Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2023 Earnings Presentation
57 slides from Lifenet Insurance's earnings presentation, May 14, 2024
Slide 1: Presentation Material for Investors Fiscal 2023
Securities Code: 7157 TSE Growth Presentation Material for Investors Fiscal 2023 May 14, 2024
Slide 2: Key Highlights
Key Highlights FY2023 ◼ Annualized premium of policies-in-force up 20% YoY, insurance service results up 24% YoY and EEV up 18% YoY Future Initiatives ◼ Established new Management Policy, FY2028 mid-term business plan and Outcome goal ◼ Set Comprehensive Equity (CE) as new key indicator Aim to achie
Slide 3: Table of Contents
Table of Contents １. Financial Results for Fiscal 2023 ２. New Management Policy and Mid-term Plan ３. Future Initiatives to Improve Market Evaluation 2
Slide 4: Fiscal 2023 Key Highlights
Fiscal 2023 Key Highlights Key Indicators Corporate Value Growth Profitability EEV Annualized premium1 Insurance service (European Embedded Value) of policies-in-force results ¥ 146,991mn ¥ 28,750mn ¥ 8,222mn (YoY 117.9%) (YoY 119.6%) (YoY 124.2%) Notable Achievements ◼ Implemented new initiatives a
Slide 5: Annualized Premium of Policies-in-Force
Annualized Premium of Policies-in-Force ◼ Achieved significant growth of 19.6% YoY with the addition of GCL YoY +19.6％ :AP1 of policies-in-force for GCL (JPY millions) ¥ 28,750mn :AP1 of policies-in-force for individual life (JPY millions) Group credit 3,326 life insurance Individual 24,033 25,424 l
Slide 6: Policies-in-Force Movement
Policies-in-Force Movement ◼ GCL remained strong with net increase of ¥449mn in the quarter ◼ Individual life keep recovery momentum, improving QoQ Net increase of :Net increase of AP of policies-in-force for GCL (JPY millions) GCL Net increase of :Net increase of AP of policies-in-force for individ
Slide 7: Summary IFRS P/L
Summary IFRS P/L ◼ Insurance service results and net income resulted in ¥8,222mn and ¥5,734mn, respectively (JPY millions) Items FY20222 FY20232 Change Insurance service results 6,618 8,222 1,604 Financial results1 (452) 555 1,008 Other results (822) (527) 295 Profit before tax 5,343 8,251 2,908 Net
Slide 8: Insurance Service Results
Insurance Service Results1 ◼ Significantly increased 24.2% YoY to ¥8,222mn despite not achieving the business forecasts Business forecasts 8,600 :Insurance service results (fiscal year, JPY millions) ￥ 8,222ｍn 2 7,216 vs. forecast 6,606 6,618 2 95.6％ 5,419 YoY ＋24.2％ 2019 2020 2021 2022 2023 (fiscal
Slide 9: Insurance Service Results Analysis
Insurance Service Results Analysis ◼ Negatively affected by GCL payments more than expected and temporary impact of reinsurance results CSM release (JPY millions) Expected 654 Items FY2022 FY2023 Change minus incurred Insurance Reinsurance 1,902 results Others service results (155) (110) Expected cl
Slide 10: European Embedded Value
European Embedded Value1 ◼ EEV and value of in-force business have been strongly growing at a CAGR of 19%2 and 30%, respectively since IPO ◼ EEV per share continued its growth trend, offset dilution by capital raising in Sep. ¥1,788 ¥1,831 ¥1,673 ¥1,570 146,991 : Value of in-force business (JPY mill
Slide 11: Changing Factors of EEV
Changing Factors of EEV1 ◼ Increased due to the growth of VoNB including GCL, the improvement of opex ratio, revision of mortality assumptions and capital raising 146,991 (JPY millions) Adjustments Adjusted incremental EV2 Economic to the values3 variances as of Mar. 31, 2024 and assumption Assumpti
Slide 12: New Product Co-developed with Eisai
