Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q2 2015 Earnings Presentation
54 slides from Lifenet Insurance's earnings presentation, Nov 13, 2015
Slide 1: Investor Meeting Presentation for 2Q of Fiscal 2015
Securities Code:7157 TSE Mothers Investor Meeting Presentation for 2Q of Fiscal 2015 November 13, 2015
Slide 2: FY2015 2Q Key Highlight
FY2015 2Q Key Highlight Ordinary income up 5% year on year Bottoming out of new business performance Tight control of operating expenses Recorded positive ordinary profit1 Fundamental profit recorded profitable on a quarterly basis Challenges for achieving of Mid-term business plan 1. The ordinary p
Slide 3: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for 2Q of Fiscal 2015 3. Key Initiatives 2
Slide 4: Mid-term Business Plan
Mid-term Business Plan LIFENET 2015 Management Goal Offer new products and Achieve 9.5 billion in services as an “innovator” ordinary income (FY 2015) to create the future of life Push the company toward insurance that resonate with profitability (FY 2015) (Based on ordinary profit before amortiza
Slide 5: Progress of Mid-term Business Plan: Ordinary Income
Progress of Mid-term Business Plan (Ordinary Income) Recorded 105% year on year (JPY mn) 9,500 8,729 : Fiscal year : First half of fiscal year 7,603 5,976 4,393 4,629 3,773 3,660 UP Progress ratio to target for 1H 2,821 5% Y-on-Y 49% 1,611 FY2011 12 13 14 15 4
Slide 6: Progress of Mid-term Business Plan: Ordinary Profit/Loss
Progress of Mid-term Business Plan (Ordinary Profit / Loss) 1 Recorded positive earnings, toward achieving annual profitability (JPY mn) Turn profitable : Fiscal year 418 : First half of fiscal year (450) (624) (472) (908) (1,192) (1,198) (1,664)2 (2,184) 1. FY2011 12 13 The Ordinary profit(loss)
Slide 7: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for 2Q of Fiscal 2015 3. Key Initiatives 6
Slide 8: Summary of 2Q for FY2015 Results
Summary of 2Q for FY2015 Results (JPY mn) 2014/1H 2015/1H Year on year Ordinary income 4,393 4,629 105.4% Operating expenses 2,130 1,460 68.5% Ordinary profit / loss1 (450) 418 - Cash flows from operating activities 1,151 2,252 195.7% Mortality margin 869 1,059 121.8% Annualized premium2 of policies
Slide 9: Key Accomplishment in FY2015 1H
Key Accomplishment in FY2015 1H Challenges for return to growth in online channel Building a secure feeling for customers Enrichment of customer services Rigorous improvement of follow-up Sales channel enhancement with partnership Enhance agents channel Capital and business alliance with KDDI 8
Slide 10: Building a Secure Feeling for Customers
Building a Secure Feeling for Customers Started airing new TVCM creative 9
Slide 11: Enrichment of Customer Services
Enrichment of Customer Services Aiming to further improvement of customer satisfaction Number 1 in the J.D. Power Asia Pacific Accept application documents via website 2015 Japan Life Insurance Contract captured by Smartphone Customer Satisfaction Pre-Purchase Study 来風 大輔 50 5 18 東京都千代田区麹町二丁目14番地2
Slide 12: Rigorous Improvement of Follow-up
Rigorous Improvement of Follow-up Contact center and website awarded the highest rating three stars in the 2015 HDI Contact Center Rankings for 4 consecutive years1 Contact Center Support Portal (Website) 1. Awarded in the 2015 HDI Contact Center Rankings (life insurance industry) hosted by HDI-Ja
Slide 13: Enhance Agents Channel
Enhance Agents Channel The number of application via agents is increasing due to sales of long-term disability Number of application of long-term disability via agents 662 Long-term aDisability “Hataraku-Hito” 367 292 121 135 103 14/1Q 15/2Q 12
Slide 14: Capital and Business Alliance with KDDI
