v3.25.2
Insurance contracts in the financial services segment
 12 Months Ended
Mar. 31, 2025
Disclosure Of Insurance Contracts [Abstract]  
Insurance contracts in the financial services segment
13.
Insurance contracts in the Financial Services segment
 
(1)
Significant judgments and estimates for insurance contracts
 
i)
Measurement methods and inputs for insurance contracts
The methods and main inputs used to measure insurance contracts are as follows:
 
 
  
  Weighted average (%)  
 
 
  
March 31
 
    
  2024  
    
  2025  
  
Mortality rates
      1.02 %      1.03 % 
Lapse and surrender rates
      3.57 %      3.80 % 
Sony estimates the mortality and morbidity rates based on the historical and most recent actual outcomes and analyzes the historical experience and trends in data using statistical methods. When estimating the mortality and morbidity rates for each group of insurance contracts, Sony takes into account the characteristics of policyholders including gender, health conditions and smoking habits and the characteristics of the group of insurance contracts such as the selective effects over time. The estimates are revised in a timely manner to reflect changes in lifestyle, as well as changes in social conditions such as improvement of mortality and morbidity rates in the future.
Sony estimates the lapse and surrender rates based on the historical and most recent actual outcomes and determines the probability-weighted lapse and surrender rates for each group of insurance contracts by analyzing historical experience and trends in data using statistical methods. Lapse and surrender rates are estimated, taking into account both ordinary and dynamic lapses, and reflect the tendency to higher surrender rates when the yield on contracts increases or exceeds the guaranteed minimum for certain insurance contracts. In determining the lapse and surrender rates, historical actual data is considered. If there is no or little historical actual data, the actual results of similar products as well as domestic and overseas practical trends are used as reference.
Sony projects estimates of future expenses based on the current expense levels. The expenses comprise expenses directly attributable to the group of insurance contracts, including the allocation of fixed and variable overhead expenses. In addition, Sony applies inflation adjustments to the estimated expenses in future.
 
ii)
Discretionary participation features of future cash flows
For certain participating insurance contracts other than direct participating contracts, the effect of discretionary changes on the fulfillment cash flows is adjusted in the CSM. Although Sony has discretionary participation features related to the investment policy for these contracts, the investment policy is established based on the market conditions. Therefore, the effect of changes in assumptions that relate to financial risk on the investment policy is included in insurance finance income or expenses. In addition, since the dividend policy can be changed at Sony’s discretion, the effect of changes in the dividend policy on the fulfillment cash flows is adjusted in the CSM.
 
iii)
Risk adjustments for
non-financial
risk
Risk adjustments for
non-financial
risk are determined to reflect the compensation that each insurance subsidiary would require for bearing
non-financial
risk, and are allocated to groups of insurance contracts based on an analysis of the risk profiles of the groups. Risk adjustments for
non-financial
risk reflect the diversification benefits, in a way that is consistent with the compensation that the insurance company would require and that reflects its degree of risk aversion.
The risk adjustments for
non-financial
risk are determined mainly using a cost of capital technique. In applying a cost of capital technique, Sony determines the risk adjustment for
non-financial
risk by applying a
cost-of-capital
rate to the amount of capital required for each future reporting date and discounting the result using risk-free rates adjusted for illiquidity. The required capital is determined by estimating the probability distribution of the present value of future cash flows from insurance contracts at each future reporting date and calculating the capital that Sony would require to meet its contractual obligations to pay claims and expenses at a 99.5% confidence level for one year. The
cost-of-capital
rate represents the additional reward that investors require for exposure to the
non-financial
risk. The weighted average
cost-of-capital
rates of Sony for the fiscal years ended March 31, 2024 and 2025 were 3.0% and 3.0%, respectively.
In addition, the risk adjustments determined by applying a cost of capital technique for the fiscal years ended March 31, 2024 and 2025 correspond to the confidence levels of 84.1% and 81.3% (time horizon: the life of the insurance contracts), respectively.
 
 
iv)
Discount rates
All cash flows are discounted using risk-free yield curves adjusted to reflect the characteristics of the cash flows and the liquidity of the insurance contracts. Sony determines the risk-free yield curves using the yields on government bonds. The yield curve is determined by incorporating long-term real interest rate and inflation expectations. Regarding extrapolation for the periods in which market data is not available, a method using an ultimate forward rate is applied. Specifically, Sony uses an ultimate forward rate of 3.5% and starts extrapolation in the 40th year (or the 30th year for U.S. dollar). The forward rates for the 41st year (or the 31st year for U.S. dollar) and onwards are extrapolated so that they will converge to the level of the ultimate forward rate in 30 years, using the Smith-Wilson method. To reflect the liquidity characteristics of the insurance contracts, the risk-free yield curves are adjusted by an illiquidity premium. Illiquidity premiums are determined by setting up a reference portfolio of Sony’s assets.
The table below sets out the yield curves used to discount the cash flows of insurance contracts for major currencies (converted at the spot rate).
 
