Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q2 FY2021 Earnings Presentation
46 slides from Lifenet Insurance's earnings presentation, Nov 10, 2021
Slide 1: Presentation Material for Investors Second Quarter for Fiscal 2021
Securities Code: 7157 TSE Mothers Presentation Material for Investors Second Quarter for Fiscal 2021 November 10, 2021
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 2021 2. Future Initiatives 2
Slide 4: Overview of 1H for Fiscal 2021
Overview of 1H for Fiscal 2021 Annualized premium1 of Annualized premium1 of policies-in-force new business 20,231 (108.1% vs. end of FY2020) million yen 2,174 (Y-on-Y 100.7%) million yen EEV2 (European Embedded Value) Adjusted incremental EV3 112,104 million yen 3,439 million yen (117.8% vs. end of
Slide 5: Number of Policies-in-Force
Annualized Premium / Number of Policies-in-Force : Annualized premium of policies-in-force1 (JPY billions) : Number of policies-in-force 20.2 476,906 17.2 14.2 405,403 ◼ Exceeded JPY20bn 11.9 in annualized 334,528 10.4 premium 283,207 248,635 ◼ Year-on-year annualized premium 117.4%, number of polic
Slide 6: Changing Factors of Policies-in-Force
Changing Factors of Policies-in-Force FY2020/1H FY2021/1H Number of policies-in-force (BOP) 365,171 439,945 +）Number of new business 51,505 53,720 －）Decreased number of policies1 (11,273) (16,759) Non-recurring record of lapsed policies※ ー (583) Number of policies-in-force (EOP) 405,403 476,906 FY20
Slide 7: Number of New Business
Annualized Premium / Number of New Business : Annualized premium of new business1 (1H of fiscal year, JPY millions) : Number of new business (fiscal year) : Number of new business (1H of fiscal year) 100,587 ◼ Achieved new 80,911 2,158 2,174 half–year record high 64,435 1,616 53,720 1,209 ◼ Year-on-
Slide 8: Number of New Business (Half year)
【Ref.】 Number of New Business （Half year） ◼ Exceeded FY2020/1H including positive impact from COVID-19 :Number of new business 51,505 53,720 49,082 42,999 37,912 36,387 28,048 22,733 16,442 1H 2H 1H 2H 1H 2H 1H 2H 1H FY2017 FY2018 FY2019 FY2020 FY2021 7
Slide 9: Surrender and Lapse Ratio (Quarter)
【Ref.】 Surrender and Lapse Ratio （Quarter） ◼ Improved to the level before COVID-19 :Impact of lump-sum recording of policies lapsed1 (%) :Surrender and lapse ratio2 without the above (%) 7.6% 0.5% 6.3 0.1% % 7.6% 7.1% 7.0% 7.1% 7.1% 6.4% 6.2% 5.9% 5.5% 5.5% 2019/1Q 2019/1Q ’19/2Q 2019/2Q ’19/3Q 2019
Slide 10: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 75 75 67 66 65 ◼ Aggressively 1.7 1.8 invested in 1.5 1.5 1.5 marketing for further growth (fiscal year) 2017 ’18 ’19 ’20 ’21/1H Marketing expenses 2,627 4,216 6,146
Slide 11: Marketing Efficiency (Quarter)
【Ref.】 Marketing Efficiency （Quarter） ◼ Increased marketing expenses while maintaining the efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 89 78 69 70 77 73 76 76 67 66 2.1 1.8 53 1.8 1.8 1.8 1.6 1.6 1.5 1.5 1.2 （fiscal year
Slide 12: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 16,892 13,982 ◼ Maintained below 11,845 20% 10,421 ◼ Aim to improve 9,566 22.2 % 22.8 % 21.6 % 19.6 % 19.4% operational efficiency by 3,023 3,317
Slide 13: 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
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 listing in March 2012 • Steadily growing even in a low interest rate environment Resilience to interest rate changes • Limited sensitivity to interest rate and stock flu
Slide 16: Strong EEV Growth
Strong EEV1 Growth ◼ EEV and value of in-force business have been growing at a CAGR of 21%2 and 34%, respectively since IPO ◼ EEV per share has also steadily increased ¥1,609 since capital raising ¥1,570 ¥1,430 : Value of in-force business (JPY millions) 112,104 : Adjusted net worth (JPY millions) 9
Slide 17: Changing Factors of EEV
Changing Factors of EEV1 ◼ Increased due to the strong new business performance, revision of claim incidence rate, the improvement of operating ratio and capital raising (JPY millions) 112,104 Adjustments Adjusted to the values2 as of incremental EV Economic Sep. 30, ’21 variances Assumption and ass
Slide 18: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Sep. 2021 Reference: March 2021 End1 End Lifenet Lifenet Company A Company B Company C 6% 5% 1.6% 1.6% 2% -0.8% -0.8% -1.7% -1.6% -3% -5% -5% 0.5% interest rate increase -7% -7% -8% 0.5% interest rate decreas
Slide 19: Life Time Value and Customer Acquisition Cost
【Ref.】 Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet FY2019 FY2020 FY2021/1H Annualized Premiums per Annualized Premiums per Annualized Premiums per ARR per Contract Policy-in-force Policy-in-force Policy-in-force (Annual Recurring Revenue) JPY 42,486 JPY 4
Slide 20: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’21/03 ’21/09 Total assets 54,501 66,204 Cash and deposits 2,059 3,950 ◼ Total net assets Monetary claims bought 999 7,999 increased by Money held in trust 5,895 5,496 capital raising Securities 40,007 42,306 Government bonds 9,004 9,006 Municipal bonds 1,4
Slide 21: Major Initiatives
Major Initiatives ◼ June : Launched new long-term disability product With industry-first coverage1, supports “medical expenses” or Long-term Disability “decrease in income” after returning to work Hataraku-Hito 3 ◼ July：Started sales of Money Forward Life Insurance Offers the service of reviewing li
Slide 22: Overseas Public Offering in September