Capital and Business Alliance with KDDI Became largest shareholder by third-party allotment Overview of third-party allotment Issued price 380 yen per share Number of newly 8,000,000 issued shares 3,040 million yen Funds raised (Increased capital by issuance : 1,520 million yen) Largest shareholde
Slide 15: Ordinary Income
Ordinary Income Number of :Fiscal year :First-half of fiscal year 8,729 (JPY mn) policies-in-force 7,603 steadily increased Reinforce 4,393 4,629 improvement to 3,660 achieve management goals of mid-term business plan 2013 14 15 14
Slide 16: Annualized Premium / Number of Policies-in-force
Annualized Premium / Number of Policies-in-force :Number of policies-in-force :Annualized premium of policies-in-force (JPY bn) 219,471 215,403 209,814 Exceeded 9 billion yen of 8.7 9.0 annualized 8.4 premium of in-force business 14/09 15/03 15/09 (YY/MM) 15
Slide 17: Breakdown of Policies-in-force
Breakdown of Policies-in-force 135,017 in-force policyholders (as of Sep. 30) (YY/MM) 14/09 15/09 Number of policies-in-force 209,814 219,471 - “Kazoku”: Term Life 108,755 114,912 - “Jibun”, New “Jibun”, New “Jibun” for Women : Whole-Life Medical 63,843 66,623 - “Jibun Plus”: Term Medical Care 12,
Slide 18: Annualized Premium / Number of New Business
Annualized Premium / Number of New Business :Number of new business :Annualized premium of new business (JPY mn) 15,053 Y-on-Y 24% Annualized new decrease 12,929 premium JPY 548 mn 11,403 694 632 548 Continuous challenge Y-on-Y 21% is return to growth in decrease new business performance 14/1H 1
Slide 19: Annualized Premium / Number of New Business (Monthly)
Annualized Premium / Number of New Business (Monthly) New business performance is seesawing while bottoming out :Number of new business 2,493 2,528 :Annualized premium of new business (JPY mn) 2,429 2,226 2,193 2,164 2,117 2,084 2,133 2,029 1,932 1,878 1,858 1,911 126 1,841 122 1,795 115 104 103 1
Slide 20: Amount of Insurance Claims and Benefits
Amount of Insurance Claims and Benefits :Amount of insurance payments (JPY mn) :Amount of insurance payments / Premiums income (%) 682 29 insurance 226 559 476 claims and 2,433 208 Benefit claims benefit claims 16.7 209 456 11.1 12.6 Ratio to premiums 351 Insurance claims income 13% 267 14/1H 14
Slide 21: Provision for Policy Reserves
Provision for Policy Reserves :Provision for policy reserves (JPY mn) :Provision for policy reserves / Premiums income (%) Same level as 1,875 1,877 previous year 1,690 Calculations 43.8 based on the five- 41.3 42.4 year Zillmer method since business commencement 14/1H 14/2H 15/1H 20
Slide 22: Operating Expenses
Operating Expenses 2,130 (JPY mn) Decreased 32% 1,684 1,070 1,460 mainly due to 602 control marketing 548 Marketing expenses 280 278 252 Customer service Operating expenses 779 803 System ratio 1 33% 658 and other 14/1H 14/2H 15/1H 52% 39% 33% Operating expenses ratio¹ 1. The ratio of operating
Slide 23: Marketing Expenses / Advertising Expenses (Quarterly)
Marketing Expenses / Advertising Expenses (Quarterly) Marketing expenses decreased due to controlling advertising expenses (JPY mn) 637 : Marketing expenses except advertising expenses : Advertising expenses 522 499 502 424 432 322 280 279 269 527 462 420 322 389 338 172 219 163 159 13/1Q 13/2Q 13
Slide 24: Marketing Expenses per New Business
Marketing Expenses per New Business :Marketing expenses per new business (JPY thousand) : Marketing expenses / Annualized premium of new business 71 Improved year on Y-on-Y 32% improved year basis 1.5 46 48 Y-on-Y 35% improved Increased marketing 1.0 expense in 1H of FY14 0.9 due to new products
Slide 25: Ordinary Profit/Loss
Ordinary Profit/Loss Ordinary profit1 became profitable on half year basis (JPY mn) 418 2014/1H 2014/2H 2015/1H Ordinary profit (loss) before (450) (21) 418 amortization Amortization cost (530) (530) (530) (21) Ordinary profit (loss) (980) (551) (111) (450) 14/1H 14/2H 15/1H 1. The ordinary profit
