Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2014 Earnings Presentation
57 slides from Lifenet Insurance's earnings presentation, May 15, 2015
Slide 1: Investor Meeting Presentation for Fiscal 2014
Securities Code:7157 TSE Mothers Investor Meeting Presentation for Fiscal 2014 May 15, 2015
Slide 2: FY2014 Key Highlight
FY2014 Key Highlight ✓Ordinary income up 15% year on year ✓Ordinary loss1 improved 61% year on year ✓Primary challenge is return to growth in new business performance ✓Challenges for final fiscal year in mid- term business plan ✓Capital and business alliance with KDDI CORPORATION 1.The ordinary prof
Slide 3: Summary of FY2014 Results
Summary of FY2014 Results (JPY mn) 2013 2014 Year on year Ordinary income 7,603 8,729 114.8% Operating expenses 4,131 3,815 92.4% Ordinary profit (loss)1 (1,198) (472) - Cash flows from operating activities 1,976 3,247 164.3% Mortality margin 1,141 1,777 155.7% Annualized premium of policies-in-forc
Slide 4: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for Fiscal 2014 3. Challenges for Fiscal 2015 3
Slide 5: Mid-term Business Plan
Mid-term Business Plan LIFENET 2015 Management Goal Achieve 9.5 billion in Offer new products and ordinary income (FY 2015) services as an innovator Push the company toward to create a future of life profitability (FY 2015) insurance that resonates (Based on ordinary profit before amortization of
Slide 6: Progress of Mid-term Business Plan: Ordinary Income
Progress of Mid-term Business Plan (Ordinary Income) Up 15% year on year due to increase of policies-in-force 9,500 (JPY mn) 8,729 7,603 Up 5,976 15% Y-o-Y 3,773 FY2011 12 13 14 15 5
Slide 7: Progress of Mid-term Business Plan: Ordinary Profit/Loss
Progress of Mid-term Business Plan (Ordinary Profit1 / Loss) Ordinary loss improved 61% year on year toward profitability Turn profitable (JPY mn) Improved 61 % Y-o-Y (472) (1,198) (1,664)2 (2,184) FY2011 12 13 14 15 1. Ordinary profit (loss) before amortization of deferred assets under Article 11
Slide 8: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for Fiscal 2014 3. Challenges for Fiscal 2015 7
Slide 9: Overview of FY2014
Overview of FY2014 First revision of core products since business commencement - Revision of Term life - Launched new Whole-life Medical Challenges for the “Second Stage” as an online life insurer - Enhance follow-up continuously - Enhance business partnerships - Enrich customer services 8
Slide 10: First Revision of Core Products since Business Commencement
First Revision of Core Products since Business Commencement Reduced premium while realized rich coverage 1. Comparison of Lifenet and 3 other online life insurance companies’ term life insurance products (excluding risk sub-divided insurance products) under the following conditions: Insurance cove
Slide 11: Annualized Premium per Policy of Application
Annualized Premium per Policy of Application Increased premium per policy due to products revision Ave. 50,593 (JPY) Ave. 39,168 Products revision (May 2014) 13/10 14/05 15/03 （ YY/MM ） 10
Slide 12: Enhance Follow-up Continuously
Enhance Follow-up Continuously Enhancing free consultation services Reduction of monthly premium of Lifenet’s customers Saved 1 9,014yen Number of applicants via free consultation services 14/04 14/10 15/03 （ YY/MM ） 1. Of the 3,401 surveys, 1,278 replied that they were able to decrease insurance
Slide 13: Enhance Business Partnership
Enhance Business Partnership Develop new channels to deliver insurance to wider range of customers Oct 2014 SURUGA Bank Nov 2014 TOYOTA TSUSHO INSURANCE PARTNERS Dec 2014 Hoken No Madoguchi 12
Slide 14: Enhance Customer Services
Enhance Customer Services Offering extensive convenience as an online insurer Informing status of claims processions Free online health consultation via email or “My Page” service “Doctors Me” for policyholders 来風 大輔 20 5 18 東京都千代田区麹町二丁目14番地2 Accept application documents via website captured by Sm
Slide 15: Highly Evaluated Products and Services
Highly Evaluated Products and Services Received award in the customer satisfaction investigation by third parties’ evaluation Number 1 in Oricon Client Highest rating three stars in the Number 1 in the J.D. Power Asia Satisfaction Rankings 2015 in 2014 HDI Contact Center rankings Pacific 2015 Japa
