Presentation Materials

Management Vision of the Sony Financial
Holdings Group for Fiscal 2008

Sony Financial Holdings Inc.
May 26, 2008

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

I am Teruhisa Tokunaka, President and Representative Director of SonyFinancial Holdings Inc. Thank you for joining us today.
Let us begin our presentation of our management vision for fiscal 2008.

0

Disclaimers:
These presentation materials contain statements concerning the current plans, expectations, strategies and beliefs of the SonyFinancial Holdings Group (the “SFH Group”). Any statements contained herein that pertain to future operating performance andthat 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,” “possibility” and similar words 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 SFH Group, based on information that is currently available to it. As
such, these forward-looking statements are subject to various risks and uncertainties, and actual business results may vary
substantially from the forecasts expressed or implied in forward-looking statements. Consequently, investors are cautioned not toplace undue reliance on forward-looking statements. The SFH Group disclaims any obligation to revise forward-looking
statements in light of new information, future events or other findings. The information contained in this presentation does notconstitute 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.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

1Disclaimer

1Today’s Agenda (From 3:00p.m. to 5:00p.m.) The Consolidated Financial Results of the Sony Financial Holdings Groupfor FY2007
Hiromichi Fujikata
Holdings Inc.

Executive Vice President and Representative Director of Sony Financial

 Management Vision for FY2008
Teruhisa Tokunaka President and Representative Director of Sony Financial Holdings Inc.
Taro Okuda

President of Sony Life Insurance Co., Ltd.

Shinichi Yamamoto President of Sony Assurance Inc.
Shigeru Ishii

President and CEO of Sony Bank Inc.

 Question and Answer

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

2

Today’s agenda is as you see here.
First, I would like to introduce the people who are present today.
Hiromichi Fujikata
Executive Vice President and Representative
Director of Sony Financial Holdings Inc.
Taro Okuda President of Sony Life Insurance Co., Ltd.
Shinichi Yamamoto

President of Sony Assurance Inc.

Shigeru Ishii President and CEO of Sony Bank Inc.
The president of each of our three main businesses is here today to help
you gain a better understanding of these businesses.
Let us begin with Executive Vice President Fujikata’s explanation of theCompany’s consolidated financial results for fiscal 2007.

2

Explanation of Consolidated Financial Resultsfor FY2007

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved3

I am Hiromichi Fujikata, Executive Vice President and Representative
Director of Sony Financial Holdings Inc.
Today, I will explain the operating results of the Sony Financial HoldingsGroup.

3

Highlights of Group Consolidated Operating
Performance for FY2007
FY2006

759.2

+8%

822.1

Change(Billions of yen)Life insurance
business

44.5

Non-life
insurancebusiness

18.3

FY2007+143%

Bankingbusiness(Billionsof yenCorporate andeliminations

SFH Group,
consolidated

Ordinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profitOrdinary
revenues
Ordinary
profit

689.8

741.3

+51.4

+8%

14.8

39.0

+24.1

+163%

51.0

55.6

+4.6

+9%

2.0

2.8

+0.7

+38%

19.4

25.9

+6.5

+33%

1.3

2.4

+1.0

+77%

(1.0)

(0.8)

+0.2

(25)%

0.0

0.2

+0.1

+203%

759.2

822.1

+62.8

+8%

18.3

44.5

+26.1

+143%

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

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

4

Consolidated ordinary revenues for the Sony Financial Holdings Groupgrew 8% compared with the preceding fiscal year, to ¥822.1 billion, owing
to performance increases in all businesses: life insurance, non-life
insurance and banking.
Consolidated ordinary profit also increased ¥26.1 billion, to ¥44.5 billion, inline with profit increases in all businesses.
Consolidated net income grew ¥14.3 billion, to ¥24.3 billion.

4

Highlights of Group Consolidated Operating
Performance for FY2007
 In the life insurance business, both the policy amount in force and new insurance sales(individual life insurance + individual annuities) remained firm, and general accountinvestment income increased. As a result, ordinary revenues and ordinary profit bothincreased.

 In the non-life insurance business, a steady rise in the number of policies, chiefly for

automobile insurance, boosted net premiums written. The net loss and expense ratios
both improved, pushing up both ordinary revenues and ordinary profit.

 In the banking business, owing to the steady expansion of operations, interest income

increased in line with expanded operations, and ordinary revenues and ordinary profit
both increased.

 Consolidated ordinary revenues grew 8% compared with the prior fiscal year, to ¥822.1

billion. Despite a ¥9.8 billion valuation loss on securities (amount of impairment loss),
ordinary profit increased ¥26.2 billion, or 143%, to ¥44.5 billion. Net income grew ¥14.2
billion, or 142%, to ¥24.2 billion.

 Owing to a downturn in the domestic stock markets, net unrealized gains on othersecurities, net of taxes, were ¥74.9 billion on March 31, 2008, down ¥50.1 billion fromMarch 31, 2007. Consolidated net assets consequently amounted to ¥261.6 billion, down
¥8.5 billion from March 31, 2007. As of March 31, 2008, consolidated total assets
amounted to ¥4,977.4 billion, up ¥653.6 billion from March 31, 2007.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

5This is an overview of the operating performance of each businesssegment. From this point, I will go into more detail on the operating
performance of each of the three companies that handle these businesses.

5Highlights of Operating Performance:
Sony Life (Non-Consolidated)(Billions of yen)

689.5

+7%

741.2

Ordinary revenues
Income from insurance
premiums

39.2

14.8

(Billions of yen)

Change
+51.6
+7%

648.4

+42.8

+7%

78.7

87.4

+8.7

+11%

Of which, interest and dividend income
Of which, income from money trusts
Of which, gain on sales of securities
owned
Of which, investment income on assets
held in separate accounts

34.2
12.1
11.8
14.9

47.9
14.7
24.0
－

+13.6
+2.6
+12.1
(14.9)

+40%
+21%
+102%
－

674.6

701.9

+27.2

+4%

Insurance claims and otherpayments

219.3

241.1

+21.7

+10%

Provision for policy reserveand others

349.6

286.2

(63.4)

(18)%

8.1

69.8

+61.7

+754%

Of which, separate account asset
investment expenses

Revenues and profit up compared with FY2006
New insurance sales up 10.9% compared with FY2006
Income from insurance premiums increased, in line with robust
growth in policy amount in force
General account investment income rose
Investment expenses increased, owing to investment losses on
assets held in separate accounts, valuation loss on securities andexpenses on financial derivatives
Net assets fell ¥33.8 billion in FY2007, to ¥182.6 billion, owing toa ¥45.9 billion decline in net unrealized gains on other securities
The lapse and surrender rate increased 0.33 percentage pointcompared with FY2006, to 6.12%

741.2

605.5

Investment expenses

Sony Life

689.5

Investment income

Ordinary expenses+164%

FY2006 FY2007

—

48.3

+48.3

—

Ordinary profit
Net income
Core profit
Securities

87.3
14.8
7.4
24.3
2,217.9

94.3
39.2
18.5
23.5
2,388.9

+7.0
+24.3
+11.0
(0.7)
+171.0

+8%
+164%
+147%
(3)%
+8%

Policy reserve

3,088.8

3,375.0+286.2+9%

Total net assets
Total assets

216.5
3,445.9

182.6
3,659.7(33.8)+213.8(16)%+6%Operating expenses

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

Note: Each figure of policy amount in force, lapse and surrender rate, new insurance sales from new policies is calculated as the total of individual life
insurance and individual annuities. The lapse and surrender rate is calculated without offsetting policies that are reinstated.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

6First, I will explain the highlights of non-consolidated operating
performance of Sony Life.
Sony Life posted a 7% increase in ordinary revenues compared with thepreceding fiscal year, to ¥741.2 billion, as the policy amount of individual
insurance in force remained robust, boosting income from insurance
premiums, and general account investment income increased.
Ordinary profit grew ¥24.3 billion, compared with the preceding fiscal year,to ¥39.2 billion, owing to such factors as the absence of an increase in thecurrent fiscal year of the provision for policy reserve as was incurred in thepreceding fiscal year, in addition to an increase in gains from generalaccount asset investment.
Owing to higher ordinary profit, net income expanded ¥11.0 billion, to¥18.5 billion.
The company posted extraordinary losses of ¥3.4 billion, owing mainly to
an increase in the provision for reserve for price fluctuations.

6Overview of Performance:
Sony Life (Non-Consolidated)(Billions of yen)

FY2006
Policy amount in force*1

30,244.4

31,497.3+ 4.1%

504.6

530.0

+ 5.0%

117.4

122.8

+ 4.6%

5.79%
3,429.4
65.5

6.12%
3,802.5
63.4+ 0.33pt+ 10.9%(3.2) %

Annualized premiums from insurance in force*1

Of which, third-sector products

Lapse and surrender rate*1,*2
New insurance sales*1
Annualized premiums from new insurance sales*1
Of which, third-sector products

Income from insurance premiums
Investment profit
Core profit

14.4

13.3

(7.7)%

605.5
70.5
24.3

648.4
17.5
23.5

+ 7.1%(75.1) %(3.3) %
(28.4) %

37.3

26.7

2.77%

2.68%

(0.09)pt

1,852.0%

1,747.9%(104.1)pt

645.5
900.5

612.0
833.8

(5.2)%(7.4)%

Negative spread
Average assumed interest rate
Solvency margin ratio

PercentagechangeFY2007

Real net assets
Embedded value (EV)Line item amounts are truncated below ¥100 million; percentage change figures are rounded.
Notes:*1 Each figure of policy amount in force, annualized premiums from insurance in force, lapse and surrender rate, new insurance sales and annualized premiums
from new policies is calculated as the total of individual life insurance and individual annuities.
*2 The lapse and surrender rate is calculated without offsetting policies that are reinstated.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

7This slide shows the principal indicators of Sony Life's financial
performance.
I will provide additional explanation in later slides, along with past results.

7

Sony Life Operating Performance (1)Insurance in ForceNew Insurance Sales(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)(Trillions of yen)

(Millions of policies)

+7.1%

3.55
27.8

3.84
29.0

4.43

(Trillions of yen)(Thousands of policies)

4.14
30.2 +4.1%

31.4

534

3.72

512

517 +1.4% 524

3.39

3.42 +10.9%

3.80

Line item amounts are truncated below ¥100 billion or ¥10 billion; numbers of policies are truncated below 10,000 or 1,000 policies; percentage change figures are rounded.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

8Sony Life's insurance in force grew steadily during the term. As a result,policy amount in force was up 4.1% from March 31, 2007, to ¥ 31.4 trillion.
The number of policies in force rose 7.1% during the term, to 4.43 million
policies.
During the year, new insurance sales on a policy amount basis increased
10.9%, to ¥3.8 trillion. Sales of such products as family income insurance
and variable life insurance were brisk. The number of new policies
expanded 1.4%, to 524 thousand policies.

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

Annualized Premiums from New Insurance Sales(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)(Billions of yen)(Billions of yen)

(3.2%)+5.0%(7.7%)+4.6%

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

9

Annualized premiums from insurance in force rose 5.0% compared withthe preceding fiscal year, to ¥530.0 billion. Of this amount, third-sector
products rose 4.6%, to ¥122.8 billion.
Annualized premiums from new insurance sales fell 3.2% compared withthe preceding fiscal year, to ¥63.4 billion. For third-sector products, thisamount fell 7.7%, to ¥13.3 billion.
The reason that annualized premiums from new insurance sales
decreased, even though new insurance sales increased, was that strong
sales of such products as term life insurance, which have relatively low
premiums given their policy amounts. Conversely, increasingly stringent
competition resulted in lower sales of medical insurance, which has
relatively high premiums.

9Sony Life Operating Performance (3)Income from Insurance Premiums

Ordinary Profit (Non-Consolidated)(Billions of yen)(Billions of yen)

+7.1%

551.6

580.5

605.5

39.2

648.4

+163.8%

24.3
17.0

14.8

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

10

Income from insurance premiums grew 7.1% compared with the preceding
fiscal year, to ¥648.4 billion, owing to a robust policy amount in force.
Sony Life’s ordinary profit grew ¥24.3 billion, compared with the preceding
fiscal year, to ¥39.2 billion, owing to such factors as the absence of anincrease in the current fiscal year of the provision for policy reserve as wasincurred in the preceding fiscal year, in addition to an increase in gains
from general account asset investment.

10Sony Life Operating Performance (4)Core Profit

Embedded Value (EV)(Billions of yen)(Billions of yen)

833.8
900.5
776.1

28.5
24.3

24.3 (3.3%) 23.5
492.0

539.3

261.7

38.9

Line item amounts are truncated below ¥100 million.

May 26, 2008

38.1

34.2

194.8

36.7

28.9

The assumptions upon which EV is calculated at the end of FY2003, FY2004,
FY2005, FY2006 and FY2007 differ. For details regarding calculation methods,
please refer to the press releases for each of these years.
Sony Financial Holdings Inc. All Rights Reserved

11Core profit declined ¥0.7 billion, to ¥23.5 billion, mainly because of theincrease of operating expenses.
I will explain embedded value in more detail later in this presentation, but:
Adjusted net worth was down ¥66.9 billion from March 31, 2007, to ¥194.8
billion.
The value of in-force business was up ¥0.1 billion from March 31, 2007, to¥638.9 billion.
Of this amount, the value of new policies was down ¥7.8 billion comparedwith March 31, 2007, to ¥28.9 billion.
Overall, embedded value was down ¥66.7 billion, to ¥833.8 billion.

11

Sony Life Operating Performance (5)Investment
Investment Yield
Yield forfor CoreCore Profit
Profit andand Investment
Investment Yield
Yield(General(General Account)
Account) versus
versus Average
Average Assumed
Assumed Interest
Interest Rate
Rate

Negative Spread(Billions of yen)

37.3
34.5

33.1
26.7

Line item amounts are truncated below ¥100 million.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

12

The negative spread improved ¥10.6 billion compared with the preceding
fiscal year, to ¥26.7 billion.
Comparing the investment yield for core profit and the investment yield in
the general account with the average assumed interest rate,
The investment yield for core profit was 1.73%,
The investment yield for the general account was 2.17% and
The average assumed interest rate was 2.68%.

12

Sony Life Operating Performance (6)Lapse and Surrender Rate*

Solvency Margin Ratio(Individual Life Insurance + Individual Annuities)
(%)

(%)

6.32

5.84

5.79

6.12

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

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

13

The lapse and surrender rate was up 0.33 percentage point compared withthe preceding fiscal year, to 6.12%. This level is still low compared withother companies in the same industry.
The solvency margin ratio remains high, at 1,747.9%.

