[Presentation Material]

Sony Financial Group
CorporatepStrategygy Meetinggfor Fiscal Year 2013

Sony Financial Holdings Inc.
June 3, 2013
Sony Financial Holdings Inc. All Rights Reserved

Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies and beliefs of the Sony Financial Group. Anystatements contained herein that pertain to future operating performance and that are not historic facts are forward-looking statements. Forwardlooking 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
written,Group, based on information that is currently available to itit. As
such, these forward-looking statements are subject to various risks and uncertainties, and actual business results may vary substantially from theforecasts expressed or implied in forward-looking statements. Consequently, investors are cautioned not to place undue reliance on forwardlooking statements. The Sony Financial Group disclaims any obligation to revise forward-looking statements in light of new information, future
events or other findings. The information contained in this presentation does not constitute or form part of any offer for sale or subscription of orsolicitation 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.

Sony Financial Holdings Inc. All Rights Reserved2Sony Financial Group

Group Mid-Term Management Policy (FY2013–2015)
Sony Financial Group

Outline ofo Group Mid-TermM
Manaagement PolicyP By pursuing each Group company’s
company s core competencies in providing
high-quality services, further enhance customer satisfaction andexpand our customer base, thereby achieving sustainable growth
for the Group Establish a revenue base that is unshakable in the face of achanging management environment
 Enhance shareholder returns, underpinned by a stable revenue
base and solid financial soundness

Sony Financial Holdings Inc. All Rights Reserved3Sony Financial Group

Group Mid-Term Management Targets (FY2013–2015)
 By providing high-quality services, further enhance customer satisfaction andexpand our customer base, thereby achieving sustainable growth for the Group Establish a revenue base that is unshakable in the face of a changing
genvironment/ enhance shareholder returns
management

1.

Accelerate top-line growth by expanding operations in the three major businesses
 Consolidated ordinary revenues are outpacing the level outlined in last year’s mid-term plan, and are expected
to reach approx. ¥1,400.0 billion in FY2015.

2.

Consolidated ordinary profit target: ¥80.0 billion in FY2015; forecast for consolidated
adjusted ROE: 7 to 8 % in FY2015
 Profit levels are down temporarily, affected by external factors, but the profit growth trend is unchanged.
 Sony Life’s adjusted ROE (MCEV growth rate) steadily increases even under the lower interest rate environment.

3.

Enter new fields of business TTake
k advantagedt
off new opportunities
t iti forf growth
th fromfa long-termltperspective,tisuch
h as byb enteringt i ththenursing care business.

4.

Establish a solid revenue base that is unaffected by changes in the management
environment
 For each Group company
company, establish a solid revenue base by pursuing more sophisticated risk management and
ALM, and steadily increase profits although interest rates are likely to remain low for the foreseeable future.

5.

Enhance shareholder returns
 We expect to increase dividends for FY2012.
y, which remains unchanged
g from FY2012,, is to steadilyy raise dividend amount.
 Our mid-term dividend p
policy,Sony Financial Holdings Inc. All Rights Reserved4Sony Financial Group

Business Growth by Segment
Achieve sustainable growth in top line in line with each businessexpansion at core three businesses
Sony Life

Sony AssuranceSony Bank

Policy Amount in Force

Direct Premiums Written

Retail Balance*(Trillions of yen)Over
¥42trillion

yen))((Trillionso s ofo ye(Billions of yen)*Sum of deposits, investment trusts andpersonal loan balance
p

4.0

Over
¥3.5trillion¥96.0 billion
100

3.0

80

60

20
2.0

40

1.0
20

0.0

0
FY11

Previousplan

Current
plan

FY12

FY13

FY14

Previous
plan

FY15

Current
planSony Financial Holdings Inc. All Rights Reserved

FY11

FY12

FY13

FY14
FY15
Current
Previous
plan
plan

5

Sony Financial Group

Consolidated Ordinary Revenues and Ordinary profit
 Consolidated ordinary revenues are outpacing the level outlined in last year’s mid-term plan,and is expected to reach approx. ¥1,400.0 billion in FY2015
 Consolidated ordinary profit is targeted to reach over ¥80.0 billion in FY2015, in considerationof a negative impact of external factors
Consolidated Ordinary Profit

Consolidated Ordinary Revenues
Life Insurance(Billions of yen)

Banking

Non-life Insurance

1,400.0
1 400 01,400(Billions of yen)

Negative impact of around ¥10.0 billion isassumed in the FY2015 forecast of the current
plan due to the revision of discount rate forcalculating policy reserves (FY2013-) and theincrease in consumption tax rate (FY2014-)

100

80.0

1,200

80

1,000

60

800

FY14
¥1,236.0
billion

600
400

FY14
over ¥80.0
billion

40
20

200
0

0

FY11

FY12

FY13(F)

FY15(F)
Previous
plan

FY11

FY12

Current
planSony Financial Holdings Inc. All Rights Reserved

FY13(F)

FY15(F)
Previousplan

Currentplan

6Sony Financial Group(Reference) U.S. GAAP Operating Income
U.S. GAAP-based operating income for Sony Financial Group is
expected to grow, reaching Approx. ¥170.0 billion in FY2015.
(Billions of yen)

Approx.
A¥170.0 billion

2,000
200

1160
1,600
600

145.8
131.4

1,200
120

800
80

400
40

0

FY11

FY12

FY13

FY14

FY15

Sony Corporation, the parent company of Sony Financial Holdings Inc. (“SFH”), prepares its consolidated financial statements in accordance with U.S. GAAP. This
reporting in accordance with U.S. GAAP includes the disclosure of financial information for the Sony Group’s Financial Services segment, including the SonyFinancial Group. On the other hand, the Sony Financial Group, which accounts for the majority of the Sony Group’s Financial Services segment, discloses financial
information in accordance with Japanese GAAP.
Please refer to P44 for the details of the difference in accounting principles between J-GAAP and US-GAAP.