Slide 16: FY2014 Financial Results
FY2014 Financial Results Ordinary income up 15% year on year Ordinary loss1 improved 61% year on year Primary challenge is return to growth in new business performance Operating cash flow up 64% Mortality margin recorded steadily Despite value of new business decline year on year, improv
Slide 17: Ordinary Income
Ordinary Income (JPY mn) 8,729 Number of policies- 7,603 in-force steadily 5,976 increased Exceeded business forecast due to returning reserves for outstanding claims FY2012 13 14 16
Slide 18: Annualized Premium of Policies-in-Force
Annualized Premium of Policies-in-Force (JPY mn) 8,793 8,077 Annualized 6,875 Premium1 JPY 8,793mn Year on year up 9% 13/03 14/03 15/03 (YY/MM) 1. The amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payments are monthly installments, thus the ann
Slide 19: Number of Policies-in-force
Number of Policies-in-force 215,403 policies-in-force (as of Mar. 31) 215,403 212,304 209,814 206,453 202,963 197,097 25,447 189,958 180,591 169,312 155,947 144,575 77,536 132,551 118,040 103,875 91,249 76,296 63,188 51,356 112,420 39,643 31,209 23,506 17,962 12,746 8,440 5,116 459 1,418 2,712 08/
Slide 20: Number of In-force Policyholders
Number of In-force Policyholders 131,319 in-force policyholders (as of Mar. 31) 131,319 128,889 126,840 124,247 121,745 Number of policyholders 118,454 114,731 109,835 103,816 96,923 91,125 83,999 75,622 67,316 59,835 51,051 43,214 35,899 28,497 23,047 17,751 13,698 9,804 6,595 3,965 341 1,097 2,0
Slide 21: Number of New Business/Annualized Premium
Number of New Business/Annualized Premium 2,409 :Number of new business :Annualized premium of new business (JPY mn) Annualized premium 60,685 Y-on-Y 1,707 22% decrease of new business1 46,237 1,327 JPY 1,327mn Y-on-Y 39% decrease 27,982 Continuous challenge is return to growth in new business p
Slide 22: Number of New Business/Annualized Premium (Quarterly)
Number of New Business/ Annualized Premium (Quarterly) Increased compared to 3Q :Number of new business :Annualized premium of new business 355 348 (JPY mn) 346 330 9,256 301 7,967 7,086 6,887 6,042 13/4Q 14/1Q 14/2Q 14/3Q 14/4Q 21
Slide 23: Insurance Claims and Other
Insurance Claims and Other : Amount of insurance payments (JPY mn) : Amount of insurance payments / Premiums income (%) 1,124 1,159 Same level as Benefit previous year 423 436 claims despite increased 15.0 13.8 policies-in-force 520 234 54 insurance claims Insurance 8.9 701 723 claims and 4,779
Slide 24: Provision for Policy Reserves and Other
Provision for Policy Reserves and Other : Provision for policy reserves (JPY mn) : Provision for policy reserves / Premiums income (%) Increased due to 3,566 increase policies-in- Effect of changing 2,961 force calculation formula of policy reserves 501 mn 2,036 Calculations 1,535 42.6 based on
Slide 25: Operating Expenses
Operating Expenses (JPY mn) 4,976 Decreased 8% 4,131 2,761 3,815 due to control 1,948 operating expenses 1,672 Marketing mainly marketing Customer 550 612 558 service Operating expenses System 1,664 1,570 1,583 and other ratio1 46% FY2012 13 14 85% 55% 46% Operating expenses ratio¹ 1. The ratio
Slide 26: Advertising Expenses (Quarterly)
Advertising Expenses (Quarterly) Increased in 1Q for products revision while controlled in 2H (JPY mn) 527 462 420 389 322 338 219 172 13/1Q 13/2Q 13/3Q 13/4Q 14/1Q 14/2Q 14/3Q 14/4Q 25
Slide 27: Marketing Expenses per New Business
Marketing Expenses per New Business :Marketing expenses per new business (JPY thousand) :Marketing expenses/Annualized premium of new business (%) Y-on-Y up 59 Increased 10% due to 42% increased premium 45 per policy 42 Y-on-Y up 10% 1.1 1.1 1.2 Marketing expenses approx. JPY 60K level per new b
Slide 28: New Business Efficiency (Quarterly)
New Business Efficiency (Quarterly) Due to controlled marketing expenses, recent marketing efficiency back on recovery track 80 :Marketing expenses per new business (JPY thousand) :Marketing expenses / Annualized premium of new business(%) 61 54 1.8 46 46 1.4 1.2 0.9 0.9 13/4Q 14/1Q 14/2Q 14/3Q 14
