Did we fully understand that family s feelings and dreams?

Transcription

1 2018 Annual Report

2 Did we fully understand that family s feelings and dreams? It s a promise, enduring and truly kept. Realizing customers dreams, full of hopes and expectations. That is Sony Life s LIFEPLANNER VALUE. Offering added value that goes beyond insurance toward achieving life plans Always following up on coverage with the very best advice Providing the necessary protection amount tailored to each customer based on life planning * Lifeplanner and LIFEPLANNER VALUE are registered trademarks of Sony Life Insurance Co., Ltd.

3 CONTENTS Message from the President 002 The Founding of Sony Life 004 The Sony Financial Group 006 Financial Highlights 008 Fiscal 2017 Operating Performance 009 Asset Management 011 Income and Expenses 013 Assets, Liabilities and Net Assets 015 Financial Soundness 016 Market Consistent Embedded Value (MCEV) and Risk Amount Based on Economic Value 019 LIFEPLANNER VALUE 024 Educational Systems, Self- evelopment and Reciprocal Studies 026 Securing the Future for Our Customers Consulting-based Sales and Follow-up Consultations 030 Providing Optimal Protection through the Life Planning Support Service (LiPSS) 032 Sony Life s Proprietary System Supporting Consulting-based Sales and Follow-up Consultations 034 System of Claim Payment Operations 035 Enhanced Products and Services for Continuous Support of Customers Life Plans 036 Service Improvements That Begin with Customer Feedback 040 Administrative Control Structure 042 ERM (Enterprise Risk Management) 044 Risk Management System 046 Personal Information Protection and Information Security 049 Compliance 052 Environmental Preservation Initiatives 055 Participation in Social Contribution Activities 057 Financial Data 063 Organization 116 Corporate History 117 Directors and Audit & Supervisory Board Members 118 Corporate Data 118 Global Network 118 LIFEPLANNER CHARTER 119

4 Message from the President Tomoo Hagimoto President, Representative Director I would like to offer my sincerest appreciation to customers for their continued interest in and support of Sony Life. First, I must address a situation that arose in fiscal 2017 regarding the cases of former employees who defrauded customers of a substantial amount of money. On behalf of management at Sony Life, I extend my deepest apologies to customers who have placed their trust in us and to everyone concerned for the tremendous inconvenience and worry that this situation caused. We take this situation very seriously and will, in all sincerity, strive to enhance our compliance system to regain the trust of customers and society. Back in April 1981, Sony Life embarked on business with the declaration Life insurance will begin changing today. Lifeplanner sales employees will drive this change. In the years since, the Company has constantly worked to provide genuine quality in life insurance products and services and convey the true principles of this business. Through a consulting-based sales approach, Sony Life consistently strives to deliver the necessary amount of protection to as many customers as possible. Through after-sales consultations, Sony Life ensures that customers have the protection they need at all stages of life. Thus, our mission at Sony Life goes beyond the provision of insurance protection, as we seek to support customers and offer added value that exceeds their expectations of insurance companies to help them achieve life plans tailored to their respective needs. This is LIFEPLANNER VALUE a value unique to Sony Life. In Japan, the government is currently reviewing the social security system due to the situation of fewer children and more elderly in society and, given such factors as an increased burden on the public to meet the costs of an aging society, the existing system is likely not sustainable. Meanwhile, on the financial front, domestic long-term interest rates remained low during fiscal In April 2018, the Standard Mortality Table was revised, given improvements in the mortality rate. This table includes assumed mortality and other rates that life insurance companies use to calculate policy reserves. Sony Life endeavors to reinforce its business platform and enhance its financial soundness, which together underpin its commitment of Protecting customers all across Japan throughout their lives. Fiscal 2017 Business Results In fiscal 2017, new policy amount* 1 increased 6.7% year on year, to 5,287.9 billion, and policy amount in force* 1 rose 4.2%, to 47,253.4 billion, extending the uninterrupted upward trend that began when the Company commenced operations in Sony Life s solvency margin ratio* 2 an indicator of financial soundness for an insurance company is in the industry s top tier, reaching 2,624.3% in fiscal To fulfill the long-term commitment promised to our customers, we will continue to strive to achieve further growth and maintain financial soundness. 002 Sony Life Insurance Co., Ltd. Annual Report 2018

5 Mission We will work for customers financial security and stability by offering optimal life insurance products and high-quality services. Corporate Philosophy We will prove worthy of the expectations and confidence of customers through the relentless pursuit of high-quality services that satisfy customers. We will conduct innovative management by anticipating future needs, while boldly staying at the forefront of developments in the business environment. We will create an open-minded workplace while maintaining an energetic organization, by respecting the individuality of employees and bringing out the very best in their talents and aptitudes. New Initiatives in Fiscal 2017 In September 2017, we began a service for customers who have been recognized as disabled or requiring long-term care. With this service, we obtain the necessary medical certificates on our customers behalf to facilitate procedures for submitting an insurance claim or a request for benefits. This helps to reduce the burden of the claim-filing process on customers. Then in January 2018, we launched a direct claims payment service for advanced medical treatments, particularly proton beam therapy and heavy particle radio therapy, that go directly to the medical facility providing treatment. This lightens the initial financial burden that such treatments put on customers and enables them to undergo treatment with greater peace of mind. On the product front, in April 2017, we began sales of the Living Benefit Decreasing Term Life Insurance (Living Standard Type). This is a comprehensive protection product in the living benefit category that provides protection for the three major diseases (cancer, heart attack and stroke), specific disabilities and nursing care, in addition to death protection. And in October 2017, amid the prolonged low-interest rate environment, we debuted two products U.S. Dollar-denominated Single Premium Whole Life Insurance (Non-notification Type) and U.S. Dollardenominated Living Benefit Whole Life Insurance (Living Standard Type) that make investments in U.S. dollars to capture higher interest rates than those denominated in yen. These products meet the needs of customers who accept exchange rate risk and want to efficiently ensure protection. Protecting Customers All across Japan Throughout Their Lives Guided by a basic mission that states, We will work for customers financial security and stability by offering optimal life insurance products and high-quality services, we formulated a new medium-term business plan. We embarked on this plan in fiscal 2018 to achieve our vision of protecting customers all across Japan throughout their lives. We will reinforce our compliance system and pursue customer-first business operations, and we will strive as a cohesive corporate team to deliver products and services that encourage all of our customers to feel that choosing Sony Life for life insurance was the right decision. I respectfully ask all of our stakeholders to continue to accord us the support and encouragement that are and always will be integral to our success. Tomoo Hagimoto President, Representative Director Sony Life Insurance Co., Ltd. *1 New policy amount and policy amount in force both represent the sum of individual insurance and individual annuities. *2 The solvency margin ratio is a metric used by regulatory authorities to determine whether or not an insurer has sufficient claims-paying ability to withstand unforeseen events such as large earthquakes. Sony Life Insurance Co., Ltd. Annual Report

6 The Founding of Sony Life A Life Insurance Company Carrying Forward Akio Morita s Passion for Contributing to Society by Taking on Challenges That Others Have Never Done Before Sony Life got its start on August 10, 1979, when the Company was established with the core mission of working for customers financial security and stability by offering optimal life insurance products and high-quality services, aiming to revolutionize the industry. The founder of Sony and Sony Life, Akio Morita, expressed his vision for Sony Life as a life insurance company unlike any other in the world that matches the needs of Japan. Just as every customer s life is different, protection needs to be as individual as the people it is aimed for. The Lifeplanner system was put in place to accurately determine these needs and bring extensive expertise and experience to bear in addressing demand based on a robust philosophy and strong conviction. At the ceremony commemorating Sony Life s inauguration, Akio Morita addressed employees with the following words: What we are trying to do here, what I am asking you to do, is to create a life insurance company the likes of which Japan has never seen before. This statement was in line with Akio Morita s passion for contributing to society by taking on challenges that others have never done before. Now more than 30 years since that time, the Company s Lifeplanner sales employees have earned strong customer support for the consulting services they provide. We look forward to passing on the passion of our founder in the years to come. Photo by Kazumi Kurigami/Igfy Corporation 004

7 Lifeplanner Sales Employees Life insurance will begin changing today. Lifeplanner sales employees will drive this change. The concept of Lifeplanner sales employees is based on the understanding that the people who provide life insurance designed to match the lives of individual customers need to be professionals in the true sense of the word. We created Lifeplanner sales employees to change the face of Japan s life insurance industry. To ensure that they are worthy of customers trust, Sony Life s Lifeplanner sales employees undergo a variety of training programs to accumulate the necessary expertise and skills, turning them into professionals in the areas of life insurance and finance. Consulting Accompanying Customers through Life s Milestones Sony Life s insurance is tailored to each customer s individual life plan. Accordingly, providing insurance requires us to determine what sort of life the customer plans to lead. We listen carefully to a customer describe his or her dreams for the family s future and then work with the customer to turn those hopes into specific plans. We work together on this life plan, calculating the necessary protection and putting in place the protection necessary to meet the customer s goals. To ensure that the life insurance policy is serving its intended role, even after a policy agreement is signed, Lifeplanner sales employees periodically check protection and provide advice. If a customer s circumstances change and some issue arises, the individual in charge of that policyholder, as well as Lifeplanner sales employees throughout Japan, are available to assist. Reciprocal Training and Contribution to Society All for Customers At Sony Life, the spirit and culture of mutual improvement a willingness among Lifeplanner sales employees and Partners to help each other enhance their skills is firmly rooted in the corporate structure. This has resulted in a solid reputation, underpinned most notably by 925* Million Dollar Round Table (MDRT) members, a top-class ranking among insurance companies in Japan. MDRT is a global, independent association comprising outstanding life insurance and financial services professionals. Members subscribe to the whole person concept, which centers on activities to improve their own skills as well as those of fellow professionals and to contribute to society. At Sony Life, we went a step further with the establishment of MDRT Sony for Lifeplanner sales employees and Partners, who gather several times a year for training and information exchange. In addition, various independent workshops are held across Japan throughout the year so that members can share know-how and skills and thereby refine their ability to deliver services of ever-higher quality to customers. Sony Life employees take the lead in social contribution activities under the banner One Love, One Trust. The Great Hanshin-Awaji Earthquake, which devastated the Kobe area in 1995, was a catalyst for action, prompting employees to set up the Sony Life Volunteer Club. The club, which operates on funds donated by employees and is administered by individual employees, is actively engaged in many pursuits, including ongoing support for the elderly victims of the Great Hanshin-Awaji Earthquake, volunteering for Special Olympics Nippon and Relay for Life, and reconstruction support in the wake of the Great East Japan Earthquake, which ravaged the Tohoku area in March *As of April 1, 2018 Evidence of Trust Fulfilling Long-term Commitments to Customers Claims paid upon the death of the insured constitute conveying feelings for bereaved family members, and policy amount in force* represents the accumulation of such actions. Sony Life sees policy amount in force as the evidence of the trust customers have placed in it, as well as proof of its long-term commitment to its customers. Sony Life strives toward sound management to ensure its ability to meet these commitments as the need arises. Policy Amount in Force (Individual life insurance + Individual annuities) * Policy amount in force is the total monetary amount of protection a life insurer provides its customers. 47,253.4 billion As of March 31, 2018 Sony Life Insurance Co., Ltd. Annual Report

8 The Sony Financial Group Aiming to Become Japan s Most Trusted and Attractive Financial Services Group The Sony Financial Group is an integrated financial services group that, in addition to Sony Financial Holdings, includes Sony Life, Sony Assurance Inc., Sony Bank Inc., Sony Lifecare Inc. and other companies. Sony Financial Holdings was established in April 2004 as Japan s first financial holding company having insurance and banking under the same umbrella. In October 2007, the company was listed on the First Section of the Tokyo Stock Exchange. Sony Financial Group Vision The Sony Financial Group seeks to become the most highly trusted financial services group in the eyes of its customers. To this end, the Group combines diverse financial functions (savings, investment, borrowing and protection) to provide high-value-added products and high-quality financial services matched to each and every customer s specific financial needs. Connection between Sony Life and Other Sony Financial Group Companies In terms of history and scale, Sony Life is a core member of the Sony Financial Group. In addition to working on a daily basis to provide optimal life insurance products and high-quality services, we are enhancing joint efforts with Sony Assurance and Sony Bank. We have been particularly effective in applying Lifeplanner sales employees consulting skills through cross-selling between Group companies. In fiscal 2017, Lifeplanner sales employees wrote 4% of all new Sony Assurance automobile insurance policies and 16% of Sony Bank mortgage loans. Going forward, the Sony Financial Group aims to continue increasing cross-selling within the Group and reinforcing synergies. (As of March 31, 2018) Structure Consolidated subsidiaries Sony Corporation 63% owned Equity-method affiliates Life Insurance Business Non-life Insurance Business Banking Business Nursing Care Business 100% owned 100% owned 100% owned 100% owned 50% owned 50% owned 57% owned 100% owned 100% owned AEGON Sony Life Insurance SA Reinsurance Sony Payment Services Lifecare Design Proud Life 100% owned SmartLink Network Hong Kong 006 Sony Life Insurance Co., Ltd. Annual Report 2018

9 AEGON Sony Life Insurance In August 2007, Sony Life formed a 50:50 joint venture life insurance company with the AEGON Group of the Netherlands to focus on the individual annuity business, which was attracting wider customer interest due to the steadily falling birthrate and aging population in Japan. The business commenced operations in December The company has tie-ups in place with 32 financial institutions, including Sony Life, as of March 31, Sales of AEGON Sony Life Insurance s Products by Lifeplanner Sales Employees Sony Life s Lifeplanner sales employees commenced sales of AEGON Sony Life Insurance s individual annuities in December For product details, please see the AEGON Sony Life Insurance website (Japanese only) at SA Reinsurance Ltd. In October 2009, we set up this joint venture reinsurance company with the AEGON Group as one aspect of our cooperative operations. Sony Assurance Established in June 1998, Sony Assurance provides optimal, high-quality insurance products and services, primarily via the Internet and over the telephone. This direct-selling non-life insurance company concentrates on automobile insurance. Lifeplanner Sales Employees Sell Sony Assurance s Products Lifeplanner sales employees began selling Sony Assurance s automobile insurance in May Sony Bank Established in April 2001, Sony Bank is an Internet bank that provides financial products, services and mortgage loans, centering on convenient, high-quality asset management. Lifeplanner Sales Employees Handle Sony Bank s Mortgage Loans and Set Up New Accounts In January 2008, Lifeplanner sales employees began explaining the details of Sony Bank s mortgage loans and delivering applications. As a result, Lifeplanner sales employees are now able to respond to specific customer requests and provide consultations about funding related to home purchases. In May 2014, Lifeplanner sales employees also began handling procedures for opening ordinary yen deposit accounts at Sony Bank, and in April 2017, they began handling procedures for foreign-currency deposits. Underwriting Group Credit Life Insurance for Sony Bank s Mortgage Loans In March 2002, Sony Life began underwriting group credit life insurance for mortgage loans extended by Sony Bank. In addition, in April 2007, we began offering group credit life insurance with protection riders covering the three major diseases. Sony Lifecare Inc. Sony Lifecare Inc. was established in April 2014 as a holding company to oversee operations in the nursing care business. The company operates pay nursing care homes through companies in the nursing care business under its umbrella and works to expand business activities by establishing new facilities. Other Major Business Development at Sony Life (As of March 31, 2018) Established Joint Venture with IBJ, Inc. In March 2017, Sony Life and IBJ, Inc., which mainly operates a marriage consulting agency business, formed a joint venture to engage in the insurance agency business. Marriage is a life event that marks an important turning point from a life planning perspective, and often prompts many customers to consider taking out a life insurance policy. This joint venture enables Sony Life to expand points of contact with customers and provide services to a larger base of customers. Established Local Subsidiary in Singapore and Joint Venture with Starts Securities In June 2017, Sony Life established a local subsidiary in Singapore and then in August established a joint venture with Starts Securities Co., Ltd., as a subsidiary of the Singapore subsidiary. Through the joint venture, the Singapore subsidiary will pave the way for drop-in companion agency services and, by maximizing the strengths of both Sony Life and Starts Securities, will provide services tailored to each customer and contribute to the security and stability of people in Singapore. Sony Life Insurance Co., Ltd. Annual Report

10 Financial Highlights Key Performance Indicators for Past Five Years () For the years ended March Policy amount in force 40,500,241 42,430,898 44,749,196 47,185,239 49,173,547 Individual life insurance 38,628,089 40,391,018 42,293,769 44,313,382 45,892,442 Individual annuities 466, , ,062 1,020,810 1,360,998 Group life insurance 1,405,237 1,442,198 1,599,364 1,851,046 1,920,106 Policy amount in force for group annuities 55,196 17,210 13,093 11,570 10,037 Annualized premiums from insurance in force 696, , , , ,823 Medical protection, living benefit protection and other products 167, , , , ,895 New policy amount 3,894,484 4,776,917 5,152,456 5,004,921 5,346,249 Individual life insurance 3,814,291 4,625,700 4,871,062 4,765,257 4,912,156 Individual annuities 75, , , , ,820 Group life insurance 5,104 5,291 1,061 47,415 58,272 Annualized premiums from new policies 63,992 76,612 85,018 78,127 73,073 Medical protection, living benefit protection and other products 13,486 15,285 15,717 15,718 12,984 Ordinary revenues 1,197,109 1,223,827 1,230,141 1,243,739 1,351,076 Income from insurance premiums 960, ,034 1,028, ,733 1,059,269 Investment income 212, , , , ,293 Ordinary expenses 1,127,904 1,144,162 1,169,348 1,183,558 1,294,738 Insurance claims and other payments 327, , , , ,538 Investment expenses 8,506 9,727 23,399 36,196 33,121 Operating expenses 113, , , , ,937 Ordinary profit 69,205 79,665 60,792 60,180 56,338 Net income 37,063 42,524 37,096 35,185 45,134 Core profit 72,365 76,505 43,019 83,831 81,384 Common stock 70,000 70,000 70,000 70,000 70,000 [Number of shares issued and outstanding (Thousands of shares)] [70,000] [70,000] [70,000] [70,000] [70,000] Total assets 6,624,903 7,301,350 8,035,408 8,873,613 9,567,689 Separate account assets 640, , , ,605 1,128,817 Policy reserves 6,123,633 6,727,241 7,336,533 7,929,944 8,566,075 Loans 154, , , , ,486 Securities 5,954,716 6,543,703 7,273,361 8,093,192 8,765,967 Solvency margin ratio 2,358.7% 2,555.0% 2,722.8% 2,568.8% 2,624.3% Number of employees 6,553 6,781 7,289 7,865 8,246 Notes: 1. Policy amount in force is the total of individual life insurance, individual annuities and group life insurance. Policy amounts for individual annuities are equal to the sum of (a) the funds to be held at the time annuity payments are to commence for policies for which annuity payments have not yet commenced and (b) the amount of policy reserves for policies for which payments have commenced. 2. Policy amount in force for group annuities is equal to the amount of outstanding policy reserves. 3. New policy amount is the total of individual life insurance, individual annuities and group life insurance. New policy amounts for individual annuities are equal to the funds to be held at the time annuity payments commence. 4. Annualized premiums, which include individual life insurance and individual annuities, are converted to a per-year premium amount by multiplying individual premiums by a coefficient corresponding to the premium payment method. (For single premium policies, premiums are divided by the number of coverage years.) 5. Medical protection, living benefit protection and other products is the portion of the annualized premium for medical protection benefits (hospitalization benefits, surgical benefits, etc.) and living benefit protection (benefits for specific diseases, nursing care benefits, etc.). 008 Sony Life Insurance Co., Ltd. Annual Report 2018

