OUR CREDO. The SPIRIT of AEGON Sony Life. Our pledge to business partners

Transcription

1 Annual Report 2017 This is an English-language version of the original Japanese-language disclosure of published in July 2017.

2 OUR CREDO The SPIRIT of AEGON Sony Life We aspire to help create a society in which people can feel really happy about living a long life. We are one team motivated to realize this common dream. Our mission is to assist our customers in achieving financial security, comfort and ultimately peace of mind. We endeavor to do this with the help of our business partners who share our same core values and determined spirit. In keeping our long-term promises to every customer, and by filling the gap between what social pension systems provide and what people truly need to retire with dignity, we enable people to live long and happy lives. Starting today, we commit ourselves to transforming the traditional annuity into a truly life enriching annuity. In order to fulfill our mission, we are committed to transforming the traditional annuity into a life enriching annuity. A life enriching annuity is one that meets our customers expectations throughout their lifetime. Moreover, it has the potential to help our customers reach their financial goals at different stages of life, enabling them to achieve their dreams while having a sense of security about their future. We are confident that by making available life enriching annuities we are helping to create a stronger sense of financial security for society; making it possible for those who rely on us to experience greater peace of mind. Our pledge to customers By providing high-quality consulting services we place our customers needs first, while always staying loyal to the central purpose of life enriching annuities. In order to earn our customers trust we will adhere to the clear guidelines outlined in our compliance programs. We vow to continuously improve our operations to ensure that we are creating long-term value, while also supporting our growth ambitions as a company. Our pledge to business partners We will do our utmost to invest in our relationships and develop trust and sustainable alliances with our business partners. We vow to create ideal partnerships that allow us to think, synergize and progress together. Our pledge to ourselves We will pursue our shared ambitions and ideals in the spirit of mutual respect. We take great pride in and are committed to our open and dynamic corporate culture. Most importantly, we vow to constantly remain agile and passionate about fostering a culture of innovation and entrepreneurship in order to realize our full potential. We are determined to achieve our dream of broadly sharing life enriching annuities with all. Current and future employees of

3 Contents 2 Message from Management Business Results Overview Summary of Selected Performance Indices Results 8 Shareholders Customer Satisfaction Establishment of Customer Oriented Business Conduct Policy Initiatives to Improve Customer Satisfaction Status of New Product Development and Product Lineup Information Disclosure Status of Distributors Corporate Governance Internal Control System Risk Management Structure Social Contribution Activities Corporate and Financial Data 19 Corporate and Financial Data Note: This is an English-language version of the original Japanese-language disclosure of published in July This condensed English-language version was prepared by solely for the convenience of non-japanese readers. If there are any discrepancies with the Japanese version please note the original Japanese version is the offi cial disclosure of Published October 2017 (Note: Original Japanese version published July 2017) Corporate Planning Division, Executive Offi ce 1

4 Message from Management Frans F. F. de Beaufort Executive Chairman, Representative Director Akira Nishino President, Representative Director Thank you very much for your continued choice and patronage of Aegon Sony Life. Aegon Sony Life is a life insurance company founded in December 2009 as a joint venture between Sony Life and Aegon. Both companies share comparable values and the aim to leverage each other s know-how in order to provide solutions that can help to secure the fi nancial needs of Japanese customers in retirement. Aegon is a global enterprise, operating in more than 20 countries including the Americas, Europe and Asia, with its core businesses centered on life insurance, pensions and asset management. Aegon Sony Life works closely with each of its parent companies in order to achieve its goals. Aegon Sony Life leverages Aegon s sophisticated knowhow of retirement products and bancassurance and the quality services of Sony Life, which have been obtained through consulting-based sales focusing on the life plans of customers. This knowledge and experience enables the Company to provide innovative, high-quality products and services to its customers in Japan. We commit ourselves to transforming the traditional annuity into a truly life enriching annuity. Japanese society is facing pension challenges, with a rapidly aging society, declining birth rate, increased longevity and declining government pension subsidies. These factors place a strain on the country s resources and particularly infl uence postretirement fi nancial needs making it all the more important for individuals to prepare their own fi nancial protection for their post-retirement lives. 2

5 Management Philosophy Aegon Sony Life values its customers, business partners, employees, shareholders and the society in which it operates and offers high-quality annuities and services as an expert in annuities, with the aim of becoming the company most trusted by customers Management Policy Develop expertise in the retirement benefits market by offering annuities and services that address customers various pension needs. Manage with the innovation to address newly emerging customer needs by understanding changes in the environment and by continually and aggressively tackling the challenge of providing high-quality services that satisfy customers. Respect employees individual characteristics and maintain a resilient and vigorous organization in which they can optimize their capabilities and aptitudes. Fulfill the Company s corporate social responsibilities by accurately managing various risks and conducting sound management in compliance with laws and regulations. Aegon Sony Life is committed to help people take responsibility for their financial future and this has never been more important than today. People are living longer than ever, which is a case for celebration. We aspire to help create a society in which people can feel really happy about living a long life. We are devoted to being an expert in annuity products and, as mentioned in its Credo since Aegon Sony Life started its business in 2009, Transforming the traditional annuity into a truly life enriching annuity. Aegon Sony Life intends to do this by providing customers with high-quality fi nancial products and services that can help them realize their dreams. Aegon Sony Life strives to contribute to a society where as many customers as possible can be freed of post-retirement-related anxieties and can feel the joy in living a long life. We appreciate your business and ask for your continued support. July 2017 Frans F. F. de Beaufort Executive Chairman, Representative Director Akira Nishino President, Representative Director 3

