Consolidated Financial Summary (Japanese GAAP) for the Nine Months Ended December 31, 2016
Company name: Sony Financial Holdings Inc.
(URL: http://www.sonyfh.co.jp/ index_en.html) Stock exchange listing: Tokyo Stock Exchange (code number: 8729) Representative: Shigeru Ishii, President and Representative Director
February 14, 2017
Inquiries: Yasuo Hasegawa, General Manager-Corporate Communications & Investor Relations Dept.
(Fractional amounts of less than ¥1 million are discarded.)
Consolidated financial results for the nine months ended December 31, 2016
Operating results
Ordinary Revenues
Ordinary Profit
Profit Attributable to Owners of the Parent
For the nine months ended December 31, 2016
Millions of yen % change
Millions of yen % change
Millions of yen % change
1,041,307 0.5
50,300 (12.4)
33,716 (11.8)
For the nine months ended December 31, 2015
1,036,134 1.4
57,450 (24.3)
38,224 (24.3)
Note: Comprehensive Income: For the nine months ended December 31, 2016: ¥18,238 million: (54.7%)
For the nine months ended December 31, 2015: ¥40,268 million: (55.3%)
Net Income per Share
Net Income per Share
(Fully Diluted)
For the nine months ended December 31, 2016
For the nine months ended December 31, 2015
Yen
77.51
87.87
Yen
77.51
-
Financial conditions
Total Assets
Total Net Assets
Net Asset Ratio
As of December 31, 2016
Millions of yen
Millions of yen
%
11,276,096
597,928
5.3
As of March 31, 2016
10,352,114
604,377
5.8
Note: Net Assets Attributable to Shareholders: As of December 31, 2016: ¥596,498million
As of March 31, 2016: ¥603,048 million
Dividends
Dividend per Share
Record date
1st quarter
2nd quarter
3rd quarter
Year-end
Annual Total
For the year ended March 31, 2016
Yen
-
Yen
0.00
Yen
-
Yen
55.00
Yen
55.00
For the year ending March 31, 2017
-
0.00
-
For the year ending March 31, 2017 (forecast)
55.00
55.00
Note:Changes in dividend forecast since the most recent public announcement: None
Forecast of consolidated financial results for the year ending March 31, 2017
(Percentage figures represent changes from the results of the previous fiscal year.)
Ordinary Revenues
Ordinary Profit
Profit Attributable to Owners of the Parent
Net Income per Share
For the year ending March 31, 2017
Millions of yen % change
1,450,000 6.5
Millions of yen % change
71,000 (0.1)
Millions of yen % change
46,000 6.1
Yen
105.75
Notes
Changes in significant subsidiaries during the period (changes in specified subsidiaries accompanying changes in scope of consolidation): None
Application of special accounting methods for preparing quarterly Consolidated Financial Statements: None
Changes in accounting policies, accounting estimates and restatements of the Consolidated Financial Statements
Changes in accounting policies resulting from the revision of the accounting standards and other regulations: Yes
Changes in accounting policies due to other reasons: None
Changes in accounting estimates: None
Restatements of the Consolidated Financial Statements: None
Note: For details, please refer to the section entitled "2.Changes in accounting policies, accounting estimates and restatements of the Consolidated Financial Statements" under "I. Notes Regarding Summary Information" on page 2 of the attachment.
Number of shares outstanding (common stock)
Number of shares outstanding (including treasury shares)
As of December 31, 2016: 435,000,000 shares
As of March 31, 2016: 435,000,000 shares
Number of treasury shares
As of December 31, 2016: 52,975 shares
As of March 31, 2016: 75 shares
Weighted-average number of shares
For the nine months ended December 31, 2016: 434,988,191 shares
For the nine months ended December 31, 2015: 434,999,936 shares
Status of quarterly review procedures
Quarterly review procedures are completed in accordance with Article 193-2-1 of the Financial Instruments and Exchange Law of Japan. However, quarterly Consolidated Financial Statements in this document are not subject to such quarterly review procedures.
Content of Supplemental Materials
I.
Notes Regarding Summary Information
1. Changes in significant subsidiaries during the period under review (changes in specified
subsidiaries accompanying changes in scope of consolidation) …………………………….
2
2. Changes in accounting policies, accounting estimates and restatements of the
II.
Consolidated Financial Statements………………………………………………………….
Consolidated Financial Statements
1. Consolidated Balance Sheets ……………………………………………………………….
2
3
2. Consolidated Statements of Income and Consolidated Statements of Comprehensive Income
(Consolidated Statements of Income) ………………………………………………………
5
(Consolidated Statements of Comprehensive Income) ……………………………………..
8
3. Segment Information ………………………………………...……………………………..
9
III.
4. Subsequent Events ………………………………………………………………………….
Attachment
Consolidated Financial Results for the Nine Months Ended December 31, 2016 and Sony Life's
9
Market Consistent Embedded Value as of December 31, 2016…………………………………...
11
The conference call for explaining the Sony Financial Group financial results will be held at 15:30 (Tokyo), February 14, 2017. Please note that our conference call will be held only in Japanese.
We will upload the presentation materials with speech text on February 14, 2017 after 15:00, and its Q&A summary at a later date on Earnings Releases and Presentation Materials page on our website: http://www.sonyfh.co.jp/en/financial_info/results/index.html
On February 14, 2017, SFH's significant subsidiaries: Sony Life Insurance Co., Ltd. (Sony Life), Sony Assurance Inc. (Sony Assurance) and Sony Bank Inc. (Sony Bank) will announce their financial results for the nine months ended December 31, 2016. SFH prepared an English-language summary of those Japanese announcements made by the above subsidiaries, solely for convenience of non-Japanese readers.
Notes Regarding Summary Information
Changes in significant subsidiaries during the period under review (changes in specified subsidiaries accompanying changes in scope of consolidation)
None.
Although not specified subsidiaries, Sony Lifecare Inc., a holding company that oversees the Sony Financial Group's operations in the nursing care business, and nursing-care provider Lifecare Design Inc., which were non-consolidated subsidiaries in the previous consolidated fiscal year, have been included in the scope of consolidation, due to a rise in their importance from the first quarter of the fiscal year ending March 31, 2017. The results of both companies are included in the "other" category in the consolidated statements of income.
Changes in accounting policies, accounting estimates and restatements of the Consolidated Financial Statements
Changes in accounting policies
(Application of the "Revised Implementation Guidance on Recoverability of Deferred Tax Assets" (ASBJ Guidance No.26, March 28, 2016)(hereinafter, the "Recoverability Implementation Guidance") )
The Sony Financial Group has applied the Recoverability Implementation Guidance from the first quarter of the fiscal year ending March 31, 2017 and partially revised the accounting method of recoverability of deferred tax assets.
The Recoverability Implementation Guidance has been applied in accordance with the transitional treatment set forth in Article 49(4) of the Recoverability Implementation Guidance. The differences between (i) the amounts of deferred tax assets
and deferred tax liabilities when provisions applicable from ① to ③ of Article 49(3) of the Recoverability Implementation
Guidance were applied as of April 1, 2016, and (ii) the amounts of deferred tax assets and deferred tax liabilities at the end of the fiscal year ended March 31, 2016, were added to retained earnings as of April 1, 2016.
As a result, deferred tax assets increased ¥48 million and retained earnings rose ¥105 million, while deferred tax liabilities decreased ¥56 million as of April 1, 2016.
