Management Message. Sony Life Insurance Co., Ltd.

Transcription

1 Annual Report

2 Management Message Taro Okuda, President Founded in August 1979, Sony Life marked its 30th anniversary in 2009 and our number of policies in force at end-fy2009 exceeded fi ve million. On our establishment, we declared: Today, life insurance will begin changing; Lifeplanner sales employees will drive this change! We have tirelessly sought to extract the true value and essence of life insurance ever since, thereby delivering value to our customers and providing each one of them with peace of mind. I believe these continuous efforts have been well received by our customers and it is thanks to them we were able to celebrate our 30th anniversary. Our promise to our customers is that we, Sony Life, will continue to make every effort to honor their support for us Performance In FY2009, our new policy amount*1 rose 4.5% from the previous fi scal year, to 4,049.2 billion. In addition, our policy amount in force*1 rose 2.9% during the year, to 33,470.7 billion as of March 31, These fi gures have continued to grow each year since the start of the Company s operations. Furthermore, our solvency margin ratio*2, an indicator of an insurance company s fi nancial soundness, rose percentage points, to 2,637.3%, remaining high. I believe the main reason behind our strong performance is the support of our customers, who have shown their understanding of the Company s sincere efforts to try to deliver the full range and true value of life insurance. But we will not be content to simply rest on our current performance. We will continue to make great efforts to seek out ways to ensure the stable and sound operation of the Company. Kunitake Ando, Chairman New Initiatives Striving to Provide Services that Continue to Meet Customers Expectations In July 2009, Sony Life entered a business tie-up with specifi ed nonprofi t organization Yuigon Sozoku Legal Network on legal consultation related to last will and testament, as well as inheritance. This cooperation enables Sony Life to improve its services to customers by adding Legal Consultation with Lawyers to the Inheritance and Business Succession Solution Services utilizing life insurance based on life planning already provided by Lifeplanner sales employees. In August 2009, AEGON Sony Life Insurance the joint venture established between AEGON of the Netherlands and Sony Life to focus on individual annuity products obtained fi nal approval from Japan s Financial Services Agency to commence operations in the life insurance business. In December 2009, AEGON Sony Life Insurance began offering variable annuity products through Lifeplanner sales employees and several fi nancial institutions, such as Sumitomo Mitsui Banking Corporation. This widened our product line and enables Sony Life to offer better and more thorough protection and services. We consider this a new step toward establishing a higher-level support structure that will help people live with peace of mind. In February 2010, a new wholly owned subsidiary, LIPLA Co., Ltd. was established. LIPLA is a shop-style insurance agency designed to offer visitors Sony Life s high-quality products and services through consultation sales, based upon the life-planning concept. At LIPLA, visitors can also fi nd products and services

3 Mission To work for customers financial security and stability by offering optimal life insurance products and high-quality services. Basic Management Philosophy Meet customer expectations and earn their trust by consistently providing customers with satisfactory, high-quality services. Always meet changes in the environment by proactively taking on new challenges, and stay ahead of demands through innovative management that anticipates emerging needs. Respect the individuality of employees and put their skills and aptitudes to the fullest use, thereby creating an unconstrained workplace and maintaining a dynamic organization. provided by other members of the Sony Financial Holdings Group. These include ordinary yen deposit accounts and mortgage loans from Sony Bank and automobile insurance from Sony Assurance. LIFEPLANNER VALUE Everything is for the Customer Sony Life s corporate slogan, LIFEPLANNER VALUE, expresses the Company s determination to walk in step with customers throughout their lives, helping them to achieve their dreams. To carry out this concept, we are determined to offer support to our customers as their life-long partner, contributing to the realization of their dreams. By its very nature, life insurance must incorporate after-sales services for its true value to be realized. Sony Life offers a rational life-insurance program tailored to each family, but our service does not stop there. Customers life plans may change as life goes on. They may face myriad fi nancial concerns over housing, children s education, medical expenses, nursing care and retirement. We believe it is also our role to help them fi nd solutions to those concerns through consultation. Sony Life offers after-sales consultations that often go beyond mere life-insurance services. Everything is for the customer. We are committed to stand at our customers side and to provide them with the most rational protection and peace of mind throughout their lives. In Closing Making the Leap to Our Next 30 Years In the 30 years we have been in business, society has evolved as the rate of childbirth has declined and the population has aged, and lifestyles, values and needs have diversifi ed. Amid these changes, Sony Life has worked consistently to help its customers achieve joyous futures, creating value in a way that defi nes the Company. Regardless of future shifts in the environment, Sony Life will continue to honor its long-term commitment to customers. We will always remain sensitive to services that better meet our customers needs and strive to make them a reality. As we take this next step into our future, we will put forth every effort to achieve our aim of being loved by our stakeholders and trusted as the world quality leader in life insurance. We would like to thank you for your ongoing support and encouragement of Sony Life in these endeavors. Taro Okuda President, Representative Director * 1 The new policy amount and policy amount in force are the total of individual life insurance and individual annuities. * 2 The solvency margin ratio is one administrative control indicator used to judge if an insurer has the ability to pay (solvency margin) insurance claims in suffi cient response to a major disaster or other unforeseen. 001

4 CONTENTS Management Message Financial Highlights FY2009 Operating Performance Asset Management Income Assets, Liabilities and Net Assets Financial Soundness Market Consistent Embedded Value (MCEV) Protecting Every Dream throughout Each Individual s Life. That s LIFEPLANNER VALUE Educational Systems, Self-Development and Reciprocal Studies Providing Optimal Protection through the Life Planning Support Service (LiPSS) Providing a Range of Follow-Up Services to Help Customers Live Fulfi lling Lives Management Improvements that Focus on Customer Satisfaction System of Claim Payment Operations Risk Management System Personal Information Protection and Information Security Compliance Environmental Protection Initiatives Social Contribution Activities The Sony Financial Holdings Group Financial Data Organization Corporate History Directors and Statutory Auditors Corporate Data Global Network Lifeplanner and LIFEPLANNER VALUE are registered trademarks of 002

5 Financial Highlights Key Performance Indicators for Past Five Years As of March 31 (Items marked with asterisk (*) are for the years ended March 31) Policy amount in force 34,598,244 33,537,084 32,434,587 31,152,672 30,007,828 Individual life insurance 33,164,100 32,229,100 31,237,078 30,038,118 28,908,802 Individual annuities 306, , , , ,735 Group life insurance 1,127,481 1,019, , , ,289 Policy amount in force for group annuities 72,348 73,499 73,307 72,633 71,400 Annualized premiums from insurance in force 573, , , , ,296 Medical protection, living benefi t and other products 133, , , , ,432 New policy amount* 4,056,495 3,888,906 3,808,542 3,437,215 3,401,226 Individual life insurance 4,017,527 3,834,610 3,744,680 3,396,867 3,361,271 Individual annuity 31,709 39,100 57,908 32,590 30,864 Group life insurance 7,258 15,196 5,953 7,757 9,090 Annualized premiums from new policies* 68,780 61,693 63,475 65,541 61,791 Medical protection, living benefi t protection and other products 16,264 13,443 13,358 14,479 14,543 Ordinary revenues* 881, , , , ,426 Income from insurance premiums 700, , , , ,516 Investment income 175,397 98,781 87,493 78, ,438 Ordinary expenses* 801, , , , ,067 Insurance claims and other payments 274, , , , ,881 Investment expenses 20, ,777 69,895 8,184 4,561 Operating expenses 96,860 93,928 94,367 87,328 82,040 Ordinary profi t* 80,099 32,409 39,290 14,895 24,359 Net income* 46,138 33,783 18,514 7,494 9,616 Core profi t* 64,517 38,005 23,571 24,366 28,564 Common stock 70,000 70,000 65,000 65,000 65,000 (Thousands of shares) 70,000 70,000 65,000 65,000 65,000 Total assets 4,286,540 3,810,929 3,659,786 3,445,970 3,103,241 Separate account assets 373, , , , ,682 Policy reserves 3,985,610 3,592,376 3,375,090 3,088,888 2,739,264 Loans 127, , ,688 96,804 86,918 Securities 3,539,114 2,819,638 2,388,932 2,217,902 2,132,216 Solvency margin ratio 2,637.3% 2,060.5% 1,747.9% 1,852.0% 1,547.0% Number of employees 5,835 5,599 5,372 5,253 5,250 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 annuity products 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 lump-sum payment 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.). 003

6 FY2009 Operating Performance Policy Amount in Force Since operations began, we have maintained consistent growth, with policy amount in force up 2.9% in FY2009. At the end of FY2009, total policy amount in force was 33,470.7 billion, up 2.9% from a year earlier. Of this amount, individual life insurance in force expanded 2.9%, to 33,164.1 billion, and individual annuities in force grew 6.3%, to billion. We believe that these fi gures refl ect the high level of trust we received from our policyholders, as well as high acclaim for our after-sales services. Group life insurance in force was 1,127.4 billion, up 10.6%. Consequently, the total of individual life insurance, individual annuities and group life insurance in force was 34,598.2 billion, up 3.2% from the previous fi scal year. The number of policies in force (the total for individual life insurance and individual annuities) came to 5,010,434, up 6.4%. Policy amount in force is the total monetary amount of protection a life insurer provides its customers. New Policy Amount Our new policy amount grew 4.5%, to 4,049.2 billion. In FY2009, our new policy amount was up 4.5% compared with the preceding fi scal year, to 4,049.2 billion. In November 2009, Sony Life introduced a discount rider for nonsmokers and others in excellent health, which can be added to family income insurance. This addition helped push up the new policy amount, which is the sum of individual life insurance and individual annuities. Of this total, individual life insurance amounted to 4,017.5 billion, up 4.8%, and individual annuities declined 18.9%, to 37.1 billion. Group life insurance fell 52.2%, to 7.2 billion. The total new policy amount of individual life insurance, individual annuities and group life insurance was up 4.3%, to 4,056.4 billion. The number of new individual life insurance policies and individual annuities during the year was 582,208, up 9.0%. New policy amount is the total monetary amount of protection provided through new policies. Policy Amount in Force (Individual life insurance + Individual annuities) (Billions of yen) (As of March 31) 40,000 32,000 24,000 16,000 8,000 0 Policy amount in force , , , , ,470.7 billion ,470.7 New Policy Amount (Individual life insurance + Individual annuities) (Billions of yen) 5,000 4,000 3,000 2,000 1,000 0 New policy amount , , ,802.5 (Years ended March 31) 3, ,049.2 billion ,

7 Product Mix Sales of family income insurance were favorable. Approximately 90% of our new policy amount in FY2009, on a policy amount basis, was for deathprotection products*. Sales were particularly strong for family income insurance, for which we introduced a discount rider for nonsmokers and others in excellent health in November * This fi gure indicates the new policy amount of death-protection products, which excludes the new policy amount of endowment/ educational insurance, individual annuities and medical treatment insurance. New Policy Amount by Type of Products (Individual life insurance and individual annuities on a policy amount basis, FY2009) Endowment/ Educational, Individual annuities 7.6% Variable life 5.2% Other 2.3% Whole life 11.8% Term life 73.1% Lapse and Surrender Rate We continued to maintain a low lapse and surrender rate. In FY2009, our lapse and surrender rate for individual life insurance and individual annuities on a policy amount basis amounted to 7.21%, compared with 6.79% during the preceding term. The main reason for the increase during the year stemmed from a shift to our affordably priced new offering of family income insurance with a discount rider for nonsmokers and others in excellent health, introduced in November 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 after-sale follow-up services. Lapse and Surrender Rate (Individual life insurance and individual annuities on a policy amount basis) (%) (Years ended March 31) 7.21% The ratio of polices that have lapsed or been cancelled to policies in force at the beginning of the fi scal year is called the lapse and surrender rate. The rate is expressed as a ratio of the amount of cancellations or lapses due to the reduction, increase or reinstatement of the total policy amount in force to the policy amount in force at the beginning of the fi scal year. 2 0 Lapse and surrender rate Ratio of Operating Expenses to Income from Insurance Premiums We continued working to raise management efficiency. In FY2009, our ratio of operating expenses to income Ratio of Operating Expenses to Income from insurance premiums declined 0.3 percentage from Insurance Premiums point, to 13.9%. We will continue striving to raise (%) 25 management effi ciency. (Years ended March 31) Selling new policies, maintaining existing policies, making insurance payouts and other tasks incur various costs, such as personnel and administrative expenses. We refer to costs necessary to conduct our business as a life insurance company as operating expenses % 5 0 Ratio of operating expenses

