Sony Financial Holdings Inc. Annual Report 2020 1 History Sony Financial Group creates new financial businesses without being constrained by existing frameworks
Akio Morita, the founder of Sony Corp., visited Chicago in the late 1950s to open a sales office for transistor radios. He was shocked to discover that the massive skyscraper towering over the streets was owned by the largest life insurance company in America at that time. This is said to be the inspiration of his dream for Sony Group to have its own financial institution and to build a magnificent skyscraper of its own one day. His entrepreneurial spirit drove him to adapt to the diversifying needs of customers and solve the problems facing society himself. The Sony Spirit to “do what has never been done before” has been passed down from one generation to the next, and the Sony Group has taken advantage of financial liberalization and deregulation to create a new financial business without being constrained by existing frameworks.
1998
Sony Insurance Planning 1979 Co., Ltd. was established (currently Sony Assurance) Sony Prudential Life 1946 Insurance Co., Ltd. was established (currently Sony Tokyo Telecommunication Life) Engineering Corporation was established (currently Sony Corp.) “Do what has never been done before”
Note: Akio Morita (left) and Masaru Ibuka (right), the founders of Sony Corporation (photographed in 1967)
1940 1970 1980 1990 1977 1989 1996 1998
■ Japan achieves ■ Nikkei Stock ■ Revision to the Insurance ■ Revision to the Act on Non-life Insurance the longest life Average reaches Business Act Rating Organization of Japan (Introduction expectancy in historic high of ・ Ban removed on mutual entry into of reference loss cost rates system) the world for both ¥38,915 life and non-life insurance fields Late 1990s– men and women ・ Reviewed accounting calculation system ■ Internet spreads with release of Windows 95 ■ Financial Big Bang occurs in Japan ・ Introduced product/rate notification system 1997
■ Licensed to offer risk-segmented 2 Sony Financial Holdings Inc. Annual Report 2020 automobile insurance The Origin of Our Corporate Logo The logo used by the Sony Financial Group, uses the “S” in “Sony” as a motif. Combining Sony blue 90, the corporate color of Sony Corporation, to represent our origin, with green, which invokes the image of “safety” required of finance Corporate businesses, the logo expresses: Logo 1. “Innovation” that overturns the image of existing finance businesses; 2. “Intelligence” that invokes new business models; and 3. “Speed” to respond to the digital network society.
2018 2014 Sony Financial Ventures was established 2001 Sony Lifecare was established
Sony Bank was established
2004
SFH was established (2007 SFH was listed on the First Section of Tokyo Stock Exchange) Become the most trusted financial services group by invoking emotion through the power of technology and high-value-added products and services that meet every customer’s needs
2000 2010 2000 2007 2010 2016
■ Enactment of the nursing care ■ Enactment of the Financial ■ Enactment of the ■ Introduction of negative interest insurance system Instruments and Exchange Act Insurance Act rates ■ Removal of ban on companies 2008 2011 ■ Full enactment of revisions to from other industries entering the Insurance Business Act ■ Collapse of Lehman Brothers ■ Occurrence of the Great the banking industry ・ Comparative recommendation East Japan Earthquake 2001 regulations 2012 ・ Fulfillment of obligation to ■ Removal of ban on sales of insurance ■ Economic policies enacted grasp intentions products at banks by the second Abe ■ Revision to the Banking Act (removal of administration (Abenomics) ban on companies from other industries entering the banking industry) Sony Financial Holdings Inc. Annual Report 2020 3 Value Creation Story Sony Financial Group’s value creation story
Sony Financial Group aims to enhance its corporate value and contribute to the development of a sustainable society, under its corporate philosophy, consisting of its “Mission, Vision & Values.” By making the most of our strengths and possibilities as a group, we will create new value of financial businesses without being constrained by existing frameworks.
