteria) was 11.98%, up 0.40 percentage point from Mach 31, 2012.
Sony bank will continue to maintain a sound financial position.

Consolidated Financial Forecast
for the Year Ending March 31, 201428

Consolidated Financial Forecast
for the Year Ending March 31, 2014
■ FY2013 Consolidated Financial Forecast(Billions of yen)

FY2012FY2013

Change(Forecast)(Actual)Consolidated ordinary revenues

1,259.0

1,222.0(2.9%)

Life insurance business

1,142.3
84.7
34.3

1,099.9
88.5
34.0(3.7%)+4.5%(0.9%)

Consolidated ordinary profit

79.2

69.0

(12.9%)

Life insurance businessBanking business

72.7
2.3
3.9

61.4
3.0
4.3

(15.5%)+30.4%+10.3%

Consolidated net income

45.0

37.0

(17.8%)

Non-life insurance businessBanking business

Non-life insurance business■Life insurance business
Ordinary revenues are expected to decrease year on year, because we do not expect such an increase in investment income on separate
account due to the market recovery as recorded in the previous fiscal year, although we expect higher income from insurance premiums.
Ordinary profit is expected to decrease, since we do not expect such a reversal of policy reserves related to minimum
guarantees for variable life insurance policies as recorded in the previous fiscal year. We also expect provision for policy reserves toincrease reflecting a revision of discount rate used for calculating policy reserves.
■Non-life insurance business
Ordinary revenues are expected to increase year on year, owing to an increase in net premiums written, primarily for automobile insurance.
Ordinary profit is expected to increase because we expect higher revenues and lower loss ratio.
■Banking Business
Ordinary revenues are expected to decrease year on year, owing mainly to a decrease in revenues in SmartLink Networks, despite anincrease in interest income on loans led by a growing balance of mortgage loans.
Ordinary profit is expected to rise, mainly because we anticipate a steady increase in gross operating profit, driven by business expansion.
Line item amounts are truncated below ¥1 million; percentage change figures are rounded.

29

With regard to SFH’s financial forecast for the year ending March 31, 2014,
stable and sustainable business growth is expected in all the businesses: life
insurance, non-life insurance and banking.
However, ordinary revenues, ordinary profit and net income are expected todecrease year on year due to the following factors.
Ordinary revenues are expected to decrease, because we do not expect such anincrease in investment income on separate account due to the market recovery
as recorded in the previous fiscal year, although
we expect higher income from insurance premiums in the life insurance business.
Ordinary profit and net income are expected to decrease year on year, since we
do not expect such a reversal of policy reserves related to minimum guarantees
for variable life insurance policies as recorded in the previous fiscal year. We also
expect provision for policy reserves to increase reflecting a revision of discountrate used for calculating policy reserves.
However, without the above factors, which impact on ordinary income weestimate is around ¥15.0 billion, we expect stable increases in ordinary revenues
and ordinary profit for the year ending March 31, 2014.
We do not consider the effects of market fluctuations after April 2013 within ourabove-mentioned forecast. Therefore, the figures stated above may
differ from actual results for a variety of reasons.

Dividend Policies

30

Dividend Policies
We
Weplanplantotopay
payaayear-end
year-enddividend
dividendofof¥25¥25perpershareshareforforFY2012,
FY2012,upup¥5¥5fromfromFY2011.
FY2011.
(total(totaldividend
dividendamount:amount:¥10.875¥10.875billion)
billion)<Mid-term Dividend Policy>z We aim for steady increases in dividends in line with earnings growth over the medium and longterm, while securing sufficient internal reserves to ensure the financial soundness of the Group
companies and invest in growing fields.
z Our mid-term target for the dividend payout ratio is 30% to 40% of consolidated net income.
z Management will determine specific dividend amounts for each fiscal year by taking into account acomprehensive range of factors, including the capital adequacy of each Group company relative torisk, investment opportunities, business forecasts and legal and regulatory developments worldwide.
■ Consolidated Net Income and Dividend Result/Forecast
FY2010FY2011FY2012FY2013(Forecast)

¥20

¥20

¥25

¥25

Annual dividend amount¥8.7 billion¥8.7 billion

10.875 billion¥10.875 billion

Consolidated net income¥41.7 billion¥32.8 billion¥45.0 billion¥37.0 billion

20.9%

26.5%

24.1%

29.4%

Dividend per share

Dividend payout ratio(consolidated)Line item amounts are truncated below ¥100 million.