11 Fiscal 2017 Operating Performance Policy Amount in Force 47,253.4 billion Policy amount in force is the total monetary amount of protection a life insurer provides its customers. Since operations began, we have maintained consistent growth. At the end of fiscal 2017, total policy amount in force was 47,253.4 billion, up 4.2% from a year earlier and continuing the steady rise that has lasted since our start of operations. We believe that these figures reflect the high level of trust we received from our policyholders, as well as high acclaim for our follow-up consultations. Group life insurance in force was 1,920.1 billion, up 3.7%. Consequently, the total of individual life insurance, individual annuities and group life insurance in force was 49,173.5 billion, up 4.2% from the previous fiscal year end. The number of policies in force (the total for individual life insurance and individual annuities) came to 7,569,000, up 3.6%. Policy Amount in Force (Individual life insurance + Individual annuities) (Billions of yen) 50,000 40,000 30,000 20,000 10,000 38,628.0 Individual annuities Individual life insurance , , , ,253.4 billion 1, , , (As of March 31) New Policy Amount 5,287.9 billion Our new policy amount reached 5,287.9 billion. New policy amount is the total monetary amount of protection provided through new policies. The new policy amount in fiscal 2017, combining individual life insurance and individual annuities, hit an all-time high of 5,287.9 billion, up 6.7% year on year. Group life insurance increased 22.9%, to 58.2 billion. The total new policy amount of individual life insurance, individual annuities and group life insurance was up 6.8%, to 5,346.2 billion. The number of new individual life insurance policies and individual annuities during the year was 540,000, up 5.2%. New Policy Amount (Individual life insurance + Individual annuities) (Billions of yen) 6,000 4,800 Individual annuities Individual life insurance ,287.9 billion , ,400 3, , , , , , (Years ended March 31) Sony Life Insurance Co., Ltd. Annual Report

12 Product Mix Death-protection products* comprised about 90% of new policy amount. Sales centered on death-protection products accounted for approximately 90% of our new policy amount in fiscal * This figure indicates the new policy amount of death-protection products, which excludes the new policy amount of endowment/educational endowment insurance, individual annuities and medical insurance. New Policy Amount by Type of Product (Individual life insurance and individual annuities on a policy amount basis, fiscal 2017) Variable life 8.7% Endowment/ Educational endowment, Individual annuities 9.5% Other 0.4% Whole life 17.5% Term life 63.9% Lapse and Surrender Rate 4.97% The lapse and surrender rate is expressed as a ratio calculated by dividing the amounts of cancellations and lapses, excluding decreases, increases or reinstatements, by the total policy amount in force at the beginning of the fiscal year. The lapse and surrender rate was 4.97%. In fiscal 2017, our lapse and surrender rate for individual life insurance and individual annuities on a policy amount basis increased 0.70 percentage point, to 4.97%, from the previous fiscal year. This increase is largely due to the surrender of existing policies by some customers at the time they opted for other policies, such as family income insurance, when rates were revised in February Going forward, we will seek to maintain positive levels for our lapse and surrender rate by providing protection that is tailored to each customer s individual life plan and through enhanced follow-up consultations. Lapse and Surrender Rate (Individual life insurance and individual annuities on a policy amount basis) (%) % (Years ended March 31) Ratio of Operating Expenses to Income from Insurance Premiums 13.2% Selling new policies, maintaining existing policies, making insurance payouts and other tasks incur costs, such as personnel and administrative expenses. We refer to costs necessary to conduct our business as a life insurance company as operating expenses. We continue working to raise management efficiency. In fiscal 2017, our ratio of operating expenses to income from insurance premiums was 13.2%. We will continue striving to raise management efficiency. (%) Ratio of Operating Expenses to Income from Insurance Premiums % (Years ended March 31) 010 Sony Life Insurance Co., Ltd. Annual Report 2018

13 Asset Management Investment Environment During the fiscal year ended March 31, 2018, the Japanese economy registered gradual growth. Exports increased, thanks to generally healthy overseas economies, leading to an economic expansion surpassing the Izanagi economic boom. Capital investment also increased, driven by improvements in corporate earnings and business confidence. Personal consumption remained solid, supported by an improving employment environment and a growing sentiment for wage hikes. In the meantime, the consumer price index remained at a low level of near 0%, with a 0.5% increase in core CPI year on year. Real GDP growth, year on year, for the April June quarter, July September quarter, October December quarter and January March quarter was 2.1%, 2.0%, 1.0% and negative 0.6%*, respectively. In the Japanese bond market, long-term interest rates moved within a narrow range. Yields on 10-year JGBs hovered around the targeted 0% level, in an inactive market with tight supply and demand, attributable to the buying operations of the Bank of Japan as part of its yield-curve control policy. Under these circumstances, the long-term interest rate as of March 31, 2018 was 0.043% (down percentage points year on year). Stock markets rose during the fiscal year. In September 2017, Prime Minister Abe announced a dissolution of the House of Representatives and a snap election, and the Liberal Democratic Party was victorious. The administration s stability gave confidence to the markets, which resulted in a rise of stock prices. This was followed by a further rally fueled by a series of announcements of healthy earnings both in Japan and the U.S., sending the Nikkei Stock Average above the 24,000 level in January 2018 for the first time in 26 years. The stock market, however, started to decline in late January following the State of the Union Address by U.S. President Trump, then fluctuated around the 21,000 level toward the end of the fiscal year. As of March 31, 2018, the Nikkei Stock Average was 21,454.30, up 2, from its level on March 31, The foreign exchange market moved within a certain range. In the first half of the fiscal year, the market continued to fluctuate within a range from 108 to 114, under a general trend of risk aversion among investors in view of the geopolitical risks and political uncertainty in both Japan and abroad. In January, the U.S. dollar depreciated to a level as low as around 104 at one point, following a remark by the U.S. Treasury secretary that was viewed by the market as indicating a tolerance for a weaker dollar, along with a series of departures of high-ranking officials from the administration. The U.S. dollar later bounced back. As of March 31, 2018, the yen was traded at to the U.S. dollar, still registering a slight yen appreciation compared with as of the end of the previous fiscal year. *Second preliminary estimates Investment Performance As of March 31, 2018, general account assets totaled 8,438.8 billion, up 7.0%, or billion, from one year earlier. Within the general account, positions of Japanese bond investments came to 7,281.1 billion (accounting for 86.3% of general account assets); foreign bonds, billion (4.3%); Japanese stocks, 38.4 billion (0.5%); money held in trust, billion (3.2%); policy loans, billion (2.2%); real estate, 92.3 billion (1.1%); and cash and deposits, call loans, 40.8 billion (0.5%). Policy loans 2.2% Money held in trust 3.2% Other securities 0.0% Foreign stocks and others 0.4% Japanese stocks 0.5% Foreign bonds 4.3% General Account Assets (As of March 31, 2018) Cash and deposits, call loans 0.5% Real estate 1.1% Other assets 1.5% Investment Yield (%) FY2016 FY2017 Investment yield for core profit Investment yield (general account) Note: Please refer to page 14 for information on core profit. Japanese bonds 86.3% Sony Life Insurance Co., Ltd. Annual Report

14 Investment Approach Based on the concept of asset liability management (ALM), Sony Life prioritizes investment in assets having characteristics that match those of insurance liabilities. Specifically, we concentrate on investment in ultralong-term JGBs with long term remaining to maturity to match the long-term liabilities that life insurance policies represent. In this manner, we work to appropriately control the interest rate risk associated with insurance liabilities. At the same time, we limit our investments in stocks and other risk assets. <Investment Assumptions: ALM> Life insurance policies are typically long term, so it is important for life insurance companies to ensure that they maintain the ability to pay their customers insurance claims and other benefits well into the future. For this reason, life insurance companies need to select investment assets having characteristics that match those of their life insurance policies, which represent liabilities. This ALM approach serves as our basis for investment. <Life Insurance Policy Liability Characteristics and Investment> Insurance liabilities refer to the amount of money that a life insurer needs to have accumulated at present in order to pay future insurance claims and other benefits. Characteristically, insurance liabilities are highly susceptible to interest rate fluctuations. This is because insurance liabilities are calculated on the basis of assumptions about future interest income. If interest rates fall, the expected interest income also drops, leading to the need to fund higher levels of insurance liabilities. Conversely, if interest rates rise, expected interest income also increases, so less money is needed to match current interest liabilities. As life insurance policies are long term, future interest income is likely to fluctuate broadly as interest rates change, which means that insurance liabilities are also highly variable. These fluctuations in insurance liabilities are referred to as insurance liabilities interest rate risk. Life insurers invest the insurance premiums paid by customers in marketable securities and other assets. When they do so, however, they must remain duly cautious of the interest rate risks inherent in their insurance liabilities. If interest rates drop, for example, the amount of funding required to cover insurance liabilities increases. By investing in fixed-coupon bonds, if interest rates fall, the value of underlying assets bonds increases, which offsets the interest rate risk of insurance liabilities. By investing in assets with characteristics that match those of insurance liabilities, insurers are able to appropriately control the interest rate risk of insurance liabilities. Controlling Assets and Liabilities Interest rates fall " Assets increase (bond prices rise) Interest rates fall " Insurance liabilities increase Interest rates rise " Assets decrease (bond prices fall) Interest rates rise " Insurance liabilities decrease Assets (yendenominated bonds, etc.) Insurance liabilities Assets (yendenominated bonds, etc.) Insurance liabilities Sony Life Signs Up for the Japanese Version of the Stewardship Code Basic Policy on the Stewardship Code Sony Life has signed up for the Japanese version of the Stewardship Code, which expresses principles for responsible institutional investors. Sony Life s Exercise of Voting Rights Please see (Japanese only) for details about the Company s policy on exercising voting rights and the basic process for exercising voting rights. 012 Sony Life Insurance Co., Ltd. Annual Report 2018

15 Income and Expenses Income from Insurance Premiums and Insurance Claims and Other Payments 1,059.2 billion/ billion Income from insurance premiums, which represents the largest component of income, reached 1,059.2 billion, and insurance claims and other payments to customers amounted to billion. In fiscal 2017, income from insurance premiums amounted to 1,059.2 billion, compared with billion a year earlier. Meanwhile, insurance claims and other payments in fiscal 2017 amounted to billion (compared with Income from insurance premiums and others, which includes such income as premiums paid by customers, is the principal source of income for insurance companies. Insurance claims and other payments includes insurance claims, benefits, annuities and surrender cash that insurance companies make to customers under their insurance policies billion in fiscal 2016). Insurance claims, benefits and annuities amounted to billion (compared with billion in fiscal 2016). Income from Insurance Premiums and Others (Billions of yen) 1,250 1,059.2 billion 1, , Insurance Claims and Other Payments (Billions of yen) Annuities Benefits Claims billion (Years ended March 31) (Years ended March 31) Investment Income and Investment Expenses billion/ 33.1 billion In fiscal 2017, investment income came to billion, down from the billion posted in fiscal This reflects a decrease in foreign exchange gains, namely, a shift to foreign exchange losses. Ordinary Profit and Net Income 56.3 billion/ 45.1 billion In fiscal 2017, ordinary profit fell 6.4%, to 56.3 billion. The year-on-year decrease is due to an increase in provision for policy reserves, paralleling the acquisition of new policies following a revision in the standard rate, and also due to a decrease in gains on the sale of securities in the general Investment income is the income received through the investment in assets, including interest and dividend income, as well as gains on sale of securities. Investment expenses are the expenses incurred in order to generate investment income, including such items as losses on sale of securities, devaluation losses on securities and provision for reserve for possible loan losses. Investment income, which expresses income from the investment in assets, came to billion. Investment expenses, which indicates the cost of generating that income, was 33.1 billion. Investment expenses settled at 33.1 billion, up from 36.1 billion a year earlier, owing to improving returns on derivative transactions executed to hedge market risk. Ordinary profit the difference between ordinary revenues and ordinary expenses represents income derived from operating activities during the fiscal year. The principal sources of revenue for life insurance companies are income from insurance premiums and investment income. The main expenses are death and other claims, insurance benefits, annuity payments, provision for policy reserves and others, investment expenses and operating expenses. Net income is calculated by adding extraordinary gains to ordinary profit, then subtracting provision for reserve for price fluctuations and other extraordinary losses, as well as provision and reversal for reserve for policyholders dividends and income taxes. Ordinary profit, which indicates the difference between ordinary revenues and ordinary expenses, was 56.3 billion, and net income came to 45.1 billion. account. Net income increased 28.3% year on year, to 45.1 billion, reflecting the recognition of gain on disposal of fixed assets from the sale of real estate held for investment purposes under extraordinary gains. Sony Life Insurance Co., Ltd. Annual Report

16 Core Profit 81.3 billion Core profit is an indicator of the profit-earning capacity of the primary insurance business over a one-year period. The term primary insurance business refers to the management of income from insurance premiums received from policyholders, along with investment income to pay insurance claims, benefits, annuities and others, and to make policy reserve provisions for future payments. Adding capital gains or losses, such as on sales of securities, and one-time gains and losses to core profit produces ordinary profit, which appears on the statements of income. Core profit, an indicator of profit in the mainstay insurance business, amounted to 81.3 billion. In fiscal 2017, despite higher profit from accumulated policies in force and a rise in the positive spread, core profit slipped 2.9% year on year, to 81.3 billion, mainly because of an increase in the provision of policy reserves relating to the acquisition of new policies due to a revision in the standard yield. Core profit of 81.3 billion Net capital gains (losses) of (17.4) billion Net other one-time gains (losses) of (7.5) billion Ordinary profit of 56.3 billion Note: Like most other life insurers that are organized as joint stock corporations, Sony Life mainly sells life insurance that is nonprofit. As no policyholder dividend is added, we are able to offer services to policyholders for lower premiums. Life insurers organized as mutual corporations, on the other hand, typically offer for-profit policies. Their income from insurance premiums includes a portion of financial resources for policyholder dividends, and financial resources for these dividends are included in core profits. For this reason, mutual corporations tend to show higher core profits than joint stock corporations that operate on the same scale. Positive (Negative) Spread Life insurance companies retain a portion of premiums received from policyholders as policy reserves in anticipation of future payments. These policy reserves are maintained by investing under the assumption that they will yield a certain rate of interest every year. This interest rate is called the assumed interest rate (for calculating policy reserves). A positive spread occurs when the actual yield on investment exceeds the average assumed interest rate. The reverse situation leads to a negative spread. Positive spread increased to 17.7 billion. In fiscal 2017, the positive spread reached 17.7 billion, up 14.9% year on year, reflecting a lower average assumed interest rate due to new policy acquisition. Formula for Calculating Positive Spread Investment yield for core profit *1 Positive Spread Average assumed interest rate *2 (Billions of yen) billion General account policy reserves * (Years ended March 31) Positive spread Notes: *1 Investment yield for core profit is the yield on general account policy reserves after subtracting the provision for policyholder dividend reserve from the general account investment returns included in core profit. *2 Average assumed interest rate is the assumed yield on general account policy reserves. *3 General account policy reserves are calculated based on the following formula for policy reserves in the general account, excluding contingency reserve: (Policy reserves at beginning of period + policy reserves at end of period assumed interest) 1/2 014 Sony Life Insurance Co., Ltd. Annual Report 2018

17 Assets, Liabilities and Net Assets Assets 9,567.6 billion Total assets, built on a base of shareholders equity and premiums paid by policyholders, also include tangible fixed assets, such as buildings, as well as investment assets, such as securities, and other assets in preparation for future insurance claims and benefit payments and to maintain the soundness of the Company s insurance business. Total assets indicate corporate scale. Total assets, which indicate a company s scale, are growing steadily. As of March 31, 2018, total assets were 9,567.6 billion, up 7.8% from a year earlier, owing to higher investment assets, such as securities, paralleling steady expansion of policy amount in force. (Billions of yen) 10,000 8,000 6,624.9 Total Assets 9,567.6 billion 8, , , ,000 4,000 2, (As of March 31) Liabilities 8,566.0 billion Policy reserve, which is included within insurance reserves, accounts for the majority of insurance company liabilities. Policy reserve is a fund derived from income from insurance premiums and investments, held in reserve to ensure life insurance companies are able to pay future insurance claims. Policy reserve is mandatory under the Insurance Business Act of Japan. We have maintained sufficient policy reserve to cover future insurance claim payments. Sony Life has accumulated standard policy reserve for policies subject to the standard policy reserve, and policy reserve based on the net level premium method the highest legally accumulated level for other policies. The policy reserve balance was a sufficient 8,566.0 billion at the end of fiscal (Billions of yen) 10,000 8,000 6,000 6,123.6 Policy Reserve 8,566.0 billion 7, , , ,000 2, (As of March 31) Net Assets and Common Stock billion/ 70.0 billion Net assets are the amount after deducting liabilities from assets. Common stock is the amount of money paid into a company by its shareholders. Article 6 of the Insurance Business Act of Japan prescribes a minimum of 1.0 billion in common stock. Net assets, the amount after deducting liabilities from assets, was billion. Common stock was 70.0 billion. As of March 31, 2018, net assets totaled billion, 4.1% higher than one year earlier. As of March 31, 2018, Sony Life had total common stock of 70.0 billion, which has been wholly provided by Sony Financial Holdings, an interim financial holding company of Sony Corporation, since April 1, Sony Life Insurance Co., Ltd. Annual Report

18 Financial Soundness Real Net Assets (A) 2,859.7 billion/(b) 1,242.2 billion We have maintained sufficient real net assets to maintain sound business operations. As of March 31, 2018, real net assets (A) stood at 2,859.7 billion, up 7.6% year on year, while real net assets (B) hit 1,242.2 billion, up 4.8% year on year. Real net assets are the net value of total assets (the fair value of securities and tangible fixed assets) minus the value of total liabilities (excluding contingency reserve and other liabilities that are similar to capital). Sony Life employs integrated ALM, determining the liability characteristics represented by long-term insurance policies and marking to market both assets and liabilities. As a result, we invest primarily in JGBs, ensuring that our investments have sufficient liquidity and categorizing the majority of our investments as held-to-maturity securities. Real net assets are the standard on which regulatory authorities base orders to halt operations, from the perspective of soundness of operations. These real net assets (shown in the table as real net assets (A) ) include, on the asset side, held-to-maturity securities that are marked to market. However, as liabilities are not marked to market, ALM s effectiveness is not reflected appropriately. To ensure that ALM is being administered appropriately, regulatory authorities need to evaluate assets that exclude unrealized gains and losses on held-to-maturity securities and policy-reserve-matching bonds. For this reason, Sony Life also calculates real net assets according to these standards (shown in the chart as real net assets (B) ). (Billions of yen) 4,000 3,200 2,400 1, , Real Net Assets Real net assets (A) Real net assets (B) 1, , , , , ,859.7 billion 1,242.2 billion 1, (As of March 31) Real Net Assets (Billions of yen) As of March (1) Total amount to be recorded as assets (= ) 7, , , , ,222.6 Total assets on the balance sheets 6, , , , ,567.6 Difference between fair value and balance sheet amount of securities , , ,617.5 Unrealized gain or loss on tangible fixed assets Unrealized gain or loss other than tangible fixed assets Deferred tax assets for net unrealized gains on available-for-sale securities, net of taxes Deferred tax assets for net deferred gains (losses) on hedging instruments (2) An amount calculated based on total amount to be recorded as liabilities (= ) 5, , , , ,362.8 Total liabilities on the balance sheets 6, , , , ,074.9 Reserve for price fluctuations Contingency reserve Part of reserves for future insurance claim payment Excess of amount equivalent to surrender values ( (a)) Unallocated amount in reserve for policyholders dividends ( (b)) Deferred tax liabilities for net unrealized gains on available-for-sale securities, net of taxes Deferred tax liabilities for net deferred gains (losses) on hedging instruments Real net assets (A) (1) (2) (including unrealized gains and losses on held-to-maturity securities and policy-reserve-matching bonds) 1, , , , ,859.7 (3) Unrealized gains and losses on held-to-maturity securities and policy-reserve-matching bonds , , ,617.5 Real net assets (B) (1) (2) (3) (excluding unrealized gains and losses on held-to-maturity securities and policy-reserve-matching bonds) , , , , Sony Life Insurance Co., Ltd. Annual Report 2018

