Presentation Material

Consolidated Financial Results
for the Six Months Ended September 30, 2013
andSony Life’s
Market Consistent Embedded Valueas of September 30, 2013

Sony Financial Holdings Inc.
November 15, 2013
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Content
 Consolidated Operating Results for the Six Months Ended September 30, 2013

P.3

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

P.30

 Sony Life’s MCEV and Risk Amount Based on Economic Value

P.32

as of September 30, 2013
 Appendix

P.35

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

Sony Financial Holdings Inc. All Rights Reserved

Content2

Consolidated Operating Results for the
Six Months Ended September 30, 2013

Sony Financial Holdings Inc. All Rights Reserved

3

Highlights of Consolidated Operating Performancefor the Six Months Ended September 30, 2013 (1)Consolidated ordinary revenues
Consolidated ordinary profit

610.7
547.0

+11.7%

FY13.1H

ChangeLife
insurancebusiness

Ordinary revenues

489.0

549.2

+60.1

+12.3%

Ordinary profit

30.7

30.2

(0.5)

(1.7%)

Non-life
insurancebusiness

Ordinary revenues

42.3

44.9

+2.5

+6.0%

Ordinary profit

0.4

2.8

+2.4

+519.9%Bankingbusiness

Ordinary revenues

16.8

17.9

+1.1

+6.9%

Ordinary profit

1.8

3.5

+1.7

+90.4%

Intersegment
adjustments*

Ordinary revenues

(1.2)

(1.3)

(0.1)

－

0.0

0.1

+0.0

+44.0%

Ordinary revenues

547.0

610.7

+63.7

+11.7%

Ordinary profit

33.1

36.8

+3.6

+10.9%Net income

19.7

20.8

+1.1

+5.9%

13.3.3113.9.30

Total assets

8,096.1

8,361.3+265.2+3.3%

Net assets

435.4

438.0

+2.6

+0.6%

Consolidated+10.9%

FY12.1H(Billions of yen)

36.8

33.1

Ordinary profit(Billions of yen)(Billions of yen)

Consolidated

Change from 13.3.31*Ordinary profit in “Intersegment adjustments” is mainly from SFH.
*Comprehensive income: FY12.1H: ¥32.0 billion, FY13.1H ¥13.5 billion

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

Sony Financial Holdings Inc. All Rights Reserved

4

During the six months ended September 30, 2013, consolidated ordinary
revenues grew 11.7% compared with the same period of the previous fiscal year,to ¥610.7 billion, owing to increases in ordinary revenues from the all businesses:
life insurance, non-life insurance and banking.
Consolidated ordinary profit increased 10.9% year on year, to ¥36.8 billion. By
business segment, ordinary profit from the non-life insurance and banking
businesses increased, whereas ordinary profit from the life insurance businessremained at the same levels.
Consolidated net income was up 5.9% year on year, to ¥20.8 billion. This ismainly because the banking business recorded profit for the same period of theprevious fiscal year, due to the tax effect of recording deferred tax assets on thetransfer of all shares of Sony Bank Securities, a wholly owned subsidiary of SonyBank.
Total net assets remained at the same level compared with March 31, 2013,
amounting to ¥438.0 billion as of September 30, 2013, owing to a decrease in net
unrealized gains on other securities, net of taxes led by a rising interest rates andthe dividend payout to shareholders.

Highlights of Consolidated Operating Performancefor the Six Months Ended September 30, 2013 (2) Life Insurance Business: Ordinary revenues increased compared with the same period of the previous

fiscal year mainly because an increase in the investment income due to higher gains on separate
accounts, net resulting from the market recovery. Furthermore, an increase in income from insurance
premiums also contributed to the rise in ordinary revenues. The rise in income from insurance premiums
was associated with steady growth in policy amount in force, despite a decrease in lump-sum payment
insurance premiums affected by the revision of Sony Life’s insurance premium rates on some of its
products. Ordinary profit remained at the same levels as during the same period of the previous fiscal
year. This is because the positive effects stemming from a recovery from negative spread into positive
and a decrease in provision of policy reserves for minimum guarantees for variable life insurance wereoffset by the negative impact from an increase in provision of policy reserves resulting from the revisionof discount rate used for calculating policy reserves.
 Non-life Insurance Business：Ordinary revenues increased year on year owing to an increase in net

premiums written primarily for its mainstay automobile insurance. Ordinary profit increased year on year
due to a decline in the loss ratio mainly led by a lower car accident ratio owing to the revision of premium
rates for automobile insurance and the introduction of a new bonus-malus system (non-fleet driver rating
system), in addition to a decline in the expense ratio.
Banking Business：Ordinary revenues increased year on year due to higher gains on foreign exchangetransactions stemming from customers’ active foreign currency trading and a rise in interest income onloans led by the growing balance of mortgage loans. Ordinary profit expanded year on year owing mainly
to an improvement in net gains on bond-dealing transactions.

 Consolidated ordinary revenues increased 11.7% year on year, to ¥610.7 billion owing to increases inordinary revenues from all businesses: life insurance, non-life insurance and banking. Consolidated
ordinary profit increased 10.9% year on year, to ¥36.8 billion. By business segment, ordinary profit from
non-life insurance and banking businesses increased, whereas the life insurance remained at the samelevels. Consolidated net income was up 5.9% year on year, to ¥20.8 billion.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

Here is highlights of consolidated operating performance.

5

Highlights of Operating PerformanceSony Life (Non-consolidated)
Ordinary revenues

Ordinary profit+12.4%

FY12.1H

FY13.1H

488.9

549.5

+60.5

Income from insurance premiums

428.8

437.9

+9.1

+2.1%

Investment income

56.0

107.6

+51.6

+92.3%

Interest income and dividends

52.1

58.9

+6.7

+13.0%

Income from monetary trusts, net

2.6

2.6

+0.0

+2.0%

Gains on sale of securities

1.1

0.0

(1.1)

(99.9%)(Billions of yen)

549.5

Ordinary revenues

488.9

31.3

(0.3%)(Billions of yen)

◆ Ordinary revenues increased year on year.
Ordinary profit remained at the same levels.
◆ A rise in income from insurance premiums was associatedwith steady growth in policy amount in force, despite adecrease in lump-sum payment insurance affected by therevision of Sony Life’s insurance premium rates on some ofits products.
◆ Investment income increased due to higher gains on
separate accounts, net resulting from the market recovery.
◆ Ordinary profit remained at the same levels. This is because
the positive effects stemming from a recovery from negative
spread into positive and a decrease in provision of policy
reserves for minimum guarantees for variable life insurance
were offset by the negative impact from an increase inprovision of policy reserves resulting from the revision of
discount rate used for calculating policy reserves.