Sony Financial Holdings Inc. All Rights Reserved7Sony Financial Group

Enhance Shareholder Returns
 We plan to pay a year-end dividend of ¥25 per share for FY2012, up ¥5 from
FY2011, reflecting our strong results.
 Our mid-term
mid term target for the dividend payout ratio is 30% to 40% of consolidated
net income. Going forward, we will steadily raise dividend amount, taking into
account management environment.
Mid-term target for the dividend
payout ratio 30％ to 40％＜Dividend Payout＞(Billions of yen)

25

26.4
26.9

21 2
21.2
21.2

20 9
20.9

13.6
13.6

26.5
26.5

20.9

Increase
dividend(planned)

Increased
dividend

10

29.4

29.4

20
15

24.1

24.2

8.7

8.7

10.87510.875

6.525

6.525

6.525

FY07

FY08

FY09

FY10

FY11

FY12

FY13(F)

¥15

¥15

¥15

¥20

¥20

¥25
(Planned)¥25(Forecast)

50
Dividend per share

Sony Financial Holdings Inc. All Rights Reserved

8

Sony
y LifeSony Financial Holdings Inc. All Rights Reserved

9Sony Life

Achieve Steady GrowthLife insurance market is shrinking by 3% per annum while
Sony Life steadily increases its policy amount in force at approx. 4% per annum.
1 279
1,279

Life insurance market scale vs Sony Life’s market share(Individual life insurance and annuities)
1,069(Trillions of yen)

964

960*

Over
¥42 trillion
CAGR

Lif insuranceLifeimarketk t scalel37.7(FY02-FY15)

over 4%

36.0
3.9%
3.7%

31.4

24.7

2.9%

Sony Life ‘sMarket ShareSony Life

1.9%

(FY)

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

*The figure of Individual life insurance market for FY12 is estimate.
Source: Statistics of Life Insurance Business in Japan, Materials officially disclosed by individual insurers

Sony Financial Holdings Inc. All Rights Reserved

2015
10

Sony Life

Key Messages Initiatives for Growth

Further enhancemarketingk tichannels Expand cadre of quality Lifeplanner sales employees Accelerate expansion of independent agent channel tomeet diverse needs

 Through Business Process Re-engineering,Continuously
pursueoperational
excellence

Achieve steady
growth inpvalue
corporate

dramatically improve service quality and marketingandd operationaltil efficiencies
ffi ii Strengthen product lineups to contribute to customers'

asset building by introducing U.S. dollar denominatediinsurance
products,
d t andd enhancehtheth productd t portfolio
tf li

 Achieve steady growth in corporate value through thesteady acquisition of new policies and by mitigatinginterest rate risk

Sony Financial Holdings Inc. All Rights Reserved11Sony Life

Overview of Sales Channels
Build the business portfolio by balancing two sales channels,
the Lifeplanner channel and the independent agent channel
Lifeplanner channel

FeatureChannelshare /
growthpotential

 High-quality consulting and lifelong
follow-up services

75％
Channel sharewithin Sony Life

Action for
the future
growthIndependent agent channel

 Response to diverse customer preferencesin how to buy life insurance products

25％

+3.0％
Growth rate
(CAGR FY08-FY12)

Channel sharewithin Sony Life

 To achieve sustainable growth, maintainhigh productivity by hiring and training
sales people with outstanding consulting
skills, and increasing the number ofLifeplanner sales employees.

+11.8％
Growth rate
(CAGR FY08-FY12)

 Pursue high growth by developing
tie-ups with various types of independent
agents, centering on shop-style agents.

(Note: Channel share and growth rate are calculated based on
annualized premiums from new policies.)

Sony Financial Holdings Inc. All Rights Reserved

12Sony Life

Lifeplanner Channel
The productivity of Lifeplanner sales employees has improved
substantially since FY2010; strive to increase the number ofthese employees to a target number of 4,400 in FY2015
Number of Lifeplanner sales employees &productivity
105.9
104.3
103.1

102.5

Productivity*
Productivity

Over 4,400

 The productivity of Lifeplanner sales employees
improved as a result of more stringent standards
for recruitment and reinforced training programs.

100.0

4,075 4,066⇒ Enhance productivity while increasing thenumber of Lifeplanner sales employees

4,116 4,119(Initiatives)⁃ AppointA
i t more competentt t Lifeplanner
Lif l
sales
l employeeslas office managers to enhance recruiting activities.
⁃ Standardize the training program for newly recruitedemployees.
⁃ Strengthen sales efficiency and service quality by
utilizing information technology.

More stringent standards
for recruitment
Strengthening training
programMarch 31,2010

March 31, March 31,
2011
2012

March 31,2013

(FY2009) (FY2010) (FY2011) (FY2012)

March 31, 2016
(FY2015)

Note: The figure as of March 31, 2016 includes the number ofcontracted Lifeplanner sales employees.

(Note: Productivity is indexed to March, 31 2010 =100,
calculated on the basis of annualized premiums from new policies.)

Sony Financial Holdings Inc. All Rights Reserved13Sony Life

Lifeplanner Channel

Recruiting Initiatives

The number of office managers increased due to the revision of office manager evaluation andcompensation systems to enhance recruiting activities. We will strive to boost recruiting
productivity by appointing more competent Lifeplanner sales employees as office managers.

Number of office managers& recruiting productivity
1 34
1.34
1.12

1.13
115

1.00

111
106

100

Revision of
officeffi manager
packages

March 31, March 31, March 31,
2011
2012
2013

(FY2010)(FY2011)(FY2012)

Office manager
gp
productivityyrecruiting(index)** New recruits per officemanager per year
(Note: Productivity is
indexed toMarch 31, 2011 = 1.00.)