6 Business Results Overview Economic Environment The fi rst half of the fi scal year 2016 can be characterized by low interest rates. The Bank of Japan introduced a negative policy rate in January of 2016 and in addition, the UK decided on leaving the European Union, leading to new risk-off attitudes. Interest rates, however, recovered slowly mainly due rising interest rates in the US as well as due to a rise of the stock market in Japan. As a result, the long term interest rate (10 year JGB yield), recovered into the positive at the end of the fi scal year and the Nikkei index increased compared to the end of. Operating Results Aegon Sony Life has been working to provide customer-centric services, improve its fi nancial strength and its internal control management in order to achieve the sustainable growth as a trusted company that customers choose. The Company successfully developed and launched its fi rst foreign currency (USD and AUD) denominated product with minimum guarantee of the single premium amount in May In addition, the Company successfully released its second foreign currency (USD) denominated product with guaranteed withdrawal benefi t in October of The Company increased its product line-up to better match customer needs and Aegon Sony Life is also working towards developing a variety of annuity products in FY2017. The Company is committed to provide a wider range of solutions in the future that the customer can chose from. At last, the company is focusing on digitization in order to improve the service provided to its customers and business partners and to improve its internal effi ciency. Regarding marketing, the Company extended its detailed training activities for agencies in the area of sales, products and after-sale follow up. As a result, partnerships with new fi nancial institutions increased to 29 partners by the end of. Aegon Sony Life will continue to establish new partnerships in order to provide people with fi nancial security all over Japan. In a challenging market environment, the Company continued to operate under the slogan of Transforming the traditional annuity into a truly life enriching annuity. In combination with the focus on consulting sales, in force annuities increased 12.9 percent to 501,784 million representing 85,942 policies. The Solvency Margin Ratio of the company ended at 986.7%, exceeding the regulatory criteria for fi nancial soundness which is set at 200%, demonstrating the company s stability and ability to stay solvent. With the FSA communicating its principles of Fiduciary Duty to the public, Aegon Sony Life feels encouraged to continue its current path. The customer has always been in the heart of everything the Company does. In order to further promote customer centricity, the Company established its customer oriented business conduct policy, which is a refl ection of the Company`s management philosophy and Credo. With initiatives in such as releasing movies that explain products and increasingly making customers aware of the internet service, the Company is dedicated and committed to fulfi ll its fi duciary duty to its customers. 4

7 Summary of Selected Performance Indices (Millions of yen, unless otherwise noted) FY2012 FY2013 FY2014 New business individual annuities (Note 1) 51, , ,254 71,593 70,814 Ordinary revenues 58, , , , ,700 Ordinary profi t (loss) (2,407) (3,418) (5,107) (2,901) (4,797) Fundamental profi t (loss) (1,947) (1,908) (3,612) (2,875) (4,996) Net income (loss) (2,509) (3,495) (5,495) (3,292) (4,497) Share capital 10,000 12,000 13,000 13,250 15,000 Outstanding shares (thousand shares) 20,000 24,000 26,000 26,500 30,000 Total assets 93, , , , ,199 Assets in separate account (Note 2) 75, , , , ,242 Policy reserves 77, , , , ,388 Loans Securities 73, , , , ,628 Solvency margin ratio 8,034.5% 4,789.7% 3,033.5% 1,111.7% 986.7% Number of employees Insurance in force (Note 3) 76, , , , ,784 Individual life insurance Individual annuities 76, , , , ,784 Group life insurance Group pension in force Notes: 1. New business individual annuities represents annuity resources at the start of annuity payments. 2. Assets in separate account: net amount after deducting receivables coming from the general account based on the Insurance Business Law of Japan. 3. Insurance in force is the total of the following: (i) Policies during accumulation period: the present value of the annuities at the time of annuity payment (ii) Policies in payout status: policy reserves 5

8 Results Policy Performance Indices Definition Overview of Face Amount Number of New Policies New business 70,814 million 14,261 policies Policies sold during the fi scal year. New business amount was 98.9% and new number of policies was 120.3% compared to. 163,254 71,593 70,814 26,834 11,851 14, (FY) (FY) Insurance in force 501,784 million 85,942 policies Total policies in force at the end of the fi scal year. Insurance in force was 112.9% and total number of policies was 117.1% compared to. 501, , ,423 63,593 73,403 85, (FY) (FY) Profitability Indices Definition Overview of Ordinary profit (loss) (4,797) million Ordinary revenues (recurring revenues generated by operating activities) less ordinary expenses. Loss occurs when ordinary expenses exceed ordinary revenues. Fundamental profit (loss) (4,996) million Net income (loss) (4,497) million Indicates core earnings. Corresponds to operating income for non-fi nancial corporations. The sum of income and expenses from insurance operations, such as premium income, claims and benefi ts, and operating expenses, plus investment income, primarily interest and dividends. Income before income taxes less current and deferred income taxes. Indicates net income or loss resulting from all corporate activity. Aegon Sony Life Insurance began operating in FY2009. Insuffi cient insurance in force has resulted in an ordinary loss, fundamental loss and net loss. 6