8 Asset Management Investment Environment In FY2009, the Japanese economy showed signs of recovery. Real GDP growth in the April June quarter was 6.0%, negative 0.6% in the July September quarter and 3.8% in the October December quarter. The rate is also estimated to have been positive in the January March quarter. The Japanese economy benefi ted from an increase in exports, buoyed by economic recoveries in China and other countries. In the bond markets, after prices decreased (yields rose) through June 2009, long-term interest rates remained in a certain range. Owing to the increased issuance of Japanese government bonds (JGBs) and concerns over government fi nances, at one point long-term interest rates exceeded 1.5%. However, this rate fell sharply, to around 1.2%, on concerns related to the cash fl ow problems of a holding company owned by the government of Dubai, and the Greek debt crisis. In the Japanese government, the Hatoyama Cabinet swept into power on the strength of a Democratic Party of Japan (DPJ) victory in House of Representative elections. Numerous DPJ policies called for increases in government expenditures, which were refl ected by higher interest rates in the bond markets. As of March 31, 2010, the yield on 10-year JGBs was 1.400%, up percentage point from one year earlier. Investment Policy Sony Life s fundamental policy on investing assets in the general account is to ensure stable interest revenues and maintain the soundness of assets, keeping a close eye on the balance between profi tability and market risk as we invest. In our bond investments, which center on Japanese government bonds, we are lengthening the duration of our portfolio by moving into longer-term bonds. Investment Performance As of March 31, 2010, general account assets totaled 3,912.9 billion, up 10.7%, or billion, from one year earlier. Within the general account, positions of Japanese government and corporate bond investments came to 3,032.9 billion (accounting for 77.5% of general account assets); Japanese stocks, 72.5 billion (1.9%); foreign government and corporate bonds, 49.9 billion (1.3%); monetary trusts, billion (7.4%); policyholder loans, billion (3.3%); cash and call loans billion (3.0%); and real estate, 79.9 billion (2.0%). Investment Yield (%) FY2008 FY2009 Yield on investment of assets included within core profit Investment yield (general account) Note: Please refer to page 10 for information on core profi t. Stock market performance refl ected a major upturn in corporate earnings. The Nikkei average, which throughout the year remained above its March 31, 2009, close of 8,109.53, as of March 31, 2009, was above 11,000 one year later. At one point, stock prices plunged on concerns surrounding the Dubai and Greek government situations, but overall the Japanese stock market was supported by stable performance in overseas stock markets. On March 31, 2010, the Nikkei average was 11,089.94, up 2, from its level a year earlier. In foreign exchange markets, the yen continued to rise against other currencies. Although the yen/dollar exchange rate rose to at one point in April, the yen appreciated against the dollar from that point onward, even reaching to the U.S. dollar on news of the Dubai issue in November Thereafter, U.S. economic recovery supported an increase in long-term exchange rates, prompting a certain degree of exchange rate amelioration. As of March 31, 2010, the yen was trading at to the U.S. dollar, representing appreciation of 5.19 compared with one year earlier. In FY2009, we increased our percentage holdings ultralong-term Japanese government and corporate bonds. Meanwhile, our holdings of Japanese stocks, which we had curtailed signifi cantly, remained essentially unchanged. We also reduced our holdings of convertible bonds. Other securities 0.2% Japanese stocks 1.9% General Account Assets (As of March 31, 2010) Real estate 2.0% Cash and call loans 3.0% Policy loans 3.3% Monetary trusts 7.4% Foreign stocks and others 0.6% Foreign government bonds and others 1.3% Other assets 2.8% Japanese government bonds and others 77.5% 006

9 Income Income from Insurance Premiums and Insurance Claims and Other Payment Income from insurance premiums and respectively, totaling billion (compared with others rose, owing to such factors as billion in FY2008). Sony Life believes that in growth in the policy amount in force. FY2009, as in past years, it was able to continue to In FY2009, such factors as a steady increase in the serve the needs of its policyholders. policy amount in force caused income from insurance premiums to rise to billion, compared with Income from insurance premiums and others, which billion in the preceding fi scal year. Meanwhile, includes such income as premiums paid by customers, insurance claims, benefi ts and annuities that Sony Life is the principal source of income for insurance companies. Insurance claims and other payments, which paid to policyholders in FY2009 amounted to 64.8 includes insurance claims, benefi ts, annuities, surrender billion (compared with 62.0 billion in FY2008), 34.6 cash and other payments that insurance companies billion (compared with 32.8 billion in FY2008) and make to customers under their insurance policies. 7.7 billion (compared with 7.1 billion in FY2008), Income from Insurance Premiums and Others (Billions of yen) (Years ended March 31) billion Insurance Claims and Other Payments (Billions of yen) (Years ended March 31) 7.7 billion 34.6 billion billion 0 Income from insurance premiums Annuities Benefits Claims Investment Income and Investment Expenses Investment income came to billion, and investment expenses totaled 20.5 billion. Investment income amounted to billion in FY2009, compared with 98.7 billion in the preceding year. Reasons for this increase included an upturn in stock prices, which improved separate account performance, as well as greater holdings of ultralong-term bonds, which boosted interest income and dividends. Investment expenses came to 20.5 billion, down from billion, owing to the absence of losses on investments in separate accounts. Investment income, or the income received through the investment in assets, includes interest and dividend income, as well as gains on the sales of securities. Investment expenses, or the expenses incurred in order to generate investment income, include such items as loss on sales of securities, devaluation losses on securities and provision for doubtful accounts. Ordinary Profit and Net Income Ordinary profit was 80.0 billion, and net income came to 46.1 billion. Ordinary profi t increased 147.1% year on year, to 80.0 billion. This improvement stemmed from higher ordinary revenues and a sharp decline in impairment losses on securities. Net income increased 36.6% year on year, to 46.1 billion, despite a 5.9 billion addition to the reserve for price fl uctuations, which had been reversed in the amount of 20.4 billion in the preceding fi scal year. Ordinary profi t the difference between ordinary revenues and ordinary expenses represents income derived from operating activities during the fi scal 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, hospitalization and other benefi ts, annuity payments, provision for policy reserves, investment expenses and operating expenses. Net income is calculated by adding extraordinary gains to ordinary profi t, then subtracting provision for reserve for price fl uctuations and other extraordinary losses, as well as provision for reserve for policyholders dividends and income taxes. 007

10 Assets, Liabilities and Net Assets Assets As of the end of FY2009, total assets amounted to 4,286.5 billion. As of March 31, 2010, Sony Life s total assets reached 4,286.5 billion, up 12.5% from a year earlier. Total assets, comprising the capital received from stockholders and premiums paid by policyholders, are invested in securities, property and equipment and other assets. These assets are held in preparation for future insurance claims and benefi t payments, as well as to maintain the soundness of the Company s insurance business. (Billions of yen) 5,000 4,000 3,000 2,000 Total Assets (As of March 31) 4,286.5 billion 1, Total assets 3, , , , ,286.5 Liabilities We maintained sufficient policy reserve to cover future insurance claim payments. Sony Life has attained a standard policy reserve level, and uses the net level premium method to build up its reserves. Under this method, we calculate operating expenses assuming a constant, or net, level throughout the premium payment period. Our policy reserve at the end of FY2009 totaled 3,985.6 billion, which we consider suffi cient. (Billions of yen) 5,000 4,000 3,000 Policy Reserve (As of March 31) 3,985.6 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 law of Japan. 2,000 1,000 0 Policy reserve , , , , ,985.6 Net Assets Sony Life s common stock was 70.0 billion. As of March 31, 2010, Sony Life had total common stock of 70.0 billion, which has been wholly provided by Sony Financial Holdings since April 1, Common stock is the minimum standard amount of shareholders equity a company must hold to protect its creditors, and Article 6 of the Insurance Business Law of Japan prescribes a minimum of 1.0 billion. Other regulations have also been established to ensure adequate capitalization. 008

11 Financial Soundness Real Net Assets Real net assets (A) were billion. Real net assets (A) were billion as of March 31, 2010, up 5.8% from a year earlier. Real net assets decreased during the previous fi scal year because the Company posted substantial impairment losses, but the fi gure rebounded during the year under review. (Billions of yen) Real Net Assets (As of March 31) billion billion Real net assets are the net value of total assets (the fair value of securities and tangible fi xed assets) minus the value of total liabilities (excluding the contingency reserve and other liabilities that are similar to capital). If a company s real net assets are negative, it is judged that liabilities exceed assets and the regulatory authority may order a company to halt operations (issue an order to suspend business) Real net assets (A) Real net assets (B) Reference According to the Comprehensive Guideline for Insurance Companies defi ned by the regulatory authority, when the amount (Real net assets (B)) obtained by deducting unrealized gains and losses on held-to-maturity bonds and policy reserve matching bonds which are not accounted for in the balance sheets as mark-to-market, from real net assets (A) is positive, and liquid assets are held, the regulatory authority will not, in principle, take early corrective actions even if real net assets becomes negative. As Sony Life has constructed its portfolio by considering the specifi c characteristics of its liabilities, the portfolio consists mainly of investments in long-term yen-dominated bonds, the majority of which are categorized as held-to-maturity bonds. Consequently, real net assets (B), the standard for applying this measure, are indicated below. Real net assets (Billions of yen) As of March (1) Total amount to be recorded as assets (= ) 3, , , , ,268.7 Total assets on the balance sheet 3, , , , ,286.5 Difference between fair value and balance sheet amount of securities 26.7 (20.4) Unrealized gain or loss on tangible fi xed assets Unrealized gain or loss other than tangible fi xed assets Deferred tax assets for available-for-sale securities (2) An amount calculated based on total amount to be recorded as liabilities (= ) 2, , , , ,705.3 Total liabilities on the balance sheet 2, , , , ,095.2 Reserve for price fl uctuations Contingency reserve Part of reserves for future insurance claim payment Excess of amount equivalent to surrender values ( (a)) Unallocated amount in reserve for policyholder s dividends ( (b)) Deferred tax liabilities for available-for-sale securities Real Net Assets (A) (1) (2) (including unrealized gains and losses on held-to-maturity securities) (3) Unrealized gains and losses on held-to-maturity securities 26.7 (20.4) Real Net Assets (A) (1) (2) (3) (excluding unrealized gains and losses on held-to-maturity securities) Solvency Margin Ratio We maintained a high solvency margin ratio, of 2,637.3%. The solvency margin ratio is an indicator of soundness for life insurance companies. Sony Life s solvency margin ratio remained high. As of March 31, 2010, this ratio was 2,637.3%, up percentage points from one year earlier. Higher earnings led to an increase in capital, and the improved market environment contributed to an increase in net unrealized gains on other securities. Furthermore, a reduction in equity securities reduced investment risks. 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 suffi ciently 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 if an insurer has the ability to pay in response to such unpredictable events. 009

12 The solvency margin ratio is calculated as follows: Formula for Calculating the Solvency Margin Ratio Solvency margin ratio (%) Total solvency margin Total risk x 1/2 Total solvency margin = [ Common stock, etc. + Reserve for price fl uctuations *1 + Contingency reserve *2 + Reserve for possible loan losses + Net unrealized gains/losses on other securities x 90%* + Net unrealized gains/losses on real estate x 85%* + Excess amount of policy reserves based on Zillmer method + Unallocated portion of reserves for policyholders dividends + Future profi t + Deferred tax assets+ Subordinated debt + Deductible items + Other ] *100% in the event of an unrealized loss *1 Reserve for price fl uctuations... 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 benefi ts in the event that losses result from the payment of claims and other benefi ts 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 factor Third-sector insurance risk (R8)... Risk that claims payments on third-sector insurance will rise substantially, owing to a major disaster or other factor Assumed interest rate risks (R2)... Risk that a downturn in the investment environment will cause a decline in yields on invested assets Asset management risks (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 risks (R4)... Risk that exceeds the scope of normal business management risk Minimum guarantee risks (R7)... Risk associated with the minimum claim guarantee amount on variable life insurance and variable annuities x 100 Core Profit Core profit was 64.5 billion. In FY2009, core profi t rose 69.8% year on year, to 64.5 billion, mainly as a result of higher income from insurance premiums, higher interest income and dividends and a decrease in the provision for policy reserves associated with the minimum guarantee on variable life insurance. Core profi t is an indicator of the profi t-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, benefi ts and annuities and to make policy reserve provisions for future payments. Adding capital gains or losses, such as on sales of securities, and onetime gains and losses to core profi t produces ordinary profi t, which appears on the statements of income. Core profit of 64.5 billion Net capital gains of 18.5 billion Net other one-time gains (losses) of (3.0) billion Ordinary profit of 80.0 billion Note: Like most other life insurers that are organized as joint stock corporations, Sony Life sells life insurance that is non-profi t. 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-profi t policies, their income from insurance premiums includes a portion of fi nancial resources for policyholder dividends and fi nancial resources for these dividends are included in core profi ts. For this reason, mutual corporations tend to show higher core profi ts than joint stock corporations that operate on the same scale. Negative Spread The negative spread for FY2009 was 11.5 billion. Our negative spread in FY2009 was 11.5 billion, down from 21.3 billion in the previous fi scal year. The Company has core profi t of 64.5 billion, which is adequate to cover its negative spread. (See the discussion of core profi t above.) 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). Negative spread arises when, owing to the deterioration of the investment environment or other factors, the actual yield on investment for a portion of the policies falls below the assumed interest rate (for calculating policy reserves). Formula for Calculating Negative Spread Yield on investment on core profit *1 Average assumed interest rate (for calculating policy reserves) *2 General account policy reserves *3 Negative spread Notes: *1. Investment yield for core profi t is the investment income from the general account that is included in core profi t, less the provision for policyholder dividend reserves, divided by policy reserve in general account. *2. The average assumed interest rate (for calculating policy reserve) is the average of the assumed interest rates used to calculate policy reserve in general account. *3. Policy reserve in general account excludes the contingency reserve, calculated as follows: (Policy reserves at beginning of term + Policy reserves at end of term Expected interest) x 1/2. 010