Overseas Public Offering in September ◼ Raised capital for further accelerating “Growth” and “Transformation” Number CAGR CAGR of shares 9,000,000 shares 20% 15% EEV（JPY billions） offered Management goal CAGR The amount to raised About JPY 9.7 billion EEV 200 billion yen 10% • Marketing expenses for
Slide 23: Table of Contents
Table of Contents 1. Results for 2Q of Fiscal 2021 2. Future Initiatives 22
Slide 24: Business Environment Surrounding Online Life Insurance Market
Business Environment Surrounding Online Life Insurance Market ◼ Large increase in preference for online application in the latest survey Latest result from the report of 2021 20.0% Customers who have intention to purchase through the Internet1 17.4% Customers who actually purchased through the Inter
Slide 25: Investment to Improve Brand Awareness
Investment to Improve Brand Awareness ◼ Accelerated marketing investment with updated TV commercials 24
Slide 26: Promotion of the White Label Business
Promotion of the White Label Business ◼ Started marketing promotion to accelerate new business growth Promotion to the customer base of Money Forward ME 25
Slide 27: Investment for Online Insurance Platform
Investment for Online Insurance Platform ◼ Promote the digitalization for customer experience Comparison & Policy maintenance Lifeplan simulation Proposal 26
Slide 28: Future Direction
Future Direction Second half of FY2021 ◼ Aim for sustainable double-digit growth in in-force business • Determine the timing of further investment in marketing expenses while considering the business environment ◼ Actively invest in business and system development for mid to long term growth, consid
Slide 29: Revision of Business Forecast FY2021
Revision of Business Forecast FY2021 ◼ Increase the use of the modified co-insurance to improve capital efficiency ◼ Aim to achieve record-high in new business for the fourth consecutive year (JPY millions) 【Revised】 【Previous】 FY2021 Forecast FY2021 Forecast FY2020 Results Annualized premium1 of po
Slide 30: Preliminary Study for IFRS Adoption
Preliminary Study for IFRS Adoption ◼ Continuing to study IFRS 17 effective in 2023 Illustration image of accounting structure1 ■Current Statutory Accounting (J-GAAP) Year 1 Year 2 Year 3 Year 4 Year 5 ・・・・ Heavy initial cost Revenue2 Revenue2 Revenue2 Revenue2 Revenue2 for acquiring new business3 i
Slide 31: 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 32: 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 33: 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 34: Appendix
Appendix ) LiFENE] LIFENET INSURANCE COMPANY
Slide 35: Develop Online Life Insurance Platform
Develop Online Life Insurance Platform Expand online products and services Supply Lifenet’s products and services ＋ Other insurers’ products and services “Online Platform” connects life insurance products and services with customers Provide products and services which customers need online Search Co
Slide 36: Initiatives for Sustainability
Initiatives for Sustainability ◼ Aim to increase the value provided to stakeholders based on Manifesto Lifenet Manifesto Comprehensible, Cost-Competitive, Convenient Enhancement of Customer-focused Adaptation to Corporate Governance business operations social changes • Board of Directors includes ou
Slide 37: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’21/03 ’21/09 ratio Number of policies-in-force 439,945 476,906 100% - Term Life 213,597 232,487 49% - Whole-life Medical 120,216 130,234 27% - Term Medical Care 8,840 8,667 2% - Long-term Disability 59,567 61,908 13% - Cancer 37,725 43,610 9% Sum insured of
Slide 38: Condensed Statements of Operation
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2020/1H FY2021/1H Change Note Increased due to growth in in-force policies business and Insurance premiums and other 9,493 12,301 2,807 reinsurance income from modified co-insurance. Other 356 343 (12) Ordinary income 9,849 12,6
Slide 39: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit First 6 months of FY2021 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 12,301 Ordinary income Premiums income 9,566 Net premiums Expense loading Reinsurance income 2,734 Reinsurance Other reinsurance income income Interest
Slide 40: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Sep. 30, 2021 ( (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 3,462.0% <numerator> ÷ < the denominator> 38,542 2,226/2 Cash and deposits Other liabilities 3,950…
Slide 41: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Sep. 30, 2021 VoNB EEV and new business value as of September 30, 2021 112,104 2,664 Sensitivity 1a: 1.0% increase in risk-free rate (3,940) (150) Sensitivity 1b: 1.0% decrease in
Slide 42: 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 43: 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 44: Adjusted Profit
Adjusted Profit ◼ Steadily recorded adjusted profit generated from policies-in-force The method for calculating adjusted profit Adjusted profit＝ⅰ) Ordinary profit（loss)＋ⅱ) Marketing expenses －ⅲ) Impact of modified co-insurance ±ⅳ) Adjustment based on standard policy reserves1 JPY millions / fiscal y
Slide 45: Explanation of Adjusted Profit
Explanation of Adjusted Profit ◼ Adjustments to provision for policy reserves based on standard policy reserves Calculation of adjusted profit Difference between methods of calculating provision for policy reserves We are currently in the transitional period and will transition all business to ⅲ) Im
Slide 46: Modified Co-Insurance
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 reinsurance Reinsurance Without
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