The number of officemanagers(Index*)(* The number of officemanagers is indexed toMarch 31, 2011 = 100.)

March 31, 2016

 Enhance office managers’ evaluation andcompensation systems and other packages.
Number of office managers
gincreased due toimproved recruiting productivity and by appointing
more competent Lifeplanner sales employees as
office managers who act as recruiters.
⇒ Strive to enhance recruiting productivity to
rejuvenate Lifeplanner Channel while increasing
the number by appointing more competent
Lifeplanner sales employeesyas office managers.
g(Initiatives)⁃ Standardize recruiting procedure and training
program⁃ Make additional revisions to performance evaluation
system
⁃ Utilize IT to raise business efficiency, but morepy to focus on recruiting
g and traininggimportantly
activities(FY2015)

Sony Financial Holdings Inc. All Rights Reserved

14Sony Life

Independent Agent Channel
Pursue high growth by developing tie-ups with various types of
independent agents, centering on shop-style agents, community-based agents andinsurance agents in corporate groups Pursue high growth through tie-ups with rapidly
growing nationwide shop-style agents.

Operating performance ofindependent agent channel

148
113
100

104

⇒ Pursue further growth by enhancing tie-ups with
community-based agents and insurance agentsCommunity-basedin corporate groups, in addition to nationwide
agents and insurance
shop-style agents and professional life
agents in corporate
insurance agents.
agentsgroups, etc.
t
(Initiatives)⁃

Nationwide shopstyle agents andprofessional life
insurance agents

March 31,2011

March 31,2012

March 31,2013

(FY2010) (FY2011) (FY2012)

March 31, 2016
(FY2015)⁃⁃

Leverageg community-basedy
independentpagentsg
and pprovidetraining programs
Build business tie-ups with insurance agents in corporategroupsProvide ongoing training programs to Sony Life’s agent sales
support staff(Annualized premiums from new policies are indexed to March 31, 2011 = 100.)

Sony Financial Holdings Inc. All Rights Reserved15Sony Life

Business Process Re-engineering“Co-Creation Project”

Realized on-line paperless applications through “Co-Creation Project”,
which dramatically improves marketing and operational efficiency and contributes
to Lifeplanner’s productivity.
Flawed paperwork

Introducing on-line
paperless application for
new contract
t t

Before“Co-Creation IT project” released in Oct. 2012
will be implemented nationwide by the end of FY2013.

After
introducing
new IT systemapprox.

70% cut

approx.

50% cut

Screening period
BeforeAfterintroducing
new IT system

Voice of office manager and Lifeplanner

Implementation ratio

approx.

90％

Save time for paper work.
U more titime ffor marketingUsek ti activities.
ti iti(As of March 31, 2013)

Sony Financial Holdings Inc. All Rights Reserved16Sony Life

Product Strategy U.S. dollar Denominated Insurance
Launch U.S. dollar denominated insurance from May 2013, with the aim of providing productsthat enable Sony Life to offer diverse proposals for protection and asset-building.
2006

Semi-Participating whole life Nursing-care insurance
Semi-Participating lump sum rider for Nursing-care insurance
Income protection insurance to cover three major diseases

2008

Whole-life cancer insurance (08)Level premium plan term life insurance (No surrender value)
Level premium plan term life insurance rider (No surrender value)

2009

Aegon Sony Life

2010

2011

2013

Variable Individual Annuity

Cancer hChospitalization
it li ti iinsurance, AdvancedAd
d medical
di l T
Treatmentttrider and Hospitalization surgical benefits rider, Additional
Benefits for Bone Marrow Donors
Discount Rider for Nonsmokers and Others in Excellent Healthfor Family Income Insurance
Whole life Nursing-care insurance (reduced surrender value)
Lump sum rider for Nursing-care insurance
Discount Rider for Nonsmokers and Others in Excellent Healthfor Decreasing Term Life Insurance
Income Protection Insurance to Cover Three Major Diseases(Type II)C
Cancerdrug therapy benefits
fU.S. dollar denominated insurance(Whole life, Endowment andSpecialty endowment)*Product brochure of U.S. dollar denominated insuranceSony Financial Holdings Inc. All Rights Reserved17Sony Life

Stable Growth in Corporate Value
Achieve steady growth in corporate value through the steady acquisition of
new policies and by mitigating interest rate risk
MCEV
Change from 2012.3.31 to 2013.3.31
MCEV
Change from 2008.3.31 to 2009.3.31

1,041.5

Impact of a change ofinterest rates, etc.

((41.3))22.9+41 6 +22.9+41.6

1,064.7(426.2)(Billions of yen)(410.0)816.5(Billions of yen)

Impact of a change ofinterest rates, etc.

+384.9(334.6)(75.4)(38bp)(45bp)

1.88%
1.89%

30YR
40YR

O
Others

2.26%
2.34%

N
New
businessvalue

Otherss

New buusinessvalue

Adjustted net
worth

Value ofoexistinggbusinesss(415.6)

March 31, 2009
MCEV

A
Adjusted
net worth
h

400 9
400.9

March 31, 2008
MCEV
30YR
40YR

V
Value
of existingbuusiness+15 4 (21.1)+15.4(21 1)March 31,2012
MCEV

＋23.2

March 31,2013
MCEV

1.95%
1
95%
2.11%

(41b )(41bp)(47bp)

1 54%
1.54%
1.64%

18

Sony LifeThe Risk Amount Based on Economic Value
To improve disclosure on financial soundness based on economic value,
upload a breakdown of the risk amount (insurance risk, market-related risk, etc.)