19 Solvency Margin Ratio 2,624.3% The solvency margin ratio indicates a company s ability to pay. Life insurance companies accumulate policy reserves against the future payment of insurance claims so they can respond sufficiently to ordinarily anticipated events. However, unforeseen events sometimes occur as a result of changes in the environment, such as a major disaster or a cataclysmic fall in the stock market. The solvency margin ratio is one administrative control indicator used to judge whether an insurer has the ability to pay in response to such unpredictable events. We have retained a high level of ability to pay in response to risks from unpredictable events. The solvency margin ratio is one of the indicators of soundness for life insurance companies. Sony Life s solvency margin ratio remained high, at 2,624.3% for fiscal 2017, as of March 31, 2018, up 55.5 percentage points from that of the previous fiscal year. () Item March 31, 2018 Total solvency margin (A) 1,233,854 Total risk (B) 94,030 Solvency margin ratio (A) (1/2) (B) 100 2,624.3% The solvency margin ratio is calculated as follows: Formula for Calculating the Solvency Margin Ratio Solvency margin ratio (%) Total solvency margin Total risk 1/2 100 Total solvency margin = [Common stock, etc. + Reserve for price fluctuations* 1 + Contingency reserve* 2 + General reserve for possible loan losses + [Net unrealized gains/losses on available-for-sale securities and net deferred gains or losses on hedging instruments] 90%* + Net unrealized gains/losses on real estate 85%* Amount excluded from deferred tax assets + Unallotted portion of reserves for policyholders dividends + Deferred tax assets + Excess amount of policy reserves based on Zillmer method + Subordinated debt The portion of the excess amount of policy reserves based on Zillmer method and subordinated debt that is not included in the margin Deductible items] *100% in the event of an unrealized loss *1 Reserve for price fluctuations... This reserve is provided to prepare for losses in the event that prices on stocks and other assets fall below expected rates. *2 Contingency reserve... This reserve is provided to ensure the ability to pay future benefits in the event that losses result from the payment of claims and other benefits owing to an actual mortality rate that is higher than the assumed mortality rate or in the event that actual yields on investment fall below expected rates of return. Total risk [= (R1 + R8) 2 + (R2 + R3 + R7) 2 + R4] This formula is used to compute all risks that fall outside the scope of normal operating risks. Insurance risk (R1)...Risk that claims payments will rise substantially owing to a major disaster or other factors Third-sector insurance risk (R8)...Risk that claims payments on third-sector insurance will rise substantially, owing to a major outbreak of a disease or other factors Assumed interest rate risk (R2)...Risk that the yield on invested assets will fall below the assumed interest rate due to a deteriorating investment environment Minimum guarantee risk (R7)...Risk associated with the minimum claim guarantee amount on variable life insurance and variable annuities Asset management risk (R3)...Risk that asset values will fall or that corporate borrowers will go bankrupt, owing to a plunge in stock prices or abrupt change in exchange rates Business management risk (R4)...Risk that exceeds the scope of normal business management risk Sony Life Insurance Co., Ltd. Annual Report

20 Unrealized Gains on Securities 1,786.7 billion Unrealized gains and losses refer to the differences between carrying amounts and fair values of securities. If fair value exceeds the carrying amount, a gain on sales of assets would be realized by liquidating them at market prices. For this reason, such unrealized gains act as a provision against various risks. Part of the unrealized gains and losses on securities is included in the total solvency margin the numerator of the formula for calculating the solvency margin ratio. We have maintained unrealized gains within our solid asset composition. Unrealized gains on securities in the general account were stable, as domestic interest rates did not undergo any major changes. Note: Unrealized gains or losses on securities list the total of unrealized gains or losses on held-to-maturity securities, policy-reserve-matching bonds and available-for-sale securities, with fair values for securities other than securities held for trading. The total amount of securities includes securities included in money held in trust. (Reference: As of March 31, 2018, Sony Life assumed unrealized gains on shares to be zero when the Nikkei Stock Average is 7,513 and the TOPIX index is 601 points.) (Billions of yen) As of March Change Unrealized gains (losses) on securities in the general account 1, , Unrealized gains (losses) on held-to-maturity securities 1, , Unrealized gains (losses) on policy-reserve-matching bonds Net unrealized gains (losses) on available-for-sale securities (4.2) Of which, unrealized gains (losses) on Japanese bonds (5.6) Of which, unrealized gains (losses) on Japanese stocks Of which, unrealized gains (losses) on foreign securities (0.8) (2.9) (2.0) Non-performing Loans Sony Life has no non-performing loans. Life insurance companies make two types of loans: policy loans and commercial loans. Policy loans comprise two types, one of which is policyholder loans, which allow policyholders to draw on surrender cash within a limited value range when they require funds. The second type, automatic premium loans, are temporary loans also limited to the value of recoverable surrender cash extended when a policyholder is temporarily unable to pay policy premiums to prevent an insurance policy from lapsing. These loans amount to the total of premiums and interest payments. Commercial loans, which are loans other than policy loans, include loans to companies in Japan and overseas, countries and government institutions, as well as mortgage loans. Life insurance companies make loans as investment assets and earn interest from such loans. These comprise policy loans offered as a service to policyholders and other loans. A company s total loan balance represents the sum of these two loan balances. The loan balance as of March 31, 2018 was billion. Essentially, this amount consisted of billion in policy loans and a minor amount of commercial loans. Most of the balance represents policy loans that are limited mainly to recoverable surrender values. The Company has no risk-managed loans (loans for which repayment circumstances are not ordinary). Moreover, all figures listed in the loans by borrower category are classified as normal loans. Credit Ratings Sony Life has been rated highly by credit rating agencies. Credit ratings express a rating agency s opinion of an insurance company s ability to make insurance claim payments. Ratings are determined on the basis of a variety of information, including a company s financial, income and expense information, and sales and management strategies. Sony Life has requested ratings from several institutions to help policyholders and potential customers make objective decisions concerning its ability to finance insurance and pay claims and benefits. Rating and Investment Information, Inc. S&P Global Ratings Credit Ratings (Ratings as of July 1, 2018) Insurance claims paying ability Insurer financial strength rating AA A+ Note: The above ratings were assigned at Sony Life s request. They are not evaluations of insurance companies overall, nor are they a guarantee of claim payments in the future. The ratings are the opinions of the respective rating agencies, based on the figures and information available to them at that time, and are subject to change. Please refer to each agency s website for more details. 018 Sony Life Insurance Co., Ltd. Annual Report 2018

21 Market Consistent Embedded Value (MCEV) and Risk Amount Based on Economic Value About Market Consistent Embedded Value (MCEV) Embedded value (EV) is an indicator used to evaluate corporate value in the life insurance industry. In Europe, EV is disclosed by many life insurers as part of their financial reports and is used as an internal management tool. Under generally accepted accounting principles in Japan (Japanese GAAP), which are applied to life insurance companies in Japan, the balance sheets do not indicate the present value of future profits on in-force business, while EV indicates the present value of future profits on in-force business together with the Company s adjusted net worth. Sony Life believes EV serves as a valuable supplement to the financial information provided under Japanese GAAP and is a helpful indicator used to evaluate corporate value. General Profit Structure of a Life Insurance Policy Profits Policy date Period Losses Life insurers have a profit structure in which costs tend to be high in the initial period of any new policy, resulting in losses, and profits are later made by recovering these costs during the period of insurance. Consequently, performance cannot be accurately assessed based solely on fiscal data for a single fiscal year. This is particularly so during years when new policy sales are strong, as first-year policy expenses are high, reducing profit. Accordingly, EV is widely used overseas, especially in Europe, as a tool for comprehensively evaluating life insurers. As an alternative to traditional EV, Sony Life began disclosing, as of March 31, 2008, Market Consistent Embedded Value (MCEV), based on European Insurance CFO Forum Market Consistent Embedded Value Principles * (MCEV Principles). MCEV represents the present value of the current and future distributable earnings to shareholders generated from assets allocated to the covered business after sufficient allowance for the aggregate risks in the covered business. MCEV is presented as the sum of adjusted net worth and value of existing business. However, MCEV covers only policy amount in force as of the date of valuation, and excludes the potential value of future new business, which is considered a constituent of the economic value of an insurance company. *Copyright Stichting CFO Forum Foundation 2008 Adjusted MCEV = + net worth Value of existing business Adjusted net worth Results of business activities to date The accumulation of profit determined in the past Value of existing business Expected future profits from existing policies Sony Life Insurance Co., Ltd. Annual Report

22 MCEV Value of existing business Use of discount rate to determine present value Adjusted net worth... Previous fiscal year Current fiscal year One year later Two years later... In regard to trends surrounding MCEV, the CFO Forum, which involves the participation of Chief Financial Officers (CFOs) from major insurance companies in Europe, revised the MCEV Principles in May 2016 and added guidance that allows EU Solvency II methodologies with conditions. The calculation standard may change in the future, thus requiring Sony Life to watch closely to ensure compliance. MCEV as of March 31, 2018 Sony Life s MCEV for fiscal 2017, as of March 31, 2018, grew billion, to 1,633.2 billion, due to a revision of the methodologies used for the quantification of insurance risks, the addition of new business and other factors. (Billions of yen) As of March Change MCEV 1, , Adjusted net worth 1, , Value of existing business (216.7) (152.9) 63.7 Note: The insurance risk measurement method was revised at the end of March 2018 in favor of a technique that takes into consideration the Company s risk characteristics. Concurrently, the capital cost rate has been revised from 2.5% to 3%. (Billions of yen) As of March Change New business value (Billions of yen) 2,500 2,000 1,500 1, Market Consistent Embedded Value (MCEV) MCEV Value of existing business Adjusted net worth 1,633.2 billion 1, , , (As of March 31) Adjusted Net Worth Adjusted net worth is calculated as the market value of assets allocated for the covered business in excess of statutory policy reserve and other liabilities as of the valuation date. Specifically, it is calculated as the total amount of the net assets section on the balance sheets, adding reserve for price fluctuations, contingency reserve, reserve for possible loan losses, reinsurance debit for coinsurance-type reinsurance (future profits to be recognized), unrealized gains or losses on held-to-maturity securities, unrealized gains or losses on policy-reserve-matching bonds and unrealized gains or losses on land and buildings, less unfunded pension liabilities and intangible fixed assets, and adjusting for the amount of tax effect equivalent to these nine items, on which valuation gains or losses on subsidiaries and affiliated companies are added. The adjusted net worth at the end of the current fiscal year increased by billion, primarily because of the increase in unrealized gain on held-to-maturity securities caused by a decrease in interest rates. The breakdown is shown in the table to the right. (Billions of yen) As of March Change Adjusted net worth 1, , Total net assets Reserve for price fluctuations Contingency reserves Reserve for possible loan losses (0.0) Reinsurance debit for coinsurancetype reinsurance Unrealized gains or losses on held-to-maturity securities 1, , Unrealized gains or losses on policy-reserve-matching bonds Unrealized gains or losses on land and buildings (1.3) Unfunded pension liabilities (3.6) (2.4) 1.1 Intangible fixed assets (19.4) (23.2) (3.9) Tax effect equivalent of above nine items (461.8) (504.4) (42.6) Valuation gains or losses on subsidiaries and affiliated companies (3.4) (3.7) (0.4) 020 Sony Life Insurance Co., Ltd. Annual Report 2018

23 Value of Existing Business The value of existing business is calculated as the present value of certainty-equivalent profit (present value of profit based on the future cash flows generated from the covered business) less the time value of options and guarantees, frictional costs (the present value of investment costs and taxes on assets backing the required capital at each point of time in the future) and the cost of non-hedgeable risks (the present value of costs to hold required capital to cover non-hedgeable risks in the future). The value of existing business as of March 31, 2018 increased 63.7 billion, primarily due to a revision of the methodologies used for the quantification of insurance risks and the addition of new business, which increased value, offset by the effect of a decrease in interest rates, which lowered the value of existing business. The breakdown of the value of existing business is shown in the table below. (Billions of yen) As of March Change Value of existing business (216.7) (152.9) 63.7 Present value of certainty- equivalent profit (33.3) Time value of options and guarantees (145.2) (136.0) 9.1 Frictional costs (35.6) (22.7) 12.9 Cost of non-hedgeable risks (385.9) (310.9) 75.0 Reconciliation Analysis from MCEV at the End of the Prior Year Impact of Changing Assumptions (Sensitivities) The table below shows the reconciliation analysis of MCEV as of March 31, 2018, from MCEV as of March 31, (Billions of yen) MCEV Opening MCEV (MCEV as of March 31, 2017) 1,441.1 Opening adjustment (23.1) Adjusted opening MCEV 1,418.0 New business value 70.4 Expected existing business contribution (risk-free rate) 16.4 Expected existing business contribution (in excess of riskfree rate) 6.8 Transfers from value of existing business and required capital to free surplus Of which, on new business Experience variances 9.2 Assumption changes 36.2 Other operating variance 80.4 Operating MCEV earnings Economic variances (4.2) Other non-operating variance Total MCEV earnings Closing adjustments Closing MCEV (MCEV as of March 31, 2018) 1,633.2 Note: Please be aware that significant changes in adjusted net worth and the value of existing business offset each other through the effect of ALM. The impact of changing the underlying assumptions of MCEV is as follows. (Billions of yen) Assumption Change in Assumption MCEV Change in Amount Rate of Change Base No change 1, bp decrease 1,552.6 (80.6) (5%) Interest rates 50bp increase 1, % Swap rates 1, % Stock/Real estate market value 10% decrease 1,610.7 (22.5) (1%) Stock/Real estate implied volatility 25% increase 1,604.2 (28.9) (2%) Interest swaption implied volatility 25% increase 1,614.5 (18.7) (1%) Maintenance expenses 10% decrease 1, % Lapse and surrender rates 0.9 1,617.9 (15.3) (1%) Death protection products , % Mortality rates Third-sector and annuity products 1,620.8 (12.3) (1%) 0.95 Morbidity rates , % Required capital Regulatory minimum 1, % Foreign exchange rates 10% appreciation of JPY 1,613.5 (19.7) (1%) Notes: 1. Frictional costs and the cost of non-hedgeable risks do not change in the sensitivity tests, with the exception of frictional costs, which are changed in terms of required capital. 2. Values of subsidiaries and affiliated companies are not changed except for stock and real estate market value sensitivity and foreign exchange rate sensitivity where the stock value of subsidiaries and affiliated companies is directly altered. 3. The impact of changing more than one assumption at a time is not congruent with the sum of impacts for each assumption. Major Assumptions Sony Life has used the JGB yields and the U.S. Treasury yields as of the end of March 2018 as reference rates for the certainty-equivalent projections. We have not added liquidity premium on the risk-free rate as there are no products that are considered to have reasonably predictable and illiquid cash flows and would therefore be appropriate to apply a liquidity premium. An ultimate forward rate is applied to extrapolate the ultralong-term portion when no market data is available. Sony Life Insurance Co., Ltd. Annual Report

24 The risk-free rates used in calculation for key terms (on a par-rate basis) are as follows: As of March 31 (%) Yen U.S. dollar Term year (0.25) (0.13) years (0.12) (0.11) years years years years years years years years (Data: Ministry of Finance Japan for JGB [extrapolated] and Bloomberg for U.S. Treasury [extrapolated]) Assumptions, including mortality and morbidity rates, lapse and surrender rates, and operating expense rates, etc., were developed based on best estimates by product as of the end of March Best-estimate assumptions are set with due consideration to past and current results and expected results in the future. Opinion of Third-party Organization Sony Life requested Milliman, Inc., an external actuarial consulting firm with expert knowledge in the area of MCEV valuations, to review the methodology, assumptions and calculations. Risk Amount Based on Economic Value Sony Life has been disclosing the risk amount based on economic value since the end of fiscal 2011 to foster a deeper understanding of the Company s financial soundness on the basis of economic value. At the end of fiscal 2017, Sony Life s risk amount based on economic value (after tax) was billion, down billion from a year earlier, mainly due to a revision of the methodologies for the qualification of insurance risk. A breakdown of the risk amount is provided below. (Billions of yen) As of March Insurance risk* Market-related risk Of which, interest rate risk* Operational risk Counterparty risk Diversification effect (392.0) (182.0) The risk amount based on economic value The risk amount based on economic value* 3 refers to the total amount of Sony Life s risks, comprehensively examined and including insurance risk and market-related risk. Sony Life is making every effort to ensure its financial soundness by maintaining the risk amount based on economic value at an appropriate level relative to MCEV, which is capital based on economic value. *1 Insurance risk at the end of fiscal 2016 is the amount before variance effect within the Life module and Health module. *2 Interest rate risk excludes the variance effect within market-related risk. *3 The risk amount based on economic value is calibrated at VaR (99.5%) over one year and based on the internal model. 022 Sony Life Insurance Co., Ltd. Annual Report 2018

25 Sony Life Insurance Co., Ltd. Annual Report

26 LIFEPLANNER VALUE Continuing to provide LIFEPLANNER VALUE to protect customers all across Japan throughout their lives LIFEPLANNER VALUE expresses the value we provide to our customers. Providing the necessary protection amount tailored to each customer based on life planning We work with our customers to develop personalized life plans, the first step in defining each family s dreams and future. We utilize these life plans to analyze each customer s current income and expenses and future family finance needs and to calculate an appropriate protection amount, plotted on a timeline, that would enable his or her family to realize their dreams and protect their future even if the unexpected occurs. Each customer is unique, so we provide optimal life insurance for his or her specific requirements. Always following up on coverage with the very best advice For the life insurance policy that a customer signs to serve its intended purpose, should the unexpected occur, we conduct follow-up reviews to catch changes at each stage in a customer s life and offer advice to ensure the individual has the most appropriate level of protection as circumstances evolve. Offering added value that goes beyond insurance toward achieving life plans However, people encounter many events over the course of a long life that life insurance alone cannot address, such as children s education, the purchase of a home, a change in jobs or the decision to set out independently, and even the second life of the middle-aged and seniors in retirement. Lifeplanner sales employees and Partners (independent agencies) go through various training programs self-directed and reciprocal studies to acquire the necessary skills and expertise to offer suitable advice that realize customers life plans. Providing optimal levels of protection, high-quality services and added value beyond the scope of insurance Sony Life breathes life into life insurance. It s a promise, enduring and truly kept. Realizing customers dreams, full of hopes and expectations. That is Sony Life s LIFEPLANNER VALUE. Offering added value that goes beyond insurance toward achieving life plans Always following up on coverage with the very best advice Providing the necessary protection amount tailored to each customer based on life planning 024 Sony Life Insurance Co., Ltd. Annual Report 2018