9 Asset and Liability Indices Definition Overview of 3-Year Graph Total assets 478,199 million The total of cash and deposits, call loans, monetary trusts, securities, tangible and intangible fi xed assets, and other assets. Total assets as of March 31, 2017 increased 45,273 million compared with, largely because of the increase in insurance in force. 432, , , (FY) Assets in separate account 464,242 million An account managed separately for individual variable annuities in order to refl ect investment results directly in claim payments. Assets in separate account as of March 31, 2017 increased 47,535 million compared with largely because of the increase in insurance in force. 464, , , (FY) Policy reserves 469,388 million Reserves required by the Insurance Business Law for each type of insurance to provide for future payments of claims, annuities and other benefi ts to customers. Policy reserves as of March 31, 2017 increased 46,201 million compared with largely because of the increase in insurance in force. 469, , , (FY) Securities 458,628 million Core part of the insurance company s investment assets. This includes government bonds, corporate bonds, stocks, foreign securities, investment trusts and other securities. Securities as of March 31, 2017 increased 51,016 million compared with largely because of the increase in insurance in force. 458, , , (FY) Soundness Indices Definition Solvency margin ratio 986.7% Share capital (including capital reserves) 30,000 million An index used by regulators to judge the ability of an insurance company to pay claims in the event of risks that exceed typical assumptions. Calculated as total solvency margin (internal reserves such as net assets plus items including net unrealized gains on available-for-sale securities) divided by total quantifi ed risks. A solvency margin of 200 percent or higher is one standard for soundness. An index of funding for operations. The Insurance Business Law stipulates that an insurance company must have share capital of 1,000 million or more. 7

10 Shareholders Aegon Sony Life is a joint venture between Sony Life and Aegon. Sony Life Sony Life s mission is to work for customers fi nancial security and stability by offering optimal life insurance products and high-quality services. Its lifeplanners and partners (soliciting agencies) consult with each customer individually to optimize fi nancial security. As a member of the Sony Financial Holdings Group, Sony Life aims to use strong synergies with Group companies to provide fi nancial services of the highest quality. In the annuity market, Sony Life and Aegon of the Netherlands each provided 50 percent of the equity capital to establish Aegon Sony Life as a company specializing in individual annuities. Lifeplanners began selling the Company s variable annuities in December 2009, which broadened their product line-up, thus enabling them to provide greater service and fi nancial security throughout their customers lives. Corporate Profile (As of March 31, 2017) Common stock: 70 billion Number of employees: 7,865 (including 4,933 Lifeplanners) Total assets: 8,873.6 billion Sony Financial Group The Sony Financial Group is a comprehensive financial services group comprising Sony Financial Holdings Inc. and subsidiaries Sony Life Insurance Co., Ltd., Sony Assurance Inc., Sony Bank Inc. and other Group companies. (As of July, 2017) 100% owned Life Insurance Business 50% owned 50% owned AEGON Sony Life Insurance SA Reinsurance Non-Life Insurance Business 100% owned Banking Business 100% owned 57% owned Sony Payment Services 100% owned SmartLink Network Hong Kong Nursing Care Business 100% owned 100% owned Lifecare Design Consolidated subsidiaries Equity-method subsidiaries 8

11 Aegon Headquartered in The Hague, the Netherlands, Aegon is one of the world s leading fi nancial services organizations, providing life insurance, pensions and asset management. Aegon s history dates back to the mid-1800s, when two civil servants helped provide funds for people to bury their loved ones with dignity. More than 170 years on, the customers remain at the heart of everything we do. Corporate Profile (As of December 31, 2016) Established Capital: billion Number of Employees: over 29,000 Total Assets: 426 billion Managed Assets: 743 billion Headquarters: The Hague, The Netherlands Creating Meaningful Connections 2016 was a year full of achievements and change for Aegon. The operational and fi nancial successes are ultimately the result of customers placing their trust in Aegon, and Aegon is proud that it s helping millions of people achieve a lifetime of fi nancial security. Aegon focuses on developing a life-long relationship with its customers so that it can serve their fi nancial needs at all the major fi nancial junctures in their lives; rather than on a one-off basis. In order to accomplish this, Aegon needs to get much closer to its customers and connect with them how and when they wish. To this end, Aegon will step up its work to provide guidance and advice to customers and accelerate investments in digital solutions. Aegon is well-positioned to take advantage of the many opportunities in its markets by connecting with ever more customers and meeting their needs in a smooth and seamless way across their lifetime. This gives Aegon confi dence it will achieve its strategic and fi nancial objectives, and also create long-term value for customers and therefore shareholders alike. Raising Awareness In developed countries, the proportion of the population aged 60-plus has increased from 12% in 1950 to 22% in 2010, and will increase to 32% by Children born in high-income countries today can expect to live to see their 100th birthday, and life expectancy in low and middle-income countries is on the rise thanks to poverty alleviation, improved nutrition and medical science. As a result, the need for long-term fi nancial security across the world can only grow. This key demographic trend of aging, frequently cited by global researchers, is attributed to healthcare advancements, birth rate decline, and poverty alleviation. For over a decade, Aegon has highlighted the impact longevity will have on society and individuals who, without adequate preparation, will outlive their money. In addition to publishing its annual Aegon Retirement Readiness Survey and a number of other consumer and healthcare studies, research and pulse checks, Aegon draws together research on aging and retirement from Europe, the Americas, and Asia through the Aegon Center for Longevity and Retirement (ACLR). The Center collaborates with the US-based Transamerica* Institute, a non-profit private foundation, which includes the Transamerica Center for Retirement Studies and the Transamerica Center for Health Studies, based in Los Angeles, California. * In the United States, Aegon mainly operates under the Transamerica brand 9