2013.3.31

 Sony Life’s Basic Policy on
Risk Preferences(Billions of yen)
1,064.7

Counter party risk

2.3
26.0

(262 5)(262.5)

605.6

MCEV

Marketrelated risk

variannce
effectt

661.3

289.9

Operational risk

Insurance
risk(Break down)

The Risk Amount Based on Economic Value Ai
Aims forf stablet bl andd sustainablet i blbusiness growth in corporate value
by aggressively increasing policies
in force and underwriting insurance
risk while maintaining sufficientrisk,
solvency based on economic
value.
 Prioritizes investment in assets thatmatch insurance liability
characteristics to reduce interest
rate risk pertaining to liabilities of
insurance p
policies with long-termgmaturities, with the aim of stably
growing corporate value of life
insurance business.
*Interest
Interest rate risk amounted to ¥234.2¥234 2 billion
billion,excluding the variance effect within marketrelated risk.

Sony Financial Holdings Inc. All Rights Reserved19Sony Life

Sony Life Mid-term Targets

FY2012
Number of
Lifeplanner

4 119
4,119

(The figure for FY2015 includes thenumber of contracted Lifeplanner sales
employees.)

PolicyPli amountt
in force(Individual insurance and annuities)

MCEV(Sony Life non-consolidated)

Ordinary
income(Sony Life consolidated)¥37.7
trillion¥1,064.7
billion¥72.7
billion

FY2015
Approx. 300
increase

Over
4,400

CAGR approx. 4％

Over
¥42
trillion

ROEV 7 to 8％¥1.3
trillion

JGB interest rate assumption based on market
conditions as of the end of March 2013.

(From FY2013)

CAGR
over 6％

Sony Financial Holdings Inc. All Rights Reserved¥71.0
billion20

Sonyy AssuranceSony Financial Holdings Inc. All Rights Reserved21Sony Assurance

Key Messages

Improve
profitability

 Make improving the loss ratio a topmost priority,

and return profitability to an appropriate level by
FY2015

 While prioritizing profitability, continue to

M i t i growth
Maintainthachieve stable growth to firmly maintain its
leading position in the direct market

Maximize customer
satisfaction levels

 By making further improvements in service

quality, earn customer trust and maintain theirsupport of the brandSony Financial Holdings Inc. All Rights Reserved22Sony Assurance

Direct Automobile Insurance Market
The Market share of major direct non-life insurers has been steadily expanding.
Sony Assurance has maintained a leading position in the direct market.
Direct premiums written by major direct
insurers (Automobile insurance)

Automobile Insurance market and market
share of major direct non-life insurers（億円）(Billions of yen)
40,0004,000.0(Billions of yen)10%

35,0003,500.0

3,000.0
30,000

80.0
800
70.0
700

8%

Total automobile insurance market

6.6%（Total direct premiums written）

Sony Assurance

60.0
600

6.2%
5.8%

25,0002,500.0

5.4%

6%

50.0
500

5.0%
20
20,0000000
2 000
2,000.0
3.6%
15,0001,500.0

2.9%
2.4%

10,0001,000.0

3.9%

4.2%

40.0
400

4 5%
4.5%
4%

Market share ofmajor direct insurers

1 8%
1.8%

Ｄ
Ｅ
Ｆ
Ｇ
Ｈ

2%

10.0
100

0.7%
0.3%

0
FY
1
FY 1
12
Es
t

9

FY
1

8

FY
0

7

FY
0

6

FY
0

5

FY
0

4

FY
0

3

FY
0

2

FY
0

FY
0

FY
0

FY
9

FY
97
FY
98
FY
99
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
FY 1 1
12
Es
t

1

00

9

0%

0

00

FY
0

0.0%

30.0
300

200
20.0

1.1%
5,000
500.0

Ａ
Ｂ
Ｃ

The figure for FY12Est is calculated by Sony Assurance, using the growth rate for the nine months ended Dec. 31, 2012 to estimate an annual figure for FY12.

Sony Financial Holdings Inc. All Rights Reserved23Sony Assurance

Improve Profitability

As the loss ratio on automobile insurance is up sharply, set top priority on improving
this ratio, improving the ratio by 4
4–5
5 percentage points by FY2015

Initiatives for improving the loss
ratio on automobile insurance

Earned/Incurred Loss Ratio
Down 4 to 5ppt

Introduced successively in November 2012 andApril 2013

(%)

72.4

To around
68%

72.9

Revise the non-fleet driver rating system(From April 2013)

Gradually improve the loss ratio by revising
discount rates for policies involving accidents

69.7

FY2013:
Approx. 3ppt
improvement

Normalize unit insurance claim amounts

65.8

FY09

Review insurance premium levels

Encourage tie-ups with excellent repair shops
and reinforce the appraisal process to hold down
costs on repairs and loaner vehicles
FY10

FY11

FY12

FY13

FY15

Revise underwriting standards

Note: Loss ratio based on all categories

Sony Financial Holdings Inc. All Rights Reserved24Sony Assurance

Maintain Growth
Prioritize improving profitability for the time being, while maintaining stable growth.
To achieve growth over the medium to long term, develop highly advanced new
products, and diversify the product lineup[New product development]
Develop even more attractive new products in mainstay fields and provide products that meet diverse needs• TVCM、Web広告媒体を中心に[Marketing]
Maintain advertising investment in TV and Web media and further enhance advertising productivity

Product Lineup

Automobile

Medical

Direct Premiums Written
CAGR

Be innovative and pursue further rationality
Incorporate increasingly sophisticated risk
segmentation

Begin soliciting for policies which
processing is completed on the Web or via
smartphone
Develop and launch new medical products+5%(Billions of yen)

67.0

72.8

78 3
78.3

96.0

82.5

Medical,etc.
Automobile

New areas

Develop new non-life insurance products
Introduce products in new categories thatleverage the strengths of direct insurance

FY09

FY10

Sony Financial Holdings Inc. All Rights Reserved

FY11

FY12

FY15

25

Sony Assurance

Maximize Customer Satisfaction Levels
By making further improvements in service quality,
earn customer trust and maintain their support of the brandInitiatives for Enhancing Customer Satisfaction2012 Customer Satisfaction Ratings
Nikkei Business after-sales service
satisfaction level

