A
Adjusted Net Income＜IFRS terminology＞Sony Financial Group (Consolidated)
Profit calculated by excluding the effects of market fluctuations and one-time profit factors from IFRS net
income.
While Sony FG manages its business primarily on an IFRS basis, under IFRS 17 the valuation gains and losses related
to the minimum guarantees for variable life insurance at Sony Life fluctuate significantly due to market movements.
To accurately measure and disclose sustainable profit growth through core operations, Sony FG has introduced
adjusted net income, which mainly excludes the impact of market fluctuations related to the minimum guarantees for
variable life insurance.
ALM (Asset Liability Management)Sony Financial Group (Consolidated)
A risk management method that aims to stabilize and enhance capital (or corporate value) by comprehensively
identifying and managing assets and liabilities with consideration of their characteristics.
Annualized Insurance PremiumsSony Life
Premium payment methods include monthly payments, annual payments, and a single lump sum payment made at the start
of the contract. Additionally, there are methods where payments are made throughout the entire contract period and
methods where payments are completed within a fixed period. The annualized premium adjusts for these differences in
payment methods and indicates how much premium income a life insurance company receives from an insurance contract
per year, assuming premiums are paid evenly over the contract period.
C
Capital Adequacy Ratio＜J-GAAP terminology＞Sony Financial Group (Consolidated)Sony Bank
An important indicator of soundness in bank management. It shows the extent to which a bank’s own capital
covers risk assets, such as credit risk asset — an amount that reflects the estimated risk of loans and other
assets becoming uncollectible.
For banks with overseas business offices, a capital adequacy ratio of 8% or higher is required under internationally
harmonized rules, while for banks without overseas business offices, a ratio of 4% or higher is required under
domestic standards.
Combined RatioSony Assurance
The sum of a net loss ratio and net expense ratio. A ratio indicating the proportion of insurance claims paid and
operating expenses relative to premium income, serving as an indicator of non-life insurance company’s
profitability in the primary business operations. Generally, a lower value indicates higher insurance profitability.
Core Profit＜J-GAAP terminology＞Sony Life
Calculated by deducting “capital gains and losses,” such as gains and losses on sales of securities, and
“one-time gains and losses” from ordinary profit, it represents the profit and loss of the primary life
insurance business for one year. The core life insurance business refers mainly to paying insurance money, benefits,
annuities, and so forth from premiums received from policyholders and investment income, as well as accumulating and
investing policy reserves to fund future payments.
CSM (Contractual Service Margin)＜IFRS terminology＞Sony
LifeSony Assurance
CSM is a liability representing unearned profit to be recognized as insurance services are provided. It is amortized
over the course of the insurance period and recognized as profit.
CSM amortization is recorded as insurance revenue for each period as the insurance company provides services to
policyholders. Increasing CSM amortization is important, because it accounts for the majority of adjusted net
income.
New business CSM refers to the contractual service margin at the time of acquisition of new policies during the
period.
D
Direct Premiums WrittenSony Assurance
Premiums received from policy holders (the consideration an insurance company collects from policyholders for
underwriting insurance) calculated by subtracting direct surrender payments and other direct payments from direct
premiums.
E
Earned/Incurred (E.I.) Loss RatioSony Assurance
An indicator that represents the loss ratio incurred during the current period that takes into account the provision
and reversal of reserve for outstanding losses and ordinary underwriting reserves calculated using the following
formula: Earned/incurred (E.I.) loss ratio = (Net losses paid + Provision for reserve for outstanding losses + Loss
adjustment expenses) / Earned premiums (excluding earthquake insurance and compulsory automobile liability
insurance)
ERM (Enterprise Risk Management)Sony Financial Group (Consolidated)
A method of comprehensively assessing and managing all risks for the overall company, selecting the risks that
should be taken given the company’s targeted returns, and managing them quantitatively and qualitatively with
a view to achieving the company’s strategic targets and sustainably increasing its corporate value.
ESR (Economic Solvency Ratio)Sony Financial Group (Consolidated)Sony LifeSony Assurance
The ratio of economic value-based capital to economic value-based risk, and one of the soundness indicators showing
whether sufficient capital is secured against risk.
EV (Embedded Value)Sony Life
One of the indicators of a life insurance company’s corporate value, consisting of “adjusted net
worth” (net worth on the balance sheet with necessary adjustments) and the “value of existing
business” (the present value of expected future profit from in-force business). In general, life insurance
contracts incur significant expenses in the initial period, resulting in a loss, but are structured to recover this
over the duration of the contract. Because performance cannot be accurately assessed based solely on single-year
financial results under Japanese GAAP, Sony Life discloses EV as an indicator that supplements Japanese GAAP -based
financial information and enables a multifaceted evaluation of corporate value. Sony Life refers to the EV that is
evaluated in a manner consistent with the prices of financial instruments traded in financial markets as an economic
value-based EV and disclose it.