12 Customer Satisfaction Establishment of Customer Oriented Business Conduct Policy Ever since the business inception of December 2009, the Company aims to facilitate a lifetime of fi nancial security under the slogan of Transforming the traditional annuity into a truly life enriching annuity and through stating that We aspire to help create a society in which people can feel really happy about living a long life. In order to truly commit to these words, the Company has established its Credo ( The Spirit of AEGON Sony Life ) with all its employees in In order to clarify and further promote ASLIC s customer centricity, which is also embedded into the Company`s management philosophy and Credo, the Company established its Customer Oriented Business Conduct Policy. This was inspired by The principle on Customer Oriented Business Conduct, which was published by the FSA in March of The details of the Customer Oriented Business Conduct Policy and the initiatives that the Company takes in the context of this policy are published on the corporate homepage. Initiatives to Improve Customer Satisfaction Aegon Sony Life defi nes customer comments, complaints, requests for assistance, opinions and disputes as follows: Customer comments are requests made to the Company on products, service content, sales activities and so on concerning annuities, etc. (Life insurance duties provided in Article 2 of the Insurance Business Law.) Complaints are expressions of dissatisfaction among customer comments received. Requests for assistance and opinions are comments without expressions of dissatisfaction among customer comments received. Disputes are, among complaints, those which have not been resolved in spite of the fact that the Company has responded and taken actions based on facts in good faith and are elevated to an external body, etc. [i.e. A body such as a designated ADR (Alternative Dispute Resolution) body that resolves complaints and disputes or other third-party organizations for resolution]. (Operational Policy) Customer Feedback System Under the management philosophy of aiming to become the company most trusted by customers, Aegon Sony Life has formulated an operational policy for handling customer feedback that involves sincerely listening and making every effort to improve services. The Company collects and analyzes customer feedback at its Customer Relation Management Section under the Sales Management Division and promotes operational improvements to strengthen relations with customers and raise their overall satisfaction. For issues with a particularly high degree of urgency or importance, information is shared and deliberations on improvement measures are held by the Customer Relations Committee, which was established to make appropriate and strategic management decisions. The results of the discussions are either reported to or discussed in the Management Committee. The Customer Relations Forum, established under the Customer Relations Committee, coordinates initiatives to improve operations with and between departments. The Customer Complaints Offi ce is dedicated to appropriately and promptly respond to complaints. It strives to understand the customer, to analyze the complaint the Company receives and to prevent recurrence. 10

13 Operational Policy for Handling Customer Comments The Company shall strive to listen and swiftly respond to customer comments in good faith and with integrity to resolve any issues in a manner that is satisfactory to customers and improve the Company s business practices based on customer comments. The Company shall conclude a basic contract for executing procedures with a designated ADR body pertinent to Article of the Insurance Business Law and observe the regulations provided by a designated ADR body and various rules set forth in such regulations. The Company shall pay attention to the characteristics of customers in handling customer comments, provide explanation on how the comments are handled where necessary and introduce a body for resolving complaints and disputes, such as a designated ADR body, when requested by a customer. Customer Feedback System (As of July, 2017) Customer feedback Third-party Organizations Solicitation Agencies Sales Promotion East Division Sales Promotion West Division Sales Support Division Sales Strategy Division Customer Relations Center Customer Relations Center Consultation/Opinions, etc. Complaints Sales Management Division Customer Relation Management Section Customer Complaints Office Customer Relations Forum Customer Relations Committee Relevant Divisions Management Committee, Board of Directors Improved operations/increased customer satisfaction Compliance and Risk Management Division Compliance Section Compliance Committee Customer Satisfaction Initiatives to Incorporate Customer Feedback Aegon Sony Life has periodically conducted customer satisfaction surveys since its establishment in December The Company sincerely responds to all customer feedback, including complaints, requests for assistance and opinions that are noted in satisfaction surveys. The Customer Relations Center then analyzes and refl ects customer feedback in on-going improvement initiatives. Complaints We received approx. 9,500 cases of customer feedback during, of which 868 were categorized as complaints. A breakdown is shown in the chart below. Type Number of cases FY2014 % of total Number of cases % of total Number of cases (Cases, %) % of total Insurance policy purchasing issues Premium payment issues Policyholder processes and dividends Payment of claims and benefi ts Other Total ,

