Annual Report
2006
For the year ended March 31, 2006
Offer ing value that goes beyond life insurance —
to “Lifeplanner Value ® ”
Breakthrough Insurance
Creating new value in life insurance
The roles of life insurance aren’t simply to protect you against
unforeseen events and illness or to provide for you in old age.
Life insurance gives you and your family a chance to rethink
your dreams and help them come true.
We stand by you throughout your life, propose appropriate
solutions at life’s various stages and help you realize your
dreams. That is the mission of the Lifeplanner ® sales
employees of Sony Life. We are the bridge to the dreams
you and your family hold dear.
Who is yourr Lifeplanner®?
Aiming to become each customer’s “own agent”
A long life visits numerous changes on each of us.
As your “own agent,”” we help you meet these changes
flexibly and with the best possible solutions.
It is the mission of our Lifeplanner ® sales employees to do so.
The face that you see in happy times and sad, in good
times and bad—that is your Lifeplanner ®.
Who is your
ur L
Lifeplanner ®?
Note: “Lifeplanner” and “Lifeplanner Value” are registered trademarks of Sony Life.
Profile
Sony Life Insurance Co., Ltd., is a wholly owned subsidiary of Sony Financial Holdings Inc.* and a prominent
member of the Sony Group. Sony Life’s philosophy of providing tailor-made solutions to the specific insurance
needs of each customer has supported annual growth every year since operations commenced in 1981. A sound
operational and financial structure is demonstrated by financial strength ratings from overseas and domestic
rating agencies, including Standard & Poor’s, which has assigned Sony Life an A+ rating (as of June 2006) and
describes the Company as offering “strong” insurer financial strength. Sony Life fosters a sales force with
a high level of financial planning knowledge through its exclusive Lifeplanner® sales employee system and
an independent agent system. Sony Life was the first company in Japan to introduce tailor-made insurance
products based on consulting expertise, and its needs-based marketing methods are rapidly becoming the
de facto industry standard.
*Sony Financial Holdings Inc. is the financial holding company of Sony Life Insurance Co., Ltd., Sony Assurance Inc. (“Sony Assurance”) and Sony Bank Inc. (“Sony Bank”), and
is 100% owned by Sony Corporation.
CONTENTS
2
Financial Highlights
3
Key Performance Measures
3
Message from Management
4
The Sony Financial Holdings Group
6
Tie-ups within the SFH Group and the Sony Group
7
Working as Our Customers’ “Own Agents”
8
Acting as a Good Corporate Citizen
11
Financial Review
20
Balance Sheets
28
Statements of Income
30
Notes to Financial Statements
31
Details of Operating Income (Core Profit)
33
Investment Summary of General Account Assets
34
Organization
38
Corporate History
39
Directors and Statutory Auditors
40
Corporate Data
41
Financial Highlights
Fiscal Years Ended March 31
Thousands of
U.S. dollars (Note 1)
Millions of yen
2006
2005
2004
2003
2002
2006
¥ 579,267
¥ 550,304
¥ 512,700
¥ 489,548
¥ 503,871
$ 4,951,001
Investment income
108,438
50,089
64,767
31,493
33,112
926,828
Ordinary revenues
Insurance premiums
696,426
604,093
580,972
524,089
539,699
5,952,366
Ordinary profit
24,359
17,070
30,478
18,557
19,898
208,201
Core profit
28,564
24,333
22,821
22,460
26,754
244,145
Net income
9,616
10,102
13,932
11,269
12,004
82,196
Common stock
Total assets
Assets in separate account
Policy reserve
Loans
Securities
65,000
65,000
65,000
65,000
65,000
555,556
3,103,241
2,617,266
2,375,828
1,981,897
1,729,077
26,523,429
280,682
200,996
164,461
118,189
106,150
2,398,992
2,739,264
2,395,060
2,095,565
1,831,100
1,600,130
23,412,515
86,918
79,914
71,629
65,574
54,463
742,896
2,132,216
1,704,663
1,563,605
1,265,650
1,046,054
18,224,075
Solvency margin ratio
1,547.0%
1,317.1.%
1,453.3.%
1,354.2.%
1,493.5.%
—
Number of employees
5,250
5,528
5,538
5,569
5,721
—
Notes: 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥117=U.S.$1.00, the approximate Tokyo Foreign
Exchange Market rate as of March 31, 2006.
2. U.S. dollar figures are based on non-truncated yen amounts.
Key Performance Measures
Insurance in Force
Billions of yen
As of March 31
Individual life insurance in force
Percentage change
2006
2005
2006
2005
¥28,909
¥27,680
+4.4
+6.0
Individual annuities in force
176
143
+22.7
+19.6
Group life insurance in force
923
816
+13.1
–1.4
71
69
+3.5
+2.8
Group annuities in force
Notes: 1. Individual annuities in force is the sum of annuity assets at the time annuity payments commence and policy reserves after annuity
payments commence.
2. Group annuities in force is the amount of policy reserves.
New Insurance Sales
Billions of yen
New insurance sales
+ Net increase from conversion
Fiscal years ended March 31
Individual life insurance sales
Individual annuity sales
Net increase
from conversion
New insurance sales
2006
2005
2006
2005
2006
2005
¥3,361
¥3,700
¥3,361
¥3,700
¥—
¥—
31
24
31
24
—
—
Group life insurance sales
9
7
9
7
—
—
Group annuity sales
2
—
2
—
—
—
Notes: 1. Individual annuity sales (New insurance sales + Net increase from conversion) equals the amount of annuity assets at the time annuity
payments commence.
2. Group annuity sales is equal to the first premium income.
3
Message from Management
4
Taro Okuda,
President and Representative Director
Kunitake Ando,
Chairman and Director
Sony Life commenced operations in 1981 with the
low, improving 0.51 percentage point, to 5.88%. We
philosophy of meeting individual needs by “providing
believe these favorable results were derived from the
optimum life insurance products and services of the
satisfaction of customers with the consulting-based
highest quality.” Thanks to the support and trust our
sales approach by Lifeplanner® sales employees and
customers have placed in us, in April 2006 we cel-
Partners (independent agencies), the Company’s
ebrated our 25th anniversary of operations. We will
method of tailoring products to provide ample protec-
continue to do our utmost to merit this support by
tion to each customer and its increasing focus on
raising the level of services we provide.
after-sale follow-up.
Operating Results in Fiscal 2005
showed signs of recovery, helped by increased sales
A Management Style that Emphasizes
Listening and Providing Ongoing Protection
to Customers
of tertiary-sector products and variable individual
The life insurance business involves the protection of
annuities, but the industry’s total insurance in force
customers over a long period of time. In addition to
continued to decline. In this environment, Sony Life
communicating face to face through its Lifeplanner®
posted a 4.5% increase in insurance in force, to
sales employees, Sony Life considers earning the
¥29,084.5 billion, buoyed by protection products,
ongoing trust of customers and society as a whole
and continuing the steady increase that Sony Life has
to be one of its most important missions. We have
achieved in each of the 25 years since its start of
introduced a number of initiatives to propel ourselves
operations. Our lapse and surrender rate remained
toward this goal.
During the year, the Japanese life insurance industry
For example, in a move designed to enhance cus-
address a variety of issues. Through this sort of
tomer convenience, in June 2005 we commenced
service, Sony Life’s Lifeplanner ® sales employees act
holiday operations at our customer center. Along with
as each customer’s “own agent,” guiding them past
the Notice of Coverage that we send out each year to
life’s milestones.
policyholders, we included a Customer Request Card
Lifeplanner Value ® is what customers experience
to elicit requests from customers. We also conducted
as a result of their communications with Lifeplanner®
a customer opinion survey to try to uncover custom-
sales employees. In a sense, this value derives from
ers’ true feelings about Sony Life. Through such
the customer’s realization that their Lifeplanner® is a
broad-ranging activities, we seek out valued customer
person who will remain by their side throughout life.
thoughts and opinions, which we then incorporate into
our management and use to enhance our services.
To protect customers and fulfill the vital public role
The Sony Financial Holdings Group
Working to Provide Higher Quality Financial Services
that the life insurance industry plays in society, we
Since its inception in April 2004, the Sony Financial
accord compliance a high priority among our man-
Holdings Group has worked to enhance group syner-
agement policies. However, I believe this particular
gies. Sony Life’s Lifeplanner ® sales employees now
area still requires a keen individual focus from each
sell Sony Assurance’s products; Sony Life’s individual
of Sony Life’s employees and executives.
annuities are offered for sale on Sony Bank’s web site;
and a host of other measures are in place to offer higher
Sony Life’s Mission and Lifeplanner Value®
Creating New Value in Life Insurance and
quality financial services and to raise corporate value.
Previously available only in certain regions, from
Aiming to Become Each Customer’s “Own Agent”
April 1, 2005, Sony Life’s Lifeplanner® sales employ-
Through its consulting-based sales approach, Sony
ees have begun introducing Sony Bank’s mortgage
Life has taken on the challenge of changing the very
loans nationwide throughout Japan.
face of life insurance. We see it as our mission to
Sony Life will continue to strengthen its ties with
provide the life insurance that is most appropriate for
other companies under the SFH umbrella. As we
each of our customers, whose satisfaction from this
increase group synergy, we will promote comprehen-
approach has enabled us to continue expanding our
sive financial services, working to provide customers
business each year since the time we began opera-
with even higher value-added products and services.
tions. Rather than simply resting on our laurels,
though, we take our mission as an ongoing challenge.
We also consider exactly what kind of value cus-
In Conclusion
To guarantee our ability to protect customers for
tomers expect Sony Life to deliver after concluding
many years to come, we will strive to heighten our
insurance contracts, as clients may have unstated
compliance, financial soundness and profitability.
needs of which they are themselves unaware. Sony
Furthermore, by enhancing the security and added
Life believes in remaining closely in tune with its cus-
value that we provide our customers, we aim to earn
tomers, serving as a trusted advisor in time of need.
increasing levels of trust and confidence and remain
Such approaches enable us to provide value to cus-
their life insurance company of choice. I thank you for
tomers who take out Sony Life policies, and envision-
your support and encouragement of Sony Life in
ing that value is the first step toward making changes.
these endeavors.
We seek to understand our customers’ goals and
work to develop life plans to ensure that these
develop beyond the state of mere dreams. Naturally,
a customer’s life plan undergoes many changes even
after their insurance policy commences. To maintain
optimum levels of protection, we review these levels
Taro Okuda
as their situations change. Aiming to do the best
President and Representative Director
for our customers, we work together with them to
Sony Life Insurance Co., Ltd.
5
The Sony Financial Holdings Group
One Team, One Dream
Aiming to Become One of the Most Trusted Financial Services Groups
6
With the establishment of the financial holding company Sony Financial Holdings Inc. in April 1, 2004,
Sony Life, together with Sony Assurance and Sony
Bank, became subsidiaries of this holding company.
In terms of history and scale of business, Sony Life
accounts for the major portion of the Sony Financial
Holdings Group (SFH Group). To provide high-valueadded products and quality services to each of our
customers in a swift and more precise manner, we
have reinforced tie-ups with Sony Assurance and
Sony Bank, two highly distinctive financial institutions.
In fiscal 2005, collaboration within the SFH Group
continued to expand steadily. For example, the volume
of new mortgage loans handled by our Lifeplanner®
sales employees accounted for more than 10% of the
total increase in Sony Bank’s mortgage loans during
the year. Lifeplanner® sales employees also made
steady progress in sales of Sony Assurance’s automobile insurance. The number of policies sold by
Lifeplanner® sales employees accounted for approximately 10% of the total number of new automobile
insurance policies for Sony Assurance during the year.
In addition to tie-ups within the SFH Group, we will
further strengthen cooperation with other companies
in the Sony Group, which provides diverse products
and services. We also will keep delivering valueadded products and services that are innovative
and that match customers’ needs.
Sony Financial Holdings is preparing for a future
initial public offering (IPO), with the goal of diversifying
financing opportunities to promote the further growth
of the SFH Group and to enhance the group’s corporate value. By reinforcing the business fundamentals
and increasing transparency, the SFH Group will
continue to secure the trust of customers.
SFH Group Management
Shigeru Ishii
President and
Representative Director
Sony Bank Inc.
Teruhisa Tokunaka
President and
Representative Director
Sony Financial Holdings Inc.
Taro Okuda
President and
Representative Director
Sony Life Insurance Co., Ltd.
Shinichi Yamamoto
President and
Representative Director
Sony Assurance Inc.
Tie-ups within the SFH Group and the Sony Group
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 qualifications. In fiscal 2005, the number of policies sold by
our Lifeplanner ® sales employees accounted for
approximately 10% of the total number of new automobile insurance policies issued by Sony Assurance.
By extending our offerings beyond life insurance to
include non-life insurance products that cover various
risks in our daily lives, Sony Life will continue to provide
comprehensive risk management for its 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.
● Sony Life’s Individual Annuities Sold by Sony Bank
In June 2004, Sony Bank started selling singlepremium individual annuities developed by Sony Life.
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 benefited in
terms of expanded sales channels, which further
enhanced customer convenience.
● Lifeplanner® Sales Employees Introduce Sony
Bank’s Mortgage Loans
In December 2004, Sony Life’s Lifeplanner® sales
employees began introducing Sony Bank’s mortgage
loans in certain regions of Japan, with these activities
expanding nationwide in April 2005. This offering
enabled our Lifeplanner® sales employees to consult
with customers in a more concrete way on their requests
or inquiries regarding home-purchasing funds.
In fiscal 2005, the volume of new mortgage
loans handled by our Lifeplanner ® sales employees
accounted for more than 10% of the total increase
of Sony Bank’s mortgage loans.