 
  
Yield curve (%)
 
 
  
March 31
 
 
  
2024
 
 
2025
 
Term
  
 JPY 
 
 
 USD 
 
 
 JPY 
 
 
 USD 
 
1 year
   
 
0.06
% 
  
 
5.11
% 
  
0.65
% 
   
4.09
% 
5 years
   
 
0.38
% 
  
 
4.25
% 
  
1.13
% 
   
4.01
% 
10 years
   
 
0.77
% 
  
 
4.25
% 
  
1.54
% 
   
4.31
% 
20 years
   
 
1.58
% 
  
 
4.63
% 
  
2.34
% 
   
4.83
% 
30 years
   
 
1.95
% 
  
 
4.37
% 
  
2.69
% 
   
4.68
% 
40 years
   
 
2.14
% 
  
 
4.07
% 
  
3.02
% 
   
4.29
% 
 
v)
Investment components
Sony identifies the investment component of an insurance contract by determining the amount that it is required to repay to the policyholder in all circumstances, regardless of whether an insured event occurs or not. These include circumstances in which an insured event occurs, or the contract matures or is terminated without an insured event occurring. Investment components are excluded from insurance revenue and insurance service expenses.
 
vi)
Determination of coverage units
The amount of the CSM of a group of insurance contracts that is recognized as insurance revenue in each period is determined by identifying the coverage units in the group and recognizing in profit or loss the amount of the CSM allocated to the coverage units provided during the current period. The number of coverage units is determined by considering for each contract the quantity of benefits provided and its expected coverage period. Specifically, Sony determines the quantity of benefits based on:
 
  -  
the death benefit amount in the case of contracts for which the death benefit amount increases or decreases based on the period (e.g., whole life, term life and variable life insurance contracts);
 
  -  
the premium amount proportionate to the insurance period in the case of contracts whose host contract and riders have different coverage types (e.g., disease and health insurance contracts); and
 
  -  
the cash surrender value (or the premium reserve during the annuity payment period) in the case of annuity contracts with investment-related services (e.g., individual variable annuity contracts).
Sony considers the characteristics of insurance contracts and aggregates the quantities of benefits related to insurance coverage, investment-return services and investment-related services when determining the relative weighting of the benefits provided to the policyholder by these services.
 
vii)
Claim development
Given that the actual amounts of claims do not materially differ from the undiscounted amounts of the claims previously estimated, information about claim development has not been disclosed for the fiscal years ended March 31, 2024 and 2025.
 
(2)
Reconciliation of insurance contract liabilities
The tables below show the changes in insurance contract liabilities for the fiscal years ended March 31, 2024 and 2025.
 
(a)
Changes in liabilities for remaining coverage and liabilities for incurred claims
 
 
 
Yen in millions
 
 
 
Liability for remaining coverage
 
 
 
 
 
Liability for
incurred claims
*4
 
 
 
 
 
Total
 
 
 
Excluding loss
component
 
 
 
 
 
Loss

component
 
 
 
 
 
 
 
Balance as of April 1, 2023
 
      
 
      
 
      
 
      
 
      
 
      
 
      
Insurance contract assets
*1
     (93,283 )        -         32,532         (60,751 ) 
Insurance contract liabilities
*2*3
     12,331,738         51,840         126,452         12,510,030  
 
 
 
      
 
 
      
 
 
      
 
 
  
Net amounts
     12,238,455         51,840         158,984         12,449,279  
Insurance revenue
     (586,115 )        -         -         (586,115 ) 
Insurance service expenses
              
Incurred claims and other insurance service expenses
     -         (3,721 )        276,809         273,088  
Amortization of insurance acquisition cash flows
     124,518         -         -         124,518  
Changes in liabilities for incurred claims
     -         -         5,008         5,008  
Losses and reversals of losses on onerous contracts
     -         4,592         -         4,592  
 
 
 
      
 
 
      
 
 
      
 
 
  
Total insurance service expenses
     124,518         871         281,817         407,206  
 
 
 
      
 
 
      
 
 
      
 
 
  
Insurance service result
     (461,597 )        871         281,817         (178,909 ) 
Insurance finance expenses (income)
     244,793         2,663         (251 )        247,205  
 
 
 
      
 
 
      
 
 
      
 
 
  
Total amounts recognized in comprehensive income
     (216,804 )        3,534         281,566         68,296  
Investment component excluded from insurance revenue and insurance service expenses
     (944,520 )        -         944,520         -  
Cash flows
              
Premiums received
     1,886,124         -         -         1,886,124  
Insurance acquisition cash flows
     (153,410 )        -         -         (153,410 ) 
Claims and other insurance service expenses paid
     -         -         (1,212,518 )        (1,212,518 ) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total cash flows
     1,732,714         -         (1,212,518 )        520,196  
Other
     (199 )        (41 )        (167 )        (407 ) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Balance as of March 31, 2024
              
Insurance contract assets
*1
     (90,377 )        -         33,402         (56,975 ) 
Insurance contract liabilities
*2*3
     12,900,023         55,333         138,983         13,094,339  
 
 
 
      
 
 
      
 
 
      
 
 
  
Net amounts
     12,809,646         55,333         172,385         13,037,364  
Insurance revenue
  
(622,959
) 
    
-
    
-
    
(622,959
) 
Insurance service expenses
              
Incurred claims and other insurance service expenses
  
-
    
(5,882
) 
    
304,059
    
298,177
Amortization of insurance acquisition cash flows
  
134,818
    
-
    
-
    
134,818
Changes in liabilities for incurred claims
  
-
    
-
    
5,661
    
5,661
Losses and reversals of losses on onerous contracts
  
-
    
14,276
    
-
    
14,276
 
 
 
      
 
 
      
 
 
      
 
 
  
Total insurance service expenses
  
134,818
    
8,394
    
309,720
    
452,932
 
 
 
      
 
 
      
 
 
      
 
 
  