Consolidated Financial Statements
Consolidated Balance Sheets
(Millions of yen)
As of March 31, 2016
As of December 31, 2016
Assets
¥144,364
¥290,943
Cash and due from banks
Call loans and bills bought
88,200
-
Monetary claims purchased
884
651
Monetary trusts
303,973
296,991
Securities
8,021,493
8,677,903
Loans
1,515,833
1,681,277
Tangible fixed assets
121,376
124,197
Intangible fixed assets
29,887
29,943
Due from reinsurers
399
1,101
Foreign exchanges
1,139
4,926
Other assets
115,474
155,987
Net defined benefit asset
2,216
2,400
Deferred tax assets
8,181
11,125
Reserve for possible loan losses
(1,308)
(1,353)
Total Assets
¥10,352,114
¥11,276,096
As of March 31, 2016
As of December 31, 2016
Liabilities
¥7,504,420
¥7,960,873
Policy reserves and others
Reserve for outstanding claims
67,177
69,144
Policy reserves
7,432,237
7,886,221
Reserve for policyholders' dividends
5,006
5,507
Due to agencies
2,455
1,496
Due to reinsurers
626
2,476
Deposits
1,912,592
2,081,100
Call money and bills sold
-
40,000
Borrowed money
40,000
90,000
Foreign exchanges
87
130
Bonds payable
20,000
10,000
Other liabilities
183,835
412,727
Reserve for employees' bonuses
3,557
1,977
Net defined benefit liability
29,263
30,857
Reserve for directors' retirement benefits
351
353
Special reserves
44,410
45,687
Reserve for price fluctuations
44,410
45,687
Deferred tax liabilities
5,647
-
Deferred tax liabilities on land revaluation
488
488
Total Liabilities
9,747,736
10,678,168
Net Assets
19,900
19,900
Common stock
Capital surplus
195,277
195,277
Retained earnings
238,079
247,157
Treasury stock
(0)
(81)
Total shareholders' equity
453,256
462,253
Net unrealized gains (losses) on other securities, net of taxes
157,364
140,289
Net deferred gains (losses) on hedging instruments, net of taxes
(2,347)
(1,387)
Land revaluation, net of taxes
(1,465)
(1,465)
Remeasurements of defined benefit plans, net of taxes
(3,760)
(3,190)
Total accumulated other comprehensive income
149,791
134,245
Subscription rights to shares
-
32
Non-controlling interests
1,329
1,396
Total Net Assets
604,377
597,928
Total Liabilities and Net Assets
¥10,352,114
¥11,276,096
Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (Consolidated Statements of Income)
(Millions of yen)
For the nine months ended December 31, 2015
For the nine months ended December 31, 2016
Ordinary Revenues
¥1,036,134
¥1,041,307
Ordinary Revenues from the Life Insurance Business Income from insurance premiums
Investment income
(Interest income and dividends) (Income from monetary trusts, net) (Gains on trading securities, net) (Gains on sale of securities)
(Gains on separate accounts, net)
Other ordinary income
935,374
753,964
153,071
105,180
10,837
- 12,193
24,404
28,339
936,806
704,439
194,629
109,689
3,366
111
1,306
55,932
37,737
Ordinary Revenues from the Non-life Insurance Business Underwriting income
(Net premiums written)
(Interest and dividends on deposits of premiums)
Investment income
(Interest income and dividends) (Gains on sale of securities)
(Transfer to interest and dividends on deposits of premiums)
Other ordinary income
72,776
71,803
71,762
41
952
981
12
(41)
20
75,948
74,323
74,273
50
1,595
994
650
(50)
29
Ordinary Revenues from the Banking Business Interest income
(Interest income on loans)
(Interest income and dividends on securities) Fees and commissions
Other operating income
Other ordinary income
27,983
19,055
10,955
8,051
4,703
3,941
283
28,379
19,618
11,904
7,660
4,941
3,651
168
Other
Other ordinary income
-
-
173
173
(Continued)
For the nine months ended December 31, 2015
For the nine months ended December 31, 2016
Ordinary Expenses
¥978,683
¥991,006
Ordinary Expenses from the Life Insurance Business Insurance claims and other payments
(Insurance claims) (Annuity payments) (Insurance benefits) (Surrender payments) (Other payments)
Provision for policy reserves and others Provision for reserve for outstanding claims Provision for policy reserves
Interest portion of reserve for policyholders' dividends Investment expenses
(Interest expenses)
(Losses on trading securities, net) (Losses on derivatives, net)
Operating expenses
Other ordinary expenses
888,087
279,355
61,305
7,725
60,979
142,940
4,920
480,245
4,648
475,595
1
4,851
40
94
515
97,082
26,552
896,244
276,009
62,524
8,266
75,877
122,713
2,428
447,069
462
446,605
0
38,802
26
- 34,275
101,324
33,038
Ordinary Expenses from the Non-life Insurance Business Underwriting expenses
(Net losses paid)
(Loss adjustment expenses)
(Net commission and brokerage fees) (Provision for reserve for outstanding losses) (Provision for underwriting reserves)
Investment expenses
(Losses on sale of securities)
Operating, general and administrative expenses Other ordinary expenses
68,434
50,580
35,513
5,267
779
1,651
7,368
4
4
17,846
2
70,451
52,231
36,941
5,519
887
1,503
7,378
2
- 18,212
4
(Continued)
For the nine months ended December 31, 2015
For the nine months ended December 31, 2016
Ordinary Expenses from the Banking Business Interest expenses
(Interest expenses on deposits) Fees and commissions
Other operating expenses
General and administrative expenses Other ordinary expenses
¥22,161 6,692
3,532
1,713
125
13,379
250
¥23,603 6,473
3,842
2,658
77
14,232
161
Other
Other ordinary expenses
-
-
708
708
Ordinary Profit
57,450
50,300
Extraordinary Losses
Losses on disposal of fixed assets Impairment losses
Provision for special reserves
Provision for reserve for price fluctuations Others
Provision for Reserve for Policyholders' Dividends
1,936
875
6
1,054
1,054
- 855
1,400
111
4
1,277
1,277
7
814
Income Before Income Taxes
54,658
48,085
Income Taxes - Current Income Taxes - Deferred
Total Income Taxes
19,860
(3,457)
16,403
16,653
(2,349)
14,303
Profit
38,255
33,781
Profit Attributable to Non-controlling Interests
31
65
Profit Attributable to Owners of the Parent
¥38,224
¥33,716
(Consolidated Statements of Comprehensive Income)
(Millions of yen)
For the nine months ended December 31, 2015
For the nine months ended December 31, 2016
Profit
¥38,255
¥33,781
Other comprehensive income
Net unrealized gains (losses) on other securities, net of taxes
1,417
(17,075)
Net deferred gains (losses) on hedging instruments, net of taxes
97
960
Foreign currency translation adjustments
0
-
Remeasurements of defined benefit plans, net of taxes
497
571
Total other comprehensive income
2,012
(15,543)
Comprehensive income
¥40,268
¥18,238
(Details)
40,235
18,170
Comprehensive income attributable to owners of the parent
Comprehensive income attributable to non-controlling interests
32
67
3. Segment Information
Segment Information by reporting segment
For the nine months ended December 31, 2015
Millions of yen
Life insurance business
Non-life insurance
Banking
business Total
Ordinary revenues
business
External customers
Intersegment
¥935,374
2,014
¥72,776
1
¥27,983
155
¥1,036,134
2,171
Total
937,389
72,777
28,139
1,038,305
Segment profit
¥48,804
¥3,824
¥4,666
¥57,294
For the nine months ended December 31, 2016
Millions of yen
Life insurance business
Non-life insurance
Banking
business Total Other Total
Ordinary revenues
business
External customers
Intersegment
¥936,806
2,330
¥75,948
0
¥28,379
143
¥1,041,133
2,474
¥173
-
¥1,041,307
2,474
Total
939,137
75,948
28,522
1,043,608
173
1,043,781
Segment profit
¥42,392
¥4,999
¥3,310
¥50,702
¥(535)
¥50,167
(Note) "Other" consists of Sony Lifecare Inc., a holding company that oversees the Sony Financial Group's operations in the nursing care business, and nursing-care provider Lifecare Design Inc., which have been included in the scope of consolidation from the first quarter of the fiscal year ending March 31, 2017.
Reconciliations of the totals of reportable segments' profit to quarterly consolidated statement of income
Millions of yen
For the nine months ended December 31, 2015
For the nine months ended December 31, 2016
Totals of reporting segments ¥57,294 ¥50,702
Other - (535)
Adjustments for intersegment transactions 6 6
Amount not allocated to reporting segments 149 126
Ordinary profit in quarterly consolidated
statement of income ¥57,450¥50,300
Information on impairment loss on fixed assets and goodwill by reporting segment None
4. Subsequent Events
There were no applicable subsequent events.
SFH's consolidated results* are prepared in accordance with Japanese GAAP. As such, these figures differ in significant respects from the financial information reported by Sony Corporation, SFH's parent company, which prepares its financial statements in accordance with U.S. GAAP.
* SFH's scope of consolidation includes following companies: Sony Financial Holdings Inc.
Sony Life Insurance Co. Ltd. Sony Assurance Inc.
Sony Bank Inc.
Sony Payment Services Inc.
SmartLink Network Hong Kong Limited. Sony Lifecare Inc*
Lifecare Design Inc.*
*Sony Lifecare Inc. and Lifecare Design Inc. are included in the scope of consolidation from the first quarter ended June 30, 2016.
Affiliated companies accounted for under the equity method: AEGON Sony Life Insurance Co., Ltd.
SA Reinsurance Ltd.
Statements made in this press release concerning the current plans, expectations, strategies and beliefs of the Sony Financial Group. Any statements contained herein that are not historical facts are forward-looking statements or pro forma information. Forward-looking statements may include-but are not limited to-words such as "believe," "anticipate," "plan," "strategy," "expect," "assume," "forecast," "predict," "propose," "intend" and "possibility" that describe future operating activities, business performance, events or conditions. Forward-looking statements, whether spoken or written, may also be included in other materials released to the public. These forward-looking statements and pro forma information are based on assumptions, decisions and judgments made by the management of Sony Financial Group companies, and are based on information that is currently available to them. As such, they are subject to various risks and uncertainties, and actual business results may vary substantially from the forecasts expressed or implied in forward-looking statements. Consequently, investors are cautioned not to place undue reliance on forward-looking statements. Sony Financial Group companies are under no obligation to revise forward-looking statements or pro forma information in light of new information, future events or other findings. The information contained in this press release does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe to any securities, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever in Japan or abroad.
For inquiries:
Corporate Communications & Investor Relations Dept. Sony Financial Holdings Inc.