Tie-ups among the Sony Group’s Four
Financial Companies
● Initiation of Benefit Provision to ANA Mileage
Club Card Members
Sony Life (from late April 2006), jointly with Sony
Assurance and Sony Bank (both from March 2006),
started offering members of the ANA eLIO Card—
which Sony Finance International Inc. issues in
affiliation with All Nippon Airways Co., Ltd. (ANA)—
ANA airline mileage and other cardmember benefits.
By cooperating with Sony Group companies, we will
continue to enhance our services and respond to
customers’ needs.
7
Working as Our Customers’ “Own Agents”
With Our Customers. For Our Customers.
Helping People Fulfill Their Lifelong Dreams.
Working Together with Customers as
Their “Own Agents”
8
Since its establishment, Sony Life has worked to
provide optimal life insurance products tailored to
the specific needs of each and every customer.
To assist in this process, first we work together
with customers to formulate individualized life plans
based on their specific circumstances and dreams.
These plans consider such factors as age, family
composition, financial condition and children’s higher
education plans. We then calculate the level of insurance coverage needed over time to help customers
fulfill their plans, and create an optimal insurance portfolio accordingly. These tailor-made solutions are provided by our Lifeplanner® sales employees and Partners
(independent agencies), who possess advanced
financial knowledge and abundant experience.
Lifeplanner ® sales employees and Partners seek to
become customers’ exclusive providers of insurance
and financial services, or their “own agents,” in building strong relationships of trust and helping them
fulfill their lifelong dreams. Even after signing the initial
insurance agreement, Lifeplanner ® sales employees
and Partners regularly review the content of coverage
according to the customer’s changing lifestyle. We
also offer peace of mind in the form of comprehensive follow-up services, including swift payment of
hospitalization benefits and claims when unforeseen
events occur.
Educational Systems, Reciprocal Studies
and Self-Development
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 fulfill their roles as insurance and financial professionals in responding to
the confidence that customers place in them.
● Basic Training Program (BTP) for Lifeplanner ®
Sales Employees
This program equips Lifeplanner® sales employees
with the basic knowledge, attitudes, skills and behavioral habits required to become life insurance professionals. It comprises various sub-programs based on
Sony Life’s needs-based marketing approach. These
include a subprogram to acquire basic Lifeplanner®
skills and another covering joint activities, in which
Lifeplanner® sales employees visit customers together
with their sales office managers.
● 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.
Enhancing Education for Managers
Our branch managers, sales office managers and
other managers who oversee sales staff have an
important responsibility to carefully nurture selected
individuals into Lifeplanner® sales employees. To help
managers fulfill 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.
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,
also promote various volunteer activities, demonstrating
their passion as conveyors of the MDRT spirit.
● Sony Life Academy
The Company opened its Sony Life Academy in fiscal
2003 to train its branch general managers and the
heads of its independent Agency Sales Division, as
well as its head office general managers. After one
year of basic training, followed by ongoing coursework,
participants emerge as accomplished life insurance
professionals with the guidance and leadership skills
required of effective managers.
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
Reciprocal Studies
Sony Life’s employees have embraced a culture of
mutual assistance in their quest to serve customers.
To this end, they have taken the initiative of hosting
independent training forums around the nation.
● Million Dollar Round Table (MDRT)
MDRT, based in Chicago, is an international association of the world’s best life insurance and finance
professionals. Based on the concept of reciprocal
training and contribution to society, MDRT seeks to
help improve the capabilities of its members, with top
priority on providing the best returns for clients. As
of June 1, 2006, there were 35,000 MDRT members
worldwide, of whom 563 were Lifeplanner ® sales
employees and Partners of Sony Life.
MDRT ® Sony Chapter training
(Fukuoka, April 2006)
● 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. Our Lifeplanner® sales
employees, sales office managers, branch managers
and Partners participate in JAIFA events, and JAIFA
Sony regional chapters have been set up in regional
areas to spearhead various activities.
JAIFA Sony regional chapter training
(Chiba, April 2006)
9
Nurturing Financial Planners
Our socioeconomic environment is undergoing major
changes, owing to the advent of the informationoriented society, reforms to the social security system, diversification of financial 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 financial planning—geared to their specific
life plans. Financial planners are professionals qualified to meet the financial planning needs of customers. A large number of Lifeplanner® sales employees
study financial planning to achieve higher levels of
needs-based sales capabilities. In fact, Sony Life is
an industry leader in terms of its number of qualified
financial planners.
Affiliated Financial Planners (AFPs)
Affiliated Financial Planners: 1,940
10
(As of June 1, 2006)
The Japan Association for Financial Planners is the
sole issuing authority for the AFP license. This qualification certifies that the licensee possesses the knowledge required of a financial planner and is competent
to offer advice and make proposals in response to
client needs.
Providing Optimal Protection through
the Life Planning Support Service (LiPSS)
When proposing protection products, Sony Life first
asks customers about their lifestyle and future life
plans. By envisioning the life plans of customers and
their families, Lifeplanner® sales employees and Partners can map out simulations of their future financial
needs. Sony Life has developed its own simulation,
called LiPSS, to explain funding complexities easily
to its customers.
Sony Life puts the many events that people commonly experience throughout their lives into 11 major
categories* from a financial standpoint, and it provides
estimates based on these categories. For example,
after listening to parents, Lifeplanner® sales employees
and Partners can design plans to help parents finance
their children’s education. In addition, Sony Life might
help a family determine the timing of purchasing, the
type of house they can afford or even provide advice
on the advance repayment of mortgage loans.
Every person has different circumstances, dreams
and concerns. By analyzing the details, Sony Life can
help customers envision their future. In this way,
Lifeplanner® sales employees and Partners help customers see how they should respond to different
situations and what level of financing will be required,
and then they propose protection plans that are
tailored to each customer’s needs.
Certified Financial Planners® (CFPs ®)
Certified Financial Planners®: 129
(As of June 1, 2006)
The CFP® license is an international qualification
conferred by the Certified Financial Planner® Board of
Standards, Inc., of the United States. This is an authoritative qualification given only to financial planners who
demonstrate sophisticated financial planning abilities
and sound work ethics.
Certified Skilled Workers of Financial Planning
1st Grade Certified Skilled Workers in
Financial Planning: 104
2nd Grade Certified Skilled Workers in
Financial Planning: 1,933
(As of June 1, 2006)
Through the Human Resources Development Promotion Law, the Japanese government has introduced
a proficiency certification system to certify levels of
expertise in various fields, including financial planning.
This law recognizes three levels of financial planning
expertise.
*Eleven Categories of Financial Needs throughout Life
●
●
●
●
●
Rent or loans
Reserve for education
Reserve for marriage
Reserve for emergencies
Funds for home
purchases
● Living expenses after
retirement
● Reserve for long-term
healthcare
● Reserve to reconfigure life
● Living expenses for
bereaved family members
● Reserve for funeral and
subsequent arrangements
● Funds for inheritance
measures
Acting as a Good Corporate Citizen
Fulfilling Our Social Responsibilities
Risk Management
Amid the rapid liberalization and internationalization
of financial 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 risk, insurance underwriting risk, operational risk, system risk
and legal risk—becomes more and more important
every year. The various transactions executed by life
insurance companies generally carry risks, which
cannot be avoided completely. Moreover, minimizing
such risks is insufficient. Instead, we must grasp the
nature of each type of risk, implement suitable controls and make preparations to ensure returns that
are reasonable and in proportion to the risks. We
must also respond flexibly to the evolution of risk
management techniques.
Sony Life works continuously to enhance its risk
management organization. In fiscal 2005, we
strengthened the management conditions of claims
payment and risk management conditions of our
overseas subsidiary, Sony Life Insurance (Philippines)
Corporation.
We also set up the Investment Committee to
realize stable investment profits over the medium
to long term by securing our soundness as a life
insurance company.
Furthermore, we have often held the Risk Management Committee, which is composed of general
managers of the several divisions responsible for the
Company’s risk management, to discuss various
Companywide risk management issues.
We have been conducting stress tests and reporting the results to the Executive Officers Board to
check the possible impacts of future unprofitability on
our financial soundness and take additional management and/or financial measurers as the need arises.
As one aspect of our investment risk management,
we conduct stress tests based on a worst-case
scenario that exceeds normal market fluctuations,
whereby interest rates, share prices and currency
exchange rates all are at historic lows. For insurance
underwriting risk management, we also perform
stress tests during new product development,
assuming income and expense fluctuations.
In its Risk Management Manual, the Company sets
forth its fundamental approach to risk management
and the methods for applying its risk management
policies, with full consideration for the specific
characteristics of each type of risk.
Sony Life’s Basic Risk Management Policy
By strengthening our risk management capabilities and
executing optimal risk controls, we aim to ensure the soundness and appropriateness of our operations and protect the
interests of policyholders. In this way, we will improve our
reputation as a trustworthy and credible life insurance
company and thus fulfill our responsibility to society.
Risk Management Organization
(As of July 1, 2006)
General Meeting of Shareholders
Board of Directors
Board of Auditors
Executive Officers Board
Chief Actuary
Internal Inspections Division
Risk Management Committee
Risk Management
Corporate Planning Division
Investment Risk
ALM Division
Liquidity Risk
ALM Division
Insurance Underwriting Risk
ALM Division
Operational Risk
Operations Administration
Division
System Risk
Operations Administration
Division
Other Management Risks
Office Risk
General Affairs Division
Market Risk
Personnel Risk
Personnel Division
Sales Administration Division
Credit Risk
Legal Risk
Compliance Division
Real Estate
Investment Risk
Reputation Risk
Corporate Communications
Division
Management Risk
Corporate Planning Division
Insurance Subsidiary Risk
New Business Promotion
Division
Business Offices
Sony Life Insurance
(Philippines) Corporation
11
Compliance (MCC) Guidelines. In these ways, we are
taking a comprehensive approach to protecting personal information and guaranteeing customer privacy.
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 diversified. Companies can now use sophisticated networks to store and handle confidential data
about their customers. Protecting private information
is thus becoming more important than ever.
To conduct their business properly, life insurance
companies need confidential 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.
12
● Gathering Personal Information
Our policy is to gather only information that is necessary for our business, based on clear disclosure of
our intentions. When collecting information, we obtain
consent from customers and strictly adhere to the
Insurance Business Law, the Law Concerning the
Protection of Personal Information and other regulations. We use fair and appropriate means to gather
information.
● Using and Managing Personal Information
We limit the use of personal information to the scope
required to conduct our business, and only people in
authorized departments are allowed to handle such
information. Customer data is not disclosed to outside parties, except in certain circumstances, such as
when specific consent has been obtained from the
customer, legislation mandates disclosure, the customer benefits from disclosure or disclosure is
deemed necessary in the public interest. Sony Life
has appropriate mechanisms in place to update and
accurately maintain its personal information database. We are also working to create systems that
address various threats to such information, including
unauthorized access, loss, duplication, destruction,
tampering or leakage.
Protecting Personal Information
● 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, as
well as a Compliance Manual and Market Conduct
System for Protecting Personal Information
Customer Data
Gathering
Use fair and appropriate
means to gather information.
Managing
Using
Ensure information
remains accurate
and up to date.
Limit usage to
the scope required
by our business.
Storing
Prevent unauthorized access, loss, duplication,
destruction, tampering or leakage of information.
When we entrust the handling—inputting, storing
and saving—of personal information to our business
partners, we enter consignment contracts with those
parties. The contracts specify various items for maintaining and handling personal information, including
secrecy obligations and prohibition of duplication. We
also perform comprehensive prior checks to confirm
the security level of business partners.
● Disclosure and Revision of Personal Information
When a customer makes a request to disclose information he or she has supplied, or to correct or delete
erroneous information, we first confirm that the person
making the request and the customer are one and
the same. Special circumstances notwithstanding,
our policy is to grant such requests. In principle, we
insist that the requester and the policyholder be the
same person.
● Law Concerning the Protection of Personal
Information
Sony Life’s Information Security Policies is a document outlining the Company’s stance with respect to
personal information, centering on our 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.
Policy Content Storage System
To ensure the stable operation of the life insurance system,
insurance companies are required to register with the Life
Insurance Association of Japan information on all policies
and riders that involve claims and benefit payments, including hospitalization benefits, for death (severe injury) protection insurance and accidental death (accidental severe
injury) protection insurance.
The association uses this information as a reference for
writing policies and disbursing claims payments and hospitalization benefits, but for no other purposes. Furthermore,
the Life Insurance Association of Japan and each life insurance company is prohibited from publicizing information
that has been received in this manner.
● 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
office areas where personal information is handled,
and counterfeit-resistant IC cards are used to monitor
entries and exits. As a further countermeasure, the
Company restricts personal items that can be brought
into insurance business departments, which handle
large amounts of personal customer information.
13
First Company in Industry to Obtain Information
Security Management System (ISMS) Certification
On June 27, 2003, Sony Life became the first company in Japan’s life insurance industry to obtain
BS7799–Part 2: 2002 and ISMS (Ver. 2.0)—two ISMS
certifications conferred by the Japan Audit
and Certification Association for Information Security.
The certifications were bestowed on the Company’s
departments related to insurance business administration. In addition, on June 22, 2006, we received
ISO 27001 certification and shifted to this international standard for information security management
systems. Going forward, we will continue to maintain
and improve our information security systems and
upgrade protection of our information assets, including
the personal information of our customers.
Information Security Management System
14
ISMS certification indicates the reliability of a company’s
information security systems. This certification 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
● Obtaining Certification
Sony Life has positioned the maintenance and
improvement of information security as a central
management priority. For this reason, we have built
and are operating a framework for guaranteeing
information security by our administrative departments (Insurance Administration Department, Information System Department and Customer Center)
that gather customer data and other information.
