Sony 2003 Annual Report Download - page 187

Consolidated Financial Information 2003
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11. Insurance-related accounts
Sony’s life and non-life insurance subsidiaries in Japan maintain their accounting records as described in Note
2 in accordance with the accounting principles and practices generally accepted in Japan, which vary in some
respects from U.S. GAAP.
Those differences are mainly that insurance acquisition costs are charged to income when incurred in
Japan whereas in the United States of America those costs are deferred and amortized generally over the
premium-paying period of the insurance policies, and that future policy benefits calculated locally under the
authorization of the supervisory administrative agencies are comprehensively adjusted to a net level premium
method with certain adjustments of actuarial assumptions for U.S. GAAP purposes. For purposes of preparing
the consolidated financial statements, appropriate adjustments have been made to reflect such items in
accordance with U.S. GAAP.
The amounts of statutory net equity of the subsidiaries as of March 31, 2002 and 2003 were ¥101,989
million and ¥100,441 million ($837 million), respectively.
(1) Insurance policies:
Life insurance policies that the life insurance subsidiary writes, most of which are categorized as
long-duration contracts, mainly consist of whole life, term life and accident and health insurance contracts.
The life insurance revenues for the years ended March 31, 2001, 2002 and 2003 were ¥393,432 million,
¥430,019 million and ¥450,363 million ($3,753 million), respectively. Property and casualty insurance
policies that the non-life insurance subsidiary writes are primarily automotive insurance contracts which are
categorized as short-duration contracts. The non-life insurance revenues for the years ended March 31,
2001, 2002 and 2003 were ¥4,545 million, ¥13,164 million and ¥21,269 million ($177 million), respectively.
(2) Deferred insurance acquisition costs:
Insurance acquisition costs, such as commission expenses, medical examination and inspection report fees,
advertising costs, etc., that vary with and are primarily related to acquiring new insurance policies are
deferred as long as they are recoverable. The deferred insurance acquisition costs are amortized mainly
over the premium-paying period of the related insurance policies using assumptions consistent with those
used in computing policy reserves. Amortization charged to income for the years ended March 31, 2001,
2002 and 2003 amounted to ¥38,886 million, ¥31,000 million and ¥44,578 million ($371 million),
respectively.
(3) Future insurance policy benefits:
Liabilities for future policy benefits are established in amounts adequate to meet the estimated future
obligations of policies in force. These liabilities are computed by the net level premium method based upon
estimates as to future investment yield, mortality and withdrawals. Future policy benefits are computed
using interest rates ranging from approximately 1.00% to 5.50%. Mortality, morbidity and withdrawal