27 Lifeplanner Sales Employees and Partners. Always for Customers, Always with Customers Lifeplanner Sales Employees We believe it is important to first consider your dreams what you want to do in the future and what you want to do for your family, for instance and then shape these into reality by choosing the life insurance that is best for you. Lifeplanner sales employees help you turn dreams into reality. Life insurance will begin changing today. Lifeplanner sales employees will drive this change. This was Sony Life s declaration at the time it commenced operations, and the basis for putting in place its Lifeplanner system. By ensuring that Lifeplanner sales employees are consistent leaders of innovation within the industry, we provide customers with ideal life insurance. Lifeplanner sales employees accompany their customers, understanding their lives as they go through each of life s milestones. The time that Lifeplanner sales employees share with customers and the strong trust-based relationships they create are an important part of helping customers meet the dreams that constitute their life plans and providing value. Unfortunate circumstances are not the only time that customers experience such value. During the course of long, full lives, customers typically experience various concerns or problems. Lifeplanner sales employees stand by to guide customers at these times and keep them from losing sight of their goals. As well as the customer representative, Lifeplanner sales employees throughout Japan offer their cooperation. Lifeplanner sales employees help customers reach their dreams. They remain alongside customers throughout every phase of their lives, providing essential support. Premier Agency Exclusive agents under new model capitalizing on skills of Sony Life Lifeplanner sales employees and managers on independent road Sony Life has built a new consulting model designed to ensure customers have continuous access to a more diverse array of services, with life insurance at the core. The model is popularized by Executive Lifeplanners, who have outstanding performance results and the Company s highest qualifications, and experienced managers, who have groomed first-rate Lifeplanner sales employees with excellent skills. These people pursue new business as corporate entities, drawing on extensive knowledge and experience to meet customer needs. Today s turbulent times call for insurance professionals who can design a wide variety of proposals and leverage problem-solving expertise in distinct areas of specialization. Being this kind of professional, with the ability to address customer needs promptly and with a high level of competency, is the Premier Agency s mission. Premier Agencies work with alliance partners specialists in various fields, including accounting, taxation, law and medicine, to deliver high-quality consultations in four priority segments: wealth management, life planning and life design, business consulting and succession, and healthcare support. These efforts transcend generations, honing in on customers life and business needs. Partners In 1989, the 10th anniversary of the Company s founding, alongside its Lifeplanner channel, Sony Life launched the Partner consulting channel as an independent agency system. In keeping with our mission to work for customers financial security and stability by offering optimal life insurance products and high-quality services, Partners are professional independent agencies who solicit insurance in partnership with Sony Life. The idea behind this channel is for Partners to offer high-quality services to customers based on their close ties with the communities in which they operate. The term Partners is apt because, in addition to agencies that act as business partners for Sony Life, they are lifelong partners to customers. Sony Life s many Partners throughout Japan currently work as life insurance professionals who consult with customers and apply specific and advanced expertise through needs-based sales that truly fulfill their role as customers partners. Sony Life Insurance Co., Ltd. Annual Report

28 Educational Systems, Self-development and Reciprocal Studies Educational Systems for Lifeplanner Sales Employees and Partners Sony Life provides a diverse range of educational programs designed to enable Lifeplanner sales employees and Partners to fulfill their roles as insurance and financial professionals in responding to the confidence that customers place in them. Lifeplanner Sales Employee Training Program Basic Training Program (B.T.P.) B.T.P. enables Lifeplanner sales employees to acquire the mental attitude, knowledge, skills and habits suitable for performing as professionals. This program runs for 36 months, beginning when sales employees join Sony Life. Through it, they learn how to get customers to reveal their thoughts, concerns and needs relating to life insurance, how to suggest the optimal coverage to protect customers at any life stage and how to provide lifelong support through high-quality follow-up services after a policy is signed. B.T.P. comprises B.T.P. for new employees and follow-up training at headquarters in a classroom format and complementary training at agency offices in line with the agency office training process. The breakdown is B.T.P. 1 in the first month after joining Sony Life; B.T.P. 6, which centers on knowledge and skills training from the second month; B.T.P. 12, which focuses on life planning; B.T.P. 24, which emphasizes knowledge, skills and compliance; and B.T.P. 36, which highlights the corporate market and follow-up consultations. Employees take tests at the end of each B.T.P. to graduate to the next level. A passing grade is a prerequisite for anyone who wants to be certified to provide non-life insurance agency services or banking agency services. The program, from start to finish, enables employees to continuously acquire a deeper understanding of the Lifeplanner basics and to move on to the next level. In addition, employees undergo on-the-job training (O.J.T.) such as meeting regularly with unit managers to confirm their progress (process meetings), role-playing and joint work, which enable employees to put the knowledge and skills they acquire in training programs to practical use. These efforts underpin the ability of employees, as Lifeplanner sales employees, to offer high-quality services to every customer. Lifeplanner Sales Employee Training System (As of July 1, 2018) Graduation test 1 Graduation test 12 Graduation test 24 Independence Attained level Necessity of life insurance Death protection Life/death consulting Comprehensive risk response Life plan support Joining 1 month Start of sales 12 months 24 months 36 months Agency office training process Before joining C.I.P. Eight hours, four times B.T.P. 1 One month after joining New employee training B.T.P. 6 B.T.P. 12 B.T.P. 24 B.T.P. 36 O.J.T. (process meetings, role-playing, apprentice fieldwork) Follow-up training I Branch follow-up training Follow-up training II Follow-up training Foreign currency denominated products certification exam Assurance certification exam Home loan certification exam Certification exam The Life Insurance Association of Japan s exam Financial planner certification exam General process exam Special course exam Variable insurance sales certification exam Kinzai Institute for Financial Affairs, Inc. Japan Association for Financial Planners AFP certification training Advanced course exam Life Insurance University course exams (Six fields) 2nd Grade Certified Skilled Worker of Financial Planning exam 2nd Grade Certified Skilled Worker of Financial Planning (national qualification) AFP Total life consultant (Financial planner certified by the Life Insurance Association of Japan) 1st Grade Certified Skilled Worker of Financial Planning (national qualification) CFP (top qualification) 026 Sony Life Insurance Co., Ltd. Annual Report 2018

29 Partner Training Program Partner Training Program (PTP) for Partners This program is designed to help Partners succeed in the life insurance business. In this program, Partners learn about our products and needs-based sales approaches derived from expertise we have accumulated over the years. Professional Agent System Sony Life introduced this solicitation certification program in 2006 to help cultivate high-quality sales personnel who understand the true value of life insurance, namely, to work closely with customers, draw up their life plans and provide optimal assurances that match those life plans. This system involves various assessments to judge objectively that a person has the capabilities that life insurance businesses require. Only agents who have passed all assessment levels and surpassed predefined levels for performance and qualification are awarded the title of Professional Agent. Professional Agents must have the ability to listen to customers and determine their needs. They must be consummate salespeople, with a high level of expertise in explaining the content and advantages of policies, and they require a level of knowledge and a track record sufficient to assure customers of their capabilities. Agents who at the culmination of long years of training have acquired the Professional Agent sobriquet work with our customers throughout Japan, providing life planning on a daily basis. Partner Training System (As of July 1, 2018) Partners Training at sales offices Training at headquarters Partner Training Program Sales process meetings, role-playing, joint work (apprentice fieldwork) Sony Life Business College sales course: headquarters group training & office follow-up (nine months) Sony Life Business College management course: headquarters group training & office follow-up (nine months) Certification exam The Life Insurance Association of Japan s exam Financial planner certification exam General process exam Special course exam Variable insurance sales certification exam Kinzai Institute for Financial Affairs, Inc. Japan Association for Financial Planners AFP certification training Advanced course exam Life Insurance University course exams (Six fields) 2nd Grade Certified Skilled Worker of Financial Planning exam 2nd Grade Certified Skilled Worker of Financial Planning (national qualification) AFP Total life consultant (Financial planner certified by the Life Insurance Association of Japan) 1st Grade Certified Skilled Worker of Financial Planning (national qualification) CFP (top qualification) Professional Agent Certification Capability prerequisites Implemented within two months following completion of knowledge assessment Entry Knowledge assessment Written test to confirm knowledge of life insurance sales System skills assessment Practical test to confirm PC skills needed to write and maintain new contracts Pass Sales skills assessment Role-playing test to confirm life planning and hands-on skills for conducting needs-based sales Pass Performance prerequisites Required qualifications Professional Agent certification Approximately six months from entry Sony Life Insurance Co., Ltd. Annual Report

30 Enhancing Education for Managers People in management positions, including agency managers and unit managers, are tasked with the important responsibility of turning carefully selected individuals into capable Lifeplanner sales employees. To help managers fulfill this responsibility, Sony Life strives to enhance educational programs, which include training to deepen understanding of the essence of life insurance, promote a shared vision of the Company and foster leadership skills. Sony Life Academy (SLA) The Company opened its Sony Life Academy in fiscal 2003 to train its agency managers, the heads of its independent Agency Sales Division and headquarters general managers. In April 2007, we also launched a course called Life Insurance Basics for unit managers, Independent Agency Sales Group office managers and headquarters managers. As of March 31, 2018, 406 people had undergone SLA training. Courses are led by current and past directors, and participants learn about the spirit that infused Sony Life at its establishment and the true meaning of life insurance. Also, through lectures by people in charge of each headquarters division, participants acquire a shared perspective related to the Company s vision and pick up key factors that underpin healthy corporate growth into the future. Many opportunities for discussion help hone leadership skills for the next generation of management at Sony Life. Nurturing Financial Planners Our socioeconomic environment is undergoing major changes, owing to the advent of the information-oriented society, reforms to the social security system, diversification of financial products and a demographic shift to an aging population with a low birthrate. In these circumstances, it is vital for individuals to conduct comprehensive asset planning and risk management or financial planning geared to their specific life plans. Financial planners are professionals qualified to meet the financial planning needs of customers. A large number of Lifeplanner sales employees study financial planning to achieve higher levels of needs-based sales capabilities. CERTIFIED SKILLED WORKER OF FINANCIAL PLANNING People with 1st Grade Certification: 122 People with 2nd Grade Certification: 3,763 (As of June 1, 2018) Through the Human Resources Development Promotion Act, the Japanese government has introduced a proficiency certification system to verify levels of expertise in various fields, including 1st, 2nd and 3rd grade Certification in Financial Planning credentials. AFFILIATED FINANCIAL PLANNER (AFP) People with AFP credential: 784 (As of June 1, 2018) The Japan Association for Financial Planners is the sole issuing authority for the AFP license. This qualification certifies that the licensee possesses the knowledge required of a financial planner and is competent to offer advice and make proposals in response to client needs. CERTIFIED FINANCIAL PLANNER (CFP ) People with CFP credential: 78 (As of June 1, 2018) The CFP license is an international qualification conferred by the CFP Board of Standards, Inc., of the United States. This is an authoritative qualification given only to financial planners who demonstrate advanced financial planning abilities and sound work ethics. 028 Sony Life Insurance Co., Ltd. Annual Report 2018

31 Reciprocal Studies Advanced consulting-based sales and follow-up consultations are linked with the satisfaction and peace of mind that Sony Life delivers to its customers. To achieve these aims, we offer a broad range of knowledge and skills training. Sony Life s employees have embraced a spirit and culture of mutual assistance. In addition to holding independent training forums around the nation, they conduct mentoring activities on a daily basis. Million Dollar Round Table (MDRT) MDRT is an international association of the world s leading life insurance and finance professionals. The organization has 62,000 members in 69 countries and regions (as of July 2017). Each year, leading insurance and financial service professionals from around the world are selected as MDRT members. These members work to develop the whole person, based on the concepts of reciprocal training and contributions to society. MDRT members demonstrate superior skills, ethical standards and customer service. These business and regional community leaders are recognized worldwide as life insurance and financial service specialists. As of April 1, 2018, 925 Lifeplanner sales employees and Partners of Sony Life were among the largest groups forming the MDRT chapter in Japan. MDRT Sony assembly and training session (Sapporo, April 2018) MDRT Sony MDRT Sony comprises Lifeplanner sales employees and Partners of Sony Life who have become MDRT members. The chapter holds training sessions several times a year to exchange the latest information and share their skills, with the aim of providing top-quality consulting and other services to customers. Chapter members, representing our most successful Lifeplanner sales employees and Partners, demonstrate their passion by serving customers in keeping with the MDRT spirit and through reciprocal studies. Members also take the initiative by participating in various volunteer activities. Japan Association of Insurance and Financial Advisors (JAIFA) Established in 1962 as the All Japan Association for Life Insurance Sales Representatives to enhance the status of life insurance salespeople through the self-development of members, the organization changed its name to Japan Association of Insurance and Financial Advisors (JAIFA) in Certified in April 2012 by the Cabinet Office as a public interest incorporated association, JAIFA aims at serving the public interest by encouraging the sound development of the life insurance industry and contributing to society in a broad sense. JAIFA All Sony liaison meeting and workshop JAIFA in Sony Life Lifeplanner sales employees as well as unit managers and agency managers participate in JAIFA events at Sony Life. As of April 2018, there were 37 JAIFA Sony Life regional chapters nationwide, involving a total of 5,528 people in a robust agenda of activities. All Sony liaison meeting, which is comprised of people who chair JAIFA regional chapters across Japan, typically meets twice a year in spring and autumn to promote the exchange of information among chapters, encourage greater interest in life insurance and engage in activities that contribute to local communities. Sony Life Insurance Co., Ltd. Annual Report

32 Securing the Future for Our Customers Consulting-based Sales and Follow-up Consultations Sony Life proposes insurance that is tailored to the individual life plans of its customers. Accordingly, providing insurance requires us to determine what sort of life the customer plans to lead. We listen carefully to a customer describe his or her dreams for the family s future and then work with the customer to turn those hopes into specific plans. We work together on this life plan, calculating the necessary protection and putting in place the protection necessary to meet the customer s goals. Sony Life refers to this process as providing consulting-based sales, and we have followed this approach diligently since the time of our establishment. We provide tailored protection to change lurking uncertainty into a sense of well-being. Consulting-based Sales Life Planning Life is constantly changing, and life insurance needs to continue offering protection throughout people s lives. Our starting point is to determine potential customers plans, dreams and timelines, to paint a picture of the future for their families and to help them envision the milestones. Calculating Income and Expenses, Designing Protection During this process, we determine a family s income and expenses, assuming they live according to the life plan we draw up. We look at whether the family would be able to live in comfort if the unexpected occurred. After clarifying future economic risks, Lifeplanner sales employees and Partners design the protection that most optimally fits that customer s needs. Giving birth Child-rearing Purchasing a home Health Medical care Retirement Nursing care, long life Sony Life sees life planning as a way of making visible the future life plan of the customers it is working to protect. The life planning process enables Lifeplanner sales employees and Partners to accompany customers on their journeys through life. 030 Sony Life Insurance Co., Ltd. Annual Report 2018

33 We recognize that the environments in which our customers live and work are always changing. To ensure that the life insurance policy is serving its intended role, even after a policy agreement is signed, we periodically check protection and provide advice. If a customer s circumstances change and some issues arise, the individual in charge of that policyholder, as well as Lifeplanner sales employees and Partners throughout Japan, are available to help customers realize their life plans. Our work goes beyond simply delivering benefit payments if the unexpected occurs. We also believe that an important part of our mission is to communicate to a bereaved family the feelings inherent in the life insurance and provide support to the family. Sony Life refers to the services it provides after concluding a policy as follow-up consultations. We aim to provide high-quality services and earn the trust of our customers as we accompany them through life s milestones. We search for measures that will resolve the issues customers face as they go through life s milestones. If the unexpected should occur, we are standing by to communicate policyholders feelings and support their families. Follow-up Consultations Periodic Checks and Advice on the Life Plan and Protection People encounter a variety of changes over the course of a long life, undergoing such experiences as child-rearing, purchasing a home, becoming sick and requiring nursing care. To ensure that the proposed life insurance is playing its properly intended role as conditions change, even after a policy is signed, we periodically check protection, offer advice and provide information. Delivering Feelings to Bereaved Family Members If the unexpected occurs, we support the bereaved family by responding quickly. We consider it our mission to communicate to the family the feelings inherent in the life insurance and provide support for their future happiness. Meeting Changes in Society and Life Regularly Checking Life Plans and Offering Advice Changes in social conditions and the economic environment can influence the future a customer envisions. We periodically confirm that appropriate protection is in place to facilitate a successful life plan. We also work with customers to update their life plan in line with changing dreams and goals for the future. Periodic Checks and Advice on Protection Such major life events as the birth of a child or a change in employment can alter coverage needs. We consistently monitor the content of our customers protection and provide advice to ensure that their life insurance coverage meets their needs to the fullest extent possible. Sony Life Letter We send out the Sony Life Letter to assemble policy content in an easy-to-understand format for our customers. Customer Web Service Various life insurance procedures and confirmation of content can be handled over the Internet. Providing Appropriate Information and Resolving Issues at Times Such as These: Home We want to set aside funds to buy a home. We want to put together an appropriate mortgage loan. We are thinking of accelerating our mortgage payments or refinancing our mortgage. We want to learn more about housing loans. And so on Child-rearing and Education How much will an education cost? We would like to set aside a regular amount as a reserve for education. And so on Retirement We would like to start setting aside funds for our senior years. We want to make investments to tide us over in our senior years. And so on Other Assets We would like to know more about the social insurance (medical care, pension, nursing care) system. We want to learn more about automobile insurance. And so on Health, Medical Treatment and Nursing Care Health Consultation Desk Inquire by phone about treatment for illness and nursing care. We have a health-related question we would like to ask a health nurse or clinical nurse. I would like to consult with a specialist physician. I would like an introduction to a hospital. And so on Magazine We deliver magazines containing useful information about medical treatment, nursing care and finance. ES Solution Service for Corporate Policyholders Health support service: We help corporate policyholders support the mental and physical well-being of their employees and management, mainly through health advice and physician access over the phone. Personnel/labor diagnostic service: We prepare diagnostic reports on five management issues related to personnel and labor. Club Off service: We offer a diverse lineup of services including restaurants and leisure activities to make working and private time better. Specialist introduction service: We provide introductions to specialists, such as lawyers and tax accountants, who can offer advice on matters of concern or difficult situations. Note: Eligibility varies, and not everyone qualifies for each service. For details, please talk to your representative. Sony Life Insurance Co., Ltd. Annual Report

34 Providing Optimal Protection through the Life Planning Support Service (LiPSS) Life Planning and Designing Protection Our LiPSS software connects specific coverage and an uncertain future. This software plan allows for contingencies so that the life plan of a customer s family does not go off track even if the unexpected occurs, and clearly estimates the amount of coverage needed to offset economic risks given a customer s future life plan. Even after protection begins, we use LiPSS to support customers at different life stages and in line with changing risks. STEP 1 Life Planning Eliciting Customers Dreams and Goals The first step is to learn the life paths a customer and his or her family intend to follow, as well as their dreams and goals. When forecasting the future, we look at this picture as seen by every member of a family. This process allows us to forecast how much money will be needed, as well as when and for what purposes. Simulation of a Life Plan Chart Life Plan Chart Considerations We look at the ways in which a family s life will change over the next few decades The chart looks at the period during which children will be attending school from kindergarten to university and estimates expenses, including times when siblings educational costs will overlap The timing of life events that involve major expenditures, such as purchasing or renovating a house Caring for senior parents living together and the customer s own plans for his or her senior years The timing for pursuing a customer s future dreams, such as career plans that involve changing jobs or striking out on his or her own 032 Sony Life Insurance Co., Ltd. Annual Report 2018

35 STEP 2 Simulation Simulation of Future Income and Expenses Next, we look at the potential changes in a family s income and expenses as they progress according to the life plan they have created. By comparing projected income and expenses on a yearly basis, we confirm whether the life plan is viable financially. By considering the balance between income and expenses and prioritizing expenditures, we propose realistic ways to make improvements. Next, we run simulations to factor in the unexpected. We clarify the shortfall in the amount of money that would be sufficient to allow the bereaved family to live comfortably in the event of an untimely death. <LiPSS> Income and Expenses on an Annual Basis for Each Year of Survival Balance of Financial Assets <LiPSS> Simulation of Income and Expenses on an Annual Basis if the Unexpected Occurs Balance of Financial Assets STEP 3 Insurance Planning Considering Life Plan Risks and Countermeasures One factor that must be considered is whether, in the event of an untimely death, the bereaved family would be able to live comfortably according to their life plan. We look at how much additional money would be needed. Based on the results of the customer s life plan and these simulations, our insurance professionals Lifeplanner sales employees and Partners analyze and consider needs from various angles before making proposals to the customer. <LiPSS> Necessary Amount of Coverage Necessary Amount of Coverage To calculate the necessary amount of coverage, we run a simulation to determine the potential gap between expenses and income in the event of an untimely death. (This is the amount that needs to be covered after allowing for a survivorship pension or other public support.) Sony Life Insurance Co., Ltd. Annual Report