Telephone: +81-3-5290-6500 E-mail: press@sonyfh.co.jp
Website of Sony Financial Holdings Inc. http://www.sonyfh.co.jp/index_en.html
Attachment
Content of Presentation Material
Consolidated Financial Results for the Nine Months Ended December 31, 2016 and Sony Life's Market Consistent Embedded Value as of December 31, 2016
・Consolidated Operating Results for the Nine Months Ended December 31, 2016…………… 3
・Consolidated Financial Forecast for the Year Ending March 31, 2017 ……………………… 29
・Sony Life's MCEV and ESR as of December 31, 2016……………………………………… 31
・Appendix ……………………………………………………………………………………… 34
Attachment
Presentation Material Consolidated Financial Results for the Nine Months Ended December 31, 2016 and Sony Life's MCEV as of December 31, 2016 Sony Financial Holdings Inc. February 14, 2017Sony Financial Holdings Inc. All Rights Reserved
ContentConsolidated Operating Results for the Nine Months Ended December 31, 2016
P.3Forecast of Consolidated Financial Results for the Year Ending March 31, 2017 (FY16) P.29
Sony Life's MCEV and ESR as of December 31, 2016 P.31
Appendix P.34
Ordinary revenues were flat but ordinary profit decreased year on year.
Income from insurance premiums decreased due to a decline in sales of single premium products.
Investment income increased led by higher gains on separate account despite lower gains on sale of securities
in the general account.
Ordinary profit decreased due mainly to lower gains on sale of securities in the general account. The provision of policy
reserves for minimum guarantees for variable life insurance declined owing to a lower acquisitions of new
policies and the improvement of the market conditions. The positive impact on ordinary profit, however, was partially offset by a deterioration in net gains/losses on derivative transactions to hedge market-related risks.
Sony Financial Holdings Inc. All Rights Reserved 6
Overview of Operating Performance: Sony Life (Non-consolidated)Attachment
(Billions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
New policy amount
4,052.4
3,499.7
(13.6%)
Lapse and surrender amount
1,474.9
1,371.1
(7.0%)
Lapse and surrender rate
3.60%
3.18%
(0.42pt)
Policy amount in force
42,841.7
44,633.9
+4.2%
Annualized premiums from new policies
65.8
54.1
(17.7%)
Of which, third-sector products
12.0
11.2
(7.0%)
Annualized premiums from insurance in force
771.8
807.3
+4.6%
Of which, third-sector products
178.3
185.1
+3.8%
Decreased due to lower sales of variable life insurance despite favorable sales of U.S. dollar- denominated insurance and term life insurance.
Decreased due to lower sales of variable life insurance despite favorable sales of term life insurance and U.S. dollar- denominated insurance.
Figures for new policy amount, lapse and surrender amount, lapse and surrender rate, policy amount in force, annualized premiums from new policies and annualized premiums from insurance in force are calculated as the total of individual life insurance and individual annuities.
The lapse and surrender rate shows the ratio derived by dividing the amount of lapses and surrenders, not adjusted for policy amount decreases, increases, and reinstatements, by the policy amount in force at the beginning of the fiscal year.
(Billions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
Gains from investment, net (General account)
123.9
100.0
(19.3%)
Core profit
35.1
65.8
+87.5%
Positive spread
11.7
11.1
(5.1%)
16.3.31
16.12.31
Change from 16.3.31
Non-consolidated solvency margin ratio
2,722.8%
2,731.1%
+8.3pt
Increased due mainly to a decrease in the provision of policy reserves for minimum guarantees for variable life insurance reflecting a lower acquisition of new policies and the improvement of the market conditions.
Investment in the monetary trusts is mainly into Japanese government and corporate bonds.
The holding ratio on the real status of Japanese government and corporate bonds including those invested in monetary trusts in the general account assets: As of Dec. 31, 2016: 90.1%
Japanese corporate bonds include FILP agency bonds and Government-guaranteed bonds.
The graphs above are asset allocation for the relevant period. Total invested amount for the relevant period as 100%. (excluding, investment in subsidiaries and affiliates, and strategic investments)
Both ordinary revenues and ordinary profit increased year on year.
Ordinary revenues expanded owing to an increase in net premiums written primarily for
mainstay automobile insurance.
Ordinary profit increased due mainly to the increase in ordinary revenues, including gains on sale of securities, and a lower expense ratio.
Sony Financial Holdings Inc. All Rights Reserved 18
Overview of Operating Performance: Sony AssuranceAttachment
(Billions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
Direct premiums written
70.8
73.3
+3.5%
Net premiums written
71.7
74.2
+3.5%
Net losses paid
35.5
36.9
+4.0%
Underwriting profit
2.9
3.4
+17.5%
Net loss ratio
56.8%
57.2%
+0.4pt
Net expense ratio
26.6%
26.3%
(0.3pt)
Combined ratio
83.4%
83.5%
+0.1pt
Increased mainly in its mainstay automobile insurance.
Declined due to a proper control on overall operating expenses.
Declined slightly due to a decrease in provision for reserve for outstanding losses in automobile insurance.
16.3.31
16.12.31
Change from 16.3.31
Number of policies in force
1.79 million
1.84 million
+0.04 million
+2.5%
Non-consolidated solvency margin ratio
693.5%
771.1%
+77.6pt
Note: The number of policies in force is the total of automobile insurance and medical and cancer insurance, which accounts for 99% of net premiums written.
Sony Financial Holdings Inc. All Rights Reserved 19
Sony Assurance's Underwriting Performance by Type of PolicyDirect Premiums Written Net PremiumsWritten
(Millions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
Fire
259
170
(34.4%)
Marine
-
-
-
Personal accident
6,496
6,583
+1.3%
Voluntary automobile
64,053
66,563
+3.9%
Compulsory automobile liability
-
-
-
Total
70,810
73,317
+3.5%
(Millions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
Fire
35
18
(48.9%)
Marine
36
(2)
-
Personal accident
6,721
6,811
+1.3%
Voluntary automobile
63,913
66,371
+3.8%
Compulsory automobile liability
1,055
1,074
+1.9%
Total
71,762
74,273
+3.5%
Net losses paid
*Medical and cancer insurance is included in personal accident.
(Millions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
Fire
1
5
+335.4%
Marine
122
(9)
-
Personal accident
1,838
1,919
+4.4%
Voluntary automobile
32,587
34,034
+4.4%
Compulsory automobile liability
963
991
+2.9%
Total
35,513
36,941
+4.0%
Sony Financial Holdings Inc. All Rights Reserved 20
Operating Performance: Sony Assurance (1)Attachment
Net Premiums Written and Number of Policies in Force
Ordinary Profit and Adjusted Ordinary Profit
Voluntary automobile insurance
Personal accident insurance
(Billions of yen)
Ordinary profit Adjusted ordinary profit
Others
Number of policies in force
8
(Millions of
6.6
+20.7%
7.3
(Billions of yen)
100
80
1.67
1.77 +3.8%
1.84
74.2
policies)
6
1.5
4.4
6.0
4.9
68.9
60
71.7
+3.5%
6.8
66.3
4
1.0 3.8
1
+30.6%
40 2
0.5
20
0
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
0 0
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
(Reference) Provision for catastrophe reserve
(Billions of yen)
FY14.3Q (9M)
FY15.3Q (9M)
FY16.3Q (9M)
Provision for catastrophe reserve
2.1
2.2
2.3
*Adjusted ordinary profit = Ordinary profit + Provision for catastrophe reserve
The number of policies in force is the total of automobile insurance and medical and cancer insurance policies, which account for 99% of net premiums written. More than 90% of personal accident insurance is medical and cancer insurance.
*Provision for catastrophe reserve is described as positive amount.
Sony Financial Holdings Inc. All Rights Reserved 21
Operating Performance: Sony Assurance (2)Earned/Incurred Loss Ratio + Net Expense Ratio
(Reference) Combined Ratio
(Net Loss Ratio+ Net Expense Ratio)
Earned/Incurred loss ratio
Net expense ratio
Net loss ratio
Net expense ratio
(%)
100
80
91.0
90.4
88.8
89.7
(0.5pt)
89.2
(%)
100
80
84.3
84.8
81.5
83.4
+0.1pt
83.5
60
64.3
40
63.3
63.5 63.1 62.9
(0.2pt)
60
57.6 57.8
40
56.2 56.8 57.2
+0.4pt
20 26.7 27.1
(0.3pt)
25.3 26.626.3
20 26.7 27.1
25.3 26.6
(0.3pt)
26.3
0
FY14 FY15 FY14.3Q FY15.3Q FY16.3Q
0
FY14 FY15 FY14.3Q FY15.3Q FY16.3Q
Notes:
(9M) (9M)
Notes:
Earned/Incurred loss ratio = (Net losses paid + Provision for reserve for outstanding
losses + Loss adjustment expenses) / Earned premiums
[Earthquake insurance and compulsory automobile liability insurance are excluded from the above calculation.]