13 Unrealized Gains on Securities Unrealized gains on our securities holdings amounted to 19.9 billion. Unrealized gains on securities in the general account stood at 19.9 billion as of March 31, 2010, down from 50.9 billion a year earlier. Of this total, unrealized gains on Japanese stocks were 10.4 billion (compared with 1.4 billion one year earlier); on Japanese government bonds and others, 37 million (compared with 53.8 billion one year earlier); and on foreign securities, there was an unrealized loss of 7.8 billion (compared with an unrealized loss of 3.8 billion one year earlier). Unrealized gains and losses refer to the differences between the book values and fair values of securities. If fair value exceeds book value, 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 and real estate is included in the total solvency margin the numerator of the formula for calculating the solvency margin ratio. Note: For securities with fair market values, unrealized gains on securities is the sum of net unrealized gains on held-to-maturity bonds and net unrealized gains on other securities. The totals for securities include fi gures related to securities held within monetary trusts. (Reference: As of March 31, 2010, Sony Life assumed unrealized gains on shares to be zero when the Nikkei Stock Average is approximately 9,167 and the TOPIX index is 809 points.) Non-Performing Assets Sony Life has no non-performing assets. 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 made to third parties. A company s total loan balance represents the sum of these two loan balances. Sony Life s loan balance at the end of FY2009 was billion. Because the Company does not engage in commercial lending, its loan balance is derived solely from policy loans, which are limited to the value of recoverable surrender cash. As a consequence, the Company has no riskmonitored loans (loans for which repayment circumstances are not ordinary). Moreover, all fi gures listed in the loans by borrower category are classifi ed as normal loans. Credit Rating Sony Life has been rated highly by credit rating agencies. Sony Life has requested ratings from several institutions to help policyholders and potential customers make objective decisions concerning its ability to fi nance insurance and pay claims and benefi ts. Life insurance companies make two types of loans: policyholder loans and commercial loans. Policyholder loans comprise two types, the fi rst of which is policy loans, which are limited to the value of recoverable surrender cash. The second type, policy 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 policyholder loans, include loans to companies in Japan and overseas, countries and government institutions, as well as mortgage loans. 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 fi nancial, income and expense information, and sales and management strategies. Rating and Investment Information, Inc. Japan Credit Rating Agency, Ltd. Moody s Investors Service, Inc. Standard & Poor s Credit Rating (Ratings as of July 1, 2010) Insurance claims paying ability Ability to pay insurance claims Insurance financial strength rating Financial strength rating AA AA Aa3 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 fi gures and information available to them at that time. Please refer to each agency s website for more details. 011

14 Market Consistent Embedded Value (MCEV) About Market Consistent Embedded Value (MCEV) Market Consistent Embedded Value (MCEV) is based on European Insurance CFO Forum Market Consistent Embedded Value Principles * (MCEV Principles). MCEV is defi ned as the present value of distributable earnings to shareholders generated from assets allocated to the covered business after suffi cient allowance for the aggregate risks in the covered business. MCEV consists of adjusted net worth and the value of existing business. 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 fi nancial reports, and is used as an internal management tool. In step with these developments, Sony Life has disclosed MCEV beginning as of march 31, 2008, in compliance with MCEV Principles. 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 profi ts on in-force business, while MCEV indicates the present value of future profi ts on in-force business together with the company s adjusted net worth. For this reason, Sony Life believes MCEV serves as a valuable supplement to the fi nancial information provided under Japanese GAAP and is a helpful indicator used to evaluate corporate value. However, MCEV covers only existing in-force business 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. With regard to the trends surrounding MCEV, the CFO Forum, which is formed by the Chief Financial Offi cers (CFOs) of major insurance companies in Europe, has revised MCEV Principles in October 2009 and added issues relating to liquidity premium. Readers are cautioned to be aware that the calculation standards are susceptible to change. * Copyright Stichting CFO Forum Foundation 2008 MCEV as of March 31, 2010 MCEV of Sony Life as of March 31, 2010, is shown in the table below. (Billions of yen) As of March Change MCEV Adjusted net worth Value of existing business New business value which is an item to reduces MCEV, has been largely declined, which also had a larger effect. Market Consistent Embedded Value (MCEV) (Billions of yen) 1, (As of March 31) billion Value of existing business has largely increased due to changes in the market environment including steepening of the yield curve on interest swap rates, which contributed to increase MCEV. Also we have been working to reduce the duration mismatch between assets and liabilities. As already announced in the Sony Financial Holdings press release Impact of Asset Management Policy Changes and Other Factors on Sony Life s Market Consistent Embedded Value on March 15, 2010, time value of options and guarantees MCEV 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. It is the total amount of the net assets line on the balance sheets, adding a reserve for price fl uctuations, contingency reserves, reserve for possible loan losses, along with unrealized gains or losses on held-to-maturity securities and unrealized gains or losses on land and buildings, deducting unfunded pension liabilities and intangible fi xed assets, and adjusting for the amount of tax effect equivalent to these seven items, on which valuation gains or losses on subsidiaries and affi liated companies are added (see right). Here, the foreign exchange rate applied in calculating the valuation gains or losses by the foreign exchange rate on Sony Life Insurance (Philippines) Corporation is 2.0/peso at the end of March We have also refl ected the tax effect equivalent in calculating valuation gains or losses according to the foreign exchange rate. (Billions of yen) As of March Change Adjusted net worth Total net assets Reserve for price fl uctuations Contingency reserves Reserve for possible loan losses Unrealized gains or losses on held-to-maturity securities 26.7 (20.5) (47.2) Unrealized gains or losses on land and buildings (16.4) Unfunded pension liabilities (6.8) (6.6) 0.1 Intangible fi xed assets (12.2) (13.9) (1.7) Tax effect equivalent of above seven items (31.1) (10.7) 20.3 Valuation gains or losses on subsidiaries and affi liated companies (4.0) (4.0) 012

15 Value of Existing Business The value of existing business is calculated as the present value of certainty-equivalent profi t (present value of profi t based on the future cash fl ows generated from the covered business) less the time value of options and guarantees*, frictional cost (the present value of investment costs and taxes on assets backing the required capital at each point of time in the future) * Sony Life has calculated the time value of options and guarantees using the stochastic method with risk-neutral scenarios. The time value of options and guarantees is calculated as the difference between the present value of certainty-equivalent profi t and the present value of stochastic future profi ts. Reconciliation Analysis from MCEV at the End of the Prior Year The table below shows the reconciliation analysis of MCEV as of March 31, 2010, from MCEV as of March 31, 2009, of which format is in line with the one prescribed by MCEV Principles. (Billions of yen) MCEV Opening MCEV (MCEV as of March 31, 2009) Opening adjustment (7.0) Adjusted opening MCEV New business value 55.6 Expected existing business contribution (risk-free rate) 18.4 Expected existing business contribution (in excess of risk free rate) 11.5 Transfers from value of existing business and required capital to free surplus Experience variances (1.0) Assumption changes (26.4) Other operating variance Operating MCEV earnings Economic variances Other non operating variance Total MCEV earnings Closing adjustments (0.2) Closing MCEV (MCEV as of March 31, 2010) Major Assumptions We have used the interest swap rate of Japanese yen as of March 31, 2010 as a risk-free rate for the certainty equivalent projections. As there is no data available beyond 50 years, we assumed that forward rates in the 51st year and beyond were equal to those in the 50th year. We have not added liquidity premium on the risk free rate, as there are no products which are considered appropriate to apply liquidity premium as they have reasonably predictable cash fl ow and are considered illiquid. Assumptions including mortality and morbidity rates, lapse and surrender rates, and operating expense rates, were developed based on product best estimates as of March 31, Best-estimate and the cost of non-hedgeable risks (the present value of costs to hold required capital to cover nonhedgeable risks in the future). A breakdown of this information is provided below. (Billions of yen) As of March Change Value of existing business Present value of certaintyequivalent profi t Time value of options and guarantees (228.7) (37.7) Frictional costs (58.5) (11.5) 47.0 Cost of non-hedgeable risks (180.5) (150.2) 30.3 Impact of Changing Assumptions (Sensitivities) The impact of changing the underlying assumptions of MCEV is as follows. (Billions of yen) Change in Assumption Change in Assumption MCEV Amount Base No change Interest rates 100bp decrease (111.1) 100bp increase Stock/Real estate market value 10% decrease (15.8) Stock/Real estate implied volatility 25% increase (4.1) Interest swaption implied volatility 25% increase (5.5) Maintenance expenses 10% decrease Lapse and surrender rates x Mortality rates Death protection products x Third-sector and annuity products x (3.1) Morbidity rates x Notes: 1. Frictional costs and the cost of non-hedgeable risks do not change in the sensitivity tests. 2. Values of a subsidiary and an affi liated company are not changed. 3. The impact of changing more than one assumption at a time is not congruent with the sum of impacts for each assumption. 4. While Japanese solvency regime will be revised at the end of March 2012, the calculation is based on the current solvency margin regime, because it is expected that MCEV would not be materially different even if required capital were set to the revised regulatory minimum solvency capital from the end of March Accordingly, sensitivity to use the current regulatory minimum solvency capital is not presented. assumptions are developed to refl ect past and current experiences as well as expected experiences in the future. Expected future changes in assumptions should be refl ected only when they are supported by suffi cient reasons. Except a deteriorating trend in morbidity rates, no other expected future changes are assumed in the best estimate assumptions applied. (%) Term As of March 31, 2009 As of March 31, year year year year year year year Opinion of Outside Specialist Sony Life has obtained an opinion on the disclosure of MECV results as of March 31, 2010, from Milliman, Inc., which is an external actuarial consulting fi rm with expertise concerning MCEV valuations, to review the calculations of MCEV. * Full information about MCEV including the opinion from Milliman, Inc. is available on Sony Life s website at les/10_ev-english.pdf Disclaimer The above-stated MCEV information is extracted from the information that the Company disclosed regarding MCEV as of March 31, For detailed information on this disclosure, please refer to Sony Life s website, at 013

16 Protecting Every Dream throughout Each Individual s Life. That s LIFEPLANNER VALUE. Providing Tailored Protection and Extensive After-Sale Follow-Up Services Our corporate slogan, LIFEPLANNER VALUE, expresses our commitment to accompanying customers through each life stage and helping them realize their dreams. To turn these concepts into reality, since the time of our founding we have sought to provide each customer with life insurance that is optimally tailored to their individual needs, through a consulting-based sales approach based on life planning. Even after they have taken out life insurance, we provide lifelong support to our customers, helping them to realize their dreams. We begin by conducting life planning simulation to determine the amount of protection that a customer needs to meet his family s goals and dreams even if the unexpected occurs by calculating the protection amount, plotted on a timeline. Even after the customer has entered into a policy, we conduct detailed after-sale follow up services, reviewing a customer s ongoing life plan and protection requirements as circumstances change. Sony Life s Lifeplanner sales employees and Partners (independent agencies) are responsible for providing such tailor-made protection and extensive follow-up services to customers. Lifeplanner Sales Employees and Partners. Always for Customers, Always with Customers Lifeplanner Sales Employees Life insurance will begin changing today. Lifeplanner sales employees will drive this change. This was Sony Life s declaration at the time of its establishment, 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 strive to provide customers with ideal life insurance. Lifeplanner sales employees serve as each customer s Own Agent, 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 defi nes the value that Lifeplanner sales employees provide. Unfortunate circumstances need not be 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 individual Lifeplanner sales employee who cares for a specifi c customer, Lifeplanner sales employees throughout Japan put forth their best effort to support customers on the whole. Lifeplanner sales employees help customers reach their dreams. They remain alongside customers throughout every phase of their lives, providing essential support. The Four Promises of LIFEPLANNER VALUE In FY2009, Sony Life established the Four Promises of LIFEPLANNER VALUE as performance indicators for all employees when putting into practice the corporate slogan, LIFEPLANNER VALUE. Planning Co-Creation Professionalism Society To enable each person turn his or her dreams into reality, we will help them create life plans and provide ongoing support to help them plan for the future proactively and with a sense of well being. We will prioritize the process of co-creation as we meet with customers, foster a sense of trust between us and work with them to turn their dreams into reality. We will each continue to develop our skills so that we will accumulate strength and become able to offer sophisticated services befitting a professional. By living up to our promises, we will contribute to the realization of a society that offers peace of mind and enables people to fulfill their dreams. 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. Empathetic to Sony Life s commitment of putting customer interests fi rst, Partners are professional agents 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. At present, Sony Life has more than 2,000 Partners throughout Japan. Partners typically possess specifi c and advanced expertise that they apply toward providing protection that meets customers needs, providing ongoing after-sale follow-up support even after customers have entered into policies. The term Partners is apt because, in addition to agencies that act as business partners for Sony Life, they are lifelong partners to customers. 014

17 Educational Systems, Self-Development and Reciprocal Studies Educational System for Lifeplanner Sales Employees and Partners Sony Life provides a diverse range of educational programs designed to enable Lifeplanner sales employees and Partners to fulfi ll their roles as insurance and fi nancial professionals in responding to the confi dence that customers place in them. Basic Training Program (BTP) for Lifeplanner Sales Employees This program equips Lifeplanner sales employees with the basic knowledge to become life insurance professionals, and attitudes, skills and behavioral habits required to put customers fi rst. BTP is designed as an effective training program to teach employees Sony Life s needs-based sales process. Specifi cally, employees learn how to provide followup services about claims payments and the appropriate way to protect these payments. During their fi rst month on the job, employees participate in BTP 1, the important fi rst level of this training program. Through BTP 1, trainees clarify the attitudes that they are to maintain in their work as Lifeplanner sales employees. They also take part in role-playing simulations of actual negotiations and equip themselves with the minimum level of expertise and skills that they need to perform as Lifeplanner sales employees. At the same time, they learn appropriate working practices based on sales and action plans. In their second month with the Company, employees undergo BTP 2 training, which involves regular meetings with their sales manager to confi rm their action processes. Trainees also conduct joint work, visiting customers together with their sales manager and putting the expertise and skills they gained during BTP 1 training into action in real negotiations. Partner Training Program Partner Training Program (PTP) for Partners This program is designed to help Partners succeed in the life insurance business. In the 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 certifi cation program in FY2006 to help cultivate high-quality sales personnel. People who meet prescribed performance and certifi cation targets are assessed in various ways to confi rm their abilities as life insurance sales professionals. Only agents who have passed all assessment levels are awarded the coveted title of professional agent. Training System (As of July 1, 2010) Lifeplanner sales employees Branch training Head office training Before joining CIP Eight hours, four days BTP (New Lifeplanner sales employee training) Three days BTP 1 One month Start of sales BTP 2 Two months after joining One month OJT, joint work, individual instruction (role playing, etc.) BTP (Two-month follow-up training) BTP 3 7 Three to seven months after joining Five months BTP (Four-month follow-up training) Branch study sessions, group study sessions, etc. Partners Initial training Takeoff plan, six months Partner Training Program Flight plan, seven months Sales process meetings, joint work, role playing, etc. Sony Life Business College Certification testing Life Association of Japan testing Financial planner certification testing General process exam General Special course exams Variable insurance sales certification testing Specialty Variable Kinzai Institute for Financial Affairs, Inc. Japan Association for Financial Planners General course exam General AFP Certification training Life Insurance University course exams (Six fields) Life Insurance University 2nd Grade Certified Skilled Workers in Financial Planning (domestic certification) products, real estate) protection Total life consultant (Financial planner certified by the Life Insurance Association of Japan) Assurance certification testing (more than two years of employment) AFP (Affiliated) 1st Grade Financial Planner (domestic certification) CFP (Certified) Financial Planner 015

