Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2021 Earnings Presentation
36 slides from Lifenet Insurance's earnings presentation, May 12, 2022
Slide 1: Full Year Financial Results Briefing for the Fiscal Year Ended March 2022
LIFENET INSURANCE COMPANY Full Year Financial Results Briefing for the Fiscal Year Ended March 2022 May 12, 2022 [Speaker] Ryosuke Mori President and Representative Director
Slide 2: Presentation
Presentation Mori: Thank you very much for joining our financial results briefing today. We announced our financial results for FY2021 at 3:05 PM today. Presentation materials are available on our IR website. Today, I would like to provide an overview of the financial results using Investor Meeting
Slide 3: Main points of today's financial results presentation
Please refer to page two. These are the main points of today's financial results presentation. First, results for FY2021. Annualized premiums of policies-in-force increased by 15% from the end of the previous fiscal year to JPY21.5 billion, continuing double-digit growth. European Embedded Value, th
Slide 4: Results of FY2021
I would like to explain our result of FY2021 first. Copyright© LIFENET INSURANCE COMPANY All rights reserved. 3
Slide 5: Trend of in-force business performance
Please refer to page four. This is the trend of the performance of in-force business. Annualized premiums of policies-in-force corresponding to annual recurring revenue totaled JPY21.5 billion at the end of FY2021, and the number of policies-in-force exceeded the 500,000 mark, reaching 507,428 polic
Slide 6: Factors in movement of policies-in-force
Page five shows the factors that cause movement in the number of policies-in-force. In FY2021, the number of new business exceeded 100,000 for the second consecutive year, reaching 100,636. The surrender and lapse ratio for FY2021 was 6.6%. While we are maintaining our medium-term trend of double-di
Slide 7: Marketing efficiency
Page six is marketing efficiency. The table below left shows the marketing expenses we invested in each fiscal year. The marketing expenses for FY2021 totaled JPY8,262 million, resulting from aggressive investments especially in the fourth quarter, in light of the business environment. As a result,
Slide 8: Operating expense efficiency excluding marketing expenses
Next, I will also explain the efficiency of operating expenses excluding marketing expenses. Operating expenses excluding marketing expenses totaled JPY3,877 million, and operating expense ratio was 19.5%. As you can see, while insurance premiums has been steadily increasing, the ratio for FY2021 re
Slide 9: Accounting structure of life insurance companies
Page eight shows the accounting structure of life insurance companies. This is important to properly understand our profitability. Under the current statutory accounting on the profit and loss statement, the entire cost associated with the acquisition of new business is recognized as a current perio
Slide 10: Adjusted profit
Page nine shows the adjusted profit. Under current statutory accounting, there is a time lag between the recognition timing of revenues and cost, and we believe that marketing expenses, which are the cost of acquiring new business, make it difficult to understand the actual state of our profitabilit
Slide 11: Structure of embedded value
Page 10 is about the structure of embedded value. The European Embedded Value is the net assets reflecting the present value of future profit, or net assets, which is the after-tax value of unrealized future profits that will generate from existing policies-in-force on statutory accounting. We focus
Slide 12: European Embedded Value as of March 31, 2022
Please refer to page 11. European Embedded Value as of March 31, 2022 was JPY116.6 billion. The compound average growth rate of EEV since listing in March 2012 has been 20%, but in particular, the value of in-force business, which is the unrealized future profits from policies-in-force, has grown at
Slide 13: Changing factors of EEV
Please refer to page 12. This is a changing factor of EEV from the end of FY2020 to the end of FY2021. We define adjusted incremental EV as the sum of the three components, value of new business, expected existing business contribution, and the operating experience variance, which are shown in the d
Slide 14: EV sensitivity to interest rates and stock prices
Page 13 shows the sensitivity of EV to changes in interest rates, stock prices and other factors for the Company and listed domestic life insurance companies. As you can see, the sensitivity of our EV to changes in interest rates and other factors has been limited as our asset management and product
Slide 15: Summary of the balance sheet
Page 14 shows a summary of the balance sheet. As of March 31, 2022, total assets were JPY67.82 billion, liabilities were JPY45.749 billion, and net assets were JPY22.071 billion. The solvency margin ratio, which indicates the Company's ability to pay out claim, is 3,182%, which maintains sufficient
Slide 16: Growth of value of in-force business
As the concluding of the financial information for FY2021, we will explain the growth of the value of in-force business. The number of policies-in-force on the left side has been steadily increasing, expanding the scale of our business. In addition to that, the value of in-force business per policy
Slide 17: Capital raised through overseas public offering
We will move to the main initiatives for FY2021. Please refer to page 16. In order to achieve further growth, the Company raised the capital through overseas public offering in September 2021 following FY2020. As you can see, we utilize all capital raised for growth investments. Through our two most
Slide 18: New white label service with Money Forward
Please refer to page 17. In FY2021, we launched a new service with Money Forward, Inc. as our white label business. As one of the fixed cost review services for an improvement of household finances which Money Forward focuses on, Lifenet offers its products to Money Forward’s customers. Since its la
Slide 19: Customer experience and satisfaction