Slide 26: Structure Breakdown of Ordinary Profit/Loss
Structure Breakdown of Ordinary Profit/Loss1 Main factors of profitability are decrease of insurance payments and operating expenses Transition of ordinary profit (loss)1 (JPY mn) Income Decrease of 48 418 Other operating expenses 670 Decrease of insurance Increase of claims and insurance other In
Slide 27: Condensed Statements of Operation
Condensed Statements of Operation (JPY mn) 14/1H 15/1H Change Insurance premiums and other 4,155 4,502 346 Other 237 127 (110) Ordinary income (A) 4,393 4,629 236 Insurance claims and other 760 658 (101) Provision for policy reserves and other 1,690 1,877 187 Operating expenses 2,130 1,460 (670) Oth
Slide 28: Mortality Margin
Mortality Margin (JPY mn) 1,059 869 908 Steadily recorded mortality margin Increased 22% due to insurance premium up 14/1H 14/2H 15/1H 27
Slide 29: Fundamental Profit
Fundamental Profit (JPY mn) 2014/1H 2014/2H 2015/1H Steadily Mortality margin Expense margin 869 908 1,059 improved (1,868) (1,413) (1,150) (loss) Interest margin 5 13 22 fundamental Fundamental profit (993) (491) (68) profit (ref.) Insurance premiums and 4,155 4,337 4,502 Adjusted other Adjuste
Slide 30: Fundamental Profit (Quarterly)
Fundamental Profit (Quarterly) Fundamental profit became profitable on a quarterly basis (JPY mn) 14/2Q 14/3Q 14/4Q 15/1Q 15/2Q Mortality margin 549 382 525 513 545 Expense margin (loss) (828) (683) (730) (602) (547) Interest margin 6 4 8 8 14 Fundamental profit (272) (295) (195) (81) 12 (ref.) In
Slide 31: Operating Cash Flows
Operating Cash Flows (JPY mn) 2,095 2,252 Steadily maintained positive cash flows 1,151 Up 96% year on year 14/1H 14/2H 15/1H 30
Slide 32: Financial Condition
Financial Condition (YY/MM) (JPY mn) 14/09 15/03 15/09 Total assets Cash and deposits 21,727 23,387 27,972 455 Increased assets 731 680 Monetary claims bought - - 1,499 due to Third- Money held in trust Securities 1,007 1,033 1,033 15,126 17,082 20,804 party allotment Government bonds 7,391 8,227
Slide 33: Solvency Margin Ratio
Solvency Margin Ratio1 2,747% Up mainly due to third-party 2,013% 2,244% allotment Average of 4 major insurance companies2 as of March 2015 Maintained at 957% high level continuously 14/09 15/03 15/09 (YY/MM) 1. The solvency margin ratio measures a life insurance company’s ability to pay out cla
Slide 34: European Embedded Value
European Embedded Value1 (JPY mn) JPY 17,889mn 32,410 value of in-force business due to 25,248 22,449 17,889 Value of updates made to in-force business operating assumptions Adjusted 14,521 net Adjusted net assets assets increased due to Third- 14/09 15/03 15/09 (YY/MM) party allotment 1. Lifene
Slide 35: Value of New Business (VoNB)
Value of New Business (VoNB) Improved year on :Fiscal Year (JPY mn) :First-half of fiscal year 838 Left: value of new business (ultimate unit cost base)1 year by initial 620 Right: value of new business expense decrease 385 384 Resulted in same 271 126 152 89 level as ultimate unit cost base1 du
Slide 36: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Significantly improved by initial expense decrease etc. VoNB per policy (ultimate unit cost base) Other (JPY thousand) Expected Surrender and lapse variables 33 incidence rate change 10 rate change Interest 15 (3) Products mix rates change Initial expense cha
Slide 37: VoNB (Ultimate Unit Cost Base)
VoNB (Ultimate Unit Cost Base) Per new business (JPY mn) 14/1H 15/1H for 15/1H (JPY thousand) Certainty equivalent present value of future profit 1,720 1,694 148 －) Time value of financial options and guarantees － － － －) Frictional cost of capital (12) (7) (0) －) Allowance for non market risk (747)