+12.4%

－

45.8

+45.8

－

457.5

518.2

+60.6

+13.3%

Insurance claims and other payments

135.3

155.0

+19.7

+14.6%

Provision for policy reserves and others

242.0

294.0

+51.9

+21.5%

Investment expenses

18.7

4.0

(14.6)(78.2%)(100.0%)Gains on separate accounts, net
Ordinary expenses

31.3

ChangeLosses on separate accounts, net
Operating expenses
Ordinary expenses
Net income(Billions of yen)

13.5

－

(13.5)

53.6

55.8

+2.2

+4.1%

31.3

31.3

(0.0)

(0.3%)(0.7)(3.8%)

18.4

17.6

13.3.3113.9.30

Change from 13.3.31

Securities

5,211.5

5,564.7+353.1

Policy reserves

5,472.9

5,766.8+293.9+5.4%

Total net assets

342.3

341.1

(1.1)

(0.3%)(9.6%)Net unrealized gains on other securities,
net of taxes
Total assets
Separate account assets

+6.8%

80.2

72.5

(7.6)

5,952.7

6,247.4+294.7

+5.0%

550.6

601.5

+50.9

+9.3%

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

Sony Financial Holdings Inc. All Rights Reserved

6

Highlights of Sony Life’s operating performance (non-consolidated basis) are
shown here.
Sony Life’s ordinary revenues increased 12.4% year on year, to ¥549.5 billion.
Of this amount, income from insurance premiums grew 2.1% from the same
period of the previous fiscal year, to ¥437.9 billion, associated with steady growthin policy amount in force, despite a decrease in lump-sum payment premiums
affected by the revision of Sony Life’s insurance premium rates on some of its
products.
Investment income increased 92.3% year on year, to ¥107.6 billion, due to higher
gains on separate accounts, net resulting from the market recovery.
Ordinary profit remained at the same levels as during the same period of theprevious fiscal year, to ¥31.3 billion. This is because the positive effects
stemming from a recovery from negative spread into positive and a decrease inprovision of policy reserves for minimum guarantees for variable life insurance
were offset by the negative impact from an increase in provision of policy
reserves resulting from the revision of discount rate used for calculating policy
reserves.

Overview of PerformanceSony Life (Non-consolidated)(Billions of yen)

FY12.1H

FY13.1H<Reasons for changes>

ChangeLapse and surrender rate

2.65%

2.32%

Policy amount in force

36,706.8

38,357.1+4.5%◆ Decreased mainly in family income
insurance. Moreover, new policy
amount decreased mainly in interest
rate-sensitive whole life insurance,
reflecting the revision of insurance
premium rates.

Annualized premiums from new policies

32.1

30.1

(6.2%)◆ Decreased mainly in term-life insurance.

Of which, third-sector products

8.1

6.9

(14.5%)

648.5

681.4

+5.1%

153.1

165.0

+7.8%

New policy amount

2,013.9

1,874.8(6.9%)

956.1

876.4

(8.3%)(0.33pt)

Lapse and surrender amount

Annualized premiums from insurance in force
Of which, third-sector products(Billions of yen)

FY12.1H

FY13.1H

ChangeGains from investment, net (General account)

50.7

57.7

+13.7%

Core profit

33.3

33.5

+0.8%

Positive (Negative) spread

(0.4)

3.3

Non-consolidated solvency margin ratio

13.3.3113.9.30

2,281.8%

2,325.0%－
Changefrom 13.3.31+43.2pt◆ Decreased mainly in educational
endowment insurance and interest
rate-sensitive whole life insurance, due
to the revision of insurance premium
rates. In the third-sector insurance
products, sale of lump-sum payment
whole life nursing-care insurance
decreased.
◆ Core profit remained at the same levels.
This is because the positive effects
stemming from a recovery fromnegative spread into positive and adecrease in provision of policy reserves
for minimum guarantees for variable life
insurance were offset by the negative
impact from an increase in provision ofpolicy reserves resulting from therevision of discount rate used for
calculating policy reserves.

Notes:
1. Figures for new policy amount, lapse and surrender amount, lapse and surrender rate, policy amount in force,
annualized premiums from new policies and annualized premiums from insurance in force are calculated as
the total of individual life insurance and individual annuities.
2 . The lapse and surrender rate shows the ratio derived by dividing the amount of lapses and surrenders, notadjusted for policy amount decreases, increases, and reinstatements, by the policy amount in force at the
beginning of the fiscal year.
3. The plus amount in negative spread indicates positive spread.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

Here is an overview Sony Life’s performance (non-consolidated basis).

7

Operating Performance :Sony Life (Non-consolidated) (1)
Number and Amount of New Policies[ Reference]
4Q(3M) Number and Amount of New Policies(Individual Life Insurance + Individual Annuities)
New policy amount

Number of new policies

New policy amount

Number of new policies(Thousands of policies)(Thousands of policies)(Trillions of yen) 283

274

180
(Trillions of yen)

(10.1%)

246

3.0+31.9%
1.5

1.23
137
2.0

2.05

2.01

1.87

1.0

0.96

137
0.97

+26.9%(6.9%)

0.5
1.0

0

0
Line item amounts are truncated below ¥10 billion; numbers of policies aretruncated below 1,000 policies; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

8(Left-hand graph)
New policy amount for the total of individual life insurance and individual
annuities for the six months ended September 30, 2013 (FY13.1H) decreased
6.9% year on year, to ¥1,874.8 billion, due to the revision of insurance premium
rates. By product type, sales of family income insurance and interest ratesensitive whole life insurance were decreased.
The number of new policies decreased 10.1% year on year, to 246 thousand
policies.
(Right-hand graph)
Next, we show you an impact of the revision of insurance premium rates,
compared with last fourth quarter ended March 31, 2013 (FY12.4Q). Insurance
premium rates in some of Sony Life’s products were revised reflecting therevision of discount rate used for calculating policy reserves in April 2013.
Consequently, new policy amount for FY12.4Q increased 26.9% year on year
associated with strong last-minute demand led by the upcoming revision of
insurance premium rates.
Accordingly, new policy amount for FY13.1H decreased year on year.

Operating Performance :Sony Life (Non-consolidated) (2)Quarterly Trend on New Policy Amount(Billions of yen)

New policy amountLine item amounts are truncated below ¥100 million.

Sony Financial Holdings Inc. All Rights Reserved

9Here is the quarterly trend on new policy amount.
New policy amount for this first quarter (FY13.1Q) and this second quarter(FY13.2Q) decreased year on year, influenced by the revision of insurance
premium rates.
New policy amount for FY13.1Q decreased only 3.1% year on year, to ¥1,033.3
billion. This is because some of new policies which were last- minute contracted
in the last forth quarter (FY12.4Q) were counted in new policy amount in
FY13.1Q due to the revision of insurance premium rates in some of Sony Life’s
products in April 2013. Moreover, sales of interest rate-sensitive whole life
insurance increased associated with strong last-minute demand led by its
premium revision in May 2013.
New policy amount for FY13.2Q decreased 11.2% year on year, to ¥841.4 billion
since these positive factors in FY13.1Q disappeared.

