Q&A (Summary) on the Corporate Strategy Meeting of theSony Financial Group for Fiscal 2013
Date:
June 3, 2013, 15:30–17:00
President , Representative Director of Sony Financial Holdings Inc.
Respondents： Katsumi Iharaand Sony Life Insurance Co., Ltd..
Hirotoshi Watanabe Senior Managing Director, Member of the Board, Sony Financial
Holdings, Inc.
Mitsuhiro Koizumi Director, Member of the Board, Sony Life Insurance Co., Ltd.
Atsuo Niwa
President, Representative Director of Sony Assurance Inc.
Shigeru Ishii
President, Representative Director of Sony Bank Inc.
Note: The original content has been revised and edited for ease of understanding.
[Q&A]
Q1. [Sony Life]
Page 17 of the presentation materials explains your launch of products denominated in U.S. dollars.
Why have you not introduced such products to date? And how would you compare these with the U.S.
dollar denominated products that Prudential Life offers? Also, to what extent have you included sales ofU.S. dollar denominated products in your plans for FY2015?
A1.
We have considered U.S. dollar denominated products many times in the past, but because of therisk inherent in these products we first needed to have adequate time to prepare for building
internal systems and sales structures in place. Another reason was that we were working on measuresthat we prioritized more highly than U.S. dollar denominated products, such as the Co-Creation
Project. This is why we launched these products in May 2013.
To your second question, our U.S. dollar denominated products and those offered by Prudential
Life have different product characteristics, so we cannot really compare them.
Rather than just selling products, Sony Life takes a consulting-based sales approach, and our U.S.
dollar denominated products target new customer needs. Although we may see some tradeoff tothese products from variable life and yen-denominated endowment insurance, we do not expect tosee a major shift in the weighting of our product portfolio among whole life, term life and savings
types of insurance products.

Q2. [Sony Life]
What is the overarching purpose of your launch of U.S. dollar denominated products? Are
these protection-type or savings-type products? If they are savings-type products, wouldn’t
Sony Life be competing with Sony Bank, which is also in the Sony Financial Group?
A2.
These are insurance products, so their underlying aim is protection. Although they do target
customers with asset management needs involving foreign currency, Sony Life will be selling themas insurance products and it has a different customer base from the one Sony Bank has, so Sony Lifeshouldn’t be competing.
Q3. [Sony Life]
Page 19 of the presentation materials shows the risk amount based on economic value. Here,your insurance risk seems to be calculated conservatively. Your risk amount leaves a lower
margin of safety on capital than other companies, but it seems to me that the settings on yourinternal model should allow you to lower the risk amount further. Rather than rigid adherence1

to an internal model based on QIS5 standards, is this your way of sending out the message of
how you compare with other companies in the industry?
A3.
The basic stance of our calculation method is to adhere to principle as fully as possible. We believe
it is important to explain the rationality behind our thoughts and continue to disclose information.
Q4. [Sony Life]In your most recently announced results, the chart showing your balance of securities byremaining period breaks down holdings with durations of less than 10 years, but your holdingsof securities due after 10 years are lumped together. Could you provide some detail on thiscategory?
A4.
Sony Life’s portfolio in this category contains mainly 40-year bonds, but we also hold some 20-yearand 30-year bonds to match our liability conditions. On average, the duration of bonds held is around20 years. We will need to discuss this internally before disclosing details of our holdings ofsecurities due after 10 years.
Q5. [Sony Life]
Page 12 of the presentation materials suggests that going forward, you plan to increase sales of
the Partner (independent agencies) channel more rapidly than those of the Lifeplanner
channel. Is this understanding correct?
A5.
The Partner (independent agencies) channel has a higher growth rate because its denominator is stillsmall.
(Additional question: In the explanation of the number of Lifeplanner sales employees on page
13 of the presentation materials, your target as of the end of FY2015 is over 4,400. This is a
substantially higher target than your rate of growth from FY2009 to FY2013. Are you
expecting a sudden increase?)
Over the past several years, we have promoted a number of our outstanding Lifeplanner sales
employees to positions as office managers. This is why our office manager numbers have increased
while our number of Lifeplanner sales employees appears to have declined. From FY2013, thisincreased number of office managers will spearhead our efforts to recruit Lifeplanner salesemployees, so we believe the number of new recruits will increase.
Q6. [Sony Assurance]
Looking at page 23 of the presentation materials, it appears that even though leading non-life
insurers are entering the direct market, the direct insurance still accounts for a smaller shareof the non-life insurance market in Japan than in other industrialized countries. What are
your thoughts on why the growth in market share for direct insurance in Japan is not higher
than it is in other industrialized countries?
A6.
We believe there are several reasons that direct insurance has taken off more slowly in Japan than inother industrialized countries. These include the facts that Japanese insurance premiums are lower,that internet shopping was slower to get off the ground, and that automobile dealership has animportant role in selling automobile insurance in Japan. That being said, aggressive advertising by
the leading non-life insurers is likely to raise awareness of direct insurance in Japan, which should
lead to ongoing increases in its share of the overall market. On the other hand, we believe it isimportant to maintain profitability while remaining competitive with other direct insurers.

2Q7. [Sony Assurance]
Are you planning to increase your insurance premiums if the consumption tax rate rises? Or isa delay in raising premiums a strategic way of taking market share from other direct insurers?
A7.
We are currently considering the question of premium increases with respect to a hike in theconsumption tax rate. We will make this decision by taking overall account of factors such as thecompetitive landscape and profitability.
(Additional question: Page 25 of the presentation materials shows that your target rate ofgrowth on direct premiums written is 5%, which is lower than your growth rate to date. Is thisbecause your policy will be to focus on improving profitability?)
Exactly.
Q8. [SFH]
Page 39 of the presentation materials suggests that although you are targeting a growth rate of
7% in consolidated ordinary revenues between FY2013 and FY2015, your target growth rate
for consolidated ordinary profit is more than 7%. Don’t you think this is too high?
A8.
In our announcement on May 20, 2013, we forecast consolidated ordinary profit of ¥69 billion forFY2013. This figure takes into account a number of factors that have a negative impact of around¥15 billion year on year, such as increased provision of policy reserves related to minimum
guarantees for variable life insurance and revision of the discount rate used for calculating policy
reserves. The revision in the discount rate accounts for around half of this negative amount, which isincluded in our assumptions for FY2013. Our forecast of ¥80 billion in ordinary profit for FY2015
takes into account a negative amount of around ¥10 billion, including impacts from the discount rate
revision and a consumption tax rate hike. To summarize, this growth rate is not unnatural, as it takes
into account external factors for each fiscal year.
Q9. [SFH]
Given that you have reduced your interest rate risk by increasing your holdings of 40-year
Japanese government bonds, and that MCEV has not fallen even in the flattening of the yield
curve, don’t you now have more leeway for shareholder returns? Please explain what isrequired before you will increase shareholder returns.
A9.
We plan to consistently raise our shareholder returns. Over the past three years, we have steadilyraised our dividend per share from ¥15 to ¥25. Rather than determining the dividend payout ratio
mechanically on the basis of statutory income, we take into account a variety of factors, includingchanges in the management environment. We plan to continue increasing dividends steadily over themedium term.
Q10. [SFH]
Given the current business climate, many companies in the financial sector are increasing theirdividends. What are your thoughts on dividend payout ratios and dividend levels? Also, don’t
you use MCEV as a reference when deciding dividends?
A10.
We take a host of factors into account when determining dividends. Based on our policy of steadily
increasing dividends, we use MCEV and U.S. GAAP as a reference and aim to strengthenshareholder returns.

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