18 Enhancing Education for Managers Our branch managers, sales offi ce managers and other managers who oversee sales staff have an important responsibility to carefully nurture selected individuals into Lifeplanner sales employees. To help managers fulfi ll this responsibility, Sony Life continues to upgrade its educational system, which includes training to deepen understanding of the essence of life insurance, develop character and acquire leadership skills. Sony Life Academy (SLA) The Company opened its Sony Life Academy in fi scal 2003 to train its branch general managers and the heads of its independent Agency Sales Division. In April 2007, we also launched a course called Life Insurance Basics for Independent Agency Sales Group offi ce managers and head offi ce managers. As of March 31, 2010, 252 people had undergone SLA training. Course instructors include university professors who specialize in the topic. Teaching people who have ample real-world experience the theoretical basis for life insurance and related areas helps them grow into higher-quality insurance professionals and helps managers polish their guidance and leadership skills. Even after course completion, ongoing training is provided to assist the lifelong learning process. Spirit Behind Creating Sony Life Academy SLA enables Sony Life s managers independently learn to grow into higher quality insurance professionals. SLA helps Sony Life s managers brush up their own guidance, leadership and personal skills. In addition to Sony Life s managers, through autonomous learning SLA fosters the growth of personnel who hold the key to the future of the entire Japanese life insurance industry. Four Pillars of Sony Life Academy Education Acquire knowledge, beliefs and convictions worthy of life insurance professionals Help people convey the business and sales philosophies of Sony Life to others Train people to acquire management skills Help people hone their sensitivities as human beings Nurturing Financial Planners Our socioeconomic environment is undergoing major changes, owing to the advent of the informationoriented society, reforms to the social security system, diversifi cation of fi nancial products and a demographic shift to an older population. In these circumstances, it is vital for individuals to conduct comprehensive asset planning and risk management or fi nancial planning geared to their specifi c life plans. Financial planners are professionals qualifi ed to meet the fi nancial planning needs of customers. A large number of Lifeplanner sales employees study fi nancial planning to achieve higher levels of needs-based sales capabilities. Affiliated Financial Planners (AFPs) Affiliated Financial Planners: 2,031 (As of June 1, 2010) The Japan Association for Financial Planners is the sole issuing authority for the AFP license. This qualifi cation certifi es that the licensee possesses the knowledge required of a fi nancial planner and is competent to offer advice and make proposals in response to client needs. Certified Financial Planners (CFPs ) Certified Financial Planners : 128 (As of June 1, 2010) The CFP license is an international qualifi cation conferred by the Certifi ed Financial Planner Board of Standards, Inc., of the United States. This is an authoritative qualifi cation given only to fi nancial planners who demonstrate sophisticated fi nancial planning abilities and sound work ethics. Certified Skilled Workers of Financial Planning 1st Grade Certified Skilled Workers in Financial Planning: 107 2nd Grade Certified Skilled Workers in Financial Planning: 2,080 (As of June 1, 2010) Through the Human Resources Development Promotion Law, the Japanese government has introduced a profi ciency certifi cation system to certify levels of expertise in various fi elds, including 1st, 2nd and 3rd grade Certifi ed Skilled Workers in Financial Planning. 016

19 Reciprocal Studies Advanced consulting services and after-sale followup services 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 skill training. Sony Life s employees have embraced a culture of mutual assistance in their quest to serve customers. In addition to holding independent training forums around the nation, they conduct mentoring activities on an everyday basis. Million Dollar Round Table (MDRT) MDRT is an international association of the world s best life insurance and fi nance professionals. The organization has 30,955 members in 76 countries (as of May 2010). Each year, leading insurance and fi nancial 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 contribution to society. MDRT members have superior skills, achieve superior ethical standards and provide superior customer service. These business and regional community leaders are recognized worldwide as life insurance and fi nancial service specialists. As of June 1, 2010, 527 Lifeplanner sales employees and Partners of Sony Life were among the largest groups forming the MDRT s chapter in Japan. MDRT Sony assembly and training session (Naha, April 2010) Japan Association of Insurance and Financial Advisors (JAIFA) JAIFA was established in 1962 with the purpose of enhancing the status of life insurance salespeople through the reciprocal education of members. As a forum for mutual training, the association hosts a variety of proactive initiatives. JAIFA Sony Chapter Our Lifeplanner sales employees, sales offi ce managers and branch managers participate in JAIFA events, and as of July 1, 2010, 32 JAIFA Sony Life regional chapters have been set up in regional areas to spearhead various activities. JAIFA All Sony, which comprises all the Sony JAIFA members throughout Japan, typically meets twice each year to hold executive board meetings, liaison meetings and workshops. These meetings aim to achieve a nationwide exchange of information. MDRT Sony Chapter The MDRT Sony Chapter 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 build 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. JAIFA All Sony liaison meetings and workshops (Kyoto, April 2010) 017

20 Providing Optimal Protection through the Life Planning Support Service (LiPSS) When proposing protection products, Sony Life first asks customers about their lifestyles and future life plans. As each member of a family paints a picture of the life that he or she envisions for several years in the future, an image of the customer s life and way of thinking begins to form. On the basis of the picture that a customer paints of his or her future, the best way to ongoing future protection also grows clearer. However, life is long and ever-changing, and people require solid insurance coverage throughout their entire lives. Helping to bridge the gap between specific coverage and an uncertain future is our Life Planning Support Service (LiPSS) software. This software plan allowances for contingencies so that the life plan of a customer s family does not go awry even if the unexpected occurs, and clearly estimates the amount of coverage needed to offset economic risks given a customer s future lifestyle. In short, LiPSS helps ensure high-quality products that offer peace of mind. Life Planning Eliciting Customers Dreams and Goals through Life Planning The fi rst 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. In light of the goals for the future that a customer projects, we create a Life Plan Chart that maps out these dreams and goals on a time axis. Life Plan Chart Considerations Life Plan Chart Considerations We look at the ways in which a family s life will change over the next few decades. The chart indicates the relationship between the period during which children will be attending school from kindergarten to university and the age of family members. If a child has siblings, the chart shows the period during which educational costs will overlap. The chart provides an opportunity to consider parents who may live with the customer in their senior years, and to think specifi cally about the customer s own plans for his or her senior years. The chart allows us to consider the timing of life events that involve major expenditures, such as purchasing or renovating a house. We consider the level of coverage that the customer will need in line with career plans that involve changing jobs, striking out on his own and the time that will be required to achieve specifi c dreams. Life Plan Simulation Simulation of a Family s 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 confi rm whether the life plan is viable fi nancially. By considering the balance between income and expenses and prioritizing expenditures, we prepare plans to set aside cash for school fees, advise customers of their leeway for purchasing a home and suggest the possible acceleration of mortgage payments. Income and Expenses on an Annual Basis Balance of Financial Assets 018

21 Simulation of Household Finances if the Unexpected Occurs Next, we run a trial calculation of a family s hypothetical income and expenses in the event of the unexpected. We take an overall look at such considerations as Income and Expenses on an Annual Basis whether the family could maintain its life plan if it needed to rely on the income of the other spouse or a survivorship pension and determine potential cash excesses or shortfalls. Balance of Financial Assets Insurance Planning Consulting Services Based on Life Plans Factors that must be considered are whether, in the case of untimely death, the bereaved family would be able to live comfortably according to their life plan or whether 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 11 fi nancial needs* from various angles before offering advice to the customer. If any upcoming economic risks are evident, we propose protection that is optimally tailored for each individual customer. Necessary Amount of Coverage *Eleven Categories of Financial Needs throughout Life Reserve for education Reserve for marriage Funds for home purchases Rent or loans Living expenses after retirement Reserve for emergencies Reserve for long-term healthcare Living expenses for bereaved family members Reserve for funeral and subsequent arrangements Reserve to reconfi gure life Funds for inheritance measures 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 even in the event of a survivorship pension or other public money.) Taking this amount of coverage as the minimum, we then determine the amount of life insurance that is needed for a family to achieve its goals and fulfi ll its dreams. Life Planning SQUARE, Our Life Planning Showroom At Life Planning SQUARE, the showroom Sony Life operates in the Sony Building in Ginza, Tokyo, the Company aims to share the importance of the life planning process with as many people as possible in an enjoyable manner. A wealth of content is available at Life Planning SQUARE to help customers experience the life planning process. Sony Life s Lifeplanner sales employees are also on hand to perform life planning with customers fi rsthand. Furthermore, we conduct banking agency business on behalf of Sony Bank, setting up ordinary yen deposit accounts and delivering applications for Sony Bank s mortgage loan products. Note: This facility does not write new life insurance policies or perform policy content change procedures. 019

22 Providing a Range of Follow-Up Services to Help Customers Live Fulfilling Lives Sony Life s Lifeplanner sales employees stand beside their customers as they move along the paths of their lives to help them lead fulfilling lives. During the course of a long life, people typically undergo such experiences as child-rearing, purchasing a home, changing jobs or striking out on their own, becoming ill and requiring nursing. We continue to monitor a customer s evolving coverage needs as their lifestyles change. Drawing on their wealth of experience of looking closely at people s lives and a broad-ranging knowledge base, Lifeplanner sales employees provide appropriate information to their customers as particular concerns arise. If the unexpected occurs, Lifeplanner sales employees help ensure that claim payments are delivered swiftly. However, delivering claim payments is not the job of Lifeplanner sales employees. Rather, Sony Life sees it as their responsibility to be the person who takes the family s needs into consideration, serves as a consultation partner as a family moves into a new phase of their life and helps the family achieve future happiness. This is one mission of Lifeplanner sales employees. Life Plans and Maintaining Coverage Changes in social circumstances or economic conditions can affect the future dreams of a customer and his or her family. By regularly checking for obstacles along the path to achieving a customer s life plans, we help customers be secure in their plans and work with them to update their plans as necessary. Such major life changes as the birth of a child or a change of employment can alter coverage needs. We consistently monitor the content of our customers protection to ensure that their life insurance coverage meets their needs to the fullest extent possible. Providing Advice Based on Specialized Knowledge and Appropriate Information Sony Life s Lifeplanner sales employees possess a wealth of economic and fi nancial knowledge and expertise, which they provide to customers as appropriate information and useful advice. Lifeplanner sales employees help customers meet their goals and answer their questions. These include: Home Purchases Child- Rearing and Education We want to set aside funds to buy a home. We want to put together an intelligent mortgage loan. We are thinking of accelerating our mortgage payments or refi nancing our mortgage. And so on 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 want to start setting aside funds for our senior years. We want to make investments to tide us over in our senior years. We want to discuss a will, inheritance or business succession. And so on Other assets We would like you to introduce us to an accountant or an attorney. We would like to know more about the social insurance (medical care, pension, nursing care) system. We would like to get a general legal opinion. And so on Sony Life Enters Tie-up with Specified Nonprofit Organization Yuigon Sozoku Legal Network In July 2009, Sony Life formed a business tie-up with specifi ed nonprofi t organization Yuigon Sozoku Legal Network on legal consultation related to last will and testament, as well as inheritance. Understanding that inheritance issues can occur with anyone, Sony Life aims to offer related services with the highest respect for the intentions of the testator to promote a smooth succession to the next generation. Through this agreement, Sony Life will strive to provide its clients with additional consulting-related services, such as Inheritance and Business Succession Solution Services utilizing life insurance based on life planning and Legal Consultation with Lawyers. Content of the Tie-up Individual legal consultation related to last wills and inheritances by lawyers Free seminars for customers Free legal consultancy for customers Joint training session by registered attorneys at Yuigon Sozoku Legal Network and Sony Life s Lifeplanner sales employees Free general legal consultation via telephone by lawyers 020