Insurance service result
  
(488,141
) 
    
8,394
    
309,720
    
(170,027
) 
Insurance finance expenses (income)
  
(631,892
) 
    
(498
) 
    
(2,415
) 
    
(634,805
) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total amounts recognized in comprehensive income
  
(1,120,033
) 
    
7,896
    
307,305
    
(804,832
) 
Investment component excluded from insurance revenue and insurance service expenses
  
(992,966
) 
    
-
    
992,966
    
-
Cash flows
                      
Premiums received
  
2,056,493
    
-
    
-
    
2,056,493
Insurance acquisition cash flows
  
(167,299
) 
    
-
    
-
    
(167,299
) 
Claims and other insurance service expenses paid
  
-
    
-
    
(1,298,150
) 
    
(1,298,150
) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total cash flows
  
1,889,194
    
-
    
(1,298,150
) 
    
591,044
Other
  
(68
) 
    
(46
) 
    
(539
) 
    
(653
) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Balance as of March 31, 2025
                      
Insurance contract assets
*1
  
(81,537
) 
    
2
    
33,820
    
(47,715
) 
Insurance contract liabilities
*2*3
  
12,667,310
    
63,181
    
140,147
    
12,870,638
 
 
 
      
 
 
      
 
 
      
 
 
  
Net amounts
  
12,585,773
    
63,183
    
173,967
    
12,822,923
 
 
 
      
 
 
      
 
 
      
 
 
  
 
 
*1
Insurance contract assets are included in other current assets or other
non-current
assets in the consolidated statements of financial position.
 
*2
The current portion of insurance contract liabilities is included in other current liabilities in the consolidated statements of financial position.
 
*3
As of April 1, 2023, March 31, 2024 and March 31, 2025, the carrying amounts of the current portion of insurance contract liabilities were 145,057 million yen, 162,344 million yen and 181,332 million yen, respectively, and the carrying amounts of the
non-current
portion of insurance contract liabilities were 12,364,973 million yen, 12,931,995 million yen and 12,689,306 million yen, respectively.
 
*4
Risk adjustment for
non-financial
risk of insurance contracts measured under the PAA is not presented separately from the estimates of the present value of future cash flows but included in liabilities for incurred claims, since the amount is not considered material.
 
 
(b)
Changes in insurance contract liabilities from insurance contracts not measured under the PAA by measurement component
 
 
 
Yen in millions
 
 
 
Estimates of
present value
of future
cash flows
 
 
 
 
 
Risk adjustment
for non-financial

risk
 
 
 
 
 
CSM
 
 
 
 
 
Total
 
Balance as of April 1, 2023
 
      
 
      
 
      
 
      
 
      
 
      
 
      
Insurance contract assets
     (341,096 )        39,067         241,278         (60,751 ) 
Insurance contract liabilities
     10,217,895         381,950         1,811,339         12,411,184  
 
 
 
      
 
 
      
 
 
      
 
 
  
Net amounts
     9,876,799         421,017         2,052,617         12,350,433  
Changes that relate to future service
              
Changes in estimates that adjust the CSM
     233,415         (18,328 )
 
       (215,087 )
 
       -  
Changes in estimates that do not adjust the CSM
     6,008         (3,532 )        -         2,476  
Effect of contracts initially recognized during the period
     (403,124 )
 
       40,912         364,328         2,116  
 
 
 
      
 
 
      
 
 
      
 
 
  
Total changes that relate to future service
     (163,701 )        19,052         149,241         4,592  
Changes that relate to current service
              
CSM recognized in profit or loss for the services provided
     -         -         (151,841 )        (151,841 ) 
Change in risk adjustment for
non-financial
risk due to release of risk
     -         (26,899 )        -         (26,899 ) 
Experience adjustments
     5,076         -         -         5,076  
 
 
 
      
 
 
      
 
 
      
 
 
  
Total changes that relate to current service
     5,076         (26,899 )        (151,841 )        (173,664 ) 
Changes that relate to past service
     255         (2 )        -         253  
 
 
 
      
 
 
      
 
 
      
 
 
  
Insurance service result
     (158,370 )        (7,849 )        (2,600 )        (168,819 ) 
Insurance finance expenses (income)
     185,948         3,262         57,995         247,205  
 
 
 
      
 
 
      
 
 
      
 
 
  
Total amounts recognized in comprehensive income
     27,578         (4,587 )        55,395         78,386  
Cash flows
              
Premiums received
     1,748,139         -         -         1,748,139  
Insurance acquisition cash flows
     (138,544 )        -         -         (138,544 ) 
Claims and other insurance service expenses paid
     (1,107,850 )        -         -         (1,107,850 ) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total cash flows
     501,745         -         -         501,745  
Other
     (834 )        52         76         (706 ) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Balance as of March 31, 2024
              
Insurance contract assets
     (291,878 )        27,824         207,079         (56,975 ) 
Insurance contract liabilities
     10,697,166         388,658         1,901,009         12,986,833  
 
 
 
      
 
 
      
 
 
      
 
 
  
Net amounts
     10,405,288         416,482         2,108,088         12,929,858  
Changes that relate to future service
              
Changes in estimates that adjust the CSM
  
276,707
    
10,662
    
(287,369
) 
    
-
Changes in estimates that do not adjust the CSM
  
11,762
    
746
    
-
    
12,508
Effect of contracts initially recognized during the period
  
(431,801
) 
    
44,335
    
389,234
    
1,768
 
 
 
      
 
