Sony Group Corporation · TSE:6758
Sony — Investor Presentation (March 2024)
16 slides from Sony's investor presentation, Mar 27, 2024
Slide 1: Financial Services Segment Small Meeting
Financial Services Segment Small Meeting March 27, 2024 Sony Group Corporation
Slide 2: Operating Income in Financial Services Segment
Operating Income in Financial Services Segment Considerable fluctuations in operating income in the Financial Services segment following the adoption of IFRS 17 Operating Income in the Financial Services Segment (IFRS 17) (Bln yen) 139.2 80.0 77.3 54.5 47.1 33.7 15.7 FY22 FY23 Q1 Q2 Q3 Q4 Q1 Q2 Q3
Slide 3: Operating Income for Sony Life
Operating Income for Sony Life While large fluctuations were noted in operating income for Sony Life, which comprises the bulk of operating income for the Financial Services segment, insurance service result arising from the life insurance business has been stable. Breakdown of Operating Income fo
Slide 4: Distinct Features of Each Insurance Type
Distinct Features of Each Insurance Type With variable insurance (with minimum guarantee), the company bears any portion of investment performance falling below the minimum guarantee. Effect from market Insurance type Insurance amount Applicable asset account fluctuations / Attribution from invest
Slide 5: Management under IFRS 17
Management under IFRS 17 Under IFRS 17, accounting policies differ based on insurance type. For variable insurance (with minimum guarantee), net income is affected since changes in insurance liability pertaining to the minimum guaranteed portion appear as profit/loss on income statements. Change
Slide 6: Relationship Akin to Options Trading
Relationship Akin to Options Trading If variable insurance (with minimum guarantee) is viewed as a type of option, the insurance premiums Sony Life collects as option seller are comparable to an options premiums. Relationship Akin to Options Trading Variable insurance (with minimum guarantee) (Opt
Slide 7: Option-like Characteristic of Variable Insurance (with Minimum Guarantee)
Option-like Characteristic of Variable Insurance (with Minimum Guarantee) Variable insurance (with minimum guarantee) is a type of put option. Variable insurance (with minimum guarantee) [Company profit/loss image] Minimum guarantee Profit Bear the difference when investment Since investment perfo
Slide 8: Key Factors in Market Fluctuation
Key Factors in Market Fluctuation Among market fluctuation factors, implied volatility is one such factor that is difficult to hedge. Key Market Fluctuation Factors and Corresponding Hedge Status Hedge Applicable1 Fluctuation factors Item risk Hedge procedure Fair value option (FVO) applied Bonds
Slide 9: Impact of Fluctuations on Implied Volatility
Impact of Fluctuations on Implied Volatility In contrast to an increase in option price, when implied volatility increases, the insurance premium (equivalent to the option premium) remains fixed. Variable insurance (with minimum guarantee) (Options offered) Options Seller Options Buyer Sony Life P
Slide 10: Current Issues and Countermeasures
Current Issues and Countermeasures Policies in force include substantial variable insurance (with minimum guarantee); market fluctuations could thus significantly impact on business results. We have been proceeding with revisions of product strategy, and considering more advanced hedge procedure
Slide 11: Appendix
Appendix
Slide 12: Breakdown of Operating Income
Breakdown of Operating Income Items for Disclosure in Supplemental Materials Insurance revenue １ Insurance service result Insurance service expenses [=(1) Insurance revenue – (2) Insurance service expenses] 2 Insurance service result Profit/loss arising from the life insurance business, originating
Slide 13: Balance Sheet Image for IFRS 17 (as of Dec. 2023)
Balance Sheet Image for IFRS 17 (as of Dec. 2023)1 (Tn yen) 15.3 15.3 Yen-denominated fixed insurance Yen-denominated 5.7 bonds (fixed) 7.7 Insurance liabilities Yen repo 0.6 ALM1 Dollar-denominated insurance 0.9 objective Dollar repo 0.7 (Liability [Breakdown] Dollar-denominated matching) Yen-denom
Slide 14: Rationale for Why Implied Volatility Hedging is Difficult
Rationale for Why Implied Volatility Hedging is Difficult 1. Difficulty of quantifying effects of implied volatility Insurance payout timing is equivalent to a put option coming to maturity, which is affected by the occurrence of death or other triggering events, as well as policyholder behaviors s
Slide 15: Glossary (1)
Glossary (1) Term Explanation Related area The book value of an insurance contract. Insurance liability Balance sheets (Liabilities) The sum total of the “contractual service margin” (CSM) and “fulfillment cash flow.” Unearned profit recognized in conjunction with provision of “insurance contract se
Slide 16: Glossary (2)
Glossary (2) Term Explanation Related area Revenue reported in response to reductions in insurance liabilities from service provision during period under review. Insurance revenue Primarily, this is comprised of “CSM” amortization, “insurance service expenses” anticipated as “fulfillment Statements