Net loss ratio = (Net losses paid + Loss adjustment expenses) / Net premiums written Net expense ratio = Expenses related to underwriting / Net premiums written
Sony Financial Holdings Inc. All Rights Reserved 22
Operating Performance: Sony Assurance (3)Attachment
Non-consolidated Solvency Margin Ratio
(%)
800
600
629.6%
693.5%
+77.6pt
771.1%
400
200
0
15.3.31 16.3.31 16.12.31
Sony Financial Holdings Inc. All Rights Reserved 23
Highlights of Operating Performance: Sony Bank (Consolidated/Non-consolidated)Consolidated ordinary revenues Consolidated ordinary profit
+1.3%
28.5
(Billions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
Consolidated ordinary revenues
28.1
28.5
+0.3
+1.3%
Consolidated ordinary profit
4.6
3.3
(1.3)
(29.1%)
Profit attributable to owners of the parent
3.0
2.1
(0.8)
(29.4%)
28.1
(29.1%)
4.6
3.3
(Billions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
Ordinary revenues
25.9
25.9
+0.0
+0.2%
Gross operating profit
16.2
15.5
(0.6)
(4.2%)
Net interest income
12.3
13.0
+0.7
+6.4%
Net fees and commissions
0.1
(1.1)
(1.2)
-
Net other operating income
3.8
3.5
(0.2)
(6.4%)
General and administrative expenses
11.6
12.4
+0.8
+7.4%
Net operating profit
4.6
3.0
(1.5)
(33.3%)
Ordinary profit
4.6
3.0
(1.5)
(34.1%)
Net income
3.0
2.0
(0.9)
(32.0%)
(Billions of yen)
16.3.31
16.12.31
Change from 16.3.31
Net assets
77.4
79.5
+2.1
+2.8%
Net unrealized gains on other securities, net of taxes
3.3
4.3
+1.0
+30.9%
Total assets
2,126.5
2,392.9
+266.3
+12.5%
(Billions of yen)
FY15.3Q (9M) FY16.3Q (9M)
Ordinary revenues increased due to an increase in interest income on loans in line with a favorably growing balance of mortgage loans and an increase in ordinary revenues from Sony Payment Services (Sony Bank's 57% owned subsidiary), partially offset by a decrease in interest and dividend income on securities.
Ordinary profit decreased due to the lower level of interest
rates, an increase in initial expenses led by a higher execution of mortgage loans, and decreased volumes of foreign
currency and investment trust transactions of customers.
Both gross operating profit and net operating profit decreased.
・Net interest income increased due to a rise in interest income on loans despite a decrease in interest and dividend income
on securities.
・Net fees and commissions decreased due to an increase in initial expenses led by a higher execution of mortgage loans and lower volumes of investment trust transactions.
・Net other operating income decreased due to lower fees and
commissions from foreign currency transactions of customers.
Sony Financial Holdings Inc. All Rights Reserved 24
Overview of Operating Performance: Sony Bank (Non-consolidated) (1)Attachment
(Billions of yen)
15.12.31
16.3.31
16.12.31
Change from 16.3.31
Customer assets
1,980.5
2,034.4
2,227.3
+192.9
+9.5%
Deposits
1,866.4
1,923.5
2,117.3
+193.8
+10.1%
Yen
1,538.5
1,587.9
1,772.1
+184.2
+11.6%
Foreign currency
327.9
335.5
345.1
+9.6
+2.9%
Investment trusts
114.1
110.9
110.0
(0.9)
(0.8%)
Loans outstanding
1,293.6
1,344.1
1,504.4
+160.2
+11.9%
Mortgage loans
1,181.8
1,237.1
1,409.0
+171.8
+13.9%
Card loans
8.0
10.5
17.0
+6.4
+61.6%
Others
103.6
96.5
*1
78.3
(18.1)
(18.8%)
Capital adequacy ratio *2
(domestic criteria)
10.50%
9.89%
9.00%
(0.89pt)
Yen deposit balance increased due to an increase in yen time deposit reflecting the special interest offering, as well as a rise in yen ordinary deposits converted from foreign currencies backed by yen depreciation.
Yen-denominated balance of foreign currency deposit increased due to a favorable exchange rate even after the negative impact of the conversion
from foreign currencies into yen led by yen depreciation.
Loan balance expanded reflecting higher demand for refinancing mortgage loans.
Calculated MCEV as of September 30, 2016 and December 31, 2016 by using updated economic assumptions and lapse and surrender rate from March 31, 2016.
New business value for FY16 is calculated accumulating new business value for each month based on economic assumptions at the end of each month.
New business value for FY15.4Q is calculated accumulating new business value for each quarter based on economic assumptions at the end of each quarter.
Reasons for changes in MCEV
・MCEV as of December 31, 2016 increased ¥53.4 billion from September 30, 2016 due mainly to a rise in interest rates, decreased ¥47.4 billion from March 31, 2016 due mainly to a decrease in lapse and surrender rate and a rise in inflation rate despite a rise in interest rates.
New business value / New business margin
・New business value for FY16.3Q (3M) was ¥10.2 billion.
New business margin was up 2.5pt from FY16.2Q (3M), due mainly to a rise in interest rates and an effect of premium revisions.
*Please refer to the appendix page 46 for trend on JGB yield.
Sony Financial Holdings Inc. All Rights Reserved 32
Attachment
Sony Life's ESR as of December 31, 2016(Billions of yen)
16.3.31
16.9.30
16.12.31
Insurance risk*
989.3
1,042.7
980.2
Market-related risk
324.2
341.6
369.5
Of which, interest rate risk**
255.2
264.1
288.5
Operational risk
31.4
31.3
31.1
Counter party risk
2.0
1.9
2.4
Variance effect
(374.4)
(394.5)
(390.4)
The risk amount based on economic value
972.4
1,023.0
992.9
(* ) Risk amount excluding the variance effect within Life module and Health module. (**) Risk amount excluding the variance effect within market-related risk.
(Billions of yen)
16.3.31
16.9.30
16.12.31
MCEV + Frictional costs
1,366.5
1,266.2
1,325.5
ESR
141%
124%
134%
Notes:
The risk amount based on economic value refers to the total amount of Sony Life's risks comprehensively examined by a market consistent approach, including insurance risk and market-related risk.
The solvency risk capital on an economic value basis is calibrated at VaR (99.5) over one year and based on the internal model, which is a similar but modified model based on the EU Solvency II standard method.
ESR=(MCEV + Frictional costs) / Risk amount based on economic value.
ESR as of December 31, 2016 was up 10pt from September 30, 2016 due mainly to a rise in interest rates and new business value accumulated during FY16.3Q.
Sony Life will continue to improve ESR levels by accumulating new business value through reinforcing its sales capabilities as well as ensuring profitability.
Sony Financial Holdings Inc. All Rights Reserved 33
Attachment
AppendixSony Financial Holdings Inc. All Rights Reserved 34
Recent Topics 1AEGON Sony Life Insurance Launch of sales: December 1, 2009 Common stock: ¥14 billion
Equity ownership: Sony Life insurance Co Ltd 50%, AEGON international B.V. 50% Marketing products: Individual Variable Annuities
Sales Channels: Lifeplanner sales employees and partner Banks (30*) *As of Feb 14, 2017
SA Reinsurance Ltd Established: October 29, 2009 Common stock: ¥13.4 billion
Equity ownership: Sony Life insurance Co., Ltd. 50%, AEGON international B.V. 50% Business: Reinsurance business
*AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint ventures established by Sony Life and AEGON Group.
Sony Bank's Mortgage Loans through Sony Life
■Sony Life accounts for 21% of the balance of mortgage loans as of December 31, 2016 Sony Life accounts for 21% of the amount of new mortgage loans for FY16.3Q (9M)
*Sony Life started handling banking agency business in January 2008.
Sony Assurance's Auto Insurance Sold by Sony Life
■Sony Life accounts for approx. 4% of new automobile policies for FY16.3Q (9M)
*Sony Life started handling automobile insurance in May 2001.
Sony Financial Holdings Inc. All Rights Reserved 35
Attachment
Recent Topics 22016-10-01
Sony Life commenced sale of new product: "Non-participating Group Welfare Term Life Insurance"
2016-10-03
Sony Life adopted paperless insurance procedures for its policyholders
2016-10-25
Sony Life acquired an entity stake in ClearView Wealth Limited (Australia) and announced business alliance
2016-10-31
Sony Bank began offering U.S. dollar-denominated active funds on investment trusts and revised the service site
2016-11-01
Sony Lifecare Group started advertisement for residents for a newly build nursing care home "SONARE URAWA", scheduled to open in May 2017
2016-11-07
Sony Bank began offering foreign currency settlement services for teenage customers
2016-11-14
Sony Life introduced a new system to quickly pay insurance claims and benefits
2016-12-01
Sony Assurance began offering new discounted premiums for new customers who contracted automobile insurance via Internet (increased discount rate from ¥8,000 to ¥10,000)
2017-01-04
Sony Bank began offering new preferential services called "Club S"
2017-01-04
Sony Life enhanced its investment product lineups for defined contribution pension plan (individual-type)
2017-01-10
Sony Assurance commenced sale of new product: "ZiPPi" medical insurance to indemnify hospital inpatient expenses and revised "SURE" medical and cancer insurance
2017-02-01
Sony Assurance and Yahoo! JAPAN announced to begin joint research with a view to developing telematics insurance products and services for individuals using driving behavior data from car navigation systems
Sony Financial Holdings Inc. All Rights Reserved 36
Sony Life's Product RevisionsFY16 Product Revisions
(Sales suspension)
May: Single premium whole life insurance (non-notification type), Semi-participating individual annuities, Semi-participating endowment insurance (short-term payment), and Non-participating endowment insurance (short-term payment)
Jul.: Single premium semi-participating whole life nursing-care insurance
Oct.: Interest rate-sensitive whole life insurance
(Premium revisions)
Apr.: Single premium whole life insurance (non-notification type)
Jul.: Semi-participating endowment insurance, Non-participating endowment insurance
Oct.: Variable life insurance (whole life type), Limited payment whole life insurance, Living benefit whole life insurance (living standard type), Living benefit insurance (whole life type), Whole life nursing-care insurance (reduced surrender value),
Semi-participating whole life nursing-care insurance, Specialty endowment insurance, Whole-life cancer insurance
FY17 Premium Revisions (plan)
Apr.: Long-term level premium plan term life insurance (with disability benefit), Cancer hospitalization insurance and other products
Sony Financial Holdings Inc. All Rights Reserved 37
Sony Life: Fair Value Information on Securities (General Account Assets)Attachment
Fair Value Information on Securities
Fair value information on securities with market value (except trading-purpose securities)
(Billions of yen)
Notes:
The above table includes monetary trusts other than trading-purpose securities.