Operating Performance :Sony Life (Non-consolidated) (3)Annualized Premiums from New Policies(Individual Life Insurance + Individual Annuities)
Annualized premiums from new policies

Of which, third-sector(Billions of yen)

[ Reference]
4Q(3M) Annualized Premiums from New Policies
Annualized premiums from new policies
Of which, third-sector(Billions of yen)

22.0
+24.8%

33.2

32.1

30.1

17.2

17.6

(6.2%)+29.1%

8.1

8.1(14.5%)

6.9

3.9

4.0

5.2

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

Sony Financial Holdings Inc. All Rights Reserved

10(Left-hand graph)
Annualized premiums from new policies for the six months ended September 30,
2013 (FY13.1H) decreased 6.2% year on year, to ¥30.1 billion due to the revisionof insurance premium rates as did new policy amount. The decrease was due
mainly to a decline in sales of educational endowment insurance and interest
rate-sensitive whole life insurance.
Of which, the figure for third-sector insurance products was down 14.5% year on
year, to ¥6.9 billion due to a decrease in sale of lump-sum payment whole life
nursing-care insurance.
(Right-hand graph)
Annualized premiums from new policies for the last fourth quarter (FY12.4Q)
increased year on year for the same reason as new policy amount had.
Sony Life’s quarterly trend on annualized premiums from new policies is updatedon page 40.

Operating Performance :Sony Life (Non-consolidated) (4)Number and Amount of Policies in Force
Policy amount in force

Annualized Premiums from Insurance in Force(Individual Life Insurance + Individual Annuities)(Individual Life Insurance + Individual Annuities)
Number of policies in force

Annualized premiums from insurance in force

Of which, third-sector(Millions of policies)(Trillions of yen)
50

5.82

+5.9%

6.16

6.04

(Billions of yen)

+2.0%
6

40

36.7

+4.5%

648.5

+5.1%

+1.7%

38.3

37.7

681.4

669.9

5

+1.5%
4

30

3
20
2

+7.8%
10
1

0

153.1

158.6

+4.0%

165.0

0

12.9.30

13.3.3113.9.30

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

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

Sony Financial Holdings Inc. All Rights Reserved

11Sony Life’s policy amount in force which reflects new policy amount and lapse
and surrender amount, is shown here.
(Left-hand graph)
Policy amount in force for the total of individual life insurance and individual
annuities increased 4.5% year on year, to 38.3 trillion due to an increase in newpolicies and a decline in lapse and surrender rate.
The number of policies in force increased 5.9% year on year, to ¥6.16 million
policies.
(Right-hand graph)
Annualized premiums from insurance in force increased 5.1% year on year, to¥681.4 billion.
Of this amount, the figure for third-sector products was up 7.8% year on year, to¥165.0 billion.

Operating Performance :Sony Life (Non-consolidated) (5)Lapse and Surrender Rate*(Individual Life Insurance + Individual Annuities)
Lapse and surrender rate (Annual)

Lapse and surrender rate (1Ｈ)

(%)

5.93
5.31

(0.33ｐｔ)

2.95

2.65

2.32

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

Sony Financial Holdings Inc. All Rights Reserved

The lapse and surrender rate for the six months ended September 30, 2013
decreased 0.33 percentage point year on year, to 2.32%, due to thelowering lapse and surrender rates primarily for term-life insurance.

12

Operating Performance :Sony Life (Non-consolidated) (6)Income from Insurance Premiums

428.8 +2.1%

Interest Income and Dividends

437.9(Billions of yen)

58.9

395.7

+13.0%

52.1
47.4

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

Sony Financial Holdings Inc. All Rights Reserved

13(Left-hand graph)
Income from insurance premiums increased 2.1% year on year, to ¥437.9 billion,
along with a steady growth in policy amount in force, despite a decrease in lumpsum payment insurance premiums affected by the revision of insurance premium
rates.
(Right-hand graph)
Interest income and dividends was up 13.0% year on year, to ¥58.9 billion, due toan expansion of investment assets along with business expansion.

Operating Performance :Sony Life (Non-consolidated) (7)Core Profit

Ordinary Profit(Billions of yen) *Included ¥3.6 billion of reversal ofreserve for outstanding claims related
to the Great East Japan Earthquake.

31.6*

33.3

(Billions of yen)

33.5
+0.8%

31.3

31.3
28.5

(0.3%)(Reference) Main differences from Core Profit(Reference) Impact on core profit

FY11.1H(Billions of yen)

FY11.1H FY12.1H FY13.1H
(1.9)
(0.4)
3.3
(6.0)
－
－

Positive (Negative) spread
Effects by the revision of policy reserve discount rate
Provision of policy reserves for minimum guarantees forvariable life insurance in the general account assets(4.8)*The plus amount in negative spread indicates positive spread.

(4.0)

(1.2)

(Billions of yen)

FY12.1H

FY13.1H

Capital gains (losses)

(1.1)

0.1

(0.0)

Provision of contingency reserve

(1.7)

(1.9)

(2.1)

*“Provision of policy reserves for minimum guarantees for variable life insurance
in the general account assets” and “Provision of contingency reserve” aredescribed as negative amount.
Line item amounts are truncated below ¥100 million; percentage figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

14(Left-hand graph)Core profit remained at the same levels as during the same period of theprevious fiscal year, to ¥33.5 billion. This is because the positive effects
stemming from a recovery from negative spread into positive and a decrease inprovision of policy reserves for minimum guarantees for variable life insurance
were offset by the negative impact from an increase in provision of policy
reserves resulting from the revision of discount rate used for calculating policy
reserves.
(Right-hand graph)
Ordinary profit remained at the same levels as during the same period of theprevious fiscal year.

Operating Performance :Sony Life (Non-consolidated) (8)Number of Lifeplanner Sales Employees+40(Number)

4,125
[110]
(2)

0

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

Sony Financial Holdings Inc. All Rights Reserved

The number of Lifeplanner sales employees as of September 30, 2013, was4,125, up 40 from September 30, 2012 and down 2 from June 30, 2013.