23 Medical Care and Nursing Care Support Sony Life is mounting an aggressive effort to offer services to its customers in the fi elds of medical care and nursing care areas where requests for consultation are particularly frequent. Specialized medical and nursing staff, and Lifeplanner sales employees, who have extensive experience in working closely with a range of people, can help customers resolve the issues they face. Medical Care Support Provide introductions to medical care institutions/ issue letters of introduction Provide consultation and information about symptoms and treatment methods Provide information about specialized physicians Consult with specialized physicians Provide consultation and information about child-raising Make appointments for health checks on behalf of customers When facing serious illness, having access to accurate information from trusted sources and as well as second opinions, can be a major advantage. Through tie-up partners, Sony Life can introduce customers to physicians and medical care institutions. We can also offer a range of other support services, such as making health check appointments on behalf of customers to ensure reasonably priced medical examinations. Nursing Care Support Introduce nursing care facilities Introduce nursing care service providers Offer consultations and provide information on nursing care Introduce home helpers Introduce care managers Confi rm care plans Whether as people receiving nursing care or members of families providing that care, we work with customers to ensure that they receive the best. Through tie-ups with various providers, Sony Life can also introduce care providers at special rates. Discount Services Customers who enter nursing care facilities run by operators with which Sony Life has a tie-up in place or who use their nursing care services may be eligible for discounts. These discounts may apply to lumpsum payments upon entering such a facility or when receiving these services on a trial basis. Notes: 1. Discount services are available only to people who will use these services in the future. Discounts are not available to customers who are already using such services. 2. Information on support and discount services is as of July Consultation regarding health and nursing care Lifeplanner sales employees Specialized Staff Specialized physicians Nurses Public health nurses Midwives Dieticians Customers Dental hygienists Social workers Care managers Tie-up care providers Attorneys, others Provide Information and Help Resolve Problems Lifeplanner sales employees support problem-solving efforts in cooperation with specialized staff. Extensive Database Information on 140,000 medical care institutions Information on 440,000 physicians Information on 220,000 specialized physicians Information on nursing care facilities and providers throughout Japan (As of July 2010) Note: These services are available to the families of policyholders who have signed agreements with Lifeplanner sales employees. Tie-Up with Watami Co., Ltd., in the Nursing Care Business We have a tie-up in place with Watami Co., Ltd., in the nursing care business. Through this collaboration, we aim to provide high-quality nursing care services to enable as many people as possible to maintain happy lives as they age. Under this agreement, Watami provides preferential treatment to customers that Sony Life introduces, offering priority in entering facilities and discounts on lump-sum move-in payments for customers with whole-life residential contracts. In addition, the two companies have set up a deliberation committee and conducted questionnaires for the heads of nursing care facilities. Sony Life expects to incorporate its better understanding of actual conditions at nursing care facilities into the provision of higherquality nursing care services. 021

24 Management Improvements that Focus on Customer Satisfaction Making Use of Customer Input in Management Sony Life makes it a practice to take customer input seriously, paying careful attention to customer satisfaction and using the information it receives to improve management. By gathering and accumulating the customer input it receives on a daily bases 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 input is an important step toward meeting the expectations of all customers. We will continue these efforts as part of our companywide initiative to improve management. Making Use of Customer Input (As of July 1, 2010) Contacts Customer input Executive Officers Board Disclose improvement status Customer input Customer center Website Agency offices Headquarters division Life Planning SQUARE Supervisory body, Life Insurance Association of Japan, other Customer opinion surveys Lifeplanner sales employee questionnaires Opinions, requests Complaints Proposal system Special committees Implementation, reporting Joint Strategy Division Use customer input effectively Business Administration Control Division Requests for improvement All headquarters office divisions Reporting MCC Committee* Assignment Reporting Improvement planning Improvement implementation Result verification Further improvement Verification via PDCA cycle Provide high-quality services Raise customer satisfaction *See page 30. Initiatives to Incorporate Customer Input into Management Companywide Business Improvement Initiatives In FY2007, we launched an initiative to improve operations in departments throughout headquarters divisions of the company, based primarily on customer complaints. Each division was required to analyze on a quarterly basis the reason for the complaints it received, determine areas of business that should be improved, draft measures and plans for making those improvements, and work to make these improvements. In the future, we will continue taking customer feedback into account by using the Plan-Do-Check-Act cycle, which involves verifying the effectiveness of improvements. In this manner, we are making a companywide effort toward operational improvement. A Further improvement P Improvement planning Customer input Result verification C D Improvement implementation Efforts to Gather Customer Input Each year, Sony Life conducts a customer opinion survey of its policyholders. In FY2009, 2188 customers cooperated in responding to this survey, sharing their opinions concerning the Company s products, the salespeople they interact with on a daily basis and the Company s attitude. We received numerous opinions, which we consider seriously as we work to eliminate points of dissatisfaction and improve our operations. Customer Opinion Survey Results Survey of policyholders taken September October 2009, 2,188 valid responses Overall Satisfaction with Sony Life Very dissatisfied 0.5% No response 0.3% Dissatisfied 2.0% Somewhat dissatisfied 4.4% Very satisfied 5.8% Total dissatisfied: 6.9% Neither 17.9% Somewhat satisfied 35.7% Satisfied 33.4% Total satisfied: 74.9% Sony Life achieved a 74.9% satisfaction rating from its customers. Unsatisfi ed customers came to 6.9%. Overall Satisfaction with Salesperson Very dissatisfied 1.8% Dissatisfied 2.5% No response 1.0% Somewhat dissatisfied 4.5% Total dissatisfied: 8.8% Neither 20.1% Somewhat satisfied 21.5% Very satisfied 16.4% Satisfied 32.2% Total satisfied: 70.1% Of the respondents, 70.1% replied that they were satisfi ed with the salespeople they interacted with directly on a daily basis. Approximately one person in six, or 16.4%, indicated that they were very satisfi ed. The overall evaluation level was extremely high. 022

25 Introduction of Lifeplanner Sales Employee Questionnaire Each year, we conduct a Lifeplanner Sales Employee Questionnaire targeting those employees who are on the front line, interacting with customers on a daily basis. Lifeplanner sales employees become attuned to certain issues and problems as part of their everyday roles. Uncovering such issues is one objective of the questionnaire, as is determining their level of customer awareness and confi rming the overall status of their activities. Proposal System/Creation of Special Committees Sony Life has created a site on its corporate intranet that employees can easily access to propose suggestions. Employees use the site frequently, offering suggestions for improvements on topics ranging from customer use of the operations ledger to proposals on product development. Several times a year, we also hold meetings of special committees, such as the Product Committee, the New Policy Operations Committee and the Maintenance Operations Committee. At these committee meetings, we seek to accumulate requests made from a customer viewpoint. Proposals arising through the proposal system and opinions gathered by the various committees are disclosed throughout the Company. Such information helps departments in charge of the various topics raised propose new measures to improve operations for the benefi t of customers. Issuance of Notice Concerning Protection Once a year, Sony Life sends customers a Notice Concerning Protection, encouraging them to confi rm the content of their policies. In the past, we issued these notices in late October, but in April 2009 we revised this schedule. We now send the notes to policyholders three months prior to their birthday, simplifying policy additions or changes in coverage prior to that date. Informal Meetings of Policyholders Sony Life does not conduct informal meetings of policyholders. However, we do refl ect customer input in our management through the various methods described above, and we strive to gather a broad range of customer input. Striving to Improve Management, Based on Complaints It Receives from Customers Sony Life takes seriously any complaints it receives from customers and works to make operational improvements to resolve such complaints and eliminate potential areas of dissatisfaction. We also hold internal training sessions covering customer mentalities and develop customer education tools as part of our proactive efforts to eliminate complaints. Definition of a Customer Complaint Any expression from a policyholder or related party to Sony Life indicating dissatisfaction with their life insurance Any statement or notice that calls into question the appropriateness of any party related to Sony Life Complaints Brought to the Company (No. of complaints, %) FY2007 FY2008 FY2009 Content Number Percentage Number Percentage Number Percentage Subscribing to insurance policy 2, , , Premium payments , , Processes and dividends after joining policy 2, , , Payment of claims and benefi ts , , Other 1, , , Total 8, , , Preempting Complaints To respond quickly and accurately to customers requests, Sony Life has developed an internal Request Response System to monitor the overall progress of each request at each stage, from the time of receipt from a customer through to fi nal processing. This system is designed to prevent delays or mistakes during the various stages of processing such requests, as well as to ensure proper follow-up. As a result, we aim to improve our level of service. Internally, Sony Life refers to instances of customer dissatisfaction as complaints. We work to ensure that potential sources of dissatisfaction are eliminated before they surface as complaints. To this end, we provide ongoing training at sales offi ces outlining certain aspects of customers mentalities. 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 salesperson or section in charge of that customer s policy. To ensure swift responses, the center manages the communications it receives through to their conclusion. Consultations and Notices to the Customer Center (Instances, %) FY2007 FY2008 FY2009 Category Number Percentage Number Percentage Number Percentage New policies, requests for materials 117, , , Loans, surrender cash referrals 31, , , Receipt-related 3, , , Claims and benefi ts 9, , , Other maintenance 73, , , Taxes, exemption certifi cation 1, , , Other 21, , , Total 259, , ,

26 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. Sony Life strives to strengthen its payment operations, reinforcing its operating systems and structures on a daily basis. Payment Operations Structure To ensure that payments to customers are assured and swift, Sony Life assigns multiple personnel to check payment approval decisions. We have also prepared reference documents highlighting points for caution when making payment assessments. We created and began utilizing an operations manual aimed at standardizing payment operations and increasing payment accuracy. To ensure the appropriateness of payments, in addition to internal checks by the Claims Payment Management Department, the Compliance Department runs checks of appropriateness, and validity is confi rmed 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 New Product Development Department and the Claims Payment Management Department cooperate to ensure the appropriateness of claims and other payments, and sharing product overviews and policy stipulations. Provision of Information Related to the Payment of Insurance and Other Claims Guidebook on the Payment of Insurance and Other Claims when the Unexpected Occurs We prepared this guidebook to help customers better understand insurance or other benefi t payment requests, as well as these payments. The guidebook contains information on the procedures for making a claim and includes specifi c examples of cases in which claim payments can and cannot be made. Customer Claims Checklist We have added to a page to the Notice Concerning Protection that we send out to customers each year. The new page contains a checklist for customers to fi ll out themselves to help them understand reasons whether potential payments that they seek may or may not be made. Status of Payments The following information represents the status of payments made against requests for payment received in FY2009. The cases described below were recorded in accordance with standards drawn up by the Life Insurance Association of Japan. Policies on Which Payments Were Made in FY2009 (Individual Life Insurance) (Instances) (Instances) Claims Benefi ts Death Disaster Severe Injury Other Total Death Hospitalization Surgery Severe Injury Other Total Number paid 3, ,934 Number paid 1, ,942 67, , ,244 Number of Policies (Individual Life Insurance) on Which Non-Payment Decisions Were Reached (Instances) (Instances) Claims Benefi ts Death Disaster Severe Injury Other Total Death Hospitalization Surgery Severe Injury Other Total Invalid, as fraudulent Invalid, as fraudulent Invalid, as acquired for Invalid, as acquired for illegal purchases illegal purchases Cancelled for Cancelled for nondisclosure reasons nondisclosure reasons Cancelled for grave Cancelled for grave reason reason Justifi ed exclusion Justifi ed exclusion Outside scope of reasons Outside scope of reasons for payment for payment , ,972 Other Other Total Total , ,

27 Risk Management System Amid the rapid liberalization and internationalization of fi nancial markets, the activities of life insurance companies are becoming increasingly diverse and complex. For such companies, the optimal management of various risks such as investment risks, insurance underwriting risk, operational risks and legal risk becomes more important every year. The various transactions that life insurance companies undertake carry inherent risks that cannot be completely avoided. Moreover, simply minimizing such risks is insuffi cient. Instead, it is necessary to grasp the nature of each type of risk, implement suitable controls and make preparations to ensure appropriate returns that are commensurate to the related risks, while also responding fl exibly to the evolution of risk management techniques. Sony Life works continuously to enhance its risk management organization. In FY2009, we established Consolidated Risk Management Provisions to facilitate integrated risk management across the organization. We also evaluated risk related to the establishment of an exclusive agency. We have also established the claims payment management system as a top management priority, and continued our endeavors in this regard. Furthermore, when necessary the Risk Management Committee, which is composed of general managers of the several divisions responsible for the company s risk management, met to discuss various companywide risk management issues. Sony Life also conducts stress tests and reports the results of those tests to its Executive Offi cers Board in order to evaluate the possible impact on its fi nancial soundness of future unprofi tability, and conducts additional management and/or fi nancial measures as necessary. As one aspect of its investment risks management activities, the Company conducts stress tests based on an extreme scenario that exceeds normal market fl uctuations, whereby interest rates, share prices and currency exchange rates all fl uctuate substantially and at the same time. As one aspect of our insurance underwriting risk management activities, we perform stress tests involving a sudden rise in mortality rates owing to a major earthquake or outbreak of infectious disease. In its Risk Management Manual, Sony Life sets forth its fundamental approach to risk management and the methods for applying its risk management policies, with full consideration of the specifi c characteristics of each type of risk. Sony Life s Basic Risk Management Policy By strengthening its risk management capabilities and executing optimal risk controls, Sony Life aims to ensure the soundness and appropriateness of its operations and to protect the interests of policyholders. In this way, we will improve our reputation as a trustworthy and credible life insurance company and thus fulfi ll our responsibility to society. Risk Management Structure (As of July 1, 2010) General Meeting of Shareholders Board of Directors Board of Auditors Chief Actuary Executive Officers Board Internal Audit Division Risk Management Committee Risk management, Integrated risk management Operations Administration Division Investment risks ALM Division Insurance underwriting risk ALM Division Operational risks Other risks Market-related risk Reinsurance risk Administrative risk Operations Administration Division Office risk General Affairs Division Sales Administration Division Personnel risk Personnel Division Sales Administration Division Credit risk Systems risk Operations Administration Division Real estate investment risk Liquidity risks ALM Division Legal risks Compliance Division Reputational risks Corporate Communications Division Management risk Corporate Planning Division Subsidiary and affiliated company risks New Business Development Division International Business Division Independent Agents Planning Division Subsidiaries and affiliates Business Offices 025

