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Review of Operations

Annualized Premiums from Policies in Force

Reviewing our fiscal 2016 consolidated performance for the Sumitomo Life Group, annualized premiums from policies in force increased 6.0% from the end of the previous fiscal year to 2,739.4 billion ($24.4 billion).
Meanwhile, annualized premiums from policies in force for the third-sector insurances, which we focus on as a growth area, increased 3.3% year on year to 552.9 billion ($4.9 billion), on the basis of two domestic entities (Sumitomo Life and Medicare Life) excluding Symetra, growing steadily for fourteen consecutive years since we started to publish such figures.

The two main reasons for these consecutive increases in Japan are:

* Symetra closes its account on December 31 each year. US dollar figures for Symetra have been converted from the Japanese yen figures published in the Japanese-language Financial Results using the exchange rate as of the end of March 2017.

Annualized Premiums from New Business

In fiscal 2016, the Sumitomo Life Groupfs annualized premiums from new business of individual life insurance and annuities increased 82.3% from the previous fiscal year to 316.4 billion ($2.8 billion). The two domestic entities (Sumitomo Life and Medicare Life) increased 49.4% to 259.2 billion ($2.3 billion) from the previous fiscal year.
This increase was due mainly to the substantial increase in sales of saving-type products, especially individual annuities.



* Symetrafs performance has been recorded since fiscal 2016.

Annualized Premiums from Surrendered and Lapsed Policies

Sumitomo Lifefs annualized premiums from surrendered and lapsed policies decreased 20.5% to 68.7 billion ($0.6 billion) over the previous year.
The annualized premiums from surrendered and lapsed policies sold through our sales representatives, our primary sales channel, decreased 7.2% to 60.9 billion ($0.5 billion), continuing a trend of improvement. This primarily reflects our sales representativesf effort to maintain regular contact with policyholders.

Core Business Profit

Core business profit is an indicator of the fundamental earnings strength of Japanfs life insurance companies.
In fiscal 2016, core business profit (Sumitomo Life Group), which represents profitability excluding the impact of the standard policy reserves concerning the minimum guarantees for variable annuities, etc., increased 1.9% from the previous fiscal year to 331.2 billion ($2.9 billion).
Meanwhile, the size of the negative spread has been constantly shrinking since fiscal 2001 when the Company started its disclosure, which turned positive for the first time in fiscal 2014 and the width of the positive spread has expanded for two consecutive years.


*1 Core business profit of the Group (see the solid line graph) is calculated by combining core business profit of Sumitomo Life and Medicare Life, and profit before tax of Symetra, Baoviet Holdings, BNI Life, and PICC Life attributable to Sumitomo Lifefs equity stake in each company, with adjustments made to some internal transactions. The dotted line graph indicates the sum of core business profit of Sumitomo Life and Medicare Life.
*2 Adjusted core business profit (see the bar graph): Core business profit excluding the impact of provision (reversal) of the standard policy reserves, etc. concerning variable annuities.



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