14 Operational Improvement Examples Aegon Sony Life implemented the following operational improvements based on customer feedback. Customer Feedback It is unclear how the fund works and how the performance increases. Unclear how tax regulation work during investment gain or surrender procedure. No clear image of Sony Life Aegon. Not knowing the availability of the internet service. Details of the product unclear as time passes and customers tend to not remember the details clearly Improvement Uploaded the FAQ with answers on our homepage. Revised initial document and clarifi ed these items as part of information we send to customers. Executed a gift campaign in order to make customers familiar with the internet service and to increase interaction with the Company. (Campaign from October March 2017) Released a product movie on the foreign dominated "Double Account Global" product. In the movie, several characters interact in order to clarify the specifi cs of the product. Introduction of Net Promoter Score (NPS) We introduced the measurement of NPS to improve customer loyalty we are working hard to engage our customers with relevant information, advice, and products and services to improve their familiarity and their experience with us. NPS is part of our customer loyalty efforts and is measured through our annually customer survey. We aim for high customer satisfaction and recommendation as part of our life-enriching annuity concept. Note: Net Promoter Score and Net Promoter System are trademarks of Bain & Company, Satmetrix Systems and Fred Reichheld. Alternative Dispute Resolution Body Aegon Sony Life handles complaints and disputes that may arise in the customer relationship in accordance with Article of the Insurance Business Law. It has concluded a Basic Contract for the Implementation of Dispute Resolution Procedures with The Life Insurance Association of Japan, a designated alternative dispute resolution (ADR) body as defi ned by Article 2-28 of the Insurance Business Law. The Life Insurance Consultation Center of The Life Insurance Association of Japan handles various consultations, inquiries and complaints regarding life insurance via phone, mail and visits (not via or facsimile). Moreover, the Center maintains offi ces throughout Japan to handle communication by phone. The Life Insurance Consultation Center communicates complaints to the relevant life insurance companies. In principle, if the policyholder and insurance company are unable to resolve the complaint within one month, the Center acts as an ADR body that provides an arbitration committee at the Life Insurance Consultation Center to protect the legitimate interests of policyholders. Contact: Life Insurance Consultation Center, The Life Insurance Association of Japan Shin Kokusai Building 3F, Marunouchi Chiyoda-ku, Tokyo Japan Tel: (overseas) Hours of operation: 9:00 17:00, Mon.-Fri. (Closed holidays) Website: Status of New Product Development and Product Lineup Status of New Product Development Aegon Sony Life energetically develops new products in order to respond to various customer needs for annuities. The Company has several types of products in its portfolio. One is a type of insurance in which assets are managed in a separate account during the accumulation and payout periods, and annuities are paid throughout the life of the insured. The other is a type of insurance in which assets are managed in a separate account during the accumulation period and in the general account during the payout period, as payments are made according to the type of annuity. 12

15 Product Lineup (As of July, 2017) Variable Annuities Guaranteed Lifetime Withdrawal Benefit (GLWB) A type of insurance in which assets are managed in a separate account during the accumulation and payout periods, and annuities are paid throughout the life of the insured, starting as early as one year after the contract date. Guaranteed Lifetime Withdrawal Benefit 2011 Guaranteed Lifetime Withdrawal Benefit (Foreign Currency Denominated 2016) Guaranteed Lifetime Withdrawal Benefi t 2011 is JPY denominated while the Guaranteed Lifetime Withdrawal Benefi t (Foreign Currency Denominated 2016 ) is USD denominated Guarantees a minimum lifetime withdrawal benefi t and a minimum death benefi t equal to the single premium. Has a function that refl ects the results of management of the separate account in the annuity amount and a function that increases the annuity amount by a fi xed percentage during the accumulation period regardless of asset management results. Guaranteed Minimum Accumulation Benefit (GMAB) A type of insurance in which assets are managed in a separate account during the accumulation period and in the general account during the payout period, as payments are made according to the type of annuity. Guarantees a fi xed minimum accumulation benefi t and death benefi t regardless of the results of management of the separate account. Guaranteed Minimum Accumulation Benefit 2015 / Guaranteed Minimum Accumulation Benefit 2015 (Foreign Currency Denominated) Guaranteed Minimum Accumulation Benefi t is a JPY denominated product and the Foreign Currency Denominated product is in USD or AUD. Guarantees a minimum accumulation benefi t and a minimum death benefi t equal to the single premium. Between the contract date and three months prior to the start of payments, when the value of the accumulated fund exceeds the single premium by 5 percent, customers may choose either to receive the asset management results in cash or to continue management in another separate account. Customer Satisfaction Variable Annuity with Currency Choices (Guaranteed Minimum Death Benefit 2016) Type I The Variable Annuity with Currency Choices (Guaranteed Minimum Death Benefi t 2016) Type I allows customers to select a currency (JPY, USD, AUD). The equivalent amount of basic benefi t (single premium) is guaranteed as a death benefi t during the deferral period. Riders Survivor Annuity Payment Policy Authorized Claim Policy JPY Premium Payment Policy JPY Payout Policy JPY Annuity Payout Policy Exchange Rate Target Payment Policy Changing Payout Date Policy This rider adds the payment of a death benefi t or lump-sum death payment as an annuity. When annuity recipient cannot claim the annuity or lump-sum death benefi t due to company circumstances, a preauthorized claimant is allowed to receive the annuity or lump-sum death benefi t on behalf of the recipient. Guaranteed Minimum Accumulation Benefi t 2015 (Foreign Currency Denominated) single premium can be paid in JPY. Guaranteed Minimum Accumulation Benefi t 2015 (Foreign Currency Denominated) annuity or lump-sum death benefi t can be received in JPY. Guaranteed Lifetime Withdrawal Benefi t (Foreign Currency Denominated 2016) payouts and lump-sum death benefi t can be received in JPY. When the contract of the Guaranteed Minimum Accumulation Benefi t 2015 (Foreign Currency Denominated) is option 1 and the value of the accumulated fund exceeds the single premium by 5 percent, the asset management result can be received in cash in accordance with the exchange rate. When Variable Annuity with Currency Choices (Guaranteed Minimum Death Benefi t 2016) Type I is USD or AUD denominated, annuity payout date can be changed based on preferred currency rate. Notes: 1. Product information is provided to explain Aegon Sony Life s business, not as a solicitation to purchase the Company s products. 2. Please confirm details in the product pamphlets, pre-contract documentation (policy provisions and policy guide), contract articles or other relevant documentation. (Japanese language only.) 13

