v3.26.1
Insurance contracts in the financial services business
 12 Months Ended
Mar. 31, 2026
Disclosure Of Insurance Contracts [Abstract]  
Insurance contracts in the financial services business
13.
Insurance contracts in the Financial Services business
 
(1)
Significant judgments and estimates for insurance contracts
As a result of the execution of the Partial Spin-off of the Financial Services business, SFGI, which operates the Financial Services business, has been excluded from consolidation. Therefore, figures in this section are presented only as of March 31, 2025, September 30, 2025 or for the fiscal year ended March 31, 2025.
 
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
 
 
  
  2025  
 
Mortality rates
      1.03 % 
Lapse and surrender rates
      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 year ended March 31, 2025 was 3.0%.
In addition, the risk adjustments determined by applying a cost of capital technique for the fiscal year ended March 31, 2025 correspond to the confidence level of 81.3% (time horizon: the life of the insurance contracts).

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). As a result of the execution of the Partial
Spin-off
of the Financial Services business, accumulated other comprehensive income related to insurance finance income (expenses) at the time of the execution was transferred to net income (loss) from discontinued operations as a loss in the consolidated statements of income. Therefore, yield curves are presented as of September 30, 2025.
 
    
Yield curve (%)
  
    
March 31
    
September 30
  
    
2025
    
2025
  
Term
   
 JPY 
    
 USD 
    
 JPY 
    
 USD 
  
1 year
      0.65 %      4.09 %      0.81 %      3.68 % 
5 years
      1.13 %      4.01 %      1.26 %      3.81 % 
10 years
      1.54 %      4.31 %      1.70 %      4.27 % 
20 years
      2.34 %      4.83 %      2.82 %      5.00 % 
30 years
      2.69 %      4.68 %      3.47 %      4.92 % 
40 years
      3.02 %      4.29 %      3.91 %      4.50 % 
 
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 year ended March 31, 2025.
 
 
 
(2)
Reconciliation of insurance contract liabilities
The tables below show the changes in insurance contract liabilities for the fiscal years ended March 31, 2025 and 2026.
 
(a)
Changes in liabilities for remaining coverage and liabilities for incurred claims
 
 
  
Yen in millions
 
 
  
Liability for remaining coverage
 
 
 
 
  
Liability for
incurred claims
*5
 
 
Total
 
 
  
Excluding loss
component
 
 
 
 
  
Loss
component
 
 
 
 
Balance as of April 1, 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  
Insurance revenue
      (332,024 )
 
 		              -    

       -       (332,024 )
Insurance service expenses
                

      
Incurred claims and other insurance service expenses
      -                (3,215 )   

       152,470       149,255  
Amortization of insurance acquisition cash flows
      70,418                -    

       -       70,418  
Changes in liabilities for incurred claims
      -                -    

       1,327       1,327  
Losses and reversals of losses on onerous contracts
      -                10,950    

       -       10,950  
  
 
 
             
 
 
    

    
 
 
    
 
 
  
Total insurance service expenses
      70,418                7,735    

       153,797       231,950  
  
 
 
             
 
 
    

    
 
 
    
 
 
  
Insurance service result
      (261,606 )
 
 		              7,735    

       153,797       (100,074 ) 
Insurance finance expenses (income)
      (141,098 )               (300 )   

       (118 )      (141,516 ) 
  
 
 
             
 
 
    

    
 
 
    
 
 
  
Total amounts recognized in comprehensive income
      (402,704 )               7,435    

       153,679       (241,590 ) 
Investment component excluded from insurance revenue and insurance service expenses
      (444,430 )               -    

       444,430       -  
Cash flows
  
 
  
 

  
 
Premiums received
      976,117                -    

       -       976,117  
Insurance acquisition cash flows
      (85,130 )               -    

       -       (85,130 ) 
Claims and other insurance service expenses paid
      -                -    

       (596,808 )      (596,808 ) 
  
 
 
             
 
 
    

    
 
 
    
 
 
  
Total cash flows
      890,987                -    

       (596,808 )      294,179  
Other
      (2,186 )               1,159    

       (81 )      (1,108 ) 
Impact from loss of control of the Financial Services business
*4
      (12,627,440 )               (71,777 )   