G
Gross Operating Profit＜J-GAAP terminology＞Sony Bank
Equivalent to gross profit (sales minus cost of sales) at a general business company, it indicates how much profit a
bank earns from its main services. It consists of “net interest income,” “net fees and
commissions,” “net trading income,” and “net other operating income.”
I
IFRS＜IFRS terminology＞Sony Financial Group (Consolidated)
Abbreviation for International Financial Reporting Standards, which are global standard accounting principles
formulated by the International Accounting Standards Board. Among these principles, IFRS 17 prescribes insurance
accounting and has been applied since 2023. Mainly, when new policy is acquired, unearned profit is recorded as the
contractual service margin (CSM) in liabilities and then amortized and recognized as profit in accordance with the
subsequent provision of services. By contrast, under Japanese GAAP, since the acquisition cost of new policies is
recorded in a lump sum at the time of policy acquisition and so forth, stronger performance in new policy
acquisition tends to dampen profit growth during the fiscal year. Accordingly, in cases such as that of Sony FG,
where the life insurance business is continuing to grow, IFRS, in which business growth is consistent with profit
growth, more accurately reflects the actual status of business than Japanese GAAP.
IFRS Comprehensive Equity＜IFRS terminology＞Sony Financial Group (Consolidated)Sony Life
In Sony FG, this is defined as an indicator of corporate value, calculated by adding “CSM (after tax effect
adjustments, including reinsurance contract CSM),” which is a liability representing unearned profit to be
recognized as insurance services are provided, to “net assets (the difference between assets and
liabilities)” on the IFRS consolidated statement of financial position.
Insurance Service Result＜IFRS terminology＞Sony Life
Profit or loss calculated as insurance revenue minus insurance service expenses.
Insurance revenue refers to income earned through the provision of insurance services, while insurance service
expenses are the costs incurred to provide those services, such as claims paid and maintenance expenses.
L
Lapse and Surrender RatesSony Life
The ratio of the amount of surrenders and lapses to the amount of policies in force at the beginning of the fiscal
year. It is calculated by dividing the total amount of surrenders and lapses during the fiscal year by the amount of
policies in force at the beginning of said fiscal year.
N
Negative SpreadSony Life
A situation in which actual investment income falls below the investment income expected based on the assumed
interest rate.
Net Fees and Commissions＜J-GAAP terminology＞Sony Bank
This refers to fees and commissions earned through the provision of services, such as transfer fees and mortgage
loan handling fees, minus the expenses paid as consideration for providing those services.
Net Interest Income＜J-GAAP terminology＞Sony Bank
The amount obtained by subtracting interest expenses on funding, such as deposits, from interest income on assets,
such as loans and securities. It is affected by fluctuations in interest rates and by increases or decreases in the
balances of deposits and loans.
Net Loss RatioSony Assurance
The ratio of the total amount of claims paid (net losses paid) and expenses incurred for loss adjustment (loss
adjustment expenses) to net premiums written, calculated using the following formula:
Loss ratio ＝ (Net losses paid + Loss adjustment expenses) / Net premiums written
Net Other Operating Income＜J-GAAP terminology＞Sony Bank
The amount of gains and losses on sales or redemption of bonds, and gains and losses on foreign exchange
transactions.
Net Premiums WrittenSony Assurance
Premiums received directly from policyholders (direct premiums written), adjusted for reinsurance premiums (net of
ceded premiums and including assumed premiums).
Net Trading Income＜J-GAAP terminology＞Sony Bank
In banks that maintain a specified transaction account, the amount of gains and losses arising from securities
transactions, derivative transactions, and similar activities conducted in that account.
New Business Value, IFRS New Business Value＜IFRS terminology＞Sony
Life
An amount calculated at the time of policy acquisition that measures how much profit newly acquired policies during
the period are expected to generate in the future.
New business value represents the impact on EV from acquiring new policies during the current period. IFRS new
business value is calculated as the sum of “new business CSM” and “new business loss
component”
*1 under IFRS, multiplied by Sony Life’s effective tax rate to derive an after-tax
figure. It is the present value of future profit from new policies, and is a concept closely aligned with new
business value under EV
*2.
*1: New business loss component refers to the value of the group of
policies that have a negative present value of future profit at the time of acquisition. It is not amortized like
CSM but recognized as a one-time loss.
*2: The scope of expenses recognized (mainly operating expenses and
provisions for risks) in IFRS new business value is narrower than in EV, and as a result, the calculated value
tends to be higher.
P
Positive SpreadSony Life
A situation in which actual investment income exceeds the investment income expected based on the assumed interest
rate.
S
Solvency Margin RatioSony Financial Group (Consolidated)Sony LifeSony Assurance
The solvency margin indicates payment ability, and the solvency margin ratio is one of the regulatory indicators
used to assess the extent to which an insurance company has the capacity to respond risks that exceed ordinary
expectations, such as a major disaster or a sharp stock market crash. If this ratio falls below 200%, supervisory
authorities will take measures to restore the soundness of management at an early stage.
Reference: Life Insurance Companies' Disclosure Handbook 2022 Edition(Japanese only) (The Life
Insurance Association of Japan)