A id t response services
Accidenti
Provide optimal services that meet accident type andcustomers’ needs
Provide systems
yand enhance training
g to boost accident
resolution capabilities

Automobile Insurance Division

HDI-Japan WEB Support Portal Rating
Non-Life Insurance Division

HDI-Japan Inquiry Desk Rating

No. 1(Two consecutive years)

Three stars(Three consecutive years)

Three stars

Non-Life Insurance Division

Customer center
Use consulting to provide more rational contract methods
Augment call support service for website and smartphone
users

Japan Brand Strategy,
Overall Customer Support

No. 1

Automobile Insurance Division

Web/smartphone services
Establish position as leading provider of non-life
insurance via smartphone
Extend functions to expand Web business and boost
usability*Sony Assurance ‘s official website as of June 2013

Sony Financial Holdings Inc. All Rights Reserved26Sony AssuranceSony Assurance Mid-term Targets

FY2012
Direct premiums
written

CAGR¥82.5
approx.5％
5％billion appro

Net Expense ratio

26.0％

E.I. loss ratio(*)

72.9％

Sum of two ratios

98.9％

Ordinary income

FY2015¥2.3
billionSum oftwo ratio
improve
4 to 5ppt
CAGR
approx.
approx20％¥96.0
billionapprox.
pp25％
approx. 68％
approx. 94％¥4.0
billion※Including all type of policy and cost of investigation for the cause of damage
damage.

Sony Financial Holdings Inc. All Rights Reserved

27

Sony
y BankSony Financial Holdings Inc. All Rights Reserved28Sony Bank

Key Messages

Increase business volume
based on strong customer
satisfaction

 Steadily increase business volume, backed by highlevels of customer satisfaction

 Further enhance two major engines of business:

StrengthenStth strategict t i
products

mortgage loans and the foreign currency business Expand the customer base further by offering expanded

settlement functions with a Sony Bank flavor

 Through appropriate execution of ALM, maintain a stable

Maintain profitgenerating capacity

interest spread and continue to expand a core base ofprofits that is relatively impervious to the financial
environment

Sony Financial Holdings Inc. All Rights Reserved29Sony Bank

Customer Satisfaction and Business Expansion
Sony Bank has stably grown business volume, backed by high levels of customer
satisfaction even in the long-time stagnant growth of business volume in the industry.
Retail Balance

１

位
第
No.1
第
位

★★★

Three stars in HDI-Japan
1st in Nikkei financial
Support Portal/ Inquiry
institution
Desk Ratingscustomer satisfaction
announced inrankings
February 2013
for the sixth straight year
announced in January 2013

【Sum of deposits, investment trusts andpersonal loan balance】
Other personal loans
Mortgage loans
Investment trusts
Foreign currency deposits
2,841.2
Yen deposits(Billions of yen)

2 621 1
2,621.1
2,419.6
2,173.4
656.0
555.1

１

第
位
No.1
第
位

１

第
位
No.1
第
位

1st in Nikkei Business1st in Oricon Mortgage Loan
after-sales service
Customer Satisfaction
satisfaction level rankings
Rankings
announced inannounced inJuly 2012
FY2011 & FY2012

Over
3,500.0

100.0
325.0

1,184.9

106.4
359.2

1,289.8

749.6
102.0
371.7

1,390.5

860.3
116 9
116.9
390.2

1,467.2

March 31, March 31, March 31, March 31,
2010
2011
2012
2013

Sony Financial Holdings Inc. All Rights Reserved

March 31,2016

30

Sony Bank

Mortgage Loans
While loan-deposit ratios throughout the banking industry continue their downward trend,Sony Bank aims to boost its volume of mortgage loan activity and its lending balance byfurther enhancing its sales channels
Mortgage loan balance andloan-deposit ratio

Well-balanced sales channel expansion

Banks nationwide*, 2012 interimSony Bank (yen deposit basis)■

Sony Bank mortgage loan balance*
68.9% ※

71.1%

69.1%

68.9%

(1) Simplify operations for Internet applications,and improve marketing sophistication(2) Cultivate new home market

66 1%
66.1%

－DeepenD
anddb
broadend ti
tie-ups withith bbuilders
ild－Strengthen alliances with Sony Life’s
Lifeplanner sales employees

60.1%(3) Cultivate markets outside major
metropolitant
lit areas

56.0%

8,603
860.3

49.5%

7,496
749.6
656.0
6,560
,

5,551
555.1
(Billions of yen)March 31
31,

10.3末
2010

March 31
31,
11.3末
2011

March 31
31,
12.3末
2012

March 31
31,
13.3末
2013

Put in place a structure to increase theannual mortgage loan volume from present
level of ¥200.0 billion now to¥250 0 billion¥250.0billi iin FY2015

Source: Nationwide Bank Financial Statement Analysis, Japanese Bankers Association

Sony Financial Holdings Inc. All Rights Reserved31Sony Bank

Foreign Currency Business (1)Amid increasingly active foreign exchange markets, strengthen the functions of SonyBank’s “Foreign Currency World” savings, asset building and spend, thereby securing
an overwhelming share
Share of foreign
currency deposits
Sony Bank
7.0%

OthersMegabanks

Note: As of March 31, 2013

Scale of foreign currency deposit market:
Approx. ¥5.5 trillion

Principal measures for boosting
competitiveness (enacted in FY2012)(1) Added three currencies (total of 12)
Oct. 2012(2) Reduced foreign exchange commissions Dec. 2012

Build share to levelin line with megabanks
Enhance functionality to allow savings, asset
building and spend in foreign currencies
 Provide benefits when remitting foreign
currency from other banks
 Provide more diverse products denominatedin foreign currencies (including bystrengthening alliance with Monex Inc.)
 Introduce unique Sony Bank type of foreign
currency asset building service for novices
 Provide Japan’s first multicurrency settlement
function Increase convenience through foreign
currency delivery, Web-based outward foreign
currency remittances