Mission Sony Financial Group
Create a sustainable society where people Holding Company Sony Financial Holdings feel a sense of enrichment Life insurance business Sony Life
[Strengths] ● Tailor-made insurance product design and sales approach that match life planning of each individual customer based on consulting (consulting sales) Vision ● Maintaining optimal coverage through inspections of and advice on post-contract life plans and Become the most coverage, adjusted to changes in environment trusted financial surrounding the customer (consulting follow-up) services group by ● Securing financial soundness through ALM opera- tion adjusted to long-term liability characteristics invoking emotion through the power of Non-life insurance business Sony Assurance technology and high-value-added [Strengths] ● Reasonable insurance premiums according to products and services each customer’s risk that meet every ● High-quality accident response, customer center, and website services customer’s needs Banking business Sony Bank
[Strengths] ● Safe, reliable and highly convenient services, Values leveraging the advantages of an Internet bank ● Extensive lineup of high-quality products ● Business operation with high customer satisfaction Customer first Nursing care business Sony Lifecare Originality
[Strengths] ● Capture a wide range of needs by expanding our Integrity & Fairness lineup Propose nursing care service suitable for each Diversity ● resident Sustainability ▶P14
SFG’s Corporate SFG’s Businesses Philosophy
4 Sony Financial Holdings Inc. Annual Report 2020 Significant Social and Value Creation Environmental Changes (Significant Business Challenges)
Demographic changes Offer lifestyles that feature safety and peace Globally low interest rates of mind
Rapid progress of technological innovation
Financial regulatory changes Contribute to a healthy, long- ▶P6 lived society
Important Items for Strengthening Our Foundation
Human Corporate Resources Make lifestyles Governance Respecting more convenient Diversity
▶P27
SFG’s Materiality SFG’s Value Provision
Sony Financial Holdings Inc. Annual Report 2020 5 Value Creation Story Analysis of social and environmental changes, and identification of significant business challenges
Identification process for significant business challenges
STEP.1 Extraction and organizing of candidates for significant business challenges Select candidates from among the social and environmental changes that are highly related to SFG’s businesses STEP.2 Evaluation from SFG’s perspective and the perspectives of stakeholders Conduct an evaluation from the perspective of SFG and those of its stakeholders STEP.3 Identification of significant business challenges Identify significant business challenges based on the results of the evaluation, with approval of management Strengthen initiatives in these areas
Significant Challenges Risk Opportunity
Demographic changes ● Shrinking markets due to population ● Expand the range of target customers through an (Population decline, aging decline enhanced product lineup population and declining ● Reduced demand for SFG’s main ● Expand opportunities to provide products and services birthrate, changes in products that capture changes in customer needs household structure, ● Increased in mortality and morbidity rate ● Increase in demand for nursing care-related services
uncertainty about social ● Difficulty in acquiring human resources, ● Enhanced productivity through the use of technology security) and soaring personnel expenses
Globally low interest rates ● Reductions in product lineup due to ● Construct product portfolios that are resilient to changes declining product profitability and revision in interest rates
and abolition of some products ● Diversify investment options ● Decline in investment income
Rapid progress of ● Changes in customer needs and behavior ● Increase operational efficiency and enhance capacity to technological innovation patterns respond to customer needs through the use of
(Advent of the data ● Obsolescence of existing businesses with technology economy, widespread the rise of new business models ● Enhance marketing, product development, risk adoption of AI, ● Higher requirements and increasing costs management and other functions through data utilization advancement of for systems development, personal ● Emergence of new insurance needs in response to new autonomous driving information protection, and information risks
technologies) security measures ● Alliances with other industries and external companies
Financial regulatory ● Increases in required capital and costs to ● Further enhance SFG’s existing strength in “customer- changes comply with regulation first” service
● Increased competition due to deregulation ● Adopt new approaches and business domains
6 Sony Financial Holdings Inc. Annual Report 2020 Significant Social and Environmental Changes (Significant Business Challenges)
Demographic changes
● Population decline ● Aging population and declining birthrate ● Changes in household structure ● Uncertainty about social security
Globally low interest rates
Rapid progress of technological innovation
● Advent of the data economy ● Widespread adoption of AI Impact on SFG ● Advancement of autonomous driving technologies
Financial regulatory changes
Requests from stakeholders
Value Creation Main Initiatives
Offer lifestyles ● We utilize a wide range of information to support the life of each customer by offering appropriate advice, that feature products and services. safety and ● We aim to contribute to a safe and secure society featuring next-generation mobility by providing new peace of mind technology-enabled insurance products and services.
Contribute to a healthy, ● We will provide products and services that anticipate a long-lived society, providing economic security and long-lived promoting wealth-building. society
Make lifestyles ● We will make life more convenient by improving more access to financial services and promoting convenient innovation.
Sony Financial Holdings Inc. Annual Report 2020 7 Financial and Non-financial Highlights
Financial Highlights
Business Volume KPI
Sony Life Sony Assurance Sony Bank (Non-consolidated) (Non-consolidated)
Policy amount in force*1 Direct premiums written Retail balance*2 (Trillions of yen) (Billions of yen) (Trillions of yen)