Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q2 2019 Earnings Presentation
37 slides from Lifenet Insurance's earnings presentation, Nov 12, 2019
Slide 1: Presentation Material for Investors for 2Q of Fiscal 2019
Securities Code: 7157 TSE Mothers Presentation Material for Investors for 2Q of Fiscal 2019 November 12, 2019
Slide 2: LIFENET is... Comprehensible, Cost-Competitive, Convenient
LIFENET is... Comprehensible Cost-Competitive Convenient ◼ Remembering the original purpose of life insurance – mutual support ◼ Helping our customers embrace life more fully 1
Slide 3: Table of Contents
Table of Contents 1. Results for 2Q of Fiscal 2019 2. Future Initiatives 2
Slide 4: Overview of 2Q for FY2019
Overview of 2Q for FY2019 Annualized premium1 of Annualized premium1 of policies-in-force new business 14,200 (108.5% vs end of FY2018) million yen 1,616 (Y-on-Y 133.7%) million yen Adjusted profit2 EEV3 (European Embedded Value) 1,972 (includes 743 million yen impact million yen 66,426 (Adjusted in
Slide 5: Number of Policies-in-Force
Annualized Premium / Number of Policies-in-Force : Annualized premium of policies-in-force (JPY bn) : Number of policies-in-force 14.2 ◼ Accelerated 11.9 growth trend 334,528 10.4 9.0 9.6 283,207 ◼ Year-on-year 248,635 annualized premium 231,538 219,471 118.5%, number of policies-in-force 118.1% 201
Slide 6: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’19/03 ’19/09 ratio Number of policies-in-force 308,854 334,528 100% - Term Life1 150,808 161,943 48% - Whole-life Medical1 85,968 92,299 28% - Term Medical Care1 9,493 9,269 3% - Long-term Disability1 49,214 51,785 15% - Cancer1 13,371 19,232 6% Sum insured
Slide 7: Number of New Business
Annualized Premium / Number of New Business : Annualized premium of new business (1H of fiscal year, JPY mn) : Number of new business (Fiscal year) : Number of new business (1H of fiscal year) ◼ Steady growth 1,616 continues, heading towards historical high 1,209 64,435 ◼ Year-on-year 730 annualized
Slide 8: Number of New Business (Half)
Number of New Business (Half) ◼ Achieved new half-year record high :Number of new business (Half) 37,912 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 7
Slide 9: Marketing Efficiency
Marketing Efficiency ◼ Expecting around 70 thousand yen level for fiscal 2019 : Marketing expenses per new business (JPY thousand) : Marketing expenses / Annualized premium of new business1 Result of changing commission payment scheme and recorded agent commissions in 84 79 thousand JPY lump as mark
Slide 10: Operating Expenses Ratio
Operating Expenses Ratio : Insurance premiums (JPY mn) : Operating expenses excl. marketing expenses (JPY mn) : Operating expenses ratio¹ (%) 11,845 ◼ Improving, forecasting to be 10,421 9,628 roughly 22% range 9,007 for FY19 21.2% 23.1 % 22.8 % 21.5 % 22.2 % 6,697 ◼ Strive for further business expa
Slide 11: Profit Structure under Current Statutory Accounting
Profit Structure under Current Statutory Accounting ◼ Time lag is caused between the recognition of costs and revenue as marketing expenses is recognized at the time of acquisition, and revenue is collected gradually over a long period Insurance policy profit structure Total profit/loss Accounting R
Slide 12: Key Business Indicators of Corporate Value
Key Business Indicators of Corporate Value ◼ Disclosure of two key management indicators during current period of growth Adjusted profit (Ordinary profit excluding marketing expenses) Indicator of profit level excluding marketing expenses as there is a time lag between the recognition of revenue and
Slide 13: Adjusted Profit
Adjusted Profit ◼ Increase in adjusted profit due to impact of modified co-insurance Ordinary profit/loss1 Adjusted profit (Ordinary profit1 excluding marketing expenses) :Fiscal year :1H of fiscal year (JPY mn) 584 (JPY mn) 2,429 2,497 88 1,887 1,910 1,972 Impact of (197) modified 743 co- insurance
Slide 14: Structure of Embedded Value
Structure of Embedded Value Adjusted Value of in-force EV net worth business (Net assets at end of period + adjustments) Profit/loss for the current fiscal year is reflected in end-of- period net assets Revenue Revenue Expense Expense Profit/loss for Unrealized future profits/losses on policies-in-f
Slide 15: EEV (European Embedded Value)
EEV （European Embedded Value） ◼ Characteristics of Lifenet’s EEV are as follows: Strong growth • Maintaining increase in EEV since company became public in March 2012 • Steadily growing even in a low interest rate environment Resilience to interest rate changes • Limited sensitivity to interest rate
Slide 16: Strong EEV growth
Strong EEV1 growth ◼ CAGR of EEV is 19%2 and value of in-force business is 36% since IPO 63,378 66,426 (JPY mn) Value of in-force business Adjusted net worth 48,518 52,413 18,547 5,122 13,425 14,860 14,012 2012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03 ’18/03 ’19/03 ’19/09 (YY/MM) 1. Lifenet’s EEV is ca
Slide 17: Structure Breakdown of EEV
Structure Breakdown of EEV1 ◼ Increase due to growth of new business, improvement in operating expense ratio and assumption changes of renewal rate 66,426 (JPY mn) Adjustments Adjusted Economic to the values2 variances incremental EV as of Assumption and assumption Sep. 30, ‘19 changes changes 41 1,
Slide 18: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Sep. 2019 Reference: March 2019 End1 End Lifenet ライフネット生命 Lifenet ライフネット生命 Company A社 A Company B社 B Company C社 C Company D社 D 13% 8% 4% 1.9% 3% 1.5% -0.6% -0.7% -1% -1.7% -2.0% -2% -6% -5% -8% -7% -10% 金利0.5
Slide 19: Financial Condition
