Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2019 Earnings Presentation
44 slides from Lifenet Insurance's earnings presentation, May 14, 2020
Slide 1: Presentation Material for Investors Fiscal 2019
Securities Code: 7157 TSE Mothers Presentation Material for Investors Fiscal 2019 May 14, 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: Table of Contents
Table of Contents 1. Impact of COVID-19 2. Financial Results for Fiscal 2019 3. Future Initiatives 2
Slide 4: Impact of COVID-19
Impact of COVID-19 New business performance Payment of insurance claim Increased at this moment No significant change ■ Monthly trend1 in annualized premium of new business2 ■ Monthly trend1 in insurance claim and benefit payments +87％ +38％ 2019/04 2020/04 2019/04 2020/04 Financial impact For stakeh
Slide 5: Table of Contents
Table of Contents 1. Impact of COVID-19 2. Financial Results for Fiscal 2019 3. Future Initiatives 4
Slide 6: Overview of Fiscal 2019
Overview of Fiscal 2019 Annualized premium1 of Annualized premium1 of policies-in-force new business 15,514 (118.6% vs end of FY2018) million yen 3,425 (Y-on-Y 123.5%) million yen Adjusted profit2 EEV (European Embedded Value) 2,784 (3,763 million yen before change in million yen 73,431 million yen
Slide 7: Number of Policies-in-Force
Annualized Premium / Number of Policies-in-Force : Annualized premium of policies-in-force (JPY billions) : Number of policies-in-force 15.5 13.0 365,171 11.1 308,854 ◼ Accelerated 9.3 10.0 263,847 growth trend 239,800 225,534 ◼ Year-on-year Annualized premium 118.6%, number of policies- in-force 11
Slide 8: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force ◼ Sum insured of policies-in-force exceeded 2.5 trillion yen Component ’19/03 ’20/03 ratio Number of policies-in-force 308,854 365,171 100% - Term Life 150,808 175,713 48% - Whole-life Medical 85,968 100,280 27% - Term Medical Care 9,493 9,105 2% - Long-term Disability
Slide 9: Number of New Business
Annualized Premium / Number of New Business : Annualized premium of new business (JPY millions) : Number of new business 3,425 2,773 80,911 80,911 ◼ Recorded 64,435 historical high 1,714 1,361 39,175 ◼ Year-on-Year 1,189 29,741 annualized 25,150 premium 123.5%, number of new business 125.6% 2015 ’16
Slide 10: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business 75* ◼ Aggressively 67 65 61 invested in marketing for growth 1.7 51 1.5 1.5 1.3 1.0 ◼ Recorded at the 70 thousand yen level as expected * Includes one-time expense fro
Slide 11: Marketing Efficiency (Half Year)
Marketing Efficiency (Half Year) : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business 84* 84 ◼ Improvement in 68 68 marketing 61 1.9 efficiency led to 1.6 1.4 1.5 better acquisition efficiency in FY2019 2H * Includes one-time expense from ch
Slide 12: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 13,982 11,845 ◼ Improved due to 9,628 10,421 expansion of 9,007 business scale 23.1 % 22.2 % 22.8 % 21.6% 21.5 % 3,023 2,699 2,225 2,315 1,937 201
Slide 13: 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 14: Key Business Indicators of Corporate Value
Key Business Indicators of Corporate Value ◼ Disclosure of two key management indicators during current period of growth Adjusted profit Indicator of profit during the period from policies-in-force EEV(European Embedded Value ) 1 Indicator of long-term profitability of insurance companies 13 1. EEV
Slide 15: Adjusted Profit
Adjusted Profit ◼ Steadily recorded profit generated from policies-in-force The method for calculating adjusted profit was changed Before change Adjusted profit＝ⅰ) Ordinary profit（loss)1＋ⅱ) Marketing expenses After change Adjusted profit＝ⅰ) Ordinary profit（loss)1＋ⅱ) Marketing expenses －ⅲ) Impact of
Slide 16: 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 17: EEV (European Embedded Value)
EEV （European Embedded Value） ◼ Characteristics of Lifenet’s EEV are as follows: Strong growth • Maintaining increase in EEV since company became public in March 2012 • Steadily growing even in a low interest rate environment Resilience to interest rate changes • Limited sensitivity to interest rate
Slide 18: Strong EEV Growth
Strong EEV1 Growth ◼ CAGR of EEV and value of in-force business are 19%2 and 36%, respectively 73,431 63,378 (JPY millions) Value of in-force business Adjusted net worth 60,878 48,518 18,547 5,122 14,860 13,425 12,553 2012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03 ’18/03 ’19/03 ’20/03 (YY/MM) 1. Lifenet
Slide 19: Structure Breakdown of EEV
Structure Breakdown of EEV1 ◼ Increased due to new business growth, mortality assumption changes and improvement in operating expense ratio (JPY millions) 73,431 Economic Adjustments variances to the values2 and assumption as of Assumption changes Mar. 31, ’20 changes (776) 126 Adjusted 6,707 increm
Slide 20: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices March 2020 Reference: March 2019 End1 End ライフネット生命 Lifenet ライフネット生命 Lifenet Company A社 A B社 B Company C社 C Company D社 D Company 13% 8% 4% 1.9% 3% 1.5% -0.6% -0.7% -1% -1.7% -2.0% -2% -5% -6% -8% -7% -10% 金利0.
