Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2017 Earnings Presentation
48 slides from Lifenet Insurance's earnings presentation, May 16, 2018
Slide 1: Investor Meeting Presentation for Fiscal 2017
Securities Code:7157 ６ TSE Mothers Investor Meeting Presentation for Fiscal 2017 May 16, 2018
Slide 2: FY2017 Key Highlight
FY2017 Key Highlight Ordinary income up 9% year on year Annualized premium of new business up 26% year on year Grown by new Cancer Insurance Double Yell, sales channel diversification and aggressive investment in marketing expenses Ordinary loss 197 million yen Progress and review of Mid-term Busine
Slide 3: Summary of FY2017 Results
Summary of FY2017 Results (JPY mn) FY2016 FY2017 Year on year Ordinary income 10,096 10,962 108.6% Operating expenses 4,047 4,942 122.1% Ordinary profit (loss)1 88 (197) - Net income (loss) (1,889) (249) - Mortality margin 2,293 2,623 114.4% FY2016 FY2017 Year on year Annualized premium2 of policies
Slide 4: Contents
Contents 1. Results for Fiscal 2017 2. Progress of Mid-term Business Plan 3. Challenges for Fiscal 2018 3
Slide 5: Overview of FY2017
Overview of FY2017 Launched and revised competitive products - Launched Cancer Insurance Double Yell and au Cancer Insurance received high evaluation - Renewal of Term Life Insurance Sales channel diversification Aggressive investment in marketing expenses 4
Slide 6: New Products and Product Revision
New Products and Product Revision Launched Cancer Insurance and revised Term Life Revised in Apr. 2018 Launched in Aug. 2017 Direct Sales & Agent Revised in Apr. 2018 KDDI Launched in Apr. 2018 5
Slide 7: Launched Cancer Insurance
Launched Cancer Insurance Recognized as the most beneficial Cancer Insurance, received the Grand Prize in Nikkei TRENDY Magazine Cancer Insurance Double Yell Treatment support Income support Income decrease after suffering cancer and Treatment support benefit living expenses are supplemented 3 maj
Slide 8: Provided Survivorship Support Services
Provided Survivorship Support Services Introduces necessary services by partnering companies based on cancer survivors’ voice Remote Housekeeping second opinion services services Appearance Commuting to care hospital/work http://www.lifenet-seimei.co.jp/survivorship/ (Japanese only) 7
Slide 9: Evaluation for Products and Services
Evaluation for Products and Services Products and services highly evaluated ■ Term Life Kazoku and Long-term Disability Hataraku-Hito 2 ranked 1st in Kakaku.com Insurance Award 20181 for 2nd consecutive year ■ Contact center and website double- Term Life Kazoku in the category of applying insuranc
Slide 10: Renewal of Term Life Insurance (Apr. 2018)
Renewal of Term Life Insurance (Apr. 2018) Keep the lowest premium level1 in the industry still after the renewal to meet broad age groups’ needs 1. Comparison of Lifenet and 5 other online life insurance companies’ Term Life insurance products (excluding risk sub-divided insurance products) under
Slide 11: Sales Channel Diversification
Sales Channel Diversification New business via KDDI channel increased significantly by improving sales structure RENEWAL Apr 2018 Application Website increased by enhancing sales structure au Financial Support Center NEW Apr 2018 Keep on Directly-managed trial sales shops by KDDI 10
Slide 12: Annualized Premium / Number of New Business
Annualized Premium / Number of New Business : Number of new business : Annualized premium of new business (JPY mn) Up 26% Y-o-Y Exceeded those in 1,707 1,714 previous year for two consecutive fiscal years 46,237 1,327 1,361 1,189 by new products and 39,175 channel diversification, 29,741 and aggre
Slide 13: Annualized Premium of New Business (Monthly)
Annualized Premium of New Business (Monthly) Continue to exceed year on year after new product launch FY2017 (JPY mn) 184 177 Launched Cancer 159 162 Insurance 156 154 FY2016 in August 142 144 136 132 124 124 115 118 114 109 109 108 108 102 101 95 96 97 04 05 06 07 08 09 10 11 12 01 02 03 (Month)
Slide 14: Number of Policies-in force / Annualized Premium
Number of Policies-in force / Annualized Premium :Number of policies-in-force :Annualized premium of policies-in-force (JPY bn) Y-on-Y Annualized 10% increase 263,847 premium of 215,403 225,534 239,800 policies-in-force 202,963 10.011.1 increased 10% 8.7 9.3 Y-on-Y year on year 8.0 10% increase
Slide 15: Breakdown of Policies-in-force
Breakdown of Policies-in-force Exceeded 170,000 policyholders in April 2018 Component (YY/MM) 2017/03 2018/03 ratio Number of policies-in-force 239,800 263,847 100% - Term Life1 122,952 131,256 50% - Whole-Life Medical1 71,172 76,606 29% - Term Medical Care1 10,462 9,924 4% - Long-term Disability1
Slide 16: Ordinary Income
Ordinary Income (JPY mn) 10,962 10,096 Up 9% year on year 9,387 8,729 Y-on-Y 9% increase by steady increase 7,603 of policies-in-force 10,616 million yen of insurance premiums and other FY2013 14 15 16 17 15
Slide 17: Insurance Claims and Benefits
Insurance Claims and Benefits Ratio to premiums income lower than assumption : Amount of insurance payments (JPY mn) : Amount of insurance payments / Premiums income (%) 15.0 16.0 15.0 13.8 12.0 1,540 1,562 1,159 1,124 1,078 1,005 978 Insurance 701 723 635 claims Benefit 535 584 423 436 443 claims
Slide 18: Provision for Policy Reserves