31

We plan to pay a year-end dividend of ¥25 per share for FY2012, up ¥5 from theprevious year. (total dividend amount is ¥10.875 billion)
Our mid-term dividend policy is unchaged from the last year’s announcement. We
aim for steady increases in dividends in line with earnings growth over the
medium and long term, while securing the financial soundness of the Group
companies and funds to invest in growing fields.
Our mid-term target for the dividend payout ratio is 30% to 40% of consolidated
net income.
We decided to increase the year-end dividend for FY2012, and we will examine
future increases in dividends.
At this moment, we plan to pay a year-end dividend of ¥25 per share for FY2013,
unchanged from FY2012.

Sony Life’s Preliminary MCEV
as of March 31, 2013,
andRisk Amount Based on Economic Value

32

Sony Life’s Preliminary MCEV as of March 31, 2013,
and Risk Amount Based on Economic Value(Billions of yen)

13.3.3112.3.31

MCEV

Change from 12.3.31

1,041.5

1,064.7+23.2

Adjusted net worth

409.2

770.8

+361.7

Value of existing business

632.4

293.9

(338.5)

Of which, new business value

65.2

41.6

(23.6)

 MCEV steadily increased through Sony Life’s efforts to increase policy amount in force and reduce a negative
impact of lower interest rates with its ALM initiatives. This is because an increase in adjusted net worth led by arise in price of ultralong-term JGBs held for ALM purpose, was enough to offset a decrease in value of existing
business resulting from lower interest rates in the ultralong term.
 New business value and new business margin(*) were ¥41.6 billion and 3.5% as of March 31, 2013, down comparedwith ¥65.2 billion and 6.4% as of March 31, 2012, due mainly to lower interest rates in the ultralong term.
(*) New business margin equals new business value divided by present value of premium income.
(Billions of yen)

The risk amount based on economic value

12.3.31551.5

13.3.31661.3

Change from 12.3.31+109.8 The risk amount based on economic value increased due to business expansion and lower interest rates in
the ultralong term, however, it was fully controlled within a low level of MCEV in terms of solvency.
Note1: The risk amount based on economic value refers to the total amount of Sony Life’s risks, comprehensively examined and including
insurance risk and market-related risk.
Note2: The solvency risk capital on an economic value basis is calibrated at VaR (99.5) over one year and based on the internal model, which isa similar but modified model based on the EU Solvency II (QIS5) standard method.
* Please keep in mind that the validity of these calculations has not been verified by outside specialists. The calculation of MCEV as of March 31, 2013,in accordance with the MCEV principles and verified by outside specialists, is scheduled to be announced on May 27, 2013.

33

Sony Life’s preliminary MCEV as of March 31, 2013 amounted to ¥1,064.7 billion, up ¥23.2 billion from March 31, 2012.
MCEV steadily increased through Sony Life’s efforts to increase policy amount inforce and reduce a negative impact of lower interest rates with its ALM initiatives.
This is because an increase in adjusted net worth led by a rise in price ofultralong-term JGBs held for ALM purpose, was enough to offset a decrease invalue of existing business resulting from lower interest rates in the ultralong term.
New business value was ¥41.6 billion as of March 31, 2013, down compared with¥65.2 billion as of March 31, 2012, due mainly to lower interest rates in theultralong term.
New business margin was 3.5% as of March 31, 2013, compared with 6.4% as ofMarch 31, 2012. New business margin as of March 31, 2013 does not reflect theeffect of the revision of insurance premium rates on some products in line withthe reduction in discount rate used for calculating policy reserves effective after
April 2013.
The risk amount based on economic value as of March 31, 2013 amounted to¥661.3 billion.

Sony Life’s ALM and Asset Management34

Result of Sony Life’s ALM Initiatives
MCEV steadily increased by controlling interest rate risk with
ALM initiatives, along with a steady acquisition of new policies(Billions of yen)

Value of existing business
30-year interest rate

Adjusted net worth
40-year interest rate
2.50%

2,500.0

2,000.0(38bp)(45bp)(47bp)(41bp)