● 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 certification, we implemented
those measures on schedule, regularly confirmed that
the measures had the desired effect and built frameworks for enforcing all of the improvements required
for certification.
Main Initiatives
● Ensure understanding among all employees,
including temporary staff, about the importance of
the Company’s information security policies and
provide training to ensure widespread acceptance
of such policies.
● Assess the dangers of leakage and 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 specific 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
Plan
Act
Ongoing
improvements
Check
Do
Compliance Programs
Compliance
Compliance means conformity with relevant laws,
regulations and rules. This is a crucial issue for companies seeking to fulfill their social responsibilities.
Life insurance companies need to reinforce their
compliance systems to maintain the long-term trust
of customers. Sony Life has positioned compliance
as a central management priority to protect customers
and earn their confidence.
Compliance Framework
Sony Life has established a Compliance Committee,
which reports to the Executive Officers Board, to
spearhead Companywide compliance programs.
In addition, our compliance officers 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.
Compliance Framework
● Every fiscal year, we compile a Compliance Program,
which serves as an action plan for implementing compliance initiatives. Based on the program, we adopt various
measures.
● We work to ensure all members of the Company are
familiar with our Compliance Manual. We modify the manual
as necessitated by changes to our compliance system,
as well as enactment or revision of relevant laws.
● We publish a booklet, called MCC Guidelines, which
contains 15 principles and serves as a compliance
manual covering our sales activities. We use the booklet
for continuous training at agency offices and independent agency sales divisions. We are also improving the
MCC training curriculum for Partners.
● We conduct regular checks of each head office and sales
division to confirm legal compliance status, and routinely
reassess and augment checking and confirmation
procedures.
● The efficacy of our compliance programs is verified
through a number of means, including internal audits,
surveys of employee awareness and practices and confirmation of the status of compliance of each division.
As required, we take concrete measures to improve and
strengthen compliance programs.
● If violations or suspected violations of laws or regulations
are discovered, they are investigated and reported. We
swiftly devise appropriate processes to prevent the reoccurrence of violations; these are added to the Compliance
Manual and circulated throughout the Company.
Adapting to Changing Laws
Board of Directors
Executive Officers Board
Compliance Committee/
Market Conduct Compliance (MCC) Committee
Compliance Officers
Agency Offices
Independent
Agency
Sales Divisions
Headquarter
Divisions
Compliance Manager
(Agency Manager)
Compliance Administrator
Compliance Manager
(Sales General Manager)
Compliance Administrator
Compliance Manager
(General Manager)
Compliance Administrator
● The Law on Sales of Financial Products and the Consumer Contract Act came into force in April 2001. In
response, Sony Life established its MCC Guidelines, a
booklet that sets forth the Company’s solicitation policy in
the form of 15 principles. Customers are kept informed
of changes to compliance laws through posters, the Company web site and other means, and employees through
education and training. In May 2004, we modified the
guidelines to reflect revisions of relevant laws and recent
changes in the environment pertaining to compliance.
● In August 2003, we reinforced our systems in response
to legislation designed to prevent the concealment of
funds for terrorism purposes and money laundering. Measures included more rigorous confirmation of customers’
identity based on the Law Concerning the Confirmation of
Customer Identity and the Prevention of Improper Deposit
Accounts, as well as the reporting of suspicious transactions under the Law for Punishment of Organized Crimes,
Control of Crime Proceeds and Other Matters.
● To fulfill our social and public service responsibilities as a
life insurance company and conduct our business in a fair
manner, we have formulated a set of behavioral guidelines to serve as basic rules for directors and employees
to observe. In February 2004, we compiled an upgraded
version called the Sony Life Activity Charter.
● Full-scale enforcement of the Law Concerning the Protection of Personal Information began in April 2005. This
law places obligations on private sector enterprises
handling personal information. We have established the
Committee to Promote the Protection of Personal Information, which spearheads Companywide measures to
address the new legislation.
15
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
We believe that preservation of the global environment is
a vital topic for all people of the world. As a member of the
Sony Group, we adhere to the Sony Group Environmental
Vision and make every effort to preserve the environment
in all aspects of our operations.
16
Performance Indicators
1. Based on the Sony Group’s Global Environmental Management System (GEMS), we enact thorough environmental compliance, seek to enhance our environmental
performance and minimize environmental risk.
2. In line with our core philosophy of providing efficient life
insurance and high-quality services, we evaluate the impact
of our activities, products and services, and set and implement programs to achieve our environmental goals and
objectives. We aim to ensure ongoing improvements in
environmental preservation and reductions in pollution.
3. We employ the following environmental preservation activities Companywide and at every stage of our activities,
products and services:
● Use documents effectively and take paper quality into
consideration.
● Recycle paper documents and office supplies.
● Reduce electric power consumption.
● Prioritize the purchase of goods and products that have
a low environmental impact. (Employ green purchasing.)
● Consider the development of environmentally conscious
products and services.
4. We continue to improve our environmental management
system by conducting internal environmental audits.
5. We conduct environmental training and other activities
that raise employees’ environmental awareness.
6. We communicate our environmental policy both inside
and outside the Company.
Acquisition of ISO 14001 Certification
and Implementation of the Green Power
Certification System
In March 2001, Sony Life acquired ISO 14001 certification, the international standard for environmental
management systems, for its head office, and has
since kept its certification up to date. In fiscal 2005,
as part of plans to reduce our consumption of fuels
that emit carbon dioxide and accelerate global warming, we set up a Green Power Certification system,
whereby the purchase of electrical power originating
from wind-powered generators is certified. This system facilitates electric-power swaps, ensuring that
our electrical power is wind generated, even if the
power originates at locations far from where it is
used. During the term, we purchased 250,000 kilowatts of “green-certified” electric power, thereby
reducing our CO 2 consumption by the equivalent of
92.5 tonnes per year. 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 14001 is an international standard for environmental
management systems created by the International Organization for Standardization (ISO). Certification is given to
entities that review their environmental management systems annually, take action to address difficult and unprecedented issues, and work continually to improve their
environmental performance.
The Certificate of Green Power
issued by Japan Natural Energy
Company Limited
Certificate documenting our ISO 14001
compliance, issued by the certifying
institution BVQI Japan Co., Ltd.
Social Contribution Activities
“One Love, One Trust”
In fiscal 2003, we established a Social Contributions
Department to spearhead our social benefit 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. Sony Life has 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 benefit
the community. August has also been declared Volunteer Enrichment Month, in which all employees
throughout Japan implement original social benefit
activities in their respective communities. 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.
Volunteer Leave Program
In fiscal 2003, Sony Life introduced a volunteer leave
program, designed to facilitate the efforts of employees to participate actively in volunteer activities. The
leave program applies to the following activities:
● Social welfare
● Disaster relief
● Environmental protection ● International exchange
● Community activities
and aid
Leave Program for Bone Marrow Donors
On April 1, 2002, Sony Life became the first 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.
Support for Special Olympics Nippon
Since 1996, Sony Life has given financial support for
Special Olympics Nippon, a non-profit organization
that provides people with intellectual disabilities with
independence and opportunities to participate in the
community through sports. We also volunteer to run
the events.
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
the Games, making ours one of the largest single
company volunteer groups.
Sony Life also helps increase awareness and
understanding of Special Olympics Nippon’s activities
by supporting charity concerts, movie screenings and
other initiatives. We plan to offer our full support for
the National Summer Games Kumamoto, which are
scheduled for November 2006. Through our support
of Special Olympics Nippon, we hope to promote
greater independence for people with intellectual
disabilities and help them become more active
members of society.
Special Olympics Nippon
Special Olympics Nippon is a specified non-profit 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.
One section of the Special Olympics Nippon home page
introduces Sony Life’s social contributions through this society.
For further details, see the following web site:
http://www.son.or.jp/tokutoku/sonylife/index.html
(Japanese only)
Japan Marrow Donor Program
Established in December 1991 under the auspices of the
Ministry of Health and Welfare (now called the Ministry of
Health, Labour and Welfare), this organization handles bone
marrow donor registrations and operates a bone marrow
bank that is used for transplants.
Alpine ski competition at the Special Olympics World Winter Games
in Nagano
17
Eye Mate Fund
Sony Life has contributed to the Eye Mate Fund since
1997, with the aim of helping visually impaired people
participate in society. The Company donates an
amount each year that matches the total raised by
employees during the year. In fiscal 2005, ¥9.72
million in employee donations and matching funds
were given to Eye Mate, Inc. (formerly the Tokyo
Guide Dog Association). Since 1997, Sony Life has
donated more than ¥100 million in contributions,
which are used in training guide dogs.
Sony Life will continue providing Eye Mate with support to help more visually impaired people participate
in society.
Eye Mate, Inc.
Since its introduction of the first 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.
Sony Life Volunteers’ Club
The Sony Life Volunteers’ Club was established by its
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.
The club promotes a variety of volunteer activities
that center on providing ongoing support to the elderly victims of the Kobe earthquake. The club also
provides ongoing support to elderly people affected
by the Niigata Chuetsu earthquake in 2004. In March
2006, the club organized a hot springs bus tour for
these people, to help keep their spirits up.
The club also conducts voluntary activities at care
facilities, as well as youth educational support activities that are designed to protect children from drugs.
The Sony Life Volunteers’ Club, whose primary membership is Lifeplanner® sales employees, actively
conducts a wide range of social contribution activities
to put employees into direct contact, conduct ongoing activities and create trust-based relationships with
people in regional communities.
Some Sony Life Volunteers’ Club Activities
18
A Sony Life employee’s son experiencing walking practice
● Support for people affected by the Kobe earthquake
in 1995 (Hyogo Prefecture)
● Support for people affected by the Niigata Chuetsu
earthquake (Niigata Prefecture)
● Care facility support (Tokyo and Kanagawa prefectures)
● Operational support for the Yokohama Handy Tennis
Competition (Kanagawa Competition)
● Bone marrow donor registrations and activities to support
the Munakata Yurix 24-hour EKIDEN marathon (Fukuoka
Prefecture)
● Operational support for the Oita International Wheelchair
Marathon (Oita Prefecture)
● Operational support and everyday training support for
Special Olympics Nippon (nationwide)
● Blood donor activities (nationwide)
Providing meals for people affected by the Niigata
Chuetsu earthquake
A hot springs bus tour for some of the people
affected by the Kobe earthquake
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 28th staging of this
traditional event, which has attracted a cumulative
total of approximately 27,000 players. The event
features a series of strongly contested tournaments that are held in various prefectures throughout Japan. Our Lifeplanner® sales employees
support as volunteers at the event, working alongside players to ensure its smooth operation and to
cheer the athletes. We will continue to support the
Sony Life Cup All Japan Ladies Tennis Tournament
as part of our efforts to foster better communication with local communities.
For more information about this tournament,
please visit:
http://zenkokuladies.jp/
(Japanese only)
19
Expanding Operations in Southeast Asia
Sony Life Insurance (Philippines) Corporation
Owing to the deregulation of financial markets in the
Philippines, the life insurance market in that nation is
expected to expand significantly. Sony Life Insurance
(Philippines) Corporation was established in 1998
with capital participation from the Sony Group and
commenced operations in November 1999. To reinforce its business foundation, Sony Life increased
that company’s capital in December 2003, before
transforming it into a wholly owned subsidiary in
March 2004.
Tailoring its activities to local conditions, Sony Life
Insurance (Philippines) Corporation is expanding its
operations using consulting methods cultivated in
Japan, and is steadily building a high-quality marketing
organization. The Company also responds steadily to
diverse local needs, as indicated by the start of its sales
of dollar-denominated products. Fulfilling 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.
Financial Review
Growth and Profitability
New Insurance Sales
● New Insurance Sales
New insurance sales totaled ¥3,392.1 billion.
In fiscal 2005, ended March 31, 2006, the total value of new life
insurance policies sold—the sum of individual life insurance and
individual annuities—was ¥3,392.1 billion. This represented an 8.9%
decrease from the preceding year, affected by an April 2005 rise in
variable life insurance premiums. Of this total, individual life insurance sales fell 9.1%, to ¥3,361.2 billion, while individual annuities
sales expanded 26.4%, to ¥30.8 billion. At the same time, group life
insurance sales surged 23.1%, to ¥9.0 billion. Total sales of individual life insurance, individual annuities and group life insurance
was therefore ¥3,401.2 billion, down 8.9%. The number of new
individual life insurance and individual annuity policies sold during
the year was 512,947, down 4.1%.
(Individual life insurance + Individual annuities)
(Billions of yen)
5,000
3,916.6
4,000
3,537.3
20
At the end of fiscal 2005, total insurance in force—including individual
life insurance and individual annuities—was ¥29,084.5 billion, up
4.5% from a year earlier. Of this amount, individual life insurance in
force expanded 4.4%, to ¥28,908.8 billion, and individual annuities
in force grew 22.7%, to ¥175.7 billion. We believe that these figures
reflect 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 ¥923.2 billion, up 13.1%. Consequently, the total of individual life insurance, individual annuities
and group life insurance in force was ¥30,007.8 billion, up 4.8%.
3,392.1
2,000
1,000
0
2002
2003
2004
2005
2006
(Years ended March 31)
Insurance in Force
(Individual life insurance + individual annuities in force)
(Billions of yen)
30,000
24,000
27,823.4
23,496.6
24,792.9
29,084.5
26,242.6
18,000
12,000
6,000
0
2002
2003
2004
2005
2006
(As of March 31)
● Ratio of Operating Expenses to Insurance Premiums
Ratio of Operating Expenses to
Insurance Premiums
Our ratio of operating expenses to insurance premiums continues
to improve each year, thanks to efficient management.