36 Sony Life s Proprietary System Supporting Consulting-based Sales and Follow-up Consultations In fiscal 2012, Sony Life introduced the C-SAAF* follow-up consulting system along with its upgraded sales support and customer management systems, which are underpinned by its LiPSS simulation system for life planning (see pages 32 33). This system greatly reduces the burden of the application process on customers. The system also allows for the consolidated management of such information as the life plan set forth when a policy was initially taken out, along with any adjustments made to accommodate later changes in conditions. This system enables Sony Life to conduct long-term follow-up consultations in a timely manner. *C-SAAF is an acronym for Consulting-Sales and Follow-up system. Paperless Application Process Customers are able to confirm policy content on-screen and conclude the procedure by providing an electronic signature through a paperless application process. In fiscal 2015, Sony Life introduced an instant approval system and launched the industry s first instant approval of new policy applications submitted through paperless processing. In fiscal 2016, we introduced paperless processing of various face-to-face administrative details following policy signing, such as changes to the payment method and policy content. Smartphone Connections to the Customer Database By linking a customer representative s smartphone with the customer database, the representative can call up and refer to a customer s policy information simply by tapping on the customer s communication records. This approach allows us to respond to telephone requests in real time and store that information in our database. We can thus respond safely and swiftly to customers at any time and from any location. Smartphone system link Filling in a paperless application CSM System The CSM system allows for the consolidated management of such information as the life plan set forth when a policy was initially taken out, along with any adjustments made to accommodate later changes in conditions. This system helps Sony Life conduct long-term follow-up consultations in a timely manner. Policy Maintenance System: SLIM SLIM enables Lifeplanner sales employees and Partners to quickly offer accurate information in response to customer inquiries and on policy maintenance procedures. SLIM allows us to review the content of each customer s policy, conduct various trial calculations, refer to the customer s Sony Life Letter and carry out a host of other processes, by simply inputting the customer s name and then selecting any singular piece of information that identifies the customer, such as an address. The system also automatically drafts necessary documentation for changes in coverage, policyholder loans and the payment of insurance claims and benefits. SLIM 034 Sony Life Insurance Co., Ltd. Annual Report 2018

37 System of Claim Payment Operations Fundamental Policy on Payment Operations Recognizing that the payment of insurance claims is the most important function of an insurance company, Sony Life provides insurance products that promise policyholders the security of economic protection. The commitment to pay claims is a long-term agreement between the Company and its customers. We therefore regard it as our responsibility to pay claims unfailingly to customers when needed. At Sony Life, we adhere to four concepts courtesy and politeness, promptness, simplicity and clarity that are particularly essential to claim payment operations. These concepts also guide us in daily efforts to improve the structure for claim payment operations and build a stronger organization. Provision of Information Related to the Payment of Insurance and Other Claims Payment Operations Guidebook We prepared this guidebook to help customers better understand insurance and other benefit payment requests, as well as these payments. The guidebook contains information on the procedures for making a claim and includes specific examples of cases in which claim payments can and cannot be made. Payment Operations Structure In order to make payments reliably and swiftly, Sony Life assigns multiple personnel to check payment approval decisions. We have also prepared reference documents and operating manuals highlighting points for caution when making payment assessments. To ensure the appropriateness of payments, in addition to internal checks by the Claims Payment Management Department, the Compliance Department runs checks of appropriateness, which are verified by knowledgeable external advisors. We also have made organizational upgrades, such as increasing the number of personnel in the Claims Payment Management Department and enhancing their education and training. When developing new products, the Product Development Department and the Claims Payment Management Department cooperate to ensure the appropriateness of claims and other payments, and share product overviews and policy stipulations. Status of Payments The following information represents the status of payments made against requests for payment received in fiscal The cases described below were recorded in accordance with standards drawn up by the Life Insurance Association of Japan. Number of Policies on Which Payments Were Made in Fiscal 2017 (Instances) Claims Death Disaster Severe Injury Other Total Number paid 5, ,150 9,510 Number of Policies on Which Non-payment Decisions Were Reached (Instances) Claims Death Disaster Severe Injury Other Total Invalid, as fraudulent Invalid, as acquired for illegal purchases Cancelled for non-disclosure reasons Cancelled for grave reason Justified exclusion Outside scope of reasons for payment Other Total (Instances) Benefits Death Hospitalization Surgery Severe Injury Other Total Number paid 2, ,545 93, , ,229 Benefits Hospitalization Death Surgery (Instances) Severe Injury Other Total Invalid, as fraudulent Invalid, as acquired for illegal purchases Cancelled for non-disclosure reasons Cancelled for grave reason Justified exclusion Outside scope of reasons for payment , ,354 Other Total , ,769 Sony Life Insurance Co., Ltd. Annual Report

38 Enhanced Products and Services for Continuous Support of Customers Life Plans At Sony Life, given customer needs and conditions impacting society, we strive to develop products that provide each and every customer with optimum protection. New Products In October 2017, Sony Life launched U.S. Dollar-denominated Single Premium Whole Life Insurance (Non-notifi cation Type/ Non-dividend) and U.S. Dollar-denominated Living Benefi t Whole Life Insurance (Living Standard Type/Non-dividend). Amid the prolonged low-interest rate environment, these products make investments in U.S. dollars to capture higher interest rates than those denominated in yen. These products meet the needs of customers who accept exchange rate risk and want to effi ciently ensure protection. Then, in July 2018, we debuted Medical Benefi t (comprehensive medical insurance (no surrender value) 18, nonparticipating) and Medical Benefi t Return (comprehensive medical insurance with special provision for health refund benefi t (no surrender value) 18, non-participating). The fi rst clearly ensures a scope of coverage and offers extensive protection against the three diseases. The second provides the same coverage for hospitalization and surgery as the fi rst but also entitles the policyholder to receive a health refund benefi t equivalent to insurance premiums paid if he or she has not been hospitalized for surgery as of a specifi ed age. Customers may attach riders to these products as well for a lump-sum benefi t upon hospitalization (non-participating), for benefi t upon hospitalization due to the three diseases (non-participating) and for female-specifi c surgeries (non-participating). U.S. Dollar-denominated Single Premium Whole Life Insurance (Non-notification Type/ Non-dividend) People with preexisting conditions or health concerns need not notify Sony Life of health status or undergo a physician s medical examination. For 15 years after the policy is taken out, the death protection amount increases each year according to a rate of gradual increase determined when the policy contract is signed. The premium payment method (number of times) is single payment. The single premium payment can be made in yen or U.S. dollars. The policy can be used as a way to transfer assets to heirs. Insurance Benefit to Be Paid Terms of Payment Payment Amount Death benefi t In the event of death Death benefi t on day of death Conditions First coverage period (15 years) Second coverage period (For life, from 16th year of policy onward) Image for illustrative purpose only. Basic policy amount (lump sum, single premium, U.S. dollars) Death benefit (U.S. dollars) Surrender value (U.S. dollars) Whole life coverage Calculation formulas for death benefi t Date of death Death benefi t First coverage period Basic policy amount + Basic policy amount x Rate of gradual increase* x Number of contract anniversaries until date of death Second coverage period Basic policy amount + Basic policy amount x Rate of gradual increase* x 15 *Rate of gradual increase is a percentage that raises policy amount. It varies, depending on contract age and gender. 036 Sony Life Insurance Co., Ltd. Annual Report 2018

39 Policy example Basic policy amount (lump sum, single premium, U.S.$100,000) Coverage period: Whole life (Amounts less than U.S.$1 are rounded off.) Age when Rate of Death benefi t during Lapse and surrender rate* 1 (Number of years elapsed* 2 ) Gender policy taken out gradual increase second coverage period 5 years 10 years 15 years % $173, % 112.0% 121.9% Male % $148, % 111.4% 120.0% % $130, % 110.0% 117.2% % $194, % 112.5% 123.3% Female % $163, % 112.2% 122.2% % $139, % 111.4% 120.0% * 1 The lapse and surrender rate (%) is calculated as surrender value divided by single premium payments x 100 (percentage rounded off to fi rst decimal place). * 2 The number of years elapsed indicates the number of years since the policy date. Lapse and surrender rate is the value corresponding to each elapsed year on the policy anniversary date. U.S. Dollar-denominated Living Benefit Whole Life Insurance (Living Standard Type/Non-participating) In addition to the three major diseases (cancer, heart attack and stroke), death or major disability, this product provides coverage for specified disabilities and conditions that require long-term care and thus addresses a broad range of risks if the insured is unable to work. Coverage is lifelong. Premium payments are in yen. However, if the entire amount for both coverage periods is paid up front, the premium can be paid in U.S. dollars. Insurance benefi ts will be paid out in the event of any of the following conditions, but such payment is limited to once during the insurance term. Insurance Benefit to Be Paid Terms of Payment Payment Amount Death benefit In the event of death Death benefi t Specifi c disease benefit Disability benefit Nursing care benefit Covered diseases Malignant neoplasm (cancer) Heart attack Stroke Upon confi rmed diagnosis by a physician that the insured has a malignant neoplasm (cancer) for the fi rst time since the start of coverage and that the insured did not have cancer before coverage began. However, the following are excluded: Cancer in situ Skin cancer except for malignant melanoma Breast cancer with a confi rmed diagnosis within 90 days of the start of coverage Upon confi rmed diagnosis by a physician that the insured experienced a heart attack after the start of coverage and that certain conditions necessitating limitations on work persisted for more than 60 days from the date the insured was examined and treated by a physician. Of ischemic heart disease, acute myocardial infarction and recurrent myocardial infarction are covered. Upon confi rmed diagnosis by a physician that the insured experienced a stroke after the start of coverage and that certain aftereffects persisted for more than 60 days from the date the insured was examined and treated by a physician. Of cerebrovascular disease, subarachnoid hemorrhage, brain hemorrhage and cerebral infarction are covered. In the event of injury or factors connected to the onset of an illness resulting in an advanced disability or specifi c disability (satisfying conditions both A and B below): A. Disabilities categorized as class 1, 2 or 3 as defi ned by the Act on Welfare of Physically Disabled Persons B. For disabilities defi ned in A., the issuance of a physical disability certifi cate indicating a disability categorized as class 1, 2 or 3, in accordance with the aforementioned act In the event of conditions due to an injury or factors connected to the onset of an illness, if either of the following apply: Insured parties under 65 years of age meeting all of the following conditions with a diagnosis confi rmed by a physician: A. Conditions requiring nursing care B. For 180 consecutive days beginning on the fi rst day of required nursing care When required nursing care of category 2 or higher is certifi ed in accordance with the Public Long-Term Care Insurance System and that certifi cation becomes effective. Same amount as for death benefi t Conditions Contract age: 30 years old Policy amount: U.S.$50,000 Premium payment period: Up to age 60 Monthly premiums for individuals Male: U.S.$92.20 Female: U.S.$89.70 Death, specified diseases, disability, nursing care payment U.S.$50,000 At age 50 Male: U.S.$19,850 Female: U.S.$17,735 At age 60 Male: U.S.$33,080 Female: U.S.$30,150 Surrender value Image for illustrative purpose only. Whole life coverage 30 years old 60 years old Sony Life Insurance Co., Ltd. Annual Report

40 Policy example Policy amount: U.S.$50,000 Premium payment period: To age 60 Coverage period: Whole life Gender Age when policy taken out Monthly premiums for individuals 20 $ Male 30 $ $ $ Female 30 $ $ Medical Benefit (comprehensive medical insurance (no surrender value) 18, non-participating) Pays out the hospitalization benefit from the first day of hospitalization, including in-and-out same-day hospitalization, when admitted to the hospital due to illness or injury. Links the surgery benefit to the public medical insurance system and lays out terms for the amount of payment to facilitate understanding of the claim content. Pays out the surgery benefit when the fee charged for the surgery that is performed is set under the public medical insurance system. Customers select a limit on the payment for single hospitalization, from 60 days, 120 days or 360 days, as well as a death benefit multiplier of zero, 10 or 100 times* 1. Hospitalization to treat the three diseases* 2 has no limit on the number of days eligible for the payment, and the surgery benefit is twice that applied to surgery for other illness or injury. * 1 Predetermined limits apply. * 2 The three diseases refers to cancer (including intraepithelial carcinoma), cardiovascular disease and cerebrovascular disease. The scope of illnesses covered is broader than for the three major diseases covered under existing products of Sony Life, namely, cancer (excluding intraepithelial carcinoma), acute myocardial infarction, and stroke. Policy example Limit on payment for single hospitalization: 120-day type Hospitalization benefit amount per day: 5,000 Death benefit multiplier: 100 times Coverage period: whole life Premium payment period: whole life Monthly premiums for individual Age When Policy Taken Out Male Female 30 2,095 2, ,890 2, ,260 3,545 Limit on payment for single hospitalization: 120-day type Hospitalization benefit amount per day: 5,000 Death benefit multiplier: 10 times Coverage period: whole life Premium payment period: age 60 Monthly premiums for individual Age When Policy Taken Out Male Female 30 3,210 3, ,345 5, ,590 11,795 Medical Benefit Return (comprehensive medical insurance with special provision for health refund benefit (no surrender value) 18, non-participating) This product provides a health refund benefit equivalent to insurance premiums paid if the policyholder has not been hospitalized before the refund date. Also, if a hospitalization benefit has been paid, the refund will be based on the equivalent of insurance premiums paid* less the hospitalization benefit received. Customers select an age between 50 and 80 at which they will be eligible to receive the refund. This varies, depending on the age of the policyholder when the policy is taken out and on gender. After a customer receives a refund, premiums will remain the same as when the policy was taken out and coverage will continue throughout the customer s life. Hospitalization and surgery-related content of this product are essentially the same as those for the Medical Benefit product. Note: Equivalent of insurance premiums paid = Amount of monthly premiums x 12 x Number of years up to the day before the refund date. Policy example Limit on payment for single hospitalization: 120-day type Hospitalization benefit amount per day: 5,000 Age for payment of health refund benefit: 70 Coverage period: whole life Premium payment period: whole life Monthly premiums for individual Age When Policy Taken Out Male Female 30 3,620 4, ,345 4, ,180 6, Sony Life Insurance Co., Ltd. Annual Report 2018

41 Conditions Insured: 30 years old Limit on payment for single hospitalization: 120-day type Hospitalization benefit amount per day: 5,000 Age for payment of health refund benefit: 70 Coverage period: whole life Premium payment period: whole life Monthly premiums for individuals: male: 3,620, female: 4,100 Hospitalization When hospitalized for more than one day due to illness or injury (disease-related hospitalization benefit, three diseases-related hospitalization benefit, disaster-related hospitalization benefit) 5,000 x number of days hospitalized When undergoing surgery that falls under the public health insurance system or surgery that is part of advanced medical treatment (surgery benefit) One of 25,000, 50,000, 100,000 or 200,000 per surgery, depending on the type of surgery Comprehensive medical insurance with special provision for health refund benefit (no surrender value) 18 Surgery, radiation treatment, etc. When receiving radiation therapy that falls under the public health insurance system or radiation therapy that is part of advanced medical treatment (radiation therapy benefit) When receiving a bone marrow transplant that falls under the public health insurance system (bone marrow transplant benefit) When undergoing surgery to harvest bone marrow stem cells one year after responsibility to pay benefit commences (bone marrow donor benefit) 100, , ,000 Whole life coverage Health refund benefit When the policyholder has survived until the health refund benefit payment date (health refund benefit) Health refund benefit (Equivalent of insurance premiums paid less hospitalization benefit received) Death When the policyholder dies at some point before the health refund benefit payment date (death benefit) Policy reserve to cover special provision for health refund benefit payments Coverage period (whole life)/premium payment period: whole life Age at contract 30 years old Age for payment of health refund benefit 70 years old Scenario for receiving health refund benefit (for the policy example noted above, the insured is male) If no benefits, including hospitalization benefit, are paid out If hospitalization benefit of 100,000 is paid out by the time the insured reaches age 70 Insurance premiums paid* ( 1,737,600) Health refund benefit payment ( 1,737,600) Insurance premiums paid* ( 1,737,600) Hospitalization benefit 100,000 Subtract hospitalization benefit portion and pay out Hospitalization benefit paid out ( 100,000) Health refund benefit payment ( 1,637,600) *Equivalent of insurance premiums paid up to the day before the policy anniversary, in units of one year, when the insured reaches the age specified at the time the policy was taken out (excludes rider premiums). Riders that can be attached to policies Sony Life expanded the list of riders that can be attached to these products, paralleling the sale of Medical Benefit and Medical Benefit Return. Rider for lump-sum benefi t at the time of hospitalization (non-participating) Rider for hospitalization benefi t applicable to the three diseases (non-participating) Rider for female-specifi c surgeries (non-participating) Provides lump-sum, comprehensive coverage of expenses, including those incurred at the time of hospitalization Provides additional protection on top of the main hospitalization policy for any of the three diseases Emphasizes protection for female-specifi c surgeries (breast, uterus, ovaries, fallopian tubes, thyroid, parathyroid) Reference: Existing riders applicable to Medical Benefit and Medical Benefit Return Diagnosis benefi t rider with low surrender value provision for specifi c diseases (non-participating) Advanced treatment rider (non-participating) Cancer drug therapy rider (non-participating) Note: The description of new products on pages is not intended as a solicitation to purchase insurance but rather as an explanation of these products. If you are considering insurance, please always refer to our product pamphlets, proposal specifi cations and other materials. When taking out an insurance policy, please refer to our Policy Terms and Conditions, Statements of Notes (Contract Overview) and Statements of Notes (Alerts) at all times. Sony Life Insurance Co., Ltd. Annual Report

42 Service Improvements That Begin with Customer Feedback Making Use of Customer Feedback in Management Sony Life takes customer feedback seriously, paying careful attention to customer satisfaction and using customer feedback as a starting point for improving services. By gathering and accumulating the customer feedback we receive on a daily basis via numerous routes, we strive to improve our business. We also make extensive use of this information when planning new products and setting service policies. Our focus on customer feedback is an important step toward meeting the expectations of customers. We will continue these efforts as part of our Companywide initiative to improve services. Initiatives to Reflect Customer Feedback (VOC*) in Management (As of July 1, 2018) Contacts Supervisory departments Executive Committee Customer Center Reporting, assignment Reporting, assignment Website Customer Center MCC Committee VOC Committee Customer feedback [Sales offices] Agency offices, independent agency sales divisions and clerical offices Business Administration Control Division Customer Services Division Legal Division Lifeplanner Sales General Headquarters Independent Agency Sales Group Reporting, assignment Implementation, reporting VOC Division Reporting, assignment Gather, analyze, evaluate, propose improvements and determine progress on customer feedback (VOC) Requests for improvement Disclose improvement status Improvement planning Improvement implementation Result verification Provide high-quality services Raise customer satisfaction Customer satisfaction surveys Corporate Administration Division Headquarters divisions Supervisory body, Life Insurance Association of Japan, other Planning & Research Division *Voice Of Customer = many different types of customer feedback Customer-Oriented Declaration (Consumer-Oriented Voluntary Declaration) Sony Life has disclosed its Customer-Oriented Declaration (Consumer-Oriented Voluntary Declaration). For details of this declaration, please refer to the following (only available in Japanese): company/management/cs/declare.html 040 Sony Life Insurance Co., Ltd. Annual Report 2018