New Product Co-developed with Eisai ◼ Launched new product in Apr. 2024 to address social issues related to dementia Started “Brenavi” on LINE for dementia information and services New Dementia Approx. one in five people aged 65 or older will be living with dementia by 2025 in Japan. Co-developed de
Slide 13: Key Efforts in Individual Life
Key Efforts in Individual Life ◼ Carried out initiatives to accelerate growth of in-force business even in environment of declining demand Direct Business Partner Business Initiatives Initiatives Implemented new various measures Launched new products embedded into point for younger generation ecosys
Slide 14: Key Efforts in GCL
Key Efforts in GCL ◼ Achieved strong growth in in-force business although higher than expected payments ◼ Forecast to record profit from FY2024 due to planned premium rate revisions au Jibun Bank’s rapid growth of mortgage loan Contribution to key indicators1 Nov. 2023 Mar. 2024 ¥3.5tn ¥4.0tn + ¥3,3
Slide 15: Consolidated Business Forecasts for FY2024
Consolidated Business Forecasts for FY2024 ◼ Expect ¥8.9bn in insurance service results and ¥6.2bn in net income (JPY millions) (JPY millions) Growth Profitability Business forecasts Business forecasts AP of policies-in-force GCL Insurance service results approx. 3,500 34,000 8,900 Individual 8,222
Slide 16: Table of Contents
Table of Contents １. Financial Results for Fiscal 2023 ２. New Management Policy and Mid-term Plan ３. Future Initiatives to Improve Market Evaluation 15
Slide 17: Committed to Outcome Goal
Committed to Outcome Goal Outcome goal A Society where next generations can be nurtured with confidence in the future we contribute to creating a future where next generations can be nurtured by society as a whole through delivering the value of insurance based on the LIFENET Manifesto. Outcome Refe
Slide 18: New Management Policy
New Management Policy Help our customers embrace life more fully by offering comprehensible, Mission cost-competitive and convenient products and services Be the leading online life insurer Vision creating the future of life insurance Lifenetter Values -Manifesto driven Value -Ownership -Teamwork -G
Slide 19: FY2024-2028 Mid-term Business Plan
FY2024-2028 Mid-term Business Plan Growth Strategy Goals in Fiscal 2028 Priority Areas Management Goal Comprehensive Equity (CE) : ¥200-240bn Rebranding Embedded Financial Targets 中期計画 Stock price：¥3,000+ Annual growth rate of CE per share： Tech & Services approx. 10% Non-financial Targets (Human ca
Slide 20: Our Business Environment
Our Business Environment ◼ External environment changes will be a major tailwind for business growth Expansion of online life Younger generation × Trend of financial １ insurance market 2 technologies 3 ecosystem • COVID-19 accelerated online • Emerging new technologies • High interest in online insu
Slide 21: Priority Areas for Further Growth
Priority Areas for Further Growth ◼ Three priority areas to move toward the next stage of growth Rebranding Embedded Qualitative changes in Business enhancement Internet direct business with partners Direct Tech & Services Partner GCL Refinement of value provided Partner GCL Direct 20
Slide 22: Individual: Direct Business
Individual：Direct Business Rebranding Tech & Services Embedded ◼ Aim for further growth by updating the Lifenet brand and being unique for younger generation Focus areas of marketing centered on younger generation Rebranding Number of new policies by age group Nurture Marketing Increase preference E
Slide 23: Individual: Partner Business
Individual：Partner Business Rebranding Tech & Services Embedded ◼ Accelerate growth by embedding our business into partners’ ecosystem Deepening ties with existing partners Telecom- munications Development of • Initiatives to enhance business synergy in new partners partners’ ecosystem Retail Paymen
Slide 24: Group Credit Life Insurance
Group Credit Life Insurance Rebranding Tech & Services Embedded ◼ Aim for business expansion by alliance with au Jibun Bank and development of new partner banks Deepening of alliance with au Jibun Bank Expansion of partner banks • Contribute to enhancing competitiveness of mortgage • Aim to develop
Slide 25: HR Strategy for Business Growth
HR Strategy for Business Growth ◼ Further strengthen initiatives for human capital based on diversity and growth opportunities Human Resources Strategy Policies regarding HR focus on Diversity & Growth Opportunities FY2028 Mid-term business plan Management Policy Cross-organizational Development thr
Slide 26: New Management Indicator Comprehensive Equity
New Management Indicator “Comprehensive Equity” ◼ Adopt “Comprehensive Equity” as new management indicator representing corporate value to replace EEV Management Goal Comprehensive Equity (CE) Aim to achieve ¥200-240bn in FY2028 European Embedded Value（EEV） Comprehensive Equity (CE) GCL contracts va
Slide 27: Table of Contents
Table of Contents １. Financial Results for Fiscal 2023 ２. New Management Policy and Mid-term Plan ３. Future Initiatives to Improve Market Evaluation 26
Slide 28: Current Market Evaluation
Current Market Evaluation ◼ Market evaluation has room for improvement while our corporate value has been growing strongly EEV per Share Stock Price Price/EEV per Share (PEV) ¥1,831 2.00 EEV/share (JPY) ¥1,788 EEV (JPY millions) ¥1,673 146,991 ¥1,570 ¥1,430 124,666 ¥1,239 116,604 95,140 ¥1,512 PEV r
Slide 29: Major Initiatives to Improve Market Evaluation
Major Initiatives to Improve Market Evaluation Major initiatives Key points • Increase the credibility of corporate value indicators by changing Adopt corporate value indicators from "EV" to "Comprehensive Equity" 1 linked to IFRS • Enable investors to compare with global peers applying IFRS17 Commi
Slide 30: Further Strengthening of Corporate Governance
Further Strengthening of Corporate Governance ◼ Shift to structure with a majority of Independent Outside Directors¹ with aim of strengthening the supervisory function of the Board of Directors and further enhancement of the separation of supervisory and executive functions Ratio of Independent Outs
Slide 31: Increase in Shareholder Value over Mid-to-long Term
Increase in Shareholder Value over Mid-to-long Term ◼ Aiming to both increase corporate value by expanding business scale and improve market evaluation Increase in corporate value（CE） Improvement market evaluation • Re-growth in individual life + expansion of GCL Scaling up • Pursuit of upside Adopt
Slide 32: For Achieving Mid-term Business Plan
For Achieving Mid-term Business Plan ◼ Aim to achieve Comprehensive Equity of ¥200-240bn in FY2028 by realizing sustainable growth through investment in new priority areas Fiscal 2025 ¥200-240bn CE growth image Aim for TSE Goals in Fiscal 2028 Prime Market Stock price 159 1241 133 ¥3,000+ Annual gro
Slide 33: LIFENET Manifesto
LIFENET Manifesto Comprehensible, Cost-Competitive, Convenient I. Our Guiding Principles II. Making Life Insurance Accessible Again - Headache-free (1) Creating the future of the life insurance without losing sight of its original (1) Helping the customers help themselves. By making our materials ea
Slide 34: 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 35: Appendix
Appendix
Slide 36: Glossary 1
Glossary 1 Glossary Explanation Revenue accrued for fulfillment of insurance services. Mainly, expected claims, expected maintenance expenses, risk Insurance revenue adjustment release, CSM release and recovery of insurance acquisition cash flows. Investment components which will be paid regardless
Slide 37: Glossary 2
Glossary 2 Glossary Explanation An indicator defined by the Group. It is the sum of “Equity (attributable to owners of the Company)” on the IFRS balance sheets, “CSM”, a liability representing unearned profit that the Group expects to earn as it provides insurance services Comprehensive Equity (insu
Slide 38: Outcome Goal and Reference Indicators
Outcome Goal and Reference Indicators Outcome Goal A Society where next generations can be nurtured with confidence in the future Reference Indicators1 Market penetration rate 01 of online life insurance 02 Prospect for the future life 03 Ease of raising children We want customers to leave their wor
Slide 39: Goals and Targets
Goals and Targets FY2023 results Goals in FY2028 Management Goals Comprehensive Equity(CE) ¥159bn ¥200-240bn Financial Targets Annual growth rate of CE per share 3.8% Approx.10% Stock price ¥1,512 ¥3,000＋ Non-financial Targets（Human capital） Engagement score(Overall) 70 Continuous improvement Ratio
Slide 40: Breakdown of Policies-in-Force
Individual life Breakdown of Policies-in-Force Component 2023/03 2024/03 ratio Number of policies-in-force 568,674 600,945 100% - Term Life 276,566 293,384 49% - Whole-life Medical 156,402 164,207 27% - Term Medical Care 7,870 7,067 1% - Long-term Disability 68,142 69,670 12% - Cancer 59,694 66,617
Slide 41: Annualized Premium / Number of New Business
Individual life Annualized Premium / Number of New Business :AP1 of new business (JPY millions) 1,166 :Number of new business 1,137 1,123 1,104 1,051 990 991 981 969 934 933 923 889 822 794 818 820 747 639 675 20,934 29,864 28,136 27,553 26,918 26,167 23,369 24,410 23,928 23,314 22,506 22,612 22,164
Slide 42: Surrender and Lapse Ratio
Individual life Surrender and Lapse Ratio :Surrender and lapse ratio1（%） 7.6% 7.6% 7.1% 7.0% 7.1% 6.9% 6.8% 6.4% 6.3% 6.6% 6.4% 6.3% 6.4% 6.6% 6.3% 6.4% 5.9% 6.0% 5.5% 5.5% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2019年度 FY2019 2020年度 FY2020 2021年度 FY2021 2022年度 FY2022 2023年度 FY20
Slide 43: Insurance Acquisition Cash Flows (IACF) Efficiency
Individual life Insurance Acquisition Cash Flows (IACF) Efficiency :Insurance acquisition cash flows / AP of new business :Insurance acquisition cash flows per new business (JPY thousands) Fiscal year1 Quarter 138 138 129 123 117 121 105 3.5 3.5 92 97 3.3 3.1 2.9 3.1 82 2.7 2.4 2.2 2.0 (fiscal year)
Slide 44: Operating Expenses Ratio
Operating Expenses Ratio1 :Operating Expenses Ratio（％） :Operating expenses excl. insurance acquisition cash flows (JPY millions) Fiscal year2 Quarter 20.7% 20.7% 19.3% 17.8% 19.4% 18.4% 18.9% 17.4% 18.6% 18.9% 4,715 4,935 3,896 3,047 2,757 1,232 1,171 1,280 1,337 1,146 (fiscal year) 2019 ’20 ’21 ’22
Slide 45: Summary IFRS P/L (Quarter)
Summary IFRS P/L (Quarter) (JPY millions) Items FY2023/1Q FY2023/2Q FY2023/3Q FY2023/4Q Note Insurance service results 2,274 1,813 2,186 1,947 Expected claims minus incurred Due to individual life’s lower incurred claims1 368 (104) 331 189 claims than expected Risk adjustment release 433 438 397 407
Slide 46: Breakdown of Insurance Service Results
Breakdown of Insurance Service Results (JPY millions) Items FY2022 FY2023 Insurance revenue 20,732 24,698 Expected claims 9,569 10,464 Risk adjustment release 1,698 1,678 CSM release 6,401 7,056 Recovery of IACF 3,184 3,647 Others (121) (150) Premium income of GCL1 － 2,004 Insurance service expenses