1,500.0

1,000.0+23.2
1,041.5
816.5

0.0

1.50%

1,064.7
1.00%(415.6)
400.9

500.0

08.3.31

2.00%

09.3.310.50%

12.3.3113.3.310.00%

35

The above graph shows year-on-year changes in MCEV as of March 31, 2009, wheninterest rates declined just after the collapse of Lehman Brothers, and as of March 31,
2013.
As of March 31, 2009, Sony Life’s MCEV decreased by half due to an impact of over
¥400.0 billion by a substantial decline in interest rates.
After that, Sony Life has increased investment in ultralong-term JGBs in order to reduce
interest rate risk from an ALM perspective.
As a result, Sony Life’s MCEV as of March 31, 2013 steadily increased along with asteady acquisition of new policies. The negative impact resulting from lower interest rates
was reduced to approximately ¥40.0 billion as of March 31, 2013, though a drop in theyield curve as of March 31, 2013 from a year earlier is the same as that as of March 31,
2009.

Sony Life’s Asset Management Policy
No change in asset management policy, even after monetary easing～Investing most of new money in ultralong-term JGBs～

Sony Life’s Basic Policy on Risk Preferences¾ Aims for stable and sustainable business growth in corporate value by
aggressively increasing policies in force and underwriting insurance risk, while
maintaining sufficient solvency based on economic value.
¾ Prioritizes investment in assets that match insurance liability characteristics to
reduce interest rate risk pertaining to liabilities of insurance policies with longterm maturities, with the aim of securing corporate value of life insurance
business.

Impact of and Response to Monetary Easing¾ Maintains a sufficient level of solvency based on economic value, though interest
rate sensitivity has risen and the amount of interest rate risk has increased due
to a decline in ultralong-term interest rates.
¾ Continues to invest in ultralong-term JGBs while monitoring market trends, withthe aim of reducing interest rate risk along with an acquisition of new policies
though interest rates are expected to be persistently low.
36

Lastly, we will explain Sony Life’s asset management policy.
As for its basic policy on risk preferences, Sony Life aims for stable andsustainable business growth in corporate value by aggressively increasing
policies in force and underwriting insurance risk, while maintaining sufficientsolvency based on economic value.
Sony Life also prioritizes investment in assets that match insurance liability
characteristics to reduce interest rate risk pertaining to liabilities of insurance
policies with long-term maturities, with the aim of securing corporate value oflife insurance business.
In the latest monetary easing in Japan, Sony Life maintains a sufficient levelof solvency based on economic value, though the amount of interest rate risk
has increased due to a decline in ultralong-term interest rates.
Sony Life will continue to invest in ultralong-term JGBs while monitoringmarket trends, with the aim of reducing interest rate risk along with anacquisition of new policies.

Appendix

37

Recent Topics 1
AEGON SONY LIFE INSURWNCE Sales Update
Launch of sales: December 1, 2009
Common stock: ¥20 billion (including capital surplus of ¥10 billion)
Equity ownership: Sony Life insurance Co.,
* Ltd. 50%, AEGON international B.V. 50%
Marketing products: Individual Variable Annuities (3 types, 4 products*)
Sales Channels: Lifeplanner sales employees and partner Banks (9*) *As of May 20, 2013
Financial Highlights for FY2012: Number of new policies: 7,357, New policy amount: ¥51.1 billion(As of Mar. 31, 2013): Number of policies in force: 10,232, Policy amount in force: ¥76.1billion
Line item amounts are truncated below ¥100 million.

Sony Bank’s Mortgage Loans through Sony Life
■ Sony Life accounts for 25% of the balance of mortgage
loans as of March 31, 2013
Sony Life accounts for 22% of the amount of new mortgage loans for FY12*Sony Life started handling banking agency business in January 2008.

Sony Assurance’s Auto Insurance Sold by Sony Life
■ Sony Life accounts for approx. 5% of new automobile policies for FY12
* Sony Life started handling automobile insurance in May 2001.
“Lifeplanner” is a registered trademark of Sony Life Insurance Co., Ltd.

38

Recent Topics 2<Highlight for FY2012>2012-5-16
2012-7-27
2012-8-01

Sony Life launched the first phase of its “Co-Creation Project”
Sony Assurance began providing smartphone applications designed to assist drivers to be conscious of theimportance of safe driving, to solve problems when troubled and to get estimates and apply for automobile
insurance via smartphone. Sony Assurance is the first Japanese automobile insurance provider to offer
these smartphone applications and services.
Sony Bank transferred all Sony Bank securities’ shares to Monex Group with the aim of enhancing financial
products intermediary services through strengthening business alliance with Monex Group.