16 Information Disclosure Provision of Information on Products, Contract Details and Demerits When a customer is considering a contract, Aegon Sony Life provides information on its demerits as well as its merits, in addition to the product s structure and features. This is done so that the customer can make an informed purchase decision based on an accurate understanding and their particular suitability. The Company also provides appropriate information after the contract signing to offer value-add services. Before Contract Signing Product pamphlet Pre-contract documentation (Contract summary/notifi cations) Product brochure Policy provisions/policy guide Guide to separate account Confi rmation of intent and conformity, etc. After Contract Signing Notification of Contract Status A Notifi cation of Contract Status is issued four times a year to confi rm contract details, status of the separate account and details of the annuity. Current Status of Separate Account (Account Statement) The current status of the separate account is issued once a year. Internet Service Details of the contract and status of the separate account can be checked on the Internet. Company Information Disclosure Materials Pursuant to Article 111 of the Insurance Business Law, the Company issues disclosure materials (documents related to operating results and the current status of assets) once a year to give customers a broad understanding of management conditions and other matters. The materials are available at major agencies and elsewhere throughout Japan and on the Company s website. Website In addition to introducing the Company s profi le, the website contains annual reports, the Aegon Retirement Readiness Survey and other information. ( english/) Corporate Profi le Contains a Company overview and other information. 14

17 Status of Distributors Status of Distributors Since the start of operations in December 2009, Aegon Sony Life has been working to increase its distribution agencies, and has alliances with 31 fi nancial institutions as of July 1, The products that are offered and the fi nancial institutions that distribute them as agencies are as follows: Products Offered and Financial Institution Agencies (As of July, 2017) Offi cial Product Name Name of Product for Sale Financial Institution Agencies Variable Annuity (Guaranteed Minimum Accumulation Benefit 2015) Guaranteed Minimum Accumulation Benefit (2015 Foreign Currency Denominated) W Account IV Catch Point IV W Account Global Sony Life Insurance Co., Ltd.; Kansai Urban Banking Corporation; The Chiba Kogyo Bank Ltd.; The Minato Bank, Ltd.; The Tokyo Star Bank, Limited; The Ashikaga Bank, Ltd.; Hokuto Bank, Ltd.; North Pacifi c Bank, Ltd.; The Mie Bank, Ltd.; The Shizuoka Bank, Ltd.; Resona Bank, Ltd.; Saitama Resona Bank, Ltd.; The Kinki Osaka Bank, Limited; Michinoku Bank Co., Ltd.; Kirayaka Bank, Ltd.; The Toho Bank, Ltd.; Amagasaki Shinkin Bank; The Bank of Kochi,Ltd.; The Bank of Nagoya, Ltd.; Ogaki Kyoritsu bank Ltd. Sumitomo Mitsui Banking Corporation Amagasaki Shinkin Bank; The Senshu Ikeda Bank, Ltd.; Ogaki Kyoritsu bank. Ltd.; Kansai Urban Banking Corporation; Kirayaka Bank, Ltd.; The Bank of Kochi,Ltd.; The Shizuoka Bank, Ltd.; The Tajima Bank,Ltd.; The Tokyo Star Bank, Limited; The Toho Bank, Ltd.; The Bank of Nagoya, Ltd.; North Pacific Bank,Ltd. Customer Satisfaction Global Gift Sony Life Insurance Co., Ltd. Variable Annuity (Guaranteed Lifetime Withdrawal Benefit 2011) Jinseinenkin Sutekini Nagaiki "Winning Road V" Japan Post Bank Amagasaki Shinkin Bank; Sony Life Insurance Co., Ltd. Guaranteed Lifetime Withdrawal Benefit (Foreign Currency Denominated 2016) "Winning Road Global" Sony Life Insurance Co., Ltd. Variable Annuity with Currency Choices (Guaranteed Minimum Death Benefit 2016) Type I "Fantastic Life" Sony Life Insurance Co., Ltd. Overview of Education and Training at Agencies Aegon Sony Life is mindful of the importance of support for building relationships of trust between sales staff at agencies and customers and therefore offers numerous training programs. Specifi cally, the Company has prepared various training programs that have been developed based on K.A.S.H. (Knowledge, Attitude, Skill, Habit) Training for sales agents covers not only instruction about products but also sales methods. Moreover, in addition to gaining the skills necessary for process-based consulting sales and sales communication the Company provides instruction on the usage of the newly developed public pension calculation tool (Nenkinkun) and the life planning tool (second life supporter). Detailed support for these activities is provided by the Company's wholesales. The Company conducts group training, one-on-one training for sales agents in the field at branch offices and elsewhere, and smallgroup training sessions. In addition to instruction on products, overall finance and the Japanese social security system, marketing planners conduct various types of training for the acquisition of skills in presentation, coaching and facilitation. 15