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.
In fiscal 2005, Sony Life held its ratio of operating expenses to
insurance premiums to 14.2%. This reflects ongoing cost reductions
and management rationalization efforts. Going forward, we will
continue working to raise our management efficiency.
3,724.2
3,000
● Insurance in Force
We have maintained consistent growth since our
establishment, with insurance in force up 4.5% in
fiscal 2005.
3,732.0
(%)
25
20
16.5
15.9
15.3
15
14.5
14.2
2005
2006
10
5
0
2002
2003
2004
(Years ended March 31)
● Lapse and Surrender Rate and Persistency Rates
Lapse and Surrender Rate
We continued to
maintain a low lapse
and surrender rate and
solid persistency rates.
(Individual life insurance on a policy amount basis)
Persistency Rates
(Individual life insurance on a policy amount basis)
(%)
(%)
10
100
93.9
93.7
93.7
94.6
95.5
80
85.7
87.0
86.4
87.6
89.3
2002
2003
2004
2005
2006
7.99
In fiscal 2005, our lapse
7.74
8
7.56
rate for individual life insur6.39
5.88
ance on a policy amount
6
basis continued to improve,
4
declining 0.51 percentage
point, to 5.88%.
2
The persistency rates
for individual life insurance
0
policies, on a policy
2002
2003
2004
2005
2006
(Years ended March 31)
amount basis, remained
high. The 13-month rate
was 95.5%, up from 94.6% in fiscal 2004, and the 25-month rate
was 89.3%, up from 87.6%.
60
40
20
0
(Years ended March 31)
13th month
25th month
Note: The lapse and surrender rate is expressed as a ratio of cancellations or lapses that
is modified due to the reduction, increase or reinstatement of the total amount of
insurance in force.
● Product Mix
Sales of term life insurance (non-smoker preferred risk
insurance) and living benefit life insurance were favorable.
In fiscal 2005, more than 80% of new policies, on a policy amount
basis, were death protection products. Sales were strong for such
mainstay term life insurance products as non-smoker preferred risk
insurance. Sales of living benefit life insurance also expanded, reflecting
steadily increasing demand for insurance to cover three major diseases
(cancer, acute myocardial infarctions and cerebral embolisms).
New Insurance Sales by Type
(Policy amount basis, fiscal 2005)
Variable life
9.9%
21
Other
3.3%
Whole life
15.5%
Endowment/
Educational
11.0%
Term life
60.3%
● Insurance Premiums and Claims
Both insurance premiums and insurance payments increased
in line with the rise in in force.
Owing to the growth in insurance in force, insurance premiums in
fiscal 2005 rose to ¥579.2 billion, from ¥550.3 billion in fiscal 2004.
Insurance claims, annuity payments and insurance benefits
totaled ¥114.4 billion, up from ¥88.0 billion in fiscal 2004, indicating
our assistance to policyholders. By payment type, claims totaled
¥86.4 billion (up from ¥62.1 billion), benefits were ¥23.5 billion (up
from ¥22.6 billion) and annuity payments amounted to ¥4.4 billion
(up from ¥3.1 billion).
Payments by Type
(Billions of yen)
125
4.4
100
23.5
● Asset Management
3.1
2.4
Our policy is to invest assets efficiently, while responding
flexibly to changes in the investment environment.
75
Sony Life’s fundamental policy on investing assets in general account
is to maintain the soundness of assets and to build an investment
portfolio capable of ensuring stable medium- and long-term returns,
taking into account expected returns and investment risks and responding deftly to changes in financial conditions and the investment environment. The Company places emphasis on risk management to
ensure stable returns.
50
22.6
19.8
2.0
1.1
19.1
86.4
16.6
25
34.0
0
62.1
59.2
2002
40.2
2003
2004
2005
Death and other claims
Hospitalization and other benefits
Pension and annuity payments
2006
(Years ended March 31)
In fiscal 2005, Sony Life followed its strategy of investing in
response to changes in the investment environment. During the first
half of the fiscal year, when the equity markets were lackluster, the
Company invested mainly in convertible bonds. When interest rates
trended upward in the second half, we shifted our investments to
longer-term Japanese government bonds.
Investment Performance
As of March 31, 2006, general account assets totaled ¥2,822.5 billion,
up 16.8%, or ¥406.2 billion, from one year earlier. Within the general
account, positions of Japanese government, municipal and Japanese
corporate bonds totaled ¥1,499.5 billion (accounting for 53.1% of
general account assets), foreign government and corporate bonds
¥89.0 billion (3.2%), Japanese stocks ¥250.7 billion (8.9%), policy loans
¥86.9 billion (3.1%), monetary trusts ¥658.3 billion (23.3%), cash and
call loans ¥71.5 billion (2.5%), and real estate ¥75.5 billion (2.7%).
● Core Profit
Core profit reached ¥28.5 billion.
22
Core profit is an indicator of the profit-earning capacity of the primary insurance business over a one-year period. The term “primary
insurance business” refers to the management of insurance premiums received from policyholders, along with investment income to
pay insurance claims, annuities and benefits and to make policy
reserve provisions for future payments.
Adding capital gains or losses, such as on sales of securities, and
one-time gains and losses to core profit produces ordinary profit,
which appears on the statements of income. In fiscal 2005, Sony Life’s
core profit increased 17.4% year-on-year, to ¥28.5 billion, owing to an
improvement in gains and losses from general account investments.
● Ordinary Profit and Net Income
Ordinary profit was ¥24.3 billion; net income came to
¥9.6 billion.
Ordinary Profit
Ordinary profit—the difference between ordinary revenues and
ordinary expenses—represents income derived from operating
activities during the fiscal year. The principal sources of revenue for
life insurance companies are insurance premiums and investment
income. The main expenses are death and other claims, hospitalization and other benefits, annuity payments, provision for policy
reserves, investment expenses and operating expenses.
In fiscal 2005, ordinary profit expanded 42.7%, to ¥24.3 billion.
This rise resulted from the steady growth in insurance premiums and
higher investment income.
Net Income
Net income is calculated by adding extraordinary gains to ordinary
profit, then subtracting extraordinary losses, such as provision for
reserve for price fluctuations, provision for policyholders’ dividend
reserve and income taxes. In fiscal 2005, net income fell 4.8%, to
¥9.6 billion, as we expanded our reserves for price fluctuations in
tandem with changes in our composition of assets.
General Account Assets
(As of March 31, 2006)
Real estate 2.7%
Other assets 2.1%
Cash and call loans
2.5%
Monetary
trusts
23.3%
Policy loans
3.1%
Japanese
government,
municipal,
and Japanese
corporate
bonds
53.1%
Other securities
0.6%
Foreign stocks
and others 0.5%
Foreign government and
corporate bonds 3.2%
Japanese stocks 8.9%
Core profit of ¥28.5 billion
Net capital gains of ¥21.4 billion
Net other operating expenses of ¥25.6 billion
Ordinary profit of ¥24.3 billion
Note: Like most other life insurers that are organized as
joint stock corporations, Sony Life sells life insurance that is non-profit. As no policyholder dividend
is added, we are able to offer services to policyholders for lower premiums. Mutual corporations,
on the other hand, typically offer for-profit policies;
their insurance premiums include a portion of financial resources for policyholder dividends; and,
financial resources for these dividends are included
in core profits. For this reason, mutual corporations
tend to show higher core profits than joint stock
corporations that operate on the same scale.
Financial Stability and Soundness
● Total Assets
As of the end of fiscal 2005, total assets amounted to
¥3.1 trillion.
Total assets, comprising the capital received from shareholders 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 benefit payments, as well as to
maintain the soundness of the Company’s insurance business. As
of March 31, 2006, Sony Life’s total assets reached ¥3,103.2 billion,
up 18.6% from a year earlier, exceeding ¥3 trillion for the first time
since operations began 25 years ago.
Total Assets
(Billions of yen)
3,500
3,103.2
2,800
2,617.2
2,375.8
1,981.8
2,100
1,729.0
1,400
700
● Policy Reserve
0
2002
We maintained sufficient policy reserve to cover future
insurance claim payments.
Policy reserve is a fund derived 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.
Since attaining standard policy reserve at the end of fiscal 2000,
Sony Life has used 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 fiscal 2005 totaled
¥2,739.2 billion, which we consider sufficient.
2003
2004
2005
2006
(As of March 31)
Policy Reserve
(Billions of yen)
3,000
2,739.2
2,395.0
2,400
2,095.5
23
1,831.1
1,800
1,600.1
1,200
600
● Solvency Margin Ratio
We maintained a high solvency margin ratio, of 1,547.0%.
The solvency margin ratio indicates a company’s “ability to pay.”
Life insurance companies accumulate policy reserves against the
future payment of insurance claims so they can respond sufficiently
to ordinarily anticipated events. However, unforeseen events sometimes occur as a result of changes in the environment, such as a
major disaster or a cataclysmic fall in the stock market. The solvency margin ratio is one administrative control indicator used to
judge if an insurer has the ability to pay in response to such
unpredictable events.
As of March 31, 2006, Sony Life had a high solvency margin
ratio of 1,547.0%, up 229.9 percentage points from the end of
the previous fiscal year.
0
2002
2003
2004
2005
2006
(As of March 31)
Solvency Margin Ratio
(%)
2,500
2,000
1,500
1,493.5
1,354.2
1,453.3
1,547.0
1,317.1
1,000
500
0
2002
2003
2004
2005
2006
(As of March 31)
● Unrealized Gains on Securities
Unrealized gains on our securities holdings amounted to
¥202.8 billion.
Unrealized gains and losses refers to the differences between the
book values and fair values of securities. If fair value exceeds book
value, a gain on sales of securities would be realized by liquidating
them at market prices. For this reason, such securities 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.
Unrealized gains on securities in the general account stood at ¥202.8
billion as of March 31, 2006, up from ¥88.0 billion a year earlier.
(Reference: As of March 31, 2006, Sony Life assumed unrealized gains on shares to
be zero when the Nikkei Stock Average is approximately ¥9,171 and the TOPIX index
is 929 points.)
● Non-Performing Assets
Sony Life has no non-performing assets.
24
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 fiscal 2005 was ¥86.9 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 risk-monitored loans
(loans where repayment circumstances are not ordinary). Moreover,
all figures listed in loans by debtor category are classified as
performing loans.
● Credit Rating
Sony Life has been rated highly by credit rating agencies.
Sony Life has requested ratings from several agencies to help policyholders and potential customers make objective decisions concerning
its ability to finance insurance and pay claims and benefits.
Credit Rating
A.M. Best Company, Inc.
Financial strength rating
Rating and Investment Information, Inc.
Insurance claim paying ability
Japan Credit Rating Agency, Ltd.
Ability to pay insurance claim
Moody’s Investors Service, Inc.
Insurance financial strength rating
Standard & Poor’s
Insurer financial strength rating
(Ratings as of June 2006)
A+
AA
AA
Aa3
A+
Superior
A very high degree of capacity for payment
of insurance claims
A very high level of capacity to honor
the financial commitment on the obligation
Offering excellent financial security
Strong
Note: The above ratings were assigned at Sony Life’s request. They are not evaluations of insurance companies overall, nor are they a guarantee of
claim payments in the future. The ratings are the opinions of the respective rating agencies, based on the figures and information available to
them at that time. Please refer to each agency’s web site for more details.
Formula for Calculating Negative Spread
● Negative Spread
The negative spread for fiscal 2005 was ¥33.1 billion.
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).
Our negative spread in fiscal 2005 was ¥33.1 billion, down from
¥34.5 billion in the previous fiscal year. The Company has adequate
other income sources to cover its negative spread, however. (See
the analysis on core profit on page 22.) Sony Life will continue working to streamline operations to maintain and generate sufficient
income to cover the negative spread.
● Capital
Sony Life’s capital was ¥65.0 billion.
Capital 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. As of March 31, 2006, Sony Life had total
capital of ¥65.0 billion (wholly provided by Sony Financial Holdings
since April 1, 2004).
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 profit” is the
investment income from general account that
is included in core profit, 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” is policy
reserve in general account, excluding the
contingency reserve, calculated as follows:
(Policy reserves at beginning of term +
Policy reserves at end of term –
Expected interest*) x 1/2
* “Expected interest” is the amount of interest
calculated by discounting the amount using
the assumed interest rate every year.
25
● Real Net Worth
Real Net Worth
Real net worth totals ¥614.9 billion.
Real net worth refers to the net asset amount that results from subtracting real liabilities—excluding such factors as policy reserves and
capital—from the fair market value of such real assets as securities
and real estate. If this number is negative, the regulating authorities
may judge a company to have real liabilities in excess of assets and
order a company to halt operations.
As of March 31, 2006, Sony Life had real net worth of ¥614.9
billion, up 44.0% from one year earlier.
(Billions of yen)
750
614.9
600
426.9
450
381.5
300
296.5
319.4
150
0
2002
2003
2004
2005
2006
(As of March 31)
Embedded Value
● Meaning of Embedded Value
Embedded value (EV) is calculated as the sum of the
“value of in-force business” and “adjusted net worth.” In
Europe and Canada, EV is regarded as a valuable source
of information for assessing the corporate value of a
life insurance company. Sony Life discloses EV at fiscal
year-end as an indicator of the value of its business.
The value of in-force business is the present value of
future after-tax profits on existing business minus the
cost of capital. Cost of capital is the spread between
the investment yield and the discount rate applied to
the amounts of capital and surplus that will be required
to maintain the assumed level of solvency margin ratio.
