7326.T

• Company Overview & History

  • SBI Insurance Group is the insurance holding company within the SBI Group, overseeing 2 full-license insurance companies and 6 small amount short-term insurance companies. It was established as a holding company in March 2017 and listed on the Tokyo Stock Exchange Growth Market after market reorganization.
  • The group was built through M&A: SBI Non-Life Insurance was founded as a joint venture in 2008, followed by the addition of SBI Life Insurance and 6 small amount short-term insurers via M&A, forming the current group structure.

• Core Growth Strategy

  • First pillar: Technology-driven low-cost operations. Leverages big data and AI to cut costs across all processes including product development, customer targeting, underwriting, claim assessment, and customer service, enabling lower premium rates than competitors.
  • Second pillar: SBI Group synergy. Leverages the SBI Group's large customer base (54 million accounts as of March 2025, target of 100 million accounts in 4 years) and uses big data analytics to target customers likely to be interested in insurance, reducing advertising costs and forming a positive cycle of lower premiums -> higher policy volume -> further cost reductions.
  • Expanded access to external partner customer bases: Already launched collaborations with Sumitomo Mitsui Financial Group (auto insurance for SMBC Card customers, pet insurance on the Vpass app), and is discussing collaboration opportunities with NTT Group following their capital business alliance.

• Operational Milestones

  • Total in-force policies exceeded 300,000 at the end of April 2025, tripling since 2016.
  • Strengthened shareholder returns: Raised the target payout ratio from 30% to 40% starting this fiscal year, and newly introduced a shareholder benefit program distributing XRP cryptocurrency based on shareholding amount and holding period.
  • Confirmed transition to IFRS starting from the fiscal year ending March 2030, with preparation work currently underway.
  • SBI Group established a new company in November to develop an integrated one-stop financial service platform on smartphones, which is expected to bring more insurance sales opportunities after launch.

• The 5-year mid-term management plan launched in 2023 targets a net profit attributable to parent shareholders of 4 billion yen by the end of the plan period. The current fiscal year's target of 2.5 billion yen is on track to be achieved, and the 4 billion yen target two years from now is expected to be exceeded.
  • Management will assess whether to upgrade the full-year earnings guidance after reviewing winter snowfall conditions, and will make a decision between late January and early February when releasing the third quarter financial results.
  • Management expects to maintain long-term growth: based on a conservative annual profit growth rate of 25%, the company will grow to a mid-sized insurance company with 60 billion yen in profit (IFRS basis) in 10 years through organic growth alone, with room for additional growth from M&A.

1. SBI Non-Life Insurance: Core business is direct auto insurance, which holds 120,000 policies (40% of the group's total 300,000 policies) and is the group's largest profit pillar. It also offers an actual-loss-compensation cancer insurance that has won 4 first-place rankings in Oricon customer satisfaction surveys. The segment's converted pre-tax profit under IFRS is 1.7 times that reported under Japanese GAAP.
2. SBI Life Insurance: Core business is group credit life insurance tied to financial institution housing loans, which has the fastest policy growth; it also offers internet-exclusive term insurance that is growing steadily. The segment's converted pre-tax profit under IFRS is 3.7 times that reported under Japanese GAAP.
3. Small Amount Short-Term Insurance Business: Rental housing property insurance has the largest number of in-force policies, while pet insurance has the highest growth rate. This segment includes other products such as senior life insurance, medical mutual aid, and the segment is restricted from investing in risky assets.

• Large-scale natural disasters can cause significant volatility in non-life insurance profit: In 2024, hail in Hyogo Prefecture caused 0.8 billion yen in unexpected claim payments; in 2018, Western Japan heavy rains and two typhoons caused 1 billion yen in unexpected claim payments, reducing annual profit.
  • Reinsurance premiums have risen industry-wide due to increased natural disaster frequency, and full risk coverage via reinsurance is no longer feasible, requiring premium increases to offset higher claim costs.
  • The company's 1-year auto insurance contract term allows premium increases to be reflected quickly, and competitors also need to raise premiums, so competitive conditions will not worsen. Management considers natural disaster risk manageable via premium adjustments.

Q: Why does the IFRS transition take 3 more years when the company already reports IFRS-aligned data to SBI Holdings? Can the timeline be moved forward? / A: The IFRS conversion that SBI Holdings performs for consolidated reporting uses a simplified system, as SBI Insurance only accounts for 1-2% of the parent's size. As an independent listed company, SBI Insurance must build a full IFRS accounting system from scratch, verifying every transaction, reserve and liability, which takes significant time. Additionally, IFRS transition must start at the beginning of a fiscal year, and one full year of parallel IFRS data must be accumulated for year-over-year comparison. These technical and institutional requirements make accelerating the timeline impossible, so the 2030 transition date is fixed.

Q: What is the company's outlook on M&A for further growth? / A: The company's current structure was built through M&A: SBI Life and all 6 small amount short-term insurers were acquired, so management will actively pursue suitable opportunities. The small amount short-term insurance sector has around 100+ players, but most small unprofitable players do not add meaningful growth, and most profitable operators are tied to parent companies' core business and not for sale. Management will wait for opportunistic deals where owners divest non-core insurance assets, like the pet insurance acquisition the company completed previously, and will not actively pursue hostile takeovers.

Q: How will rising interest rates impact the company's insurance business? / A: Non-life insurance uses mostly 1-year contracts, so excess funds are invested short-term, with no large valuation losses from rising rates. Small amount short-term insurers cannot hold risky assets, so they also face no impact. For life insurance, most long-term bonds held are classified as held-to-maturity, so valuation changes do not impact the profit and loss statement. Long-term, rising rates increase interest income from new investments, which is a net positive for the company.

Q: What is the company's long-term vision 5 and 10 years from now? / A: The Japanese insurance market is extremely large: 11 trillion yen in non-life premiums and 37 trillion yen in life premiums annually, and the company's current market share is only 0.5% in non-life and 0.08% in life, leaving massive room for growth. If the company maintains a 25% annual profit growth rate, it will reach 5 billion yen in profit (Japanese GAAP) in 3 years, which converts to 15 billion yen under IFRS, and will grow to 60 billion yen (IFRS) in 10 years, becoming a mid-sized insurance company. At that scale, the company can pursue larger M&A and may consolidate overseas insurance assets currently held directly by SBI Holdings.