       (175,187 )      (12,874,404 ) 
  
 
 
             
 
 
    

    
 
 
    
 
 
  
Balance as of March 31, 2026
                

      
Insurance contract assets
      -                -    

       -       -  
Insurance contract liabilities
      -                -    

       -       -  
  
 
 
             
 
 
    

    
 
 
    
 
 
  
Net amounts
      -                -    

       -       -  
  
 
 
             
 
 
    

    
 
 
    
 
 
  
*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, 2024 and March 31, 2025, the carrying amounts of the current portion of insurance contract liabilities were 162,344 million yen and 181,332 million yen, respectively, and the carrying amounts of the
non-current
portion of insurance contract liabilities were 12,931,995 million yen and 12,689,306 million yen, respectively.
 
*4
Amount as of the date of deconsolidation of SFGI, which operates the Financial Services business, resulting from the execution of the Partial
Spin-off
of the Financial Services business.
 
*5
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, 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  
Changes that relate to future service
              
Changes in estimates that adjust the CSM
     14,984         47,569         (62,553 )        -  
Changes in estimates that do not adjust the CSM
     6,908         2,569         -         9,477  
Effect of contracts initially recognized during the period
     (177,699 )        21,537         157,636         1,474  
 
 
 
      
 
 
      
 
 
      
 
 
  
Total changes that relate to future service
     (155,807 )        71,675         95,083         10,951  
Changes that relate to current service
              
CSM recognized in profit or loss for the services provided
     -         -         (79,908 )        (79,908 ) 
Change in risk adjustment for
non-financial
risk due to release of risk
     -         (16,164 )        -         (16,164 ) 
Experience adjustments
     (7,549 )        -         -         (7,549 ) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total changes that relate to current service
     (7,549 )        (16,164 )        (79,908 )        (103,621 ) 
Changes that relate to past service
     324         (5 )        -         319  
 
 
 
      
 
 
      
 
 
      
 
 
  
Insurance service result
     (163,032 )        55,506         15,175         (92,351 ) 
Insurance finance expenses (income)
     (152,695 )        (1,373 )        12,465         (141,603 ) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total amounts recognized in comprehensive income
     (315,727 )        54,133         27,640         (233,954 ) 
Cash flows
              
Premiums received
     893,895         -         -         893,895  
Insurance acquisition cash flows
     (77,407 )        -         -         (77,407 ) 
Claims and other insurance service expenses paid
     (520,614 )        -         -         (520,614 ) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Total cash flows
     295,874         -         -         295,874  
Other
     (12,883 )        -         (1,207 )        (14,090 ) 
Impact from loss of control of the Financial Services business
*1
     (10,135,173 )        (496,064 )        (2,114,182 )        (12,745,419 ) 
 
 
 
      
 
 
      
 
 
      
 
 
  
Balance as of March 31, 2026
              
Insurance contract assets
     -         -         -         -  
Insurance contract liabilities
     -         -         -         -  
 
 
 
      
 
 
      
 
 
      
 
 
  
Net amounts
     -         -         -         -  
 
 
 
      
 
 
      
 
 
      
 
 
  
 
*1
Amount as of the date of deconsolidation of SFGI, which operates the Financial Services business, resulting from the execution of the Partial
Spin-off
of the Financial Services business.
 
 
(3)
Effect of contracts initially recognized in the year
The table below shows the effect of contracts initially recognized during the fiscal year ended March 31, 2025 on measurement components of insurance contracts not measured under the PAA. As a result of the execution of the Partial
Spin-off
of the Financial Services business, SFGI, which operates the Financial Services business, has been excluded from consolidation. Therefore, figures are presented only for the fiscal year ended March 31, 2025.
 
