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Derivative Financial Instruments and Hedging
 6 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging
21.
Derivative Financial Instruments and Hedging
Risk management policy
The Company and its subsidiaries manage interest rate risk through asset-liability management (“ALM”). The Company and its subsidiaries use derivative financial instruments to hedge interest rate risk and avoid changes in interest rates that could have a significant adverse effect on the Company’s results of operations. As a result of interest rate changes, the fair value and/or cash flow of interest sensitive assets and liabilities will fluctuate. However, such fluctuation will generally be offset by using derivative financial instruments as hedging instruments. Derivative financial instruments that the Company and its subsidiaries use as part of the interest risk management include interest rate swaps.
The Company and its subsidiaries appropriately manage exchange rate risk by using means such as foreign currency-denominated loans, foreign exchange contracts and currency swaps to hedge exchange rate volatility in our business transactions in foreign currencies and overseas investments. A certain subsidiary holds futures and foreign exchange contracts for the purpose of economic hedges against minimum guarantee risk of variable annuity and variable life insurance contracts.
By using derivative instruments, the Company and its subsidiaries are exposed to credit risk in the event of nonperformance by counterparties. The Company and its subsidiaries attempt to manage the credit risk by carefully evaluating the content of transactions and the quality of counterparties in advance and regularly monitoring the amount of notional principal, fair value, type of transaction and other factors pertaining to each counterparty.
The Company and its subsidiaries have no derivative instruments with credit-risk-related contingent features as of March 31, 2025 and September 30, 2025.
(a) Cash flow hedges
The Company and its subsidiaries designate interest rate swap agreements, foreign currency swap agreements, foreign exchange contracts and forward agreements as cash flow hedges for variability of cash flows originating from floating rate borrowings and forecasted transactions and for exchange fluctuations.
(b) Fair value hedges
The Company and its subsidiaries use financial instruments designated as fair value hedges to hedge their exposure to interest rate risk and foreign currency exchange risk. A certain subsidiary designates foreign exchange contracts to minimize foreign currency exposures on bonds in foreign currencies in the insurance business. The subsidiary also uses interest rate swap agreements to hedge interest rate exposure of the fair values of bonds in foreign currencies in the insurance business.
(c) Hedges of net investment in foreign operations
The Company and its subsidiaries use foreign exchange contracts and borrowings and bonds denominated in foreign currencies to hedge the foreign currency exposure of the net investment in overseas subsidiaries and equity method investments.
(d) Derivatives not designated as hedging instruments
The Company and its subsidiaries entered into interest rate swap agreements, futures and foreign exchange contracts for risk management purposes which are not qualified for hedge accounting. A certain subsidiary holds futures and foreign exchange contracts for the purpose of economic hedges against minimum guarantee risk of variable annuity and variable life insurance contracts.
 
The effect of derivative instruments on the consolidated statements of income,
pre-tax,
for the six months ended September 30, 2024 is as follows.
(1) Cash flow hedges
 
    
Millions of yen
  
  
Gains (losses) recognized
in other comprehensive
income on derivative
           
Gains (losses) reclassified from
other comprehensive income (loss) into income
  
 
Life insurance premiums
and related investment
income
     
Interest expense
    
Other (income) and
expense
  
Interest rate swap agreements
    ¥ (7,712 )    ¥ 0      ¥ (68 )    ¥ 0  
Foreign exchange contracts
      (803 )      0        0       0  
Foreign currency swap agreements
      (4,906 )      0        1,584       4,710  
Options held/written and other
      (2,193 )      4        0       0  
(2) Fair value hedges
 
    
Millions of yen
  
    
Gains (losses) recognized in income

on derivative and other
     
Gains (losses) recognized in income

on hedged item
  
    
Life insurance premiums
and related investment
income
    
Other (income) and
expense
     
Life insurance premiums
and related investment
income
    
Other (income) and
expense
  
Interest rate swap agreements
    ¥ 138     ¥ 40      ¥ (92 )    ¥ (13 ) 
Foreign exchange contracts
      (22,854 )      142        22,944       (237 ) 
(3) Hedges of net investment in foreign operations
 