18 Corporate Governance Internal Control System Aegon Sony Life employs an internal control system created to ensure appropriate operations. This system follows the basic policies outlined by the Board of Directors for establishing such a system. Risk Management Structure Basic Policy Aegon Sony Life has an interdivisional, company-wide risk management structure for dealing with operating and management risks. The Company uses appropriate risk management to ensure that operations are solid and reliable in order to protect the interests of policyholders and other stakeholders. Risk Management Structure Aegon Sony Life strengthens its risk management structure each year in order to manage risks based on the above policy. Insurance companies must meticulously control certain risks while also comprehensively managing all risks. The Company employs the structure outlined below for appropriate risk management that is both specifi c and yet still comprehensive. The Company assigns divisions responsibility for managing specifi c types of risk in order to control them appropriately. The Risk & Capital Committee, which advises the Management Committee, governs the information regarding each type of risk. This committee engenders horizontal, company-wide risk management by centralizing jurisdiction over collecting information and setting policy. The Risk & Capital Committee includes the President, the Chief Actuary and the general managers of each division responsible for risk management. The auditors and the general manager of the Internal Audit Division also attend committee meetings to provide an appropriate check and balance. In addition, Aegon Sony Life is working on the enhancement of its crisis management capabilities. This includes revising its business continuity plan based on experience garnered through the Great East Japan Earthquake that occurred in March Risk Management Structure (As of July, 2017) General Meeting of Shareholders Board of Auditors Board of Directors Chief Actuary Management Committee Internal Audit Division Risk & Capital Committee Compliance and Risk Management Division (Risk Management Committee) Asset management risk Underwriting risk Operational risk Investment Division Actuarial Division Compliance and Risk Management Division Information Systems Division Accounting Division HR & General Affairs Division Corporate Planning Division 16

19 Stress Tests The Company periodically subjects its assumptions for various contingencies to stress tests. The Risk & Capital Committee uses the test results in confi rming fi nancial stability. Policies for Addressing Risk Risk Asset management risk Risk Management Policy Given the importance of integrated asset and liability management, the Company determines asset allocation after taking issues including liability characteristics and equity capital into account. In addition, it has upgraded system checks and balances in order to ensure its effectiveness. Underwriting risk Use of reinsurance* Operational risks Administrative risk Systems risk Insurance underwriting has a profound, long-term impact on operations. The Company therefore appropriately manages underwriting risk based on the status of its policy reserves and equity capital. In addition, it regularly verifi es the profi tability of both new and existing products. The Company uses reinsurance as necessary to appropriately manage underwriting risk and employs rigorous criteria for credit ratings and other factors to select reinsurance companies. The Company also regularly reconfi rms the soundness of the reinsurance companies it uses. The Company does not underwrite reinsurance. Aegon Sony Life manages and reduces the administrative risk inherent in corporate operations to ensure they are appropriate. The Company formulates and disseminates internal rules and prepares and disseminates manuals, while conducting regular inspections and internal audits to ensure their effectiveness. The Company implements various measures to achieve stable operation of computer systems and prevent accidents and other problems. It has also installed backup centers at remote locations and upgraded its contingency plan. Liquidity risk Legal risk Reputational risk Human risk Tangible asset risk To the degree possible, the Company prepares for unforeseeable contingencies by limiting the use of non-liquid investments in asset management and by adequately managing cash requirements including overdraft protection as necessary. The Company strives to understand, practice and improve legal matters in accordance with the compliance. When risk materializes, the Company takes various response measures in order to minimize the loss. The Company strives to constantly be aware that adverse information will not spread in Japan and abroad and corresponds to such events adequately with close cooperation of divisions. The Company carries out appropriate human resource and labor management and strives to educate employees in such a way accidents will not arise. The company strives to facilitate smooth business operations through its tangible assets and when risks arise, response adequately while minimizing the losses. Corporate Governance * Reinsurance entails underwriting by an insurance company of a portion of the risk during the period of a contract entered into by another insurance company. Reinsurance enables the appropriate dispersal of the risk involved in insurance underwriting. 17