13

Sony Life Operating Performance (7)Breakdown of General Account Assets (March 31, 2008 vs. March 31, 2007)

Notes:
Japanese stocks and CBs contained in general account assets asof March 31, 2008 are as follows.
Note: Figures in brackets, [ ], are as of March 31, 2007.
Japanese stocks: ¥206.2 billion [¥298.7 billion]
Of which, Japanese stocks in monetary trusts: ¥33.3 billion [¥54.3
billion]Accounting for 6.2% [9.6%] of general account assets
Convertible bonds: ¥427.0 billion [¥432.0 billion]
Of which, CBs in monetary trusts: ¥139.4 billion [¥128.7 billion]
Accounting for 12.8% [13.8%] of general account assets

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

14This is a breakdown of Sony Life's general account assets as of March 31,
2008, compared with March 31, 2007.
Looking in real terms at Japanese stocks and convertible bonds included
within Japanese government and corporate bonds, as well as Japanese stocks
and convertible bonds included within monetary trusts and convertible bonds,
Japanese stocks make up 6.2% of general account assets, while convertible
bonds account for 12.8%.

14

Sony Life Operating Performance (8)Valuation Gains or Losses on General Account Assets(March 31, 2008 vs. March 31, 2007)(Billions of yen)

03/31/07

03/31/08

ChangeJapanese government and corporate bonds

57.1

83.4

26.3

Japanese stocks

130.0

50.8

(79.1)

Foreign securities

4.2

(95)

(13.7)

Other securities

6.8

3.0

(3.8)

198.2

127.8

(70.4)

Total
Line item amounts are truncated below ¥100 million.

Additional Information Concerning Major Fluctuations■
Lower interest rates caused an increase in valuation gains on
Japanese government and corporate bonds. However, a downturn in the Japanese stock
markets resulted in declines in the market value of Japanese stocks held, resulting in a
substantial decline in valuation gains.
■
The company holds no securitized products backed by U.S.
subprime loans.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

15Sony Life’s valuation gains on securities at market value amounted to¥127.8 billion, down ¥70.4 billion from March 31, 2007.
Lower interest rates caused an increase in valuation gains on Japanese
government and corporate bonds. However, a downturn in the Japanesestock markets resulted in a substantial decline in the market value ofJapanese stocks held.
The company does not invest in securitized products backed by U.S.
subprime loans, so as far as we are aware the company is experiencing no
direct impact of the subprime loan issue.
A press release dated April 24 announced that the total amount of
impairment losses on securities for the Sony Financial Holdings Group at
the end of the fiscal year ended March 31, 2008, was ¥9.8 billion. Sony
Life’s valuation gains on general account assets* are reflected in thisamount.

* Valuation gains on general account assets are calculated by subtracting
their book value on March 31, 2007, from their market value on March 31,
2008.

15

Sony Life Operating Performance (9)Number of Lifeplanners
and Other Salespeople(People)May 26, 2008

Independent Agents(Agencies)

Sony Financial Holdings Inc. All Rights Reserved

16

As of March 31, 2008, Sony Life’s Lifeplanners and other salespeople
numbered 4,248, nine more than as of March 31, 2007. This total included
3,779 Lifeplanners, an increase of three people.
In addition, independent agents numbered 2,151, down 35.

16

Highlights of Operating Performance:
Sony Assurance
FY2006

FY2007

51.0

55.6

+4.6

+9%

Underwriting income

50.4

55.0

+4.5

+9%

Investment income

0.4

0.5

+0.1 +22%

Ordinary expenses(Billions of yen)

51.0

+9%

Ordinary revenues

55.6

+42%
2.0

2.8
(Billions of yen)Sony AssuranceRevenues and profit up compared with FY2006
Net premiums written up 9%, to ¥55.0 billion, owing to increase in
number of policies for mainstay automobile insurance
In addition to an increase in net premiums written up, the loss ratio
was stable, resulting in ordinary profit of ¥2.8 billion
Combined ratio improved 0.4 percentage point, to 80.3%

May 26, 2008

Change

48.9

52.8

+3.8

+8%

Underwriting expenses

36.4

38.9

+2.5

+7%

Investment expenses

0.0

0.0

+0.0 +82%

12.4

13.8

+1.3 +11%

Ordinary profit

2.0

2.8

+0.7 +38%

Net income

1.5

2.1

+0.5 +37%

Securities

51.1

56.2

5.0 +10%

Policy reserves

36.1

42.7

6.6 +18%

Total net assets

13.3

15.3

+2.0 +15%

Total assets

67.4

78.6 +11.1 +17%

Operating, general andadministrative expenses

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

Sony Financial Holdings Inc. All Rights Reserved

17

Next, I will explain the highlights of Sony Assurance's operating
performance.
Sony Assurance posted a 9% increase in ordinary revenues comparedwith the preceding fiscal year, to ¥55.6 billion, owing chiefly to favorable
performance in mainstay automobile insurance, which raised net
premiums written.
Ordinary profit rose ¥0.7 billion, to ¥2.8 billion. In addition to the increasein ordinary revenues, the loss ratio remained stable.
Net income rose ¥0.5 billion, to ¥2.1 billion.

17

Overview of Performance: Sony Assurance(Billions of yen)

FY2006

FY2007

ChangeDirect premiums written

50.1

54.6

+9%

Net premiums written

50.4

55.0

+9%

Net losses paid

24.1

26.2

+9%

1.6

2.2

+41%

Net loss ratio

53.6%

53.5%

0.1 pt improvement

Net expense ratio

26.3%

26.7%

0.4 pt improvement

Combined ratio

79.9%

80.3%

0.4 pt up

1,009.7%

1,073.9%

64.2 pt up

0.93 million

1.02 million+ 10%

Underwriting profits

Solvency margin ratio
Number of policies in force

Line item amounts are truncated below ¥100 million; percentage change figures are rounded.
Net expense ratio = Operating expenses related to underwriting ÷ net premiums written
Net loss ratio = (Net losses paid + expenses incurred in surveying damages) ÷ net premiums written
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. These numbers are rounded below 10,000.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

18This slide shows the principal indicators of Sony Assurance's financial
performance.
I will provide additional explanation in later slides, along with past results.

18

Sony Assurance Operating Performance (1)Net Premiums Written andNumber of Policies in Force(Billions of yen)(Thousands of policies)

55.0
50.4
45.2
37.8

Combined Ratio
(%)

86.5

82.5

79.9

80.3

1,020
930

820

670

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. Most
personal accident insurance is medical and cancer insurance.
Line item amounts are truncated below ¥100 million for net premiums written androunded below 10,000 for the number of policies in force.
May 26, 2008

Net expense ratio = Operating expenses related to underwriting ÷ net
premiums written
Net loss ratio = (Net losses paid + expenses incurred in surveying damages)
÷ net premiums writtenSony Financial Holdings Inc. All Rights Reserved

19

In terms of insurance underwriting, as you see here the number of policies
in force increased steadily. The number of policies in force as of March 31,
2008—the total number of automobile insurance and medical and cancer
insurance policies—was up 10% compared with March 31, 2007, to 1.02
million policies. Net premiums written grew 9% compared with thepreceding fiscal year, to ¥55.0 billion.
The net loss ratio improved 0.1 percentage point, to 53.5 %.
The net expense ratio rose 0.4 percentage point, to 26.7%. Although thecompany pursued increases in operating efficiency, system-related
expenses increased.
As a result, the combined ratio, which is the sum of the net loss ratio andthe net expense ratio, rose 0.4 percentage point, to 80.3%.

19Sony Assurance Operating Performance (2)Ordinary Profit (Loss)

Solvency Margin Ratio(Billions of yen)

(%)

2.8
2.0

(0.7)

(2.8)

Line item amounts are truncated below ¥100 million.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

20

The steady increase in the number of policies that I mentioned earlier, as
well as a stable loss ratio, enabled Sony Assurance to raise its profitability
during the fiscal year ended March 31, 2008, after having moved into theblack in the preceding fiscal year.
Operating expenses increased from the preceding fiscal year, but
remained favorable in comparison with other companies in the industry.
The solvency margin ratio remained at a sound level, amounting to
1,073.9% as of March 31, 2008.

20

Highlights of Operating Performance:
Sony Bank (Non-Consolidated)
Ordinary revenues
Ordinary profit

19.4

+33%

FY2006

FY2007

Ordinary revenues

19.4

25.9

+6.5

+33%

Gross operating profit

9.0

10.9

+1.9

+21%

4.5

5.1

+0.5

+11%

0.5

0.3

(0.1)

(28)%

3.9

5.4

+1.5

+40%

7.6

8.1

+0.4

+6%

(Billions of yen)

25.9

ChangeNet interest income

+103%

2.7

1.3
(Billions of yen)

Net fees andcommissions
Net other operating
incomeGeneral and administrative
expenses

1.3

2.7

+1.3

+103%

Net income
億

1.0

4.4

+3.4

+339%

Securities円

381.2

488.7

+107.5

+28%

Loans

284.7

347.0

+62.3

+22%

Deposits

752.3

1,144.3+392.0+52%

Customer assets

848.8

1,247.3+398.4＋47%

Total net assets

36.8

35.7

(1.1)

(3)%

Total assets

806.8

1,211.0+404.1+50%

Ordinary profit
FY2006

FY2007（

Sony Bank
Revenues and profit were both up, compared with FY2006
Net interest income and net other operating income increased,
owing mainly to higher interest on loans—stemming from a higher
mortgage loan balance—and higher market investment income
 Net income amounted to ¥4.4 billion, owing to an increase indeferred income taxes
Gross operating profit totaled ¥10.9 billion; the sum of net
interest income of ¥5.1 billion, net fees and commissions of ¥0.3
billion and net other operating income of ¥5.4 billion. General andadministrative expenses were up slightly, to ¥8.1 billion
Customer assets were up ¥398.4 billion, compared with March
31, 2007, to ¥1,247.3 billion

May 26, 2008）

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

Sony Financial Holdings Inc. All Rights Reserved

21

Now I will explain the highlights of Sony Bank’s non-consolidated
operating performance.
Sony Bank’s ordinary revenues increased 33% compared with thepreceding fiscal year, to ¥25.9 billion, as a higher balance of mortgage
loans resulted in increased interest on loans, leading to higher interest
income, and a higher balance of deposits led to greater investment
income.
Owing to the rise in gross operating profit, ordinary profit increased ¥1.3
billion compared with the preceding fiscal year, to ¥2.7 billion.
Owing to an increase in deferred income taxes, Sony Bank’s net income
increased substantially, to ¥4.4 billion.

21

Overview of Performance:
Sony Bank (Non-Consolidated)(Billions of yen)

FY2006

FY2007

ChangeGross operating profit

9.0

10.9

+ 21%

General and administrative expenses

7.6

8.1

+ 6%

Net operating profit

1.3

2.8

+ 107%

Ordinary profit

1.3

2.7

+ 103%

Customer assets

848.8

1,247.3

+ 47%

173.7

398.4

+ 129%

284.7

347.0

+ 22%

45.2

62.3

+ 38%

11.49%

9.15%(2.34)pt

491 thousand

610 thousand+ 24%

61 thousand

118 thousand+ 57 thousand

Of which, FY2007 increase
Loans
Of which, FY2007 increase
Capital adequacy ratio(domestic criteria)
Number of accounts
Of which, FY2007 increase

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

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

22This slide shows the principal indicators of Sony Bank's financial
performance.
I will provide additional explanation in later slides, along with past results.

22Sony Bank Operating Performance (1)Customer Assets (Deposits + Investment Trusts)
and Number of Accounts(Billionsof yen)610

Number of accounts (thousands)
Investment trusts

1,247.3

Foreign-currency deposits
Yen deposits

491
430

367
848.8
675.1

Loans

(Billions of yen)

Investment
trusts:¥102.9 billion

347.0

Foreigncurrency
deposits:¥251.7 billion

284.7
239.4

Yen deposits:¥892.6 billion

Others:¥8.1
billionMortgageloans:¥338.8billion

576.3

126.3

Amounts are truncated below ¥100 million.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

23

As of March 31, 2008, owing to an increase in business, the balance ofcustomer assets (the total of deposits and investment trusts) expanded,largely due to the contribution of increased deposits. The balance
amounted to ¥1,247.3,billion, up ¥398.5 billion, or 46.9%, from March 31,
2007.
Total yen and foreign currency deposits amounted to ¥1,144.3 billion, up¥392.0 billion, or 52.1%, from March 31, 2007.
Investment trusts were up ¥6.4 billion compared with March 31, 2007, or
6.7%, to ¥102.9 billion. Loans were up ¥62.3 billion, or 21.9%, to ¥347.0
billion.
On March 31, 2008, accounts numbered 610 thousand, up 118 thousand
from March 31, 2007.

23

Sony Bank Operating Performance (2)Gross Operating Profit, General and
Administrative Expenses, Ordinary Profit(Billions of yen)

Capital Adequacy Ratio(Domestic Criteria)
(%)

10.9
9.4

6.9

7.0

9.0
7.6

8.1
11.97

11.49
9.24

9.15

5.3
2.7

2.2
1.3

Notes: On April 23, 2008, Sony Financial Holdings increased Sony Bank’s capital by
accepting an allocation of new shares.

(1.6)

Amounts are truncated below ¥100 million.
May 26, 2008

Capital adequacy ratios as of March 31, 2007 and March 31, 2008 were
calculated based on the standard stipulated in the Financial Services Agency
Public Announcement No. 19 of 2006. The capital adequacy ratios up to andincluding those for March 31, 2006 were calculated based on the standard
stipulated in the former public announcement.
Sony Financial Holdings Inc. All Rights Reserved

24

Looking next at profitability, boosted by such factors as higher net interest
income, gross operating profit grew ¥1.9 billion compared with preceding
fiscal year, to ¥10.9 billion.
Breaking down gross operating profit, net interest income increased ¥0.5
billion, to ¥5.1 billion, as a result of a higher balance of invested assets
through the expansion of operations. Net fees and commissions fell ¥0.1
billion, to ¥0.3 billion, owing to higher ATM fees and other service costs.
Net other income increased ¥1.5 billion, to ¥5.4 billion, as market
investment profit improved.
The capital adequacy ratio remained healthy, at 9.15%, although downfrom the March 31, 2007, figure primarily as a result of a substantial
increase in assets.

24

Sony Life’s Embedded Value (EV)May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

25Sony Life’s embedded value, or EV

25

Overview of Embedded Value in FY2007
 EV came to ¥833.8 billion, down ¥66.7 billion from March 31, 2007.
 The value of in-force business was ¥638.9 billion, up ¥0.1 billion from March 31, 2007, and adjusted net worth was ¥194.8 billion,

down ¥66.9 billion.
 EV of new policies during FY2007 amounted to ¥28.9 billion, down ¥7.8 from March 31, 2007.

