Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2020 Earnings Presentation
49 slides from Lifenet Insurance's earnings presentation, May 13, 2021
Slide 1: Presentation Material for Investors Fiscal 2020
Securities Code: 7157 TSE Mothers Presentation Material for Investors Fiscal 2020 May 13, 2021
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. Financial Results for Fiscal 2020 2. Future Initiatives 2
Slide 4: Overview of Fiscal 2020
Overview of Fiscal 2020 Annualized premium1 of Annualized premium1 of policies-in-force new business 18,713 (120.6% vs end of FY2019) million yen 4,197 (Y-on-Y 122.5%) million yen EEV (European Embedded Value) Adjusted incremental EV2 95,140 million yen 7,553 million yen (129.6% vs end of FY2019) (Y
Slide 5: 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 18.7 15.5 439,945 13.0 365,171 Accelerated 11.1 308,854 growth momentum 10.0 263,847 239,800 Year-on-year Annualized premium 120.6%, number of policies- in-for
Slide 6: Changing Factors of Policies-in-Force
Changing Factors of Policies-in-Force Increased due to growth of new business and improvement of surrender and lapse ratio Fiscal 2019 Fiscal 2020 Number of policies-in-force (BOP) 308,854 365,171 +）Number of new business 80,911 100,587 －）Decreased number of policies1 (24,594) (25,813) Surrender a
Slide 7: Number of New Business
Annualized Premium / Number of New Business : Annualized premium of new business1 (JPY millions) : Number of new business 4,197 3,425 100,587 Recorded historical high 2,773 80,911 64,435 1,714 Year-on-Year 1,361 39,175 annualized 29,741 premium 122.5%, number of new business 124.3% 2016 ’17 ’18
Slide 8: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 (JPY) 75 61 67 65 66 Aggressively invested in marketing in Q4 1.5 1.7 1.5 1.5 1.3 for further growth Improved mainly due to temporary impact by COVID- (fiscal yea
Slide 9: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 16,892 Improved with the 13,982 growth of in-force 11,845 business 10,421 9,628 23.1 % Aim to improve 22.2 % 22.8 % 21.6 % 19.6% operational e
Slide 10: 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 11: 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 12: 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 13: 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 14: Strong EEV Growth
Strong EEV1 Growth EEV and value of in-force business have been growing at a CAGR of 20%2 and 35%, respectively since IPO 95,140 (JPY millions) 73,431 Value of in-force business Adjusted net worth 76,149 60,878 18,547 5,122 13,425 12,553 18,990 2012/03 ’13/03 ’14/03 ’15/03 ’16/03 ’17/03 ’18/03 ’19
Slide 15: 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) 95,140 Adjustments to the values2 Economic as of Adjusted variances Mar. 31, ’21 and assumption incremental EV Assumption changes 9,063 chan
Slide 16: EV Resilience to Financial Changes
EV Resilience to Financial Changes Limited sensitivity to interest rates and stock prices March 2021 Reference: March 2020 End1 End Lifenet Lifenet Company A Company B Company C 11% 7% 7% 1.6% 1.5% -0.8% -0.6% -1.6% -1.7% -4% -5% -7% -10% -9% 0.5% interest rate increase 0.5% interest rate decrease
Slide 17: 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 The value of the contracted Annualized Premiums per Annualized Premiums per ARR per Contract recurring revenue components of the term Policy-in-force Policy-in-
Slide 18: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’20/03 ’21/03 Total assets 41,144 54,501 Cash and deposits 1,377 2,059 Maintained prudent Monetary claims bought 299 999 Money held in trust 3,539 5,895 investment Securities 32,058 40,007 management policy Government bonds 8,065 9,004 1,391 1,482 Maint
Slide 19: Overseas Public Offering and Secondary Offering
Overseas Public Offering and Secondary Offering Raised new capital for future business growth through overseas public offering in July 2020 Distribution of share ownership • Offered shares totaled as of Mar. 31, 2021 13.8 billion yen Financial Japanese Institutions Individuals 6.85% • Raised new c
Slide 20: Expanded White Label Business
Expanded White Label Business Gained more partners for mid to long- term growth Launched products from April Plan to distribute products from 2020 by leveraging the brand summer 2021 as a part of Money power and strong customer base Forward Fixed Cost Review to of Seven & i Group improve household
Slide 21: High Evaluation for Products and Services
High Evaluation for Products and Services Achieved high level of customer satisfaction J.D. Power 2021 #1 Japan Life Insurance Contract Customer Satisfaction StudySM ＜Direct Distribution Channel Segment＞ Highest in the all factors • Interaction channel Satisfaction Ranking • Types of products Sati
Slide 22: Raise the Competitiveness of Products and Services
Raise the Competitiveness of Products and Services Launch new long-term disability product with industry-first coverage in June 2021 New Long-term Disability Hataraku-Hito 3 Support “living expenses” which cannot be covered by social welfare and medical insurance when one is not able to work due t
Slide 23: Table of Contents
Table of Contents 1. Financial Results for Fiscal 2020 2. Future Initiatives 22
Slide 24: Aim to Realize Lifenet Manifesto
Aim to Realize 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 mak
Slide 25: Impact of COVID-19
Impact of COVID-19 Temporary changes and structural changes brought by the Pandemic • Emerging customer needs for life insurance Temporary due to health concerns changes • Restricted business activities because of work-from-home requests Structural • Change in consumers’ behavior changes from offl
Slide 26: Business Environment surrounding Online Life Insurance Market
Business Environment surrounding Online Life Insurance Market Financial digitalization is proceeding driven by COVID-19, and structural growth of online life insurance is expected in the future Phase1 Phase2 Phase3 Adaptation to Start up consumer behavior Growth 25.0% Needs for online life insuran
Slide 27: Investment in Priority Areas
Investment in Priority Areas Innovation of customer experience and enhancement of promotion capabilities are key sources of competitiveness Internet Channel White Label Channel Further improve brand awareness Expand strategic partners and frictionless CX Brand Awareness Telecom Retail Internet ser
Slide 28: Develop Online Life Insurance Platform
Develop Online Life Insurance Platform Expand online products and services Supply Lifenet’s products and services ＋ Other insurers’ products and services “Online Platform” connects life insurance products and services with customers Provide products and services which customers need online Search Co
Slide 29: Established New Joint Venture LIFENET MIRAI Inc.