Derivative financial products such as principal protected 30 year notes with Nikkei 225 index-linked coupons are included in the "Held-to-maturity-securities" above. Principal protected 30 year notes with Nikkei 225 index-linked coupons
Foreign exchange gains, net for FY16.3Q (9M) include foreign exchange gains of ¥21,805 million relating to U.S. dollar-denominated insurance. Losses on derivatives, net include foreign exchange losses relating to U.S. dollar-denominated insurance of ¥ 17,445 million. Moreover, other capital losses include the provision of policy reserves for U.S. dollar-denominated insurance of ¥4,941 million relating to foreign exchange fluctuation.
Foreign exchange gains, net for FY15.3Q (9M) include foreign exchange gains of ¥19 million relating to U.S. dollar-denominated insurance. Moreover, other capital gains include the reversal of policy reserves for U.S. dollar-denominated insurance of ¥13 million relating to foreign exchange fluctuation.
The figures of income (losses) from monetary trust, net, income (losses) from trading securities, net, gains (losses) on derivatives and foreign exchange gains (losses), net were recorded after offsetting gains and losses of each item.
Sony Financial Holdings Inc. All Rights Reserved 40
Sony Life's Quarterly Trend on New Policy AmountQuarterly Trend on New Policy Amount
(Billions of yen)
1,500
1,250
1,000
1,135.8
991.5
1,491.6
1,152.5
1,324.2 1,290.7
1,437.4
1,098.9
1,260.0
11,890
1,050.7
750
500
250
0
FY14.1Q FY14.2Q FY14.3Q FY14.4Q FY15.1Q FY15.2Q FY15.3Q FY15.4Q FY16.1Q FY16.2Q FY16.3Q
Sony Financial Holdings Inc. All Rights Reserved 41
Sony Life's Quarterly Trend on Annualized Premiums from New PoliciesAttachment
Quarterly Trend on Annualized Premiums from New Policies
Annualized premiums from new policies Of which, third-sector
(Billions of yen)
25
20 18.9
15
17.2
21.8
18.5
22.3
20.6
22.7
19.1
20.5
18.2
15.3
10
5
3.7
0
2.8
5.1
3.5 3.9 3.4 4.6 3.6 4.1 3.9
3.1
FY14.1Q FY14.2Q FY14.3Q FY14.4Q FY15.1Q FY15.2Q FY15.3Q FY15.4Q FY16.1Q FY16.2Q FY16.3Q
Sony Financial Holdings Inc. All Rights Reserved 42
Operating Performance : AEGON Sony Life Insurance*AEGON Sony Life Insurance sells individual variable annuities.
Number and Amount of New Policies
Number and Amount of Policies in Force
New policy amount Number of new polices []
Policy amount in force Number of policies in force [ ]
(Billions of yen)
120
100
80
107.5
[18.1]
53.2
(Thousands of policies)
24
20
16
53.3
(Billions of yen)
600
430.4
[70.8]
500
400
444.2
[73.4]
489.1
[82.7]
(Thousands of policies)
80
60
60[8.9]
[10.5] 12
300 40
40 8
20 4
200
20
100
0 0
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
0 0
15.12.31 16.3.31 16.12.31
(Billions of yen)
FY15.3Q (9M)
FY16.3Q (9M)
Change
AEGON Sony Life Insurance
(1.5)
(3.1)
(1.6)
SA Reinsurance
0.8
(2.7)
(3.6)
AEGON Sony Life Insurance and SA Reinsurance are equity method companies, 50-50 joint venture established by Sony Life and AEGON Group.
SA Reinsurance prepares its financial statements in accordance with U.S. GAAP. 50% of the net income (losses) for AEGON Sony Life Insurance and SA Reinsurance are recognized as investment profit (losses) on equity method in the SFH's consolidated net income.
Sony Financial Holdings Inc. All Rights Reserved 43
Method of Measuring Risk Amount Based on Economic Value (1)Market-related Risk*1
Attachment
Sony Life
(Reference) EU Solvency II Implementing Measures (Delegated Regulation)
Interest rate risk
Percentage increases or decreases differ for each currency and term.
Different percentage changes in interest rates are set for each term, from one year to 20 years.
Fluctuations in net asset
As for measuring interest rate risk in Japanese yen,
For terms longer than 20 years and through 90
value based on economic value in response to the shocks in the right columns.
introduced principal component analysis, where yield curve changes are disaggregated into three
years, percentage changes are set using linear interpolation, with negative 29% as the percentage
The same applies below.
components, parallel shift, twist and butterfly, and the
change for 20 years and negative 20% as the
yield curve is shocked by each component.
percentage change for 90 years.
(Example)
For Yen 30-year, 33% decrease (parallel shift),
28% decrease (twist), 8% decrease (butterfly)
Equity risk
Listed equities 45%, Other securities 70%
Global 39%, Others 49%*2
Real estate risk
Actual real estate 25%
Same as on the left
Credit risk
Credit risk = (market value) x (risk coefficient for each credit rating) x duration
Note that durations have caps and floors, depending on credit ratings.
(Example)
Rating A: Risk coefficient (1.4%), cap (23), floor (1)
Credit risk = (market value) x (risk coefficient for each credit rating and duration)
(Example)
Rating A: Duration (Dur): 5-10 years
Risk coefficient=7.0% + 0.7% x (Dur - 5 )
Currency risk
35% downside fluctuation
25% downside fluctuation
Notes
Principal items as of December 31, 2016.
Symmetric adjustment (an adjustment of±10% of the average value of the stock price index during a defined period in the past) is applied.
Sony Financial Holdings Inc. All Rights Reserved 44
Method of Measuring Risk Amount Based on Economic Value (2)Insurance Risk*1
Sony Life
(Reference) EU Solvency II Implementing Measures (Delegated Regulation)
Mortality risk
Mortality rate increases by 15% for each year elapsed
Same as on the left
Longevity risk
Mortality rate decreases by 20% for each year elapsed
Same as on the left
Lapse risk
The largest amount of these; *2
•Lapse rate increases by 50% for each year elapsed
The largest amount of these;
•Decreases by 50% in the assumed rates of lapsation for Life module, 50% for Health module
Expense risk
Operating expenses increase by 10% for each year elapsed
Rate of inflation rises by 1%
Same as on the left
Disability risk
Rate of occurrence increases by 35% in the first fiscal year, rising by 25% for each year thereafter
Rate of occurrence increases by 35% in the first fiscal year, rising by 25% for each year thereafter. Recovery rate decreases by 20%.
Lapse rate decreases by 50% for each year elapsed
30% of policies on which surrender value is in excess of best estimate liability are immediately surrendered
Increases by 50% in the assumed rates of lapsation for Life module, 50% for Health module
40% of policies (70% for group annuities, etc.) on which surrender value is in excess of best estimate liability are immediately surrendered
Notes
Principal items as of December 31, 2016.
At Sony Life, lapse risk is calculated by computing and adding together the largest amount of three options for each insurance policy
Sony Financial Holdings Inc. All Rights Reserved 45
Attachment
Trend on JGB Yields (Par rate)As of the end of each month
Sony Financial Holdings Inc. All Rights Reserved 46
Trend on Risk-free Rate (Japanese yen/ Par rate)Convergence period: 20 year
Last liquid point: 40 year
*For above risk-free rate, we employ the Smith-Wilson method for extrapolation so that the 60-year forward rate will coverage on the UFR (3.5%).
Sony Financial Holdings Inc. All Rights Reserved 47
Attachment
Contact:
Communications & Investor Relations Department Sony Financial Holdings Inc.