Note: As of March 31, 2013. Source for share information: Bank ofJapan statistics (individual customer deposit balances)

Sony Financial Holdings Inc. All Rights Reserved32Sony Bank

Foreign Currency Business (2): Foreign Currency WorldA world where you can freely spend as foreign currency
the foreign currency you have saved up
Provide multiple foreign
Currency settlement function

Foreigncurrency time
deposits

Provide diverse
products
denominated inforeign currencies

Foreign currency
time deposits
with covenantsCredit cards withdual-currency
settlement function

Foreign currency
MMF
Foreign currency
ordinary deposits

Foreign currencytransfers to SonyBank

Foreign currency
delivery

Increase convenience
Foreign currencytransfers from Sony Bank

Increase convenience
Foreign exchange
margin tradingSony Financial Holdings Inc. All Rights Reserved

Introduce foreign
currency asset
building service
for novices

33

Sony Bank

Expanding the Customer Base Further
To expand the customer base further, promote an increase of transactions in theasset-building category by providing settlement services unique to Sony Bank
Sony Bank’s current customer
distribution weighs on the investment
categoryg y
Investment

Expand transactions among people in theasset-building category, who will be in theinvestment category in the future(1) Accelerate account acquisition throughstronger liaisons with Sony Life and Sony
Assurance(2) Provide new services that will link toincreased transactions in the asset-building
category

Note:
People in their
20s not shown,as the sample is
small

20代
20s

－Provide easily accessible and diverse asset-building
products－Introduce unique settlement-related products
Asset building
30代
30s

40代
40s

－BeginBegin handling highly convenient card loans
50代
50s

60代～
60s
and upFinancialassets < ¥500,000
金融資産50万円未満¥500,000≤ ¥1 million
50万円～100万円未満¥1
million ≤ ¥3 million
100万円～300万円未満¥3
million ≤ ¥5 million
300万円～500万円未満¥5
million ≤ ¥10 million
500万円～1千万円未満¥10
million ≤ ¥20 million
1千万円～2千万円未満≥2千万円以上¥20 million

Source: User profile from customer satisfaction survey conducted in November 2012 by Macromill

Sony Financial Holdings Inc. All Rights Reserved34Sony Bank

Stable Profitability Leads to Steady Growth in Profits[Expanding Business Volume] X [Maintaining a Stable Interest Spread that isimpervious to the financial environment] = [Steady Growth in Profits]
Sony Bank’s Stable Interest Spread(appropriate execution of ALM)
Interest spread

1 48%
1.48%

1.44%

Regional banks (reference)

Regional banks

1.36%

Stably Growing Core-based
Gross Operating Profit
in line with Business Expansion
3.64

3.62

3.56

(Trillions of yen)

[3.48*]

1.30%(Billions of yen)

0.91%
% 0.89%% 0.94%% 0.92%%

FY09 FY10 FY11 FY12FY15Source: Nationwide Bank Financial Results Announcements,
Japan Bankers Association

14.6

15.7

FY09

FY10

18 1
18.1

18.6

FY11

FY12

FY15

Source: Japan Bankers Association, Figures are sum of net interest income and net fees and commissions*The above figure in FY2012 is an estimate, calculated by doubling the first-half financial results.

Sony Financial Holdings Inc. All Rights Reserved35Sony Bank

Sony Bank Mid-term Targets
Sony Bank will stably grow business volume and profits with its high competitiveedge and enhanced ALM operations, even though the banking industry faces
difficulty
y in raisingg core profits,p, some of which are dependingp
g on gains
gfrom bonddealing transactions.

FY2012Retail balance[Sum of deposits, investment trusts
and personal loan balance]

Gross operating
Gti
Profit¥2.8 trillion¥21.1 billion(Sony Bank consolidated)

Operating profit(Sony Bank consolidated)¥4.4 billion

FY2015CAGR

OverOver 8%¥3.5 trillion

CAGR
Over 6%
CAGR
Over 10%

Sony Financial Holdings Inc. All Rights Reserved¥25.6 billion

Over¥6.0 billion
36ソニーフィナンシャルグループ
Sony Financial GroupSony Financial Holdings Inc. All Rights Reserved37Sony Financial Group

Group Mid-Term Management Policy(Overview: Business Strategy)
By working to provide high-quality services, achieve further increases in customer satisfaction andexpand the customer base, thereby accelerating top-line growth.

Consolidated ordinary revenues outpacing levels announced in last year’s mid-term
management plan; anticipating approx. ¥1,400.0 billion in FY2015
1. Three core existing businesses
Key Strategic Measures

FY2015 Targets

Sony Life

 Expand Lifeplanner channel while maintaining quality
 Accelerate growth in independent agent channel
 Enhance operating efficiency through Business
Process Re-engineering.
 Expand product portfolio through introduction of U.S.
dollar denominated insurance products

 Policyy amount in force of more than
¥42 trillion(Annual growth rate of approx. 4%)
 Approximately 4,400 Lifeplanner
sales employees(Up by approx. 300)

Sony
Assurance

 Take initiatives that prioritize profitability improvements
by improving the loss ratio Aggressively develop business in categories other thanautomobile insurance Achieve
A hiffurtherth increaseiin
i service
i qualitylit Improve the earned/incurred loss
ratio by 4-5 ppt
 Direct premiums written of ¥96.0
billion(Annual growth rate of approx
approx. 5%)

Sony Bank

 Continue to expand the mortgage loan and foreign
currency businesses Expand highly convenient settlement services

 Retail balance of more than ¥3.5
trillion(Annual growth rate of over 8%)

2. New business development: Making specific preparations for entering the nursing care businessSony Financial Holdings Inc. All Rights Reserved38Sony Financial Group

Group Mid-Term Management Policy(Overview: Revenue/Profit Targets, etc.)
1.