15

Operating Performance :Sony Life (Non-consolidated) (9)Breakdown of General Account Assets
13.3.3113.9.30

Amount%Amount

%4,561.0

84.4%

4,848.3

85.9%

Japanese stocks

31.1

0.6%

36.0

0.6%

Foreign securities

62.0

1.1%

69.6

1.2%

Foreign stocks

25.4

0.5%

26.3

0.5%

Monetary trusts

306.1

5.7%

302.5

5.4%

(Billions of yen)Japanese governmentand corporate bonds<Asset management review>
On the asset side, we lengthened the duration of
securities held to match the liability characteristics
of insurance policies with long-term maturities withthe aim of reducing interest rate risk.
Japanese government and corporate bonds:
Continue to accumulate ultralong-term bonds in FY13.
<Bond duration>
Mar. 31, 2012 19.2 years
Mar. 31, 2013 19.9 years
Sep. 30, 2013

Policy loans

145.0

2.7%

149.7

2.7%

Real estate

70.3

1.3%

67.3

1.2%

Cash and call loans

103.3

1.9%

45.4

0.8%

Others

97.7

1.8%

100.4

1.8%

5,402.1

100.0%

5,645.9

100.0%

Total

19.7years■ Investment in the monetary trusts is mainly into Japanese
government and corporate bonds.
■ The holding ratio on the real status, of Japanese
government and corporate bonds including those invested in monetary trusts in the general account assets:
As of Sep. 30, 2013: 91.2%, (As of Mar. 31, 2013: 90.1%)

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

Sony Financial Holdings Inc. All Rights Reserved

16

Here is a breakdown of Sony Life’s general account assets as of September 30,
2013, compared with March 31, 2013.
As Sony Life continued its investment in ultralong-term bonds, the holding ratioon the real status, of Japanese government and corporate bonds including thoseinvested in monetary trusts rose to 91.2% as of September 30, 2013.
Going forward, Sony Life will invest most of new money acquired from income
from insurance premiums in ultralong-term bonds in order to properly control
interest rate risk on insurance liabilities.

Operating Performance :Sony Life (Non-consolidated) (10)Non-consolidated solvency Margin Ratio(%)+43.2pt

2,325.0

2,281.8
1,980.40Sony Financial Holdings Inc. All Rights Reserved

17

As of September 30, 2013 , Sony Life’s non-consolidated solvency margin ratio
was 2,325.0%, up 43.2 percentage points from March 31, 2013, remaining at ahigh level.

Operating Performance:
AEGON Sony Life Insurance*AEGON Sony Life Insurance sells individual variable annuities.

Number and Amount of Policies in Force

Number and Amount of New Policies
New policy amount

Number of new policies[ ](Hundreds of policies)(Billions of yen)

Policy amount in force

Number of policies in force[ ](Hundreds of policies)(Billions of yen)

*AEGON Sony Life Insurance is an equity method company, 50-50 joint venture established by Sony Life and AEGON Group.
(Billions of yen)

FY12.1H

FY13.1H

Change(Reference) FY12

Ordinary revenues

18.3

85.9

+67.5

+368.4%

58.6

Ordinary profit (losses)

(1.1)

(1.6)

(0.5)

－

(2.4)

Net income (losses)

(1.2)

(1.7)

(0.5)

－

(2.5)

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

Sony Financial Holdings Inc. All Rights Reserved

AEGON Sony Life Insurance, which sells individual variable annuities, has
steadily expanded its business volume.

18

Highlights of Operating PerformanceSony Assurance
Ordinary revenues

Ordinary profit

FY12.1H

FY13.1H

42.3

44.9

Underwriting income

41.8

44.2

+2.4

+5.8%

Investment income

0.4

0.5

+0.1

+22.7%

41.9

42.0

+0.1

+0.3%

Underwriting expenses

31.7

31.7

+0.0

+0.0%

Investment expenses

0.0

0.0

(0.0)

(81.4%)

Operating, general andadministrative expenses

10.0

10.2

+0.1

+1.3%

Ordinary profit

0.4

2.8

+2.4

+520.0%Net income

0.2

1.8

+1.6

+669.8%(Billions of yen)

42.3

+6.0%

44.9

Ordinary revenues

Ordinary expenses

2.8+520.0%0.4(Billions of yen)

◆ Ordinary revenues and ordinary profit increased
year on year.
◆ Ordinary revenues increased year on year, due
to an increase in net premiums written for its
mainstay automobile insurance.
◆ Ordinary profit increased due to a decline in theloss ratio mainly led by a lower car accident
ratio owing to the revision of premium rates forautomobile insurance and the introduction of a
new bonus-malus system (non-fleet driver
rating system), in addition to a decline in the
expense ratio.

(Billions of yen)

Change+2.5+6.0%

Change from
13.3.3113.3.3113.9.30

70.6

74.6

+4.0

+5.8%

Underwriting reserves
Total net assets

19.9

21.8

+1.9

+9.7%

Total assets

127.4

134.4

+7.0

+5.5%

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

Sony Financial Holdings Inc. All Rights Reserved

19Sony Assurance’s ordinary revenues increased 6.0% year on year, to ¥44.9
billion due to an increase in net premiums written for its mainstay automobile
insurance.
Ordinary profit significantly increased year on year, to ¥2.8 billion, due to a
decline in the loss ratio mainly led by a lower car accident ratio owing to therevision of premium rates for automobile insurance and the introduction of a new
bonus-malus system (non-fleet driver rating system), in addition to a decline in
the expense ratio.

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

FY12.1H

FY13.1H

ChangeDirect premiums written

41.3

43.6

+5.6%

Net premiums written

41.8

44.2

+5.8%

Net losses paid

23.1

23.2

+0.7%

Underwriting profit

0.0

2.3

－

Net loss ratio

62.0%

59.6%

(2.4pt)Net expense ratio

25.7%

24.6%

(1.1pt)Combined ratio

87.7%

84.2%

(3.5pt)◆ Increased mainly in its mainstay
automobile insurance.
◆ Decreased owing to the revisionof premium rates for automobile
insurance and the introduction ofa new bonus-malus system.
◆Declined due to a proper control of
insurance acquisition cost, in
addition to a rise in automobile
insurance premiums.

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

Number of policies in force
Non-consolidated
Solvency margin ratio

13.3.3113.9.30

1.55 million

1.57 million

504.2％

547.2%

Change from 13.3.31+0.02 million+1.5%+43.0pt

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

Sony Financial Holdings Inc. All Rights Reserved

Here is an overview of Sony Assurance’s performance.

20

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

Net Premiums Written
FY12.1H

FY13.1H

Change

Fire

73

82

+12.4%

Marine74

68(7.0%)

FY12.1H

FY13.1H

Change

Fire

111

115

+3.5%

Marine－－－Personal accident*

3,895

4,124

+5.9%

Personal accident*

4,009

4,254

+6.1%

Voluntary automobile

37,29339,391+5.6%

Voluntary automobile

37,15539,264

+5.7%

－

－

－

Compulsory
automobile liability

532

608

+14.3%

41,30043,632+5.6%

41,84544,279+5.8%(Millions of yen)

(Millions of yen)Compulsory
automobile liability
Total

Net losses paid

Total

*SURE, medical and cancer insurance is included in personal accident.

FY12.1H

FY13.1H

Change(Millions of yen)

Fire

0

0

+1.3%

Marine14277(45.8%)

Personal accident*

941

1,010

7.2%

Voluntary automobile

21,562

21,667+0.5%

Compulsory
automobile liability

489

544

+11.1%

23,13723,299

+0.7%

Total

Line item amounts are truncated below ¥ 1 million;
percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

This slide shows direct premiums written, net premiums written and net
losses paid by type.