Slide 29: Ordinary Profit/Loss
Ordinary Profit/Loss Improved steadily towards profitability1 (JPY mn) FY2012 FY2013 FY2014 Ordinary loss before deferred (1,664)2 (1,198) (472) (472) expenses and amortization Deferred Improved expenses 2,701 - - 61% Y-o-Y Amortization cost (1,060) (1,060) (1,060) (1,198) Ordinary profit (loss) (
Slide 30: Mortality Margin
Mortality Margin (JPY mn) 1,777 Steadily improved 1,437 Effect of changing calculation formula mortality margin of policy reserves 501 mn 1,141 935 Increased 56% due to insurance premium up FY2012 13 14 29
Slide 31: Fundamental Profit
Fundamental Profit (JPY mn) FY2012 FY2013 FY2014 Mortality margin Expense margin (loss) 1,4371 (1,219) 1,141 (3,234) 1,777 (3,282) Steadily improved Interest margin 27 3 19 fundamental Fundamental profit (ref.) Insurance 244 (2,089) (1,484) profit premiums and other 5,915 7,537 8,493 Adjusted fund
Slide 32: Cash Flows from Operating Activities
Cash Flows from Operating Activities (JPY mn) 3,247 Continuously recording positive 1,976 operating cash flows on annual basis Increased 64 % year on year (35) FY2012 13 14 31
Slide 33: Financial Condition
Financial Condition (JPY mn) (YY/MM) 13/03 14/03 15/03 Total assets 20,450 Promote 21,188 23,387 Cash and deposits 353 418 731 Money held in trust - 1,000 1,033 diversification Securities Government bonds 13,488 7,331 14,154 6,636 17,082 8,227 in investment Municipal bonds - - 851 assets Corporate
Slide 34: Solvency Margin Ratio
Solvency Margin Ratio1 2,266% 2,244% Maintained at 1,922% healthy level Average of 4 major insurance companies as of September 30, 20142 903% 13/03 14/03 15/03 (YY/MM) 1. The solvency margin ratio measures a life insurance company’s ability to pay out claims when unforeseen events occurs, such as
Slide 35: European Embedded Value
European Embedded Value1 JPY 14,152mn (JPY mn) 25,248 22,907 value of in-force 18,746 Value of business 14,152 in-force Due to updates business made to operating Adjusted assumptions 11,095 net assets reflecting actual benefit payment 13/03 14/03 15/03 (YY/MM) 1. Lifenet has fully adopted the EE
Slide 36: Value of New Business (VoNB)
Value of New Business (VoNB) 838 (JPY mn) Decreased year on 709 year due to increased :Value of new business 620 :Value of new business (ultimate unit cost base) 1 initial expenses Improved in 2H by controlling 152 marketing expenses 127 89 and efficiency FY2012 13 14 1. The expense assumptions
Slide 37: VoNB (Quarterly)
VoNB (Quarterly) Improved in 2H, while negative VoNB in 1H (JPY mn) 566 370 338 271 329 (177) 12/1H 12/2H 13/1H 13/2H 14/1H 14/2H 36
Slide 38: VoNB (Ultimate Unit Cost Base)
VoNB (Ultimate Unit Cost Base)1 Per new business (JPY mn) FY2013 FY2014 for FY2014 (JPY thousand) Certainty equivalent present value of future profit 4,442 3,720 132 －) Time value of financial options and guarantees － － － －) Frictional cost of capital (28) (19) (0) －) Allowance for non market risk (
Slide 39: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Increased initial expense per policy due to number of new business decline VoNB per policy (ultimate unit cost base) Insurance 18 premiums per policy Interest Expected Surrender and lapse (JPY thousand) increased incidence rate change rates 6 change rate chan
Slide 40: EV Sensitivity Analysis
EV Sensitivity Analysis Impacts of changes in assumptions (sensitivities) on the EEV results Change in EEV as of Change in value of (JPY mn) March 31, 2015 new business EEV and new business value as of March 31, 2015 25,248 89 Sensitivity 1a: 1.0% increase in risk-free rate 1,115 376 Sensitivity 1
Slide 41: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for Fiscal 2014 3. Challenges for Fiscal 2015 40
Slide 42: Mid-term Business Plan
Mid-term Business Plan Aim to achieve Management Goal in the last fiscal year of current mid-term business plan Offer new products and services as an “innovator” to create the future of life insurance that resonate with stakeholders, and LIFENET2015 achieve the highest sustainable growth among onl
Slide 43: Priority Areas and Major Challenges