Consolidated earnings targets




2
2.
3.

Consolidated ordinary profit: Target of approx. ¥80.0 billion for FY2015. Profit levels are down
temporarily as a result of external factors, but the Company’s trend toward stable profit growth remains
unchanged. (Because of Sony Life’s policy of maintaining an excess in its reserve for price fluctuations,consolidated net income should be essentially unchanged.)
Consolidated adjusted ROE: Expected to be around 7-8 % in FY2015. Even under the lower interest rateenvironment , Sony Life’s adjusted ROE (MCEV growth rate), which makes up the core, continues togrow stably thanks to robust new policy acquisition.

Establish a solid revenue base by continuing to promote more sophisticated risk
management and ALM
Continue to augment shareholder returns, predicated on a stable revenue base androbust financial soundness

Group revenue/profit
indicators

FY2012FY2013

FY2015(Actual)(Forecast)(Mid-Term Plan)¥1,259.0
billion¥1,222.0
billionConsolidated ordinary profit¥79.2 billion¥69.0 billion

Consolidated net income¥45 0 billion¥45.0¥37 0 billion¥37.0

Consolidated ordinary revenues

CAGR 7%Over
CAGR 7%

Approx.
¥1,400.0 billion
Over ¥80.0 billion
Over ¥37.0¥37 0 billion

3.3%

7–8%

Of which, Sony Life (Non-consolidated)

3.3%

7–8%

Of whichwhich, Sony Assurance(0 1%)(0.1%)

9-10%
9
10%

Of which, Sony Bank (Consolidated)

4.3%

5-6%

Consolidated adjusted ROE(Note) Please refer to slide 45 for the details on the method for calculating adjusted ROE.

Sony Financial Holdings Inc. All Rights Reserved

39

End

Sony Financial Holdings Inc. All Rights Reserved

40Appendix

Sony Financial Holdings Inc. All Rights Reserved41Sony Financial Group (Reference 1)

Consolidated Financial Forecast for FY2013■ FY2013 Consolidated Financial Forecast(Billions of yen)

FY2012FY2013(Actual)(Forecast)

ChangeConsolidated ordinary revenues

1,259.0

1,222.0(2.9%)

Life insurance business

1,142.3

1,099.9

Non-life insurance business

84.7

88.5

(3.7%)+4.5%

Banking business

34.3

34.0

(0.9%)

Consolidated ordinary profit

79.2

69.0

(12.9%)

Life insurance business

72.7

61.4

(15.5%)

Non-life insurance business

2.3

3.0

+30.4%

Banking business

39
3.9

43
4.3

+10 3%+10.3%

Consolidated net income

45.0

37.0

(17.8%)■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 aniincrease
iin iinteresttt iincome on lloans lleddb
by a growing
i bbalanceloff mortgagetlloans.
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.

Sony Financial Holdings Inc. All Rights Reserved42Sony Financial Group (Reference 2)

Financial Soundness

2013.3.31 (Actual)
Solvency
margin ratio

2,281.8%

 Conduct ongoing risk management which

Risk amountbased oneconomic value¥661.3billion Sony Life ensures financial soundness by

Solvency
margin ratio

504.2%

Sony Life(non-consolidated)

Sony
Assurance

Sony Bank(non-consolidated)

Mid-term Policy

Capitaladequacy ratio

11.98%

Tier 1 ratio

8.85%

has been incorporating possible tighteningof capital requirements based on economic
value in future.
p g its risks within a p
properp level ofkeeping
MCEV, which is capital based on economic
value (MCEV as of the end of March 2013:¥1,064.7 billion).

 In preparation for future growth of businessvolume and risk assets, ensure soundness
which is consistent with levels ultimately
required by Basel III. Also consider Tier 1
and Tier 2 balance from standpoint of
capital efficiency.

Sony Financial Holdings Inc. All Rights Reserved43Sony Financial Group (Reference 3)

U.S. GAAP-based Operating Income
As for profit of an insurer with growing policies in force, the following two reasons increase
profit for U.S. GAAP-based operating income of the Sony Group’s financial services
segmentt comparedd withith JapaneseJ
GAAP-based
GAAP bd ordinarydiprofitfit off th
the SSony Fi
Financial
i lG
Group:
 Different accounting treatment for policy reserves (future insurance policy benefits) Accounting
g treatment of deferred insurance acquisitionqcosts ((recorded in U.S. GAAP only)y)

SFH’s consolidated results* are prepared in accordance with Japanese GAAP. As such, these figures differ insignificant respects from the financial information reported by Sony, the SFH’s parent company, which prepares its
financial statements in accordance with U.S. GAAP.
*SFH’s scope of consolidation includes Sony Financial Holdings Inc., Sony Life Insurance Co. Ltd., Sony Assurance
Inc Sony Bank Inc
Inc.,
Inc., Sony Life Insurance (Philippines) Corporation
Corporation, Sony Bank Securities Inc
Inc., and SmartLink
Network, Inc. It also includes AEGON Sony Life Insurance Co., Ltd. and SA Reinsurance Ltd., as affiliated companies
accounted for under the equity method. Sony Bank Securities Inc. and Sony Life Insurance (Philippines) Corporation
were out of the scope of consolidation from August 1, 2012 and December 6, 2012, respectively and thereafter.
Sony Financial Group companies constitute the majority of Sony Group’s Financial Services segment. However, thescope of Sony Group’s Financial Services segment differs from the scope of SFH’s consolidated results.