 
      
 
 
      
 
 
  
Total changes that relate to future service
  
(143,332
) 
    
55,743
    
101,865
    
14,276
Changes that relate to current service
                      
CSM recognized in profit or loss for the services provided
  
-
    
-
    
(151,025
) 
    
(151,025
) 
Change in risk adjustment for
non-financial
risk due to release of risk
  
-
    
(28,681
) 
    
-
    
(28,681
) 
Experience adjustments
  
656
    
-
    
-
    
656
 
 
 
      
 
 
      
 
 
      
 
 
  
Total changes that relate to current service
  
656
    
(28,681
) 
    
(151,025
) 
    
(179,050
) 
Changes that relate to past service
  
6
    
(6
) 
    
-
    
-
 
 
 
      
 
 
      
 
 
      
 
 
  
Insurance service result
  
(142,670
) 
    
27,056
    
(49,160
) 
    
(164,774
) 
Insurance finance expenses (income)
  
(661,734
) 
    
(2,250
) 
    
30,155
    
(633,829
) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total amounts recognized in comprehensive income
  
(804,404
) 
    
24,806
    
(19,005
) 
    
(798,603
) 
Cash flows
                      
Premiums received
  
1,894,792
    
-
    
-
    
1,894,792
Insurance acquisition cash flows
  
(151,614
) 
    
-
    
-
    
(151,614
) 
Claims and other insurance service expenses paid
  
(1,179,036
) 
    
-
    
-
    
(1,179,036
) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total cash flows
  
564,142
    
-
    
-
    
564,142
Other
  
2,883
    
643
    
(1,334
) 
    
2,192
 
 
 
      
 
 
      
 
 
      
 
 
  
Balance as of March 31, 2025
                      
Insurance contract assets
  
(245,602
) 
    
24,501
    
173,386
    
(47,715
) 
Insurance contract liabilities
  
10,413,511
    
417,430
    
1,914,363
    
12,745,304
 
 
 
      
 
 
      
 
 
      
 
 
  
Net amounts
  
10,167,909
    
441,931
    
2,087,749
    
12,697,589
 
 
 
      
 
 
      
 
 
      
 
 
  
 
 
(3)
Effect of contracts initially recognized in the year
The table below shows the effect of contracts initially recognized during the fiscal years ended March 31, 2024 and 2025 on measurement components of insurance contracts not measured under the PAA.
 
 
 
Yen in millions
 
 
 
Fiscal year ended March 31
 
 
 
2024
 
 
2025
 
 
 
Profitable
contracts
issued
 
 
Onerous
contracts
issued
 
 
Total
 
 
Profitable
contracts
issued
 
 
Onerous
contracts
issued
 
 
Total
 
Estimates of the present value of future cash outflows
 
      
 
      
 
      
 
      
 
      
 
      
Claims and other insurance service expenses
  
 
2,117,351
 
  
 
4,844
 
  
 
2,122,195
 
  
 
2,227,649
 
  
 
6,376
 
  
 
2,234,025
 
Insurance acquisition cash flows
  
 
143,674
 
  
 
2,203
 
  
 
145,877
 
  
155,135
  
2,735
  
157,870
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total estimates of the present value of future cash outflows
  
 
2,261,025
 
  
 
7,047
 
  
 
2,268,072
 
  
2,382,784
  
9,111
  
2,391,895
Estimates of the present value of future cash inflows
  
 
(2,666,256
) 
  
 
(4,940
) 
  
 
(2,671,196
) 
  
(2,816,078
) 
  
(7,618
) 
  
(2,823,696
) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total estimates of the present value of future cash flows
  
 
(405,231
) 
  
 
2,107
 
  
 
(403,124
) 
  
(433,294
) 
  
1,493
  
(431,801
) 
Risk adjustment for
non-financial
risk
  
 
40,903
 
  
 
9
 
  
 
40,912
 
  
44,060
  
275
  
44,335
CSM
  
 
364,328
 
  
 
-
 
  
 
364,328
 
  
389,234
  
-
  
389,234
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total effect on measurement components
  
 
-
 
  
 
2,116
 
  
 
2,116
 
  
-
  
1,768
  
1,768
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
(4)
Insurance revenue
The table below shows the breakdown of insurance revenue for the fiscal years ended March 31, 2023, 2024 and 2025.
 
 
  
Yen in millions
 
 
  
Fiscal year ended March 31
 
 
  
 2023 
 
 
 
 
  
 2024 
 
 
 
 
  
 2025 
 
Insurance contracts not measured under the PAA
                                              
Amounts relating to the changes in the liability for remaining coverage
  
      
 
      
  
      
 
      
  
      
Expected incurred claims and insurance service expenses
   
 
152,732
 
     
 
163,182
 
     
 
178,224
 
Changes in risk adjustments for
non-financial
risk due to release of risk
   
 
23,466
 
     
 
26,899
 
     
28,681
CSM recognized in profit or loss for services provided
   
 
151,483
 
     
 
151,841
 
     
151,025
  
 
 
       
 
 
       
 
 
  
Total amounts relating to the changes in the liability for remaining coverage
   
 
327,681
 
     
 
341,922
 
     
357,930
Recovery of insurance acquisition cash flows
   
 
98,234
 
     
 
109,824
 
     
119,490
  
 
 
       
 
 
       
 
 
  
Total insurance revenue for the insurance contracts not measured under the PAA
   
 
425,915
 
     
 
451,746
 
     
477,420
Insurance contracts measured under the PAA
   
 
128,655
 
     
 
134,369
 
     
145,539
  
 
 
       
 
 
       
 
 
  
Total insurance revenue
   
 
554,570
 
     
 
586,115
 
       
622,959
  
 
 
       
 
 
       
 
 
  
 
 
(5)
Timing of when the CSM is expected to be recognized in profit or loss
The table below shows when Sony expects to recognize the CSM in profit or loss for insurance contracts not measured under the PAA as of March 31, 2024 and 2025.
 