28 Specific Risk Management Definitions and Procedures Investment risks Investment risks refers to the risk of suffering losses due to fl uctuations in the values of investment assets, the risk of liquidating investment assets in adverse conditions to comply with asset-liability management requirements and/or the risk of failing to ensure target investment performance. With respect to investment risks, Sony Life manages its asset allocation in accordance with internal regulations established in light of the importance of managing balance between assets and liabilities comprehensively, the specifi c characteristics of its liabilities and the need to maintain appropriate levels of capital. Sony Life involves its front-offi ce and middle-offi ce personnel in its risk monitoring activities and revises its risk management policies and procedures in light of evolving risk management practices in the life insurance industry. Market-related risk Market-related risk refers to the risk of suffering losses due to changes in the values of investment assets as a result of fl uctuations in interest rates, securities values, exchange rates and/or various other risk factors. Sony Life strives to maintain an investment portfolio that will provide stable medium- to long-term returns in light of the specifi c characteristics of its investment assets, including stability, liquidity, profi tability and other factors. In addition, Sony Life establishes limits, as it deems necessary, as a means of controlling the magnitude of potential market-related losses. 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 fi nancial conditions of issuers. Sony Life exercises care in evaluating the credit quality of issuers when investing in debt obligations and strives to diversify its portfolio to avoid risks associated with concentrating its investments in the debt obligations of a small number of issuers or within particular industries. 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 the result of fl uctuations 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 establishes objective standards to evaluate real estate investments and takes care to diversify its real estate investments in terms of timing and geographical location. In addition, in an effort to ensure the quality of its real estate investment portfolio, Sony Life manages each property individually and sells off properties that produce investment returns below minimum pre-determined levels or for which unrealized losses exceed pre-determined alarm points. Insurance underwriting risk Insurance underwriting risk refers to the risk of suffering losses due to unexpected changes in economic conditions and/or insurance benefi t 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. Operational risks Administrative risk Administrative risk refers to the risk of suffering losses due to either the bankruptcy of external contractors or improper operations, or as a result of corruption or other inappropriate action by company offi cers, employees, insurance agents or external contractors. Sony Life strives to continually improve its internal administrative processes to reduce risk by carefully analyzing the underlying causes of failures in administrative processes, undertaking evaluations of existing risk management procedures, and developing and communicating to its employees detailed internal regulations and providing manuals governing risk management procedures. Furthermore, as part of its efforts to prevent the recurrence of past failures in administrative processes, Sony Life has implemented a self- assessment program for its internal departments and undertakes periodic audits of its administrative risk management activities. Sony Life has also developed internal regulations regarding the monitoring of third-party service providers as part of its efforts to control administrative risk relating to such providers. 026

29 Systems risk Systems risk refers to the risk of suffering losses due to critical trouble with computer systems. Systems risk also includes the risk of losses due to the illegal use of computer systems. Sony Life separately manages the systems risk associated with its operation of existing information technology and other systems from those associated with the development of new information technology and other systems. Sony Life analyzes recent failures, threats and vulnerabilities affecting its existing systems infrastructure when determining its future systems needs. Sony Life also undertakes periodic testing of its systems to ensure appropriate risk management. With regard to systems risks relating to third-party service providers, Sony Life has developed internal regulations regarding the monitoring of third-party service providers. Sony Life has also developed a contingency plan to govern its response to potential disasters that may affect its ability to continue its operations. Liquidity risks Liquidity risks are classifi ed into fund fl ow risks and market liquidity risks. Fund fl ow risks refer to the risk of suffering losses if assets must be sold in adverse conditions to secure funds. Market liquidity risks refer to the risk of suffering losses if assets must be sold in adverse conditions owing to exchange 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. Other risks Other risks include legal risk, such as the risk of loss resulting from Sony Life conducting its operations in a manner that violates applicable laws, rules or regulations, and the risk of loss resulting from Sony Life s inability to exercise certain rights as a result of it conducting its operations in an inappropriate manner, even without any violation of law. Other risks also include reputational risk, including the risk of loss resulting from negative media coverage, rumors, defamation and other forms of criticism. Sony Life strives to establish risk management policies relating to these and other risks in order to ensure its ability to conduct its operations in a sound and appropriate manner. Accumulating Policy Reserves for Third-Sector Insurance Sony Life conducts stress tests and liability adequacy tests to determine the appropriate amount of policy reserves it needs to accumulate for third-sector insurance. Stress Test and Liability Adequacy Test for Third-Sector Insurance Using various settings for each product, the stress test confi rms risk coverage given the expected rate of accident occurrence and computes the contingency reserve on this basis. The contingency reserve is calculated for the amount of future benefi ts (10 years), based the difference between the amount calculated using the insured accident occurrence rate (hazard rate A) to cover risk that exceeds the normally expected scope and the insured accident incidence rate (hazard rate B), which covers the normally expected scope of risk. The liability adequacy test, on the other hand, is used to verify whether other sources of income and profi t are suffi cient to cover the amount of future benefi ts in the event that the results of the stress test indicate insuffi cient coverage of the amount of future benefi ts (10 years) using hazard rate B. If there exists a fi scal year when the fi nancial resources, including additional sources of income and profi t, are insuffi cient to cover the benefi t, that amount corresponding to that shortfall need be accumulated as policy reserves. The methods for the stress test and liability test are stipulated by law, but the hazard rate and other factors used in these tests are based on Ministry of Finance Offi cial Notifi cation No Liability adequacy test assumptions are based on Financial Supervisory Agency, Ministry of Finance Offi cial Notifi cation No. 22. Stress Test and Liability Adequacy Test Results In preparation for uncertainty related to future worsening of the insured accident occurrence rate, Sony Life conducts the stress test and the liability adequacy test and ensures the appropriateness of its policy reserves related to third-sector insurance are suffi cient according to these test results. Stress test and liability adequacy test results as of March 31, 2010, are given below. As of March 31, 2010 Stress test (accumulated contingency reserve) 45 million Liability adequacy test (accumulated premium reserve) Not insuffi cient Note: Policy reserves are segmented into accumulated premium reserve, prepaid insurance premiums and contingency reserves. 027

30 Personal Information Protection and Information Security Amid rapid innovations in information technology in recent years, computer networks have become more advanced and complex, while services are growing more diversifi ed. Companies can now use sophisticated networks to store and handle important data. Protecting private information is thus becoming more important than ever. To conduct their business properly, life insurance companies need confi dential information about their individual customers. To enhance convenience for customers, Sony Life uses networks as part of its policy of delivering the most advanced services. The Company places high priority on effectively managing customer information and implementing measures to ensure information security. Protecting Personal Information Initiatives to Protect Personal Information Sony Life s Information Security Policies is a document outlining the Company s stance with respect to personal information, centering on its customers. Based on these policies, we seek to ensure proper management, usage and protection of information. Following the enactment of the Law Concerning the Protection of Personal Information, we established a Privacy Policy, as well as a Committee to Promote the Security of Personal Information. Together, these address the gathering and use of personal information, as well as methods of assembling and managing it. The Company will strive more rigorously than ever to protect all personal information in its possession. Information Management System Sony Life has appointed information managers and security managers to each department that handles personal customer information. We have also established protocols to ensure effective protection of personal information and upgrade regularly our training system for employees. In addition, we have formulated a set of Customer Data Protection Rules to ensure that personal customer information is handled System for Protecting Personal Information Board of Directors Executive Officers Board appropriately, as well as a Compliance Manual and Market Conduct Compliance (MCC) Guidelines. In these ways, we are taking a comprehensive approach to protecting personal information and guaranteeing customer privacy. 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 diversifi cation of risk inherent to insurance underwriting. Sony Life s statements of important notes to policy agreements and documents related to the provision of protection explain that such information may be provided to reinsurance companies. Customers agree to this condition when signing insurance agreements. Policy Content Storage 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 benefi t 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 or policy claim 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 claim and other payments. This information, which is maintained for all life insurance companies, is used for no purpose other than referring to the payment of claims and other benefi ts 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 consultation items involving insurance policies. When a request for the payments of an insurance or other benefi ts 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 via any other system. Protection of Personal Information Promotion Committee Lifeplanner Sales Group agency offices Independent Agency Sales Group sales divisions Headquarter divisions Note: For details, refer to the website of Life Insurance Association of Japan ( or Sony Life ( (Japanese only). Information Manager (Branch Manager) Security Administrator Information Manager (Sales General Manager) Security Administrator Information Manager (General Manager) Security Administrator 028

31 Security Measures for Protecting Personal Information Standards for the Safe Management of Personal Information Sony Life has established standards for the safe management 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 To prevent notebook PCs containing personal customer information from being stolen in a car break-in or other type of theft, employees who take these PCs outside the Company are required to keep them nearby at all times. Customer data that is copied onto electronic storage media is protected with a special electronic encryption key. Password-protected integrated circuit (IC) cards double this security. Office Security Measures Only authorized employees are allowed access to offi ce 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 insurance business departments, which handle large amounts of personal customer information. Information Security Initiatives First Company in Industry to Obtain Information Security Management System (ISMS) Certification On June 27, 2003, Sony Life became the fi rst company in Japan s life insurance industry to obtain BS7799 Part 2: 2002 and ISMS (Ver. 2.0) two Information Security Management System ISMS certifi cation indicates the reliability of a company s information security systems. This certifi cation is provided to companies that have systems to determine the appropriate level of security based on risk self-assessments, and that have concrete plans and resources allocated to ensure the effective management of such systems. 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 information-processing methods are accurate and complete Accessibility: The guarantee that authorized people can have timely access to required information and related assets ISMS certifi cations conferred by the Japan Audit and Certifi cation Association for Information Security. The certifi cations were bestowed on the Company s departments related to insurance business administration. As BS7799 Part 2 certifi cation content was adopted by ISO certifi cations and Japanese ISMS standards were enhanced on a par with ISO standards, on June 22, 2006, we shifted our certifi cation to ISO/IEC 27001: 2005 (JIS Q 2007: 2006). 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. Maintaining and Improving Information Security Our administrative departments constantly assess the danger of leaks and breakdowns affecting all of our information assets, including customer information, and formulate and take measures designed to minimize such dangers. To earn certifi cation, we implemented those measures on schedule, regularly confi rmed that the measures had the desired effect and built frameworks for enforcing all of the improvements required for certifi cation. 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 destruction of all information assets and take measures to minimize such dangers. Constantly improve our information systems based on regular system audits by external specialists. ISMS Cycle ISMS targets improvements in information security through repeated implementation of the cycle described below: Plan: Formulate specifi c plans and policies for information security Do: Implement measures outlined in the security plans Check: Monitor the results of implementation Act: Undertake regular reassessments and improvements Act Plan Ongoing improvements Check Do 029

32 Privacy Policy Sony Life makes every effort to protect the personal information of its customers. Our privacy policy outlines our compliance efforts. Privacy Policy, 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 In handling personal information, Sony Life will comply with the applicable laws and regulations including the Act on the Protection of Personal Information, obligations under the applicable ministerial guidelines and this privacy policy in handling personal information. 2. Purpose of Using Personal Information Sony Life will acquire and use customers personal information only for the purposes described below. (1) To underwrite various types of insurance policies, to sustain and manage benefi ciaries of insurance policies, and to pay claims and other benefi ts (2) To enable Sony Life and its affi liated and related companies to introduce, provide and maintain various products and services (3) To enable the provision of information, manage operations related to Sony Life, and to enhance its products and services (4) For other business related or ancillary to insurance 3. Obtaining Personal Information Sony Life will endeavor to clearly notify customers about necessary information, such as purpose(s) of use, names of user(s) as well as contact details and to obtain consent when asking for personal information. 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 take special consideration in handling the personal information of customers under 15 years of age, e.g., to provide clear advance notice asking such a customer to provide personal Information only upon a guardian s consent. 7. Supervision of Subcontractors Sony Life may subcontract the processing of entrusted personal information to a third party within the scope necessary for the achievement of the purpose(s) of use. Such third party will be selected after confi rming suffi cient level of information security, and Sony Life will exercise necessary and adequate supervision to the party by such means as making contracts. 8. Provision to Third Parties Without the consent of the individual, Sony Life will not provide personal information to any third party, except for cases permitted under the related laws or regulations. 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. Requests for Review or Consultation Sony Life will, based on the provisions of the related laws or regulations, properly respond to comments and requests from the individual regarding the handling of personal information such as to review, correct, stop receiving further product or service information from Sony Life, or to delete personal information on their own after confi rming their identity. 10. Continuous Improvement of Internal Systems Sony Life has received certifi cation under the ISO international standard of information security management systems for its insurance-related 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: 6. Security Control Measures Sony Life will endeavor to maintain entrusted personal information that is accurate 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, modifi cation, loss or destruction. Note: The information above is excerpted and summarized from Sony Life s Privacy Policy. 030