21

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

Personal accident insurance

Ordinary Profit andAdjusted Ordinary Profit(Billions of yen)
Ordinary profit

Adjusted ordinary profit

Number of policies in force

3.3(Millions of policies)(Billions of yen)

+2.8%

1.57

+5.8%

44.2 0.7

1.53

2.8

1.44
0.6
0.4 39.4
3.7

41.8
4.0

4.2

39.2
35.2

+520.0%

37.1

0.7

0.7
0.4
(0.1)

*Adjusted ordinary profit =Ordinary profit - Provision (Reversal) for
catastrophe reserve, net(Reference) Provision (Reversal) for catastrophe reserve, net
Provision (Reversal) for catastrophe reserve, net
The number of policies in force is the total of automobile insurance and medical
and cancer insurance policies, which account for 99% of net premiums written.
More than 90% of personal accident insurance is medical and cancer insurance.

(Billions of yen)

FY11.1H

FY12.1H

FY13.1H

+0.0

+0.6

(0.4)

*Provision for catastrophe reserve is described as negative amount.
Line item amounts are truncated below ¥100 million; numbers of policies aretruncated below 10,000 policies; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

22(Left-hand graph)
The number of policies in force for the total of automobile insurance andmedical and cancer insurance steadily increased 2.8% year on year, to 1.57
million policies. This is because Sony Assurance began offering a new
discounted premiums (increased discount rate from ¥5,000 to ¥8,000) for new
customers who contracted automobile insurance via Internet.
Net premiums written posted a 5.8% year-on-year increase, to ¥44.2 billion,
owing to an increase in the number of automobile insurance and the effect of thepremium revision.
(Right-hand graph)
Ordinary profit significantly increased year on year, due mainly to a decline inloss ratio as described in the previous pages. We also show you adjusted
ordinary profit in addition to ordinary profit on the graph. Adjusted ordinary profit
is an profit indicator on a managerial accounting basis. The figure is calculated byadjusting the amount of provision(reversal) for catastrophe reserve, net toordinary profit. Adjusted ordinary profit also increased significantly year on year,to ¥3.3 billion.

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

(%)

98.1

98.9

(Reference) Combined Ratio(Net Loss Ratio+ Net Expense Ratio)
Net loss ratio

Net expense ratio

96.1

Net expense ratio

(%)

99.0
90.5

89.0

89.2

(8.5pt)

85.7

87.7

84.2
(3.5pt)(7.4pt)(2.4pt)(1.1pt)(1.1pt)Notes:
Earned/Incurred loss ratio = (Net losses paid + Provision for reserve for outstanding losses+ Loss adjustment expenses) / Earned premiums[Earthquake insurance and compulsory automobile liability insurance are excluded
from the above calculation.]

Notes:Net loss ratio = (Net losses paid + Loss adjustment expenses ) / Net premiums written
Net expense ratio = Expenses related to underwriting / Net premiums writtenSony Financial Holdings Inc. All Rights Reserved

23(Left-hand graph)
For the six months ended September 30, 2013, the E.I. loss ratio declined 7.4
percentage points year on year, to 65.9%, mainly led by a lower car accident ratio
owing to the revision of premium rates for automobile insurance and introductionof new bonus-malus system (non-fleet driver rating system).
The net expense ratio declined 1.1 percentage point year on year, to 24.6%, due
to a proper control of insurance acquisition cost and a rise in automobile
insurance premiums.
Consequently, the sum of the E.I. loss ratio and the net expense ratio declined
8.5 percentage points year on year, to 90.5%.
(Right-hand graph)
The net loss ratio declined 2.4 percentage points year on year, to 59.6%. This isdifferent from the E.I. loss ratio, which reflects an increase or a decrease inprovision for reserve for outstanding losses.
The combined ratio (the sum of the net loss ratio and the net expense ratio)
declined 3.5 percentage points year on year, to 84.2%.

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

557.8%

504.2%

547.2%+43.0pt

Sony Financial Holdings Inc. All Rights Reserved

24

As of September 30, 2013, Sony Assurance’s non-consolidated solvency margin
ratio was 547.2%, up 43.0 percentage points from March 31, 2013.

Highlights of Operating Performance:
Sony Bank (Consolidated/Non-consolidated)<Consolidated>

Consolidated ordinary revenues
Consolidated ordinary profit

+6.9%

16.8

17.9

(Billions of yen)

FY12.1H

FY13.1H

Consolidated ordinary revenues

16.8

17.9

+1.1

Change+6.9%

Consolidated ordinary profit

2.1

3.5

+1.4

+68.1%

Consolidated net income

1.8

2.2

+0.3

+21.4%<Non-consolidated>
FY12.1H

FY13.1H

Ordinary revenues

15.2

16.7

+1.5

+10.2%

Gross operating profit

8.9

11.0

+2.0

+22.6%Net interest income

8.3

9.9

+1.5

+18.5%Net fees and commissions

0.0

(0.1)

(0.1)

―

Net other operating income

0.5

1.2

+0.6

+117.7%

General and administrative
expenses

6.9

7.2

+0.3

+4.4%

Net operating profit

2.0

3.7

+1.7

+81.7%

Ordinary profit

1.9

3.6

+1.7

+89.6%Net income (loss)

(0.5)

2.3

+2.8

―

13.3.3113.9.30

67.8

70.3

+2.5

+3.8%

6.5

6.2

(0.2)

(4.0%)

2,005.0

1,966.2(38.8)(1.9%)(Billions of yen)

3.5
+68.1%

2.1(Billions of yen)<Consolidated>◆ Ordinary profit increased year on year due to higher gains
on foreign exchange transactions stemming from customers’
active foreign currency trading and a rise in interest income onloans led by the growing balance of mortgage loans.
<Non-consolidated>◆ Both gross operating profit and net operating profit
increased year on year.
-Net interest income increased owing to a rise in interest
income on loans led by a growing balance of mortgage loans,
and a decrease in interest expenses.
-Net other operating income increased due mainly to an
improvement in net gains on bond-dealing transactions, inaddition to higher gains on foreign exchange transactions
stemming from customers’ active foreign currency trading.

(Billions of yen)
Total net assets
Net unrealized gains onother securities, net of taxes
Total assets

ChangeChange from 13.3.31

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

Sony Financial Holdings Inc. All Rights Reserved

25Sony Bank’s consolidated ordinary revenues and ordinary profit increased year
on year. Consolidated ordinary revenues increased 6.9% year on year, to ¥17.9
billion and consolidated ordinary profit increased 68.1% year on year, to ¥3.5
billion.
On a non-consolidated basis, Sony Bank’s net interest income increased owing
to an increase in interest income on loans led by a growing balance of mortgage
loans and a decrease in interest expenses.
Moreover, gross operating profit increased 22.6% year on year, to ¥11.0 billion
and net operating profit increased 81.7% year on year, to ¥3.7 billion. This ismainly because of an improvement in net gains on bond-dealing transactions, inaddition to higher gains on foreign exchange transactions stemming from
customers’ active foreign currency trading.