 
 
CSM
 
 
 
Yen in millions
 
 
 
Within

1 year
 
 
1 year
to 2 years
 
 
2 years
to 3 years
 
 
3 years
to 4 years
 
 
4 years
to 5 years
 
 
5 years
to 10 years
 
 
More than
10 years
 
 
Total
 
As of March 31, 2024
     125,233       117,663       109,776       100,912       92,671       376,011       1,185,822       2,108,088  
As of March 31, 2025
     122,591       114,961       107,412       97,307       89,960       362,794       1,192,724       2,087,749  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
(6)
Information of net investment returns and insurance finance income or expenses
The table below shows the information related to net investment returns on assets and insurance finance expenses (income) recognized in profit or loss and other comprehensive income for the fiscal years ended March 31, 2023, 2024 and 2025.
 
 
Yen in millions
 
 
 
Fiscal year ended March 31
 
 
 
2023
 
 
2024
 
 
2025
 
Amounts recognized in profit or loss
 
      
 
      
 
      
Net investment returns
*1
 
      
 
      
 
      
Financial assets measured at FVPL
     (59,193 )      715,388      
10,104
  
Interest income from debt instruments required to be measured at FVOCI
     179,207       180,822    
182,436
Currency exchange differences
     93,858       156,970    
(16,412
 ) 
Other
     (12,374 )      (35,463 )   
(36,466
 ) 
 
 
 
    
 
 
    
 
 
  
Total net investment returns
     201,498        1,017,717      
139,662
  
 
 
 
    
 
 
    
 
 
  
Insurance finance expenses (income)
*2
      
Effect of changes in the value of underlying items of variable life insurance and individual variable annuity contracts and changes in interest rates and other financial risks
     (176,328 )      685,726    
(5,684
 ) 
Interest accreted
     174,107       183,188    
193,523
Currency exchange differences
     103,391       173,230    
(20,958
 ) 
Other
     (15,771 )      (12,444 )   
(13,320
 ) 
 
 
 
    
 
 
    
 
 
  
Total insurance finance expenses (income)
     85,399       1,029,700    
153,561
 
 
 
    
 
 
    
 
 
  
Amounts recognized in profit or loss
     116,099       (11,983 )   
(13,899
 ) 
 
 
 
    
 
 
    
 
 
  
Amounts recognized in other comprehensive income
      
Net investment returns
      
Underlying assets
     (1,131,508 )      (969,774 )   
(969,331
 ) 
 
 
 
    
 
 
    
 
 
  
Total net investment returns
     (1,131,508 )      (969,774 )   
(969,331
 ) 
 
 
 
    
 
 
    
 
 
  
Insurance finance expenses (income)
*2
        
Effect of changes in interest rates and other financial risks
     (1,010,761 )      (782,495 )   
(788,366
 ) 
Other
     44       -    
-
 
 
 
    
 
 
    
 
 
  
Total insurance finance expenses (income)
     (1,010,717 )      (782,495 )   
(788,366
 ) 
 
 
 
    
 
 
    
 
 
  
Amounts recognized in other comprehensive income
     (120,791 )      (187,279 )   
(180,965
 ) 
 
 
 
    
 
 
    
 
 
  
Total net investment returns and insurance finance income or expenses
     (4,692 )      (199,262 )   
(194,864
 ) 
 
 
 
    
 
 
    
 
 
  
 
*1
Included in other financial services revenue in the consolidated statements of income.
 
*2
Expenses are presented as positive and income is presented as negative.
 
 
(7)
Underlying items of insurance contracts measured under the variable fee approach
The table below shows the underlying items of insurance contracts measured under the variable fee approach and their fair values as of March 31, 2024 and 2025.
 
 
 
Yen in millions
 
 
 
March 31
 
 
 
2024
 
 
2025
 
Cash and cash equivalents
  
 
19,411
 
  
35,235
Debt securities
      
Japanese national/local government bonds and corporate bonds
  
 
42,349
 
  
34,936
Foreign national/local government bonds and corporate bonds
  
 
312,919
 
  
478,751
Equity securities
  
 
  1,855,432
 
  
2,375,201
Other
  
 
2,390
 
  
2,057
 
 
 
    
 
 
  
Total fair values of the underlying items of insurance contracts measured under the variable fee approach
     2,232,501      
2,926,180
  
 
 
 
    
 
 
  
 
(8)
Disclosure of transition to IFRS 17
IFRS 17 was effective for Sony as of April 1, 2023. As a result, the effect of adopting IFRS 17 on Sony’s total equity as of April 1, 2022, the transition date for IFRS 17, was a decrease of 1,490,667 million yen, which consisted of an increase of 409,654 million yen of retained earnings and a decrease of 1,900,321
million yen of accumulated other comprehensive income, mainly due to the effect of the changes in the discount rate used in measuring insurance contract liabilities and other measurement method differences between IFRS 4 “Insurance Contracts” and IFRS 17. Upon transition to IFRS 17 as of April 1, 2022, Sony determined that it would be impracticable to apply the full retrospective approach to certain groups of insurance contracts, as the necessary information was unavailable due to restrictions of contract data and systems in the past or it was impossible to recreate past estimation without the use of hindsight. Sony has applied alternative transition methods (the modified retrospective approach or the fair value approach) to groups of insurance contracts for which the full retrospective approach is impracticable as of the date of the transition.
Sony has applied the following approaches on transition to IFRS 17:
 
