Sony 2006 Annual Report Download - page 110

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108
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
for life and non-life insurance 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 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, 2005 and 2006 were ¥153,228 million and ¥229,543
million ($1,962 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 fiscal
years ended March 31, 2004, 2005 and 2006 were ¥437,835
million, ¥426,774 million and ¥453,496 million ($3,876 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 fiscal years
ended March 31, 2004, 2005 and 2006 were ¥28,371 million,
¥35,454 million and ¥42,743 million ($365 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 fiscal years
ended March 31, 2004, 2005 and 2006 amounted to ¥50,492
million, ¥47,120 million and ¥42,933 million ($367 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, morbidity and withdrawals. Future policy benefits are
computed using interest rates ranging from approximately
0.90% to 5.10%. 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, 2005 and
2006, future insurance policy benefits amounted to ¥1,782,850
million and ¥1,901,716 million ($16,254 million), respectively.
12. Short-term borrowings and long-term debt
Short-term borrowings comprise the following:
Dollars in
Yen in millions millions
March 31 2005 2006 2006
Unsecured loans,
principally from banks:
with weighted-average
interest rate of 2.79% . . .
¥38,796
with weighted-average
interest rate of 3.63% . . .
¥ 32,066 $ 274
Secured call money:
with weighted-average
interest rate of 0.01% . . .
—40,000 342
Secured bills sold:
with weighted-average
interest rate of 0.00% . . .
24,600
with weighted-average
interest rate of 0.01% . . .
70,700 604
. . . . . . . . . . . . . . . . . . . .
¥63,396 ¥142,766 $1,220
At March 31, 2006, marketable securities and securities
investments with a book value of ¥119,598 million ($1,022
million) were pledged as collateral for call money and bills sold
by a Japanese bank subsidiary.