Sony 2005 Annual Report Download - page 101

98 Sony Corporation
costs are deferred and amortized generally over the premium-
paying period of the related insurance policies, and that future
policy benefits for life insurance 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, 2004 and 2005 were ¥146,540 million and ¥153,228
million ($1,432 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, 2003, 2004 and 2005 were ¥450,363 million,
¥437,835 million and ¥426,774 million ($3,989 million), respec-
tively. 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,
2003, 2004 and 2005 were ¥21,269 million, ¥28,371 million and
¥35,454 million ($331 million), respectively.
(2) Deferred insurance acquisition costs:
Insurance acquisition costs, including such items as commis-
sion, medical examination and inspection report fees, 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 for traditional life insurance contracts
are amortized over the premium-paying period of the related
insurance policies using assumptions consistent with those
used in computing policy reserves. The deferred insurance
acquisition costs for non-traditional life insurance contracts are
amortized over the expected life in proportion to the estimated
gross profits. Amortization charged to income for the years
ended March 31, 2003, 2004 and 2005 amounted to ¥44,578
million, ¥50,492 million and ¥47,120 million ($440 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,
morbidity, mortality and withdrawals. Future policy benefits are
computed using interest rates ranging from approximately
1.30% to 5.20%. Mortality, morbidity and withdrawal assump-
tions for all policies are based on either the subsidiary’s own
experience or various actuarial tables. At March 31, 2004 and
2005, future insurance policy benefits amounted to ¥1,605,178
million and ¥1,782,850 million ($16,662 million), respectively.
(4) Separate account assets:
Separate account assets are funds on which investment income
and gains or losses accrue directly to policyholders. Separate
account assets are legally segregated. They are not subject to
the claims that may arise out of any other business of a life
insurance subsidiary. As described in Note 2, the AcSEC issued
SOP 03-1, “Accounting and Reporting by Insurance Enterprises
for Certain Nontraditional Long-Duration Contracts and for
Separate Accounts”. As a result of the adoption of SOP 03-1 on
April 1, 2004, the separate account assets, which are defined by
insurance business law in Japan and were previously included in
“Securities investments and other” (Note 8) in the consolidated
balance sheet, were excluded from the category of separate
accounts under the provision of SOP 03-1. Accordingly, the
assets previously treated as separate account assets are now
treated within general account assets. The related liabilities are
treated as policyholders’ account and included in future insur-
ance policy benefits and other in the consolidated balance
sheet. Fees earned for administrative and contract-holder
services performed for the separate accounts are recognized as
financial service revenue.
12. Short-term borrowings and long-term debt
Short-term borrowings comprise the following:
Dollars in
Yen in millions millions
March 31 2004 2005 2005
Unsecured loans,
principally from banks:
with weighted-average
interest rate of 1.80% . . .
¥26,260
with weighted-average
interest rate of 2.79% . . .
¥38,796 $362
Secured call money:
with weighted-average
interest rate of 0.01% . . .
65,000 ——
Secured bills sold:
with weighted-average
interest rate of 0.00% . . . —24,600 230
. . . . . . . . . . . . . . . . . . . . ¥91,260 ¥63,396 $592
At March 31, 2005, marketable securities and securities
investments with a book value of ¥27,433 million ($256 million)
were pledged as collateral for bills sold by a Japanese bank
subsidiary.
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