Adjusted net worth is calculated as (a) Total equity
in the balance sheets, excluding net unrealized gain
on bonds except for convertible bonds + (b) Reserve
for price fluctuations + (c) Contingency reserve +
(d) Reserve for possible loan losses + (e) Net unrealized
gains on land – (f) Unfunded employees’ retirement
benefits liability – (g) Deferred tax assets for (b), (c),
(d), (e) and (f).
Under generally accepted accounting principles in
Japan (Japanese GAAP), which applies to life insurance
companies in Japan, the balance sheets exclude future
profits on existing business, while EV indicates the
present value of future profits on existing business,
together with the Company’s adjusted net worth. For
this reason, EV serves as a valuable supplement to
the financial information provided under Japanese
GAAP and is a helpful indicator used to evaluate
corporate value. However, EV 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.
● EV as of March 31, 2006
EV as of March 31, 2006, and changes in EV compared with one year earlier, are
indicated below.
March 31
EV
Value of in-force business
Adjusted net worth
Value of new business in the fiscal year
26
2004
2005
2006
(Billions of yen)
Increase (Decrease)
492.0
381.7
110.2
38.9
539.3
409.6
129.7
38.1
776.1
499.8
276.3
34.2
236.8
90.2
146.6
(3.8)
■ The value of in-force business as follows:
Value of in-force business = Present value of future after-tax profits on existing business – Cost of capital.
Cost of capital is the spread between the investment yield and the discount rate applied to the amounts
of capital and surplus that will be required to maintain the assumed level of solvency margin ratio.
■ Adjusted net worth is calculated as follows:
Adjusted net worth = (a) Total equity in the balance sheets* + (b) Reserve for price fluctuations +
(c) Contingency reserve + (d) Reserve for possible loan losses + (e) Net unrealized gains on land –
(f) Unfunded employees’ retirement benefits liability – (g) Deferred tax assets for (b), (c), (d), (e) and (f).
* Total equity in the balance sheets excludes net unrealized gain on bonds except for convertible bonds.
■ “Value of new business in the fiscal year” refers only to that portion of EV derived from new policies
concluded during each fiscal year.
■ In calculating “value of in-force business,” the present value of future after-tax profits and adjusted net
worth use balance sheet and reserve figures, based on Japanese GAAP.
■ Assumptions and methods of computing EV differ for March 31, 2004, 2005 and 2006.
Embedded Value
of yen)
539.3
492.0
2004
2005
2
(Years ended March 31)
● Principal Assumptions
Below are the principal assumptions used to compute EV as of March 31, 2006.
Category
Method of Establishing
1. Discount rate
2. Investment yield on new investments
6.5%
Investment yield is based on implied forward rates, assuming Sony Life
makes all new investments only in Japanese government bonds.
Based on the Company’s experience over the three most recent fiscal years
Based on the Company’s experience over the three most recent fiscal years
The unit cost for the maintenance and administration of policies and for
payments of claims is based on Sony Life’s experience during the most
recent fiscal year.
Based on the most recent effective tax rate
For the purpose of calculating cost of capital, the required solvency margin
ratio of 600% was assumed.
3. Mortality and morbidity rates
4. Lapse and surrender rate
5. Operating expenses (unit cost)
6. Effective tax rate
7. Required solvency margin ratio
1. Discount rate
The discount rate was set by adding the Company’s assumed risk premium (4.5%) to the risk-free rate (the yield on 10-year Japanese government
bonds: approximately 1.77%), as of the end of the fiscal year.
2. Investment yield
(1) Investment yield on new investments:
Investment yield on new investments was calculated based on the implied forward rates computed from the yield curve of Japanese government bonds as of March 31, 2006, and assuming that the Company invests only in Japanese government bonds every year. Sony Life sets the
assumed investment yield on new investments at the end of each fiscal year with the assumption that future market conditions will be neutral.
This assumption is made to avoid potential complications arising from the fact that the more Sony Life invests in assets with higher expected
returns, the higher is the calculated EV. Sony Life believes such assets contain higher risks and should be adjusted when calculating EV.
(2) Investment yield on existing assets:
Investment yield on existing assets was calculated separately for each asset with the following assumptions:
■ For existing bonds other than convertible bonds, Sony Life assumes holdings to maturity.
■ For convertible bonds, Sony Life’s calculations assume that the Company will conduct rebalancing as of the date of evaluation as follows:
After taking unrealized gains from convertible bonds into account when adjusting net worth, Sony Life purchases straight bonds corresponding
to the marked-to-market bond portions while immediately reinvesting the remaining amount into Japanese government bonds.
■ For stocks and other assets (policyholder loans, real estate, private equity funds, etc.), Sony Life is assumed to maintain a balance at the end
of the fiscal year within the limits of its internal holdings.
Interest, dividends and proceeds from redemptions are calculated with the assumption that Sony Life reinvests these proceeds into
Japanese government bonds.
● Breakdown of Changes in EV
The change in EV from March 31, 2005, to March 31, 2006, is split into the following components:
(Billions of yen)
Amount
Item
1. EV as of March 31, 2005
2. Shareholder dividends
3. Release from the value of existing policies in force*
4. EV of new policies for the year ended March 31, 2006
5. Difference between assumptions and actual experience for the year ended March 31, 2006
6. Differences from changes in assumptions
7. EV as of March 31, 2006 (Total of items 1 through 6)
539.3
(6.5)
24.7
34.2
137.2
47.2
776.1
Notes: Reversal of discount rate on the value of in-force business for the year:
The amount in item 5 includes an ¥87.8 billion increase in unrealized gains on securities other than bonds.
The amount in item 6 includes a ¥25.9 billion increase due to changes in the method of valuing convertible bonds.
● Impact of Changing Assumptions (Sensitivities)
The impact of changing the underlying assumptions on EV at March 31, 2006, is as follows:
Amount of Increase (Decrease)
Discount rate
Solvency margin ratio
Investment yield: +0.25%*
Investment yield: –0.25%
Mortality and morbidity
Lapse and surrender rate
Operating expenses (unit cost of ongoing policies)
6.5%→5.5%
6.5%→7.5%
600%→500%
600%→700%
On total assets
On new assets
On total assets
On new assets
Assumption x 1.1
Assumption x 1.1
Assumption x 1.1
57.1
(47.1)
11.6
(12.9)
48.3
30.3
(49.7)
(30.6)
(52.4)
(15.9)
(4.0)
(Billions of yen)
EV Amount
833.2
729.0
787.7
763.2
824.4
806.4
726.4
745.5
723.7
760.1
772.1
* The impact of changes in investment yield assumptions is also reflected in policyholders’ dividends.
● Notes
Regulations require that certain reserves be set aside for minimum guarantee benefit features on variable life
insurance and annuity contracts issued in fiscal 2005 and thereafter. In calculating EV as of March 31, 2006, while
setting aside the reserve for guaranteed minimum death benefits (GMDB) based on Japanese GAAP, Sony Life
evaluated the future cash flow on GMDB for all existing variable life insurance policies using the stochastic method.
This evaluation reduced EV by ¥3.2 billion.
For calculating EV as of March 31, 2006, Sony Life changed the method of accounting for existing convertible
bonds at fiscal year-end. In calculating EV as of March 31, 2005, Sony Life assumed that convertible bonds would
be held to maturity with stock prices remaining unchanged from March 31, 2005. As is described above, Sony Life
calculated EV as of March 31, 2006, assuming the rebalancing of convertible bonds as of the date of evaluation.
This increased EV by ¥25.9 billion.
● Opinion of Outside Specialist
Sony Life has obtained an opinion letter from Milliman, Inc., an independent actuarial firm that possesses insurance
actuarial expertise. The opinion letter can be found on Sony Life’s web site (http://www.sonylife.co.jp/).
Disclaimer
Statements made in this section of the annual report contain calculations based on assumptions regarding future projections that are subject to risks
and uncertainties. It should be noted that actual future results might materially differ from the assumptions used in the EV calculations. Therefore,
readers are advised to be cautious and not place undue reliance on EV calculations.
27
Balance Sheets
As of March 31
Thousands of
U.S. dollars (Note 1)
Millions of yen
Assets
Cash and deposits
Cash on hand
Cash in banks
Call loans
Monetary trusts
Securities
Japanese government bonds
Municipal bonds
Japanese corporate bonds
Japanese stocks
Foreign securities
Other securities
Loans
Policy loans
Other loans
28
Property and equipment
(net of accumulated depreciation)
Land
Buildings
Furniture and equipment
Construction in progress
Due from agencies
Due from reinsurers
Other assets
Other receivables
Prepaid expenses
Accrued income
Money on deposits
Derivative assets
Advance payments
Others
Deferred tax assets
Allowance for doubtful accounts
Total assets
2006
¥
63
31,370
31,433
2005
¥
167
51,443
51,611
2004
¥
104
66,276
66,381
2003
¥
124
130,025
130,149
2002
¥
192
226,583
226,775
2006
$
542
268,124
268,666
55,900
176,100
175,000
135,100
77,800
477,778
658,351
515,229
419,224
320,941
248,750
5,626,935
1,054,410
53,252
487,933
278,860
164,092
93,665
2,132,216
712,158
54,504
629,561
74,249
179,239
54,949
1,704,663
397,522
167,941
660,699
57,939
235,443
44,058
1,563,605
127,767
199,989
665,179
41,658
219,601
11,455
1,265,650
73,228
214,794
532,471
40,908
180,853
3,798
1,046,054
9,012,059
455,153
4,170,375
2,383,427
1,402,497
800,564
18,224,075
86,918
—
86,918
79,914
—
79,914
71,629
—
71,629
65,574
—
65,574
54,463
0
54,463
742,896
—
742,896
32,855
11,869
160
30,853
75,739
32,855
12,159
161
5,586
50,763
32,855
12,281
161
1,145
46,444
32,780
12,819
189
500
46,289
32,707
13,106
188
280
46,283
280,820
101,452
1,369
263,707
647,348
0
5
0
2
3
2
335
184
960
730
654
2,866
23,910
703
22,244
11,938
39
1,484
2,067
62,389
19,746
749
13,225
2,835
—
351
2,028
38,936
18,354
730
8,823
3,122
—
334
1,323
32,688
1,591
973
7,850
3,118
—
320
1,426
15,281
6,406
992
8,856
2,744
—
222
1,690
20,912
204,366
6,012
190,120
102,042
338
12,688
17,675
533,241
—
—
—
2,330
7,540
—
(44)
(142)
(107)
(153)
(163)
(378)
¥3,103,241
¥2,617,266
¥2,375,828
¥1,981,897
¥1,729,077
$26,523,429
Notes: 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥117=U.S.$1.00, the approximate Tokyo Foreign Exchange Market rate as
of March 31, 2006.