TEL: +81-3-5290-6500
Sony Financial Holdings Inc. All Rights Reserved 48
Disclaimers:
This presentation material contains statements concerning the current plans, expectations, strategies and beliefs of the Sony Financial Group. Any statements contained herein that are not historical facts are forward-looking statements or pro forma information. Forward-looking statements may include-but are not limited to-words such as "believe," "anticipate," "plan," "strategy," "expect," "assume," "forecast," "predict," "propose," "intend" and "possibility" that describe future operating activities, business performance, events or conditions. Forward-looking statements, whether spoken or written, may also be included in other materials released to the public. These forward-looking statements and pro forma information are based on assumptions, decisions and judgments made by the management of Sony Financial Group companies, and are based on information that is currently available to them. As such, they are subject to various risks and uncertainties, and actual business results may vary substantially from the forecasts expressed or implied in forward-looking statements. Consequently, investors are cautioned not to place undue reliance on forward-looking statements. Sony Financial Group companies are under no obligation to revise forward-looking statements or pro forma information in light of new information, future events or other findings. The information contained in this presentation does not constitute or form part of any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe to any securities, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever in Japan or abroad.
*Unless otherwise indicated, in these materials figures less than the indicated unit have been truncated, while ratios and percentage changes have been rounded. Also, a "-" is used where percentage changes exceed 1,000% and in cases where one or both comparisons are negative.
* "Lifeplanner" is a registered trademark of Sony Life.
Sony Financial Holdings Inc. All Rights Reserved 2
Attachment
Consolidated Operating Results for the Nine Months Ended December 31, 2016Sony Financial Holdings Inc. All Rights Reserved 3
(Billions of yen) | FY15.3Q (9M) | FY16.3Q (9M) | Change | |||
Life Insurance business | Ordinary revenues | 937.3 | 939.1 | +1.7 | +0.2% | |
Ordinary profit | 48.8 | 42.3 | (6.4) | (13.1%) | ||
Non-life Insurance business | Ordinary revenues | 72.7 | 75.9 | +3.1 | +4.4% | |
Ordinary profit | 3.8 | 4.9 | +1.1 | +30.7% | ||
Banking business | Ordinary revenues | 28.1 | 28.5 | +0.3 | +1.4% | |
Ordinary profit | 4.6 | 3.3 | (1.3) | (29.1%) | ||
Intersegment adjustments* | Ordinary revenues | (2.1) | (2.3) | (0.1) | ― | |
Ordinary profit | 0.1 | (0.4) | (0.5) | ― | ||
Consolidated | Ordinary revenues | 1,036.1 | 1,041.3 | +5.1 | +0.5% | |
Ordinary profit | 57.4 | 50.3 | (7.1) | (12.4%) | ||
Profit attributable to owners of the parent | 38.2 | 33.7 | (4.5) | (11.8%) |
Consolidated ordinary revenues Consolidated ordinary profit
1,036.1
57.4
+0.5%
(12.4%)
1,041.3
50.3
FY15.3Q (9M) FY16.3Q (9M)
(Billions of yen)
*Ordinary profit in "Intersegment adjustments" is mainly from SFH. Nursing care business has been included in the scope of consolidation from FY16.1Q.
*Comprehensive income : FY15.3Q (9M): ¥40.2 billion, FY16.3Q (9M): ¥18.2 billion
(Billions of yen) | 16.3.31 | 16.12.31 | Change from 16.3.31 | ||
Consolidated | Net assets | 604.3 | 597.9 | (6.4) | (1.1%) |
Total assets | 10,352.1 | 11,276.0 | +923.9 | +8.9% |
Sony Financial Holdings Inc. All Rights Reserved 4
Highlights of Consolidated Operating Performance for FY16.3Q (9M) (2)Attachment
Life Insurance Business: Ordinary revenues were essentially flat year on year, because an increase in investment income was offset by a decrease in insurance premium revenues led by a decline in sales of single premium products. Ordinary profit decreased year on year due mainly to lower gains on sale of securities in the general account. The provision of policy reserves for minimum guarantees for variable life insurance declined owing to a lower acquisition of new policies and the improvement of the market conditions. This positive impact on ordinary profit, however, was partially offset by a deterioration in net gains/losses on derivative transactions to hedge market-related risks
Non-life Insurance Business: Ordinary revenues expanded year on year, owing mainly to an increase in net premiums written primarily for mainstay automobile insurance. Ordinary profit increased year on year, due mainly to the increase in ordinary revenues, including gains on sale of securities, and a lower expense ratio.
Banking Business: Ordinary revenues increased year on year due to an increase in interest income on loans in line with a favorably growing balance of mortgage loans and an increase in ordinary revenues from Sony Payment Services (Sony Bank's 57% owned subsidiary), partially offset by a decrease in interest and dividend income on securities. Ordinary profit decreased year on year due to the lower level of interest rates, an increase in initial expenses led by a higher execution of mortgage loans, and decreased volumes of foreign currency and investment trust transactions of customers.
Consolidated ordinary revenues increased 0.5% year on year, to ¥1,041.3 billion. Ordinary revenues from the life insurance business were flat year on year, while ordinary revenues from the non-life insurance and the banking businesses increased. Consolidated ordinary profit decreased 12.4% year on year, to ¥50.3 billion. By business segment, ordinary profit from the life insurance and the banking businesses decreased, whereas ordinary profit from the non-life insurance business increased. Profit attributable to owners of the parent was down 11.8% year on year, to ¥33.7 billion due to the decrease in consolidated ordinary profit.
Sony Financial Holdings Inc. All Rights Reserved 5
Highlights of Operating Performance: Sony Life (Non-consolidated)(Billions of yen) | FY15.3Q (9M) | FY16.3Q (9M) | Change | |||
Ordinary revenues | 937.2 | 938.9 | +1.7 | +0.2% | ||
Income from insurance premiums | 754.8 | 705.4 | (49.4) | (6.5%) | ||
Investment income | 153.4 | 195.0 | +41.5 | +27.1% | ||
Interest income and dividends | 105.5 | 110.0 | +4.5 | +4.3% | ||
Income from monetary trusts, net | 10.8 | 3.3 | (7.4) | (68.9%) | ||
Gains on sale of securities | 12.1 | 1.3 | (10.8) | (89.3%) | ||
Foreign exchange gains, net | 0.4 | 24.2 | +23.7 | ― | ||
Gains on separate accounts, net | 24.4 | 55.9 | +31.5 | +129.2% | ||
Ordinary expenses | 888.2 | 893.7 | +5.5 | +0.6% | ||
Insurance claims and other payments | 279.3 | 276.0 | (3.3) | (1.2%) | ||
Provision for policy reserves and others | 480.2 | 447.0 | (33.1) | (6.9%) | ||
Investment expenses | 5.0 | 38.9 | +33.9 | +667.9% | ||
Losses on derivatives, net | 0.5 | 34.2 | +33.7 | ― | ||
Operating expenses | 97.4 | 101.6 | +4.2 | +4.4% | ||
Ordinary profit | 49.0 | 45.1 | (3.8) | (7.8%) | ||
Net income | 32.8 | 31.2 | (1.6) | (5.0%) | ||
(Billions of yen) | 16.3.31 | 16.12.31 | Change from 16.3.31 | |||
Securities | 7,273.3 | 7,916.0 | +642.6 | +8.8% | ||
Policy reserves | 7,336.5 | 7,783.1 | +446.6 | +6.1% | ||
Net assets | 482.1 | 483.0 | +0.9 | +0.2% | ||
Net unrealized gains on other securities | 150.6 | 133.5 | (17.0) | (11.3%) | ||
Total assets | 8,035.4 | 8,721.1 | +685.7 | +8.5% | ||
Separate account assets | 850.3 | 957.9 | +107.5 | +12.7% |
Ordinary revenues Ordinary profit
938.9
937.2 +0.2%
(7.8%)
49.0
45.1
(Billions of yen)
FY15.3Q (9M) FY16.3Q (9M)
Notes:
Sony Financial Holdings Inc. All Rights Reserved 7
Operating Performance : Sony Life (Non-consolidated) (1)Number and Amount of New Policies
(Individual Life Insurance + Individual Annuities)
Annualized Premiums from New Policies
(Individual Life Insurance + Individual Annuities)
New policy amount Number of new policies Annualized premiums from new policies Of which, third-sector
(Trillions of yen)
(Thousands of policies)
(Billions of yen)
80
6 463501
5
4.05
4 3.61
3
(22.5%)
(13.6%)
388
3.49
500
60
400
300
40
58.0
65.8
(17.7%)
54.1
200
2
20
1 100
11.7
12.0
(7.0%)
11.2
0 0
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
0
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
Sony Financial Holdings Inc. All Rights Reserved 8
Attachment
Sony Life's Product PortfolioAnnualized Premiums from New Policies by Product
FY15 (12M) ¥85.0 billion FY16.3Q (3M) ¥15.3 billion
FY16.1H(6M) ¥38.7 billion
Sony Financial Holdings Inc. All Rights Reserved 9
Operating Performance : Sony Life (Non-consolidated) (2)Number and Amount of Policies in Force
(Individual Life Insurance + Individual Annuities)
Annualized Premiums from Insurance in Force
(Individual Life Insurance + Individual Annuities)
Policy amount in force Number of policies in force Annualized premiums from insurance in force Of which, third-sector
(Trillions of yen)
+3.9%
(Millions of
policies) (Billions of yen)
781.3
807.3
6.98
50
42.8
40
+4.2%
7.04
43.1
+2.9%
+3.4%
7.25
44.6
8800
6600
771.8
+4.6%
+3.3%
30 4
400
20
2 200
10
178.3
+3.8%
179.7
+3.0%
185.1
0 0 0
15.12.31 16.3.31 16.12.31
15.12.31 16.3.31 16.12.31
Sony Financial Holdings Inc. All Rights Reserved 10
Operating Performance : Sony Life (Non-consolidated) (3)Attachment
Lapse and Surrender Rate*
(Individual Life Insurance + Individual Annuities)
Lapse and surrender rate (12Ml)
Lapse and surrender rate (9M)
(%)
10
8
6 5.35
4.72
4
4.00 3.60
2
(0.42pt)
3.18
0
FY14 FY15 FY16
*The lapse and surrender rate shows the ratio derived by dividing the amount of lapses and surrenders, not adjusted for policy amount decreases, increases, and reinstatements, by the policy amount in force at the beginning of the fiscal year.
