I first wish to express my deepest sympathies to those directly affected by the Great East Japan Earthquake on March 11, 2011.
We sincerely hope for the earliest possible recovery of the devastated areas.
The entire Sony Financial Holdings Group will make every effort to provide assistance to those directly affected by the disaster.
In FY2010, the fiscal year ended March 31, 2011, the Japanese economy gradually improved from the global financial market turmoil triggered in 2008.However, it has yet to stage a convincing recovery, mainly as a result of the yen's sharp appreciation and job uncertainty. Furthermore, the Great East Japan Earthquake in March 2011 caused untold damage, with no end in sight to the problems plaguing the Fukushima Daiichi Nuclear Power Station. These factors are expected to delay the recovery of the devastated regions and hinder manufacturing activity in Japan. As a result, there are increasingly strong concerns over a slowdown in the Japanese economy.
Under these conditions, the Sony Financial Holdings Group implemented a range of initiatives addressing diversifying needs in the past year, with the aim of becoming the most highly trusted financial services group by customers through the provision of high-quality services. Thanks to these customer-focused efforts, in FY2010, the Sony Financial Holdings Group steadily expanded business volume in all three of its businesses, namely life insurance, non-life insurance, and banking. Key indicators in every business increased steadily. At Sony Life, new policy amount rose 3.7% year on year to ¥4,199.0 billion, while policy amount in force increased 3.8% to ¥34,748.5 billion. At Sony Assurance, direct premiums written increased 8.6% year on year to ¥72.8 billion. Meanwhile, Sony Bank posted an 11.3% year-on-year increase in the retail balance (the sum of customers' yen deposits, foreign currency deposits, investment trusts, and personal loan balance) to ¥2,419.6 billion. In terms of overall performance, consolidated ordinary revenues rose 2.4% year on year to ¥1,002.2 billion. However, consolidated ordinary profit decreased 8.9% year on year to ¥76.8 billion, primarily as the result of higher insurance claims and other payments due to the earthquake, coupled with the impact of increased provisions for policy reserves, mainly in the life insurance business. Consequently, the Sony Financial Holdings Group recorded net income of ¥41.7 billion, down 13.3% year on year. Meanwhile, Sony Life's market consistent embedded value (MCEV), an important benchmark of its corporate value, decreased ¥40.4 billion from March 31, 2010 to ¥853.6 billion as of March 31, 2011, despite an increase in new business value. This decrease was mainly due to the impact of falling interest rates. Having positioned the lowering of interest rate risk as a priority, Sony Life has substantially reduced the sensitivity of MCEV to interest rates movements over the past 2.5 years by promoting the purchase of ultralong-term bonds. Looking ahead, Sony Life will continue to raise corporate value by increasing new business value, while controlling the impact of changes in interest rates and other financial market changes.
We have always managed the Sony Financial Holdings Group from a long-term perspective, in response to difficulties financial institutions are facing such as Japan's aging society and low birthrate, and low interest rates. From FY2011, we intend to drive further growth and expansion in the Sony Financial Holdings Group's businesses, so that we may lend a hand in Japan's economic recovery from the catastrophic damage caused by the earthquake and tsunami. Strongly aware of our role in society and purpose as a financial institution, we intend to fulfill our obligations to all stakeholders in order to realize a sustainable society. We look forward to your continued support and understanding as we endeavor to reach our goals.
Katsumi Ihara
President, Representative Director