Embedded
Embedded Value
Value(Billions of yen)

1,000
900
800
700
600
500
400
300
200
100
0

In force businessadjusted net worth

03/31/04

03/31/05

03/31/06

03/31/07

03/31/08(Billions of yen)

03/31/04

03/31/05

03/31/06

03/31/07

03/31/08

Total EV

492.0

539.3

776.1

900.5

833.8

In-force business

381.7

409.6

499.8

638.8

638.9

Adjusted net worth

110.2

129.7

276.3

261.7

194.8

Of which, EV of new policies

38.9

38.1

34.2

36.7

28.9

Source: Sony Life
Note: Assumptions and calculation methods differ for EV calculated as of March 31, 2004, March 31, 2005, March 31, 2006, March 31, 2007, and March 31, 2008.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

26Sony Life discloses EV, beginning with the fiscal year ended March 31,
2004, as one of the important indices used to evaluate the corporate valueof its life insurance business.
Overall, EV for the year ended March 31, 2008 was ¥833.8 billion, down
¥66.7 billion from the preceding fiscal year. The value of in-force business
was essentially flat, but adjusted net worth declined ¥66.9 billion, to ¥194.8
billion, owing to such factors as an ¥82.7 billion decline in a net unrealized
gains.
EV of new policies during the fiscal year declined ¥7.8 billion, to ¥28.9
billion. We analyze the principal reasons for the year-on-year decline in thevalue of new policies to include a rise in operating expenses—centered on
system-related expenses—which had a ¥3.5 billion negative effect. Also,
such factors as a revision in insurance rates and lower annualized new
policy premiums on medical insurance had a ¥3.6 billion negative effect,
and lower market interest rates had a ¥1.1 billion negative effect.

26EV: Assumptions and Movement Analysis
Major
Major Assumptions
Assumptions Employed
Employed inin
Calculating
Calculating EV
EV at
at March
March 31,
31, 2008
2008

Movement
Movement Analysis
Analysis of
of EV
EV
from
from March
March 31,
31, 2007
2007(Billions of yen)

Discount rate

6.0%

Investment
yield on newinvestments

Investment yield on new investments isbased on implied forward rates, assumingSony Life makes all new investments only inJapanese government bonds.

EV as of March 31, 2007

900.5

Shareholder dividends(6.5)

Release from the value of in-force
business*

38.1

Mortality andmorbidity
rates

Based on Sony Life’s experience over thethree most recent fiscal years (FY2005–
FY2007)

EV of new policies for the year ended
March 31, 2008

28.9

Lapse andsurrender rate

Based on Sony Life’s experience over thethree most recent fiscal years (FY2005–
FY2007)

Difference between assumptions andactual results for the year ended March
31, 2008(113.2)

Operatingexpenses(unit costs)

Calculated using the cost (unit cost) for the
maintenance and administration of policies
and for payments of claims based on Sony
Life’s experience during the most recent
fiscal year (FY2007)

Difference from changes in theassumptions(14.1)

EV as of March 31, 2008

833.8

Effective tax
rate

Based on the most recent effective tax rate(based on the rate for FY2007)* This item corresponds to unwinding of the amount of discount for one
year made as of March 31, 2007 on the value of in-force business.

Solvency
margin ratio

For the purpose of calculating the cost ofcapital, maintenance of a solvency margin
ratio of 600% was assumed.

May 26, 2008

IPOプレゼン資料より抜粋

Sony Financial Holdings Inc. All Rights Reserved

27

Next, I will explain the major assumptions employed in calculating EV, as well as principalchanges since March 31, 2007.
The table on the right shows the reasons for the increases and decreases in EV since
March 31, 2007.
First, EV decreased ¥6.5 billion from March 31, 2007, owing to the payment of shareholder
dividends, but the release from the value of in-force business and the value of new policies
acquired during the year caused a ¥67.0 billion increase.
However, the difference between assumptions and actual results for the year ended March
31, 2008, came to ¥113.2 billion, and investment yields were revised from the assumed
investment yields and other factors from April 1, 2008. This situation resulted in a ¥14.1
billion negative difference from changes in the assumptions. As a result, EV as of March
31, 2008, was ¥833.8 billion.
Of the ¥113.2 billion difference between assumptions and actual results for the year ended
March 31, 2008, ¥82.7 billion was due to the downturn in stock prices during the fiscal
year ended March 31, 2008, which caused decreases in valuation gains on owned stocks
and convertible and certain other bonds.
The effect of fluctuations in market conditions was felt through the difference between
assumptions and actual results and the difference from changes in the assumptions.
Within the difference from changes in the assumptions and actual results, an increase in
the minimum guarantee cost on variable life insurance accounted for ¥9.1 billion, andincreased capital costs on investments in ultralong-term bond investments accounted for a¥5.9 billion decline. With regard to the impact of operating expenses, an internal survey
conducted during working hours suggested that increases in the percentage of time spent
on ongoing policy maintenance should be reflected in the EV calculations, which brought
EV down ¥8.4 billion. Of the ¥14.1 billion decrease caused by difference from changes in
the assumptions, ¥13.7 billion arose from the decrease in expected future investment
yields on securities other than bonds.
During the year ended March 31, 2008, EV decreased as the result of market-related andother factors. In the fiscal year ending March 31, 2009, we expect the release from thevalue of in-force business to remain stable and new policies to increase.

27EV: Sensitivity
EV
EV Sensitivity
Sensitivity at
at March
March 31,
31, 2008
2008(Billions of yen)Amount of
Increase(Decrease)
Discount rate
Solvency margin ratio
Investment yield: +0.25%*
Investment yield: –0.25%*

EV Amount

From 6.0% to 5.0%

83.1

916.9

From 6.0% to 7.0%

(67.5)

766.3

From 600% to 500%

7.7

841.5

From 600% to 700%

(8.6)

825.2

On total investments

59.1

892.8

On new investments

34.8

868.6

On total investments(61.2)

772.5

On new investments(35.0)

798.7

Mortality and morbidity

Assumption x 1.1(65.3)

768.5

Lapse and surrender rate

Assumption x 1.1(16.1)

817.7

Operating expenses (unit cost to maintain policy)

Assumption x 1.1

(6.5)

827.2

* The impact of changes in investment yield assumptions is shown after taking into account the impact on policyholders’ dividends.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

28

Here we show the effects of changing the assumptions, along with their
sensitivities. Please use this as a reference.

28EV: Breakdown of Adjusted Net Worth
Breakdown
Breakdown ofof Adjusted
Adjusted Net
Net Worth
Worth(Billions of yen)

As of March 31,
2008
Adjusted net worth

As of March 31,
2007

Change

194.8

261.7

(66.9)

Total net assets*

136.9

207.6

(70.7)

Reserve for price fluctuations

24.1

20.9

3.2

Contingency reserve

61.8

59.0

2.8

Reserve for possible loan losses

0.0

0.0

0.0

Net unrealized gains on land

8.4

6.8

1.6

Unfunded employees’ retirement
benefits liability

(3.5)

(1.9)

(1.6)

Deferred tax assets corresponding topreceding five items(32.9)(30.7)(2.2)* Excluding net unrealized gain on bonds except for convertible and certain other bonds

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved29

EV: Breakdown of adjusted net worth29EV: Major Assumptions (Investment Yield)
Investment Yield
Yield onon New
New Investments
Investments
Investment

Investment Yield
Yield onon Existing
Existing Assets
AssetsInvestment

The implied forward rates that were used are as follows.

The weighted average investment yields on newinvestments and existing assets that were used are as
follows.

May 26, 2008

FY

Investment Yield

FY

Investment Yield

2008

0.57%

2008

1.92%

2009

0.61%

2009

1.88%

2010

0.81%

2010

1.89%

2011

0.98%

2011

1.91%

2012

0.98%

2012

1.88%

2017

2.78%

2017

2.90%

2022

3.18%

2022

3.24%

2027

3.50%

2027

3.66%

2032

3.40%

2032

3.63%

2037

3.51%

2037

3.77%

Sony Financial Holdings Inc. All Rights Reserved30

EV: Major assumptions (investment yields)

30

Key Management Benchmarks

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

31

Now I will explain our key management benchmarks.

31

Key Management Benchmarks (1)¾ Consolidated ordinary revenues, consolidated ordinary profit andconsolidated net income¾ Consolidated adjusted ROE
Perspective on Consolidated Adjusted ROESony Financial Holdings GroupSony Life

Sony Assurance

Net increase in EV
plus dividend
Numerator

Denominator

Note: Changes in provision forcontingency reserves and thefuture value of existing policies
are added to net income.

The average of (EV atprevious fiscal year-end
minus dividend plus EV atcurrent fiscal year-end)
Note: The contingency reserveand the future value of existing
policies are added tostockholders’ equity or net
assets.

Sony Bank

Net income+ Increase in provision for special
catastrophe reserves (after tax)++

+ Increase in reserve for pricefluctuations (after tax)

The average of (net assets +special catastrophe reserveand reserve for pricefluctuations (after-tax)) as ofthe previous fiscal year-end
and the current fiscal year-end

Net income++

The average of net assets asof the previous fiscal year-end
and the current fiscal yearend

Note: Calculations take dividends and taxes into consideration.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

32

In addition to such key accounting indicators as consolidated ordinary
revenues, consolidated ordinary profit and consolidated net income, SFH
closely follows consolidated adjusted ROE as one of its management
benchmarks.
Consolidated adjusted ROE is calculated as you see here.

32

Key Management Benchmarks (2)Key Management Benchmarks
 Consolidated ordinary revenues, consolidated

ordinary profit and consolidated net income
 Consolidated adjusted ROESony Life Embedded Value andSony Life Embedded Value andAdjusted ROE
Adjusted ROE(Billionsof yen)Source: Sony Life
Notes: Calculation of Adjusted ROE
Numerator: Net increase in EV plus dividend
Denominator: The average of (EV at previous fiscal year-end — dividend +EV at current fiscal year-end）

May 26, 2008

(Millions of yen, %)FY2004

FY2005

FY2006

FY2007

Consolidated ordinary revenues

653,259

758,711759,280

822,153

Consolidated ordinary profit

12,26925,377

18,35444,500Consolidated net income

6,375

11,537

10,021

24,255

Consolidated adjusted ROE

8.0%

35.1%

15.2%

(5.7%)

Sony Assurance Net Income andSony Assurance Net Income andAdjusted ROE
Adjusted ROE(Billionsof yen)Sony Bank Net Income and ROESony Bank Net Income and ROE(Billionsof yen)Source: Sony Assurance
Notes: Calculation of Adjusted ROE
Numerator: Net income plus an increase in provision for special
catastrophe reserves (after-tax) and an increase in reserve for pricefluctuations (after-tax)
Denominator: The average of (shareholders’ equity or net assets + special
catastrophe reserve and reserve for price fluctuations (after-tax)) as of theprevious fiscal year-end and the current fiscal year-end

Source: Sony Bank
Notes：Calculation of ROE:
Numerator: Net income
Denominator: The average of shareholders’ equity or net assets as of theprevious fiscal year-end and the current fiscal year-end

33

Sony Financial Holdings Inc. All Rights Reserved

As the chart to the upper right shows, SFH’s key management benchmarks
on a consolidated basis—ordinary revenues, ordinary profit and net income—remain steady.
Looking at consolidated adjusted ROE, Sony Life’s EV decreased, causing
consolidated adjusted ROE to fall, but Sony Assurance and Sony Bank
both posted year-on-year increases in ROE.

(For reference)

FY2004

FY2005

FY2006

FY2007

Consolidated adjusted ROE

8.0%

35.1%

15.2%

(5.7%)

Sony Life

10.5%

37.2%

15.7%

(6.9%)

Sony Assurance(8.1%)

3.3%

16.1%

17.2%

Sony Bank(5.3%)

9.3%

2.9%

12.4%

33

Management Vision for FY2008

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

34

We will move on now to a discussion of our management vision for fiscal
2008.

34

About the Sony Financial Holdings GroupThe Sony Financial Holdings Group aims to integrate the diverse functions that are inherent to such financial services
as savings, investment, borrowing and protection; offer high-value added products and quality services that meet
individual customers' economic needs; and become one of the most trusted financial services groups.

100%

Sales
channels

100%

100%

 Consulting sales
 Lifeplanner (sales employees)
 Partners (independent agencies) Direct sales
 Telephone Internet

 Internet

 Death protection life insurance
 Medical insurance, etc.

 Automobile insurance
 Medical and cancer insurance Deposits (yen, foreign currencies) Mortgage loans
 Investment trusts

 Individuals

 Individuals

Main
products
Targetcustomers

 Individuals

Policies in force:2


4.43 mn Capital:3 ¥65.8 bn
 Total assets: ¥3,659.7 bn
 Employees:4 5,3725

Scale1

1(risk segmented)






Policies in force: 1,020 thousand
Capital:3 ¥40.0 bn
Total assets: ¥78.6 bn
Employees:4 651






Accounts: 610 thousand
Capital:3 ¥40.0 bn
Total assets: ¥1,211.0 bn
Employees:4 165 (including Sony Bank Securities)

As of March 31, 2008.
policies in force are for individual life insurance and individual annuities.

2 Sony Life’s

3 The amounts of capital above include capital surplus.
4 Employee numbers indicate the number of employees in each of the Company’s business segments.
5 Lifeplanners: 3,779
6

May 26, 2008

Other consolidated subsidiaries include Sony Life (Philippines) and Sony Bank Securities
Sony Financial Holdings Inc. All Rights Reserved

35

Here you see an overview of the Sony Financial Holdings Group.
The Sony Financial Holdings Group aims to integrate the diverse functions thatare inherent to such financial services as savings, investment, borrowing andprotection; offer high-value added products and quality services that meet
individual customers' economic needs; and become one of the most trusted
financial services groups.
Thanks to the ongoing expansion of each company’s scale of business, the total
number of policies and accounts for all companies exceeded 6 million as ofMarch 31, 2008.

35

Views on Raising Corporate Value
 Value Creation =Raising the value of each of the three financial companies + synergy + moving into new fields of business In addition to raising corporate value through the steady growth of all three companies, we will foster
cross-selling and other synergies within Group companies, as well as move into new fields of business.
As a result, we will raise the corporate value of the SFH Group.

Corporatevalue3) Move into new fields of business2) Contribute to cross-sellingand other synergies

1) Ongoing growth from our current three main businesses
zSony LifezSony AssurancezSony Bank
SFH establishedMay 26, 2008

Now

Time

Sony Financial Holdings Inc. All Rights Reserved

36

The core management philosophy of the SFH Group is based on thestable ongoing growth of the three existing companies. In addition, we aim
to raise the corporate value of the overall group by:•Cross-selling among the three companies and through other synergistic
measures that add value, and•Investing in and entering new fields of business, including throughmergers, acquisitions and tie-ups.
From here, we will hear explanations from the presidents of each of thethree companies that handle our main businesses: Sony Life, Sony
Assurance and Sony Bank.