43 Customer Feedback to Sony Life Customer Feedback to the Customer Center (Number of Incidents) Consultations and Notices to the Customer Center (Instances, %) FY2015 FY2016 FY2017 Category Number Percentage Number Percentage Number Percentage New policies, requests for materials 60, , , Loans, surrender cash referrals 66, , , Receipt-related 19, , , Claims and benefits 28, , , Other maintenance 166, , , Taxes, exemption certification 9, , , Other 55, , , Total 406, , , Customer Center Initiatives In addition to handling new inquiries, our Customer Center is available for customers to contact to discuss procedures after entering into policies, as well as for a wide range of consultations and various requests. Requests made via the Customer Center are transmitted in a timely manner to the customer representatives or section in charge of that customer s policy. To ensure swift responses, the center manages the communications it receives through to their conclusion. Feedback from Policyholders Considered as Complaints (Number of complaints, %) FY2015 FY2016 FY2017 Content Number Percentage Number Percentage Number Percentage Subscribing to insurance policy 5, , , Premium payments 5, , , Processes and dividends after joining policy 20, , , Payment of claims and benefits 4, , , Other 6, , , Total 41, , , Note: Number of complaints and percentages are as of the annual report s publication date for each fiscal year. * Seeking to capture customer feedback over a wide spectrum, we recorded some suggestions as complaints, along with comments that fit the definition of a complaint. In fiscal 2016, we changed the criteria to improve the accuracy of identifying suggestions that meet the definition of a complaint. Definition of a Customer Complaint Any expression from a policyholder to Sony Life indicating dissatisfaction Any statement or notice that calls into question the appropriateness of any party related to Sony Life Preventing Complaints from Recurring We strive to resolve policyholder complaints quickly. We analyze the sources of complaints, consider improvement measures and work to prevent recurrence. Financial Alternative Dispute Resolution (ADR) System A financial ADR system employs a designated third-party institution (a designated ADR institution ) to act as a fair and neutral arbiter of disputes that arise between a customer and a financial institution with the aim of reaching an amicable resolution without going through the courts. This system of resolving issues simply and quickly outside the courts is designed to provide additional protection to customers and seeks to enhance the level of trust that customers place in financial products and services. The Life Insurance Association of Japan serves as the designated ADR institution for life insurers. Designated ADR Institution Contact URL Life Insurance Counseling Desk, The Life Insurance Association of Japan (Japanese only) (9:00 17:00, weekdays, except holidays) (Japanese only) Sony Life Insurance Co., Ltd. Annual Report

44 Administrative Control Structure Guided by its core mission and corporate philosophy, Sony Life strives to meet the expectations of customers, society, shareholders, employees and other stakeholders, and prove worthy of the trust from stakeholders in the Company. At the same time, through greater transparency, Sony Life will work to ensure sound business practices and appropriate management practices in accordance with the Basic Policy on Corporate Governance, established by the financial holding company Sony Financial Holdings (SFH), to achieve sustainable growth as a life insurance company and medium- to long-term improvement in corporate value. Sony Financial Holdings, Inc. Administrative control General Meeting of Shareholders Various committees Board of Directors Audits by audit & supervisory board members Audit & Supervisory Board Members/Audit & Supervisory Board Audit & Supervisory Board Members Office Executive Committee Accounting audits Independent Auditors Various committees Business execution departments Internal audits Internal audit department Administrative Control through Financial Holding Company With prior approval from SFH, Sony Life implements decisions on important aspects of business execution related to Group management, including management systems, management direction and business plans, based on an administrative control agreement signed with SFH. Board of Directors The Board of Directors meets once a month, in principle, to decide on important business execution undertaken by the Company and also to supervise the execution of duties by directors. The SFH representative director and directors responsible for the execution of business activities hold concurrent positions at Sony Life, which boosts the effectiveness of Sony Financial Group strategies and also ensures sound business and management practices at the Company. To further strengthen the supervisory function of the Board of Directors, Sony Life appoints an outside director, as stipulated by the Companies Act of Japan. Executive Committee Sony Life has an executive committee, which has participation from directors responsible for business execution as well as executive officers chosen to sit on the committee by the Board of Directors. The Executive Committee meets once a week, in principle, and decides on important matters pertaining to the execution of business by the Company, on the delegation of the Board of Directors. Various Committees Sony Life has set up various committees to promote effective management practices. These various committees discuss issues referred to them by the Board of Directors and the Executive Committee and submit reports on the content of their discussions to the respective management group. Audit & Supervisory Board Members/ Audit & Supervisory Board Audit & supervisory board members assess the execution of duties by directors, mainly through attendance at important meetings, such as those of the Board of Directors. In addition, by maintaining close contact with independent auditors and the internal audit department, audit & supervisory board members ensure a systematic and efficient auditing structure and keep auditing processes functioning effectively. The Audit & Supervisory Board engages in discussions and makes resolutions on important matters pertaining to audits. The Audit & Supervisory Board Members Office was established to offer assistance to audit & supervisory board members in performing audits and handle administrative tasks for the Audit & Supervisory Board. 042 Sony Life Insurance Co., Ltd. Annual Report 2018

45 Establishing an Internal Control System The Board of Directors at Sony Life adopted the following basic policy on the establishment of an internal control system to ensure the appropriateness of business activities and to reinforce corporate governance and raise the caliber of associated practices. This policy is regularly reviewed, once a year, and the system is enhanced as necessary. Basic Policy on Establishment of Internal Control System 1. System to ensure execution of duties by directors and employees complies with laws and regulations, and the Articles of Incorporation i. The Board of Directors and corporate structures established by the Board of Directors (hereafter, collectively, the Board of Directors ) shall establish a code of conduct as a basic policy for compliance and make this code clear to executives and employees of Sony Life. ii. The Board of Directors shall prepare a compliance manual that lays out specific compliance guidelines and a compliance program that defines specific plans. iii. The Board of Directors shall set up a compliance supervisory department to roll out a compliance program. The compliance supervisory department shall regularly report to the Board of Directors on the implementation status of the compliance program. iv. The Board of Directors shall take a firm stance against anti-social forces, in accordance with the Basic Group Policy on Eradicating Anti-Social Forces, set forth by Sony Financial Holdings Inc., and shall build the structure necessary to comply with this policy. v. The Board of Directors shall establish an internal hotline system and provide information to executives and employees of Sony Life on how to use the system. This system shall enable employees or others who feel business policies, operations or other activities contravene (or are in danger of contravening) laws and regulations to report directly to a hotline desk. The system shall prohibit any action that would put at a disadvantage any employee or other individual who provides such reports. vi. The Board of Directors shall establish an Information Security Policy and shape a framework to properly manage information assets, including customer information. vii. The Board of Directors shall establish a Policy on Managing Conflicts of Interest and shape a framework to properly control transactions that have the potential to harm the interests of customers. viii. The Board of Directors shall establish a Basic Policy Related to Internal Audits and make executives and employees of Sony Life aware of the policy. ix. The Board of Directors shall establish an internal audit supervisory department that is independent from other operating departments. The internal audit supervisory department shall liaise and cooperate with the audit & supervisory board members and the independent auditors; monitor and verify, from an independent and objective viewpoint, the implementation and operational status of the internal control system; and report regularly to the Board of Directors regarding the status of internal audits. 2. System for storing and managing information related to execution of duties by directors Sony Life has Record-Keeping Regulations to ensure that documents pertaining to the execution of duties by directors, such as meetings of the Board of Directors and Executive Committee as well as records of resolutions made at such meetings, are appropriately stored and managed in accordance with the law and the aforementioned regulations. 3. Regulations related to managing risk of loss, and other related systems i. The Board of Directors shall establish Basic Rules on Risk Management and make these rules known to executives and employees of Sony Life. ii. The Board of Directors shall establish a risk management supervisory department to appropriately manage different risks, according to the Company s rules, characteristics and business content. The risk management supervisory department shall provide to the Board of Directors an update on risk management status on a regular basis. iii. The Board of Directors shall formulate a business continuity plan (BCP) that lays out a structure to facilitate a rapid response in times of crisis and promotes suitable measures to minimize risk. The Board of Directors shall make the BCP known to executives and employees at Sony Life. 4. System to ensure the efficient execution of duties by directors i. The Board of Directors shall establish approval regulations, organizational and task-sharing regulations and other internal rules, and create an appropriate structure for the efficient execution of duties. ii. The Board of Directors shall set up an executive committee and delegate to this committee discussion and decision-making authority for the execution of important day-to-day business activities of Sony Life. iii. The Board of Directors shall establish Business Plan Control Regulations, formulate and oversee medium-term business plans and annual business plans, and regularly confirm progress on business plans. 5. System to ensure reliability of financial reports Sony Life maintains the necessary system to ensure reliability of financial reports, in accordance with the Basic Policy Regarding the Establishment of Internal Controls Pertaining to Group Financial Reporting and Evaluation of Implementation Status, as set forth by Sony Financial Holdings. 6. System to ensure the appropriateness of operations at Sony Life and its subsidiaries and affiliated companies along with the corporate group to which the Company s parent belongs i. Sony Life shall, as a life insurance company permitted to operate under the Insurance Business Act of Japan, build a system that considers the scale and attributes of subsidiaries and affiliated companies, to ensure sound and appropriate execution of business activities and fairness in insurance solicitation. In addition, the Company shall establish regulations to control subsidiaries and affiliated companies, build systems to ensure appropriate business activities at subsidiaries and affiliates, as described in (1) (4) below, and ensure appropriate business activities within the corporate group. (1) System for reporting to Sony Life any matters related to the execution of duties by directors and employees of subsidiaries and affiliates (2) Regulations and other systems related to loss risk management at subsidiaries and affiliates (3) System to ensure efficient execution of duties by directors at subsidiaries and affiliates (4) System to ensure that duties of directors and employees at subsidiaries and affiliates comply with laws and the Articles of Incorporation ii. The internal audit department at Sony Life shall be aware of the internal control systems at subsidiaries and affiliated companies to confirm that such systems are properly in place and shall monitor and verify the results of internal and third-party audits of these subsidiaries and affiliated companies. iii. Sony Life shall, as necessary, provide management information about itself and its subsidiaries and affiliated companies to the parent company and also cooperate with the parent company s internal audit supervisory department. iv. Sony Life shall build a system that enables directors and employees of subsidiaries and affiliates to report directly to the Company s internal hotline, if management policy, business activity or any other action is found to violate (or has the potential to violate) laws or regulations. The system shall include measures to prevent inappropriate treatment of any person who alerts the Company to real or possible wrongdoings. 7. Items pertaining to employees who are requested by audit & supervisory board members to assist in their auditing duties If audit & supervisory board members request the assistance of employees to execute auditing duties, Sony Life is required to assign employees to this task. 8. Independence from directors of employees assigned to assist audit & supervisory board members noted in item 7 above i. Audit & supervisory board members must agree to the appointment, dismissal and evaluation of employees assigned to assist them in their auditing duties under item 7 above. ii. Employees assigned to assist audit & supervisory board members in their auditing duties are to follow only the instructions and directions given by audit & supervisory board members, once such requests are made. 9. System for directors and employees to report to audit & supervisory board members, and other reporting systems i. If directors or employees are asked by audit & supervisory board members to provide information on issues related to the execution of business activities, they must do so immediately. ii. If directors or employees discover a fact that could significantly affect the operations or financial condition of Sony Life, a subsidiary or an affiliated company, the information must be reported to audit & supervisory board members without delay. Note that the system shall prohibit any action that would put anyone who provides such reports at a disadvantage, and the Company s directors and employees shall be made aware of the meaning of this measure. iii. If directors or employees become aware of a situation through the internal hotline, they must inform audit & supervisory board members in accordance with internal rules. 10. System to ensure the effectiveness of audits by audit & supervisory board members i. Representative directors shall endeavor to deepen interaction with audit & supervisory board members based on mutual understanding and trust, and shall take the steps necessary to create an environment conducive to audits by audit & supervisory board members. ii. When audit & supervisory board members require advice from lawyers, certified public accountants or other outside experts to perform their auditing duties, or when they engage outside providers to conduct studies, appraisals or other administrative tasks, Sony Life shall pay the costs incurred or settle invoiced payment obligations, unless such activities are proved to be unnecessary to the execution of said auditing duties. Sony Life Insurance Co., Ltd. Annual Report

46 ERM (Enterprise Risk Management) Sony Life established Enterprise Risk Management (ERM) Guidelines and manages enterprise risk based on an integrated approach to risk, return and capital, which underpins efforts to fulfill its mission and boost corporate value. The guidelines also require risk appetite, and in drafting medium-term business plans and other strategic agendas, we are careful to keep our risk amount to an acceptable limit. Furthermore, we have in place a structure to weigh up countermeasures and expedite responses, in the event our risk amount goes beyond the alarm point. ERM Guidelines (Summary) To deliver customers financial security and stability by providing optimal life insurance and high-quality services, Sony Life prioritizes steady and sustained improvement in corporate value, which hinges on solid growth in the life insurance business. To this end, we aggressively take on underwriting risk within an established limit while maintaining sufficient solvency claims-paying ability to fulfill promises of future payments to customers. The long-term nature of life insurance policies predisposes insurance liabilities to significant fluctuations in risk caused by shifting interest rates. If we do not catch trends to harmonize assets and insurance liabilities, risks with the potential to damage corporate value will grow and our solvency position will be weakened. Therefore, at Sony Life, we endeavor to minimize the interest risk inherent in insurance liabilities as much as possible, from the perspective of assets as well as liabilities. In asset management, we prioritize investment into assets matched to the characteristics of insurance liabilities, and remaining assets are invested within limits that will accord a certain level of liquidity while not significantly impacting corporate value. Also, in corporate management activities, we relentlessly strive to provide high-quality services, meet customer expectations and earn trust while preventing potential damage to brand value. To enhance the efficiency and effectiveness of risk management practices, we take an integrated approach to the evaluation of risk, return and capital, using market consistent measures. We deal with risks that are difficult to measure by taking a forward-looking perspective that includes qualitative assessment. At Sony Life, we take an integrated approach to the evaluation of risk, return and capital through a market consistent technique. We have made capital evaluated through this technique the essence of corporate value, and we strive to achieve sustainable growth. We established a division within the Corporate Planning Division to reinforce this effort, and we maintain an organizational structure that raises effectiveness. Capital To realize our corporate vision of Protecting customers all across Japan throughout their lives, we have formulated Companywide strategic targets as well as management strategies emphasizing key measures for achieving these targets, based on ERM guidelines. We also identify risk phenomenon with the potential to impact numerical targets in the medium-term business plan or adversely affect fiscal performance or corporate health, and by evaluating and analyzing influences that exert pressure on our business, we are able to raise the probability of achieving our targets. To ensure that we are able to pay customers insurance claims and other benefits well into the future, we regularly check the status of risk and capital. We also regularly check that we have a sufficient level of liquid assets and carefully manage these assets to avoid running afoul of financial soundness criteria set by laws and regulations. Risk Return 044 Sony Life Insurance Co., Ltd. Annual Report 2018

47 Maintaining a Sound Financial Structure Management Indicators At Sony Life, we pursue business management with an emphasis that goes beyond the typically used management indicators, such as figures in the financial statements and operating results, and prioritize Market Consistent Embedded Value (MCEV) an integral component of corporate value as a key indicator of management performance. In addition, to achieve a sound financial foundation, we view ESR (economic solvency ratio) the ratio of capital to risk amount based on economic value as an indicator of soundness, and strive to keep ESR above a certain level to ensure risk amount based on economic value is at a suitable level for MCEV. Risk Limit and Risk Appetite Seeking to prevent excess risk-taking, Sony Life stipulates risk appetite consistent with ERM guidelines, sets risk limits and strives to keep its risk amount from exceeding the acceptable limit. Through such strategies as the establishment of alarm points, we have a structure in place that expedites consideration of countermeasures for dealing with increases in risk amounts or decreases in capital. Efforts in Business Operations Asset Management As life insurance policies are long-term liabilities, from an overall corporate perspective, Sony Life s asset investment policy is to prioritize investments in assets having characteristics matched to those of insurance liabilities. The primary investment target is ultralong-term Japanese government bonds (JGBs) with a remaining period exceeding 10 years. Through this approach, we seek to limit the impact of fluctuating interest rates on the difference between the economic value of assets and liabilities that is, the economic value of net assets and to stabilize profits associated with life insurance, our core business. Investment in assets other than JGBs includes a limited range of risky assets that do not have a significant impact on the economic value of net assets. Product Development The profitability of products is determined by applying a method consistent to that of evaluating the economic value of net assets or, specifically, the market consistent method. The results derived from such a method provide a basis for product-related decisions, such as whether or not to revamp or suspend certain products. The market consistent method generates evaluation matched to the economic environment at a particular point in time, without any influence from losses or other factors in the past, and is also useful in recognizing the level of hedgeable income from a market perspective. It therefore forms an important part of our product development activities. Preparing for a Highly Uncertain Future Sensitivity Analysis When changes in assumptions about the economic environment and other factors required for predicting future income and expenditures occur, we need to evaluate and analyze their impact on the economic value of net assets. The results are used in making management decisions. Stress Tests With our own risk characteristics in mind, we visualize situations that could have an enormous impact on business, and evaluate and analyze the impact on various indicators and consider responses in advance of need, so that we can continue operations should a supposed situation become a reality. Predictor Control We gather information internally and externally, covering such situations where the impact on business is hard to judge and where the possibility of occurrence may be low at present but would, if manifested, have significant consequences. The information is shared throughout the Company to raise awareness of changes in the operating environment. Sony Life Insurance Co., Ltd. Annual Report

48 Risk Management System Risk Management Structure Sony Life drafted Basic Rules on Risk Management, which set the tone for our approach to risk management as well as risk-specific policies, and we constantly strive to reinforce the system, mainly through the establishment of corporate structures and control processes. In addition, to pinpoint the overall status of risk management efforts and weigh up responses from a perspective cutting laterally across the whole organization, we set up the Risk Management Committee, which involves participation of the general managers of the divisions responsible for managing each of the risks that we face. Committee members provide updates on the status of risk management efforts in each risk category and discuss a variety of measures related to risk management. Risk Management Structure (As of July 1, 2018) General Meeting of Shareholders Board of Directors Audit & Supervisory Board Chief Actuary Executive Committee Internal Audit Division Risk Management Committee Integrated Risk Management Corporate Administration Division Market-related risks ALM Division Insurance underwriting risk ALM Division Liquidity risk ALM Division Operational risks Other managerial risks Going concern risk Operational Risk Administration Division Market risk Administrative risk Operational Risk Administration Division Systems risk Operational Risk Administration Division Office risk General Affairs Division Sales Administration Division Personnel risk Human Resources Division Sales Administration Division Credit risk Real estate investment risk Legal risk Legal Division Reputational risk Corporate Communications Division Management risk Corporate Administration Division Subsidiary and affiliated company risk Subsidiaries and affiliates Business Offices Specific Risk Management Definitions and Procedures Market-related Risks Market-related risks refer to the risk of suffering losses due to fluctuations in the values of assets and liabilities. Specifically, market risk, credit risk and real estate investment risk make up the majority of the risks the Company faces. Sony Life manages market-related risks in an appropriate manner, based on internal regulations and taking into account asset and liability risk characteristics, as well as an acceptable level of risk to capital. Market risk Market risk refers to the risk of suffering losses due to changes in the economic values of investment assets and liabilities as a result of fluctuations in interest rates, share prices, exchange rates and/or various other risk factors. Sony Life strives to determine the amount of market risk in relation to its assets and liabilities, taking into account the risk characteristics of interest rate risk, share price risk and exchange rate risk. In addition, Sony Life establishes risk limits, as it deems necessary, as a means of controlling the magnitude of potential market-related losses. We recognize that managing interest rate risks on assets and liabilities is of particular importance, given the substantial impact that interest rate risks on long-term insurance agreements have on management. 046 Sony Life Insurance Co., Ltd. Annual Report 2018