Slide 38: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) on the EEV results Change in EEV as of Change in value of (JPY mn) Sep. 30, 2015 new business EEV and new business value as of September 30, 2015 32,410 384 Sensitivity 1a: 1.0% increase in risk-free rate 463 123 Sensitivit
Slide 39: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for 2Q of Fiscal 2015 3. Key Initiatives 38
Slide 40: 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 41: Progress of Business Alliance with KDDI
Progress of Business Alliance with KDDI Establishing customer-oriented services Online services au Customer Database Financial services Commerce “au” Value-Added Economic Zone 40
Slide 42: Business Potential by Telecommunication x Life Insurance
Business Potential by Telecommunication x Life Insurance Large potential because of high affinity Similarities between telecommunication business and life insurance business Telecommunication and life insurance are both stock businesses (monthly payment required) Long-term relationship with cu
Slide 43: Progress of Business Alliance with KDDI
Progress of Business Alliance with KDDI Preparation is in progress as planned Started Business Alliance in April 2015 Established Business Alliance Committee in May 2015 aiming to discuss details Starts trial sales at a shop managed KDDI for successful business start-up Ensure adequate pre
Slide 44: Expanded Range of Designatable Beneficiaries
Expanded Range of Designatable Beneficiaries Necessary insurance for those who needs it - Same-sex partners accepted as beneficiaries http://www.lifenet-seimei.co.jp/rainbow/ 43
Slide 45: Same-sex Partners Accepted as Beneficiaries
Same-sex Partners Accepted as Beneficiaries Responding to actualized needs and changes in society Customers’ voice after announcement “Want to consider applying, send me brochures.” “Glad to know about this by press. Let me know about detailed conditions and required documents.” “Want to change my
Slide 46: Services for Policyholders
Services for Policyholders Free health consultation services via web and phone What’s the services? Good points Whenever and wherever you can consult! Emergency consultation 24x7 consultations for babies/infants Medical institutions guide 45
Slide 47: Strengthen Sales Activity of Long-term Disability
Strengthen Sales Activity of Long-term Disability Enhance agents channels and expands range of underwriting Long-term Disability a “Hataraku-Hito” Strengthen sales via agent Started accepting applications from part-time workers Over 80%1 of application via over-the-counter agent is Reviewed accept
Slide 48: Business Forecast
Business Forecast Business forecast for FY2015 remains same as management goals of mid-term business plan Effect of business alliance with KDDI is not incorporated in fiscal 2015 (JPY mn) Ordinary income Ordinary profit/loss1 Turn Business forecast FY2015 9,500 profitable (Reference) Results for
Slide 49: 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 50: 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 51: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 52: 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
Slide 53: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit 1st half year of FY2015 Statements of Operations Profit analysis Insurance premiums and other 4,502 Ordinary income Net premiums Expense loading Premiums income 4,429 Reinsurance income 73 Reinsurance income Interest and Gains on sales Investment income 91
Slide 54: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Sep. 30, 2015 (R R ) (R R R ) R / 2 1 8 2 2 3 7 2 4 Solvency margin ratio Total amount of solvency margin Total amount of risk/2 2,747.3% = <numerator> 18,133 ÷ < the denominator> 1,320/2 Cash and deposits Other liabilities 317 Insurance risk R1 9
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