Financial Condition (JPY mn) (YY/MM) ’19/03 ’19/09 Total assets 38,247 39,707 Cash and deposits 1,192 1,074 Monetary claims bought 999 799 Money held in trust 3,114 3,336 ◼ Maintained Securities 30,989 31,618 sufficient financial Government bonds 8,071 8,104 stability as Municipal bonds 1,394 1,405
Slide 20: Main Initiatives
Main Initiatives ◼ Contact center and website awarded top ratings Contact Center and Website awarded top rankings of three stars in HDI Benchmarking for 7th time, the highest number of times for a company to receive three-star ratings in the life insurance industry1. Phone Support Web Support (Conta
Slide 21: Table of Contents
Table of Contents 1. Results for 2Q of Fiscal 2019 2. Future Initiatives 20
Slide 22: New Whole-life Medical Product
New Whole-life Medical Product ◼ Expanded lifetime coverage based on customer needs Whole-life Medical Jibun 3 Whole-life Medical Jibun 3 for Women • Expanded hospitalization benefit for women that pays 5 days for hospitalization of up to 5 days • New benefits for out-patient surgeries and advanced
Slide 23: Change in Largest Major Shareholder
Change in Largest Major Shareholder ◼ Organizational changes within KDDI Group lead to change in largest major shareholder to au Financial Holdings Corporation (“auFH”) Shares: 24.99％1 Financial Holdings Corporation ◼ Lifenet, auFH and KDDI will aim to provide new products and services in future 1.
Slide 24: New Business Partnership
New Business Partnership ◼ Aim to innovate customer experience and enhance promotion capabilities with insurtech business company justInCase To design a product or service exploiting product and sales channels through business collaboration 23
Slide 25: Number of New Business (Monthly)
Number of New Business (Monthly) ◼ Exceeding 7,000 new policies in October for the first time :Number of new business 7,067 Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct FY2017 FY2018 FY2019 1. October 2019 results based on monthly disclosure 24
Slide 26: Business Forecast FY2019
Business Forecast FY2019 ◼ Promote further business acquisition following strong business performance (JPY mn) 【Revised】 【Original】 (Reference) Business forecast Business forecast FY2018 Including Including impact of modified impact of modified Results co-insurance co-insurance Ordinary income 16,50
Slide 27: Management Policy
Management Policy Help our customers embrace life more fully Mission by offering comprehensible, cost-competitive and convenient products and services Vision Be the leading company driving the growth of the online life insurance market • Innovation of customer experience Priority Enhancing and evolv
Slide 28: LIFENET Manifesto
LIFENET Manifesto Comprehensible, Cost-Competitive, Convenient I. Our Guiding Principles II. Making Life Insurance Accessible Again - Headache-free (1) Creating the life insurance of the future without losing sight of (1) Helping the customers help themselves. By making our its original premise: “an
Slide 29: https://ir.lifenet-seimei.co.jp/en/
All information on this document that is not historical fact constitutes forward-looking information and is based on assumptions and forecasts available to the company at the time of preparation. The company cannot guarantee the accuracy of these assumptions and forecasts. Earnings projections and o
Slide 30: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 31: Condensed Statements of Operation / Fundamental Profit (1H)
Condensed Statements of Operation / Fundamental Profit (1H) (JPY mn) 2018/1H 2019/1H Change Note Due to increase in in-force policies business and utilization of Insurance premiums and other 5,847 7,754 1,906 modified co-insurance Other 250 199 (51) Ordinary income 6,097 7,953 1,855 Includes 852M in
Slide 32: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in (JPY mn) Change in EEV VoNB EEV and new business value as of September 30, 2019 66,426 911 Sensitivity 1a: 1.0% increase in risk-free rate (2,354) 77 Sensitivity 1b: 1.0% decrease in risk-free rate 1,877 (201) Sensi
Slide 33: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit 2Q of FY2019 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 7,754 Ordinary income Premiums income 6,697 Net premiums Expense loading Reinsurance income 1,056 Reinsurance Other reinsurance income income Interest and Gains on
Slide 34: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Sep 30, 2019 ( R 1 + R 8 ) 2 + ( R 2 + R 3 + R 7 ) 2 + R 4 / 2 (JPY mn) = Solvency margin ratio Total amount of solvency margin Total amount of risk/2 2,132.3% <numerator> ÷ < the denominator> 19,627 1,840/2 Cash and deposits Other liabilities 1,074 993 Insura
Slide 35: Adjusted Profit
Adjusted Profit Significance of Adjusted Profit disclosure • As accrual timing of cost and revenue do not match, statutory accounting does not necessarily provide an accurate picture of profitability of our business • We, therefore, disclose the indicator of profit level excluding marketing expenses
Slide 36: Adjusted Incremental EV
Adjusted Incremental EV ◼ Adjusted Incremental EV accurately indicates our business growth during a certain period within increase in EEV Adjusted incremental EV Defined as constitution of components below: - New business value in the fiscal year - Expected existing business contribution - Operating
Slide 37: Utilization of Reinsurance (Modified Co-Insurance)
Utilization of Reinsurance (Modified Co-Insurance) ◼ Ease pressure of new business costs on P&L ◼ Alleviate decrease in capital during growth Illustration image of change in Illustration image of impact of profit/loss structure by reinsurance reinsurance on net assets ：Revenue ：Costs ：Effects of rei
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