2. U.S. dollar figures are based on non-truncated yen amounts.
Thousands of
U.S. dollars (Note 1)
Millions of yen
Liabilities and shareholders’ equity
Policy reserve and others
Reserve for outstanding claims
Policy reserve
Reserve for policyholders’ dividends
Due to agencies
Due to reinsurers
Other liabilities
Accrued income taxes
Other payables
Accrued expenses
Unearned income
Deposits received
Deposits received for guarantees
Borrowed securities
Derivative liabilities
Policy suspense and other suspense
Reserve for employees’ retirement benefits
Reserve for directors’ and auditors’
retirement benefits
Reserve for price fluctuations
Deferred tax liabilities
Deferred tax liabilities for land revaluation
Total liabilities
2006
¥
18,415
2,739,264
1,584
2,759,264
1,415
782
17,705
2,395,060
735
2,413,501
1,155
625
¥
17,913
2,095,565
783
2,114,262
1,038
524
2003
¥
13,260
1,831,100
709
1,845,070
786
432
2002
¥
10,082
1,600,130
720
1,610,933
754
419
2006
$
157,399
23,412,515
13,542
23,583,456
12,102
6,686
1,272
14,504
8,751
244
323
2,153
—
0
4,824
32,075
10,204
2,168
81,287
8,658
158
334
2,018
—
—
1,327
95,953
8,366
105
14,020
7,515
221
333
2,851
—
—
2,810
27,858
6,720
64
6,091
8,139
232
627
2,791
—
—
3,179
21,126
4,981
13,562
258,800
78,382
2,137
2,636
19,255
83,459
—
17,860
476,091
90,874
109
20,109
36,685
706
2,885,408
77
12,666
5,817
—
2,476,124
46
12,225
10,933
—
2,243,350
—
5,960
—
—
1,886,829
—
5,632
—
—
1,643,847
937
171,873
313,548
6,041
24,661,608
65,000
865
865
65,000
865
865
65,000
865
865
65,000
865
865
—
—
—
555,556
7,393
7,393
4,478
—
—
18,055
9,616
22,533
(1,475)
3,178
40
40
16,197
10,102
19,417
(768)
1,878
3
3
13,932
13,932
15,814
(768)
—
4
4
11,269
11,269
11,274
(768)
—
—
—
—
—
—
—
38,278
—
—
154,320
82,196
192,598
(12,612)
130,909
217,833
3,103,241
56,629
141,142
2,617,266
51,567
132,478
2,375,828
18,697
95,068
1,981,897
—
—
—
1,118,886
1,861,821
26,523,429
—
—
—
—
—
—
—
—
—
—
—
—
65,000
25,625
(768)
—
—
—
—
—
—
—
—
—
—
—
5
5
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(24,761)
(24,755)
20,128
85,230
¥1,729,077
—
—
—
—
—
Common stock
Additional paid-in capital
Land revaluation
Retained earnings (Accumulated deficit)
General reserves
Special depreciation reserve
Unappropriated retained earnings
(Undisposed deficit)
Unrealized gain on securities
Total shareholders’ equity
Total liabilities and shareholders’ equity
¥
2004
1,586
30,279
9,170
250
308
2,252
9,764
—
2,089
55,702
10,632
Common stock
Capital surplus
Capital reserve
Retained earnings
Earned reserve
General reserves
Special depreciation reserve
Unappropriated retained earnings
Net income
Land revaluation
Net unrealized gain on other securities,
net of taxes
Total shareholders’ equity
Total liabilities and shareholders’ equity
2005
¥
¥
¥
¥
$
29
Statements of Income
Fiscal Years Ended March 31
Thousands of
U.S. dollars (Note 1)
Millions of yen
Ordinary revenues:
Income from insurance premiums and others
Insurance premiums
Reinsurance income
Investment income
Interest and dividends
Interest on bank deposits
Interest and dividends on securities
Interest on loans
Rental income from real estate
Other interest and dividends
Income from monetary trusts, net
Income from trading securities, net
Gain on sales of securities
Gain on redemption of securities
Gain from derivatives, net
Foreign exchange gain, net
Other investment income
Gain on separate accounts, net
Other ordinary income
Income for annuity riders
Income for deferred payment of claims
Reversal of reserves for outstanding claims
Others
Total ordinary revenues
Ordinary expenses:
Insurance claims and other payments
Insurance claims
Annuity payments
Insurance benefits
Surrender payments
Refund to policyholders
Reinsurance premiums
30
Provision for policy reserve and others
Provision for reserve for outstanding claims
Provision for policy reserve
Interest on policyholders’ dividend reserves
Investment expenses
Interest expenses
Losses on trading securities, net
Loss on sales of securities
Devaluation losses on securities
Losses on redemption of securities
Losses from derivatives, net
Foreign exchange losses, net
Provision for doubtful accounts
Depreciation of real estate for rent and others
Other investment expenses
Losses on separate accounts, net
Operating expenses
Other ordinary expenses
Payments of deferred claims
Taxes other than income taxes
Depreciation
Provision for retirement benefits
Provision for directors’ retirement benefits
Others
Total ordinary expenses
Ordinary profit
Extraordinary gains:
Gain on sales of properties
Reversal of reserve for possible loan losses
Extraordinary losses:
Loss on sales of properties
Impairment loss
Provision for reserve for price fluctuations
Others
Provision for policyholders’ dividend reserve
Income before income taxes
Income taxes—current
Income taxes—deferred
Net income
Earning (Deficit) at beginning of the year
Unappropriated retained earnings at the end of the year
(Accumulated deficit at the end of the year)
2006
2005
2004
2003
2002
2006
¥579,267
1,249
580,516
¥550,304
1,306
551,610
¥512,700
2,125
514,825
¥489,548
2,034
491,582
¥503,871
2,062
505,934
$4,951,001
10,679
4,961,680
26,581
10
19,640
3,607
3,313
8
19,558
—
6,546
5,342
825
59
0
49,524
25,595
9
19,349
3,357
2,828
51
7,170
3,962
3,339
2,393
—
—
4
7,623
24,377
16
17,202
3,141
3,966
50
7,951
154
2,343
3,991
2,245
—
0
23,702
23,746
34
17,600
2,820
3,246
44
891
—
2,289
4,560
3
—
1
—
25,021
57
20,352
2,350
2,225
36
733
—
4,262
2,931
109
3
50
—
227,190
92
167,871
30,831
28,324
72
167,170
—
55,953
45,661
7,058
508
2
423,286
108,438
50,089
64,767
31,493
33,112
926,828
5,466
1,401
—
602
7,471
696,426
1,037
729
207
418
2,392
604,093
251
878
—
249
1,379
580,972
96
373
—
543
1,013
524,089
195
344
—
112
653
539,699
46,724
11,981
—
5,153
63,858
5,952,366
86,477
4,437
23,582
113,637
1,663
2,083
231,881
62,136
3,173
22,698
101,649
2,046
2,436
194,141
59,210
2,435
19,836
105,227
2,370
2,462
191,542
40,291
2,016
19,188
104,435
2,620
2,353
170,905
34,052
1,177
16,608
74,991
1,696
2,800
131,327
739,121
37,931
201,557
971,259
14,217
17,810
1,981,895
709
344,204
1
344,915
—
299,494
0
299,494
4,652
264,464
0
269,117
3,177
230,970
0
234,148
970
285,515
0
286,486
6,068
2,941,915
12
2,947,995
9
647
267
—
212
—
—
6
523
2,895
—
4,561
82,040
133
—
330
217
1,146
342
59
118
558
2,208
—
5,116
79,729
4
—
928
—
704
—
21
24
612
1,308
—
3,605
78,254
2
149
465
2,538
797
—
3
—
723
1,358
8,894
14,933
77,875
3
388
43
7,309
1,130
—
—
—
592
902
851
11,221
82,989
77
5,533
2,284
—
1,818
—
—
52
4,476
24,746
—
38,986
701,200
647
5,517
789
1,681
31
0
8,668
672,067
24,359
486
5,425
704
1,837
31
55
8,541
587,023
17,070
399
5,199
672
1,646
46
10
7,973
550,493
30,478
213
4,944
769
1,739
—
0
7,667
505,531
18,557
126
5,092
888
1,668
—
0
7,776
519,800
19,898
5,533
47,162
6,744
14,373
272
5
74,089
5,744,165
208,201
—
—
—
0
—
0
2
—
2
0
3
3
0
76
76
—
—
—
72
5
7,442
—
7,520
1,491
15,347
17,027
(11,296)
74
—
441
—
515
519
16,035
13,922
(7,989)
67
—
6,264
1
6,332
644
23,504
14,966
(5,394)
40
—
327
—
368
583
17,609
317
6,023
36
—
281
18
335
601
19,038
64
6,969
617
44
63,614
—
64,275
12,751
131,175
145,534
(96,555)
9,616
8,438
10,102
6,095
13,932
—
11,269
—
12,004
(36,766)
82,196
72,124
¥ 18,055
¥ 16,197
¥ 13,932
¥ 11,269
¥ (24,761)
$ 154,320
Notes: 1. U.S. dollar amounts have been translated from yen, for convenience only, at the rate of ¥117=U.S.$1.00, the approximate Tokyo Foreign Exchange Market rate as
of March 31, 2006.
2. U.S. dollar figures are based on non-truncated yen amounts.
Notes to Financial Statements
As of March 31
Significant Accounting Policies—As of March 31, 2006
1. Basis of Presentation of Financial Statements
The accompanying financial statements have been prepared
based on the accounts maintained by Sony Life Insurance Co.,
Ltd. (“the Company”), in accordance with the provisions set forth in
the Insurance Business Law of Japan, and in conformity with
accounting principles and practices generally accepted in Japan,
which are different in certain respects as to the application and
disclosure requirements of International Accounting Standards.
2. Valuation of Securities (Including Securities Managed as Trust
Assets of Monetary Trusts)
Trading securities are stated at market value, and sales cost is
determined by the moving-average method. Shares of subsidiaries
(shares issued by subsidiaries that fall under Article 2–12 of the
Insurance Business Law of Japan) are stated at cost. Other securities
for which market prices are available are stated at market value based
on market prices as of March 31, and sales cost is determined by
the moving-average method. Other securities for which market
prices are unavailable, such as public and corporate bonds (including
foreign bonds) for which the difference between acquisition cost
and face amount is due to adjustment of interest to maturity, are
stated at amortized cost (straight-line method) determined by the
moving-average method. Remaining other securities are stated at
cost determined by the moving-average method. Unrealized gains
or losses on other securities are reported as a separate component
of shareholders’ equity.
3. Standards of Valuation of Derivatives
Derivatives are stated at market value.
4. Depreciation of Property and Equipment
Depreciation of property and equipment is computed by the
declining balance method, except for buildings acquired after
April 1, 1998, which are computed by the straight-line method.
5. Translation of Foreign Currencies
Assets and liabilities denominated in foreign currency (excluding
shares of subsidiaries) are translated into Japanese yen using
exchange rates at the balance sheet date. Shares of subsidiaries
are translated into Japanese yen using exchange rates at the time
of acquisition.
6. Basis for Recording Allowances
(1) Allowance for doubtful accounts
Allowance for doubtful accounts is calculated as follows based
on the self-assessment rule for assets and the rules for write-off
and allowance.
For debt in which the debtors are legally and formally bankrupt by such measures as filing under the Civil Rehabilitation
Law or the Bankruptcy Law and are substantially bankrupt in
terms of their business operations, for debt in which the debtors
are actually bankrupt and for such debt as deposited money,
of which the collectible amount has remarkably decreased, the
allowance amount is calculated as the principal balance less
the amounts collectible from foreclosing collateral and from the
loan’s third-party guarantors.
For other kinds of debt, the reserve amount is calculated in
accordance with historical credit loss ratios and other factors.
For debt in which debtors are currently not bankrupt in terms
of their business operations but have been determined to have
a high likelihood of going into bankruptcy (hereinafter, “debtors
in danger of bankruptcy”), the amount remaining after deducting the amount of collateral that is expected to be recoverable
and guarantee amounts that are determined to be recoverable,
the necessary allowance amount is calculated by taking into
consideration overall ability of the debtor to pay. For debt other
than that described above, the reserve amount is calculated in
accordance with historical credit loss ratios over a specific
period of time.
For all debt, the allowance amount is calculated in accordance with the self-assessment rule for assets and rules for
write-off and allowance conducted by the appropriate division
and audited by an independent audit division.
(2) Reserve for Employees’ Retirement Benefits
Based on the accounting standards for retirement benefits
(Opinion Concerning the Establishment of Accounting Standard
for Retirement Benefits, Business Accounting Council, June 16,
1998), reserve for employees’ retirement benefits is provided
based on the estimated amount of retirement benefit liabilities
at the balance sheet date.
The retirement benefit system for internal employees has
been revised. Whereas the previous system was according to
base salary, the new system is based on the number of points
received through certain qualifications. In line with this revision,
the periodic disbursement method for the expected accrued
benefit amount was changed from a fixed amount over a
specific period of time to point-based standard. This revision
caused a ¥1,291 million decrease in past service obligations
(reduction of obligation), which will be amortized over a 10-year
period beginning with the year under review.
(3) Reserve for Directors’ and Auditors’ Retirement Benefits
The Company provides a reserve for directors’ and auditors’
retirement benefits based on amounts necessary at the end
of the year according to internal rules. This is an allowance
defined by Article 43 of the Japanese Commercial Code
Enforcement Regulations.
7. Basis for Reserve for Price Fluctuations
Reserve for price fluctuations is provided for according to Article
115 of the Insurance Business Law.
8. Others
(1) Accounting for consumption taxes and regional consumption tax
Consumption taxes are excluded from expenses. Regarding
consumption taxes relative to assets, deferred consumption taxes
under Japanese income tax regulations are included in prepaid
expenses and amortized over five years based on the straight-line
method, and others are charged to expenses as incurred.
(2) Method for calculating policy reserve
Policy reserve is provided for according to Article 116 of the
Insurance Business Law and calculated as follows.
a. Reserves for policies subject to standard policy reserves
are calculated in accordance with the method determined
by the Financial Services Agency (Ministry of Finance
Directive 48, 1996).
b. Other reserves are calculated in accordance with the net
level premium method.
(3) Amortization of software
Amortization of software for internal use, which is included in
other assets (others), is calculated by the straight-line method
over the useful lives.
9. Accounting Standards for the Impairment of Fixed Assets
Beginning with the fiscal year under review, the Company adopted
accounting for the impairment of fixed assets according to the
Opinions on Accounting Standards for the Impairment of Fixed
Assets by the Business Accounting Council on August 9, 2002, and
the Guidance for the Application of the Impairment of Fixed Assets
(Business Accounting Standards Guidance No. 6, October 31, 2003).
This resulted in a decrease of ¥5 million in net income before income
taxes. Accumulated impairment losses are written off directly from
the values of the relevant assets.
Balance Sheets—As of March 31, 2006
1. Loans
Loans do not include any loans to borrowers under bankruptcy
proceedings, loans past due for three months or more, or
restructured loans.
2. Land Revaluation
Based on the Land Revaluation Law (Law No. 34, promulgated on
March 31, 1998—the “Law”), the Company revalued its businessuse land. Regarding valuation differences, in the event of revaluation losses the tax-equivalent portion is recognized in the valuation
reserve. In the event of revaluation gains, the tax-equivalent portion
of the revaluation is recorded in the “deferred tax liabilities for land
revaluation” in liabilities. After excluding these amounts, the net
revaluation difference is reported as “land revaluation” in
stockholders’ equity.
The date of the revaluation was March 31, 2002, and the
revaluation method as stipulated by Article 3, Clause 3 of the Law
was based on an appraisal as stipulated by Article 2, Clause 5 of
the Law Enforcement Order related to the Law (Government
Ordinance No. 119, effective from March 31, 1998).
3. Accumulated Depreciation of Property and Equipment
Accumulated depreciation of property and equipment amounted
to ¥4,240 million.
4. Separate Accounts
The amount of total assets for separate accounts was ¥280,682
million. The amount of total liabilities was the same.
31
5. Net Assets
Net assets, as defined by Paragraph 1–3 of Article 17–3 of the
Insurance Business Law Enforcement Regulations, totaled
¥136,853 million.
6. Receivables and Payables Due to/from Majority Shareholders
Total receivables due from majority shareholders amounted to
¥129 million, and total payables were ¥13,226 million.
7. Receivables and Payables Due to/from Subsidiaries
Total payables due to subsidiaries amounted to ¥0 million. There
were no total receivables due from subsidiaries.
8. Leased Computer Equipment
The Company has computer equipment taken on lease contracts
that is not included in property and equipment on the balance sheets.