36

Ongoing Growth in Each of Our Three Existing
Businesses

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

37

First, Taro Okuda of Sony Life will explain the life insurance business.

37

Sony Life
Today’s Topics for Explanation

1. Overview of Sony Life
2. Sony Life’s Operating Performance
3. Sony Life’s Medium-Term Strategies

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved38

I am Taro Okuda, President of Sony Life Insurance.
I will provide an overview of Sony Life.

38

Sony Life: Corporate Philosophy
Mission
To work for customers’ financial security and stability by offering optimal life insurance products
and high-quality services.

Basic Management Philosophy
Meet customer expectations and earn their trust by providing customers with satisfactory, highquality services.
Always meet changes in the environment by proactively taking on new challenges, and stay aheadof demands through innovative management that anticipates emerging needs.
Respect the individuality of employees and employ their skills and aptitudes appropriately, thereby
creating an unconstrained workplace and maintaining a dynamic organization.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

39

First, let me explain Sony Life’s corporate philosophy.
Sony Life’s management philosophy includes its mission and its basic
management philosophy.
Our mission is “to work for customers’ financial security and stability by offering
optimal life insurance products and high-quality services.” This basic idea isconsistent with the approach we have adopted since our establishment—
providing insurance that is tailored to individual customers.
To achieve the goals of this mission, we focus the combined strength of ouremployees on a dedication to service quality and meeting customer needs.
These are the precepts of our basic management philosophy.
This mission and basic management philosophy constitute Sony Life’s reason forexisting. We will preserve these values even as times change, instilling thesephilosophies in all employees.

39Sony Life: Corporate Philosophy
Corporate Vision

Always
ForeverLive safely and energetically
Reach for your dreams

Always
Forever
Hold on to your sense of wonder
Helping you turn your dreams into reality

With you each step of the way

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

40Sony Life’s corporate vision is expressed through Lifeplanner Value—the value itdelivers to customers.
In addition to providing the optimal protection to meet customers’ life plans, evenafter signing a contract we deliver detailed after-sale follow-up services that
protect customers throughout their lives including protection against changing
social circumstances. In short, Lifeplanner Value refers to the sort of value that
only Sony Life can offer.
The Lifeplanners and Partners who are in charge of customers pursue this value,
as do all Sony Life employees, as we work toward the medium-term goal of
ensuring that we maintain the support of our customers.

40

Sony Life: Business Model/Characteristics
 Sony Life has expanded its market share by offering primarily death protection life insurance, tailored toeach customer through consulting-based sales and detailed after-sale follow-up services

Main
Main markets
marketsandandcustomers
customers

Sales
Sales
channelschannelsStrengths
Strengths

Main markets
 Center on the field of death protection, where profitable and highly stable consulting-based sales
are effective
 Also make an early entry into third-sector areas that offer high profitability and growth potential
Main customers
Heads of families in their 30s and 40s, for whom consulting sales activities work wellAlso focus on small and medium-sized companies
 Sales force with strong consulting skills
 Lifeplanner sales employees /Partners (independent agencies)z Special knowledge and abundant experiencez High morale and motivationz High productivity
 Offering insurance tailored to each customer through consulting-based sales and detailed aftersale follow-up services
 Stable acquisition of new policies
 Low lapse and surrender rate and a steady increase in policies in force
 Maintaining a high level of customer satisfaction and earning us high evaluations from themedia and other third parties
Robust financial healthMay 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

41

Next, I will explain Sony Life’s business model.
Since its time of establishment, Sony Life has expanded its market share by offering primarily
death protection life insurance, tailored to each customer through consulting-based sales anddetailed after-sale follow-up services.
Our main markets center on the field of death protection, where profitable and highly stableconsulting-based sales are effective.
We will also make an early entry into third-sector areas that offer high profitability and growthpotential.
Main customers include heads of families in their 30s and 40s, for whom consulting sales
activities work well.
Small and medium-sized sales are another major market.
We have developed two sales channels with strong consulting skills—Lifeplanner sales
employees and Partners. In particular, the Lifeplanner channel offers specialized knowledge andabundant expertise, delivering high productivity through its high morale and motivation.
Our strength lies in offering insurance tailored to each customer through consulting-based sales
and detailed after-sale follow-up services.
•We achieve stable acquisition of new policies.
•Also, we have a low lapse and surrender rate, and policies in force are increasing.
•Our level of customer satisfaction is high, earning us high evaluations from the media and otherthird parties.
Our financial health is also favorable. This supports the growth that is one of our corporate
strengths.

41

Today’s Topics for Explanation

1. Overview of Sony Life
2. Sony Life’s Operating Performance
3. Sony Life’s Medium-Term Strategies

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

42

Next, I will explain Sony Life’s operating performance.

42

Sony Life: Market Position (1) Share Despite a shrinking market, our share of new policy amount and policy amount in force is
growing steadily
Policy Amount in Force (Individual Life Insurance)
Policy Amount in Force (Individual Life Insurance)

New Policy Amount (Individual Life Insurance)
New Policy Amount (Individual Life Insurance)(Trillions of yen)

(%)

200
Sony Life's share

(%)

2,000

1H 07
6.3%

Total of all insurers(Trillions of yen)

1H 07
3.1%
06
05

Total of all insurers

6.0%Sony Life's share

06
150

5.0%

1,500

00
98
100

99

03

05
01

2.5%

04

04

3.0%

4.0%

03

2.0%

02
01

02

1,000

00

3.0%

97

1.5%

99

96
95

98

2.0%

1.0%

97

500

50

96

94

95

1.0%

0.5%

94

93
92
0.0%

0
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07

0

92

93

(FY)

Source: Statistics of Life Insurance Business in Japan0.0%

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07(FY)
Source: Statistics of Life Insurance Business in Japan

Note: New policy amount is calculated without adjusting for the impact of conversion.

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

43First, I will explain our market position.
The bar graph on the left shows the new policy amount of individual life insurance
for the industry overall. The graph on the right shows trends of the policy amountin force for the industry overall.
As you can see here, although the market began shrinking in the latter half of the90s, Sony Life continued to grow. As a result, in the first half of fiscal 2007 thecompany had a 6.3% market share in new policy amount, and a 3.1% share of
the market in terms of policy amount in force.

43

Sony Life: Market Position (2) Industry Ranking
 Sony Life ranks sixth in new policy amount, and is closing in on the top five insurers
 Sony Life maintained its top net increase ranking
New Policy Amount* Ranking
Ranking

InsurerPolicy Amount in Force

ResultShare(YoY increase/(YoY increase/decrease)

Decrease)Ranking

InsurerNet Increase

ResultShare(YoY increase/(YoY increase/decrease)

Decrease)1(1)Nippon3,655.5(63.6)

12.4(-3.2)

1(1)Nippon214,187.5(92.9)

21.4(-0.3)2(2)Dai-ichi

3,599.5(81.4)

12.2(-1.1)

2(2)Dai-ichi

171,175.1(95.5)

17.1(±0.0)3(3)Sumitomo

3,033.7(71.6)

10.3(-1.1)3(3)Sumitomo

136,482.7(93.9)

13.6(-0.1)

4(5)

Daido

2,390.7(108.5)

8.1(+1.8)

4(4)Meiji Yasuda

120,007.0(92.9)

12.0(-0.1)

Ranking

Insurer

Result1(3)Sony Life

605.6

2(2)

ALICO

517.5

3(4)

Tokio

423.4

4(1)

Prudential

369.9
278.6

5(4)

Meiji Yasuda

2,165.0(87.5)

7.4(-0.1)

5(5)

Asahi

42,054.2(91.2)

4.2(-0.1)5(10)Mitsui
Sumitomo

6(6)Sony Life

1,849.3(110.1)

6.3(+1.2)

6(7)

Daido

38,657.3(99.8)

3.9(+0.2)

6(6)

Aflac

269.3

7(8)

ALICO

1,431.2(102.7)

4.9(+0.7)7(6)Mitsui38,454.2(90.7)

3.8(-0.1)

7(5)Himawari

264.3

8(7)

Prudential

1,275.2(93.6)

4.3(-0.2)

8(8)Fukoku32,372.2(97.0)

3.2(±0.0)

8(28)

Daido

176.9

9(9)

Fukoku1,025.1(88.1)

3.5(+0.1)9(9)Sony Life

30,643.7(103.9)

3.1(+0.2)9(7)Nipponkoa

88.8

10(10)

Tokio

986.8(109.3)

3.4(+0.4)

10(10)

Prudential

25,147.5(105.0)

2.5(+0.1)

10（8)

Aioi

78.6

* Excluding on rollover basis

All-company total down 14.7% year on year

All-company total down 4.5% year on year

Notes: Comparisons for the first half of
FY2007
Individual insurance (Units in billionsof yen, %)Source:Materials officially disclosed byindividual insurers

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

44

Next, let us look at industry rankings.
In the first half of fiscal 2007, Sony Life ranked sixth in the industry in terms of
new policy amount and is now positioned to move in on the top five insurers.
Sony Life also ranked ninth in policy amount in force, with only a small difference
between itself and the eighth-ranking insurer.
In terms of net increase, which indicates the real increase in policy amount inforce, Sony Life has maintained the top ranking in recent years.

44

Sony Life: Revenue and Profit Structure (1)Product Portfolio
 Product portfolio, centering on death protection

Industrywide Product Portfolio（As of March 31, 2007）

Sony Life’s Product Portfolio（As of March 31, 2007）

Annualized premiums (Policy amount in force)

Annualized premiums (Policy amount in force)

Medical protection
and living benefit
23.3%

Individual annuities
24.4%

Medical protection
and living benefit
23.1%

Death protectionand endowment(First-sector products)
52.5%

Individual annuities
1.4%

Death protectionand endowment(First-sector products)
75.3%
Source: Statistics of Life Insurance Business in JapanMay 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

45

Next, I will explain our revenue and profit structures.
Looking first at product portfolio, whereas industrywide the weight of individual
annuities has risen to one-fourth of the total, Sony Life is unusual in that death
protection and endowment products, which are first-sector products, make up
three-fourths of the total.
We position death protection products, which provide stable economic protection
to policyholders, as core products. These products are central to our sales
strategy.
In the future, we plan to build on the death protection platform to provide adiverse range of products that meet customers’ changing needs.

45Sony Life: Revenue and Profit Structure (2) EV
 In general, Sony Life’s EV, which is a measure of corporate value for life insurers, has been increasing,although EV declined in FY2007
Embedded
Embedded Value
Value

EV
EV Sensitivity
Sensitivity at
at March
March 31,
31, 2008
2008(Billions of yen)(Billions of yen)

1,000

Amount of
Increase(Decrease)

EV
AmountFrom 6.0% to 5.0%

83.1

916.9

From 6.0% to 7.0%

(67.5)

766.3

From 600% to 500%

7.7

841.5

From 600% to 700%

(8.6)

825.2

On total investments

59.1

892.8

On new investments

34.8

868.6

900.5
833.8

776.1

800

Discount rate

600

492.0

539.3
Solvency margin ratio

400
Investment yield: +0.25%*200

3/20043/20053/20063/20073/2008

Total EV

492.0

539.3

776.1

900.5

833.8

EV of new policies

38.9

38.1

34.2

36.7

28.9

In force business

381.7

409.6

499.8

638.8

638.9

Adjusted net worth

110.2

129.7

276.3

261.7

194.8

Note: Assumptions and calculation methods differ for EV calculated in March 2004, March
2005, March 2006, March 2007 and March 2008.

May 26, 2008

On total investments(61.2)

772.5

On new investments(35.0)

798.7

Mortality and morbidity

Assumption x 1.1(65.3)

768.5

Lapse and surrender rate

Assumption x 1.1(16.1)

817.7

Operating expenses (unitcost to maintain policy)

Assumption x 1.1

(6.5)

827.2

Investment yield: –0.25%*

0Sony Financial Holdings Inc. All Rights Reserved

46

Embedded value, or EV, is a measure of corporate value for life insurers. Sony
Life’s EV increased steadily though fiscal 2006, but unfortunately we experienced
a decline in fiscal 2007.
As we indicated earlier during the discussion of operating performance, thisdecrease was largely a result of a worsened operating environment.
The chart on the right shows EV sensitivity, or the factors that drive increases
and decreases in EV. We explained this earlier in the presentation so we will omit
such discussion here. However, we plan to focus on these factors to drive EV
growth.

46

Today’s Topics for Explanation

1. Overview of Sony Life
2. Sony Life’s Operating Performance
3. Sony Life’s Medium-Term Strategies

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

47

Now, we will move on to an explanation of Sony Life’s medium-term strategies.

47

Sony Life: Future Management Policies (1)Understanding the Environment People in their 30s and 40s, Sony Life’s primary target customer base, are expected to continue to account for a large
portion of Japan’s population, offering high growth potential
 However, the senior market will expand as the baby boomer generation moves into retirement, and Japan’s low birthratemeans that our main customer segment will become smaller. We will need to respond to these upcoming changes inmarket composition.
Demographic Composition and Percentage of New Policies
by Age of Insured (Individual Annuities)

Changes in Population Composition(Thousands)(Percentage)

Second-generation
baby boomers(age)
Source: Prepared by Sony Life based on the Life Insurance Business Overview, fiscal 2006

May 26, 2008(age)
Sources: Annual Report on Current Population Estimates (Statistics Bureau, Ministry ofInternal Affairs and Communications) and Population Projections for Japan(National Institute of Population and Social Security Research)48

Sony Financial Holdings Inc. All Rights Reserved

8First, let us review our understanding of the market environment.
As the graph on the left shows, our main customers are in their 30s and 40s,
whereas other insurers are weighted more toward people in their 20s and 30s.
As the graph on the right shows, within this market segment the peak that
corresponds to the second-generation baby boomers will move to the right as thisgeneration ages. This stable shift should have a positive effect on Sony Life’s
growth over the medium term.
Although the 50s and 60s senior market is expanding, in the future our mainmarkets are expected to shrink. We recognize the need to take appropriate
measures to maintain or increase our ability to grow, amid these changes inmarket structure.