    
Millions of yen
  
  
Gains (losses) recognized
in other comprehensive
income on derivative
and others
    
Gains (losses) reclassified from
other comprehensive income (loss) into income
  
 
Gains on sales of

subsidiaries and

equity method investments
and liquidation losses, net
    
Interest expense
  
Foreign exchange contracts
    ¥ 920     ¥ (790 )    ¥ 7,635  
Borrowings and bonds in foreign currencies
      (12,854 )      0       0  
(4) Derivatives not designated as hedging instruments
 
    
Millions of yen
  
  
Gains (losses) recognized in income on derivative
  
  
Life insurance premiums and
related investment income*
    
Interest expense
    
Other (income) and

expense
  
Interest rate swap agreements
    ¥ 0     ¥ 0     ¥ 8  
Futures
      (141 )      0       1,259  
Foreign exchange contracts
      6,698       (10,630 )      44,741  
Credit derivatives held/written
      0       0       0  
Options held/written and other
      0       0       (522 ) 
 
*
Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for the six months ended September 30, 2024 (see Note 17 “Income and Expenses Relating to Life Insurance Operations”).
 
The effect of derivative instruments on the consolidated statements of income,
pre-tax,
for the six months ended September 30, 2025 is as follows.
(1) Cash flow hedges
 
    
Millions of yen
  
  
Gains (losses) recognized
in other comprehensive
income on derivative
    
 
     
Gains (losses) reclassified from
other comprehensive income (loss) into income
  
 
Life insurance premiums
and related investment
income
     
Interest expense
    
Other (income) and
expense
  
Interest rate swap agreements
    ¥ (2,575 )    ¥ 0      ¥ (121 )    ¥ 0  
Foreign exchange contracts
      298       0        945       (4,017 ) 
Foreign currency swap agreements
      5,174       0        1,124       (2,906 ) 
Options held/written and other
      (6,469 )      50        0       0  
(2) Fair value hedges
 
    
Millions of yen
  
  
Gains (losses) recognized in income
on derivative and other
    
Gains (losses) recognized in income
on hedged item
  
  
Life insurance premiums
and related investment
income
     
Interest expense
     
Other (income) and
expense
    
Life insurance premiums
and related investment
income
    
Other (income) and
expense
  
Interest rate swap agreements
    ¥ 0      ¥ 0      ¥ (36 )    ¥ 0     ¥ (62 ) 
Foreign exchange contracts
      5,252        630        (2,995 )      (5,217 )      1,380  
(3) Hedges of net investment in foreign operations
 
    
Millions of yen
  
  
Gains (losses) recognized
in other comprehensive
income on derivative
and others
     
Gains (losses) reclassified from
other comprehensive income (loss) into income
  
  
Gains on sales of

subsidiaries and

equity method investments
and liquidation losses, net
     
Interest expense
  
Foreign exchange contracts
    ¥ 356      ¥ 9,890      ¥ 7,109  
Borrowings and bonds in foreign currencies
      4,554        0        0  
(4) Derivatives not designated as hedging instruments
 
    
Millions of yen
  
  
Gains (losses) recognized in income on derivative
  
  
Life insurance premiums and
related investment income*1
    
Interest expense*2
    
Other (income) and
expense
  
Interest rate swap agreements
    ¥ 0     ¥ 0     ¥ 33  
Futures
      (1,106 )      0       2,513  
Foreign exchange contracts
      (3,070 )      (2,436 )      (11,733 ) 
Credit derivatives held/written
      0       0       (2 ) 
Options held/written and other
      0       0       95  
 
*1
Futures and foreign exchange contracts in the above table include gains (losses) arising from futures and foreign exchange contracts held to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts for the six months ended September 30, 2025 (see Note 17 “Income and Expenses Relating to Life Insurance Operations”).
*2
The portion of gains (losses) recognized in income on derivative arising from foreign exchange contracts that represents interest rate adjustments is recognized as interest expense.
 