Please refer to page 18. We aim to provide convenient life insurance services that exceed customer expectations by redesigning the customer experience in the procedures related to life insurance. We would like to provide what customers really need from customers’ perspectives, not what life insurers
Slide 20: Initiatives for FY2022 and beyond
From this point forward, we will explain our initiatives for FY2022 and beyond. Copyright© LIFENET INSURANCE COMPANY All rights reserved. 19
Slide 21: LIFENET Philosophy
Please refer to page 20. Since our business commencement, we have established the LIFENET Philosophy as a guideline for all officers and employees to follow. This is our greatest strength and what differentiates us from our competitors. We will continue to question the value of life insurance for ou
Slide 22: Growth potential of the online life insurance market
On page 21, we will explain the growth potential of the online life insurance market. Since the emergence of the COVID-19 pandemic, our business performance has been affected by both tailwinds and headwinds as the pandemic situation has been fluctuating. However, we believe that the growth potential
Slide 23: Online life insurance market and competitive landscape
Please refer to page 22. Here is our view of the online life insurance market and competitive landscape in the online life insurance market as we perceive it. In general, there are three phases in the development process of a new market, as shown in the figure: a period when a small number of player
Slide 24: Priority investment areas: business, system, organization
Please refer to page 23. We believe that UI/UX and website traffic are critical for significant success in the online life insurance business. In other words, this corresponds to the innovation of customer experience and strengthening of sales capabilities that we have set as priority areas in our m
Slide 25: Business: Internet direct and white label channels
First is the business. Please refer to page 24. The Company aims to achieve double-digit growth in in-force business performance on two pillars: the Internet direct channel and the white label channel. First, the Internet direct channel. As explained earlier on page 21, the intention to purchase lif
Slide 26: Online insurance platform subsidiary and agency business
We will accelerate investment for growth in the Internet direct channel and white label channel to achieve growth in in-force business. Please refer to page 25. We established a subsidiary in FY2021 with the goal of becoming an online life insurance platform. In FY2021, we launched an online insuran
Slide 27: Investment in system development
Next is the second point of our growth strategy: investment in system development. Please refer to page 26. Until FY2021, we focused especially on revamping the the front-end infrastructure, which means strength of the touchpoint with customers. From FY2022 onward, we will aggressively invest in the
Slide 28: Investment in human resources and organization
The third point of the growth strategy is investment in human resources and organization. Please see page 27. Since the business commencement in 2008, we have been providing new life insurance value from the customer's perspective by hiring people with diverse backgrounds, free from industry norms.
Slide 29: LIFENET philosophy and sustainability
Then refer to page 28. LIFENET philosophy is the heart of our company's sustainability. In order to continue to be needed by policyholders as an insurance company and to continue to be supported by shareholders and investors as a publicly listed company, we will promote sustainability initiatives an
Slide 30: Asset management in the current interest rate environment
Here, we would like to share our thoughts on asset management in light of the current interest rate environment. In general, a gradual increase in interest rates give positive impact to financial institutions, and we see it as a positive environment for our company as well. We have approximately JPY
Slide 31: Business forecasts for FY2022
Based on the explanations given so far, we would like to present our business forecasts for FY2022. Please refer to page 30. The forecast for FY2022 is based on the information shown. Annualized premiums for in-force business is expected to increase by approximately 13% from March 31, 2022, to JPY24
Slide 32: Voluntary adoption of IFRS 17
Please refer to page 31. We have been conducting a preliminary study for the voluntary adoption of International Financial Reporting Standards, IFRS 17, in our financial reporting. At this stage, the probability of the implementation of IFRS 17 scheduled to start in January 2023 has increased suffic
Slide 33: Objectives of IFRS adoption: statutory accounting, EV and IFRS 17
Please refer to page 32. I will explain the objectives of IFRS adoption by comparing the main features of Statutory Accounting Standards, Embedded Value, and IFRS 17. The point is that they are closely linked each other because we are just looking at the same thing from different angle though the re
Slide 34: IFRS 17 and investor communication
IFRS 17 has been developed by the International Accounting Standards Board (IASB) to improve comparability and transparency of financial statements of insurance companies and thereby provide useful information for investors' decision-making. We believe that financial reporting under IFRS 17 will ena
Slide 35: Future direction
Please refer to page 33. We will explain our future direction. FY2021 was a milestone year for us, in that we achieved our 2018 management goal of reaching European Embedded Value of JPY100 billion and the number of policies-in-force exceeded 500,000. In FY2022, we will continue our efforts to achie
Slide 36: Management policy
Finally, there is the management policy. There is no change in our policy of prioritizing growth with the aim of expanding the scale of our business. We will continue to expand the online life insurance market firmly by our own efforts and remain the leading company in this market, aiming to achieve
Lifenet Insurance Company — FY2021 Earnings Presentation on 6ix