Priority Areas and Major Challenges For sustainable growth of insurance premiums ― Further development of online insurer business model ― Rigorous improvement of follow-up ― Continuous enhancement of partnership 42
Slide 44: Further Development of Online Insurer Business Model
Further Development of Online Insurer Business Model Move into the “Second Stage” as an online life insurer, compensating conventional weakness Focus on building a secure I’ve heard of the company name, feeling but not sure Lifenet is reliable Shift TVCM from brand enough because it’s new… awa
Slide 45: Rigorous Improvement of Follow-up
Rigorous Improvement of Follow-up Provide enriched support structure for customers Major measures for follow-up Improve policyholders’ satisfaction Develop customer relationship management platform Improve proposal tool to meet customer needs Continuous training for insurance planners and
Slide 46: Continuous Enhancement of Partnership
Continuous Enhancement of Partnership Generate synergy with online direct channel with agents Major measures for partnership Enhance agents channel by reallocation of resources Create new services with KDDI Consider alliance with partners with large customer base 45
Slide 47: Create New Services with KDDI
Create New Services with KDDI Capital and business alliance agreement with KDDI Capital and business alliance overview Explore possibilities for planning customer- oriented new services taking advantage of our combined strength Subject to obtaining regulatory approval, KDDI will become our lar
Slide 48: Capital Alliance with KDDI
Capital Alliance with KDDI Becoming “insurance companies major shareholder”1 by third-party allotment etc. Capital alliance overview Payment date May 22, 2015 Number of newly 8,000,000 issued shares Funds raised 3,040 million yen Subject to KDDI obtaining regulatory approval to become a major shar
Slide 49: Major Shareholders (after Third-party Allotment)
Major Shareholders (after Third-party Allotment) Major shareholders (after third-party allotment)1 Shareholders Voting rights KDDI CORPORATION 15.95% Swiss Reinsurance Company Ltd 11.33% Asuka DBJ Investment Limited Partnership 11.33% MITSUI & CO., LTD. 9.57% Seven Financial Service Co., Ltd. 6.48%
Slide 50: Business Alliance with KDDI
Business Alliance with KDDI Provide customer-oriented financial services Online services au Customer Database Financial services Commerce “au” Value-Added Economic Zone 49
Slide 51: Business Alliance Committee with KDDI
Business Alliance Committee with KDDI Continuous discussion about specific measures in the business alliance To be discussed in business alliance Committee Measures of customer-oriented financial services － Products and services combination of two companies － Effective approaching methods to cus
Slide 52: Other Challenges
Other Challenges Improvement in productivity ― Continue severe control of operating expense Being an “innovator” in life insurance ― Keep on “Edgy” challenges with “Social Cause” ― Aim to expand online insurance market 51
Slide 53: Business Forecast
Business Forecast Business forecast for FY2015 remains as business goals of Mid-term business plan Effect of business alliance with KDDI is under careful examination (JPY mn) Ordinary profit Ordinary income (loss)1 Business forecast Turn FY2015 9,500 Profitable Results FY2014 8,729 (472) 1. The
Slide 54: LIFENET Manifesto
LIFENET Manifesto I. Our Guiding Principles II. Life Insurance will be Comprehensive (1) We believe that our responsibility to society is to return life insurance to its (1) Our products will be simple and comprehensible. There will not be complex original state. Life insurance is for the customers,
Slide 55: http://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 56: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 57: Embedded Value and Value of New Business
Embedded Value and Value of New Business (Illustrative purpose only: Based on present value) Appraisal Value (AV) Insurance payments Premium for Value of in-force business is the present value future growth at the valuation date of future after-tax profits distributable to shareholders from in-force
Lifenet Insurance Company — FY2014 Earnings Presentation on 6ix