2012-10-11

Sony Assurance added a GPS system to its free application, “Trouble Navigation” for smart phone users

2012-10-19

Sony Life launched the second phase of its “Co-Creation Project”

2012-10-22

Sony Bank began offering Chinese HongKong (CNH), South African Rand and Swedish Krona for foreign
currency deposits
Sony Assurance revised automobile insurance details including a discount on paperless insurance policies
and establishing a new rider, commencing on or after November 1, 2012
Sony Bank reduced exchange transaction fees for its all twelve foreign currency deposits and revised
preferential system
Sony Life transferred the business of Sony Life Insurance (Philippines) Corporation

2012-11-01
2012-12-01
2012-12-06
2013-1-14

2013-5-01

Sony bank launched new financial products intermediary services with Monex GroupSony Financial Holdings issued No. 2 unsecured corporate bonds(The bonds were raised as a subordinated loan aimed at reinforcing Sony Bank’s financial base on February
1. 2013)
Sony Life revised insurance premium rates on some products in line with the reduction in discount rate used
for calculating policy reserves.
Sony Life transferred the business of LIPLA Co., Ltd.

2013-5-02

Sony Life commenced sale of a new product: “ U.S. Dollar Denominated Insurance.”

2013-1-31
2013-4-02

39

Sony Life: Fair Value Information on Securities(General Account Assets)
Fair Value Information on Securities
Fair value information on securities with market value (except trading-purpose securities)

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

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

40

Sony Life’s Interest Income and Dividends (Details)(Millions of yen)

FY2012FY2011

ChangeCash and deposits
Japanese governmentand corporate bonds
Japanese stocks

00(6.8%)

77,182

87,634+13.5%

869

536(38.4%)

Foreign securities

2,908

3,746

+28.8%

Other securities

285

251

(12.0%)

Loans

5,367

5,450

+1.5%

Real estate

11,241

10,854(3.4%)

Others10567(36.0%)

Total

97,960108,539+10.8%

Line item amounts are truncated below ¥1 million

41

Sony Life’s Quarter trend on New Policies Amount
Quarter (3M) trend on New Policies Amount(Billions of yen)

New policy amount

1,065.3
1,000.0

1,003.0

1,201.9 1,238.7

1,175.4

1,160.8

1,200.0

1,054.4
969.6

997.3

1,066.5
976.1

947.4

800.0
600.0
400.0
200.0
0.0

FY10.1Q FY10.2Q FY10.3Q FY10.4Q FY11.1Q FY11.2Q FY11.3Q FY11.4Q FY12.1Q FY12.2Q FY12.3Q FY12.4Q
Line item amounts are truncated below ¥100 million;

42

Sony Life’s Quarter trend on
Annualized Premiums from New Policies
Quarter (3M) trend on Annualized Premiums from of New Policies
Annualized premiums from new policies

Of which, third-sector(Billions of yen)

24.0

22.0

22.0
20.0
18.0

18.1

19.8

19.0
17.2

16.8

17.1

16.0

19.0
17.6

16.0

17.4
14.6

14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0

4.1

3.8

4.7

3.9

4.2

3.8

4.9

4.0

4.4

3.6

5.0

5.2

FY10.1Q FY10.2Q FY10.3Q FY10.4Q FY11.1Q FY11.2Q FY11.3Q FY11.4Q FY12.1Q FY12.2Q FY12.3Q FY12.4Q
Line item amounts are truncated below ¥100 million;

43

Sony Life’s Policy Amount in Force
Policy Amount in Force/New Policy Amount/ Lapse and Surrender Amount(Trillions of yen)

Policy amount in f orce (lef t scale)

40.0
31.4

4.1%

30.0

Growth rate (right scale)
36.0
34.7

33.4

32.5

4.7%
3.8%

3.8%

3.2%

37.7

4.0%
3.0%

2.9%

20.0

5.0%

2.0%
10.0

0.0

(Trillions of yen) 5.0
4.0

1.0%

FY07

FY08

FY09

FY10
4.1

FY11
4.2

FY12
4.4

3.8

3.8

4.0

(1.8)

(2.1)

(2.3)

(2.1)

(2.0)

(1.9)

0.0%

3.0
2.0
1.0
0.0
-1.0
-2.0
-3.0

New policy amount

Lapse and surrender amountLine item amounts are truncated below ¥100 billion

44

Contact:
Corporate Communications & Investor Relations Department
Sony Financial Holdings Inc.
TEL： +81-3-5785-1074
45