Sony Financial Group Inc.

Business Details

Comprised of two companies: Sony Life Insurance Co., Ltd. and Sony Life Communications Co., Ltd. This segment provides made-to-order life insurance based on detailed consulting by Life Planners (sales employees) and Partners (agency distributors). Its main products are Individual Insurance, Individual Annuity Insurance, and variable insurance, making it the largest segment, accounting for approximately 88% of the Group's total ordinary revenues. Segment assets stood at ¥17,499,285 million (as of the end of FY2026 (ending March 2026)).

Recent Overview

Segment profit expanded approximately 2.9x year-on-year, driven by a one-time gain from reinsurance cession and improved foreign exchange gains. Losses on sale of securities expanded significantly.

Life Insurance Business segment profit for FY2026 (ending March 2026) increased substantially to ¥59,407 million (from ¥20,615 million in the prior period). The main drivers were a one-time gain of ¥109,900 million from partial reinsurance cession of the existing US Dollar-denominated Whole Life Insurance policy block, and improved earnings due to market fluctuations including foreign exchange gains/losses. Meanwhile, losses on sale of securities associated with bond sales aimed at ALM rebalancing expanded to ¥218,829 million (from ¥84,575 million in the prior period). In addition, ¥793,331 million of held-to-maturity bonds were reclassified as available-for-sale securities, improving the flexibility of ALM management. Reinsurance income increased substantially to ¥97,269 million (from ¥31,840 million in the prior period).

Key Products

Growth Drivers

• Recognition of a one-time gain/loss from partial reinsurance cession of the existing US Dollar-denominated Whole Life Insurance policy block (¥109,900 million in FY2026 (ending March 2026))
• Recognition of foreign exchange gains (¥132,550 million in FY2026 (ending March 2026), versus a foreign exchange loss of ¥18,421 million in the prior period), improving earnings
• Increase in investment gains on separate account assets (¥141,339 million, up 18.5% year-on-year)
• Solid growth in net insurance premium income (¥1,886,066 million), expanding the in-force policy base
• Improved flexibility of ALM operations through reclassification of held-to-maturity bonds as available-for-sale securities
• Substantial increase in reinsurance income (¥97,269 million, up 205.5% year-on-year)

Risks

• Continued expansion of losses on sale of securities associated with bond sales aimed at ALM rebalancing (¥218,829 million in FY2026 (ending March 2026), up 158.7% year-on-year)
• In FY2027 (ending March 2027), under IFRS accounting standards, the Life Insurance Business is expected to record a pre-tax loss of ¥57.5 billion (IFRS basis), mainly due to the fading of market fluctuation effects related to minimum guarantees on variable insurance
• Separate account assets are significantly affected by market fluctuations, making forecasts of ordinary revenues and profit difficult
• Foreign exchange risk related to foreign currency-denominated assets (general account) (foreign exchange gains/losses significantly affect earnings)
• Risk of fluctuation in the burden of policy reserve provisions due to rising interest rates
• Reclassification of held-to-maturity bonds as available-for-sale securities resulted in a decrease of ¥87,353 million in net unrealized gains on available-for-sale securities, manifesting an impact on net assets

Business Details

The Non-Life Insurance Business is comprised solely of Sony Assurance Inc. It is a direct-type non-life insurance company providing Automobile Insurance, Fire Insurance, medical insurance, and other products via the internet and telephone. Its mainstay Automobile Insurance accounts for the majority of net premiums written, with steady growth in premium income continuing. For the current consolidated fiscal year (April 2025 to March 2026), ordinary revenues were ¥191,342 million (up 13.3% year-on-year), and segment profit was ¥12,523 million (up 73.9% year-on-year). A decrease in the loss ratio due to fewer natural disasters and other factors resulted in a substantial increase in profit.

Recent Overview

Decrease in loss ratio due to fewer natural disasters; ordinary profit increased substantially, up 73.9% year-on-year.

In the Non-Life Insurance Business for FY2026 (ending March 2026), net premiums written grew steadily to ¥188,852 million (up 13.0% year-on-year), driven mainly by the mainstay Automobile Insurance, and ordinary revenues reached ¥191,342 million (up 13.3% year-on-year). Segment profit increased substantially to ¥12,523 million (up 73.9% year-on-year) due to a decrease in the loss ratio resulting from fewer natural disasters and other factors. Meanwhile, expenses also increased, with net claims paid at ¥102,243 million (up 11.6% year-on-year) and operating, general and administrative expenses at ¥44,538 million (up 10.2% year-on-year).

Key Products

Growth Drivers

• Steady increase in net premiums written, centered on the mainstay Automobile Insurance (up 13.0% year-on-year)
• Decrease in the loss ratio and improved profitability due to fewer natural disasters and other factors
• Maintenance and improvement of operating expense efficiency through the direct-type business model
• Revenue diversification through product lineups other than Automobile Insurance, such as Fire Insurance

Risks

• Risk of loss ratio deterioration due to rising average claim payments in Automobile Insurance (net claims paid up 11.6% year-on-year)
• Risk of increased insurance claim payments due to greater frequency and scale of natural disasters
• Risk of price competition in the direct-type non-life insurance market due to intensifying competition
• Risk of profitability pressure from increased operating, general and administrative expenses (up 10.2% year-on-year)
• Impact on performance presentation and comparability due to transition to IFRS accounting standards in FY2027 (ending March 2027)

Business Details

The Banking Business is comprised of Sony Bank Inc. and three equity-method affiliates (four companies in total). Sony Bank is a direct bank that provides deposits (yen and foreign currency), Housing Loans, Investment Trusts, Foreign Exchange Margin Trading (FX), and other services via the internet. It employs a highly cost-efficient business model without physical branches, offering financial services to individual customers through digital channels. In FY2026 (ending March 2026), while investment income expanded, profit decreased due to a decline in housing loan-related fee income and an increase in operating expenses.

Recent Overview

Investment income expanded, but profit decreased due to declining fee income and rising expenses.

In the Banking Business for FY2026 (ending March 2026), investment income expanded to ¥117,638 million (up 21.6% year-on-year), driven by increases in interest on loans (¥49,865 million, up 37.2% year-on-year) and interest and dividends on securities (¥60,235 million, up 13.7% year-on-year). Meanwhile, fee and commission income declined to ¥10,179 million (down 29.7% year-on-year) due to a decrease in housing loan-related fee income, and operating expenses also increased to ¥32,001 million (up 16.1% year-on-year), resulting in a decrease in ordinary profit to ¥16,718 million (from ¥18,881 million in the prior period). For the next fiscal year (FY2027, ending March 2027), pre-tax profit of ¥228 million (up 24.3% year-on-year) is forecast under IFRS standards, expected to be driven by increased income from market investment operations and increased net interest income.

Key Products

Growth Drivers

• Substantial increase in interest on loans amid the Bank of Japan's rate hikes (¥49,865 million, up 37.2% year-on-year)
• Increase in interest and dividends on securities amid rising interest rates (expanded to ¥60,235 million, from ¥52,989 million in the prior period)
• Steady increase in deposit balances on a consolidated basis (¥4,600,113 million, up 8.4% from the end of the prior period)
• Expected increase in market investment operation income in the next fiscal year due to the buildup of investment balances, under IFRS standards
• Expected increase in net interest income in the next fiscal year's earnings forecast, driven by the interest rate environment

Risks

• Decline in housing loan-related fee income: fee and commission income declined substantially to ¥10,179 million (from ¥14,469 million in the prior period) due to intensifying competition and changes in market conditions
• Increase in operating expenses: operating expenses increased to ¥32,001 million (from ¥27,575 million in the prior period), mainly due to system-related costs, with further increases in system-related costs expected in the next fiscal year
• Rise in funding costs: funding costs such as deposit interest increased to ¥53,757 million (from ¥44,250 million in the prior period) amid the rising interest rate environment
• Decrease in loan balance: consolidated loan balance decreased to ¥3,828,729 million (from ¥3,899,036 million at the end of the prior period)
• Contraction of segment assets: segment assets decreased to ¥5,919,550 million (from ¥6,078,423 million at the end of the prior period)
• Interest rate risk: risk of duration mismatch between assets and liabilities amid the Bank of Japan's further rate hike phase
• IFRS transition risk: impact of accounting treatment changes associated with the voluntary application of IFRS accounting standards from the first quarter of FY2027 (ending March 2027)

Business Details

The "Other" segment is comprised of Sony Life Care Inc. (which oversees the Nursing Care Business, with Life Care Design Co., Ltd. and Proud Life Co., Ltd. under it), which oversees the Nursing Care Business, and Sony Financial Ventures Inc. (with SFV-GB Investment Limited Partnership and Sony Financial Ventures & Global Brain Frontier Inc., among others, under it), which handles the Venture Capital Business. It is positioned as a group of non-core businesses complementing the three main businesses of life insurance, non-life insurance, and banking, and accounts for a small proportion of the Group's overall ordinary revenues, at approximately 0.6%.

Recent Overview

Segment turned from profit to loss year-on-year; resolution passed for absorption-type merger between nursing care subsidiaries

In the "Other" segment for FY2026 (ending March 2026), ordinary revenues (external customers) declined to ¥18,247 million (down ¥1,168 million year-on-year), and segment profit/loss deteriorated to a loss of ¥743 million (a turn to loss from a profit of ¥644 million in the prior period). Meanwhile, impairment losses shrank substantially to ¥21 million (from ¥166 million in the prior period). As a subsequent event, a resolution was passed for an absorption-type merger (effective April 1, 2027) in which Life Care Design Co., Ltd., a subsidiary under Sony Life Care, will be the surviving company and Proud Life Co., Ltd. will be the absorbed company. The purpose is to consolidate management functions, accelerate decision-making, and unify branding, though the impact on consolidated results is expected to be minor.

Key Products

Growth Drivers

• Expansion of service demand in the Nursing Care Business amid the progression of an aging society
• Effects of brand unification, management efficiency, and centralized governance through the merger between nursing care subsidiaries
• Revenue contribution from the addition of Sony Financial Ventures & Global Brain Frontier Inc. to the scope of consolidation (from the third quarter of FY2026 (ending March 2026))
• Promotion of the "exploration" strategy in the Group's medium-term management plan (strengthening non-financial touchpoints with younger generations, supporting senior customers)

Risks

• Risk of investment losses due to deteriorating performance of venture capital investees or market fluctuations (the segment fell into a loss of ¥743 million in the current period)
• Risk of difficulty securing personnel and rising labor costs in the Nursing Care Business
• Risk of impairment of fixed assets (impairment losses in the "Other" category were ¥21 million in the current period, versus ¥166 million in the prior period)
• The proportion of the Group's overall ordinary revenues is small, at approximately 0.6%, limiting its contribution to overall Group performance
• Integration cost and business transition risk associated with the merger of nursing care subsidiaries