9. Reserve for Policyholders’ Dividends
The movement of reserve for policyholders’ dividends was as follows:
Balance at the beginning of the year
¥ 735 million
Payments made in the year
¥ 644 million
Increase by interest earned
¥
1 million
Provision for reserves made in the year
¥1,491 million
Balance at the end of the year
¥1,584 million
32
(2) The effective tax rate for the year under review was 36.21%.
The difference between the legal effective tax rate and the
actual tax burden after the application of tax effect accounting
was minimal.
(3) Sony Life is treated for tax purposes as a consolidated entity
with Sony Corporation as its consolidated parent company.
16. The amount of ¥278 million is set forth as a reinsurance provision
against a corresponding portion of claims for outstanding reserves,
as set forth in Item 3, Provision 73 of the Insurance Business Law
and as set forth in Item 1, Provision 71. Furthermore, the corresponding policy reserve is ¥955 million, as set forth in Item 1,
Provision 71 of this same law.
17. Units smaller than those stated herein have been rounded off.
Statements of Income—From April 1, 2005 to March 31, 2006
1. Total income from transactions with majority shareholders was ¥63
million, while total expenses amounted to ¥2,115 million.
2. Gain on sales of securities consisted of ¥231 million from Japanese
government bonds and other securities and ¥6,314 million from
stocks and others.
10. Assets Pledged as Collateral
The amount of assets pledged as collateral was ¥14,067 million.
There was no debt with collateral.
3. Loss on sales of securities consisted of ¥105 million from Japanese
government bonds and other securities and ¥161 million from
stocks and others.
11. Assets and Liabilities Denominated in Foreign Currencies
Assets denominated in foreign currencies amounted to ¥105,753
million, which mainly comprised US$494 million, EUR162 million
and GBP77 million. Liabilities denominated in foreign currencies
amounted to ¥4 million (US$0 million, PHP0 million).
4. When calculating the provision for outstanding claims, the amount
deducted as the ceded provision for outstanding claims was ¥252
million, and when calculating the provision for policy reserves, the
added amount of the returned portion of ceded policy reserves
was ¥108 million.
12. Policyholder Protection Fund and Organization
(1) The Company’s estimated future contribution to the former Policyholder Protection Fund, which has been superseded by the Life
Insurance Policyholder Protection Corporation, in accordance with
Paragraph 5, Article 140 of the Financial Reconstruction Law was
¥461 million at March 31, 2006. The contribution will be recorded
in operating expenses in the year in which it is paid.
(2) The Company’s estimated future contribution to the Life Insurance Policyholder Protection Corporation, as provided in Article
259 of the Insurance Business Law, was ¥6,289 million at
March 31, 2006. The contribution will be recorded in operating
expenses in the year in which it is paid.
5. Losses on trading securities, net, was the net result of gain on
sales of ¥130 million and valuation loss of ¥778 million.
13. Retirement Benefit Obligation
(1) Breakdown of retirement benefit obligation
Retirement benefit obligation
¥(14,478) million
Pension assets
¥ 1,264 million
Funded status
¥(13,213) million
Unrecognized transition obligation
¥ 3,729 million
Unrecognized actuarial gain
¥
(14) million
Unrecognized prior service obligations
¥( 1,162) million
Reserve for employees’ retirement benefits
¥(10,632) million
(2) Basis for calculation of retirement benefit obligation
Allocation of projected retirement benefits
Point standard for internal employees
Period definition standard for sales employees
Discount rate
1.4%
Amortization period of transition obligation
15 years
Expected rate of investment return
—
Amortization period of actuarial differences:
Sales employees
7 years
Internal employees
10 years
The processing period for prior service obligations is 10 years
for internal employees.
10. Retirement benefit cost totaled ¥2,011 million, and consisted of
the following:
Service cost
¥1,608 million
Interest cost
¥ 190 million
Expected investment income
¥ — million
Amortization of transition obligation
¥ 414 million
Amortization of actuarial gain
¥ (72) million
Amortization of prior service obligations
¥ (129) million
14. Shares of Subsidiaries
Shares of subsidiaries amounted to ¥3,047 million.
15. Taxes
(1) Deferred tax assets totaled ¥38,368 million and deferred tax
liabilities were ¥74,887 million. Valuation allowance totaling
¥165 million was excluded from deferred tax assets. Deferred
tax assets consisted mainly of insurance reserves of ¥24,198
million, reserve for price fluctuations of ¥7,281 million and
reserve for employees’ retirement benefits of ¥3,849 million.
Deferred tax liabilities arose mainly due to unrealized gain on
other securities of ¥74,310 million.
6. Income from monetary trusts included ¥3,907 million in valuation gains.
7. Gain from derivatives, net, includes a valuation loss of ¥11 million.
8. Other investment expenses mainly consisted of ¥2,590 million in
expenses related to real estate for investment purposes.
9. Net income per share was ¥147.95. The basis for this calculation
is net income of ¥9,616 million, of which the entire portion is applicable to shares of common stock, and an average of 65,000,000
shares of common stock outstanding during the period.
11. During the year under review, the Company recorded impairment
losses on fixed assets, as described below.
(1) Method of grouping assets
Real estate that is dedicated to use in the insurance business
constitutes a single asset group. In rental real estate and idle
assets, each individual property constitutes a single asset group.
(2) Recognition of impairment losses
In the fiscal year under review, the book value of idle assets for
which no future use is expected was written down to their recoverable value. The resulting decreases in value were accounted for
as impairment losses and considered an extraordinary loss.
(3) Breakdown of asset groups and types for which impairment
losses were recognized
Use
Category
Impairment loss
Idle assets
Buildings, etc.
¥5 million
(4) Method of computing recoverable value
The recoverable value is considered to be the net sale value
of idle assets, as estimated by a third party.
12. Units smaller than those stated herein have been rounded off.
Details of Oridnary Profit (Core Profit)
Fiscal Years Ended March 31
Millions of yen
2006
2005
¥28,564
¥24,333
22,316
10,555
14,884
3,253
—
3,962
6,546
3,339
825
—
Foreign exchange gain, net
59
—
Others
—
—
914
949
—
—
Core profit
(A)
Capital gains
Income from monetary trusts, net
Income from trading securities, net
Gain on sales of securities
Gain from derivatives, net
Capital losses
Loss from monetary trusts, net
Losses on trading securities, net
647
—
Loss on sales of securities
267
330
Devaluation losses
—
217
Losses from derivatives, net
—
342
Foreign exchange losses, net
—
59
Others
—
—
Net capital gains
(B)
21,401
9,605
Core profit + capital gains
(A + B)
49,966
33,939
Other operating income
—
—
Reinsurance income
—
—
Reversal of risk
—
—
Others
—
—
25,606
16,868
Other operating expenses
Reinsurance payments
Provision for contingency reserves
Provision for individual doubtful accounts
Write-off of loans
Others
Net other operating loss
(C)
Ordinary profit
(A + B + C)
—
—
22,090
16,750
5
118
—
—
3,511
—
(25,606)
(16,868)
¥24,359
¥17,070
Notes: 1. In fiscal 2005, core profit (A) includes an income gain of ¥4,674 million in income from monetary trusts. Other operating expenses include a ¥3,511 million increase
in policy reserve.
2. Core profit (A) for fiscal 2005 includes income gains of ¥3,917 million income from monetary trusts.
33
Investment Summary of General Account Assets
1. Breakdown of Assets
Amount
2006
2005
2006
2005
71,598
¥ 214,266
2.5
8.9
Repurchase agreement account
—
—
—
—
Purchased monetary trusts
—
—
—
—
Trading securities
—
—
—
—
658,351
515,229
23.3
21.3
1,870,288
1,517,858
66.3
62.8
As of March 31
Cash and call loans
Monetary trusts
Securities
Japanese government and corporate bonds
¥
1,499,591
1,321,447
53.1
54.7
Stocks
250,718
53,248
8.9
2.2
Foreign securities
102,720
131,068
3.6
5.4
Public and corporate bonds
89,095
122,782
3.2
5.1
Stocks and others
13,624
8,285
0.5
0.3
17,257
12,093
0.6
0.5
86,918
79,914
3.1
3.3
86,918
79,914
3.1
3.3
Other securities
Loans
Policy loans
Other loans
Property and equipment
Deferred tax assets
Other assets
Provision for possible loan losses
Total assets
34
Millions of yen / Percentage
Percentage of total
(Foreign currency assets)
—
—
—
—
75,579
50,602
2.7
2.1
—
—
—
—
59,866
38,541
2.1
1.6
(44)
(142)
¥2,822,559
¥2,416,269
100.0
(0.0)
100.0
(0.0)
46,973
46,240
1.7
1.9
Note: Monetary trusts for investment and securities held for trading purposes and other securities are posted at a price equivalent to present market value.
2. Change in Assets
Years ended March 31
Cash and call loans
Millions of yen
Amount
2006
2005
¥(142,668)
¥ (17,845)
Repurchase agreement account
—
—
Purchased monetary trusts
—
—
Trading securities
—
—
Monetary trusts
143,121
96,005
Securities
352,430
108,780
Government and corporate bonds
178,143
163,017
Stocks
197,470
14,486
Foreign securities
(28,347)
(68,640)
(33,686)
(71,081)
5,339
2,441
5,164
(83)
Public and corporate bonds
Stocks and others
Other securities
Loans
7,004
8,284
Policy loans
7,004
8,284
Other loans
—
—
24,977
4,319
Property and equipment
Deferred tax assets
Other assets
Provision for possible loan losses
Total assets
(Foreign currency assets)
—
—
21,325
5,395
98
(35)
¥ 406,289
¥204,902
733
4,268
Note: Monetary trusts for investment and securities held for trading purposes and other securities are posted at a price equivalent to present market value.
3. Investment Income (General Account)
Millions of yen
2006
2005
¥26,581
¥25,595
Years ended March 31
Interest and dividends
Interest on bank deposits
10
9
19,640
19,349
Interest on loans
3,607
3,357
Rental income from real estate
Interest and dividends on securities
3,313
2,828
Other interest and dividends
8
51
Gain on sales of securities owned
—
—
Investment income from securities owned
—
—
19,558
7,170
—
3,962
6,546
3,339
231
482
Income from monetary trusts, net
Income from trading securities, net
Gain on sales of securities
Gain on sales of government bonds and others
Gain on sales of stocks and others
6,314
2,497
Gain on sales of foreign securities
—
359
Gain on sales of other securities
—
—
5,342
2,393
825
—
59
—
Gain on redemption of securities
Gain from derivatives, net
Foreign exchange gain, net
Other investment income
Total
0
4
¥58,914
¥42,466
35
4. Investment Expenses (General Account)
Millions of yen
2006
2005
9
¥ 133
Loss on sales of securities owned
—
—
Investment loss on securities owned
—
—
Loss on monetary trusts, net
—
—
Years ended March 31
Interest expense
¥
Losses on trading securities, net
647
—
Loss on sales of securities
267
330
Loss on sales of government bonds and others
105
4
Loss on sales of stocks and others
161
326
Loss on sales of foreign securities
—
—
Loss on sales of other securities
—
—
—
217
Devaluation losses on securities
Valuation loss on government bonds and others
—
—
Valuation loss on stocks and others
—
217
Valuation loss on foreign securities
—
—
Losses on redemption of securities
212
1,146
Losses from derivatives, net
—
342
Foreign exchange loss
—
59
6
118
Provision for possible loan losses
Write-off of loans
Depreciation of properties for lease
Other investment expenses
Total
—
—
523
558
2,895
2,208
¥4,561
¥5,116
5. Yields on Investment Assets
(a) Yield by Asset Class (General Account)
Percentage
Years ended March 31
Cash and call loans
Securities
2006
2005
0.01
0.01
—
—
Monetary trusts
3.51
1.59
Government and corporate bonds
1.19
1.31
Stocks
11.05
17.57
Foreign securities
5.67
3.14
Loans
4.39
4.43
Property and equipment
0.33
0.39
2.22
1.70
Total assets in general account
Notes: 1. The denominator of yield calculations is the daily average balance on a book value basis. The numerator is the yield calculated by subtracting investment
expenses from investment income in operating income (expenses).
2. The above yield calculations do not include valuation gains in accordance with Article 112 of the Insurance Business Law.
(b) Yield on Overseas Investments (General Account)
Percentage
Years ended March 31
Yield on overseas investments
2006
2005
5.67
3.13
Note: Overseas investments is the sum of foreign-currency and yen-denominated assets.
(c) Valuation Gain (Loss) on Securities Held for Trading Purposes
Millions of yen
36
Amount in balance sheets
Years ended March 31
Securities held for trading purposes
Note: “Securities held for trading purposes” includes monetary trusts and other items.
