SBI Insurance Group Co.,Ltd. FY2026 Q2 Earnings Report

Financial Highlights

• Net Income: ¥1.64B
• EPS: ¥90.82

Income Statement

Balance Sheet

Cash Flow Statement

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Segment Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

SBI Insurance Group (TSE: 7326) reported FY2026 Q2 (cumulative) consolidated results under JGAAP with solid profitability and strong cash conversion, albeit with material disclosure gaps typical for insurers in quarterly XBRL (e.g., revenue, current items, and cash balance not shown). Operating income was ¥7.307bn and ordinary income matched at ¥7.307bn, indicating limited non-operating swings this period. Net income rose to ¥2.254bn, up 38.6% YoY, reflecting improved operating performance and very light reported tax/interest charges. Depreciation and amortization totaled ¥0.897bn, supporting an EBITDA proxy of ¥8.204bn. Interest expense was minimal at ¥5m, yielding an exceptional interest coverage ratio of roughly 1,461x, underscoring low financial cost pressure. Operating cash flow reached ¥4.685bn, exceeding net income with an OCF/NI ratio of 2.08x, a positive indicator of earnings quality in the context of insurance operations and float dynamics. Total assets were ¥222.403bn and total equity ¥45.078bn, implying a financial leverage multiplier (Assets/Equity) of about 4.93x and an equity-to-assets ratio of roughly 20.3%. Total liabilities were ¥175.192bn (about 78.8% of assets), which for an insurer largely comprise policy reserves rather than interest-bearing debt. Reported DuPont components tied to revenue (net margin, asset turnover) are not meaningful because revenue was unreported in XBRL; profitability assessment must rely on operating/ordinary income and cash flow instead. Liquidity metrics such as current ratio and quick ratio are also not applicable to insurers and appear as zero due to classification rather than economic reality. Financing cash flow was a net outflow of ¥446m, likely reflecting capital management actions (e.g., minor debt repayment or intercompany flows), with no cash dividends disclosed year-to-date. The company’s dividend per share was reported as ¥0.00 with a payout ratio of 0.0%, indicating retention of earnings through Q2; capacity for distributions appears adequate given cash generation, subject to regulatory capital considerations. While calculated ROE is shown as 0.00% due to missing revenue-derived fields, a directional ROE gauge using period-end equity suggests mid-to-high single-digit to low double-digit annualized ROE potential if H1 earnings were extrapolated. Overall, results point to improved profitability, robust cash conversion, and manageable financial risk, but comprehensive conclusions on underwriting strength and sustainability require non-reported insurance KPIs (combined ratio, loss and expense ratios, premium growth, investment yield) and regulatory capital metrics. The primary analytical caveat is the prevalence of zeros for unreported items, which are placeholders, not actual zero values. Thus, this assessment emphasizes the disclosed non-zero figures and sector-specific context.

Profitability Analysis

ROE decomposition via standard DuPont is not feasible because revenue and net margin fields are unreported (shown as zero). However, leveraging available data: (1) Profitability: Operating income ¥7.307bn and ordinary income ¥7.307bn indicate strong core earnings with limited non-operating noise; net income ¥2.254bn rose 38.6% YoY, implying margin expansion or improved claims/investment environment. (2) Leverage: Financial leverage (Assets/Equity) is ~4.93x; equity-to-assets is ~20.3%. For an insurer, this reflects typical balance sheet leverage driven by policy liabilities rather than debt. (3) Operating leverage: D&A ¥0.897bn and EBITDA ¥8.204bn suggest healthy operating profitability cushions; if top line (premiums) is growing, fixed cost absorption likely improved, contributing to YoY earnings growth. (4) Interest burden: Interest expense is de minimis (¥5m), so nearly all operating gains translate to pretax income; effective tax rate appears understated due to disclosure (income tax ¥54m) and may not reflect the full tax burden. Directionally, profitability improved in H1 with significant cash backing (OCF/NI 2.08x), pointing to better quality earnings likely driven by underwriting discipline and/or higher net investment income.

Growth Assessment

Revenue (premiums and fee income) is not disclosed in XBRL and shows as zero, preventing direct growth analysis of the top line. Nonetheless, net income increased 38.6% YoY to ¥2.254bn, signaling stronger earnings momentum. Operating income at ¥7.307bn, flat YoY per the placeholder tag, still indicates stable core profitability; the YoY flag for operating income (+0.0%) is likely an unreported comparator rather than true stagnation. Growth drivers for insurers typically include premium volume expansion, improved combined ratio, and investment income; the high OCF suggests premium inflows and float were supportive in H1. Without loss/expense ratios, we cannot apportion earnings growth between underwriting and investments, but the negligible interest expense implies growth is not debt-fueled. Outlook hinges on underwriting cycle, claims inflation, catastrophe losses, and interest rate environment; with Japanese yields modestly higher versus prior years, reinvestment yields may continue to underpin ordinary income. Sustainability will depend on maintaining disciplined pricing and expense control; absence of combined ratio data is the key limitation. Near-term growth appears supported by internal cash generation and capital retention (no dividends paid in H1), enabling reinvestment in distribution and digital capabilities.