48

Sony Life: Future Management Policies (2)Major Tasks
Strengthen and confirm our insurance claim payment management structure Ensure thorough customer follow-up and measures to prevent recurrence through a special project for the introduction of countermeasures
to strengthen the insurance claim payment management structureEnhance market share in the highly profitable death protection field, ensuring profitability


Make even better use of our sales channels in this domain, where consulting-based sales is particularly effectiveStrengthen our after-sale follow-up structure to build lifelong relationships with customers

Concentrate on the medical and nursing care field Provide attractive products and services for this sector, expanding and entrenching business in this market

Prepare a product development structure in the individual annuities segment
 By establishing a joint venture with AEGON in the field of annuities, employ consulting-based sales to make individual annuities a pillar ofsurvivor protection, along with death protection

Expand business domains
 Ensure growth through the expansion of business in Japan, including through M&A activities, as well as by developing business in overseas
markets

Recent Initiatives

Planned Future Initiatives

 Introduced proprietary Life Planning Support Service (LiPSS) software Expand and improve efficiency of Lifeplanner and Partner channels

to help customers develop life plans and select optimal coverage forsuch plans (October 2006)
 Concluded basic agreement to form business tie-up with Watami Co.,

Ltd., in the nursing care business (September 2006)
 Began selling whole life nursing-care insurance (November 2006)
 Established company to prepare for the establishment of annuities joint

venture (August 2007)
 Introduced new system spanning entire insurance operation (October

2007, March 2008)

 Ensure profitability by maintaining or improving productcompetitiveness Introduce customer communication support system (FY2009)
 Begin operations at annuities joint venture subsidiary (FY2008)
Commence sales at bank counters and through Lifeplanner

channel Consider establishing life insurance subsidiary in East Asia (Greater

China)

 Began selling whole life cancer insurance (April 2008)

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

49

Based on this understanding of the market environment, I will explain some of our major
management tasks.
First, one of our most important tasks is to strengthen and confirm our insurance claim payment
management structure. In September 2007, we completed our review into the inadvertent nonpayment of insurance claims. Following on from there, we launched a special project for the
introduction of countermeasures to strengthen the insurance claim payment management
structure. We are following up with customers and implementing measures to prevent recurrence.
On the sales front, we will aim to expand our market share in the field of death protection, which iscurrently one of our major business domains. In addition, we will concentrate on the medical andnursing care field and set up a product development structure in the field of individual annuities.
Through these efforts, we plan to expand our business foundation.
In the medium term, we aim to expand our business domains by expanding business in Japan,
possibly through activities that include mergers and acquisitions. We also aim to move into
overseas markets.
We will take steady steps to address these tasks, such as by introducing new systems andproducts, forming tie-ups with other companies and preparing for the establishment of a newcompany.
In the future, we plan to:•Expand and improve the efficiency of our sales channels,•Ensure profitability by maintaining or improving product competitiveness, and•Enhance relations with our customers.
In addition to continuing with these efforts, in fiscal 2008 we will complete preparations for theestablishment of an annuities subsidiary. We anticipate a smooth business startup andcommencement of operations.
In overseas markets, we are exploring the possibility of establishing a life insurance subsidiary inEast Asia. In particular, we are focusing on the Greater China region, including Taiwan and Hong
Kong.

49

Sony Life: Target Figures from a Business
Perspective
Hone our competitive edge, from the dual standpoints of growth and soundness
GrowthSoundness

Expand sales channels
 Aim for Lifeplanner sales employees to number
4,000 by FY2010

Maintain a high level of financial soundness

Raise corporate value
 Continue to raise corporate value, achieving EV
of between ¥1 trillion and ¥1.1 trillion by March 31,
2011

 Maintain or increase ratings
 Take appropriate action to shift toward accounting
standard based on economic value Through annual growth of more than 4%, aim toachieve policy amount in force of ¥36 trillion by
March 31, 2011
 Also continue to expand business domains toachieve higher levels of future growth(Reference) Credit Ratings (as of March 31, 2008)
A.M. Best Company, Inc.

Financial strength rating

A+ (Superior)

Rating and Investment Information, Inc.

Insurance claims paying ability

AA (A very high capacity for payment of insurance claims)

Japan Credit Rating Agency, Ltd.

Ability to pay insurance claims

AA(A very high capacity to honor the financial commitment on the
obligation)

Moody’s Investors Service, Inc.

Insurance financial strength rating

Aa3

Standard and Poor’s

Financial strength rating

A+ (Strong)

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

50

Finally, I will explain the figures that constitute our medium-term targets.
Our aim is to maintain or enhance our competitiveness by striking a balance
between growth and financial soundness, which are two of our strengths.
First, we will work to achieve growth by expanding our sales channels, which
drive this growth. By fiscal 2010, we intend to expand our number of Lifeplanner
sales employees to 4,000.
We will strive to enhance our corporate value, aiming to reach EV of between ¥1
trillion and ¥1.1 trillion by March 31, 2011.
By maintaining an annual growth rate of 4% or more, by March 31, 2011, we aim
to have insurance in force of ¥36 trillion.
To achieve higher levels of future growth, we will continue to expand ourbusiness domains.
Next, let us look at soundness. We aim to maintain a high level of financial
soundness by either maintaining or increasing our current rating levels.
In addition, financial standards are expected to move to an economic value basis,and solvency regulations are likely to change. We will respond appropriately tosuch shifts, ensuring high levels of soundness under these new standards, as
well.

50

Sony Life: EV Growth Targets through FY2010(Billions of yen)

1,200

1,000.0~1,100.0

Value of insurance in force

1,000

Adjusted net assets

800
600

900.5

833.8

'07.3

'08.3

776.1
539.3

492.0

400
200
0
'04.3

'05.3

'06.3

・・・

3/20043/20053/20063/20073/2008

Total EV

492.0

539.3

776.1

900.5

833.8

In force business

381.7

409.6

499.8

638.8

638.9

EV of new policies

38.9

381

34.2

36.7

28.9

Adjusted net worth

110.2

129.7

276.3

261.7

194.8

'11.3

(Billions of yen)
Note: These figures indicate traditional embedded value (TEV). The company is considering a shift to market consistent embedded value (MCEV).
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

51

We believe it is possible to achieve EV of between ¥1 trillion and ¥1.1 trillion by March 31, 2011
assuming that market factors remain constant.
To achieve this objective,•First, we will strengthen consulting-based sales through our Lifeplanner and Partner channels, aswell as expand these channels.
•At the same time, we will bolster new product development, improve the value of new policy
amount.
•By enhancing our after-sale follow-up structure, we will improve the value of policy amount inforce.
Concerning operating costs, which were one reason for the EV decrease during fiscal 2007, inrecent years we have:•Strengthened our insurance claim payment management structure,•Enhanced our personal information protection system,•Reinforced our explanation of disclaimers during the solicitation phase, and•Responded to the Financial Products and Exchange Law.
These and other factors such requirements as enhancing our after-sale follow-up structure will
require a certain amount of investment continuing into fiscal 2008 and fiscal 2009.
We are presently investing in recruiting systems to ensure adequate personnel and making
system-related investments to raise efficiency. For these reasons, we do not expect operating
expense levels to improve in the near future. However, we expect to begin benefitting from someresulting efficiency improvements in fiscal 2010.
This concludes my explanation of Sony Life’s management policies.
Thank you for listening.

51

Ongoing Growth in Each of Our Three Existing
Businesses

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

52

Next, Mr. Yamamoto of Sony Assurance will explain the non-life insurance
business.

52

Sony Assurance
Today’s Topics for Explanation

1. Overview of Sony Assurance
2. Sony Assurance’s Operating Performance
3. Sony Assurance’s Medium-Term Strategies

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

53(Change speakers)
I am Shinichi Yamamoto of Sony Assurance. I will begin my explanation by
providing an overview of Sony Assurance.

53

Sony Assurance, Present and Past
Overview
Name

Sony Assurance Inc.

President

Shinichi Yamamoto

Established

June 10, 1998 (as Sony Insurance Planning Co., Ltd.)

Head office

11F Aroma Square, 37-1, Kamata 5-chome, Ota-ku, Tokyo, Japan 144-8741

Phone+81-3-5744-0300

Capitalization ¥40,000 million (common stock of ¥20,000 million, capital reserve of ¥20,000 million)
Share ownership
Business

Wholly owned by Sony Financial Holdings Inc.

Non-life insurance businessTimeline
Jun.

1998

Sony Insurance Planning Co., Ltd., established

Jul.

1999

Head office moves to Ota-ku, Tokyo

Aug. 1999

Capital increased to ¥10,000 million

Sep. 1999
Receives license from the Financial Reconstruction Commission, Financial Services Agency, to conduct
non-life insurance business (Name changed to Sony Assurance Inc.)
Begins accepting automobile insurance applications over the Internet
Oct.

1999

Begins accepting automobile insurance applications over the telephone

Jul.

2000

Capital raised to ¥20,000 million (¥10,000 million increase)Aug. 2001

Capital raised to ¥30,000 million (¥10,000 million increase)

Jun.

2002

Jun.

2003

Capital raised to ¥40,000 million (¥10,000 million increase)

Apr.

2004

Becomes subsidiary of Sony Financial Holdings

May 26, 2008

Begins offering medical and cancer insuranceSony Financial Holdings Inc. All Rights Reserved

54

Here is a outline of the company’s present and past.
In September 1999, we began writing insurance over the Internet, and on the firstday of the next month we began telephone sales.

54

Vision & Mission

Instilled with a Sony-likeenvironment of unconstrainedof ideas, we offer new lifestyleopportunities in a spirit ofcreativity and innovation.

May 26, 2008

Through direct communication,
we provide reasonable, quality
insurance services that help
make customers’ lives safer
and more secure.

Sony Financial Holdings Inc. All Rights Reserved

55

Here you see a description of our company vision and mission.
Our aim is to achieve a “Sony-like” feel and contribute to the individual market as
a direct insurance provider.

55

Corporate Slogan

A difference that will change insurance
Innovative and Professional
Always innovative; professional product quality guaranteed

Progress with Customers
Moving alongside and progressing in step with our customers

Committed Service and One-on-One Solutions
Service that demonstrates our deep commitment to customers and tailored solutions that show wevalue the individual

Sincere and Faithful
Acting in the best of faith and responding with sincerity

Convincing Satisfaction
Dedicated to ensuring our customers are satisfied

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved56

Our company slogan is “Feel the Difference.”“Progress with customers” describes our aim of moving alongside andprogressing in step with our customers. For further information on this topic,
please have a look at our website (which is in Japanese only).
“Committed service” is a guarantee of our service level. This strategic approachis one way of differentiating our services.

56

Operations (1)Main Types of Insurance: Distinctive Products−Sony Assurance automobile insurance
Automobile insurance offering extensive indemnifications that policyholders appreciate, as well as careful risk
segmentation
Original Sony Assurance discount:
Kurikoshi discount system to match insurance premiums with distance driven;
continuation discount; new vehicle discountOriginal Sony Assurance policy rider: Oritemo coverage policy rider−SURE medical and cancer insurance policies

Kurikoshi discount on
insurance covering distancenot driven this year
Insurance covering
distance not driven

Kurikoshi discount¥2,000¥2,000

Medical insurance with a wide range of coverage and premium options
Original Sony Assurance rider: Half-price policy riders for policyholders
from age 60

This year

Next year
Note: Sample of Kurikoshi discountfor illustrative purposes only

60 yearsof ageHigh-Quality Services

Monthly premiumfor insurance
entered into
before age 59−Advanced accident resolution service
Committed service: Speedy accident resolution eases the uncertainty
policyholders feel at the time of an accident

Coverage begins

Monthly payments

Down 50%

Monthly premiumfrom age 60

High-Quality
Services

Age 60

Customer response by an appointed staff member within three hours of receiving an accident report“On the Day, Any Day, Response” service

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

57

Our main products are automobile insurance and medical insurance.
Risk segmentation by distance driven is a typical feature of automobile
insurance, but our Kurikoshi discount is unique because it takes this idea one
step further. This policy premium discount, corresponding to the amount not
driven during the year, is provided the following year.
For SURE medical insurance, we offer half-price policy riders for policyholders
who have reached their 60th birthday. This unique method of halving insurance
premiums for people aged 60 and older has proven popular.
We aim to offer high-quality services. Current services that are part of our“committed service” offering include:1.
A commitment to providing a customer response by an appointed
staff member within three hours of receiving an accident report, and2.
A commitment to providing an initial response on accident claimson the day they are received.

57

Operations (2)Target customers−

Individual customers

Number of policies in force−

1,024,448 polices, as of March 31, 2008

Sales channels−

Direct channel via customer centers (telephone) and the Internet−

Tie-up channel that operates via agencies and other tie-up partners

Television commercial

Newspaper advertisement

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

58

We target individual customers. As of March 31, 2008, the number of policies inforce in our mainstay automobile insurance and medical insurance exceeded 1
million.
In addition to the direct channel, we operate a tie-up channel, which operates via
tie-up partners, such as Sony Life’s Lifeplanners, credit card companies andother agencies.

58

Today’s Topics for Explanation

1. Overview of Sony Assurance
2. Sony Assurance’s Operating Performance
3. Sony Assurance’s Medium-Term Strategies

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

59

Next, I will explain Sony Assurance’s operating performance.

59Direct Automobile Insurance Market
Sony Assurance—the leader in direct premiums written since FY2002
Increasing
Increasing Share
Share byby Direct
Direct Insurers
Insurers(Billions of yen)

Total direct premiums written (all non-life insurancecompanies in Japan)

4,000

Direct automobile insurance market share(%)²

DirectDirect Premiums
Premiums Written
Written by
by SixSix Companies
Companies(Billions of yen)

50

5.0%

Sony
Company A

3,500

40

4.0%

Company B
Company C

3,000

Company D
Company E

2,500

3.0%

30

2,000
1,500

2.0%

20

1.0%

10

1,000
500
0
97

May 26, 2008

98

99

00

01

02

03

04

05

0.0%
0
06
FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07
(FY)
Source: Insurance magazine

Sony Financial Holdings Inc. All Rights Reserved

60

I will explain the status of our automobile insurance, one of our major offerings.
On the left, the bar graph shows direct premiums written for automobile
insurance marketwide. The red line shows the share of this market held by direct
insurers. As you can see, direct insurers enjoy a steadily growing share of themarket.
The graph on the right shows direct premiums written by six direct insurers. The
red line shows Sony Assurance.

60

Profit/Expense Structure• In our revenue/expense structure, maintenance of existing policies recover initial costs
and generate profits
Profit/Expense Structure for Automobile Insurance
New
Newpolicies
policies

Maintenance
Maintenanceofofexisting
existingpolicies
policies

ProfitProfitLosses
LossesOperating expenses

Operating expenses

Premiums on
maintenanceof existing
policies

New policy
premiums

Loss amount
Loss amountMay 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

61

The graph on the left shows our profit/expense structure on automobile
insurance. New policies generate losses, but these losses are covered by profits
from maintenance of existing policies.
For this reason, as our percentage of maintenance of existing policies increases,
profits rise accordingly.