Year of issue (fiscal year)
  
Transition approach
2015 and thereafter
  
For all groups of insurance contracts: Full retrospective approach
1993 – 2014
  
For groups of insurance contracts with direct participation features and certain groups of insurance contracts without direct participation features: Fair value approach
 
For other groups of insurance contracts: Modified retrospective approach
In and before 1992
  
For all groups of insurance contracts: Fair value approach
 
 
Modified retrospective approach
The objective of the modified retrospective approach was to achieve the closest outcome to retrospective application possible using reasonable and supportable information available without undue cost or effort. Sony has applied each of the following modifications only to the extent that it did not have reasonable and supportable information to apply IFRS 17 retrospectively.
Sony has applied the following modifications to certain groups of insurance contracts:
 
  -
for groups of contracts issued, initiated or acquired from April 1, 1993 to March 31, 2015, the future cash flows on initial recognition were estimated by adjusting the amount as of April 1, 2015, which can be determined retrospectively, for the cash flows that were known to have occurred before that date;
 
  -
for groups of contracts issued, initiated or acquired from April 1, 1993 to March 31, 2013, the illiquidity premiums applied to the observable risk-free yield curves on initial recognition were estimated by determining an average spread between the observable risk-free yield curves and the discount rates, which can be determined retrospectively, for the period from April 1, 2013 to March 31, 2022. The amount of insurance finance income or expenses recognized in accumulated other comprehensive income as of April 1, 2022 was calculated by using this discount rate; and
 
  -
the risk adjustment for
non-financial
risk on initial recognition was determined by adjusting the amount as of April 1, 2022 for the expected release of risk before that date.
After applying such modifications to fulfillment cash flows, the CSM (or the loss component) on initial recognition was determined as follows:
 
  -
the amount of the CSM recognized as profit or loss before April 1, 2022 was determined by comparing the remaining coverage units as of April 1, 2022 and the coverage units provided based on groups of insurance contracts before that date; and
 
  -
the amount allocated to the loss component before April 1, 2022 was determined using the proportion of the loss component relative to the total estimate of the present value of the future cash outflows plus the risk adjustment for
non-financial
risk on initial recognition.
Fair value approach
Under the fair value approach, the CSM (or the loss component) as of April 1, 2022 was determined as the difference between the fair value of a group of insurance contracts and the fulfillment cash flows at that date.
For all insurance contracts measured under the fair value approach, Sony used reasonable and supportable information available as of April 1, 2022 to determine the following matters:
 
 
-
how to identify groups of contracts;
 
 
-
whether a contract meets the definition of an insurance contract with direct participation features; and
 
 
-
how to identify discretionary cash flows for contracts without direct participation features.
For groups of contracts measured under the fair value approach, the discount rates on initial recognition were determined as of April 1, 2022 rather than at the date of initial recognition.
For all insurance contracts measured under the fair value approach, the amount of insurance finance income or expenses recognized in accumulated in other comprehensive income as of April 1, 2022 was determined to be zero.
The effects of transition to IFRS 17 on Sony’s consolidated financial statements are as follows:
 
i)
Insurance revenue and the CSM by transition approach
Upon transition to IFRS 17, Sony applied either the modified retrospective approach or the fair value approach for groups of insurance contracts where it was impracticable to fully apply IFRS 17 retrospectively. The table below shows insurance revenues by transition approach for the fiscal years ended March 31, 2023, 2024 and 2025, as well as the balances of the CSM by transition approach as of March 31, 2024 and 2025.
 
 
 
Yen in millions
 
 
 
Fiscal year ended March 31
 
 
 
Contracts measured under
the modified retrospective
approach at transition
 
 
Contracts measured under
the fair value

approach at transition
 
 
New contracts and
contracts measured under
the full retrospective
approach at transition
 
 
Total
 
Insurance revenue
 
      
 
      
 
      
 
      
2023
          190,199            26,988           337,383           554,570  
2024
     185,731       27,079       373,305       586,115  
2025
   172,003   29,206   421,750   622,959
 
 
 
    
 
 
    
 
 
    
 
 
  
 
 
 
Yen in millions
 
 
 
Fiscal year ended March 31
 
 
 
2024
 
 
2025
 
 
 
Contracts
measured
under the
modified
retrospective
approach at
transition
 
 
Contracts
measured
under the fair
value

approach at
transition
 
 
New
contracts
and
contracts
measured
under the
full
retrospective
approach at
transition
 
 
Total
 
 
Contracts
measured
under the
modified
retrospective
approach at
transition
 
 
Contracts
measured
under the
fair value

approach at
transition
 
 
New contracts
and contracts
measured
under the full
retrospective
approach at
transition
 
 
Total
 
CSM
 
      
 
      
 
      
 
      
 
      
 
      
 
      
 
      
Beginning balance of the fiscal year
  
 
864,530
 
  
 
58,008
 
  
 
1,130,079
 
  
 