Financial Health

Total assets ¥222.403bn; total liabilities ¥175.192bn; total equity ¥45.078bn. Equity-to-assets is ~20.3%, and liabilities-to-assets ~78.8%, reasonable for an insurer where policy reserves dominate liabilities. Debt-to-equity is shown as 3.89x but likely conflates insurance liabilities with financial debt; pure interest-bearing debt appears minimal given interest expense of only ¥5m. Liquidity ratios (current, quick) register as 0.0% due to non-applicability and unreported breakdowns; insurers manage liquidity via asset-liability matching rather than working capital cycles. Interest coverage is extremely strong at ~1,461x (OI/interest), indicating very low solvency risk from financial charges. Regulatory capital (e.g., solvency margin ratio) is not reported here; this is the primary missing piece to fully gauge capital adequacy. Financing cash flow outflow of ¥446m suggests modest capital management actions with no stress signals. Overall, balance sheet strength appears sound with healthy equity buffers and low financial gearing costs, subject to confirmation via regulatory capital disclosures.

Cash Flow Quality

Operating cash flow was ¥4.685bn versus net income of ¥2.254bn (OCF/NI 2.08x), indicating strong cash realization and supportive working capital/float dynamics. Investing cash flow is unreported (0), which is a limitation for an insurer where investment portfolio activity is central to cash movements; thus, traditional free cash flow is indeterminable from the provided data (reported FCF 0 reflects missing data, not true zero). The positive OCF relative to earnings suggests earnings quality is solid in H1, with limited accrual buildup. D&A of ¥0.897bn implies a meaningful non-cash component embedded in EBITDA, but cash generation remains robust after these non-cash expenses. Working capital line items (current assets/liabilities) are unreported, so we cannot isolate changes in receivables/payables or claim reserves; the OCF strength likely reflects premium inflows net of claims payments and operating expenses. Financing CF was -¥446m, consistent with minor repayments or internal funding flows; no dividends were paid per the DPS disclosure. Net cash and cash equivalents are unreported (0), which is common in quarterly XBRL snapshots for insurers.

Dividend Sustainability

Disclosed DPS is ¥0.00 for the period with a payout ratio of 0.0%, indicating full earnings retention in H1. With net income at ¥2.254bn and OCF at ¥4.685bn, the capacity to pay dividends appears adequate from a cash standpoint, but regulatory capital requirements are the gating factor. Reported free cash flow is 0 due to missing investing cash flow; therefore, FCF coverage cannot be reliably assessed. Historically, insurers align dividends with sustainable underwriting and investment earnings and solvency targets; absent the solvency margin ratio and combined ratio, prudence favors retention amid growth or capital build. If H1 earnings were annualized, the company could support a modest payout while maintaining capital, but this remains contingent on catastrophe experience and interest rate trends. Policy outlook: likely conservative, with flexibility to resume or raise dividends when regulatory capital headroom and earnings visibility permit.

Risk Assessment

Business Risks:

• Underwriting risk from claims frequency/severity and catastrophe events not observable in combined ratio here
• Pricing and competitive pressure in Japanese P&C and health lines affecting margins
• Claims inflation (medical, auto repair, property) potentially outpacing premium rate increases
• Investment market volatility impacting ordinary income and capital (credit spreads, equity markets, JGB yields)
• Regulatory changes to solvency, product design, or reserve assumptions
• Operational and IT risk given digital distribution focus within the SBI ecosystem

Financial Risks:

• Sensitivity of capital to market movements due to sizable investment portfolios (details not disclosed here)
• Asset-liability duration mismatch risk amid changing interest rate environment
• Catastrophe risk accumulation potentially straining short-term capital and liquidity
• Limited visibility into liquidity buffers due to unreported cash and current items
• Potential reserve adequacy risk; reserving methodologies not disclosed in this snapshot

Key Concerns:

• Lack of disclosed revenue/premium, combined ratio, and investment income details
• Absence of regulatory capital metrics (e.g., solvency margin ratio) to validate capital adequacy
• Zeros in current assets/liabilities and cash preventing granular liquidity analysis

Investment Implications

Key Takeaways:

• H1 FY2026 profitability improved with net income ¥2.254bn (+38.6% YoY) and operating income ¥7.307bn
• Earnings quality looks strong with OCF/NI of 2.08x, suggesting cash-backed profits
• Balance sheet leverage is typical for an insurer (Assets/Equity ~4.93x) with very low interest burden (coverage ~1,461x)
• Dividend held at ¥0 in H1; ample internal cash generation but payouts likely governed by capital needs
• Analytical visibility limited by missing underwriting and regulatory capital metrics

Metrics to Watch:

• Combined ratio (loss and expense ratios) and their trend
• Net premiums written/earned growth and retention
• Net investment income and portfolio yield/duration
• Solvency margin ratio and economic capital coverage
• Catastrophe loss impact and risk exposure management
• Expense ratio/operating efficiency (digital initiatives payback)

Relative Positioning: Within Japan’s P&C/insurance peers, the group appears to be delivering solid H1 earnings growth with strong cash conversion and minimal financing costs, consistent with a relatively conservative balance sheet; however, without combined ratio and solvency disclosures, precise benchmarking versus major P&C peers on underwriting quality and capital strength remains constrained.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis