Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q3 FY2022 Earnings Presentation
24 slides from Lifenet Insurance's earnings presentation, Feb 9, 2023
Slide 1: Q3 Financial Results Briefing for the Fiscal Year Ending March 2023
LIFENET INSURANCE COMPANY Q3 Financial Results Briefing for the Fiscal Year Ending March 2023 February 9, 2023 [Speaker] Ryosuke Mori President and Representative Director
Slide 2: Presentation
Presentation Mori: Thank you very much for attending our financial results briefing today. The Company announced its financial results for Q3 of FY2022 at 15:30 today. Presentation materials are available on our IR website. I would like to provide an overview of the financial results using the prese
Slide 3: Main points of today's financial results presentation
Please see page 2. These are the main points of today’s financial results presentation. First, annualized premiums of policies-in-force at the end of December 2022 increased 12.8% YoY to JPY23.5 billion, continuing steady double-digit growth. COVID-19 claims was large in H1 of FY2022, but after we r
Slide 4: Performance of in-force business
Please see page 3. This is the performance of in-force business. Annualized premiums of policies-in-force, which correspond to annual recurring revenue, amounted JPY23.5 billion at the end of December 2022, with 556,942 policies-in-force. Both the annualized premium and the number of policies-in-for
Slide 5: Movement in the number of policies-in-force
Page 4 shows the movement in the number of policies-in-force. The green bar graph on the far right is for Q3 of FY2022. The number of new business for Q3 totaled 22,612. The surrender and lapse ratio was 6.4%. As you can see, we are maintaining our mid-term trend of double-digit growth in policies-
Slide 6: Marketing efficiency
Page 5 shows marketing efficiency. The table below left shows the marketing expenses invested. Figures from FY2018 to FY2021 stands for the full fiscal year, and that of FY2022 stands for the first nine months of the fiscal year, totaled JPY6,424 million. As shown in the bar graph, marketing expense
Slide 7: Efficiency of operating expenses excluding marketing expenses
Next, I will explain the efficiency of operating expenses excluding marketing expenses on page 6. Operating expenses, excluding marketing expenses, totaled JPY3,499 million for the first nine months of FY2022. The Operating expenses ratio to insurance premium was 21.0%. Although insurance premium is
Slide 8: Condition of COVID-19 claims
Page 7 shows the condition of COVID-19 claims. Due to the increase in COVID-19 cases, a large number of COVID-19 claims were incurred in H1 of FY2022. As a result, we revised the business forecasts of ordinary profit and net income downward in our announcement of financial results for Q2 of FY2022.
Slide 9: Accounting structure of life insurance companies
Page 8 shows the accounting structure of life insurance companies. This is important to properly understand our profitability. Under the current statutory accounting on the profit and loss statement, the entire cost associated with the acquisition of new business is recognized as a current period ex
Slide 10: Adjusted profit
Page 9 shows adjusted profit. Under current statutory accounting, there is a time lag between the recognition timing of revenues and cost, and we believe that marketing expenses, which are the cost of acquiring new business, make it difficult to understand the actual state of our profitability. As a
Slide 11: Structure of Embedded Value
Page 10 is the structure of Embedded Value. European Embedded Value, or EEV, is the present value of net assets, or net worth, after taking into account the after-tax value of unrealized future profits that the in-force business will generate in the future under statutory accounting. Copyright© LIFE
Slide 12: European Embedded Value growth
Please see page 11. European Embedded Value as of December 31, 2022 was JPY122.9 billion. The compound average growth rate (CAGR) of EEV since listing in March 2012 has been 19%. Especially, the value of in-force business, which means the unrealized future profits arising from in- force business has
Slide 13: Analysis of factors contributing to change in EEV
Page 12 is an analysis of factors contributing to the change in EEV from the end of March 2022 to the end of December 2022. We define adjusted incremental EV as the sum of the three components that represents our performance: (1) value of new business, (2) expected existing business contribution, an
Slide 14: Economic variances and assumption changes
Also, economic variances and assumption changes was minus JPY1,148 million, mainly due to a decline in the valuation of securities held by the Company as a result of the current rise in interest rates. In particular, the decrease in economic variances and assumption changes had a significant impact
Slide 15: Sensitivity of EV to interest rates and stock prices
Page 13 shows the sensitivity of EV to changes in interest rates, stock prices, and other factors for the Company and listed domestic life insurance companies. As explained on page 12, although our EEV is also affected by rising interest rates right now, our EEV’s nature of limited sensitivity to in
Slide 16: Summary of the balance sheet
Page 14 is the summary of the balance sheet. As of December 31, 2022, total assets were JPY67.897 billion, liabilities were JPY51.031 billion, and net assets were JPY16.866 billion. The solvency margin ratio, an indicator for the level of payment capacity, is 3,140%, which is sufficient in terms of
Slide 17: Growth of the value of in-force business
On page 15, I would like to explain the growth of the value of in-force business. The number of policies-in-force on the left side steadily has been increasing, indicating that the scale of our business is expanding. In addition, the value of in-force business per policy shown in the center has not
Slide 18: Main initiatives in Q3: white label with KDDI
Please see page 16. I will explain our main initiatives in Q3 of FY2022. We have positioned the white label channel as one of the major drivers that will support our mid- to long-term growth, and we are working with partners who have broad customer bases and brand power to provide the value of our i
Slide 19: Agency agreement with Loyalty Marketing (Ponta)
As for the third point, we are pleased to announce that we have signed an agency consignment agreement with Loyalty Marketing, Inc., which operates Ponta points. This enables au life insurance policies that accumulate Ponta points to be sold not only to the KDDI Group’s customer base, but also to th
Slide 20: Business alliance with Sumitomo Mitsui Card
Please go to page 17. In October 2022, together with our subsidiary LIFENET MIRAI Inc., we concluded a business alliance agreement with Sumitomo Mitsui Card Company. I will briefly explain the update regarding on this collaboration. Last week it was announced that Sumitomo Mitsui Financial Group, Su
Slide 21: Materiality: key sustainability issues
Please see page 18. We have recently identified Materiality, key sustainability issues. In identifying Materiality, we considered two perspectives: key issues of society as a whole and that of our company. In initiatives for sustainability, we place importance on the concept of mutual support, which
Slide 22: Voluntary adoption of IFRS 17
Please see page 19. In the announcement of our FY2021 financial results in May 2022, we announced that we aim for the voluntary adoption of IFRS 17 starting in FY2023 and we are currently proceeding with various preparations. As part of this effort, we held the third IFRS study session for instituti
Slide 23: Business forecasts for FY2022
Page 20 is the business forecasts for FY2022. This is unchanged from what we announced in November 2022. Although the business environment is uncertain in the short term, we will continue to aim for double-digit growth in in-force business, and we will also make investments that will also contribute
Slide 24: Management policy
Finally, here is the management policy. There is no change in our major policy of pursuing growth with the aim of expanding the scale of our business while capturing structural trends. We will continue to further expand the online life insurance market through our own strengths and internal marketin
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