2,052,617
 
  
763,669
 
86,271
  
1,258,148
  
2,108,088
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Changes that relate to future service
  
 
(61,165
) 
  
 
32,341
 
  
 
178,065
 
  
 
149,241
 
  
(89,828
) 
  
556
  
191,137
  
101,865
Changes that relate to current service
  
 
(66,827
) 
  
 
(5,834
) 
  
 
(79,180
) 
  
 
(151,841
) 
  
(55,642
) 
  
(7,020
) 
  
(88,363
) 
  
(151,025
) 
Insurance finance expense (income)
  
 
26,954
 
  
 
1,673
 
  
 
29,368
 
  
 
57,995
 
  
23,501
  
781
  
5,873
  
30,155
Other
  
 
177
 
  
 
83
 
  
 
(184
) 
  
 
76
 
  
(1,090
) 
  
-
  
(244
) 
  
(1,334
) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Ending balance of the fiscal year
      763,669         86,271       1,258,148        2,108,088      
640,610
      
80,588
      
1,366,551
      
2,087,749
  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
 
ii)
Changes in accumulated other comprehensive income for financial assets measured at fair value through other comprehensive income due to the application of IFRS 17.
The table below shows the changes in accumulated other comprehensive income during the fiscal years ended March 31, 2024 and 2025 for financial assets measured at fair value through other comprehensive income, among investment assets related to groups of insurance contracts to which Sony applied the modified retrospective approach or the fair value approach as of the date of the transition.
 
 
 
Yen in millions
 
 
 
Fiscal year ended
March 31
 
 
2024
 
 
2025
 
Beginning balance of the fiscal year
     (448,390 )     
9,445
  
 
 
 
    
 
 
  
Net change in fair value
  
 
     618,978
 
  
778,509
Net amount reclassified to profit or loss
  
 
16,903
 
  
1,142
Related income tax
  
 
(178,046
) 
  
(225,613
) 
 
 
 
    
 
 
  
Ending balance of the fiscal year
     9,445    
563,483
  
 
 
 
    
 
 
  
 
(9)
Insurance and market risks
Risk management policy and exposure
In the life insurance business, Sony manages various market-related risks in the following manner:
 
(a)
Insurance risk management
Insurance risk
With respect to insurance underwriting risk, based on the level of policy reserves and capital levels, the life insurance subsidiary manages the insurance portfolio appropriately, such as setting policy limits for each type of insurance as necessary. In addition, underwriting standards and standards for revising and abolishing each product are clearly defined as internal rules and are regularly reviewed.
Concentration of insurance risk
The insurance contract portfolio does not have an excessively concentrated insurance risk.
 
 
(b)
Market risk management
Interest rate risk management
Interest rate risk is managed by the risk management division of the life insurance subsidiary based on the policies for interest rate risk management that specify details such as risk management methods and procedures. Based on ALM policies that are determined through such methods as deliberation by the life insurance subsidiary’s Executive Committee, the subsidiary determines and confirms actual risk conditions with its Board of Directors. The division maintains an overall understanding of the interest rates and durations of financial instruments, monitors them based on the analysis of the quantity of risk using VaR, and periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.
As part of the ALM management, the life insurance subsidiary invests in financial assets that match the characteristics of the insurance contract obligations, and thereby reduces interest rate risk as much as possible. Through the purchase and sale of financial assets included in their portfolio, the interest rate sensitivity (duration) of financial assets and insurance contract obligations is matched as much as possible so that they ensure sufficient cash flow to settle insurance claims as they come due.
Exchange rate risk management
Exchange rate risk is managed by the risk management division of the life insurance subsidiary based on the policies for exchange rate risk management that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.
Equity market price fluctuation risk management
Equity market price fluctuation risk is managed by the risk management division of the life insurance subsidiary based on the policies for equity market price fluctuation risk management that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.

Derivative transactions risk management
Derivative transactions are managed by the risk management division of the life insurance subsidiary based on the policies for derivative transactions that specify details such as risk management methods and procedures. The division periodically reports the status of each risk to the life insurance subsidiary’s Board of Directors and Executive Committee.
 
 
Sensitivity analysis
Market risk
The table below shows the effects on income before income taxes and equity as of March 31, 2024 and 2025 if the underlying assumptions of the insurance contracts and financial instruments which Sony has in the life insurance business had changed.
 
 
 
 
 
March 31, 2024
 
 
 
 
 
Yen in millions
 
 
Insurance contracts
 
 
Financial

instruments
 
 
Total
 
Assumption
 
Changes in assumptions, etc.
 
Income
before
income
taxes
 
 
Equity
 
 
Income
before
income
taxes
 
 
Equity
 
 
Income
before
income
taxes
 
 
Equity
 
Interest rates
   50bp decrease     (152,232 )      (653,432 )      165,181       806,432       12,949       153,000  
  50bp increase     112,418       548,289       (143,050 )      (705,029 )      (30,632 )      (156,740 ) 
Fair value of stocks
   10% decrease     339,421       244,383       (341,783 )      (246,544 )      (2,362 )      (2,161 ) 
  10% increase     (344,921 )      (248,343 )      341,783       246,544       (3,138 )      (1,799 ) 
Foreign exchange rates
   10% appreciation of the Yen     468,851       315,357       (470,452 )      (287,872 )      (1,601 )      27,485  
  10% depreciation of the Yen     (475,489 )      (320,136 )      470,452       287,872       (5,037 )      (32,264 ) 
Maintenance expenses rates
   10% increase     (4,780 )      (8,024 )      -       -       (4,780 )      (8,024 ) 
Lapse and surrender rates
   10% increase     (13,351 )      (13,140 )      -       -       (13,351 )      (13,140 ) 
Mortality rates (death protection)
   5% increase     (4,892 )      (5,501 )      -       -       (4,892 )      (5,501 ) 
Mortality rates (third sector / annuity products)
   5% increase     1,382       2,054       -       -       1,382       2,054  
Morbidity rates
   5% increase     (8,239 )      (11,700 )      -       -       (8,239 )      (11,700 ) 
       
March 31, 2025
  
       
Yen in millions
  
 
Insurance contracts
    
Financial

instruments
    
Total
  
Assumption
  
Changes in assumptions, etc.
  