Overview of Performance:
Sony Bank (Non-consolidated) (1)12.9.30

13.3.3113.9.30(Billions of yen)

Change from
13.3.31

Customer assets

1,921.5

1,974.3

1,930.7(43.6)(2.2%)

Deposits

1,819.3

1,857.4

1,813.0(44.3)(2.4%)

Yen

1,456.0

1,467.2

1,435.1(32.1)(2.2%)

363.3

390.2

377.9

(12.2)(3.1%)

Foreign currency
Investment trusts

102.1

116.9

117.6

+0.7

+0.6%

Loans outstanding

898.6

970.2

1,009.5

+39.3

+4.1%

Mortgage loans

802.9

860.3

899.6

+39.2

+4.6%

*1

95.6

109.8

109.9

91

92

94

Non-performing assets Ratio(Based on Financial
Reconstruction Law) *2

0.44%

0.41%

0.39%

(0.02pt)

Capital adequacy ratio(domestic criteria) *3

11.18%

11.98%

11.99%+0.01pt

9.30%

8.85%

9.14%

+0.29pt

OthersNumber of accounts(10 thousand)Tier 1 ratio

+0.0

+0.1%
+1

<Reasons for changes>◆ Yen deposit balance decreased
owing to lower interest rates
offered by Sony Bank thaninvestment return of other financial
products.
◆ Foreign currency deposit balance
decreased due to an increase in
selling to lock in profits led byyen depreciation.

◆ Loan balance increased due an
increase in the balance ofmortgage loans◆ Non-performing assets ratio was
kept at an extremely low level.

*1 Loans in others include corporate loans of ¥103.8 billion.
*2 Balance of problem assets based on the Financial Reconstruction Law / Total credit exposure*3 Please refer to the graph of the non-consolidated capital adequacy ratio (domestic criteria) on P29.

Line item amounts are truncated below ¥100 million;
numbers of accounts are truncated below 10 thousands accounts;
percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

Here is an overview of Sony Bank’s performance.

26

Overview of Performance:
Sony Bank (Non-consolidated) (2)<Reference> On Managerial Accounting Basis<Reference> Interest Spread(Managerial Accounting Basis)

FY12.1H

FY13.1H

8.9

10.9

+2.0

+22.7%

①

8.5

9.1

+0.5

+6.8%

Net fees and commissions*2 ②

0.2

0.4

+0.2

+81.2%Net other operating income*3

0.1

1.3

+1.2

－

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

8.8

9.6

+0.8

+9.1%

Operating expenses and otherexpenses ③

6.8

7.2

+0.3

+4.8%

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

1.9

2.4

+0.4

+24.2%(Billions of yen)
Gross operating profit
Net interest income*1

Change■ Managerial accounting basis
The following adjustments are made to the figures on a financial accounting basis toaccount for profits and losses more appropriately.
*1: Net interest income: Includes profits and losses associated with fund investment
recorded in net other operating income, including gains or losses from currency
swap transactions.
*2: Net fees and commissions: Includes profits and losses for customer dealings inforeign currency transactions recorded in net other operating income.
*3: Net other operating income: After the above adjustments (*1 and *2), consists ofprofits and losses for bond and derivative dealing transactions.
■ Core profit
Profits and losses exclude net other operating income, which includes those on
bond and derivative dealing transactions, and stands for Sony Bank’s basic profits.

Yield on investment
Interest spread

Yield on financing(%)+0.03pt

0.93

Note: Interest spread=(Yield on investment)-(Yield on financing)Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

27

We break down gross operating profit on a managerial accounting basis tofacilitate an understanding of operational sources of revenue and profits.
(Left-hand table)
Net interest income on a managerial accounting basis amounted to ¥9.1 billion,
up 6.8% from the same period of the previous fiscal year, owing to an increase ininterest income on loans led by a growing balance of mortgage loans and adecrease in interest expenses.
Net fees and commissions were doubled to ¥0.4 billion, owing mainly to anincrease in gains on foreign exchange transactions stemming from customers’
active foreign currency trading.
Net other operating income increased to ¥1.3 billion, due mainly to an
improvement in net gains on bond-dealing transactions.
Consequently, gross operating profit on a core profit basis increased ¥0.8 billion
year on year, to ¥9.6 billion, and net operating profit on a core profit basis
increased ¥0.4 billion year on year, to ¥2.4 billion.
(Right-hand graph)
The yield on investment for FY13.1H was 1.20%.
The yield on financing for FY13.1H was 0.27%.
Consequently, interest spread for FY13.1H was 0.93%.

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

Loans

Foreign currency deposits

Mortgage loans

Others(Billions of yen)(Billions of yen)

1,762.2

1,857.4

970.2

1,813.0+39.3

1,009.5*Corporate*Corporateloans
loans

109.9 ofof¥103.8¥103.8billion.
billion.

835.5(44.3)
377.9

899.6

1,435.1

Line item amounts are truncated below ¥100 million.

Sony Financial Holdings Inc. All Rights Reserved

28(Left-hand graph)
As of September 30, 2013, deposits (the sum of Japanese yen and foreign
currency deposits) amounted to ¥1,813.0 billion, down ¥ 44.3 billion from March
31, 2013.
Of which, yen deposit balance amounted to ¥1,435.1 billion, down ¥32.1 billion
from March 31, 2013 because interest rates were at unattractively low levels.
Foreign currency deposit balance decreased ¥12.2billion, to ¥377.9 billion, due toan increase in selling to lock in profits led by yen depreciation.
(Right-hand graph)
Loans balance exceeded ¥1 trillion to ¥1,009.5 billion, up ¥39.3 billion fromMarch 31, 2013 due to the growing balance of mortgage loans.

Operating Performance:
Sony Bank (Non-consolidated) (2)Balance of Securities by Credit Rating
AAA
BBB

Non-Consolidated Capital Adequacy Ratio(Domestic Criteria)
Capital adequacy ratio

AA
A
OthersTier1 ratio(%)(Billions of yen)

11.98

+0.01pt

11.58
912.9

11.99

908.8
+0.29 pt

784.9
9.63
(123.8)9.14
8.85*Calculated based on the standard FSA Notification No. 19 (2006), which
establishes standards based on Article 14-2 of the Banking Act of Japan for
determining the capital adequacy of a bank in light of the assets held by thebank.
Amounts are truncated below ¥100 million.

Sony Financial Holdings Inc. All Rights Reserved

29(Left-hand graph)
As of September 30, 2013, the balance of securities decreased ¥123.8 billion, to¥784.9 billion from March 31, 2013.
Sony Bank continuously invests in highly rated bonds.
(Right-hand graph)
As of September 30, 2013, Sony Bank’s non-consolidated capital adequacy ratio(domestic criteria) was 11.99%.
Sony Bank has maintained financial soundness.

