Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q1 FY2020 Earnings Presentation
35 slides from Lifenet Insurance's earnings presentation, Aug 11, 2020
Slide 1: Presentation Material for Investors
Securities Code: 7157 TSE Mothers Presentation Material for Investors First Quarter for Fiscal 2020 August 11, 2020
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: Overview of 1Q for Fiscal 2020
Overview of 1Q for Fiscal 2020 Annualized premium1 of Annualized premium1 of policies-in-force new business 16,461 (106.1% vs end of FY2019) million yen 1,166 (Y-on-Y 141.9%) million yen Adjusted profit2 EEV (European Embedded Value) 854 million yen 75,921 million yen (Adjusted incremental EV3 2,122
Slide 4: 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 16.4 13.6 387,775 11.5 ◼ Accelerated 321,829 9.5 10.2 growth pace 272,830 243,610 228,846 ◼ Year-on-year Annualized premium 120.6%, number of policies- in-force 12
Slide 5: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force ◼ Improved surrender and lapse ratio Component ’20/03 ’20/06 ratio Number of policies-in-force 365,171 387,775 100% - Term Life 175,713 186,984 48% - Whole-life Medical 100,280 106,508 27% - Term Medical Care 9,105 9,041 2% - Long-term Disability 54,665 56,416 15% - Ca
Slide 6: Number of New Business
Annualized Premium / Number of New Business : Annualized premium of new business (1Q of fiscal year, JPY millions) : Number of new business (fiscal year) : Number of new business (1Q of fiscal year) 1,166 80,911 ◼ Achieved historical 64,435 record high on a 822 quarterly basis 39,175 572 ◼ Year-on-Y
Slide 7: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business 75 67 ◼ Significantly 65 61 improved 53 under COVID-19 1.7 environment 1.2 1.5 1.5 1.3 ◼ Aim to improve from the level in fiscal 2019 (fiscal year) 2016 ’17 ’18 ’19 ’2
Slide 8: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 13,982 ◼ Aim to improve 11,845 10,421 9,628 operational 23.1 % 22.2 % 22.8 % efficiency by 21.6 % 21.2% further business 3,940 expansion 2,315 2,6
Slide 9: 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 10: 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)1＋ⅱ) Marketing expenses －ⅲ) Impact of modified co-insurance ±ⅳ) Adjustment based on standard policy reserves2 JPY millions / fiscal
Slide 11: 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 12: 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 13: Strong EEV Growth
Strong EEV1 Growth ◼ EEV and value of in-force business have been growing at CAGR of 19%2 and 36%, respectively 73,431 75,921 (JPY millions) Value of in-force business Adjusted net worth 60,878 63,879 18,547 5,122 13,425 12,553 12,042 2012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03 ’18/03 ’19/03 ’20/03 ’
Slide 14: Changing Factors of EEV
Changing Factors of EEV1 ◼ Value of new business contributed to EEV growth because of strong new business performance (JPY millions) Adjusted 75,921 incremental EV Economic Assumption variances Operating changes and assumption Expected experience 31 changes variances existing 335 business 251 Value
Slide 15: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices June 2020 Reference: March 2020 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 11% 7% 7% 1.4% 1.5% -0.6% -0.6% -1.7% -1.7% -4% -5% -7% 金利0.5%上昇 0.5% interest rate increase -
Slide 16: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’20/03 ’20/06 Total assets 41,144 42,298 Cash and deposits 1,377 1,566 Monetary claims bought 299 － Money held in trust 3,539 3,710 ◼ Solvency margin Securities 32,058 32,846 Government bonds 8,065 8,034 ratio remained Municipal bonds 1,391 1,386 above 2,00
Slide 17: Notable Achievements
Notable Achievements ◼ Launched the second white label business with Seven & i group ◼ Ranked number one in major price comparison websites1,2 Whole-life Long-term Term Life Cancer Medical Disability 1. The most popular insurance products in each category from January through December 2019, receivin
Slide 18: Overseas Public Offering and Secondary Offering
Overseas Public Offering and Secondary Offering ◼ Successfully executed full marketing while working remotely under COVID-19 Overview • Offered shares totaled 13.8 billion yen • Raised new capital of 9 billion yen from overseas market, mainly Asia and Europe • All the proceeds to be used for future
Slide 19: Objectives for Offering
Objectives for Offering ◼ Aim for Growth and Transformation Growth Confirm the positioning as a financial institution with strong growth potential Accelerate growth of in-force business Transformation Realize the mid-term vision of “Internet Service Company of Life Insurance” Improve the mar
Slide 20: Life Time Value and Customer Acquisition Cost
【Ref.】 Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet Commonly Used SaaS Glossary FY2019 FY2020/1Q ◼ The value of the contracted recurring revenue Annualized Premiums per Annualized Premiums per ARR per Contract components of the term Policy-in-force Policy-
Slide 21: Business Forecast FY2020
Business Forecast FY2020 ◼ Aim for record high of new business performance under COVID-19 environment (JPY millions) FY2020 Forecast (Reference) FY2019 Results Of which: impact Of which: impact of modified of modified co-insurance co-insurance Ordinary income 20,000 2,700 16,850 2,034 Ordinary profi
Slide 22: 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 23: 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 24: 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 25: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 26: Impact of COVID-19 for 1Q of Fiscal 2020
Impact of COVID-19 for 1Q of Fiscal 2020 ◼New business performance achieved record high on a quarterly basis ◼Surrender and lapse ratio improved ◼No significant impact on payment of insurance claim ◼Various special measures based on customer-oriented business 25
Slide 27: Number of New Business (Quarter)
Number of New Business (Quarter) ◼ Recorded historical high :Number of new business 28,136 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016
Slide 28: Condensed Statements of Operation / Fundamental Profit
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2019/1Q FY2020/1Q Change Note Increased due to growth in in-force policies business and Insurance premiums and other 3,774 4,633 859 utilization of modified co-insurance Other 121 92 (28) Ordinary income 3,895 4,726 831 Includes
Slide 29: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) June 30, 2020 VoNB EEV and new business value as of June 30, 2020 75,921 1,542 Sensitivity 1a: 1.0% increase in risk-free rate (2,612) 9 Sensitivity 1b: 1.0% decrease in risk-free
Slide 30: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit 1Q of FY2020 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 4,633 Ordinary income Premiums income 3,940 Net premiums Expense loading Reinsurance income 693 Reinsurance Other reinsurance income income Interest and Gains on sa
Slide 31: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of June 30, 2020 ( 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 2,093.9% <numerator> ÷ < the denominator> 19,367 1,849/2 Cash and deposits Other liabilities 1,566 1,190 Ins
Slide 32: 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 33: 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 business profit for a given fiscal year. • We disclose adjusted profit as an indicator of profit generated by poli
Slide 34: 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 35: 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 11,773 million yen R
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