Income
before
income
taxes
    
Equity
    
Income
before
income
taxes
    
Equity
    
Income
before
income
taxes
    
Equity
  
Interest rates
   50bp decrease   (96,388 )    (489,064 )    98,806   620,061   2,418   130,997
  50bp increase   69,393   413,835   (87,517 )    (546,554 )    (18,124 )    (132,719 ) 
Fair value of stocks
   10% decrease   404,020   290,894   (412,232 )    (297,160 )    (8,212 )    (6,266 ) 
  10% increase   (407,812 )    (293,625 )    412,232     297,160   4,420   3,535
Foreign exchange rates
   10% appreciation of the Yen   539,518   366,832   (546,899 )    (339,178 )    (7,381 )    27,654
  10% depreciation of the Yen   (543,155 )    (369,450 )    546,899   339,178   3,744   (30,272 ) 
Maintenance expenses rates
   10% increase   (4,313 )    (5,390 )    -   -   (4,313 )    (5,390 ) 
Lapse and surrender rates
   10% increase   (23,254 )    (34,971 )    -   -   (23,254 )    (34,971 ) 
Mortality rates (death protection)
   5% increase   (4,838 )    (4,710 )    -   -   (4,838 )    (4,710 ) 
Mortality rates (third sector / annuity products)
   5% increase   960   (467 )    -   -   960   (467 ) 
Morbidity rates
   5% increase   (7,191 )    (4,639 )    -   -   (7,191 )    (4,639 ) 
* bp = basis point
 
 
Liquidity risk
 
(a)
Risk management policy and exposure
In line with liquidity risk management policies, the accounting division of each insurance subsidiary prepares and updates cash flow plans in a timely manner based on the reports from departments and manages cash flows, and the risk management division of each insurance subsidiary manages the liquidity risk. The accounting division and risk management division periodically or as needed report such information to each insurance subsidiary’s Board of Directors and Executive Committee.
 
(b)
Maturity analysis
The following table summarizes the estimated timing of the remaining undiscounted net cash outflows from insurance contract liabilities and investment contract liabilities and the contractual timing of the remaining undiscounted cash inflows arising from securities held in the insurance business as of March 31, 2024 and 2025. The cash flows of insurance contract liabilities are based on assumptions regarding morbidity rates, mortality rates, and lapse rates, which are consistent with the estimates used for the carrying
amounts.
 
 
 
Yen in millions
 
 
 
March 31, 2024
 
 
 
Total
 
 
Indefinite
Terms
 
 
Within

1 year
 
 
1 year to
2 years
 
 
2 years to
3 years
 
 
3 years to
4 years
 
 
4 years to
5 years
 
 
More than

5 years
 
Insurance contract liabilities and investment contract liabilities
 
 
19,173,131
 
 
 
-
 
 
 
60,673
 
 
 
86,008
 
 
 
127,079
 
 
 
175,412
 
 
 
248,021
 
 
 
18,475,938
 
Securities held in the insurance business
 
 
20,808,629
 
 
 
3,687,375
 
 
 
780,798
 
 
 
341,277
 
 
 
355,062
 
 
 
374,354
 
 
 
305,612
 
 
 
14,964,151
 
 
 
Yen in millions
 
 
 
March 31, 2025
 
 
 
Total
 
 
Indefinite
Terms
 
 
Within

1 year
 
 
1 year to
2 years
 
 
2 years to
3 years
 
 
3 years to
4 years
 
 
4 years to
5 years
 
 
More than

5 years
 
Insurance contract liabilities and investment contract liabilities
 
 
22,740,658
 
 
 
  -
 
 
 
64,000
 
 
 
95,151
 
 
 
157,008
 
 
 
246,745
 
 
 
288,630
 
 
 
21,889,124
 
Securities held in the insurance business
 
 
20,876,179
 
 
 
4,372,358
 
 
 
699,185
 
 
 
358,761
 
 
 
398,222
 
 
 
314,310
 
 
 
283,300
 
 
 
14,450,043
 
Since the total of the above estimated amounts is the amount before discounting, it exceeds the amount of insurance contract liabilities and securities which is included in investments and advances in the Financial Services segment shown in the consolidated statements of financial position.
 
(c)
Amounts payable on demand
The table below shows the amounts payable on demand from insurance contracts issued by Sony and the carrying amounts of the related insurance contract portfolios. The amounts payable on demand represent the amount of the cash surrender value to be paid if the insurance contracts are surrendered as of March 31, 2024 and 2025.
 
 
  
Yen in millions
 
 
  
March 31
 
 
  
2024
 
  
 2025 
 
Amounts payable on demand
      12,580,674        13,214,887  
Carrying amount
      12,870,195      12,642,981