Valuation gain (loss)
included in statements of income
2006
2005
2006
2005
¥59,649
¥87,370
¥3,907
¥(1,042)
(d) Market Value Information for Listed Marketable Securities
Millions of yen
Book
value
Market
value
Net gain
or loss
Gain or loss
Gain
Loss
Book
value
Market
value
Gain or loss
Net gain
or loss
Gain
2006
As of March 31, 2006 and 2005
Loss
2005
Bonds to be held until
maturity
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
¥2,186,863 ¥2,389,702 ¥202,839 ¥222,866 ¥20,026 ¥1,766,699 ¥1,854,708 ¥88,009 ¥91,180
¥3,170
Bonds corresponding to
policy reserves
Shares of subsidiaries and
affiliated companies
Other securities
Government and
corporate bonds
Stocks
Foreign securities
1,927,403
1,968,806
41,402
60,193 18,790
1,591,361
1,651,629
60,268
62,312
160,589
311,061
150,471
150,848
376
90,694
93,820
3,125
3,984
859
90,622
93,577
2,955
3,814
859
128,836
2,044
38,253
57,863
19,609
20,221
611
128,909
133,944
5,034
5,549
514
133,746
4,910
5,424
514
—
Government and
corporate bonds
Stocks and others
72
242
169
169
—
72
197
124
124
8,175
16,015
7,839
7,839
—
8,175
11,272
3,097
3,097
—
¥2,186,863 ¥2,389,702 ¥202,839 ¥222,866 ¥20,026 ¥1,766,699 ¥1,854,708 ¥88,009 ¥91,180
¥3,170
Other securities
Total
Government and
corporate bonds
1,927,403
1,968,806
41,402
1,591,361
1,651,629
60,268
62,312
160,589
311,061
150,471
150,848
376
38,253
57,863
19,609
20,221
611
90,694
93,820
3,125
3,984
859
128,909
133,944
5,034
5,549
514
corporate bonds
90,622
93,577
2,955
3,814
859
128,836
133,746
4,910
5,424
514
Stocks and others
72
242
169
169
—
72
197
124
124
—
8,175
16,015
7,839
7,839
—
8,175
11,272
3,097
3,097
—
Stocks
Foreign securities
60,193 18,790
2,044
Government and
Other securities
Notes: 1. The above table includes securities such as CDs which are regarded appropriate to treat as securities defined by Securities and Exchange Law.
2. The above table includes monetary trusts except securities held for trading purposes. Its book value for the fiscal year ended March 31, 2006 was ¥499,575 million
and net gain was ¥35,591 million.
3. The book value represents the value after accounting for depreciation and impairment losses, but before determining the fair market value.
The following table shows book value of securities without market value at March 31, 2006 and 2005:
Millions of yen
2006
2005
—
—
Unlisted foreign bonds
—
—
Other
—
—
As of March 31, 2006 and 2005
Bonds to be held until maturity
Bonds corresponding to policy reserves
Shares of subsidiaries and affiliated companies
Other securities
Unlisted domestic stock, excluding over-the-counter stocks
Unlisted foreign stock, excluding over-the-counter stocks
—
—
¥ 3,047
¥3,047
10,326
5,101
5
5
159
116
Unlisted foreign bonds
1,125
—
Others
9,036
4,980
¥13,374
¥8,149
Total
37
Organization
As of July 1, 2006
General Meeting of Shareholders
Board of Directors
Compensation Advisory Committee
Executive Management Board
Board of Auditors
Chief Actuary
Executive Officers Board
Compliance Committee
Market Conduct Compliance (MCC) Committee
Protection of Personal Information Promotion Committee
Risk Management Committee
Disciplinary Committee
Environment Committee
Personnel Development Committee
SLQ Committee
Investment Committee
Lifeplanner Sales Group 1
Lifeplanner Sales Group 2
Lifeplanner Sales Group 3
Lifeplanner Sales Group 4
Agency Office
Agency Office
Agency Office
Agency Office
Independent Agency Sales Group
Independent Agency Sales Division
Independent Agents Planning Division
Independent Agents Sales Promotion Division
Market Development Division
Sales Administration Group
Sales Administration Division
Sales Education & Training Administration Division
Product Development Division
Office Administration Division
Total Administration Control Group
Business Administration Control Division
Compliance Division
Operations Administration Division
Investment Group
Investment Division
Business Process Reengineering Group
Information System Division 1
Information System Division 2
Operations Planning Division
General Operation Division
38
Lifeplanner Planning & Promotion Division
Lifeplanner Education & Training Division
Marketing Division
Knowledge Management Division
Underwriting Division
Policyholders’ Service Division
Claims & Benefits Division
Real Estate Division
Chief Medical Officer
Medical Division
Corporate Communications Division
International & Business Development Division
Actuarial Division
ALM Division
Corporate Planning Division
Customer Relation Planning Division
Accounting Division
Investment Administration Division
Customer Center
Internal Audit Division
Personnel Division
General Affairs Division
Health Promotion Center Division
Representative Office for East Asia
Corporate History
1979
June
Aug
Sept
1980
1981
1982
1986
1987
Dec
Sept
Feb
Feb
Sept
Oct
July
Sept
1988
1989
1990
1991
Oct
Apr
June
Aug
Oct
Dec
Apr
June
1992
1993
July
Nov
Apr
Feb
Sept
1994
Sept
Dec
1995
Dec
1996
Mar
Dec
1997
1998
Feb
July
Jan
Aug
1999
Nov
Mar
Apr
Aug
Sept
Nov
Dec
Preliminary authorization obtained from the
Ministry of Finance
Sony Prudential Life Insurance Co., Ltd.,
established with capital of ¥400 million as a joint
venture between Sony Corporation and Prudential
Insurance Company of America
Head office established at 1-1, Minami Aoyama
1-chome, Minato-ku, Tokyo
Capital increased to ¥1.2 billion
Capital increased to ¥3.0 billion
Business license obtained from the Ministry
of Finance
Capital increased to ¥4.5 billion
Capital increased to ¥5.5 billion
Variable life insurance launched
Agreement reached with Prudential to terminate
joint venture contract
Corporate name changed to Sony Pruco Life
Insurance Co., Ltd.
Equity interest: Sony Corporation 50%; Pruco Inc.
30%; Career Development International Co., Ltd.
10%; Mitsui Bank, Ltd. 5%; The Mitsui Trust &
Banking Co., Ltd. 5%
Capital increased to ¥11.0 billion
Cancer insurance launched
Individual life insurance in force exceeded
¥1 trillion
Tenth anniversary of founding
Independent agency system introduced
Capital increased to ¥18.0 billion
Corporate name changed to Sony Life Insurance
Co., Ltd.
Individual life insurance in force exceeded
¥2 trillion
Began handling group annuity insurance
Capital increased to ¥22.0 billion
Comprehensive medical insurance launched
Individual life insurance in force exceeded
¥3 trillion
Equity interest: Sony Corporation 50%; Sony
Corporation of America 30%; Career Development
International Co., Ltd. 10%; The Sakura Bank,
Ltd. 5%; The Mitsui Trust & Banking Co., Ltd. 5%
Equity interest: Sony Corporation 60%; Sony
Corporation of America 30%; Career Development
International Co., Ltd. 10%
Individual life insurance in force exceeded
¥5 trillion
All sales employees provided with personal
computers
Individual life insurance in force exceeded
¥8 trillion
Equity interest: Sony Corporation 100%
Individual life insurance in force exceeded
¥10 trillion
Total assets exceeded ¥500.0 billion
Capital increased to ¥50.0 billion
Individual life insurance in force exceeded
¥13 trillion
Sony Life Insurance (Philippines) Corporation
established
Total assets exceeded ¥800 billion
Individual life insurance in force exceeded
¥16 trillion
Mutual fund launched
Twentieth anniversary of founding
Cumulative deficit cleared
Capital decreased to ¥40.0 billion
Variable annuity insurance launched
Non-smoker preferred risk insurance launched
Total assets exceeded ¥1 trillion
2000
Jan
Feb
Sept
Oct
2001
Mar
Apr
May
June
July
Sept
2002
Mar
Apr
May
July
Sept
Oct
2003
Jan
May
June
July
2004
Nov
Mar
Apr
May
June
Dec
2005
June
July
Nov
2006
Jan
Feb
Individual life insurance in force exceeded
¥18 trillion
Sales of Global Wrap mutual fund launched
through Lifeplanner® marketing channel
Whole-Life Insurance launched
Cancer rider launched
Individual life insurance in force exceeded
¥20 trillion
Standard policy reserves achieved by increasing
capital by ¥50.0 billion
Capital increased to ¥65.0 billion
ISO 14001 certification acquired
Long-term comprehensive medical insurance
launched
Sales of Sony Assurance’s products started
through Lifeplanner® sales employees
Sales structure for mutual funds expanded
through Lifeplanner®
Individual life insurance in force exceeded
¥22 trillion
Comprehensive long-term medical insurance
coverage launched, including features for
hospitalization and surgical procedures
Commenced group credit life insurance service for
mortgage loan borrowers from Sony Bank Inc.
Nursing needs rider launched
Registration of legal entity for management of
defined contribution plans completed
Variable life term insurance product launched
Separate accounts associated with variable life
insurance product, proliferated with Japan Equity
Growth Fund and World Core Equity Fund
Individual life insurance in force exceeded
¥24 trillion
Began selling insurance products through bank
channels
Increasing term life insurance product Excellent
Value Plan launched
Sony Life Academy for executive training opened
Total assets exceeded ¥2 trillion
The Book 1 completed
ISMS certification obtained
Rider to cover initial period of hospitalization
launched
Individual life insurance in force exceeded
¥25 trillion
The Book 2 completed
Individual life insurance in force exceeded
¥26 trillion
Sony Corporation established Sony Financial
Holdings Inc.
Sony Life became 100% subsidiary of Sony
Financial Holdings Inc.
Insurance with special exemption from payment of
premiums launched
Sony Bank began selling Sony Life’s individual
annuities
Individual life insurance in force exceeded
¥27 trillion
Commenced introduction of Sony Bank mortgage
loans through Lifeplanner® sales channel
Individual life insurance in force exceeded
¥28 trillion
“Lifeplanner Value® ” registered as a trademark
Commenced sales of Long-Term, Level Term Life
Insurance (Disability Compensation, Non-Profit)
Total assets exceeded ¥3 trillion
Commenced sales of Increasing Term Life Insurance
(Low Surrender Payments, Non-Profit)
39
Directors and Statutory Auditors
As of July 1, 2006
FOUNDER
Taro Okuda
Hiromichi Fujikata
STANDING STATUTORY
Akio Morita
President,
Executive Vice President,
AUDITOR
Representative Director,
Representative Director,
Fumio Mitani
BOARD OF DIRECTORS
Sony Life Insurance Co., Ltd.
Sony Financial Holdings Inc.
Kunitake Ando
Director,
Director,
STATUTORY AUDITORS
Chairman,
Sony Financial Holdings Inc.
Sony Assurance Inc.
Yoshiaki Yamauchi
Sony Life Insurance Co., Ltd.
Hiroshi Sano
Chairman and Representative
Akihiko Nakamura
Director,
Executive Deputy President,
Sony Financial Holdings Inc.
Sony Life Insurance Co., Ltd.
Director,
Sony Assurance Inc.
Masamitsu Shimaoka
Senior Executive Vice President,
Sony Life Insurance Co., Ltd.
OFFICERS
40
Taro Okuda
Shigeru Arakawa
Hirotoshi Watanabe
Yoshihiko Kaiya
President
Executive Vice President,
Executive Vice President
Senior Vice President,
and Representative Director
Independent Agency Sales
Corporate Communications
Lifeplanner Sales Group 3
Group, Chairman of the
Division, International & Business
Akihiko Nakamura
Board of Sony Life Insurance
Development Division,
Yuichiro Sumimoto
Executive Deputy President,
(Philippines) Corporation
Representative Office
Senior Vice President,
for East Asia
Independent Agency Sales
Total Administration Control
Group, Investment Group
Tohru Hanatsuya
Group
Executive Vice President,
Tominaga Ozawa
Hisakazu Takeuchi
Chief Actuary,
Senior Vice President,
Kiyoshi Watanabe
Senior Executive Vice President,
Actuarial Division, ALM Division
Real Estate Division
Senior Vice President,
Lifeplanner Planning & Promotion
Hideki Yamada
Toshirou Maeda
Division, Lifeplanner Education &
Executive Vice President,
Senior Vice President,
Training Division, Marketing
Underwriting Division,
Chief Medical Officer,
Jun Shirai
Division, Knowledge
Policyholders’ Service Division,
Medical Division
Senior Vice President,
Management Division
Claims & Benefits Division,
Lifeplanner Sales Group,
Total Administration Control
Group
Internal Audit Division
Accounting Division, Investment
Kazuhiro Wakayama
Takeshi Honda
Administration Division,
Senior Vice President,
Tomohito Tsuchiya
Senior Executive Vice President,
Customer Center
Lifeplanner Sales Group 4
Senior Vice President, Customer
Taketoshi Nonaka
Masao Hagiwara
(Corporate Planning Department,
Mitsuhiro Koizumi
Executive Vice President,
Senior Vice President,
investment planning by request)
Senior Executive Vice President,
Personnel Division, General
Lifeplanner Sales Group 1
Sales Administration Group
Affairs Division, Health Promotion
Investment Group
Relation Planning Division
Center Division
Mafumi Hashimoto
Masamitsu Shimaoka
Senior Vice President,
Senior Executive Vice President,
Lifeplanner Sales Group 2
Business Process Reengineering
Group, Corporate Planning Division
Corporate Data
As of March 31, 2006
Sony Life Insurance Co., Ltd.
Head Office
Representative Office for East Asia
1-1, Minami Aoyama 1-chome, Minato-ku, Tokyo 107-8585, Japan
35th Floor, PB Com Tower
E-mail: info-e@sonylife.co.jp
6795 Ayala Avenue Corner V.A. Rufino Street, 1226
Chief Representative Officer: Hiromitsu Onodera
Makati City, Philippines
Established:
August 1979
Common Stock: ¥65,000 million
Tel: +63-2-819-1801
Sony Life Insurance (Philippines) Corporation
Chairman of the Board: Shigeru Arakawa
Employees:
5,250 (including 3,826 Lifeplanner ® )
Total Assets:
¥3,103,241 million
Fiscal Year:
April 1 to March 31
President and Chief Executive Officer: Akira Yazawa
35th Floor, PB Com Tower
6795 Ayala Avenue Corner V.A. Rufino Street, 1226
Makati City, Philippines
Tel: +63-2-819-6001
41
Sony Financial Holdings Group
This business report is printed on recycled paper.
Printed in Japan