33 Compliance Compliance means conformity with relevant laws, regulations and rules. This is a crucial issue for companies seeking to fulfi ll 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 confi dence. Compliance Framework Sony Life has established a Compliance Committee, which reports to the Executive Offi cers Board, and the Compliance Division to spearhead companywide compliance programs. In addition, our compliance offi cers and supervisors conduct routine checks of compliance status and create plans and systems for improving overall compliance. In May 2005, we also established the Market Conduct Compliance (MCC) Committee to strengthen the compliance of sales activities. In these ways, we are striving to build a more effective compliance framework. Board of Directors Executive Officers Board Compliance Committee/ Market Conduct Compliance (MCC) Committee Lifeplanner Sales Group agency offices Compliance Manager (Branch Manager) Compliance Administrator Compliance Framework Independent Agency Sales Group sales divisions Compliance Manager (Sales General Manager) Compliance Administrator Compliance Officers Headquarter divisions Compliance Manager (General Manager) Compliance Administrator Basic Stance on Compliance and Code of Conduct To fulfi ll 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 defi nes our basic stance for ensuring appropriate compliance. In addition to compliance, this declaration defi nes 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 offi cers and employees, ensuring the fairness of its 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, internal policies and regulations, business operations conducted ethically and in good faith; appropriate risk management, customerfi rst orientation, internal reporting, response to 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, confl icts of interest, etc. Compliance Manual This manual is provided as a reference for realizing compliance. The manual contains numerous case studies as examples for resolving everyday issues involving compliance. In addition to the compliance manual, Sony Life provides a compliance-oriented manual directed at sales employees, to ensure compliance when performing such tasks as insurance solicitation. Compliance Programs Every fi scal year, we compile a Compliance Program that serves as an action plan for implementing compliance initiatives. Education and training Sony Life conducts various types of training on a regular basis to foster understanding of the Company s code of conduct and compliance effi cacy, management of personal information and response to anti-social forces, among other themes. In addition, we provide training and monthly confi rmation tests for sales personnel on such topics as insurance soliciting. Compliance checks of operating performance The Compliance Division checks policy agreements, solicitation documents, claim non-payment decisions, internal regulations, contracts and the like. Monitoring the status of compliance Each headquarters and sales division is regularly checked to determine its state of legal compliance, and checklist items are added or revised as necessary. Verifying compliance effi cacy The effi cacy of our compliance programs is verifi ed comprehensively through a number of means, including internal audits, surveys of employee awareness and practices and confi rmation of the status of compliance of each division. Specifi c improvements and revisions are made as necessary. Internal reporting system If violations or suspected violations of laws or regulations are discovered, they are reported to our internal contact (in some cases to legal offi ces that are under contract with the company), and whistleblowers are appropriately protected. Legal revisions Sony Life has systems in place to respond appropriately in the event of legal revisions. In FY2009, in response to the changes in the New Insurance Law we initiated the New Insurance Law Response Project to spearhead such activities as revising policy clauses and other materials, the establishment of internal regulations and systems, the provision of education and training about the New Insurance Law and enhanced customer protection. 031

34 Market Conduct Compliance (MCC) Guidelines Sony Life has formulated the MCC Guidelines to indicate its policy on marketing activities and ensure thorough compliance when performing these activities. 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 Law on Sales of Financial Products. MCC Guidelines (Policies on Marketing Activities) Sony Life conducts market compliance steadily in accordance with these guidelines, ensuring that each customer receives appropriate consulting-based products and services according to their life plan and provides ongoing follow-up services with the aim of delivering financial security throughout the customer s life. In these ways, we endeavor to fulfill our social responsibilities and public mission as a financial institution. Our Stance toward All Customers 1. As a Professional 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 Contact Overview, Explanation of Important Notes and Explanation of Important Policy and Rider Information, explain the content of this information to ensure that it is understood, including any items that could be disadvantageous to the customer s interest. 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. 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 identify 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. For Policyholders 9. Responding appropriately to requests We strive to respond to customer requests promptly and appropriately. 10. Payment of claims and other fees To avoid customer misunderstandings, we respond clearly to customers about decisions on whether to pay claims and other fees. Furthermore, we respond quickly to customers claim payment requests, taking into consideration their situations and policy content. 032

35 Policy on Managing Conflicts of Interest In accordance with the Insurance Business Law and the Financial Instruments and Exchange Law, the Company has established a Policy on Managing Confl icts of Interest to ensure that transactions by Sony Life Group companies with regard to business by the Company or its subsidiary fi nancial institutions do not cause unjustifi able 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 Confl icts 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 (4) are subsidiary financial institutions of Sony Life, while (5) and (8) belong to Sony Life s parent financial institutions. (1) (2) Sony Life Insurance (Philippines) Corporation (3) AEGON (4) SA Reinsurance Ltd. (5) Sony Assurance Inc. (6) Sony Bank Inc. (7) Sony Bank Securities Inc. (8) Sony Finance International 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 targets 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 differences in 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 of the department conducting the Subject Transactions from the customer (isolating information) (2) Changing the Subject Transaction or customer conditions or methods (changing conditions or methods) (3) Discontinuing Subject 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 Policy on Eliminating Anti-Social Forces Companies are to maintain a high regard for compliance and manage themselves in a manner that includes no involvement with anti-social forces. At the same time, if a company receives an inappropriate demand from such forces, the company must reject that demand unequivocally. Sony Life s Basic Policy on Internal Control System Structure establishes a basic policy for eliminating anti-social forces, as well as for putting in place preventive measures to isolate itself from relationships with anti-social forces. We are strengthening our preparations accordingly. Basic Policy on Eliminating Anti-Social Forces We are duly aware of the importance of isolating ourselves from relationships with anti-social forces from the perspectives of social responsibility, compliance and corporate defense. We have in place systems to isolate ourselves from relationships with anti-social forces, and we reject all inappropriate demands from anti-social forces. We have strengthened our communications with police and other outside organizations to ensure that we are able to coordinate our actions and cooperate appropriately should we receive an inappropriate demand from anti-social forces. In such ways, we maintain a firm organizational resolve to extirpate inappropriate demands. 033

36 Environmental Protection Initiatives 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, and 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. Refl ecting 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 in which to live. 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 is 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, aim for ongoing improvements in our environmental preservation activities, as well as preventing 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. Donating to the Sorabear Foundation In March 2010, Sony Life began providing customers with CD-ROM versions of policy clauses. For each customer who opts for the CD-ROM, the Company donates a portion of its savings on printing costs to the Sorabear Foundation, a non-profi t organization engaged in global warming prevention. ISO Certification and Introduction of a Green Power Certification System Using Natural Energy (Generation Using Biomass from Wood Chips) In March 2001, Sony Life acquired ISO certifi - cation, the international standard for environmental management systems, for its head offi ce, and has since kept its certifi cation up to date. In FY2005, as part of plans to reduce our consumption of fuels that emit carbon dioxide and accelerate global warming, we set up a Green Power Certifi cation system, whereby the purchase of electrical power originating from wind-powered generators is certifi ed. This system facilitates electric-power swaps, ensuring that our electrical power is generated from sustainable energy resource, even if the power originates at locations far from where it is used. In FY2007, Sony Life began using electricity generated from wood-chip biomass, rather than wind-powered generation. Continuing in this vein, in FY2010 the Company purchased 250,000 kw worth of green power certifi - cates for the year. This level equates to an annual reduction of approximately tons of CO2. (This calculation assumes the production of tons of CO2 produced for each kwh of electricity used.) This electricity helps power Sony Life s headquarters building in Aoyama, Tokyo. Protection of the global environment is a top- priority issue for the Company. Through our environmental management system, we are working constantly to protect the environment in all of our daily activities. What is ISO 14001? ISO is an international standard for environmental management systems created by the International Organization for Standardization (ISO). Certifi cation is given to entities that review their environmental management systems annually, take action to address diffi cult and unprecedented issues and work continually to improve their environmental performance. 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. FY2009 Green Power Certificate 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. This certifi cate verifi es Sony Life s purchase of 250,000 kwh of electricity generated from wood-chip biomass. 034

37 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. In FY2003, we established a Social Contributions Department to spearhead our social benefi t initiatives. We also set up a Volunteer Activity Coordination Committee, with the aim of promoting the sharing of information from various sources, enhancing our support for volunteerism and broadening the scope of volunteer activities. As part of our efforts to be a good corporate citizen, we encourage each Sony Life employee to be active in their social contribution efforts, which we believe are instrumental in building up society s confi dence and trust of Sony Life. Volunteer Day Activities In fi scal 2003, Sony Life designated August 10, the anniversary of its founding, as Volunteer Day. This is a special day when all employees are encouraged to consider and implement activities that benefi t the activity. August has also been declared Volunteer Enrichment Month, in which all employees throughout Japan implement original social benefi t activities in their respective communities. Principal Volunteer Day activities include regional cleaning activities and blood donation drives. Consistently performing such activities each year helps build community awareness, and over time our volunteer activities have increased. We conduct volunteer sessions throughout Japan, including those offered by JAIFA Sony Chapters. These activities are designed to raise employee awareness of volunteer activities in a variety of fi elds. New Section of Website Describing Sony Life s Social Contribution Activities In April 2010, Sony Life opened a new section on its website describing its social contribution activities. The content is organized to make the Company s social contribution activities easily understandable. Sony Life s Social Contribution Activities (Japanese only) Content Social Contribution Activities That We Think up Ourselves Sony Life Volunteers Club Special Olympics Nippon Support Activities Life-Planning Courses Volunteer Day Eye Mate Fund Paralym Art Sony Life Cup All Japan Ladies Tennis Tournament Clean-up volunteers Sony Life volunteers cooperating in a blood donation drive 035

38 Eye Mate Fund Sony Life has contributed to the Eye Mate Fund since 1997, 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 FY2009, million in employee donations and matching funds was given to Eye Mate, Inc. This fi gure brings cumulative donations to Eye Mate to million, making Sony Life one of the largest among corporate and other donor organizations. Since FY2008, Sony Life has held Eye Mate charity goods sales. We donated to Eye Mate all funds this sale generated beyond their purchase costs. Sony Life will continue providing Eye Mate with support to help more visually impaired people participate in society. Helping People with Challenges Introduction of Paralym Art Sony Life helps people with physical and mental challenges overcome their obstacles by displaying Paralym Art, which is created by people with disabilities. Part of the contract fees received for allowing the art to be placed on display go to the individual artists through Self Support Inc., which organizes the activities. To encourage with people with challenges to turn their creative skills into business by creating art, Sony Life has two of these works on display in its headquarters building. We also introduced Paralym Art to each of the 80 lodging rooms at Academy Forest, a training facility completed in June Eye Mate, Inc. Since its introduction of the fi rst guide dogs to Japan, this organization has been responsible for training numerous guide dogs. The assistance of properly trained Eye Mate guide dogs helps people with visual impairment participate in society by enabling them to walk about on their own. An example of Paralym Art on display in Sony Life s headquarters reception area Employee s child experiences walking with a guide dog Painter and her family with the members of our Social Contributions Department Waku-Waku Hoken Kids Section of Website Opens to Commemorate 30 Years in Business August 10, 2009, marked Sony Life s 30th anniversary of establishment. One way in which we commemorated this date was to create a section on our website called Waku-Waku Hoken Kids, targeting children. The idea is for children, mainly upper-grade elementary school children, to learn how life insurance is structured and about life planning through fun and easy-to-understand website content. On the website, animations with lighthearted characters and games help children develop the spirit of helping one another as they learn the basics of life insurance, as well as the importance of life planning. Waku-Waku Hoken Kids ( Japanese only) 036

39 Special Olympics Nippon Support Activities Creating a Circle of Support that Expands with Each Event Sony Life believes that it contributes to society and promotes diversity each time it helps a single person with disabilities gain independence and participate in society. Our support of Special Olympics Nippon is based on this conviction. In February 2005, Nagano Prefecture hosted the Special Olympics World Winter Games, which drew 2,500 athletes from 84 countries. Approximately 400 Sony Life employees volunteered their time to work at these games. Interest throughout the Company increased as word of the inspiration volunteers gained from this experience spread to other employees. As a result, some 700 employees volunteered to help with the National Summer Games Kumamoto, held in November In March 2008, again around 700 employees from Hokkaido in the north of Japan to Kyushu in the south volunteered to help with the National Winter Games Yamagata, making ours the largest single company voluntary group. These volunteers served as team assistants and fi ll-in competitors, among other roles. In addition to helping with Olympic events, Sony Life volunteers take part in numerous other activities. Employees support the establishment of organizations throughout Japan, serve as coaches, volunteer for regular sports training activities and help with movie screenings and charity events, to name a few. In these ways, Sony Life employees actively search out times and places where they can share their special skills. In FY2009, Sony Life donated 5 million to this cause, and we plan to participate as a volunteer in the fi fth Special Olympics Nippon National Summer Games Osaka 2010, scheduled for November Special Olympics Activities Sony Life employees have commented that at their fi rst encounter with people who have intellectual disabilities, they are unsure how to interact. As they spend more time together, however, they fi nd themselves laughing together, sharing enjoyable time together, and their interactions grow more natural. In addition, volunteers shared both the disappointment of athletes who fell short of their goals and the excitement of the medal-winners. In both cases, however, Sony Life volunteers were impressed by the will of the athletes to persevere toward their goals. Special Olympics Nippon (Japanese only) Special Olympics Nippon is a specifi ed non-profi t organization that provides people with intellectual disabilities with ongoing year-round sports training opportunities and holds athletic competitions to demonstrate their accomplishments and give them an opportunity to participate in society. Sony Life volunteers at the Special Olympics Nippon National Winter Games Yamagata Volunteers help manage facilities at the Zao ski slope (Left) Yuko Arimori, director of Special Olympics Nippon (Right) Taro Okuda, President and Representative Director of Sony Life Sony Life presenting Ms. Arimori with the Company s Special Olympics Nippon donation during her visit on October 6,