Sony Financial Holdings Inc. All Rights Reserved 11
Operating Performance : Sony Life (Non-consolidated) (4)Income from Insurance Premiums Interest Income and Dividends
(Billions of yen) (Billions ofyen)
800
600
675.4
754.8
(6.5%)
705.4
120
100
99.5
105.5
+4.3%
110.0
80
400 60
40
200
20
0
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
0
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
Sony Financial Holdings Inc. All Rights Reserved 12
Operating Performance : Sony Life (Non-consolidated) (5)Attachment
Core Profit Ordinary Profit
(Billions of yen) (Billions ofyen)
80
60.6
60
40
35.1
+87.5%
65.8
80
67.1
60
40
49.0
(7.8%)
45.1
20 20
0
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
0
(Reference) Main differences from core profit | |||
(Billions of yen) | FY14.3Q (9M) | FY15.3Q (9M) | FY16.3Q (9M) |
Capital gains (losses) excluding gains or losses on hedges (*) | 10.4 | 19.7 | 0.0 |
Gains (losses) on hedges of variable life insurance | ― | (0.6) | (14.2) |
Provision of contingency reserve (*) | (3.8) | (4.9) | (6.2) |
FY14.3Q (9M) FY15.3Q (9M) FY16.3Q (9M)
(Reference) Impact on core profit | |||
(Billions of yen) | FY14.3Q (9M) | FY15.3Q (9M) | FY16.3Q (9M) |
Positive spread | 9.4 | 11.7 | 11.1 |
Provision of policy reserves for minimum guarantees for variable life insurance (*) | (3.3) | (24.2) | (4.5) |
Others | 54.5 | 47.6 | 59.2 |
"Provision of policy reserves for minimum guarantees for variable life insurance" and "Provision of contingency reserve" are described as negative amount. Capital gains (losses) exclude gains or losses on hedges of variable life insurance.
Sony Financial Holdings Inc. All Rights Reserved 13
Operating Performance : Sony Life (Non-consolidated) (6)Number of Lifeplanner Sales Employees
+354
(Number)
5,000
4,500
4,3294,352
4,415 4,376
4,612
4,682
4,751
(21)
4,730
4,000
3,500
3,000
15.3.31 15.6.30 15.9.30 15.12.31 16.3.31 16.6.30 16.9.30 16.12.31
Sony Financial Holdings Inc. All Rights Reserved 14
Operating Performance : Sony Life (Non-consolidated) (7)Attachment
Breakdown of General Account Assets
(Billions of yen) | 16.3.31 | 16.12.31 | ||
Amount | % | Amount | % | |
Japanese government and corporate bonds | 6,351.1 | 88.4% | 6,722.1 | 86.6% |
Japanese stocks | 33.3 | 0.5% | 34.9 | 0.5% |
Foreign bonds | 70.1 | 1.0% | 234.1 | 3.0% |
Foreign stocks | 23.0 | 0.3% | 31.4 | 0.4% |
Monetary trusts | 280.9 | 3.9% | 273.9 | 3.5% |
Policy loans | 171.6 | 2.4% | 176.8 | 2.3% |
Real estate* | 115.8 | 1.6% | 117.7 | 1.5% |
Cash and call loans | 52.5 | 0.7% | 55.4 | 0.7% |
Others | 86.4 | 1.2% | 116.6 | 1.5% |
Total | 7,185.0 | 100.0% | 7,763.2 | 100.0% |
We have continued to accumulate ultralong- term bonds to match the liability characteristics of insurance policies with long- term maturities with the aim of reducing interest rate risk.
Mar. 31, 2015: 20.3 yearsMar. 31, 2016: 21.8 years
Dec. 31, 2016: 21.5 years
(As of Mar. 31, 2016: 92.3%)
*Real estate is the total of land, buildings, and construction in progress.
Sony Financial Holdings Inc. All Rights Reserved 15
Review of Sony Life's Asset ManagementDiversify asset management under the negative interest rate environment (purchase securities in the general account asset)
FY14 (12M) Japanese
stocks 0.4% Other securities
0.4%
Foreign bonds 3.9%
JGBs 95.4%
■Promote diversification of investment assets while
continue to invest in assets that match the liability characteristics.
・Expand investments in ultralong-term Japanese corporate bonds (including FILP agency bonds)
・Significantly increase investments in U.S. government bonds, responding to higher sales of U.S. dollar denominated insurance policies.
FY15 (12M) Japanese stocks 0.5%
FY16.3Q (9M)
Japanese stocks 0.4%
Foreign bonds
Japanese 2.3%
corporate
bonds 11.9%
JGBs 85.3%
Foreign bonds 28.3%
Japanese corporate
JGBs 40.3%
bonds 31.0%
Notes:
Sony Financial Holdings Inc. All Rights Reserved 16
Operating Performance : Sony Life (Non-consolidated) (8)Attachment
Non-consolidated Solvency Margin Ratio
(%)
3,000
2,500
2,555.0
2,722.8
+8.3pt
2,731.1
2,000
1,500
1,000
0
15.3.31 16.3.31 16.12.31
Sony Financial Holdings Inc. All Rights Reserved 17
Highlights of Operating Performance: Sony Assurance(Billions of yen) | FY15.3Q (9M) | FY16.3Q (9M) | Change | ||
Ordinary revenues | 72.7 | 75.9 | +3.1 | +4.4% | |
Underwriting income | 71.8 | 74.3 | +2.5 | +3.5% | |
Investment income | 0.9 | 1.5 | +0.6 | +67.5% | |
Ordinary expenses | 68.9 | 70.9 | +1.9 | +2.9% | |
Underwriting expenses | 50.9 | 52.5 | +1.6 | +3.2% | |
Investment expenses | 0.0 | - | (0.0) | (100.0%) | |
Operating general and administrative expenses | 18.0 | 18.3 | +0.3 | +2.0% | |
Ordinary profit | 3.8 | 4.9 | +1.1 | +30.6% | |
Extraordinary Losses | 0.8 | 0.0 | (0.8) | (97.7%) | |
Net income | 2.1 | 3.6 | +1.4 | +70.5% |
Ordinary revenues Ordinary profit
72.7 +4.4%
75.9
+30.6%
4.9
3.8
FY15.3Q (9M) FY16.3Q (9M)
(Billions of yen)
(Billions of yen) | 16.3.31 | 16.12.31 | Change from 16.3.31 | |
Underwriting reserves | 95.7 | 103.0 | +7.3 | +7.7% |
Net assets | 28.3 | 29.6 | +1.3 | +4.6% |
Total assets | 172.3 | 179.4 | +7.0 | +4.1% |
Note:
FY15.3Q (9M) | FY16.3Q (9M) | Change | |
E. I. loss ratio | 63.1% | 62.9% | (0.2pt) |
E. I. loss ratio + Net expense ratio | 89.7% | 89.2% | (0.5pt) |
Net loss ratio = (Net losses paid + Loss adjustment expenses ) / Net premiums written Net expense ratio = Expenses related to underwriting / Net premiums written
Notes:
E.I. loss ratio = (Net losses paid + Provision for reserve for outstanding losses + Loss adjustment expenses) / Earned premiums [Earthquake insurance and compulsory automobile liability insurance are excluded from the above calculation.]
*1 Loans in others include corporate loans of ¥78.3 billion
*2 Please refer to the graph of the non-consolidated capital adequacy ratio (Domestic criteria) on P28.
Sony Financial Holdings Inc. All Rights Reserved 25
Overview of Operating Performance: Sony Bank (Non-consolidated) (2) On Managerial Accounting Basis(Billions of yen) | FY15.3Q (9M) | FY16.3Q (9M) | Change | ||
Gross operating profit | 16.1 | 15.5 | (0.6) | (4.2%) | |
Net interest income*1 ① | 13.9 | 15.0 | +1.0 | +7.8% | |
Net fees and commissions*2 ② | 0.7 | (0.6) | (1.4) | ― | |
Net other operating income*3 | 1.4 | 1.0 | (0.3) | (24.3%) | |
Gross operating profit (core profit) (A)=①+② | 14.7 | 14.4 | (0.3) | (2.3%) | |
Operating expenses and other expenses ③ | 11.6 | 12.4 | +0.8 | +7.2% | |
Net operating profit (core profit) =(A)-③ | 3.1 | 1.9 | (1.1) | (37.6%) |
(%)
1.50
Yield on investment Interest spread
Yield on financing
1.19 1.20
+0.01pt
1.00 0.93 0.94
■Managerial accounting basis
The following adjustments are made to the figures on a financial account for profits and losses more appropriately.