61

Automobile Insurance•As the percentage of maintenance of existing policies rises, the profit/expense balance improves(Moved into the black in FY2006, calculated according to Japanese GAAP)
Automobile Insurance Policies
Net automobile premiums written

1,000,000

New policies

Underwriting profits

Maintenance of existing policies

900,000+9%800,000

47.0

700,000

43.9

600,000

39.9

500,000

34.2

400,000
300,000+61%

200,000

1.1

100,000

(1.0)

0.7

(2.3)

0
FY04
May 26, 2008

FY05

FY06

FY07

FY04

Sony Financial Holdings Inc. All Rights Reserved(Billions of yen)

FY05

FY06

FY07

62

The graph on the left shows Sony Assurance’s number of automobile insurance
policies. The yellow indicates new policies, while the green shows maintenanceof existing policies.
The ratio of maintenance of existing policies is steadily rising, so as you can see
from the right-hand graph underwriting profits on automobile insurance turned
positive, pushing the overall company into the black in fiscal 2006.

62

Past Operating Expense Ratios(Automobile Insurance)
値は5/21に確定

Automobile Insurance Operating Expense Ratio
34%

Major company E
Major company D
Major company A

32%

Major company C
Major company B
30%

Sony Assurance
28%
FY2004

FY2005

FY2006

FY2007

Sources: Compiled by Sony Assurance based on individual companies’ financial reports
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

63

The automobile insurance operating expense ratio tends fall as the scaleof business grows. You can see here that our ratio is low, even comparedwith major insurers.
The decrease in our operating expense ratio is due to:•A growing scale of business,•Structural factors, such as changes in our percentages of new andmaintenance of existing policies, and•Improved business efficiencies.
We saw an increase in fiscal 2007, which was due primarily to a rise insystem-related expenses.

63

Past Loss Ratios (Automobile Insurance)
値は5/21に確定
Automobile Insurance Loss Ratio (Written Basis)70%

Automobile Insurance Loss Ratio (Earned Basis)
75%

Major company C

Major company C

Major company E
Major company B

65%

Major company A

Major company B
Major company E
70%

Major company D
60%
Major company A

Sony Assurance

65%
Major company D

55%Sony Assurance

60%

50%
FY2004

FY2005

FY2006

FY2007

Loss ratio = net claims paid/net premiums written(Including loss adjustment expenses)

FY2004

FY2005

FY2006

FY2007

Loss ratio = (net claims paid + provision for outstanding claims) /earned premium (要確認: 既経過保険料)(Including loss adjustment expenses)

Sources: Compiled by Sony Assurance based on individual companies’ financial reports
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

64

The automobile insurance loss ratios shown on the graph at left werecompiled from the publicly released figures for the net loss ratio. This
information is on a written basis.
Sony Assurance’s figure on a written basis tends to be low, so we havereversed the numerator and denominator to create the graph on the right,
which is on an earned basis. As this indicator closely mirrors the incident
loss ratio before eliminations (要確認: 出再控除前の発生損害率), we
believe this figure is most realistic.
Even on an earned basis, our loss ratio is stable and is lower than theratio for large insurers. Therefore, we conclude that our loss ratio is good.

64

Operating Performance (1)Net Premiums Written andNumber of Policies in Force(Billions of yen)

Combined Ratio(Thousands of policies)

55.0
50.4

(%)

86.5

82.5

79.9

80.3

45.2
1,020
930

37.8
820
670

Number of policies in force = Automobile insurance + SURE

May 26, 2008

Net loss ratio includes loss adjustment expenses.

Sony Financial Holdings Inc. All Rights Reserved

65

Looking at operating performance, the number of policies in force has steadily
increased, and net premiums written grew to ¥55.0 billion. In fiscal 2007, the net
loss ratio (on a written basis, as explained earlier) was 53.5%, and the net
operating expense ratio was 26.7%.
The loss ratio remained stable as a result of controlling operating expenses inline with losses.
As a result, the combined ratio, which is the total for the net expense ratio andthe net loss ratio, was 80.3%.

65

Operating Performance (1) Reference
Combined Ratio (Using the Earned Loss Ratio)

Combined Ratio
Net expense ratio(%)

Net loss ratio

(%)

100

100

86.5

82.5

80

80.3

79.9

100.1

51.9

52.3

60

64.6

53.5

53.6

89.9

89.0

63.6

62.3

26.3

26.7

FY06

FY07

40

40

20

94.9

Earned loss ratio

80
65.5

60

Net expense ratio

34.6
30.3

20
26.3

26.7

FY06

FY07

34.6
30.3

0

0
FY04

FY05

Net loss ratio includes loss adjustment expenses.

FY04

FY05

Earned loss ratio = net claims paid + loss adjustment expenses +accumulation in reserves for outstanding claims / earned premium(要確認: 既経過保険料)
Excluding earthquake insurance and automobile liability insurance

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

66

For reference, the graph on the right uses the loss ratio on an earned basis,
rather than the net loss ratio, to calculate the combined ratio.
This indicator is included to provide you with a better understanding of thecompany’s actual condition.

66

Operating Performance (2)Ordinary Profit (Loss)(Billions of yen)

Solvency Margin Ratio

2.8

(%)

2.0

(0.7)

(2.8)

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

67

Operating income rose to ¥2.8 billion in fiscal 2007.
The solvency margin ratio remained at a sound level, amounting to 1,073.9% asof March 31, 2008.

67

Today’s Topics for Explanation

1. Overview of Sony Assurance
2. Sony Assurance’s Operating Performance
3. Sony Assurance’s Medium-Term Strategies

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

68

Now I will explain our medium- to long-term strategies.

68Medium- to Long-Term Strategies

Medium- to Long-Term Targets

Profitability:
Maintain profitability sufficient to sustain adjusted ROE of 10% or more

Growth:Continue growing, with the aim of achieving direct premiums written of¥100.0 billion

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

69

We have two medium- to long-term financial targets.
In terms of profitability, we aim to achieve adjusted ROE of 10%. Our adjusted
ROE during the past two years has exceeded 10%, and we aim to keep this levelstable at more than 10% into the future.
In terms of growth, we target direct premiums written of ¥100.0 billion. This figure
is an important watershed in and of itself, as it will substantially raise our market
presence. It is also meaningful from the viewpoint of raising adjusted ROE.

69

Growth (Direct Premiums Written) andSoundness
FY2004 direct
premiums written¥37.5 billion

FY2007 direct
premiums written¥54.6 billion

FY2010 direct
premiums written¥70.0 billion

80

Solvency Margin Ratio(%)(Thousans ofpolicy)2,000 1,500(Billions of yen)

Direct premiums written
Number of policies in f orce

70

1,095

1,500

60

1,074
976

1,000

1,104

1,128

1,140

FY08

FY09

FY10

1,010

50
1,000

40
30

500

20

500

10
0

0
FY04

FY05

FY06

FY07

FY08

FY09

FY10

0
FY04

FY05

FY06

FY07

Number of policies in force = automobile insurance + SURE
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

70

Although ¥100.0 billion is our target for direct premiums written, in the meantime
we will use the interim figure of ¥70.0 as our medium-term target. This figure will
not be easy to reach, but we believe it is attainable.
For the foreseeable future, we expect to maintain a solvency margin ratio of
1,000%.

70

Profitability: Combined Ratio
Combined Ratio (Using the Earned Loss Ratio)

(%)

100

Net expense ratio

Earned loss ratio

100.1
94.9

89.9

89.0

63.6

62.3

26.3

26.7

92.3

92.0

91.3

80
65.5
64.6

60

40

20

34.6

30.3

0
FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
Earned loss ratio = net claims paid + loss adjustment expenses +accumulation in reserves for outstanding claims / earned premium(要確認: 既経過保険料)
Excluding earthquake insurance and automobile liability insurance
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

71

We expect our combined ratio to increase in fiscal 2008, then to fall again.
Please be aware that here the combined ratio calculation uses the earned loss
ratio. So far, our loss ratio has remained in line with the trend. For automobile
insurance, we assume the loss ratio is unlikely to fall below its current level, andthat this represents a natural loss level.
The net expense ratio incorporates increases in system-related expenses.
Over the long term, we believe the net expense ratio will improve because of:
1. An expanded scale of operations,
2. Higher operating efficiencies and better system efficiency, owing to the new
system, and3. The shift of contracts onto the web.

71

Profitability: Adjusted ROE
Adjusted ROE and Adjusted Profit(Billions of yen)

20%

4Adjusted ROE
Adjusted profit

15%

3

10%

2

5%

1

0%

0

FY04

FY05

FY06

FY07

FY08

FY09

FY10

-5%

-1

-10%

-2

Adjusted ROE = Adjusted profit / adjusted capital
Adjusted profit = net income (after tax) + provision for special catastrophe reserves(要確認：危険準備金繰入額＝異常危険準備金繰入額？) (after tax) + provision for reserves for price fluctuation (after tax)
Adjusted capital = average value during the year of (net assets + special catastrophe reserves(要確認：危険準備金＝異常危険準備金？) (after tax) + provision for reserves for price fluctuation (after tax))

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

72

In fiscal 2007, adjusted ROE was 17.2%.
As we expect the combined ratio fall back after rising in fiscal 2008, we expect
adjusted profit to fall temporarily. We also expect adjusted ROE to drop below
10%, before returning to around 10.9% in fiscal 2010.

72

Ongoing Growth in Each of Our Three Existing
Businesses

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

73

Next, Sony Bank President Ishii will explain the banking business.

73

Sony Bank
Today’s Topics for Explanation

1. Overview of Sony Bank
2. Sony Bank’s Operating Performance
3. Sony Bank’s Medium-Term Strategies

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

74(Change speakers)
I am Shigeru Ishii of Sony Bank. I will take the explanation from here.
First, I will provide an overview of the bank.
Sony Bank was established in 2001 as an Internet bank specializing ininvestment products for individual customers.
The bank has earned a strong reputation with a wide range of customers for its
yen deposits, foreign currency deposits, mortgage loans, investment trusts andother products that are reasonable and feature pricing that is near market rates.
As of December 31, 2007, the bank had approximately 470 thousand accounts.
Furthermore, these accounts had high balances, averaging ¥1.71 million peraccount. Sony Bank has earned a strong external reputation for supporting theasset management needs of customers who have high levels of financial literacy.
In fiscal 2005, its fifth year since establishment, the bank moved into the black.
Fiscal 2007 marks the third consecutive year of profitable operations for Sony
Bank.

74

Corporate Philosophy

 Be fair Support the growth of the Japanese economy
 Provide asset management tools
 Make maximum use of information technology
 Offer individually tailored services
 Provide more advantageous products and better services
 Create an infrastructure to provide services over the Internet
 Foster a liberating and pleasant business environment

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

75First, I will explain Sony Bank’s corporate philosophy
Sony Bank’s philosophy begins with the words “be fair.”As an asset management bank for individuals, we believe that being fair—incorporate activities both within and outside the company—is the key to earning
trust and support.
In the past, we have worked to express this sense of fairness through our
products and services, as well as in our corporate activities.
This March, we began offering asset management tools based on thisphilosophy, releasing the “life passbook.”
In line with our philosophy of “providing more advantageous products and better
services,” on May 12 we commenced foreign exchange margin transactions.
These additions are all based on the customer-first concept, where we aim toclearly understand customer needs, and then “be fair” in our pursuit of solutions
that satisfy these demands.
In the future, we will do our utmost to infuse all our employees with thesephilosophies, as well as to share them with our partner companies, making thesephilosophies a cornerstone of our corporate activities.

75

Business Model

Customer profile

A “money toolbox” interface
to assist customers as they
consider, research and carryout transactions

 For individuals’ portfolios
 Provide innovative products
and services


Sex: 70% male
Age: 80% in 30s to 50s
Location: 80% in Japan’s
three major metro areas

 Raise flexibility for individuals
 Yen deposits
 Foreign currency
deposits

Metropolitan
businesspeople

 Investment trusts
 Mortgage loans Financial productintermediation
 “Life passbook”

May 26, 2008

By forging a link between banking
and securities, propose newfinancial products and services thatare one-half step ahead of themarketSony Financial Holdings Inc. All Rights Reserved

Increase the freedom individuals
feel from the constraints of time andlocation by allowing banking
transactions to be conducted 24
hours a day from the comfort ofhome Bring individuals and markets
closer

Use information technologies tooffer interest rates, pricing andcommissions that are nearer
market rates

76

Next, I will explain Sony Bank’s business model.
As an Internet bank, Sony Bank takes advantage of a channel that is unrestrictedby place or time and that features an inexpensive structure. We have introduced
the MONEYKit service site to take advantage of these features, as well as tobring individuals and markets closer, offer interest rates and commissions thatare closer to market rates and offer more abundant investment opportunities,
innovative products and services.
Using the Internet to “bring banking to the home” and a mobile service site basedon the concept of “the bank that you carry with you,” we have expanded thenumber of financial opportunities for individuals.
As a “money toolbox” interface to assist customers as they consider, researchand carry out transactions, MONEYKit supports a host of diverse financial
activities.
Our current customers tend to be aged in their 30s to 50s and located in Japan’s
three major metropolitan areas.
The increasing prevalence of the Internet and advances in the financial
environment have brought about steady increases in the number of people whoare independent and have increasingly sophisticated needs.
Sony Bank considers the expansion of financial markets that target individuals abusiness opportunity. By meeting these needs more precisely, we also entrench
our own position more firmly.

76Market Position
We enjoy a unique position as an “investment bank for individuals.”
Main bank◆◆◆◆

Main bank◆◆

Settlement

Asset
Management

◆

◆

◆

◆

Sony Bank◆◆

Settlement bank◆◆

Asset managementbank

Sub-bank
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

77

Next, I will explain Sony Bank’s market position.
In recent years, customers have begun to categorize banking institutions by theircharacteristics. Here is a visual map of how customers tend to divide banks.
Banks can be broadly segmented into three types. People think of the bank withan account where their salaries are deposited, from which they pay utilities andperform other duties as their “main bank.” Banks that offer attractive transfer fees
and allow payments over the Internet are “settlement banks.” “AssetManagement banks” handle foreign currency deposits, investment trusts andother savings as well as asset management.
As a new market entrant, as well as one positioned as an asset managementbank, we face stiff competition. However, we believe that inter-bank competition
encourages higher product and service quality, and raises the overall level of themarket.
As an industry frontrunner, we plan to remain an innovative force. By providing
products and services that are distinctively our own, we will carve a uniqueposition in an intensely competitive environment.