40 Sony Life Volunteers Club The Sony Life Volunteers Club was established by employees at the time of the Kobe 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. Ongoing Support for Earthquake Victims Sony Life volunteers provide wide-ranging support for earthquake victims, centering on support for the senior citizens who were affected by the Kobe earthquake. At the time of the disaster, employee volunteers provided meals for earthquake victims. Afterward, they provided other types of support as needed, such as helping victims fi nd refuge in temporary housing and restoring their homes. Now more than 15 years on, Sony Life volunteers continue to support these earthquake victims by planning and inviting them to bus tours to visit hot springs and holding Christmas parties to deepen mutual relations. seen these children become more cheerful and develop a more optimistic outlook. Relay for Life In the 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. A Sony Life team fi rst took part in a relay, held in the city of Ashiya, in In FY2008, we took part in this relay in seven locations throughout Japan. Sony Life, mainly through branch offi ces, participated in relays at 15 locations throughout Japan in FY2009, from Naha in March to Kagoshima in November. They ran and walked throughout the relay s 24-hour duration with current cancer patients and their families, while conducting volunteer activities to support the event. Attesting to their growing popularity, Relay for Life events are taking place in more locations each year. Sony Life will proactively support these activities, as part of its efforts to realize a harmonious society that is free from worries of cancer. A hot springs bus tour for some of the people affected by the Kobe earthquake. Employees participating in the 24-hour team relay Youth Educational Support The Sony Life Volunteers Club conducts a number of activities around Japan to support the children to whom we entrust the future. For example, each year the club plans beach trips and barbecues for the children who for a variety of reasons, are unable to live with their parents. Over the course of several years, the change in some children participating in these events has been noticeable. Children who were initially reticent and standoffi sh now clearly enjoy the outings. As in previous years, in 2009 the club offered some children the opportunity to participate in beach cleanup activities. To keep the environment free of litter, children were asked to bring their own plates, chopsticks and cups to the barbecue following the cleanup. Activities such as these, held in different parts of Japan, give children who otherwise have little opportunity to interact with adults a new chance to participate in society. As a result, we have Oita International Wheelchair Marathon Each year, Sony Life employee volunteers in surrounding areas provide operational support for the Oita International Wheelchair Marathon. This major event was held for the 29th time in 2009 and attracted 264 contestants from around the world. Employees provide end-to-end support for the event, from initial preparations through to cleanup. Rising cheers from the sidelines spur on the runners, and between their vigor and the enthusiasm from the sidelines, all feeling of being different vanishes. One volunteer commented, This event provided a fresh reminder of the volunteer spirit; it demonstrated the success that results from the accumulation of small individual contributions. We plan to continue supporting the marathon. 038

41 Life-Planning Courses by Lifeplanner Sales Employees Since FY2005, 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. Although high school students are the focus of our life-planning course, we also offer courses for students from elementary school to university age. We plan to continue such efforts as part of our active contribution to society. Life-Planning Course Objectives To provide the protection products that optimally match customers lives, when proposing such products Sony Life fi rst asks customers about their dreams and future goals. Based on this information, we map out a specifi c life plan for each customer. We refer to this process as life planning. Through the process of life planning, we aim to convey the importance of planning their lives and persevering to achieve their dreams to young students who have long lives in front of them. 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 lifeplanning process. The simulation begins by creating a family. Childbirth necessitates plans for education, buying a house and helps them imagine other future events that might require planning. Next, the course takes on an economic focus, looking at the fi nancial resources that are needed to achieve the simulated life plan. Lifeplanner sales employees offer advice, using Sony Life s proprietary software, LiPSS (see pages 18 19). 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. Students dreaming up their futures as they participate in life planning Consulting by Lifeplanner sales employees to help realize those dreams Life-Planning Courses to Date As of July 1, 2010, Sony Life had held life-planning courses at 190 schools throughout Japan. (Schools) Private Public Subtotal Elementary Schools Junior High Schools High Schools Colleges and Vocational Schools Universities Subtotal As of July 1, 2010 (Schools) Activities by Fiscal Year Schools FY FY FY FY FY2010 (As of July 1) 13 Schools 190 Students attending 14,387 Lifeplanner instructors 2,391 Supporting Lifeplanners Approx. 2,

42 Sony Life Cup All Japan Ladies Tennis Tournament Since 2002, Sony Life has provided support to the Sony Life Cup All Japan Ladies Tennis Tournament, one of the largest amateur events for women tennis players in Japan, through sponsorship and volunteer activities. The tournament has been held since 1979 to promote the development of tennis as a sport with mass appeal that also helps improve women s health. This year marks the 32nd staging of this traditional event, which has attracted a cumulative total of more than 330,000 players. At tournament qualifiers held in each prefecture, Sony Life employees, including Lifeplanner sales employees, participate in volunteer activities that support the tournament. Through its participation in such events, Sony Life increases its community interaction and actively contributes to society. Sony Life Cup All Japan Ladies Tennis Tournament Website (Japanese only) Sony Life s principal volunteer activities at prefecture-level tournament qualifiers Lifeplanner sales employees volunteer at the event, working alongside players to ensure its smooth operation and to cheer the athletes. The branches in charge of each prefecture-level tournament qualifier lead teams of volunteers to support the events. The following activities were conducted as part of the 31st tournament. For the Tokushima Prefecture qualifier, which was held in the summer heat of September, volunteers distributed specially designed promotional hand fans for free. During match intervals at the qualifier in Miyazaki Prefecture, we held a drawing for attendees, and tennis-experienced Lifeplanner sales employees livened up the atmosphere by offering tennis pointers. As the qualifiers were held in often blazing summer conditions, volunteers offered attendees crushed ice treats and drinking water and distributing hand fans all free of charge, which added to the enjoyment of the matches by friends and family of participants. 040

43 Volunteer Leave Program In fi scal 2003, Sony Life introduced a volunteer leave program, designed to facilitate the efforts of employees to participate actively in volunteer activities. We also offer a volunteer insurance so that employees can feel safe on the job front as they volunteer their time. The program applies to the following activities: Social welfare Environmental protection Community activities Disaster relief International exchange and aid Leave Program for Bone Marrow Donors On April 1, 2002, Sony Life became the fi rst life insurance company to introduce a special leave program for bone marrow donors, offering employees compensated time off, independent of their regular holidays, for the period necessary to donate bone marrow for transplants. Sony Life Recognized as a Company that Actively Supports the Children Responsible for Future Generations Sony Life has been recognized by the Tokyo Labour Bureau as a Company that Actively Supports the Children Responsible for Future Generations. We will continue our proactive efforts to create an environment that supports healthy childbirth and child-raising by creating an environment in which parents can balance work and raising children. Sony Life s Child-Oriented Activities (Overview) 1. Child-rearing leave period extended to three years 2. Partially paid time off for child rearing leave 3. Introduction of system of shorter working hours (until child enters third year of elementary school) 4. Exemption from overtime working hours (until child enters third year of elementary school) 5. Added more fl exible working styles for employees raising children 6. Expansion of accumulated leave for childraising or nursing care 7. Paid leave for time off to nurse children 8. Support of care by babysitter 9. Introduction of a work-life balance day (no-overtime day) 041

44 The Sony Financial Holdings Group One Team, One Dream Aiming to Become One of Japan s Most Trusted Financial Services Groups The Sony Financial Holdings Group (SFH Group) is an integrated fi nancial services group that, in addition to Sony Life, includes Sony Assurance Inc., Sony Bank Inc. and our subsidiaries and affi liated companies. On October 11, 2007, Sony Financial Holdings Inc., Sony Life s holding company, listed its shares on the First Section of the Tokyo Stock Exchange. We believe that this listing was the result of the support of numerous customers that each SFH Group company has offered since the time the Group was established. As a member of the SFH Group, Sony Life will continue working to enhance the level of trust its customers place in it. In terms of history and scale of business, Sony Life is a core member of the SFH Group. In addition to striving to meet customer demand for reasonably priced life insurance products and services on a daily basis, we are enhancing collaboration with Sony Assurance and Sony Bank to ensure high levels of customer satisfaction for high-value-added fi nancial services in a variety of fi elds. We have been particularly effective in applying Lifeplanner sales employees consulting skills through cross-selling between Group companies. In FY2009, Lifeplanner sales employees were responsible for approximately 5% of all new Sony Assurance automobile insurance policies and some 37% of Sony Bank mortgage loans. LIPLA, a shop-style insurance agency of Sony Life that commenced operations in May 2010, also takes care of procedures for opening ordinary yen deposit accounts and handles mortgage loans for Sony Bank, and provides Sony Assurance automobile insurance. In addition to raising the level of group synergy, this addition enables us to meet customers needs for a wider range of fi nancial services. Going forward, the SFH Group will continue working to provide customers with higher levels of service as we aim to become the fi nancial services group that customers trust the most. (As of July 1, 2010) 042

45 Tie-Ups with Sony Assurance Lifeplanner Sales Employees Sell Sony Assurance s Products In March 2001, Sony Life obtained authorization to act as an agent for Sony Assurance, and in May 2001 our Lifeplanner sales employees started selling non-life insurance products. Sales of non-life insurance products are handled by Lifeplanner sales employees with relevant qualifi - cations. In FY2009, the number of policies sold by our Lifeplanner sales employees accounted for approximately 5% of the total number of new automobile insurance policies issued by Sony Assurance. By extending our offerings beyond life insurance to include automobile insurance, which covers automobile risks, we will continue to provide comprehensive risk management for our customers. Tie-Ups with Sony Bank 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. This insurance applies to customers taking out mortgage loans, and claims on this insurance are used to repay mortgage loans when unforeseen events prevent customers from making mortgage repayments. In addition, in April 2007 we began offering group credit life insurance with protection riders covering the three major diseases. Lifeplanner Sales Employees Handle Sony Bank s Mortgage Loans In December 2004, Sony Life s Lifeplanner sales employees began introducing Sony Bank s mortgage loans, but any questions from potential clients had to be passed on to Sony Bank. In FY2007, we received permission from the relevant authorities to conduct banking agency business on behalf of Sony Bank, and 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 specifi c customer requests and provide consultations about funding related to home purchases. At Life Planning SQUARE, Sony Life may handle Sony Bank s mortgage loans as well as procedures for opening ordinary yen deposit accounts at Sony Bank. In FY2009, the volume of new mortgage loans handled by our Lifeplanner sales employees accounted for approximately 37% of Sony Bank s new mortgage loans. Sony Life s Individual Annuities Sold by Sony Bank In June 2004, Sony Bank started selling single-premium individual annuities developed by Sony Life. In November 2006, the bank added monthly, biannual and annual level payment plans to its annuity offerings. With this launch, Sony Bank expanded its product lineup beyond those of a bank primarily focused on asset management, consequently responding to diverse customer needs in a more effective manner. At the same time, Sony Life has also benefi ted in terms of expanded sales channels, which further enhanced customer convenience. We have begun handling Sony Bank mortgage loans at Life Planning SQUARE. Products handled Semi-participating individual annuities (lump-sum, level-payment) Variable individual annuities (non-profi t) (lump-sum, level-payment) 043

46 Overseas Business Developments Sony Life Insurance (Philippines) Corporation Sony Life Insurance (Philippines) Corporation was established in the Philippines in 1998 and commenced operations in November To reinforce its business foundation, the company s capital was increased in December 2003, before it was transformed into a wholly owned subsidiary of Sony Life in March Similar to the marketing channels used in Japan, Sony Life Insurance (Philippines) Corporation employs a consulting-based marketing approach using Lifeplanner sales agents. The company is steadily building up its marketing organization, particularly in the Manila metropolitan area. The company also responds continuously to diverse local needs as indicated by the start of its sales of dollar-denominated products and its efforts involving group life insurance for enterprise customers. Fulfi lling its social responsibilities as a life insurance company, Sony Life Insurance (Philippines) Corporation places importance on compliance with all regulations and is upgrading its control systems to minimize business risk. Representative Offices in Beijing and Taipei Having received the necessary permissions from the applicable authorities, we opened our Beijing Representative Offi ce in China on October 1, 2008, and the Taipei Representative Offi ce in The Republic of China on July 1, Through these offi ces, we plan to gather information and conduct surveys on the fi nancial and insurance markets in China and Taiwan. AEGON Sony Life Insurance Starts Business In August 2009, AEGON Sony Life Insurance Co., Ltd., a joint venture established by Sony Life and AEGON of the Netherlands as a life insurance company to handle individual annuity business exclusively, obtained approval from the Japanese Financial Services Agency to conduct life insurance business. In December, Lifeplanner sales employees and fi nancial institutions including Sumitomo Mitsui Banking Corporation began sales of AEGON Sony Life Insurance s variable annuity products. In addition to increasing the number of products that Lifeplanner sales employees handle, the new offering raises the level of protection and increases the services we provide customers throughout their lives. Now that AEGON Sony Life Insurance has commenced operations, Sony Life mounted a full-fl edged effort targeting over-the-counter bank sales. In the future, Sony Life plans to augment its offerings of innovative, high-quality annuities and services designed to ensure that customers live secure long lives. For product details, please see the AEGON Sony Life Insurance website (Japanese only) at Reinsurance Company Established Sony Life and the AEGON Group have established SA Reinsurance Ltd. as a joint venture based in Bermuda, an overseas territory of the United Kingdom. In February 2010, Sony Life established LIPLA Co., Ltd., as a wholly owned subsidiary to serve as an insurance agency of Sony Life and a physical shop that customers can visit. LIPLA, an acronym for life planning atelier, provides customers with optimal protection on the basis of life planning. In addition to life insurance, LIPLA handles procedures for opening Sony Bank ordinary yen deposit accounts, Sony Bank mortgage loans and Sony Assurance automobile insurance. The fi rst LIPLA shop opened in Yokohama, Kanagawa Prefecture, in May 2010, which we plan to follow with other shop openings. Going forward, we look forward to providing a host of services that will meet diverse customer needs. LIPLA s website (Japanese only): 044

47 045 Financial Data 046 Sony Life Financial Data (Consolidated) 054 Sony Life Financial Data (Non-consolidated) 078 Performance Indicators of Sony Life (Non-consolidated) 045