The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,
pre-tax,
for the six months ended September 30, 2024 is as follows.
Fair value hedges
 
    
Millions of yen
  
    
Gains (losses) recognized in income
  
    
Life insurance premiums and related
investment income
     
Interest expense
     
Other (income) and

expense
  
Foreign exchange contracts
    ¥ 14,454      ¥ 12      ¥ 0  
Options held/written and other
      0        0        28  
The carrying amount of hedged assets and liabilities recognized in balance sheets in fair value hedges and the cumulative amount of fair value hedging adjustments included in the carrying amount (excluding the effect of changes in foreign exchange rates) at March 31, 2025 is as follows.
 
Assets as hedged items in fair value hedges
    
Liabilities as hedged items in fair value hedges
  
    
Millions of yen
         
Millions of yen
  
Consolidated balance
sheets location
   
Carrying
amount
     
The cumulative
amount of fair value
hedging adjustments
included in the
carrying amount
    
Consolidated balance
sheets location
   
Carrying
amount
     
The cumulative
amount of fair value
hedging adjustments
included in the
carrying amount
  
Investment in Securities
    ¥ 491,447      ¥ 0     Long-term Debt    ¥ 28,220      ¥ 0  
Installment Loans
      22,451        (92 )    —       —         —   
 
The effect of the components excluded from the assessment of hedge effectiveness on the consolidated statements of income,
pre-tax,
for the six months ended September 30, 2025 is as follows.
Fair value hedges
 
    
Millions of yen
  
    
Gains (losses) recognized in income
  
    
Life insurance premiums and related
investment income
     
Interest expense
    
Other (income) and

expense
  
Foreign exchange contracts
    ¥ 8,761      ¥ (4 )    ¥ 0  
The carrying amount of hedged assets and liabilities recognized in balance sheets in fair value hedges and the cumulative amount of fair value hedging adjustments included in the carrying amount (excluding the effect of changes in foreign exchange rates) at September 30, 2025 is as follows.
 
Assets as hedged items in fair value hedges
    
Liabilities as hedged items in fair value hedges
  
    
Millions of yen
         
Millions of yen
  
Consolidated balance
sheets location
   
Carrying

amount
     
The cumulative
amount of fair value
hedging adjustments
included in the
carrying amount
    
Consolidated balance
sheets location
   
Carrying
amount
     
The cumulative
amount of fair value
hedging adjustments
included in the
carrying amount
  
Investment in Securities
    ¥ 593,523      ¥ 1,634    
Long-term Debt
    ¥ 25,900      ¥ 0  
Installment Loans
      6,646        (51 )    —       —         —   
 
Notional amounts of derivative instruments and other, fair values of derivative instruments and other before offsetting at March 31, 2025 and September 30, 2025 are as follows.
March 31, 2025
 
         
Derivative assets
  
Derivative liabilities
   
Notional

amount
    
 Fair value 
    
Consolidated balance
sheets location
  
 Fair value 
    
Consolidated balance
sheets location
   
Millions

of yen
    
Millions

of yen
        
Millions

of yen
      
Derivatives designated as hedging instruments and other:
          
Interest rate swap agreements
   ¥ 676,691     ¥ 17,788     Other Assets   ¥ 2,768     Other Liabilities
Options held/written and other
     94,608       98     Other Assets     7,323     Other Liabilities
Futures, foreign exchange contracts
       932,649       9,515     Other Assets     25,445     Other Liabilities
Foreign currency swap agreements
     303,060       9,570     Other Assets     159     Other Liabilities
Foreign currency long-term debt
     250,702       0         —     0         —
Derivatives not designated as hedging instruments:
          