SFH announced [Reference Disclosure] Key Performance Figures Based on U.S. GAAP. Please refer the announcement.
http://www.sonyfh.co.jp/web/en/financial_info_e/results_e/sfh_fy2012_4q_02.pdf

Sony Financial Holdings Inc. All Rights Reserved

44Sony Financial Group (Reference 4)

Adjusted ROE (Consolidated)Sony Life’s adjusted ROE (MCEV growth rate) for FY12 declined due to lower
interest rates in the ultra-long term.
SFH’sSFH
s adjusted ROE is at 7 to 8% based on market conditions as of the end of
March 2013.

FY2012
Consolidated
adjusted ROEO

FY15
7 - 8%

3.3%

Of which

3.3%

Sony Life (non-consolidated)
Sony Assurance(0.1%)
4.3%

Sony Bank (consolidated)* As for Sony Life’s
target, market
assumptions areunchanged from themarket conditions asof the end of March2013.

7 - 8％
9 – 10%5 – 6%

Note: Calculation of consolidated adjusted ROE is as follows.
Numerator
S
Sony
Life
Lif
(non-consolidated)
Sony AssuranceSony Bank(consolidated)

Denominator

Net increase in MCEV plus dividends

The average of (MCEV at previous fiscal year-end minus
dividends plus MCEV at current fiscal year-end)

Net income+ increase in provision for catastrophe
reserve (after tax)+ increase in reserve for pricefluctuations (after tax)

The average of (net assets + catastrophe reserve (after-tax) andreserve for price fluctuations (after-tax)) as of the previous fiscal
year-end and the current fiscal year-end

Net income

The average of net assets as of the previous fiscal year-end andthe current fiscal year-end

Sony Financial Holdings Inc. All Rights Reserved

45Sony Life (Reference 5)

Response to the Revision of Policy Reserves Discount Rates
FY13-:
Sony Life Revises insurance premium rate inline with the reduction in p
policyy reserves
discount rates.

Changes in Policy
Reserves Discount Rates
Apr. 1996
2 75%
2.75%

Apr. 1999

2.00%

 Rates are not revised on its mainstay term life insurance
products,, includingpg familyy income insurance,, and annuities.

Apr. 2001

1.50%
Apr.
p 20131.00%

 Rates are revised 5 to 10% upward on saving-typeinsurance products, such as whole life insurance, living
benefit insurance, nursing care insurance and educational
endowment insurance products, etc.

Operating profit for FY2013 and thereafter will be somewhat decreased
due to an increase in provision of policy reserves.
Improvement on new business margin of MCEV
Little impact on U.S. GAAP-based operating income【Reference 】Press release: Sony Life Revises Insurance Premium Rate (Feb.19, 2013)
http://www.sonyfh.co.jp/web/en/news_e/article_e/130219.html

Sony Financial Holdings Inc. All Rights Reserved

46Sony Life (Reference 6)

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

Sony Life’s Basic Policy on Risk Preferences 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.
 Prioritizes investment in assets that match insurance liabilityy 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 Easing Maintains a sufficient level of solvency based on economic value, though interest
rate sensitivityy has risen and the amount of interest rate risk has increased due
to a decline in ultralong-term interest rates.
 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.
Sony Financial Holdings Inc. All Rights Reserved

47Sony Life (Reference 7)

Average Assumed Interest Rate and Negative Spread
Average Assumed Interest Rate andInvestment Yield for Core Profit

Negative Spread(Billions of yen)

3.00%

Average assumed interest rate

5
4Investment yield for core profit

2.1

3

2.43%

2.26%

2

2.35%
2.31%

1

2.31%

0

2.27%

-1
-2

2.00%

(1.5)

-3
-4
-5
-6
-7
-8

(6.3)

-9
9
-10
-11

1.00%
FY2010FY2011FY2012-12FY2010FY2011FY2012* The plus amount in negative spread indicates positive spread.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved48Sony Assurance (Reference 8)

Automobile Insurance
Net Expense Ratio

40%

35%

Combined Ratio(N t E(Net
Expense R
Ratio
ti + N
Nett L
Loss R
Ratio)
ti )

B
D
C
E
A

30%

Sony Assurance

110%

25%
B
E

100%

20%
FY07

FY08

FY09

FY10

FY11

FY12

Net Loss Ratio

80%

Sony Assurance
E I Loss Ratio
E.I.
E
B
C
A
D

70%

Sony AssuranceS
A
Net Loss Ratio

60%

C
D
A

Sony Assurance
Net Expense Ratio+ E.I. Loss Ratio

Sony Assurance
Combined Ratio

90%

80%
FY07

FY08

FY09

FY10

FY11

FY12

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

50%
FY07

FY08

FY09

FY10

FY11

FY12

Earned/Incurred loss ratio = ((Net losses paidp
+ Provision for reserve for outstandingglosses + Loss adjustment expenses) / Earned premiums.
[Earthquake insurance and compulsory automobile liability insurance are excluded
from the above calculation.]Sony Financial Holdings Inc. All Rights Reserved

Source: Disclosure from each insurer

49

Sony Bank (Reference 9)Interest Rate Assumptions by Currency* Solid lines show the assumption in Jan. 2013, while dotted lines show those set in Jan. 2012
* Implied forward rates are used for the future assumption.

ソニー銀行
通貨別on
政策金利トレンド＆シナリオ
Sony Bank:
Assumption
interest rates of each currency
9.00

8.00

7 00
7.00

9.00

8.00

NZD

7 00
7.00

AUD

6.00

6.00

5.00

5.00

4.00

4.00

EUR
3.00

3.00

2.00

2.00

USD
1.00

1.00

JPY
0.00
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3
4
5
6
7
8
9
10
11
12
1
2
3

0.00

FY2008
2008年度FY20092009年度FY20102010年度FY2011
2011年度FY2012
2012年度FY20132013年度Sony Financial Holdings Inc. All Rights Reserved

FY20142014年度FY20152015年度50

Contact:
Corporate Communications & Investor Relations Department
Sony Financial Holdings Inc.
TEL： +81-3-5785-1074
51