*1: Net interest income: Includes profits and losses associated with fund investment recorded in net other operating income, including gains or losses from currency swap transactions.
*2: Net fees and commissions: Includes profits and losses for customer dealings in foreign currency transactions recorded in net other operating income.
*3: Net other operating income: After the above adjustments (*1 and *2), mainly consists of profits and losses for bond and derivative dealing transactions.
0.50
0.00
0.26 0.26
FY15.3Q (9M) FY16.3Q (9M)
■Core profit
Profits and losses exclude net other operating income, which includes those on bond and derivative dealing transactions, and stands for Sony Bank's basic profits.
Note: Interest spread=(Yield on investment)-(Yield on financing)
Sony Financial Holdings Inc. All Rights Reserved 26
Operating Performance: Sony Bank (Non-consolidated) (1)Attachment
Deposits Loans
Yen deposits Foreign currency deposits Mortgage loans Others
(Billions of yen)
+193.8
2,117.3
(Billions of yen)
2,000
2,000
1,878.2
327.2
1,923.5
335.5
345.1
1,500
+160.2
1,504.4
1,500
1,000
1,551.0
1,587.9
1,772.1
1,000
1,187.1
112.8
1,074.3
1,344.1
107.0
1,237.1
95.3
1,409.0
*Corporate loans of ¥78.3 billion Card loans of
¥17.0 billion
500
500
0
15.3.31 16.3.31 16.12.31
0
15.3.31 16.3.31 16.12.31
Sony Financial Holdings Inc. All Rights Reserved 27
Operating Performance: Sony Bank (Non-consolidated) (2)Balance of Securities by Credit Rating Non-Consolidated Capital Adequacy Ratio
(Domestic Criteria)
AAA
AA A
BBB Others
(Billions of yen)
730.0 | ||||||
620.9 631.1 | ||||||
+10.1 | ||||||
800
(%)
15
600
10
10.65
9.89
9.00
(0.89pt)
400
5
200
0
15.3.31 16.3.31 16.12.31
0
15.3.31 16.3.31 16.12.31
*Calculated based on the standard FSA Notification No. 19 (2006), which establishes standards based on Article 14-2 of the Banking Act of Japan for determining the capital adequacy of a bank in light of the assets held by the bank.
Sony Financial Holdings Inc. All Rights Reserved 28
Attachment
Forecast of Consolidated Financial Results for the Year Ending March 31, 2017 (FY16)Sony Financial Holdings Inc. All Rights Reserved 29
Forecast of Consolidated Financial Results for FY16Forecast of consolidated financial results for FY16 is unchanged from the forecast announced on April 28, 2016
(Billions of yen) | FY15 (Actual) | FY16 (Forecast) | Change |
Consolidated ordinary revenues | 1,362.0 | 1,450.0 | +6.5% |
Life insurance business | 1,230.2 | 1,309.8 | +6.5% |
Non-life insurance business | 96.9 | 101.6 | +4.8% |
Banking business | 37.9 | 37.9 | (0.1%) |
Consolidated ordinary profit | 71.1 | 71.0 | (0.1%) |
Life insurance business | 60.2 | 62.5 | +3.8% |
Non-life insurance business | 4.6 | 4.4 | (6.0%) |
Banking business | 5.9 | 4.5 | (24.9%) |
Profit attributable to owners of the parent | 43.3 | 46.0 | +6.1% |
FY16.3Q (9M Actual) | Progress rate |
1,041.3 | 71.8% |
939.1 | 71.7% |
75.9 | 74.8% |
28.5 | 75.3% |
50.3 | 70.8% |
42.3 | 67.8% |
4.9 | 113.6% |
3.3 | 73.6% |
33.7 | 73.3% |
■Life insurance business
In FY16.3Q (9M), ordinary revenues were below our initial expectations due to a decline in insurance premium revenues although investment income exceeded our initial expectations. Ordinary profit was nearly in line with our initial forecast. Therefore, we maintain our full year forecast of ordinary revenues and ordinary profit.
■Non-life insurance business
Ordinary revenues for FY16.3Q (9M) were nearly the same as our initial forecast. Ordinary profit outpaced our initial expectations due mainly to higher gains on sale of securities recorded in FY16.1Q. As we expect higher expenses related to new policy acquisitions in FY16.4Q, we maintain our full year forecast of ordinary revenues and ordinary profit.
■Banking business
We maintain our full year forecast of ordinary revenues and ordinary profit because the operating results in FY16.3Q (9M) were nearly the same as our initial forecast, and we expect this trend to continue in FY16.4Q.
Sony Financial Holdings Inc. All Rights Reserved 30
Attachment
Sony Life's MCEV and ESR as of December 31, 2016MCEV as of March 31, 2016 is restated by using ultimate forward rates (UFR).
Please keep in mind that the validity of these calculations has not been verified by outside specialists. A part of the calculations of MCEV adopted simplified method except for that as of March 31, 2016.
*In this part, figures, ratios and percentages changes have been rounded.
Sony Financial Holdings Inc. All Rights Reserved 31
Sony Life's MCEV as of December 31, 2016(Billions of yen) | 16.3.31 | 16.9.30 | 16.12.31 | Change from 16.3.31 | Change from 16.9.30 | |
MCEV | 1,330.1 | 1,229.3 | 1,282.7 | (47.4) | +53.4 | |
Adjusted net worth | 2,074.4 | 2,187.8 | 1,831.1 | (243.3) | (356.7) | |
Value of existing business | (744.4) | (958.5) | (548.4) | +196.0 | +410.1 | |
(Billions of yen) | FY15.4Q (3M) | FY16.1Q (3M) | FY16.2Q (3M) | FY16.3Q (3M) | ||
New business value | 3.9 | (0.2) | 5.0 | 10.2 | ||
New business margin | 1.2% | (0.0%) | 1.6% | 4.0% |
FY16.3Q (9M) |
14.9 |
1.6% |
Notes:
As of Mar. 31, 2015; Carrying amount: ¥44.2 billion, Fair market value: ¥57.5 billion, Net unrealized gain (losses): ¥13.2 billion As of Mar. 31, 2016; Carrying amount: None
As of Dec. 31, 2016; Carrying amount: None
Valuation gains (losses) on trading-purpose securities (Billions ofyen)
Note: The above chart includes trading-purpose securities included in "monetary trusts," etc
Sony Financial Holdings Inc. All Rights Reserved 38
Sony Life's Interest Income and Dividends (Details)(Millions of yen) | |||
FY15.3Q (9M) | FY16.3Q (9M) | Change | |
Cash and deposits | 0 | 0 | +166.1% |
Japanese government and corporate bonds | 85,907 | 90,445 | +5.3% |
Japanese stocks | 356 | 345 | (3.0%) |
Foreign securities | 5,653 | 6,017 | +6.4% |
Other securities | 1,260 | 177 | (85.9%) |
Loans | 4,616 | 4,784 | +3.6% |
Real estate | 7,681 | 8,148 | +6.1% |
Others | 47 | 144 | +202.0% |
Total | 105,524 | 110,064 | +4.3% |
Sony Financial Holdings Inc. All Rights Reserved 39
Attachment
Sony Life's Capital Gains/Losses(Millions of yen) | FY15.3Q (9M) | FY16.3Q (9M) | ||
Capital gains | 19,762 | 25,628 | ||
Income from monetary trusts, net | 7,119 | ― | ||
Income from trading securities, net | ― | 103 | ||
Gains on sale of securities | 12,193 | 1,306 | ||
Gains on derivatives, net | ― | ― | ||
Foreign exchange gains, net | 435 | 24,218 | ||
Gains (losses) on sale of foreign bonds | (64) | 2,375 | ||
Other capital gains | 13 | ― | ||
Capital losses | 758 | 39,882 | ||
Losses on monetary trusts, net | ― | ― | ||
Losses on trading securities, net | 143 | ― | ||
Losses on sale of securities | ― | ― | ||
Devaluation losses on securities | ― | ― | ||
Losses on derivatives, net | 515 | 34,275 | ||
Losses on hedges of variable life insurance | 699 | 14,292 | ||
Losses on hedges of available-for-sale securities | ― | 2,265 | ||
Foreign exchange losses, net | ― | ― | ||
Other capital losses | 99 | 5,606 | ||
Net capital gains (losses) | 19,003 | (14,253) |
◆ In FY16.3Q (9M),
recorded ¥3,681 million as a total of gains on sale of securities and foreign exchange gains on sale of foreign bonds.
Notes:
Sony Financial Holdings Inc. published this content on 14 February 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 14 February 2017 06:08:10 UTC.
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