49 Credit risk Credit risk refers to the risk of suffering losses due to the decrease or loss in value of an investment asset as a result of the deterioration in the financial conditions of parties providing credit facilities. Investments in foreign countries are subject to country risk, which refers to the potential difficulty in collecting invested capital due to instability or disruptions in investee countries governments, economies, societies or economic conditions, as well as the possibility of incurring losses stemming from fluctuations in asset prices. Counterparty risk is the risk of incurring losses in the event that a transaction counterparty defaults on debt or becomes unable to fulfill specified contract obligations due to factors such as a worsening of credit. To manage credit risk, Sony Life selects potential investees with care, prioritizing stability and employing a variety of investment ceilings. In addition, Sony Life strives to ensure the stability of its investments through self-assessment of the credit quality of its assets in accordance with internal regulations, establishing reserves and recording write-offs as appropriate. Real estate investment risk Real estate investment risk refers to the risk of suffering losses due to reduced gains on real estate as a result of fluctuations in rental income or decreases in the value of underlying real estate assets owing to changes in market conditions. In light of the low liquidity and large capital commitments that characterize real estate investments, Sony Life has established real estate investment standards that it uses to ensure the quality of its real estate investment portfolio. Sony Life manages each property individually and sells off properties that produce investment returns that fall below these standards or for which unrealized losses exceed these levels. Insurance Underwriting Risk Insurance underwriting risk refers to the risk of suffering losses due to unexpected changes in economic conditions and/or insurance benefit rates. With regard to insurance underwriting risk, Sony Life conducts appropriate insurance portfolio management, such as establishing policy limits as necessary on each type of insurance in line with accumulated policy reserves and capital levels. In addition, for each product it sells, the Company maintains underwriting standards, reinsurance standards and reinsurance company selection standards, as well as criteria for the improvement or elimination of these standards. These internal regulations are clearly established and periodically reviewed. Concerning reinsurance risk, Sony Life s policies on insurance in force and reinsurance provide controls intended to ensure that, in cases where underwritten risks exceed limits on insurance in force, excess risk is adequately managed through the appropriate use of reinsurance. We do not, however, underwrite reinsurance ourselves. Liquidity Risk Liquidity risk is classified into fund flow risk and market liquidity risk. Fund flow risk stems from the worsening of cash flow in the event that deteriorating financial conditions cause a decrease in new policies, resulting in lower premium income; an increase in surrender payments due to a large number of or large-scale cancellations; cash outflows resulting from a massive disaster; or losses if assets must be sold in adverse conditions to secure funds. Market liquidity risk refers to the risk of suffering losses if assets must be sold in adverse conditions owing to market instability. Sony Life aims to minimize its holding of low liquidity assets and to adopt, and periodically review, internal regulations clarifying the methods for managing, reporting and settling cash payments in light of its immediate liquidity needs. Operational Risks Administrative risk Administrative risk refers to the risk of suffering losses due to improper operations, or as a result of corruption or other inappropriate action by Sony Life executives, employees, insurance agents or external contractors. For administrative risk, we analyze underlying factors, such as administrative errors and accidents, and formulate effective measures to prevent reoccurrence. We also strive to minimize risk by having each division run regular selfchecks on risks inherent in operations and to determine control status and then improve administrative processes as necessary. For administrative risk on the external contractor side, we have clearly defined standards on such aspects as selection requirements for service providers and safety control measures, as in-house rules. We implement regular checks and assessments to ensure that administrative risk is suitably monitored. Sony Life Insurance Co., Ltd. Annual Report

50 Systems risk Systems risk refers to the risk of incurring losses due to crashes and malfunctions with computer systems. Systems risk also includes the risk of losses due to the inappropriate use of computer systems. For systems risk, we evaluate the risk of systems as a whole and maintain a framework to prevent system malfunctions and other issues while facilitating a quick recovery in the event of a situation. Of note, we reinforced our control structure, highlighted by the creation of a multilevel defense net to protect against unauthorized access and cyberattacks, installing a special unit, the Computer Security Incident Response Team (CSIRT), to deal with cybersecurity incidents. Moreover, we have a business continuity plan (BCP) in place to prepare for unforeseen circumstances involving system failures resulting from such situations as cyberattacks or large-scale natural disasters. For systems risk on the external contractor side, we have clearly defined standards on such aspects as selection requirements for external contractors and safety control measures, as in-house rules. We implement regular checks and assessments to ensure that systems risk is suitably monitored. Other Managerial Risks Other managerial risks include legal risk, such as the risk of loss resulting from Sony Life conducting its operations in a manner that violates applicable laws and regulations, and the risk of loss resulting from Sony Life s inability to exercise certain rights as a result of its conducting operations in an inappropriate manner. Other managerial risks include reputational risk, including the risk of loss resulting from negative media coverage, and rumors, defamation and other forms of criticism related to anti-social influences. Sony Life strives to establish risk management policies relating to these and other managerial risks in order to ensure its ability to conduct operations in a sound and appropriate manner. Business Continuity Structure Ready for Various Crisis Situations Revised Business Continuity Structure Drawing on lessons learned from the Great East Japan Earthquake, Sony Life set up a structure in 2012 to focus exclusively on crisis management and then radically revised and improved its business continuity plan (BCP). We have built a business continuity structure to ensure quick disbursement of insurance claims and other payments even in the event of perilous situations with the potential to disrupt customers lives and interrupt our business activities. Such situations include major earthquakes, including the looming threat of one whose epicenter is right under Tokyo, as well as global pandemics of infectious disease and cyberattacks. Specific Activities to Deal With Emergencies As an infrastructure-oriented response, we installed key systems at a data center with high solidity, and we maintain a backup environment in case the data center is damaged. In addition to the systems environment, we have prepared a backup environment for key offices that execute operations, such as call centers and insurance administration offices, and we have built a structure that enables us to provide customers with continuous services. In 2016, Sony Life relocated its headquarters to Otemachi Financial City Grand Cube, as this location will allow the Company to resume operations in a relatively short time in the event of an earthquake centered in Tokyo. We also constantly run BCP-related drills and verify the effectiveness of these drills while promoting a PDCA cycle that allows us to review our assessment of drill results and make improvements. 048 Sony Life Insurance Co., Ltd. Annual Report 2018

51 Personal Information Protection and Information Security In recent years, computer networks have become more sophisticated and complex, and services have diversified along with rapid advances in information technology, making it possible for companies and their customers to relay key information through networks. As a result, protecting personal information and ensuring information security have become more important than ever before. To enhance convenience for customers, Sony Life uses networks to deliver advanced services. As one of its crucial management policies, the Company makes it a top priority to properly manage the information it collects from customers while conducting its life insurance business and to formulate measures that keep such information secure. The Company takes a robust approach to ensure this. Protecting Personal Information Initiatives to Protect Personal Information Sony Life has formulated various policies and rules, including the Privacy Policy, Information Security Policy and Regulations on the Protection of Personal Information, and carefully handles customers personal information in line with these policies and rules. The Company also conducts regular information security training for directors and employees, including temporary staff, to ensure thorough efforts to protect customers personal information and safeguard privacy. Information Management System Sony Life has appointed information managers and security administrators to each department that handles personal information. We have also created a flow of operations that ensures effective protection of personal information and upgrade our training system for employees regularly. In addition, we have established the Protection of Personal Information Promotion Committee as a subcommittee to the Executive Committee to consider and implement information security promotion measures. System for Protecting Personal Information Lifeplanner Sales General Headquarters Agency offices Information Manager (Agency Manager) Security Administrator Board of Directors Executive Committee Protection of Personal Information Promotion Committee Independent Agency Sales Group Sales divisions Information Manager (Sales General Manager) Security Administrator Headquarters divisions Information Manager (General Manager) Security Administrator Providing Information to Reinsurance Companies As part of its reinsurance contracts, Sony Life provides personal information on its policyholders to reinsurers. This information may also be as part of reinsurance payment invoicing procedures. Reinsurance is a process whereby insurance companies share a portion of the risk of the policies they underwrite with other insurance companies. This procedure allows the diversification of risk inherent to insurance underwriting. Sony Life s statements of important notes to policy agreements, etc., explain that such information may be provided to reinsurance companies. Customers agree to this condition when signing insurance agreements. Policy Content Registration and Reference Systems Sony Life and other life insurers share policy and other information pertaining to policy underwriting decisions, as well as information related to decisions on claims and other payments. When it receives insurance and other benefit claims, Sony Life must register with the Life Insurance Association of Japan certain information regarding the policyholder or insured party, as well as information about the policy. When an application is made by one insurer, information registered with the Life Insurance Association of Japan may be provided to other life insurers. Life insurers refer to this information to make decisions on underwriting, as well as on policy claims and other payments. This information, which is maintained for all life insurance companies, is used for no purpose other than undertaking insurance policies and referring to the payment of claims and other benefits on policies to which life insurance companies are party. Furthermore, life insurance companies do not provide that information to any other parties. Payment Screening Inquiry System Sony Life and other life insurers share certain information related to insured parties and policies for reference when making payment decisions. This information is used for mutual reference items involving insurance policies. When a request for the payments of insurance or other benefits is received, and an insured event is determined to have occurred, some or all consultation items are shared among other life insurers via the Life Insurance Association of Japan. Based on this sharing of information, other life insurers may use payment and other decisions for reference, but information is used for no other purpose. Furthermore, information that is provided under this system is not disclosed in any other way. Note: For details, refer to the website of the Life Insurance Association of Japan ( or Sony Life ( sonylife.co.jp/) (Japanese only). Sony Life Insurance Co., Ltd. Annual Report

52 Security Measures for Protecting Personal Information Standards for security control measures of personal information Sony Life has established standards for security control measures of personal information at each stage, including the gathering, use, storage and disposal of this information. The Company thoroughly trains all executives and employees, including temporary staff, on these standards. Measures to counter the theft of notebook personal computers (PCs) and other property We have established rules regarding the handling of devices containing customers personal information, and such rules are strictly enforced. For instance, if an employee takes a business-use notebook PC or other device containing customers personal information off-site, the employee must keep such Company-owned property close at hand at all times to prevent it from being stolen from a car or other places. Also, as a precaution, no matter how remote the chance, we have security measures in place, including encryption of all personal information when customers personal information is copied to electronic storage media. Office security measures Only authorized employees are allowed access to office areas where personal information is handled, and counterfeit-resistant IC cards are used to monitor entries and exits. As a further countermeasure, the Company restricts personal items that can be brought into administrative departments, which handle large amounts of personal customer information. Privacy Policy Sony Life makes every effort to protect the personal information of its customers. Our privacy policy outlines our compliance efforts. Privacy Policy* Sony Life Insurance Co., Ltd., retains personal information about its customers as part of its efforts to provide excellent products and services. Sony Life considers maintaining this information an important responsibility. Accordingly, the Company manages this information carefully, and uses the information only in line with customers wishes. The declaration below outlines some of Sony Life s thoroughgoing efforts to maintain its customers personal information. 1. Compliance When handling personal information, Sony Life will comply with obligations set forth under various guidelines announced by the Personal Information Protection Commission and relevant government agencies regarding the Act on the Protection of Personal Information and associated laws, and this privacy policy. 2. Purpose of Using Personal Information Sony Life will acquire and use customers personal information only for the purposes described below. To underwrite various types of insurance policies, to sustain and manage beneficiaries of insurance policies and to pay claims and other benefits To enable Sony Life and its affiliated and related companies to introduce, provide and maintain various products and services To enable the provision of information, manage operations related to Sony Life and enhance its products and services For other business related or ancillary to insurance 3. Obtaining Personal Information When obtaining personal information, Sony Life will clearly describe items of information to be handled, the intended purpose of use and information needed to address inquiries, and will strive to obtain customer consent. When personal information is obtained from a third party, Sony Life will comply if the Company is legally obligated to confirm receipt of information provided by the third party or to prepare a record of such activity. Sony Life may record in writing or in voice the contents of transactions and inquiries. 4. Handling Sensitive Information Sony Life will, to ensure the appropriateness of its operations, with customer consent and within the necessary scope of operational necessity, acquire and use information on the customer s state of health or physical disorder, past medical records and other sensitive information. 5. Personal Information on Customers Under 15 Years Old Sony Life will strive to comply with all laws applicable to the collection, storage and use of personal information related to customers who are under 15 years of age. If it becomes known that a child has given Sony Life personal information without the consent of the person(s) having custody of the child or a legal guardian, then the person(s) having custody of the child or the legal guardian should contact the office noted in the policy. 6. Security Control Measures Sony Life will endeavor to maintain personal information that is accurate, complete and updated to the extent necessary for the purpose(s) of its use. Sony Life will take necessary and appropriate security control measures in line with existing technical standards and will implement corrective actions as needed to protect entrusted personal information from unauthorized access, leakage, modification, loss or destruction. 7. Supervision of Subcontractors Within the scope necessary to achieve the purpose(s) of use, Sony Life may entrust the handling of personal information in its possession to another Sony Group company or to a third party. Should this occur, Sony Life will take appropriate security control measures under the common information security policy of the Sony Group. For operations outsourced to a third party, the Company will seek appropriate safety controls through such written assurances as contracts pursuant to the handling of personal information. When operations are outsourced to a third party overseas, Sony Life will comply if the Company is legally obligated to prepare a record. 8. Provision to Third Parties Without consent of the individual, Sony Life will not provide personal information to any third party, except in cases recognized by law. When providing personal information to a third party, Sony Life will comply if the Company is legally obligated to prepare a record of provision to the third party. Sony Life will not provide personal information to any third party, based on the Opt-Out System (Article 23.2 of the Act on the Protection of Personal Information). 9. Responding to Opinions and Consultation Sony Life will, based on the provisions of the related laws and regulations, properly respond to comments and requests from individuals regarding the handling of personal information such as to disclose, correct, stop receiving further product or service information from Sony Life, or to delete personal information on their own. 10. Continuous Improvement of Internal Systems Sony Life has received certification under the ISO international standard of information security management systems for its administrative departments. Going forward, the Company will continue to strengthen and improve its internal systems. 11. Authorized Personal Information Protective Association Sony Life is a member of the Life Insurance Association of Japan, an authorized personal information protective association. This association accepts complaints and consults with individuals regarding the handling of personal information by their member companies. For details, please refer to the Life Insurance Association of Japan s website: (Japanese only). * Due to limited space on this page, the privacy policy has been excerpted and summarized from the main text. Detailed information about Sony Life s privacy policy and personal information handling procedures are available for viewing at (Japanese only). 050 Sony Life Insurance Co., Ltd. Annual Report 2018

53 Information Security Initiatives First Company in Industry to Obtain Information Security Management System (ISMS) Certification On June 27, 2003, Sony Life became the first company in Japan s life insurance industry to obtain BS7799 Part 2 and ISMS certifications. The certifications were bestowed on the Company s administrative departments. As BS7799 Part 2 certification content was adopted by ISO certifications and Japanese ISMS standards were enhanced on a par with ISO standards, on June 22, 2006, we shifted our certification to ISO/IEC (JIS Q 27001). Going forward, we will continue to maintain and improve our information security systems and upgrade protection of our information assets, including the personal information of our customers. Information Security Management System ISMS indicates an operating system that determines the appropriate level of security based on risk self-assessments, and has concrete plans and resources allocated to ensure its effective management. The principal concept of ISMS is for a company to maintain and improve the secrecy, completeness and accessibility of its information assets in a well-balanced manner. Secrecy: The guarantee that information can only be accessed by authorized people Completeness: The guarantee that information and informationprocessing methods are accurate and complete Accessibility: The guarantee that authorized people can have access to required information and related assets when needed Maintaining and Improving Information Security Our administrative departments constantly assess the danger of leaks and falsification affecting all of our information assets, including customer information, and formulate and take measures to minimize such dangers. To earn certification, we implemented those measures on schedule, regularly confirmed that the measures had the desired effect and built and operate frameworks for enforcing all of the improvements required for certification. Main Initiatives Ensure understanding among all employees, including temporary staff, about the importance of the Company s information security policies and provide training to ensure widespread acceptance of such policies. Assess the dangers of leakage and falsification of all information assets and take measures to minimize such dangers. ISMS Cycle ISMS targets improvements in information security through repeated implementation of the cycle described below: Plan: Formulate specific information security response plans and policies Do: Implement measures outlined in the security plans Check: Monitor the results of implementation Act: Undertake regular reassessments and improvements Plan Act Ongoing improvements Do Check IS / ISO Sony Life Insurance Co., Ltd. Annual Report

54 Compliance We believe compliance means conformity with relevant laws and regulations and conducting business ethically and in good faith. This is one of the crucial issues for companies seeking to fulfill their social responsibilities. Life insurance companies need to reinforce their compliance systems to maintain the long-term trust of customers. Sony Life has positioned compliance as a central management priority to protect customers and earn their confidence. Compliance Structure Sony Life has established the Compliance Committee, which reports to the Executive Committee and is chaired by the president. This committee is tasked with fostering a compliance-focused corporate culture at Sony Life and contributing to its public nature as a life insurance company by putting compliance into practice. We have also created the Compliance Division to integrate Company wide compliance programs and draft measures needed to address individual issues and conduct operations. In addition, we maintain an effective compliance structure through the assignment of compliance supervisors who conduct routine checks of legal compliance in each division and establish appropriate systems as well as compliance officers who offer advice on these systems and track implementation status in sales divisions. We also have established the Market Conduct Compliance (MCC) Committee to strengthen the compliance of sales activities. Based on Sony Life s policy on marketing activities, the MCC Committee deliberates and makes decisions to ensure that Sony Life fulfills its social responsibilities and public mission, achieving these aims by thoroughly managing solicitation and internal activities in line with sales operations that follow appropriate market conduct and compliance. The Business Administration Control Division serves as a planning department to ensure the thoroughness of internal management, particularly solicitation management. This division drafts measures to confirm the status of solicitation and internal management and expand these activities, conducting and promoting these efforts in cooperation with related departments. Board of Directors Executive Committee Compliance Committee (Secretariat: Compliance Division) Market Conduct Compliance (MCC) Committee (Secretariat: Business Administration Control Division) Basic Stance on Compliance and Code of Conduct To fulfill our social responsibilities and public mission as a life insurance company, we have formulated a Compliance Declaration (outlining our basic stance on compliance) and Sony Life s Code of Conduct. Compliance Declaration (Basic Stance on Compliance) This declaration defines our basic stance for ensuring appropriate compliance. In addition to laws and regulations, this declaration clarifies Sony Life s respect of social mores, management philosophy, code of conduct and objective of being a world leader in quality. Sony Life s Code of Conduct This charter sets forth basic principles to be respected by all executives and employees, ensuring the fairness of operations as a life insurance company. Below are some excerpts. Basic Principles Respect for Human Rights Business Operations Conducted Fairly and in Good Faith Ethical Conduct Compliance with laws and regulations, internal policies and regulations; business operations conducted ethically and in good faith; appropriate risk management, customer-first orientation, internal reporting, eschewing relations with anti-social forces, etc. Equal-opportunity employment, working environment, etc. Products and services that provide peace of mind, environmental conservation, disclosure of corporate information, personal information protection, etc. Prevention of insider trading, conflicts of interest, etc. Each fiscal year, we formulate a compliance program containing specific action plans for achieving compliance. We also create a Compliance Manual as a reference for realizing compliance and distribute the document to all executives and employees. Furthermore, Sony Life creates and distributes to all sales employees a complianceoriented manual specific to their tasks. Lifeplanner Sales General Headquarters Administration Control Group Compliance officers Agency offices Independent Agency Sales Group Compliance officers Sales divisions Headquarters divisions 052 Sony Life Insurance Co., Ltd. Annual Report 2018