Consolidated Financial Forecast
for the Year Ending March 31, 2014

Sony Financial Holdings Inc. All Rights Reserved30Consolidated Financial Forecast
for the Year Ending March 31, 2014
SFH’s forecast of consolidated financial results for FY2013 is unchanged from the forecast announced on May 9, 2013,
while forecasts of the non-life insurance and banking businesses are revised upward.
(Billions of yen)

FY2012(Actual)

FY2013(Forecast)

ChangeConsolidated ordinary revenues

1,259.0

1,222.0

Life insurance business

1,142.3

1,099.9(3.7%)

88.5⇒89.5
34.0⇒34.9+4.5%⇒+5.7%

Banking business

84.7
34.3

Consolidated ordinary profit

79.2

69.0

(12.9%)

Life insurance business

61.4(15.5%)

Non-life insurance business

72.7
2.3

3.0⇒3.8+30.4%⇒+60.2%

Banking business

3.9

4.3⇒5.2+10.3%⇒+31.5%

Consolidated net income

45.0

37.0

(17.9%)

Non-life insurance business(2.9%)(0.9%)⇒+1.7%■Life insurance business
The forecast of ordinary revenues and ordinary profit remains unchanged because the actual results for the first half of the fiscal year were close to theamounts we had expected.
■Non-life insurance businessWe have revised our forecast for ordinary revenues for the full fiscal year because the net premiums written in its mainstay automobile insurance
during the first half were higher than we had expected, and we expect this trend will continue in the second half. We have also revised ordinary
profit for the full fiscal year because the loss ratio for the first half was significantly lower than we had expected, in addition to the increase in ordinary
revenues.
■Banking businessWe have revised our forecast for ordinary revenues for the full fiscal year because of higher-than expected income from gains related to foreignexchange transactions during the first half. We have also revised our forecast for ordinary profit for the full fiscal year because of better-than-expected
first-half performance due to an improvement in net gains on bond-dealing transactions.
As for Sony Life’s calculation policy of the reserve for price fluctuations, Sony Life accumulate reserve in excess of a required level in line with its policyin this fiscal year ending March 31, 2014. However, Sony Life will change its policy to accumulate reserve up to a required level from the next fiscal year
ending March 31, 2015.
Line item amounts are truncated below ¥100 million; percentage change figures are rounded.

Sony Financial Holdings Inc. All Rights Reserved

31

SFH’s forecast of consolidated financial results for FY2013 is unchanged fromthe forecast announced on May 9, 2013, while forecasts of the non-life insurance
and the banking businesses are revised upward. This is because the changes in
the forecast of the non-life insurance and the banking businesses are notconsidered significant to the consolidated forecast.
As for Sony Life’s calculation policy of the reserve for price fluctuations, Sony Life
accumulate reserve in excess of a required level in line with its policy in this fiscal
year ending March 31, 2014. However, Sony Life will change its policy toaccumulate reserve up to a required level from the next fiscal year ending March
31, 2015.

Sony Life’s MCEV and
Risk Amount Based on Economic Valueas of September 30, 2013

Sony Financial Holdings Inc. All Rights Reserved32Sony Life’s MCEV as of September 30, 2013
13.3.3113.6.30

13.9.30

Change from
13.3.31

Change from
13.6.30

1,064.7

1,149.9

1,158.2

+93.5

+8.2

Adjusted net worth

770.8

572.5

682.1

(88.7)+109.6

Value of existing business

293.9

577.4

476.1

+182.2(101.3)(Billions of yen)

MCEV

Notes:
1. Calculated MCEV for policies in force as of June 30 and September 30, 2013 by using updated lapse and surrender rate and economic assumptions.
2. Adopted simplified method for a part of MCEV calculations as of June 30 and September 30, 2013.

13.3.3141.6(12M)
3.5%(Billions of yen)

New business value
New business margin13.6.3017.1(3M)
6.5%

13.9.30
29.7(6M)
6.3%(*) New business margin equals new business value divided by present value of premium income.

 MCEV as of September 30, 2013 increased ¥8.2 billion due mainly to a steady acquisition of new policies despite
lower interest rates in the ultra-long term than as of June 30, 2013.
 New business margin as of September 30, 2013 was up from March 31, 2013, due mainly to higher interest rates in
the ultra-long term and the revision of Sony Life’s insurance premium rates on some of its products from April
2013 onward. New business margin was down from June 30, 2013 due mainly to lower interest rates in the ultralong term.
*Please see page 43 for trend on JGB yields.

* Please keep in mind that the validity of these calculations has not been verified by outside specialists.
Sony Financial Holdings Inc. All Rights Reserved

33Sony Life’s MCEV as of September 30, 2013 increased ¥8.2 billion, to¥1,158.2 billion due mainly to a steady acquisition of new policies despite
lower interest rates in the ultra-long term than as of June 30, 2013.
New business value (new business margin) for 6 months ended
September 30, 2013 was ¥29.7 billion (6.3%) while that for 12 months
ended March 31, 2013 was ¥41.6 billion (3.5%) and that for 3 months
ended June 30, 2013was ¥17.1 billion (6.5%).
New business margin as of September 30, 2013 was up from March 31,
2013, due mainly to higher interest rates in the ultra-long term and therevision of Sony Life’s insurance premium rates on some of its products
from April 2013 onward. New business margin was down from June 30,
2013 due mainly to lower interest rates in the ultra-long term.

Sony Life’s Risk Amount Based on Economic Valueas of September 30, 2013
(Billions of yen)

Insurance risk

13.3.31605.6

Market-related risk

13.6.30

13.9.30

597.2

610.4

289.9

234.5

260.1

234.2

175.4

201.0

Operational risk

26.0

25.0

25.2

Counter party risk

2.3

1.7

1.5

Variance effect(262.5)(241.3)(253.7)

The risk amount based on economic value

661.3

617.0

643.5

Of which, interest rate risk*(Billions of yen)

MCEV

13.3.311,064.7

13.6.30
1,149.9

13.9.30
1,158.2(*) Interest amount excluding the variance effect within market-related risk.

 Maintained capital adequacy by controlling market-related risk.
Notes
1. The risk amount based on economic value refers to the total amount of Sony Life’s risks, comprehensively examined and including insurance risk
and market-related risk.
2. The solvency risk capital on an economic value basis is calibrated at VaR (99.5) over one year and based on the internal model, which is a similar
but modified model based on the EU Solvency II (QIS5) standard method.

* Please keep in mind that the validity of these calculations has not been verified by outside specialists.