20 Social Contribution Activities The Company actively participated in events hosted by the Life Insurance Association of Japan and Sony Sendai FC. Also, the monthly cleaning activities in the office area continuously took place. In support of the Credo s statement, We aspire to help create a society in which people can feel really happy about living a long life, the Company has coordinated with Aegon to conduct a survey on preparations for retirement and post-retirement life in over 15 countries with aging societies since The results have been published in the yearly report A Retirement Wake-Up Call: Aegon Retirement Readiness Survey. The Company, in order to meet expectations as a corporate Aegon Retirement Readiness Survey citizen, intends to continue expanding its social contribution activities in the future. *Our Credo, The SPIRIT of Aegon Sony Life, is presented on the inside front cover. Sony Sendai FC Kids Project Global Volunteer Day 18

21 Annual Report 2017 Corporate and Financial Data Contents Corporate Data 20 Corporate History 20 Organization 20 Historical Data on Share Capital 21 Total Number of Shares 21 Shares 21 Status of Major Shareholders 21 Directors and Statutory Auditors 22 Financial Condition 23 Non-Consolidated Balance Sheets 23 Non-Consolidated Statements of Income 24 Non-Consolidated Statements of Cash Flows 25 Non-Consolidated Statements of Changes in Net Assets 26 Audit by Independent Auditors of the Financial Statements 26 Solvency Margin Ratio 30 Market Value of Securities (Company Total) 31 Details of Ordinary Profi t (Fundamental Profi t) 32 Performance Indices 33 Overview of Performance Indices 33 Insurance-Related Indices 35 Financial Indices 37 Asset Management Indices (General Account) 41 Market Value of Securities (General Account) 48 Status of Separate Account 49 Balance of Separate Account 49 Status of Separate Account Assets for Individual Variable Insurance and Annuities 49 Status of Individual Variable Insurance and Annuities 52 Corporate and Financial Data Note: This is an English-language version of the original Japanese-language disclosure of published in July This condensed English-language version was prepared by solely for the convenience of non-japanese readers. If there are any discrepancies with the Japanese version please note the original Japanese version is the offi cial disclosure of 19

22 Corporate Data Corporate History 2007 August Established AEGON Sony Life Planning Co., Ltd August Changed company name to Obtained license from the Japanese prime minister to engage in the life insurance business December Began operations and launched Winning Road and Victory Run 2010 February Launched My History 2011 January Launched Catch Point and W Account August Launched Winning Road and W Account September Launched Catch Point 2012 August Launched With Family October Launched Winning Road 2013 January Launched W Account September Launched W Account s October Launched W Account Plus 2014 October Awarded with Deshima Business Award October Launched W Account III and Catch Point IV 2016 February Awarded with Shibuya Beautiful and Clean City (CSR) Award May Launched Global Gift July Launched Jinseinenkin Sutekini Nagaiki Launched W Account Global October Launched Winning Road Global Launched W Account IV 2017 February Launched Catch Point V May Launched Fantastic Life Organization (As of July 1, 2017) Shareholders Meeting Board of Auditors Board of Directors Compensation & Remuneration Committee Chief Actuary Management Committee Finance Committee Information System Committee Investment Committee Commendation and Disciplinary Committee Product Development Committee Compliance Committee Risk & Capital Committee Customer Relations Committee Product Strategy Committee Sales Strategy Committee Sales Promotion East Division Sales Promotion West Division Sales Support Division Sales Strategy Division Policyholder Service Division Information System Division Investment Division Actuarial Division Accounting Division Product Development Division Corporate Planning Division HR & General Affairs Division Compliance and Risk management Division Internal Audit Division Customer Complaints Office 20

23 Historical Data on Share Capital Date Increase (decrease) in share capital Share capital August 29, ,000 1,000 April 3, ,000 2,000 October 6, ,000 3,000 May 13, ,000 4,000 August 5, ,000 10,000 August 28, ,000 11,000 March 24, ,000 12,000 October 31, ,000 13,000 March 14, ,250 April 28, ,000 February 24, ,000 15,000 Note: Excluding capital reserves. Total Number of Shares Total number of shares to be issued 100,000 thousand Total number of shares issued 30,000 thousand Number of shareholders at the end of the period 2 Shares 1. Details of shares issued Shares issued Class Common stock Number of shares issued 30,000 thousand 2. Major shareholders Shareholder s investment in Company Company s investment in shareholder Number of Shareholding Number of Shareholding shares held ratio shares held ratio Sony Life Insurance Co., Ltd. 15,000 thousand 50% Aegon International B.V. 15,000 thousand 50% Status of Major Shareholders Name Sony Life Insurance Co., Ltd. Aegon International B.V. Location of Share Description Date of head offi ce capital of business establishment Life Otemachi, 70,000 August 10, insurance Chiyoda-ku, Tokyo, Japan million 1979 business Aegonplein 50, 165 Investment October 1, 2591 TV, The Hague, million business 1936 The Netherlands Ratio of shares, etc. held to the total number of shares, etc. 50% 50% Corporate and Financial Data 21