Slide 21: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’19/03 ’20/03 Total assets 38,247 41,144 Cash and deposits 1,192 1,377 Monetary claims bought 999 299 Money held in trust 3,114 3,539 ◼ Maintained Securities 30,989 32,058 sufficient financial Government bonds 8,071 8,065 stability as Municipal bonds 1,394
Slide 22: New Whole-life Medical Products
New Whole-life Medical Products ◼ Expanded coverage first time in 5 years New Whole-life Medical Jibun 3 New Whole-life Medical Jibun 3 for Women - Expanded hospitalization benefit for women that pays for five days for hospitalizations of up to five days - Established surgery benefit paid for out-pa
Slide 23: New White Label Business
New White Label Business ◼ Launched product with brand of Seven Financial Service for their customers Feb. 2020 Announced Business Alliance with Seven Financial Service Apr. 2020 Launched new business https://7fi.lifenet-seimei.co.jp/ (Japanese version only) 22
Slide 24: Launched online distribution initiative
Launched online distribution initiative ◼ Started distribution of other insurer’s product leveraging Lifenet website traffic Customers Company website Products offered (Person considering (Insurance providers) insurance policy) Lifenet brand products 1 Warikan insurance1 わりかんがん保険 Other insurers’ pro
Slide 25: High Evaluations of Products and Services
High Evaluations of Products and Services ◼ Each products ranked No.1 at PCWs1 Chosen the most popular insurance products2,3 Whole-life Long-term Term Life Cancer Medical Disability ◼ Contact Center and Website awarded top ratings HDI Benchmarking for 7th time, the highest number of times for a comp
Slide 26: Table of Contents
Table of Contents 1. Impact of COVID-19 2. Financial Results for Fiscal 2019 3. Future Initiatives 25
Slide 27: 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 28: Future Direction
Future Direction Established a new management policy and aim to FY2018 achieve EEV of 100 billion yen by business growth in a mid-term as a management goal Focused on accelerating the growth momentum and FY2019 achieved historical high of new business performance • Aim for double-digit growth in pol
Slide 29: Initiatives for EEV Growth
Initiatives for EEV Growth ◼ Further growth of in-force business ◼ Improvement of operating expenses efficiency 28
Slide 30: Further Growth of In-force Business
Further Growth of In-force Business ◼ Focus on priority areas and aim for vigorous growth Priority area Innovation of customer experience Enhancement of promotion capabilities • New business growth • Improvement of surrender and lapse ratio Further growth of in-force business 29
Slide 31: Improvement of Operating Expenses Efficiency
Improvement of Operating Expenses Efficiency ◼ Aim to increase productivity company-wide, and expand business scale Marketing efficiency Operating expenses ratio1 Consider the balance between growth in Strive for further business expansion new policy performance and marketing and operational efficie
Slide 32: Fiscal 2020 Business Forecasts
Fiscal 2020 Business Forecasts ◼ Business forecasts remains undetermined due to the impact of COVID-19 Present outlook for fiscal 2020: • Continued double-digit growth in in-force business performance • Improvement in marketing efficiency from the level in fiscal 2019 • Ordinary profit continues to
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 life insurance of the future without losing sight of (1) Helping the customers help themselves. By making our its original premise: “an
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 ) LiFENE] LIFENET INSURANCE COMPANY
Slide 36: Number of New Business (Quarter)
Number of New Business (Quarter) ◼ Recorded historical high :Number of new business 23,314 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 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY
Slide 37: Condensed Statements of Operation / Fundamental Profit
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2018 FY2019 Change Note Increased due to growth in in-force policies business and Insurance premiums and other 12,159 16,455 4,296 utilization of modified co-insurance Other 401 395 (6) Ordinary income 12,560 16,850 4,289 Includ
Slide 38: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Mar. 31, 2020 VoNB EEV and new business value as of March 31, 2020 73,431 2,977 Sensitivity 1a: 1.0% increase in risk-free rate (2,585) 161 Sensitivity 1b: 1.0% decrease in risk-fr
Slide 39: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2019 (JPY millions) Statements of operations Profit analysis Insurance premiums and other 16,455 Ordinary income Premiums income 13,982 Net premiums Expense loading Reinsurance income 2,473 Reinsurance Other reinsurance income income Interest and Gains o
Slide 40: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation (JPY millions) As of Mar 31, 2020 (R 1 + R 8 )2 + (R 2 + R 3 + R 7 )2 + R 4 / 2 = Solvency margin ratio Total amount of solvency margin Total amount of risk/2 2,117.1% <numerator> ÷ < the denominator> 19,213 1,815/2 Cash and deposits Other liabilities 1,377 1,163 In
Slide 41: 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 42: 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 43: 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 44: 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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