Sony Financial Services Business Segment Meeting 2024

Sony held its “Business Segment Meeting 2024” yesterday, with all business segments presenting. In light of its planned partial spin-off from Sony Group Corporation (“SGC”) in October 2025, Sony Financial Group (“SFG”) was no longer included in the mid-term projections for the group as communicated with the annual results, but it detailed review was promised for the Business Segment Meeting — and management delivered.

SFG’s Historical Performance and Key Characteristics

SFG has achieved steady growth since its inception, propelled by its customer-centric approach and the robust reputation of the Sony brand. Its life insurance business, led by Sony Life, has consistently expanded its market share through a dedicated network of Lifeplanner sales specialists, focusing on family-oriented insurance solutions. Sony Assurance, leveraging its brand recognition, has secured a leading position in the direct non-life insurance market, particularly in auto insurance. Sony Bank, an online banking pioneer, has carved a niche in the rapidly growing mortgage loan and foreign currency deposit segments.

Financial Performance and Targets

SFG’s financial performance has been consistently strong, with adjusted net income reaching 89.4 billion yen and adjusted ROE at 8.1% in FY23 (see chart in the header). The group has set ambitious targets for FY26, the concluding year of its new Mid-Range Plan, aiming for adjusted net income of 120 billion yen and adjusted ROE exceeding 10%. These targets underscore the importance of delivering returns exceeding the cost of capital for SFG as a publicly listed company. Notably, SFG intends to transition from J-GAAP to IFRS in FY26 to align its accounting standards with its long-term business growth and profit generation cycles, particularly in its core life insurance business.

Shareholder Return Policy

SFG plans to implement a proactive shareholder return policy following its listing. It aims to distribute approximately 40–50% of its adjusted net income as dividends, ensuring a consistent increase in dividends per share.

SFG’s Mid-Range Plan: A Detailed Overview

The new Mid-Range Plan outlines a comprehensive roadmap for SFG’s growth and development, focusing on three key pillars:

1. Stable Profit Growth at Sony Life

• Sony Life’s financial performance has been robust, delivering stable adjusted net income around 90 billion yen, with adjusted ROE exceeding 8% under IFRS 17.
• New business value and annualized premiums are steadily increasing, indicating healthy growth in new policies.
• The new business margin, a key profitability indicator, has reached almost 10%, signifying the high-quality and profitability of new business acquisitions.

2. Direct/Online-focused Sony Assurance and Sony Bank

• Sony Assurance has consistently grown its direct premiums written, driven by its leadership in the direct auto insurance market. Its high profitability stems from lower combined ratios compared to competitors, enabled by its strong brand recognition and customer satisfaction.
• Sony Bank has achieved consistent profit growth and high customer satisfaction in its core mortgage loan and foreign currency deposit businesses. Its robust customer base, low default rates, and successful asset management strategies have been instrumental in driving its financial success.

3. Robust Financial Base and Proactive Shareholder Return Policy

• SFG maintains a conservative investment portfolio, predominantly comprised of yen interest-bearing assets, aligning with its liability characteristics. The focus on ALM strategy has resulted in a near elimination of the duration gap. However, recent interest rate increases have led to a re-emergence of the duration gap, prompting SFG to refine its ALM strategy further to mitigate interest rate volatility risks.
• The group’s risk profile remains concentrated on insurance risk, but rising interest rates have increased the proportion of market risk. Recognizing this shift, SFG is implementing measures to reduce ESR sensitivity and enhance its capital position.

Mid-Range Plan Strategies: “Exploitation” and “Exploration”

The Mid-Range Plan incorporates a balanced approach of “Exploitation” and “Exploration.”

“Exploitation” — Growth of Existing Businesses:

Sony Life:

• Enhance Lifeplanner productivity by focusing on top-tier sales specialists and creating an environment for high-value work.
• Expand customer segments beyond families to include corporations, mass affluent individuals, and seniors. This will be achieved by (I) offering tailored business security solutions to corporations, and (II) providing senior life planning services, including AI-powered solutions, and specialized products for their unique needs.

Sony Assurance:

• Target prospective customers from major non-life insurers in auto insurance, introducing new services and preparing for technological innovations like connected-car insurance.
• Differentiate fire insurance offerings through advanced risk segmentation and leverage the efficient direct advertising expertise gained in the auto insurance business.

Sony Bank:

• Strengthen the mortgage business and foreign currency business by adapting to changing customer needs and interest rate environments.
• Expand the customer base by leveraging community-based touchpoints, particularly in the entertainment sector.

“Exploration” — Cross-Group Initiatives for Further Growth:

Extending Customer Segments:

• Target younger generations through digital platforms and financial education content.
• Expand into the mass affluent market through the innovative “Hoken Seisakusho” branches, offering a diverse range of financial services and building a customer community.
• Strengthen the customer base among seniors by offering tailored products and services addressing their unique needs, including wealth management, caregiving, and dementia-related insurance.

Strengthening Collaboration with the Sony Group:

• Continue leveraging the Sony brand after the partial spin-off.
• Enhance brand value through collaborative business initiatives with other Sony Group companies.
• Utilize entertainment and intellectual property to strengthen SFG’s brand identity and foster a sense of unity among its subsidiaries.
• Employ Sony Group’s advanced technology to enhance customer value through AI-powered solutions, integration of entertainment and digital banking, and data analysis for improved efficiency in nursing care operations.

SFG’s Competitive Advantages

SFG’s success is attributed to its inherent strengths and strategic initiatives:

• Strong Brand Recognition: The Sony brand enjoys high recognition and trust among consumers, providing a solid foundation for SFG’s operations.
• Customer-Centric Approach: SFG prioritizes customer needs, tailoring its products and services to meet their specific requirements.
• Highly Skilled Sales Force: The Lifeplanner sales specialists are highly trained professionals dedicated to providing exceptional customer service.
• Advanced Technological Capabilities: SFG leverages Sony Group’s technological expertise to enhance its operational efficiency and customer offerings.
• Conservative Investment Strategy: The focus on ALM and a bond-heavy portfolio reflects SFG’s commitment to financial stability.
• Robust Financial Position: SFG boasts a strong capital base and consistently operates within its target ESR range.

SFG’s Future Prospects

The planned partial spin-off presents SFG with significant opportunities and challenges. By becoming a standalone company, SFG will gain increased financial flexibility, enabling greater investment in growth initiatives and enhancing shareholder returns. However, it will also face greater scrutiny from investors and heightened competition in the financial services market.

Conclusion

SFG is poised for continued growth and success. Its strong brand, customer-centric approach, skilled workforce, and innovative strategies position it as a formidable competitor in Japan’s financial services sector. The planned partial spin-off, while presenting challenges, offers an exciting opportunity for SFG to enhance its financial flexibility, expand its customer base, and deliver strong returns to its shareholders. As SFG embarks on its journey as an independent company, its commitment to “Kando for Life (Filled with Emotion),” “Asset for Life (Financial Well-Being),” and “Health for Life (Energy and Vibrance”” will remain paramount in its mission to create exceptional value for its customers and stakeholders.

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