77

Business Expansion and Profits
Retail Balance

Profits

Retail balance: Total of customer transactions
Number of accounts (thousands)

61.0
49.2

43.0

(Billions of yen)(Billions of yen)

Gross operating profit

36.8

1,800

26.9

1,594.2

General and administrative expenses

12

Ordinary profit

1,600

9.4

10
1,400
1,200

8

Investment trusts

1,133.4

Foreign-currency deposits
1,000

Yen deposits

102.9

400
200

702.6
458.2
63.0
16.4
107.2
271.6

126.3
29.6
159.1

914.4

284.7

239.4

96.5

75.1

7.1

7.7

5.3
3.8
2.7

2.2
1.4

2

147.8

148.9
892.6

0
-2

451.0

8.1

5.8

251.7

604.4
387.6

6.9

6
4

800
600

9.1

347.0
Loans

11.0

-2.2

-1.7

-4

0
2003

May 26, 2008

2004

2005

2006

2007

03

04

05

Sony Financial Holdings Inc. All Rights Reserved

06

07

(FY)

78

Next, I will explain Sony Bank’s business expansion and profits.
Sony Bank uses retail balance as an indicator of business expansion. The retailbalance is the total volume of customer transactions, including deposits,
investment trusts and loans.
Our retail balance has grown steadily in the past. In fiscal 2007, retail balance
expansion was robust, rising ¥460.8 billion, to ¥1,594.4 billion. Yen deposit
growth was particularly noteworthy, pushed up ¥288.2 billion year on year, largely
owing to higher yen time deposits.
In terms of profits, gross operating profit increased in line with our businessexpansion. Because of this rise and by controlling general and administrative
expenses, profits have grown steadily since we moved into the black in fiscal
2005. In fiscal 2007, ordinary profit reached ¥2.7 billion.

78

Securities (Breakdown)
Securities, by Sector

Securities (by Ratings)(Billions of yen)

600
(Billions of yen)

500

600
500

451.5

400

354.4

323.6

200
100

195.2

169.1

25.9

23.0
10.0

182.6
215.2

200

47.3
112.5
31.8

183.0
45.6
84.7

18.3
53.4

400
300

381.2

300

0

488.8

122.4

100
0

39.2

95.1

141.9
03/31/04

121.1
69.4
81.5
17.0
146.6

53.6

113.3
32.8

69.2

110.1
54.8

214.5

03/31/05 03/31/06

277.3

P-2
P-1
BB or lower
BBB
A
AA
AAA

157.5
03/31/07 03/31/08

85.4

110.3

110.5

95.1

03/31/04

03/31/05

03/31/06

45.6

76.0

03/31/07

03/31/08

Unrealized Gains and Losses(Billions of yen)

2

OthersFunds

0

Corporate and financial bonds-2

Japanese government-affiliated institution and foreign
government bonds
Floating-rate Japanese government bonds
Fixed-rate Japanese government bonds

0.7

0.4

03/31/04

03/31/05-4-6-8

03/31/06

03/31/07

03/31/08

-4.4
-6.0
-9.0

-10

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

79

Next, I will explain the breakdown of securities, which are Sony Bank’s principal
investments.
Our securities investments center on investment grade corporate bonds, whichtake on credit risk, and government bonds, which take on interest rate risk. As of
March 31, 2008, securities investments totaled ¥488.7 billion.
Unrealized losses have increased since March 31, 2006, primarily because oflower prices on floating-rate Japanese government bonds.

79

Revenue and Profit Composition
Gross Operating Profit

Basic Balance and Interest Spread* Internal management basis
Average balance of deposits* Internal management basis

918.2

683.3

0.88%

586.4
466.8

(Billions of yen)

12
10

4

9.4
2.8

5.3

6
3.8

1.4
0.3

9.1
1.3
0.4

-4

-2

FY 03

9.3
7.3

6.4
4.0
2.3

1.1

0
-2

7.3

4.0
-0.1

Net interest income
General and administrative expenses
Basic balance

8

2
9.3

-3.6
-5.8

-6

2.3
0

10

4

0.3

6.4

* Interest spread = Yield on investment – Yield on financing(Billions of yen)

6

1.4

1.6
2

0.56%

11.0

8

-0.7

-0.3

-6.9

-7.1

-7.7

-8.1

FY 04

FY 05

FY 06

FY07

-2.9

-8
-0.0

FY 04

0.91%

0.64%

324.4
Net other income (loss)
Net fees and commissions
Net interest income

0.90%Interest spread

-10
FY 05

FY 06

FY 03

FY 07

* Internal management basis: Of transactions treated as “net other income (loss)” and “net fees and commissions” from a financial accounting standpoint,
real investment gains or losses are recognized as “investment of assets” from a managerial accounting standpoint.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

80

Next, I will explain Sony Bank’s composition of revenue and profits.
Among transactions that are counted as net fees and commissions or net otherincome (loss) from a financial accounting standpoint, we consider real profits orlosses on investments (such as profit on foreign currency investment resulting
from foreign currency swaps) “net interest income” on an internal management
basis.
In line with our business expansion, gross operating profit exceeded ¥10.0 billion
in fiscal 2007. Steady gains from net interest income were particularly noticeable.
By maintaining interest spreads of around 0.9%, we pushed our basic balance—
excluding general and administrative expenses from the net interest income —into the black for the first time in fiscal 2007, resulting in a more robust revenue
and profit base.

80

Future Management Policy:
The Second Stage—Acceleration of Growth
Positioning fiscal 2008 as our “second stage,” we aim to takea new step toward realizing our corporate philosophy. At thesame time, we will fully leverage the management base wehave established to date to achieve an acceleration of growth.

“Second Stage”
From customer satisfaction to increased loyalty
Business
expansion,
revenue andprofit strength

FY2008 to FY2010
FY2006 to FY2008
Until FY2006

Acceleration
Accelerationofofgrowth
growthSetting
Settingthe
thestagestagetotoaccelerate
accelerategrowth
growthBuilding
Buildingaaprofitableprofitablebusinessbusiness

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

81

Next, I will explain Sony Bank’s future management policy.
The chart divides the bank’s growth stages into periods of building a profitablebusiness, setting the stage to accelerate growth and acceleration of growth. We
are currently at the “second launch” stage. In fiscal 2007, deposits reached ¥1trillion, and our basic balance moved into the black. This was the year when weclearly moved to the next stage.
As a result, we are positioning fiscal 2008 as the first year of our “second launch,”
and we aim to take a new step toward realizing our corporate philosophy. At thesame time, we will fully leverage the management base we have established todate to achieve an acceleration of growth.

81Medium-Term Management Targets,Management Policies and Priority Measures
Medium-Term

Medium-Term Priority

Management Targets

Numeric Targets

Measures
Strengthen
Strengthenproducts
products
andandservices
services

Establish
Establishourselves
ourselvesas
as
bank
that
bank thatisisthe
theclear
clear
leaderleaderin
incustomer
customersatisfaction
satisfaction

1.
Maintain our unique position
1.
Maintain our unique position
2.
Earn unswerving customer
2.
Earn unswerving customer
supportsupport3.
Leverage existing customer base3.
Leverage existing customer baseto cultivate new customers
to cultivate new customers

EnhanceEnhanceALM
ALM

Medium-Term1.
Promote ALM through1.
Promote ALM throughoverall balance sheet optimization
overall balance sheet optimization2.
Raise ROE by optimizing
2.
Raise ROE by optimizing
allocation of capital
allocation of capital
3.
Strengthen investment to3.
Strengthen investment toaccelerate growth
accelerate growthManagement Policies
Acceleration
Accelerationof
ofgrowth
growthEstablish
Establishaafirm
firm
presence
presenceas
asan
anassetasset
management
managementbank
bank

Raise
RaiseLevel
LevelofofReliability
Reliability
Raise the level of trust with each
Raise the level of trust with eachstakeholder, building even stronger win–stakeholder, building even stronger win–
win relationships at each level.
win relationships at each level.
1.
Achieve operational
1.
Achieve operational
excellence
excellence2.
Initiate environmental
2.
Initiate environmental
activities
activities
3.
Balance profitability and3.
Balance profitability andsoundnesssoundness
4.
Strengthen management
4.
Strengthen management
control structure
control structureRaiseRaiseefficiency
efficiency
Forgestronger
Forge strongerwin–win
win–winrelationships
relationshipswith
withcustomers
customers
May 26, 2008

◆ FY2007
ROE*

4.5%

Capital adequacy
ratio

9.15%

Retail balance¥1,594.4 billion* Real ROE after adjusting for tax
effects (effective tax rate of 40%).
ROE of 12.4% on a financial
accounting basis.

◆ FY2010
ROE*

More than 8%

Capital adequacy
ratio

Approx. 10%

Retail balance¥2,600 billion

82

Sony Financial Holdings Inc. All Rights Reserved

Next, I will explain Sony Bank’s medium-term management targets, management
policies and priority measures.
Maintaining our customer-first management focus, through our “second launch”
we aim to accelerate our speed of growth, establish a firm presence as an asset
management bank, raise operating efficiency another notch and forge stronger
win–win relationships with our customers. Through these efforts, we aim toestablish ourselves as a bank that is the clear leader in customer satisfaction.
We have formulated three priority measures to help us reach these goals. They
are: 1) strengthen products and services, 2) enhance ALM and 3) raise the levelof reliability. Through these activities, we aim to achieve the numeric targets of:
Fiscal 2007 →ROE
8%

Fiscal 2010

4.5% (after adjustment for tax effects)

Capital adequacy ratio

9.15%

Retail balance¥1,594.4 billion→→

More than

Approx. 10%→¥2,600 billion

82

Responding to Customers’ Asset Management
Needs
 The Sony Bank Hypothesis

 Changing Asset Management(at Establishment)

StylesAlthough individuals are perceived to be riskAlthough individuals are perceived to be riskaverse, if they are given more flexibility andaverse, if they are given more flexibility andallowed to conduct transactions at nearallowed to conduct transactions at nearmarket rates, even if they shoulder somemarket rates, even if they shoulder somedegree of risk they will be interested indegree of risk they will be interested inearning high rates of interest through foreignearning high rates of interest through foreign
currency deposits.
currency deposits.

Emergence of medium- to long-term asset
Emergence of medium- to long-term asset
management styles employing foreign
management styles employing foreign
currency time deposits with high interest
currency time deposits with high interest
rates, as well as short-term asset
rates, as well as short-term asset
management styles targeting foreign
management styles targeting foreignexchange gains on transactions taking
exchange gains on transactions taking
advantage of exchange rate fluctuations
advantage of exchange rate fluctuations

 Transactions possible over the Internet 24
 Transactions possible over the Internet 24
hours a day, 365 days a year
hours a day, 365 days a year
 Transaction rates linked to market rates
 Transaction rates linked to market rates
and shown in real timeand shown in real time One-way foreign exchange commissions
 One-way foreign exchange commissionsof ¥0.25 yen to the U.S. dollarof ¥0.25 yen to the U.S. dollar

Market share

August 2007 introduction of “preferential
August 2007 introduction of “preferential
system on foreign currency deposits,”
system on foreign currency deposits,”
offering preferential rates on foreignoffering preferential rates on foreignexchange commissions according to
exchange commissions according todeposit balance
deposit balanceMay
May2008
2008
Commenced
Commencedforeignforeignexchange
exchange
margintransactions
margin transactions

 Growing Needs
 Desire to hedge foreign exchange Desire to hedge foreign exchange Desire to generate profits denominated Desire to generate profits denominatedin yenin yen Lower exchange commissions
 Lower exchange commissions

Rates set every 0.01 of a yen
Rates set every 0.01 of a yen
Real time shifts from regular foreign
Real time shifts from regular foreign
currency deposits
currency deposits
Extensive information content
Extensive information content

Emergence of FX providers* Market share calculated from the Bank of Japan’s “Domestic
Bank Accounts/Individual Foreign Currency Deposits”
Foreign currency deposits(billions of yen)Sony Bank’s Response

4.5%

5.2%

3.6%

2.5%

1.5%
251.7

0.5%
15.2

48.6

FY2002

FY2003

May 26, 2008

5.7% (As of February 2008)

107.2
FY2004

159.1

148.9

147.9

FY2005

FY2006

FY2007

FY2008Sony Financial Holdings Inc. All Rights Reserved

83

Next, I will explain some of Sony Bank’s customer-first initiatives.
At its establishment, Sony Bank’s hypothesis was that “Although individuals areperceived to be risk-averse, if they are given more flexibility and allowed to
conduct transactions at near-market rates, even if they shoulder some degree ofrisk they will be interested in earning high rates of interest through foreign
currency deposits.” Based on this hypothesis, we provided foreign currency
deposits that allowed transactions to be performed over the Internet 24 hours aday, 365 days a year, established transaction rates linked to market rates andshown in real time, and set one-way foreign exchange commissions of ¥0.25 yen
to the U.S. dollar.
As a result of these offerings, Sony Bank’s share of individual foreign currency
deposits at Japanese banks has grown to 5.7%, as of February 2008.
In addition to steadily proving our hypothesis that there was interest in earninghigh rates of interest through foreign currency deposits, our offerings supported
asset management styles targeting foreign exchange gains through short-termtransactions taking advantage of exchange rate fluctuations.
In line with the growing level of interest in short-term asset management styles,
individuals have grown more interested in foreign exchange margin transactions,which conventional foreign currency deposits are not capable of handling.
In response, we added to our product features by introducing a preferential
system on foreign currency deposits and filled the demand gap by commencing
foreign exchange margin transactions on May 12.
In the future, we will continue to listen sincerely to customers’ needs and strive todevelop products and services that meet those needs as we work to establish
ourselves as the leading bank in terms of customer satisfaction.
83

Product and Service Expansion and a Broader
Base to Generate Revenue and Profits
Sony Bank Securities
Yen deposits
ForeignForeigncurrency
deposits

StocksSony Bank customer
portfolios

ETF

Loans

While developing products to meet
diverse customer needs, we will build
a broader base from which to generate
revenue and profits.

REIT

Net interest income

Investment
trustsNet fees and commissions(Commissions, etc.)
Insurance

Foreignexchange
margintransactions

Credit card
settlement

Non-Interest Income Ratio
More than 30%

19%
15%

2006
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

2007

2008

2009

2010
(Fiscal year)

84

Foreign currency deposits are one example of the stance Sony Bank takes
toward proposing and developing products to meet diverse customer needs. As
we continue this development, we are also building a broader base from which togenerate revenue and profits.
In addition to foreign exchange margin transactions, October 2007 marked thestart of operations of Sony Bank Securities, which offers stocks, exchange tradedfunds and real estate investment trusts.
This development expands Sony Bank’s sources of non-interest income. Overthe medium term, we aim to raise our ratio of non-interest income from 15% atpresent to more than 30%.