Interest rate swap agreements
   ¥ 1,477     ¥ 81     Other Assets   ¥ 6     Other Liabilities
Options held/written and other
     582,939       15,669     Other Assets     6,392     Other Liabilities
Futures, foreign exchange contracts*
     1,592,590       11,449     Other Assets     13,942     Other Liabilities
Credit derivatives written
     1,000       0         —     3     Other Liabilities
 
*
The notional amounts of futures and foreign exchange contracts in the above table include futures contracts of ¥5,575 million and foreign exchange contracts of ¥2,205 million to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts at March 31, 2025, respectively. Derivative assets in the above table include fair value of the futures and foreign exchange contracts before offsetting of ¥38 million and ¥38 million and derivative liabilities include fair value of the futures and foreign exchange contracts before offsetting of ¥57 million and ¥11 million at March 31, 2025, respectively.
September 30, 2025
 
         
Derivative assets
  
Derivative liabilities
   
Notional

amount
    
 Fair value 
    
Consolidated balance
sheets location
  
 Fair value 
    
Consolidated balance
sheets location
   
Millions

of yen
    
Millions

of yen
        
Millions

of yen
      
Derivatives designated as hedging instruments and other:
          
Interest rate swap agreements
   ¥ 660,629     ¥ 17,766     Other Assets   ¥ 2,843     Other Liabilities
Options held/written and other
     85,362       7     Other Assets     12,589     Other Liabilities
Futures, foreign exchange contracts
     947,525       2,661     Other Assets     36,648     Other Liabilities
Foreign currency swap agreements
     461,350       16,098     Other Assets     573     Other Liabilities
Foreign currency long-term debt
     92,444       0         —     0         —
Derivatives not designated as hedging instruments:
          
Interest rate swap agreements
   ¥ 1,303     ¥ 75     Other Assets   ¥ 2     Other Liabilities
Options held/written and other
     779,487       15,871     Other Assets     7,029     Other Liabilities
Futures, foreign exchange contracts*
     1,496,880       31,552     Other Assets     14,706     Other Liabilities
Credit derivatives held/written
     1,357       8     Other Assets     1     Other Liabilities
 
*
The notional amounts of futures and foreign exchange contracts in the above table include futures contracts of ¥2,629 million and foreign exchange contracts of ¥1,662 million to economically hedge the minimum guarantee risk of variable annuity and variable life insurance contracts at September 30, 2025, respectively. Derivative assets in the above table include fair value of the futures and foreign exchange contracts before offsetting of ¥1 million and ¥6 million and derivative liabilities include fair value of the futures and foreign exchange contracts before offsetting of ¥33 million and ¥42 million at September 30, 2025, respectively.
 
The Company and its subsidiaries have contracted credit derivatives for the purpose of trading. Details of credit derivatives written as of March 31, 2025 and September 30, 2025 are as follows.
March 31, 2025
 
Types of derivatives
   
The events or circumstances
that would require the seller
to perform under the credit
derivative
   
Maximum potential
amount of future
payment under the
credit derivative
     
Approximate
remaining term
of the credit
derivative
     
Fair value of
the credit
derivative
  
  
Millions of yen
     
Millions of yen
  
Credit default swap
    In case of credit event (bankruptcy, failure to pay, restructuring) occurring in underlying reference company *    ¥ 1,000     
 
Less than
three years
 
 
    ¥ (3 ) 
 
*
Underlying reference company’s credit ratings are A1 or better rated by rating agencies as of March 31, 2025.
September 30, 2025
 
Types of derivatives
   
The events or circumstances
that would require the seller
to perform under the credit
derivative
   
Maximum potential
amount of future
payment under the
credit derivative
     
Approximate
remaining term
of the credit
derivative
     
Fair value of
the credit
derivative
  
  
Millions of yen
     
Millions of yen
  
Credit default swap
    In case of credit event (bankruptcy, failure to pay, restructuring) occurring in underlying reference company *    ¥ 1,000       
Less than
two years
  
 
    ¥ (1 ) 
 
*
Underlying reference company’s credit ratings are A1 or better rated by rating agencies as of September 30, 2025.