Established New Joint Venture Launch online insurance agency services in July 2021 New company LIFENET MIRAI Inc. Comparison of Proposal for Policy Support for insurance insurance review maintenance insurance claims products (Investment ratio: 80%) (Investment ratio: 20%) • Create a stress-free CX
Slide 30: Update the Management Goal
Update the Management Goal Our commitment to the current Management Policy remains unchanged to aim for further growth Help our customers embrace life more fully by offering Mission comprehensible, cost-competitive and convenient products and services Vision Be the leading company driving the grow
Slide 31: Initiatives for Sustainability
Initiatives for Sustainability Aim to increase the value provided to stakeholders based on Manifesto Lifenet Manifesto Comprehensible, Cost-Competitive, Convenient Enhancement of Customer-focused Adaptation to Corporate Governance business operations social changes • Board of Directors includes ou
Slide 32: Further Strengthen Governance
Further Strengthen Governance Establish a management structure for strong growth and transformation ■Transition to a company with audit and supervisory committee1 Board of Directors Number of directors 11 9 Audit and supervisory committee member Outside directors Outside Directors Ratio of outside
Slide 33: Future Direction
Future Direction Established a new management policy to FY 2018 achieve EEV of 100 billion yen in a mid-term as a management goal Accelerated business growth by adapting to the FY 2020 COVID-19 environment, and getting closer to the management goal of EEV 100 billion yen • Adapt to new business envi
Slide 34: Business Forecast FY 2021
Business Forecast FY 2021 Aim for double-digit growth in in-force business performance (JPY millions) FY 2021 Forecast FY 2020 Results Annualized premium of policies-in-force1 21,800 18,713 Annualized premium of new business1 4,400 4,197 Of which: impact Of which: impact of modified of modified co
Slide 35: 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 36: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 37: New Management Team
New Management Team1 Directors Yasuhiro Koba Ryosuke Mori Representative Director and President Director, Executive Vice President General Manager of Sales & Marketing Division Goldman Sachs Japan Co., Ltd. Head of Corporate Planning Department and Ministry of Health, Labour and Welfare General Mana
Slide 38: Expand Online Life Insurance Market with Lifenet's Strengths
Expand Online Life Insurance Market with Lifenet’s Strengths × ＝ Improve CVR by Generate customer traffic Maximize revenue innovation of by aggressive promotion customer experience Diversify revenue source ＝ Lifenet Insurance premium products business （underwriting） Annual website traffic of over 10
Slide 39: Number of New Business (Quarter)
Number of New Business (Quarter) :Number of new business 26,918 1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q FY2008 FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 38
Slide 40: Number of New Business (Monthly)
Number of New Business (Monthly) :Monthly trend in number of new business1 11,078 8,890 5,605 2019/04 2020/04 2021/04 1. Based on Monthly Disclosure 39
Slide 41: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’20/03 ’21/03 ratio Number of policies-in-force 365,171 439,945 100% - Term Life 175,713 213,597 49% - Whole-life Medical 100,280 120,216 27% - Term Medical Care 9,105 8,840 2% - Long-term Disability 54,665 59,567 14% - Cancer 25,408 37,725 9% Sum insured of
Slide 42: Condensed Statements of Operation
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY 2019 FY 2020 Change Note Increased due to growth in in-force policies business and Insurance premiums and other 16,455 20,282 3,827 reinsurance income from modified co-insurance. Other 395 507 112 Ordinary income 16,850 20,789
Slide 43: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2020 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 20,282 Ordinary income Premiums income 16,892 Net premiums Expense loading Reinsurance income 3,389 Reinsurance Other reinsurance income income Interest and Gains on sale
Slide 44: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of March 31, 2021 ( 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 2,647.1% <numerator> ÷ < the denominator> 28,455 2,149/2 Cash and deposits Other liabilities 2,059 1,605 In
Slide 45: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Mar. 31, 2021 VoNB EEV and new business value as of March 31, 2021 95,140 5,798 Sensitivity 1a: 1.0% increase in risk-free rate (3,213) (120) Sensitivity 1b: 1.0% decrease in risk-
Slide 46: 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 47: 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 48: 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 49: 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 Reinsurance Without
Lifenet Insurance Company — FY2020 Earnings Presentation on 6ix