84

Balance Between Profitability and Soundness
zImprove ROE

ROE of morethan 8%ROE (after adjustment for tax effects)

4.5%

RaiseRaiseefficiency
efficiencythroughthroughbusinessbusiness
expansion
expansion

2.3%

Improve
Improveallocation
allocationof
ofcapital
capitalImprove
non-interest
incomeImprove non-interest incomeratio
ratio

11.49%

Capitaladequacy ratioof approximately
10%

9.15%
Capital adequacy ratio

zMaintain Capital Adequacy
Ratio
Increase
Increasecapital
capitalasasand
andwhenwhen
appropriate,
in
line
with
appropriate, in line withacceleration
accelerationofofgrowth
growth

Tier2
Tier1

Capital(Billions of yen)

374

374

2006

2007

Employ
Employsubordinate
subordinate(Tier(Tier2)2)capital
capitalMay 26, 2008

2008

2009

2010 (Fiscal year)

Sony Financial Holdings Inc. All Rights Reserved

85

Finally, I will explain our future growth in terms of the balance between
profitability and soundness.
In terms of soundness, our basic policy is to maintain a capital adequacy ratio ofaround 10%, which we will achieve by adding capital as and when appropriate as
our growth accelerates. In the future, we plan to begin employing subordinate, orTier 2, capital.
In terms of profitability, we will raise our efficiency through business expansion,
improve our allocation of capital and improve our non-interest income ratio.
Through these efforts, we aim to raise ROE over the medium term to more than8%.

85Group Synergy

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

86(Change speakers)
Now, I would like to turn back to SFH for an explanation of group synergy.

86

Group Synergy Foster steady contribution to revenue and profits by cross-selling automobile insurance and mortgage loans through theLifeplanner channel
 Enjoy mutual benefits from offering fire insurance, group credit insurance and annuities
 Benefit from the December 2007 lifting of the ban on bank counter sales by expanding intra-group product offerings
 Continue to explore Group synergies in addition to cross-selling
Automobile
Automobileinsurance
insurance(via(viaLifeplanners)
Lifeplanners)
2,000

New policy premiums (Millions of yen)
Cross-selling share (%)

Mortgage
Mortgageloans
loans
(via
(viaLifeplanners)
Lifeplanners)
20.0%

New financing (Millions of yen)
Cross-selling share (%)

30,000

15.0%

15.0%

25,000
1,500

10.0%

(Millions of yen)

5.0%

1,000

0.0%
-5.0%

500

10.0%
20,000 of yen)
(Millions

5.0%
0.0%

15,000-5.0%

10,000-10.0%-15.0%

0-20.0%

FY2007

FY2008FY200920.0%-10.0%
5,000-15.0%

0-20.0%
FY2007FY2010FY2008FY2009FY2010Note: Figures for FY2008 onward are targets.
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

87

In terms of group synergy, Sony Life’s Lifeplanners are generating steady crossselling results by offering Sony Assurance automobile insurance and Sony Bank
mortgage loans.
In January, Sony Life received permission to sell mortgage loans on behalf ofSony Bank. The results have exceeded our expectations, and we believe thisbusiness will contribute to further Group synergies.
In fiscal 2008, we expect such synergies to continue contributing to Grouprevenues and profit, and we will pursue cross-selling over the medium term. We
will also aggressively pursue other mutually beneficial products and services.

87Entering New Fields of BusinessSony Life: Moving toward establishment of joint venture annuities subsidiary with AEGON
In 2007, established AEGON Sony Life Planning as preparatory company
In May 2008, SFH resolved to accept third-party allocation to raise Sony
Life’s capital ¥10.0 billion
Subsidiary to be capitalized initially at ¥20.0 billion (50:50), including capitalreserveSony Bank: Securities subsidiary commenced operations in October 2007
Began accepting account applications: October 1, 2007
Began handling Japanese stock transactions: October 15, 2007
Accounts as of March 31, 2008: 11,883
Customer assets as of March 31, 2008: ¥3,899 million
Established with aim of creating new securities business through tie-up between bank andsecurities company
Creating diverse lineup of asset management products that banks cannot handleAiming for profitability in FY2010

Other
Continuing to explore possibility of establishing a life insurance subsidiary in Greater China
May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

88

Let us look at new business.
First, Sony Life is pursuing the establishment of an annuities joint venturesubsidiary with AEGON.
In 2007, Sony Bank established a securities subsidiary, which should support its
steady growth.
We are also moving ahead with preparations aiming to form a life insurance
subsidiary in Greater China.
We believe that these moves will help raise our corporate value.

88Capital and Dividend Policies
 Appropriate assessment of the risks that the Group faces and maintenance of adequate capitalcorresponding to that risk
 In principle the Company will ensure stable ongoing dividends to shareholders, taking into considerationindustry trends and the Group’s operating performance, as long as our ongoing soundness as a financial
institution is ensured

Steady dividend payments since FY2004

Net income

Dividends

Forecast dividends of ¥3,000 per share for FY2007

Additional capital(Raised by newly
issued shares through
IPO)

Risks resulting fromentering new
businesses

Broad-based capital

Amount of risk

External
fund-raising

May 26, 2008

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89

Turning now to our capital and dividend policies, as in the past we will fund ouroperations internally, through profits, as well as through external sources of funds,
to maintain our soundness as a financial institution. We will allocate this capitalefficiently to enable stable dividend payments. We expect to pay a dividend of¥3,000 per share for fiscal 2007.

89

Consolidated Operating Performance
Forecast for FY2008(Billions of yen; line item amounts are truncated below ¥100 million; changes are rounded) Additional Information

We expect ordinary revenues to continue

FY2008FY2008 Percentage increasing, owing to the robust expansionof each business. However, ordinary profit
is expected to decrease, for the reasonschangeFY2004

FY2005

FY2006

FY2007(Interim
forecast)(Full-year
forecast)

Consolidated ordinary revenues

653.2

758.7

759.2

822.1

430.0

884.0

+ 7.5%Of which, life insurance business
Of which, non-life insurance business
Of which, banking business

604.0

696.4

689.5

741.3

386.0

793.0

+ 7.0%

38.1

45.7

51.0

55.6

30.0

59.8

+ 7.5% ■ Non-life insurance business

11.3

17.2

19.4

25.9

14.4

30.7

+ 18.5% The operating expense ratio is expected toConsolidated ordinary profit

12.2

25.3

18.3

44.5

18.0

37.0

(16.9%)Of which, life insurance business
Of which, non-life insurance business
Of which, banking business

17.0

24.3

14.8

39.0

17.0

34.0

(13.0%)

(2.8)

(0.7)

2.0

2.8

0.6

1.3

(53.9%)

(1.6)

2.2

1.3

2.4

0.5

1.3

(45.9%)

Consolidated net income

6.3

11.5

10.0

24.2

10.0

21.0

(13.4%)

Consolidated Ordinary Revenues(Billions of yen)

Banking business
Non-life insurance businessLife insurance business

758.7

759.2

described below.
■ Life insurance business
The yield on general account investments
is expected to fall, compared with FY2008.

rise slightly, owing to higher system-related
expenses.
■ Banking business
Expenses are expected to increase:system-related and other expenses are
expected to increase, Sony Bank Securities
is expected to operate in the red initially,
and goodwill will be amortized, among
other factors.

Consolidated Ordinary Profit

884.0(Billions of yen)

822.1

Banking business
Non-life insurance businessLife insurance business

37.0

44.5

653.2
25.3
(Forecast)May 26, 2008

12.2

18.3

(Forecast)Sony Financial Holdings Inc. All Rights Reserved

90

Next, I will explain the Sony Financial Holdings Group’s consolidated
results forecast for the fiscal year ending March 31, 2009, which wereannounced on May 14.
For the fiscal year ending March 31, 2009, we expect consolidated
ordinary revenues of ¥884.0 billion, up 7.5% from the preceding fiscal year,
owing to the steady expansion of each business.
In the life insurance business, we assume that the yield on investment ofgeneral account assets will be lower than for the preceding fiscal year, andthat system-related expenses will increase in the non-life insurance andbanking businesses. For such reasons as these, we expect consolidated
ordinary profit to decrease 16.9%, to ¥37.0 billion, and forecast a 13.4%
decline in consolidated net income, to ¥21.0 billion.

90Medium-Term Management Targets (FY2010)
Key Management Benchmarks
 Consolidated ordinary revenues, consolidated ordinary profit and consolidated net income
 Consolidated adjusted ROESony Life Embedded Value andSony Life Embedded Value andAdjusted ROE
Adjusted ROESony Assurance Net Income andSony Assurance Net Income andAdjusted ROE
Adjusted ROE

Target EV of ¥1–1.1 Trillion by FY2010

Aim to Maintain Adjusted ROE of 10%
or Higher

Sony Bank Net Income and ROESony Bank Net Income and ROE

Target ROE of 8% or More(Billions of yen)(Billionsof yen)(Billionsof yen)May 26, 2008

(FY)

(FY)

(FY)
Source: Sony Life
Notes: Calculation of Adjusted ROE
Numerator: Net increase in EV plus dividend
Denominator: The average of (EV at previous fiscal year-end — dividend +EV at current fiscal year-end）

Source: Sony Assurance
Notes: Calculation of Adjusted ROE
Numerator: Net income plus an increase in provision for special
catastrophe reserves (after-tax) and an increase in reserve for pricefluctuations (after-tax)
Denominator: The average of (shareholders’ equity or net assets + special
catastrophe reserve and reserve for price fluctuations (after-tax)) as of theprevious fiscal year-end and the current fiscal year-end

Source: Sony Bank
Notes：Calculation of ROE:
Numerator: Net income
Denominator: The average of shareholders’ equity or net assets as of theprevious fiscal year-end and the current fiscal year-end

Sony Financial Holdings Inc. All Rights Reserved

91

We aim to raise corporate value through a combination of sustaining the
growth of each company, achieving Group synergies and moving into new
businesses.
Each of the three companies has already explained its medium-termtargets for fiscal 2010.
By expanding its operations, Sony Life aims to achieve embedded valueof between ¥1 trillion and ¥1.1 trillion.
Following an investment in operating expenses, Sony Assurance expects
to have in place a structure that will allow it to generate adjusted ROE ofmore than 10%.
Sony Bank, through its “second launch,” is investing in growth. Once thisinvestment is complete, the bank targets ROE of more than 8%.
This concludes our presentation.

91

Thank you!

May 26, 2008

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92

92

APPENDIX

May 26, 2008

Sony Financial Holdings Inc. All Rights Reserved

93

Appendix93Comparison with Sony Corporation’s
Consolidated Financial Services Segment(Principal Differences between Japan GAAP and U.S. GAAP)* “SFH” refers to “Sony Financial Holdings Inc.”
Financial Services Segment of Sony
Corporation, Consolidated(U.S. GAAP)*SFH Consolidated(Japan GAAP)

Treatment of new policy acquisition
costs(Concerns the life insurance business andthe medical care insurance portion of the
non-life insurance business)

The portion of costs related to acquiring new
policies or changes in these costs that is deemed
recoverable is deferred.

Costs are treated as expenses during the period
in which they are incurred.

Method of calculating policy reserves（insurance policy liabilities)(Concerns the life insurance business andthe medical care insurance portion of the
non-life insurance business)

Under U.S. GAAP, calculated according to the net
level premium method using insurance actuarial
figures.

Calculated according to methods approved byregulatory bodies. Computed with an emphasis on
the early accumulation of policy reserves from thestandpoint of protecting policyholders.

Treatment of the market value of
convertible bonds held
(Concerns the life insurance business)

Changes in the fair value (changes in the market
value) of so-called “hybrid financial products,”
which include derivatives, are posted to theincome statement as profits or losses.

Changes in fair value are posted to the balance
sheets as increases or decreases in net assets.

Notes:
1. The above-mentioned differences between U.S. GAAP and Japan GAAP are deemed material to SFH’s consolidated ordinary profit for FY2007.
2. The scope of Sony Corporation’s consolidated Financial Services segment and SFH’s consolidation differ, as follows:• Sony Corporation’s consolidated Financial Services segment: Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank Inc., Sony FinanceInternational Inc., others• SFH consolidated: Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank Inc., Sony Bank Securities Inc., Sony Life Insurance (Philippines)
Corporation
3.Under U.S. GAAP, the book value at the date of conversion to shares is used as the market value of shares converted from convertible bonds (CBs),
whereas under Japanese accounting principles the book value is carried as the CB acquisition price even after conversion. Consequently, total gains orlosses on the sales of shares converted from CBs (differences between selling prices and book values), and total impairment losses (differences between
market value and book value)—of stocks included in the scope of impairment loss accounting—differ depending on the use of U.S. or Japanese GAAP.

May 26, 2008

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94

I will explain the major differences between the accounting standards employed by the SFH Group and those
employed by Sony Corporation, our parent company, when accounting for the Financial Services segment in
its consolidated accounts.
First, as Note 2 indicates, the scope of consolidation used by Sony Corporation's consolidated Financial
Services segment and SFH's consolidation are different.
Next, we consider there to be three significant differences mainly in the life insurance business at SFH's
consolidated ordinary profit level for the year ended March 31, 2008.
The first involves the treatment of costs to acquire new policies. Under U.S. GAAP, these costs are deferred
as long as they are recoverable generally over the premium-paying period of the related insurance policies,
whereas under Japan GAAP these costs are charged to income when incurred.
The second involves the method of calculating policy reserves. Under U.S. GAAP, these reserves arecalculated according to the net level premium method with certain adjustments of actuarial assumptions for
U.S. GAAP purposes. Under Japan GAAP, however, policy reserves are calculated according to methods
approved by Japan's Financial Services Agency, which place an emphasis on the early accumulation of policy
reserves from the standpoint of protecting policy holders.
In these two areas, the Japanese statutory requirements are more conservative than the U.S. accounting
standards, in terms of profits and losses, for cases that have an upward-trending policy amount in force likeour life insurance business.
The third area concerns the treatment of convertible bonds, or CBs, held by our life insurance business.
Under U.S. accounting standards, changes in market value are charged to income, whereas under Japanese
accounting standards without charging to income these amounts are recorded on the balance sheet aschanges in net assets.
Let me add supplemental explanation on accounting treatments of shares converted from CBs. As Note 3
indicates, under U.S. accounting treatments the book value at the date of conversion to shares is recognized
as the market value of shares that are converted from CBs, whereas under Japanese accounting treatments
the book value is carried at the CB acquisition price even after conversion. Consequently, as the book value
used for computing gains/losses on sales and impairment losses of those shares are different depending on
the use of either accounting treatments, the amount of gains/losses on sales and impairment losses differ as
well.
In general, U.S. accounting treatments tend to record higher book value of shares as a result of recording
valuation gains when stock markets are rising, comparing to Japanese accounting treatments.
Conversely, when stock markets are declining, I understand that gains on sales of the shares are lesser andlosses on sales or impairment losses are larger under U.S. accounting treatments.
These are the principal differences between the two accounting standards, and I encourage you to take thesedifferences into consideration for your analysis.

94

Contact:
SFH

May 26, 2008

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

Sony Financial Holdings Inc. All Rights Reserved

95

Contacts

95