Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q2 2020 Earnings Presentation
37 slides from Lifenet Insurance's earnings presentation, Nov 11, 2020
Slide 1: Presentation Material for Investors, Second Quarter Fiscal 2020
Securities Code: 7157 TSE Mothers Presentation Material for Investors Second Quarter for Fiscal 2020 November 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 2Q for Fiscal 2020
Overview of 2Q for Fiscal 2020 Annualized premium1 of Annualized premium1 of policies-in-force new business 17,234 (111.1% vs end of FY2019) million yen 2,158 (Y-on-Y 133.5%) million yen EEV2 (European Embedded Value) Adjusted incremental EV3 91,275 million yen 4,496 million yen (124.3% vs end of FY
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 17.2 14.2 405,403 11.9 334,528 ◼ Exceeded 400,000 9.6 10.4 283,207 policies-in-force 248,635 ◼ Year-on-year 231,538 Annualized premium 121.4%, number of policies-
Slide 5: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force ◼ Improved surrender and lapse ratio Component ’20/03 ’20/09 ratio Number of policies-in-force 365,171 405,403 100% - Term Life 175,713 195,656 48% - Whole-life Medical 100,280 111,386 27% - Term Medical Care 9,105 9,006 2% - Long-term Disability 54,665 57,526 14% - Ca
Slide 6: 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) 80,911 2,158 ◼ Achieved 64,435 1,616 new half–year 51,505 record high 1,209 39,175 29,741 ◼ Year-on-
Slide 7: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business 75 ◼ Improved efficiency 67 65 mainly due to 61 5959 COVID-19 impact 1.7 ◼ Based on the 1.3 1.5 1.5 1.4 business circumstances, consider further investment in marketin
Slide 8: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 13,982 ◼ Improved with the 11,845 growth of in-force 10,421 business 9,628 8,079 23.1 % 22.2 % 22.8 % ◼ Aim to improve 21.6 % operational 19.5% ef
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 significant 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 a
Slide 13: Strong EEV Growth
Strong EEV1 Growth ◼ Adjusted net worth increased due to overseas public offering in July ◼ EEV and value of in-force business have been growing at a CAGR of 21%2 and 36%, 91,275 respectively 73,431 (JPY millions) Value of in-force business Adjusted net worth 70,565 60,878 18,547 5,122 13,425 20,709
Slide 14: Changing Factors of EEV
Changing Factors of EEV1 ◼ Increased due to the strong new business performance, the improvement of operating expenses ratio and capital raising (JPY millions) 91,275 Adjustments to the values2 Adjusted Economic as of incremental EV variances Sep. 30, ’20 and assumption 9,047 Assumption changes chan
Slide 15: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Sep. 2020 Reference: March 2020 End1 End Lifenet Lifenet Company A Company B Company C 11% 7% 7% 1.7% 1.5% -0.6% -0.6% -1.8% -1.7% -4% -5% -7% 0.5% interest rate increase -10% -9% 0.5% interest rate decrease
Slide 16: 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 FY2020/1H ◼ 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 17: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’20/03 ’20/09 Total assets 41,144 52,270 Cash and deposits 1,377 2,143 Monetary claims bought 299 4,499 Money held in trust 3,539 4,734 ◼ Solvency margin Securities 32,058 36,419 Government bonds 8,065 8,632 ratio of 2,957% Municipal bonds 1,391 1,388 Corpo
Slide 18: Expanded White Label Business
Expanded White Label Business ◼ Promote white label products for customers of the Seven & i Group 17
Slide 19: Overseas Public Offering and Secondary Offering
Overseas Public Offering and Secondary Offering ◼ Raised new capital for further growth through overseas public offering in July Distribution of share ownership as of Sep. 30, 2020 ⚫ Offered shares totaled 13.8 billion yen Japanese Individuals Financial and others Institutions ⚫ Raised new capital o
Slide 20: Received High External Rating
Received High External Rating ◼ Recorded the most times to be awarded in the life insurance industry HDI Benchmarking (Life Insurance Industry) ⚫ The 8th time, industry record that Lifenet awarded a three-star rating in two categories: Contact center and Website1 ⚫ The 10th consecutive year for Webs
Slide 21: Adapt the New Normal after COVID-19
Adapt the New Normal after COVID-19 ◼ Started new series of TV commercial from November Enhancement of promotion capabilities Featuring convenient services online and price-competitive products 20
Slide 22: Investment in CX
Investment in CX ◼ Visualize the data of customer and aim to provide a more personalized experience Innovation of customer experience Website App LINE Brochure Call/Chat Potential needs PWC1 Customer data Mail 1. price comparison website 21
Slide 23: Future Direction
Future Direction Fiscal 2020 ◼ New business performance • Increased significantly for the first half of the year impacted by COVID-19 • Aim for the steady growth with new normal, recognizing a temporary regression from the drastic increase ◼ In-force business performance • Aim for double-digit growt
Slide 24: Business Forecast FY2020
Business Forecast FY2020 ◼ Looking carefully at the continuing future uncertainty caused by the impact of COVID-19 ◼ No change from August disclosure (JPY millions) FY2020 Forecast (Reference) FY2019 Results Of which: impact Of which: impact of modified of modified co-insurance co-insurance Ordinary
Slide 25: 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 26: 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 27: 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 28: Appendix
Appendix ) LiFENE] LIFENET INSURANCE COMPANY
Slide 29: Number of New Business (Half)
Number of New Business (Half) ◼ Achieved new half-year record high :Number of new business 51,505 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H 2H 1H FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 28
Slide 30: Condensed Statements of Operation
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2019/1H FY2020/1H Change Note Increased due to growth in in-force policies business and Insurance premiums and other 7,754 9,493 1,739 reinsurance income from modified co-insurance. Other 199 356 157 Ordinary income 7,953 9,849
Slide 31: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Sep. 30, 2020 VoNB EEV and new business value as of September 30, 2020 91,275 3,274 Sensitivity 1a: 1.0% increase in risk-free rate (3,347) (36) Sensitivity 1b: 1.0% decrease in ri
Slide 32: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit First 6 months of FY2020 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 9,493 Ordinary income Premiums income 8,079 Net premiums Expense loading Reinsurance income 1,414 Reinsurance Other reinsurance income income Interest a
Slide 33: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Sep. 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 <numerator> ÷ < the denominator> 2,957.1% 28,731 1,943/2 Cash and deposits Other liabilities 2,143 1,117 Ins
Slide 34: 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 35: 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 36: 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 37: 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
Lifenet Insurance Company — Q2 2020 Earnings Presentation on 6ix