Sony Financial Holdings Inc. All Rights Reserved

34

The risk amount based on economic value as of September 30, 2013 amounted
to ¥643.5 billion. Sony Life has maintained high financial soundness by keeping it
within a proper level of MCEV, which is capital based on economic value.
Within Sony Life’s risks, insurance risk and market-related risk as of September
30, 2013 amounted to ¥610.4 billion and ¥260.1 billion respectively, up from June30, 2013, owing to an increase in policy amount in force and a rise in interest
rates in the ultra-long term.
Going forward, Sony Life will control a market-related risk such as an interest raterisk from an ALM perspective, while insurance risk is expected to increase
through the acquisition of new policies. Sony Life will strive to raise corporate
value on an economic value basis.

Appendix

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Appendix35

Recent Topics 1
AEGON Sony Life Insurance
Launch of sales: December 1, 2009
Common stock: ¥22 billion (including capital surplus of ¥11 billion)
Equity ownership: Sony Life insurance Co., Ltd. 50%, AEGON international B.V. 50%
Marketing products: Individual Variable Annuities
Sales Channels: Lifeplanner sales employees and partner Banks (13*) *As of Nov. 15, 2013
SA Reinsurance Ltd.
Established： October 29, 2009
Common stock: ¥8 billion
Equity ownership: Sony Life insurance Co., Ltd. 50%, AEGON international B.V. 50%
Business： Reinsurance business* AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint ventures established by Sony Life and AEGON Group.

Sony Bank’s Mortgage Loans through Sony Life
■Sony Life accounts for 25% of the balance of mortgage loans as of September 30, 2013
Sony Life accounts for 20% of the amount of new mortgage loans for FY13.1H*Sony Life started handling banking agency business in January 2008.

Sony Assurance’s Auto Insurance Sold by Sony Life
■Sony Life accounts for approx. 5% of new automobile policies for FY13.1H*Sony Life started handling automobile insurance in May 2001.

“Lifeplanner” is a registered trademark of Sony Life Insurance Co., Ltd.

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Appendix36

Recent Topics 2<Highlight for FY2013.1H>
2013-7-25

SA Reinsurance increased its capital to ¥8 billion form ¥5 billion*

2013-8-1

Sony Assurance enhanced special benefit service for its policyholders with renewal contract.

2013-8-12

SFH announced the revision of dividend forecast for the year ending March 31, 2014.

2013- 8-30

AEGON Sony Life Insurance increased its capital to ¥22 billion from ¥20 billion*(including capital surplus)

2013-10-28 Sony Bank launched new service: automatic saving plans for foreign currency deposits.
2013-10-31 Sony Bank closed its representative office in Sydney.
Sony Financial Group entered nursing care business.
―Acquired Senior Enterprise Corporation as a wholly owned subsidiary of SFH―
Sony Life starts selling a new educational endowment insurance (non-participating type)2013-11-15
from Jan. 2, 2014.
2013-11-11*AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint ventures established by Sony Life and AEGON Group.
Half of the above mentioned capital increases was executed by Sony Life.

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Appendix37

Sony Life: Fair Value Information on Securities(General Account Assets)
Fair Value Information on Securities
Fair Value Information on Securities(Billions of yen)

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

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

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Appendix38

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

FY12.1H

FY13.1H

ChangeCash and deposits
Japanese governmentand corporate bonds
Japanese stocks

00(52.8%)

42,35347,874+13.0%

295

198(32.9%)

Foreign securities

1,255

2,868

+128.5%

Other securities

143

47

(67.2%)

Loans

2,705

2,820

+4.2%

Real estate

5,431

5,145

(5.3%)

14

17+20.5%

52,19958,971+13.0%

Others
Total

Line item amounts are truncated below ¥1 million

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Appendix39

Sony Life’s Quarterly Trend on
Annualized Premiums from New Policies
Quarterly trend on Annualized Premiums from New Policies
Annualized premiums from new policies

Of which, third-sector(Billions of yen)Line item amounts are truncated below ¥100 million.

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Appendix

40

Method of Measuring Risk Amount
Based on Economic Value (1) Market-related Risk

Interest rate risk
Fluctuations in net asset
value based on economic
value in response to theshocks in the right columns.
The same applies below

Equity risk

Sony Life(Reference) EU Solvency II (QIS5)-For each currency, uses whatever interest rateincrease or decrease generates the largest loss
- Percentage increases or decreases differ for eachcurrency and term (example: yen 10-year, 49%
decrease)
However, a minimum decrease of 1% with minimum
interest rate of 0%-For each currency, uses whatever interest rateincrease or decrease generates the largest loss
-Percentage increases or decreases differ foreach currency and term
(example, yen 10-year, 31% decrease)
However, a minimum decrease of 1% withminimum interest rate of 0%-Listed equities and REIT 45% decline-Global 30%-Unlisted equities 55%-Others 40% (Note 2)-Other securities 70%-Subsidiaries, affiliated companies and strategic
investment 100%
Real estate risk

Actual real estate 25%

Same as on the left

Credit risk

Credit risk = (market value) x (risk coefficient foreach credit rating) x adjusted duration
Note that adjusted durations have caps and floors,
depending on credit ratings.
(Example)
Rating A: Risk coefficient (1.4%), cap (23), floor (1)Same as on the left

Currency risk

30% downside fluctuation

25% downside fluctuation

Notes
1. Principal items as of September 30, 2013. Market-related risk quantification follows the QIS5 approach in principle. However, Sony Life modified it to make it moresuitable to Japanese market by adapting the past and latest data of the market which is different from the method prescribed in QIS5.
2. Standard risk coefficients are global: 39%/other: 49%. Symmetric adjustment (an adjustment of ±10% of the average value of the stock price index during a defined
period in the past) is applied; as of the QIS5 trial introduction (December 31, 2009), these were 30%/40%.

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Appendix41

Method of Measuring Risk Amount
Based on Economic Value (2) Insurance Risk

Sony Life
Mortality risk

Mortality rate increases by 15% for each year

Longevity risk

Mortality rate decreases by 20% for each year

(Reference) EU Solvency II (QIS5)Same as on the left

elapsedSame as on the left

elapsed
Lapse risk

Expense risk

The largest amount of these*;

The largest amount of these;-Lapse rate increases by 50% for each year

-Increase by 50% in the assumed rates of

elapsedlapsation for Life module, 20% for Health module-Lapse rate decreases by 50% for each year

-Decrease by 50% in the assumed rates of

elapsedlapsation for Life module, 20% for Health module-30% of policies on which surrender value is inexcess of best estimate liability are immediately
surrendered-30% of policies (70% for group annuities, etc.) on
which surrender value is in excess of best
estimate liability are immediately surrendered

Operating expenses increase by 10% for eachSame as on the left

year elapsed
Rate of inflation rises by 1%
Disability risk

Rate of occurrence increases by 35% in the firstfiscal year, rising by 25% for each year thereafter

Rate of occurrence increases by 35% in thefirst fiscal year, rising by 25% for each year
thereafter. Recovery rate decreases by 20%.

* At Sony Life, lapse risk is calculated by computing and adding together the largest amount of three options for each insurance policy.

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Appendix42Appendix：JGB Yields

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

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