Investment in securities as of March 31, 2026 and September 30, 2026 consists of the following:

 

		Millions of yen
		March 31, 2026				September 30, 2026
Equity securities *		¥	782,137			¥	639,339
Available-for-sale debt securities			2,360,361				2,333,404
Total		¥	3,142,498			¥	2,972,743

 

Gains and losses realized from the sale of equity securities and net unrealized holding gains (losses) on equity securities are included in gains on investment securities and dividends, life insurance premiums and related investment income, and write-downs of securities. For further information, see Note 17 “Income and Expenses Relating to Life Insurance Operations.” Net unrealized holding gains (losses) on equity securities held as of September 30, 2025 and 2026 were gains of ¥64,149 million and gains of ¥100,176 million for the six months ended September 30, 2025 and 2026, respectively, which does not include net unrealized holding gains (losses) on investment funds that elected the fair value option.

Equity securities include non-marketable equity securities and preferred equity securities, etc. elected for the measurement alternative. Upward or downward adjustments resulting from observable price changes are included in gains on investment securities and dividends and life insurance premiums and related investment income. Impairments are included in write-downs of securities.

The following tables provide information about impairment and upward or downward adjustments resulting from observable price changes as of March 31, 2026 and September 30, 2026, and for the six months ended September 30, 2025 and 2026.

 

 

Gains and losses realized from the sale of trading debt securities and net unrealized holding gains (losses) on trading debt securities are included in gains on investment securities and dividends. Net unrealized holding gains (losses) on trading debt securities held as of September 30, 2025 were gains of ¥5 million for the six months ended September 30, 2025. There were no gains and losses recognized on trading debt securities held as of September 30, 2026.

24,84525,231

A certain subsidiary elected the fair value option for investments in foreign government bond securities included in debt securities to mitigate volatility in the consolidated statements of income caused by the difference in recognition of gain or loss that would otherwise exist between the foreign government bond securities and the derivatives used to reduce the risks of fluctuations in market interest rates and exchange rates on these foreign government bond securities. As of March 31, 2026 and September 30, 2026, these investments were fair valued at ¥3,024 million and ¥17,551 million, respectively.

A certain subsidiary elected the fair value option for investments in foreign corporate debt securities included in debt securities to mitigate volatility in the consolidated statements of income caused by the difference in recognition of gain or loss that would otherwise exist between the foreign corporate debt securities and the derivatives used to reduce the risks of fluctuations in market interest rates and exchange rates on these foreign corporate debt securities. As of March 31, 2026 and September 30, 2026, these investments were fair valued at ¥11,927 million and ¥9,006 million, respectively.

 

The amortized cost basis amounts, gross unrealized holding gains, gross unrealized holding losses and fair values of available-for-sale debt securities in each major security type as of March 31, 2026 and September 30, 2026 are as follows:

March 31, 2026

 

 

The following table presents roll-forwards of the allowance for credit losses for the six months ended September 30, 2025 and 2026, respectively:

 

 

 

The following tables provide information about available-for-sale debt securities with gross unrealized losses (including allowance for credit losses) and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2026 and September 30, 2026, respectively:

March 31, 2026

 

 

The following table provides information about debt securities with gross unrealized losses for which allowance for credit losses were not recorded and the length of time that individual securities have been in a continuous unrealized loss position as of March 31, 2026 and September 30, 2026, respectively:

March 31, 2026

 

The number of investment securities that were in an unrealized loss position as of March 31, 2026 and September 30, 2026 were 903 and 1,144, respectively. The gross unrealized losses on these debt securities are attributable to a number of factors including changes in interest rates, credit spreads and market trends.

As of March 31, 2026 and September 30, 2026, the amount of accrued revenues on debt securities were ¥14,393 million and ¥16,054 million, respectively, which were included in other assets. The Company and its subsidiaries estimate credit losses and develop an allowance for credit losses for accrued interest receivables. There was no allowance for credit losses for accrued interest receivables as of March 31, 2026 and September 30, 2026.

For debt securities, if the fair value is less than the amortized cost, the debt securities are impaired. The Company and its subsidiaries identify per each impaired security whether the decline of fair value is due to credit losses component or losses component. Impairment related to credit losses is recognized in earning through an allowance for credit losses. Impairment related to other factors than credit losses is recognized in other comprehensive income (loss), net of applicable income taxes. In estimating an allowance of credit losses, the Company and its subsidiaries consider the existence of credit losses if the present value of estimated cash flows is less than the amortized cost basis. When the Company and its subsidiaries intend to sell the debt securities for which an allowance for credit losses is previously established or it is more likely than not that the Company and its subsidiaries will be required to sell the debt securities before recovery of the amortized cost basis, the allowance for credit losses is fully and the amortized cost is reduced to the fair value after recognizing additional impairment in earnings. In addition, the Company and its subsidiaries recognize in earnings the full difference between the amortized cost and the fair value of the debt securities by direct write-down, without any allowance for credit losses, if the debt securities are expected to be sold and the fair value is less than the amortized cost.

 

Reversals of credit losses related to debt securities recognized for the six months ended September 30, 2025 resulted from an increase in the fair value of foreign corporate debt securities for which credit losses had been recorded as of March 31, 2025. Additionally, credit losses were recognized for other overseas debt securities due to a deterioration of cash flows. During the six months ended September 30, 2026, credit losses were recognized on certain foreign corporate debt securities due to declines in fair value, while reversals of credit losses were recognized on certain other overseas available-for-sale debt securities due to factors including recoveries of amounts previously written off. The evaluation of credit losses with debt securities is compared to the amortized cost of debt securities with the present value of cash flows estimated based on a number of overall conditions, including estimated fair value of the underlying receivables and the repayment priority of the securities. Because the Company and its subsidiaries do not intend to sell the debt security and it is not more likely than not that the Company and its subsidiaries will be required to sell the debt security before recovery of its amortized cost basis, the Company and its subsidiaries recognized the allowance for credit losses.

Unrealized losses on debt securities mainly result from changes in market interest rates and foreign exchange rates, and changes in risk premiums. In order to evaluate the recoverability of the debt securities, the Company and its subsidiaries utilize all available information such as an issuer’s financial condition and business outlook. The fair value of Japanese and foreign government bond securities, Japanese prefectural and foreign municipal bond, and corporate debt securities is mainly estimated based on prices for similar assets. If there are no prices for similar assets available, the fair value of these securities is estimated by using discounted cash flow methodologies and broker quotes. The fair value of CMBS and RMBS in the Americas and other asset-backed securities and debt securities refers to prices from independent pricing service vendors and brokers, such as trading prices and bid prices. If the Company and its subsidiaries cannot rely on such prices, the fair value is calculated by using discounted cash flow methodologies and broker quotes. In discounted cash flow methodologies, future cash flows estimated based on a number of assumptions such as default rate, prepayment rate, and seniority are discounted by discount rate adjusted for credit risk and liquidity risk.

There were no debt securities accounted for as purchased credit deterioration financial assets acquired for the six months ended September 30, 2025 and 2026.