   
Yen in millions
  
   
Fiscal year ended March 31
  
   
2025
  
   
Profitable
contracts
issued
    
Onerous
contracts
issued
    
Total
  
Estimates of the present value of future cash outflows
      
Claims and other insurance service expenses
     2,227,649       6,376       2,234,025  
Insurance acquisition cash flows
     155,135       2,735       157,870  
 
 
 
    
 
 
    
 
 
  
Total estimates of the present value of future cash outflows
     2,382,784       9,111       2,391,895  
Estimates of the present value of future cash inflows
     (2,816,078 )      (7,618 )      (2,823,696 ) 
 
 
 
    
 
 
    
 
 
  
Total estimates of the present value of future cash flows
     (433,294 )      1,493       (431,801 ) 
Risk adjustment for
non-financial
risk
     44,060       275       44,335  
CSM
     389,234       -       389,234  
 
 
 
    
 
 
    
 
 
  
Total effect on measurement components
     -       1,768       1,768  
 
 
 
    
 
 
    
 
 
  
 
(4)
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, 2025. As a result of the execution of the Partial
Spin-off
of the Financial Services business, SFGI, which operates the Financial Services business, has been excluded from consolidation. Therefore, figures are presented only as of March 31, 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, 2025
     122,591       114,961       107,412       97,307       89,960       362,794       1,192,724       2,087,749  
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  

(5)
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, 2025. As a result of the execution of the Partial
Spin-off
of the Financial Services business, SFGI, which operates the Financial Services business, has been excluded from consolidation. Therefore, figures are presented only as of March 31, 2025.
 
   
Yen in millions
  
   
March 31
  
   
2025
  
Cash and cash equivalents
     35,235  
Debt securities
  
Japanese national/local government bonds and corporate bonds
     34,936  
Foreign national/local government bonds and corporate bonds
     478,751  
Equity securities
     2,375,201  
Other
     2,057  
 
 
 
  
Total fair values of the underlying items of insurance contracts measured under the variable fee approach
        2,926,180  
 
 
 
  

(6)
Disclosure of transition to IFRS 17
IFRS 17 was effective for Sony as of April 1, 2023. 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. As a result of the execution of the Partial
Spin-off
of the Financial Services business, SFGI, which operates the Financial Services business, has been excluded from consolidation. Therefore, figures are presented only for the fiscal year ended March 31, 2025.
 
 
i)
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 the balances of the CSM by transition approach as of March 31, 2025.

    
Yen in millions
  
    
Fiscal year ended March 31
  
    
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
  
CSM
         
Beginning balance of the fiscal year
      763,669       86,271       1,258,148       2,108,088  
  
 
 
    
 
 
    
 
 
    
 
 
  
Changes that relate to future service
      (89,828 )      556       191,137       101,865  
Changes that relate to current service
      (55,642 )      (7,020 )      (88,363 )      (151,025 ) 
Insurance finance expense (income)
      23,501       781       5,873       30,155  
Other
      (1,090 )      -       (244 )      (1,334 ) 
  
 
 
    
 
 
    
 
 
    
 
 
  
Ending balance of the fiscal year
       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 year ended March 31, 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
  
    
2025
  
Beginning balance of the fiscal year
      9,445  
  
 
 
  
Net change in fair value
          778,509  
Net amount reclassified to profit or loss
      1,142  
Related income tax
      (225,613 ) 
  
 
 
  
Ending balance of the fiscal year
      563,483  
  
 
 
  
 
(7)
Insurance and market risks
As a result of the execution of the Partial
Spin-off
of the Financial Services business, SFGI, which operates the Financial Services business, has been excluded from consolidation. Therefore, each risk related to the Financial Services business is presented only as of March 31, 2025.
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 for each product and standards for revision and abolishment 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 understands 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 net income before income taxes from discontinued operations and equity as of March 31, 2025 if the underlying assumptions of the insurance contracts and financial instruments which Sony has in the life insurance business had changed.
 
 
 
 
 
March 31, 2025
 
 
 
 
 
Yen in millions
 
 
Insurance contracts
 
 
Financial

instruments
 
 
Total
 
Assumption
 
Changes in assumptions, etc.
 
Income

before
income
taxes

from

discontinued

operations
 
 
Equity
 
 
Income

before
income
taxes

from

discontinued

operations
 
 
Equity
 
 
Income

before
income
taxes

from

discontinued

operations
 
 
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, 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, 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 business 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 amount 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, 2025.
 
    
Yen in millions
  
    
March 31
  
    
 2025 
  
Amounts payable on demand
      13,214,887  
Carrying amount
      12,642,981