55 Market Conduct Compliance (MCC) Guidelines The MCC Guidelines outline basic items for attention to protect customers interests when Sony Life s Lifeplanner sales employees and Partners (independent agencies) conduct marketing activities, including insurance solicitation and maintenance. Note: The MCC Guidelines (policy on marketing activities) are based on Sony Life s Solicitation Policy, which is compliant with the Act on Sales, etc. of Financial Instruments. MCC Guidelines (Policy on Marketing Activities) We will deliver financial security and peace of mind throughout the lives of each customer by providing optimal life insurance, determined through consultations and high-quality services, based on individual life plans. This is how we fulfill our social responsibilities and public mission as a financial institution. Our Stance toward All Customers 1. As Professionals As life insurance professionals, we provide thoroughly high-quality service that includes compliance with laws and regulations, broad-ranging expertise that covers economics, finance, taxation and other topics, honing our skills on a daily basis. 2. Protection of Privacy Our actions take customer privacy into careful consideration, and we handle customers personal information in strict accordance with laws, regulations and internal rules. 3. Visits and Communications When visiting or telephoning customers, we take pains to avoid inconveniencing them in their work or private lives. Unless with their consent, we do not visit or initiate communications with customers early in the morning or late at night. For Customers Considering Policies 4. Confirming Appropriateness When marketing variable life insurance, variable individual annuities or other products that involve risk to the customer, we solicit such products only after confirming the purpose of application, the customer s level of understanding of and experience with financial products, and financial status, and then propose products that optimally suit the customer. 5. Explaining Important Items When accepting policy applications, in accordance with laws and regulations, we provide customers with a Contract Overview, Explanation of Important Notes and Explanation of Policy Terms and Conditions, and explain the content of this information to ensure that it is understood, including any items that could be disadvantageous to the customer s interest. 7. Handling of Notification We endeavor to explain clearly to customers that maintaining fair policy premiums and the soundness of the insurance system involves the duty of disclosure, and that failure of a customer to completely fulfill this duty can result in policy cancellation or be disadvantageous to the customer s interest. 8. Customer Identification When interviewing a policyholder or insured party, we confirm their identity as well as their right to apply and the intent of the insured party. Particularly on life insurance agreements for customers who have not reached legal adulthood, we carefully check the purpose of enrollment and policy amount to ensure that sales are appropriate. 9. Respecting Our Elderly Customers We explain our products in easy-to-understand terms that enable all customers, including the elderly, to fully grasp the content. But for our elderly customers, in particular, we take their circumstances into consideration and request their family to participate in discussions or confirm their wishes over the phone. For Policyholders 10. Responding Appropriately to Requests We strive to respond to customer requests promptly and appropriately, providing ongoing follow-up after a policy is concluded and checking, confirming and reviewing the content of coverage. 11. Payment of Claims and Other Items We respond quickly and appropriately to customers requests for the payment of claims, benefits and other items. Furthermore, we take customers situations and policy content into consideration when responding to inquiries about decisions on whether to pay claims, benefits and other items, as well as their amounts. 6. Preventing Misidentification of Financial Products We clearly explain life insurance products to avoid their confusion with non-life insurance products, investment trusts, deposits or other financial products, or with products or services provided by third parties. Furthermore, when handling non-life insurance or mortgage loans, we prevent their confusion or misidentification with life insurance products. Sony Life Insurance Co., Ltd. Annual Report

56 Policy on Managing Conflicts of Interest In accordance with the Insurance Business Act and the Financial Instruments and Exchange Act, the Company has established its Policy on Managing Conflicts of Interest to ensure that transactions by Sony Life Group companies with regard to business by the Company or its subsidiary financial institutions do not cause unjustifiable harm to their customers. The policy outlines the appropriate management of information related to these operations and calls for the establishment of a system to ensure the appropriate supervision of the status of execution of the Company s business. An outline of Sony Life s Policy on Managing Conflicts of Interest is provided below. Overview of Policy on Managing Conflicts of Interest 1. Sony Life Group Companies Conflicts of interest are managed for the companies indicated below. In the following list, (2) and (3) are subsidiary financial institutions of Sony Life, while (4) and (5) belong to Sony Life s parent financial institutions. (1) Sony Life Insurance Co., Ltd. (2) AEGON Sony Life Insurance Co., Ltd. (3) SA Reinsurance Ltd. (4) Sony Assurance Inc. (5) Sony Bank Inc. 2. Transactions Involving Potential Conflicts of Interest Transactions involving potential conflicts of interest are transactions among those conducted by Group companies that could involve unjustifiable harm to customers (hereinafter, Subject Transactions ). Customers, as referred to below, refers to customers of the Company or the Company s subsidiary financial institutions that are the subjects of protection by the Company s conflict of interest management. 3. Types of Transactions Involving Potential Conflicts of Interest Subject Transactions are divided into the following types. (1) Transactions that, when customers interests and Group companies interests differ, prioritize Group companies interests (2) Transactions that involve the use of customer information to benefit a Group company (3) Transactions that benefit a Group company by taking advantage of opposing interests among customers (4) Other transactions with Group companies that are deemed to harm customers interests 4. System for Managing Conflicts of Interest To ensure that conflicts of interest are managed appropriately, the director in charge of the Compliance Division has been given overall responsibility for managing conflicts of interest. The Compliance Division, which has overall responsibility for managing conflicts of interest, manages specific Subject Transactions, centrally and independently from other divisions. Subject Transactions are managed using the following methods, other measures that have been selected appropriately or in some combination of these. (1) Separating the department conducting the Subject Transactions from the department conducting transactions with the customer (isolating information) (2) Changing conditions or methods involving Subject Transactions or transactions with the customer (changing conditions or methods) (3) Discontinuing Subject Transactions or transactions with the customer (discontinuing transactions) (4) Providing appropriate notice to the customer in the event that Subject Transactions have the potential to harm the customer s interests (notifying the customer) 5. Recording The division that has the overall responsibility for managing conflicts of interest records the items indicated below and stores this information for a five-year period. (1) Records pertaining to specific Subject Transactions (2) Records pertaining to measures to ensure appropriate customer protection Basic Group Policy on Eradicating Anti-Social Forces From the perspective of social responsibility and compliance, companies are expected to maintain sound business practices with no connection to anti-social forces, and if any sort of inappropriate request is received, it must be flatly refused. Sony Life s Basic Policy on Internal Control System Structure establishes a basic Group policy for eradicating anti-social forces, as well as for putting in place preventive measures to isolate Sony Life from relationships with anti-social forces. We are strengthening our corporatewide preparations accordingly. Basic Group Policy on Eradicating Anti-Social Forces Management and employees alike are fully aware of the importance, from social responsibility, compliance and corporate defense perspectives, to steer well clear of anti-social forces, and in line with the Basic Group Policy on Eradicating Anti-Social Forces, drawn up by SFH to guide the entire Sony Financial Group in efforts to eradicate contact with anti-social forces, Sony Life has put in place its own system to preclude relationships with anti-social forces. We strive, as an organization, to address the problem of anti-social forces, ensure the safety of management and employees who may be approached by such criminal elements and constantly seek to build closer ties with external specialist agencies to promote better access to pertinent advice and assistance in the event a situation arises. We flatly refuse to entertain inappropriate demands from anti-social forces and will pursue legal options civil and criminal action when necessary, disassociate ourselves from any and all connections, including business relationships, and will not in any circumstances conduct backroom deals or provide funds to anti-social forces. 054 Sony Life Insurance Co., Ltd. Annual Report 2018

57 Environmental Preservation Initiatives Sony Life s Environmental Conservation Activities Environmental Management System Sony Life has mounted a number of initiatives to reduce the burden it places on the environment. We have established environmental goals and objectives, put programs in place to lead us toward these aims and will continue with such environmentally conscious activities and initiatives. Environmental Policy Core Philosophy Sony Life works toward the realization of a sustainable society in accordance with the Sony Group Environmental Vision. As a member of the Sony Group, we adhere to this vision and make every effort to preserve the environment in all aspects of our operations. Reflecting our role as a life insurer in providing long-term security, in addition to providing economic assurance to policyholders, we aim to contribute to a prosperous and stable environment. Accordingly, we practice environmental protection on an ongoing, everyday basis. Policy 1. We strive to reduce our environmental impact by promoting the recycling of resources and conservation of the energy that are essential to our business, and work to ensure that all employees maintain a high level of environmental awareness. 2. In the course of our business activities, we conform appropriately with all laws, regulations and other requirements related to environmental protection. 3. We evaluate the environmental impact of our business and the insurance products and services that we provide and set environmental objectives, targets and implementation programs. Through these approaches, we aim for ongoing improvements in our environmental preservation activities, as well as the prevention of pollution. 4. Sony Life ensures that all employees are aware of its environmental policies and environmental preservation activities. Through this awareness, we aim to raise employees environmental consciousness from a variety of vantage points, through business and their personal lives. ISO Certification In March 2001, Sony Life acquired ISO certification, the international standard for environmental management systems, for its headquarters, and has since kept its certification up-to-date. Green Power Certification Systems In fiscal 2005, Sony Life introduced a green power certification system for power originating from wind-powered generators. This system facilitates electric-power swaps, certifying the environmental value of green power generation, even if the power originates at locations far from where it is used. Since fiscal 2007, Sony Life has been purchasing certificates for energy generated from wood-chip biomass, rather than wind-powered generation. What is ISO 14001? ISO is an international standard for environmental management systems created by the International Organization for Standardization (ISO). Certification is given to entities that review their environmental management systems annually, take action to address difficult and unprecedented issues and work continually to improve their environmental performance. Fiscal 2017 Green Power Certificate Green Power Green power refers to electricity generated from wind, solar, biomass (such as wood chips) and other renewable energy sources. In addition to using sustainable resources, no CO2 is emitted in producing this energy. Even in cases where wood chips are burned to generate electricity, the CO2 emitted during combustion is offset by the amount the trees absorb during maturation, resulting in a net carbon effect of zero. This certificate verifies Sony Life s purchase of 250,000 kwh of electricity generated from Noshiro Biomass Power Plant. (This is equivalent to about 130 tons of CO2 reduction on an annualized basis. A CO2 emission coefficient of t-CO2/kWh is used to calculate emission amount.) Sony Life Insurance Co., Ltd. Annual Report

58 Environmental Preservation Activities with Customers Donating to the Sorabear Foundation In March 2010, Sony Life introduced a CD-ROM version of policy terms and conditions, and in July 2017 made the information available on its website as well. When customers take out a policy and choose either the CD-ROM or online version of policy terms and conditions, the portion of the printing costs saved by using a non-printed version is donated to the Sorabear Foundation, a non-profit organization engaged in activities to prevent global warming. The Sorabear Foundation uses the donations from Sony Life to install solar power generation equipment at nursery schools and preschools throughout Japan. In fiscal 2017, our eighth such installation went into place at a kindergarten in Fukui Prefecture. Sony Life will continue to participate in environmental conservation activities and support the Sorabear Smile Project. Ceremony to commemorate the donation of a Sorabear power generator at Nittazuka Kindergarten in Fukui Prefecture The brothers Sora (left) and Bear (right) are the Sorabear Foundation s characters. Designer Shinzi Katoh modeled them on polar bears, which are gradually losing their habitat as the northern polar cap recedes. Paperless Processing Sony Life implemented paperless processing for new policy applications as well as various administrative details following policy signing, such as changes to the payment method and policy content, and realized a reduction in the use of paper as a result. 056 Sony Life Insurance Co., Ltd. Annual Report 2018

59 Participation in Social Contribution Activities One Love, One Trust Our rallying cry is the phrase one love, one trust, reminding us that for each voluntary contribution, or act of love, our standing within the community increases. As part of our efforts to be a good corporate citizen, we encourage every Sony Life employee to be active in his or her social contribution efforts, which we believe are instrumental in expanding the circle of love and trust. Sony Life s Social Contribution Activities (Japanese only) This site describes our social contribution efforts in an easy-to-understand manner. Sony Life Volunteer Club The Sony Life Volunteer Club was established by employees at the time of the Great Hanshin-Awaji Earthquake in 1995, and has continued its activities to the present day. The club operates using funds collected from employee donations, and is managed by individual employees. Website describing Sony Life s social contribution activities Principal Sony Life Volunteer Club Activities during the Year by Region Hokkaido Relay for Life, one location Chugoku Kinki Koshinetsu/ Hokuriku Relay for Life, four locations Relay for Life, three locations Child Chemo House Charity Walk Blind tennis Emotional support for victims of the Great Hanshin-Awaji Earthquake Kobe Fureai spring festival Kobe Fureai autumn festival Tohoku Relay for Life, five locations Great East Japan Earthquake reconstruction support Yamada-cho festival Summer festival at temporary housing in Kesennuma Summer festival at temporary housing at Midorigaoka/Tomita-cho And others Kyushu Relay for Life, six locations Aira Kodomo no Ie get-together Support for areas hit by the Kumamoto Earthquake and northern Kyushu torrential rains Support for Iwasaka temporary housing in the town of Ozu Support for temporary housing in the city of Asakura And others Relay for Life, one location Shikoku Relay for Life, four locations Support for the charity Yumewasou Project Tosa Kanto Relay for Life, eight locations J-League Sign Language Support Social event at Kobo Aijien/Shunko Gakuen Social event at St. Francis children s Tokai dormitory Yokohama Tennis Competition for People with Disabilities Social event at Koyama Home Relay for Life, four locations Christmas party at Kinjo Rokka-en Sony Life Insurance Co., Ltd. Annual Report

60 Ongoing Support for Earthquake Victims Support for Victims of the Great Hanshin-Awaji Earthquake Beginning with meals provided by employee volunteers right after the Great Hanshin-Awaji Earthquake struck in 1995, Sony Life has extended support matched to circumstances whenever people displaced by the earthquake moved from emergency shelters to temporary housing and then to reconstructed homes. More than 20 years since the earthquake rocked the region, we continue to hold seasonal festivals to raise the spirits of seniors who were affected by the disaster. Kobe Fureai spring festival Support for Victims of the Great East Japan Earthquake Right after the earthquake struck, on March 11, 2011, Sony Life spearheaded the establishment of the Reconstruction Support Council (now, the Tohoku Reconstruction Support Council) and extended support for meals prepared by employee volunteers, as well as for temporary housing. Even today, we continue to hold a summer festival to raise the spirits of people who were affected by the disaster. Principal Volunteer Activities Aimed at Providing Support for Areas Affected by the Great East Japan Earthquake Volunteering for Summer Festivals Since July 2011, every year employees have voluntarily taken part in the summer festivals. Participation during these events ranges from Sony Group employees manning food stalls to concerts by the Sony Brass Band, hula dances by local hula girls and massage services offered by Sony Life employees called health keepers, who have technical qualifications. Distributing Planters with Flowers Volunteers distribute flower-filled planters including support messages from Sony Life agency offices and headquarters to temporary housing locations. Distributing planters Summer festival Support in Areas Affected by the Kumamoto Earthquake and Torrential Rains in Northern Kyushu Sony Life s activities include distributing planters with flowers in bloom and organizing fairs to brighten up temporary housing. Support for areas hit by the Kumamoto Earthquake: distribution of planters 058 Sony Life Insurance Co., Ltd. Annual Report 2018

61 Relay for Life In Relay for Life, cancer patients and their families, as well as bereaved families, participate in a 24-hour track relay. Funds generated through the relay are donated to charity. Such relays are held at more than 5,000 locations in 20 countries. In fiscal 2017, more than 2,500 people took part in the relay, mainly agency office employees at 36 locations throughout Japan, as well as family members and customers. They ran and walked with current cancer patients and their families throughout the relay s 24-hour duration, while conducting volunteer activities to support the event. Sony Life will proactively support these activities, as part of its efforts to realize a harmonious society that is free from worries of cancer. Employees participating in the 24-hour Relay for Life Youth Educational Support We conduct a number of activities around Japan to support children, to whom we entrust the future. For example, each year the club plans beach and pool trips and barbecues for children who for a variety of reasons are unable to live with their parents. Activities such as these, held in different parts of Japan, give children who otherwise have little opportunity to interact with adults a chance to participate in society. As a result, we have seen these children become increasingly cheerful and develop a more optimistic outlook. Children participating in a beach cleanup and barbecue Providing Support for People with Disabilities Participating in events and competitions alongside people with disabilities gives people without disabilities a chance to join in the fun, as well as providing opportunities for interaction. To this end, volunteers participate in the J-League Sign Language Support and Yokohama Tennis Competition for People with Disabilities. Yokohama Tennis Competition for People with Disabilities Sony Life Insurance Co., Ltd. Annual Report

62 Regional and Community Contributions Support Activities for Special Olympics Nippon Sony Life believes that it contributes to society and promotes diversity each time it helps a single person with intellectual disabilities gain independence and participate in society. Our support for Special Olympics Nippon is based on this conviction. Approximately 500 Sony Life employees volunteered at the 6th Special Olympics Nippon National Winter Games in Niigata Prefecture in Throughout the Games, volunteers were involved mainly in supporting athletes, running events and organizing competition venues. The Games were exciting for everyone, including the athletes and volunteers. In addition to competitions such as these, volunteers are active in helping to establish regional organizations and serving as coaches during daily sports training sessions. In 2018, a huge contingent of employees from Sony Life will volunteer for the 7th Special Olympics Nippon National Summer Games in Aichi Prefecture. A meeting held by volunteers Volunteer in charge of an event Special Olympics Nippon (Japanese only) Special Olympics is a global, sports-oriented organization that provides people with intellectual disabilities routine access to sports training throughout the year and holds competitions where athletes can demonstrate the results of their training. In Japan, the public-interest foundation Special Olympics Nippon runs these activities as the domestic arm of the international organization. Eye Mate Fund Sony Life contributes to the Eye Mate Fund with the aim of helping visually challenged people participate in society. The Company donates an amount each year that matches the total raised by employees during the year. In fiscal 2017, million in employee donations and matching funds was given to Eye Mate, Inc. This figure brings cumulative donations to Eye Mate to million ( million including other organizations), making Sony Life one of the largest donors among corporate and other organizations. Seeing-eye dogs learning to wait at their masters feet Eye Mate, Inc. (Japanese only) Since its introduction of the first seeing-eye dogs to Japan, this organization has been responsible for training numerous seeing-eye dogs. The assistance of formally trained Eye Mate seeing-eye dogs helps people with visual impairment participate in society by enabling them to walk about on their own. Dog trained to assist sight-impaired travel by train and bus 060 Sony Life Insurance Co., Ltd. Annual Report 2018

63 Promoting Better Health Sony Life Cup All Japan Ladies Tennis Tournament Since 2002, Sony Life has sponsored and supported the Sony Life Cup All Japan Ladies Tennis Tournament, one of the largest amateur events for women tennis players in Japan. The tournament has been held since 1979 to promote the development of tennis as a sport with mass appeal and one that also helps improve women s health. This year marks the 40th staging of this traditional event, which has attracted a cumulative total of more than 400,000 players. At tournament qualifiers held in each prefecture, Sony Life employees, including Lifeplanner sales employees, participate in a variety of activities that support the tournament. By backing this tournament, Sony Life helps people to realize their dreams and forge stronger interpersonal ties. An exciting match unfolds before spectators eyes Website: (Japanese only) Athletes from around the country The tournament website features a movie recapping event history and the drive and determination of the female competitors. Please watch the movie. Facebook page: (Japanese only) Sony Life Insurance Co., Ltd. Annual Report

64 Contributing to the Growth of Students and Youth Life Planning Courses by Lifeplanner Sales Employees Since fiscal 2006, Sony Life has offered life planning courses for students who are preparing to make their own way in society. Lifeplanner sales employees, who serve as instructors, emphasize the importance of having dreams for the future. Life Planning Course Objectives To provide protection products that optimally match customers lives, when proposing such products, Sony Life first asks customers about their dreams and future goals. Based on this information, we work with each customer to map out a specific life plan, emphasizing the importance of life planning. Through the process of life planning, we aim to convey to students who have long lives in front of them the importance of planning their lives and persevering to achieve their dreams. Students dreaming up their futures as they participate in life planning Monetary Simulations to Help Students Plan Their Lives as They Spread Their Wings As life planning professionals, Lifeplanner sales employees instruct and support students in the life planning process. The simulation begins with a family. The overall life plan covers the arrival of children and the creation of an education plan as well as a plan for the purchase of a home, and lays out approaches to achieve the kind of future the students envision down the road and the dreams that they aspire to. Next, the course takes on an economic focus, looking at the financial resources that are needed. Lifeplanner sales Consulting by Lifeplanner sales employees to help realize those dreams employees offer advice, using Sony Life s proprietary software, LiPSS (see pages 32 33). Consulting from an economic perspective, we examine the income, expenses and savings that will be needed. This realistic approach gives students a better understanding of what is needed to achieve their goals and dreams. Life Planning Courses to Date As of July 1, 2018, Sony Life had held life planning courses at 1,222 schools throughout Japan. (Schools) Private Public Total Junior High Schools High Schools Junior Colleges and Vocational Schools Universities Others Total ,222 As of July 1, 2018 (Schools) Activities by Fiscal Year Schools (Continuing) FY FY FY FY FY FY FY FY FY FY FY FY FY2018 (As of July 1) Schools 1,222 Students attending Approx. 129, Sony Life Insurance Co., Ltd. Annual Report 2018