Slide 47: Breakdown of Financial Results
Breakdown of Financial Results ◼ Increase in foreign interest rates has been mitigated, resulting in a recovery in the valuation of investment trusts and other assets (JPY millions) Items FY2022 FY2023 Change Investment results (381) 670 1,051 Interest income 293 450 157 Impairment losses on financi
Slide 48: Detail of Bond Portfolio
Detail of Bond Portfolio1 As of March 31, 2024 (JPY millions) Available-for-Sale Held-to-Maturity Total JPY Bonds 17,224 22,682 39,906 Duration2 4 years 9 years 7 years Foreign Currency Bonds 11,478 — 11,478 Duration2 5 years Non-Currency Hedged 1,447 — 1,447 Currency Hedged 10,030 — 10,030 1. Based
Slide 49: CSM Movement
CSM Movement ◼ Increased due to new business CSM of individual life, improvement of opex ratio from GCL and revision of mortality assumptions Impact of assumption (JPY millions) changes, etc. 11,309 Items FY2022 FY2023 CSM, end of the period CSM, beginning of the period 74,907 83,604 92,173 Interest
Slide 50: CSM Future Allocation
CSM Future Allocation ◼ Stable profits will be realized over long period from in-force CSM ◼ Aim for CSM release growth by adding CSM generated from future acquired new business Future allocation of CSM (JPY billions) Expected timing when CSM is recognized in PL Amount A+year 6 A+year 1 A＋year 2 A＋y
Slide 51: Structure of Embedded Value
Structure of Embedded Value Adjusted net worth Value of in-force EV (Net assets at end of period business + adjustments) Profit/loss for the current fiscal year is reflected in end-of- period net assets Revenue Revenue Expense Expense Unrealized future profits/losses on policies-in-force at the end
Slide 52: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Mar. 2024 End Reference: March 2023 End1 Lifenet Lifenet Company A Company B Company C 4% 4% 2.3% 1.9% 1% -0.2% -0.8% -1% -2.3% -2.0% -4% 0.5% interest rate increase -5% -5% -5% 0.5% interest rate decrease -7
Slide 53: EV Sensitivity Analysis
EV Sensitivity Analysis1 ◼ Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Mar. 31, 2024 VoNB EEV and new business value as of March 31, 2024 146,991 6,730 Sensitivity 1a: 1.0% increase in risk-free rate (6,606) (1,129) Sensitivity 1b: 1.0% decrease in
Slide 54: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of Mar. 31, 2024 ( (𝑅 1 + 𝑅 8 )2 + (𝑅 2 + 𝑅 3 + 𝑅 7 )2 + 𝑅 4 )/2 (JPY millions) = Solvency margin ratio Total amount of solvency margin Total amount of risk/2 2,065.0％ <numerator> ÷ < the denominator> 【Ref.】 43,291 Consolidated 4,192/2 Solvency margin…
Slide 55: IFRS Reporting
IFRS Reporting ◼ IFRS adoption better presents periodic performance and profitability from policies-in-force ◼ Capital adequacy and dividends are regulated by statutory accounting standards (J-GAAP) Statutory Accounting Embedded Value IFRS 17 （J-GAAP） Economic value of Recognition of revenue Financi
Slide 56: Changing Factors of Comprehensive Equity
Changing Factors of Comprehensive Equity ◼ CE increases through growth in CSM, GCL contracts value and net income. Equity movement Other (JPY millions) movement GCL Net income 9,827 159,802 attributable to movement owners of the CSM (after tax) movement1 Company Impact of GCL contracts value 5,734 a
Slide 57: Dividend Policy
Dividend Policy ◼ Aim for the increase in total shareholder return by capital gain1 Profit Policies-in-force & profit and loss（illustrative image） : Policies-in-force : New business : J-GAAP profit and loss Retained earnings are realized after generating profit Marketing expenses are recorded in lum
Lifenet Insurance Company — FY2023 Earnings Presentation on 6ix