Provision for Policy Reserves : Provision for policy reserves (JPY mn) : Provision for policy reserves / Premiums income (%) Decreased in accordance with 3,566 3,744 3,638 3,567 elapsed years 2,961 42.6 41.6 To be transfered 1 from 39.4 37.8 34.2 5-year Zillmer's method to standard policy reserv
Slide 19: Operating Expenses
Operating Expenses (JPY mn) 4,942 Continued aggressive 4,131 4,047 investment in 3,815 3,239 2,627 Marketing marketing expenses 1,948 1,822 1,672 1,302 Operating expenses Customer 612 558 526 569 687 service ratio1 22% excluding System marketing expenses, 1,570 1,583 1,655 1,628 1,410 and other
Slide 20: Marketing Expenses per New Business
Marketing Expenses per New Business :Marketing expenses per new business (JPY thousand) :Marketing expenses/Annualized premium of new business 67 61 Declined efficiency 59 51 year on year due to 42 1.5 aggressive allocation 1.2 1.3 of marketing expenses 1.1 1.0 FY2013 14 15 16 17 19
Slide 21: Ordinary Profit/Loss
Ordinary Profit/Loss Ordinary loss 197 million yen (JPY mn) FY2013 FY2014 FY2015 FY2016 FY2017 Ordinary profit (loss) before amortization of deferred assets under (1,198) (472) 584 88 (197) Article 113 of IBA Amortization cost (1,060) (1,060) (1,060) (2,120)2 - Ordinary profit (loss) (2,258) (1,53
Slide 22: Structure Breakdown of Ordinary Profit/Loss
Structure Breakdown of Ordinary Profit/Loss Decreased due to increase of operating expenses Transition of ordinary profit (loss) 1 (JPY mn) Other Increase of Increase of Increase of 65 insurance claims and provision insurance for policy premiums other reserves and other Increase of and other (95)
Slide 23: Condensed Statements of Operation
Condensed Statements of Operation (JPY mn) FY2016 FY2017 Change Insurance premiums and other 9,816 10,616 800 Other 280 3462 65 Ordinary income 10,096 10,962 866 Insurance claims and other 1,796 1,891 95 Provision for policy reserves and other 3,638 3,684 46 Operating expenses 4,047 4,942 895 Other
Slide 24: Fundamental Profit
Fundamental Profit Decreased due to increase of operating expenses 609 183 Fundamental profit1 (JPY mn) (424) (120) (1,029) (JPY mn) FY2013 FY2014 FY2015 FY2016 FY2017 Mortality margin 1,141 1,777 2,100 2,293 2,623 Expense margin (loss) (3,234) (3,282) (2,595) (4,247) (2,752) Interest margin 3 19
Slide 25: Financial Condition
Financial Condition (JPY mn) (YY/MM) 16/3 17/3 18/3 Total assets 30,317 31,934 35,541 Cash and deposits 734 1,004 926 Monetary claims bought 1,999 1,999 1,999 Promote diversification Money held in trust 1,035 995 2,567 Securities 23,067 26,372 28,303 in investment assets Government bonds 10,102 9,
Slide 26: European Embedded Value (EEV)
European Embedded Value (EEV)1 (JPY mn) EEV increased 23% 44,440 year on year 36,261 31,284 Value of Caused by reduction in-force 20,240 28,427 business in mortality 15,198 assumptions based on revised standard life 16,086 16,021 16,012 Adjusted net worth table 2016/32 17/3 18/3 (YY/MM) 1. Lifen
Slide 27: Value of New Business (VoNB)
Value of New Business (VoNB) (JPY mn) Significantly increased 539 year on year by new business growth and reduction in mortality assumptions Reduction in Term Life 55 70 insurance premiums will impact FY2018 onward FY20151 16 17 1. Restated by changing extrapolation method of interest rates for
Slide 28: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Increased by expected incidence rate and other change though reduction in insurance premiums VoNB per policy Surrender Other (JPY thousand) and variables lapse Unit cost rate base Risk 2.2 13.7 assessment change change method Initial expense change Expected (
Slide 29: VoNB
VoNB Per new business (JPY mn) FY2016 FY2017 (JPY thousand) Certainty equivalent present value of future profit 3,604 4,442 113 -) Time value of financial options and guarantees - - - -) Frictional cost of capital 11 13 0 -) Allowance for non-hedgeable risk 1,830 1,427 36 Value of in-force business
Slide 30: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in value of (JPY mn) March 31, 2018 new business EEV and new business value as of March 31, 2018 44,440 539 Sensitivity 1a: 1.0% increase in interest rates (77) 211 Sensitivity 1b: 1.0% decrease i
Slide 31: Contents
Contents 1. Results for Fiscal 2017 2. Progress of Mid-term Business Plan 3. Challenges for Fiscal 2018 30
Slide 32: Mid-term Business Plan
Mid-term Business Plan Summary of Mid-term Business Plan FY2018 13.5 billion yen in ordinary income Management Positive profitability of ordinary profit (loss) Goal 1. The pillars of business : “Online direct sales”, “KDDI (exclusive alliance agent)” and “Over- the-counter agent” Business 2. Conti
Slide 33: To Achieve Mid-term Business Plan
To Achieve Mid-term Business Plan Return to growth path in FY2017 by products and channel development, and aggressive allocation of marketing expenses Further growth in new Establish a system business performance realizing sustainable Return to profitability growth in new 2018 business perfo
Slide 34: Progress of Mid-term Business Plan
Progress of Mid-term Business Plan Management Goal FY2018 is not expected to be achieved :Ordinary income ::Ordinary profit (loss) 1 13,500 Ordinary income (JPY mn) 10,962 FY2018 10,096 by revision of 9,387 business forecast 12,000 Y-on-Y Y-on-Y 9% increase 8% increase 584 Turn 88 (197) profitable
Slide 35: Progress of Mid-term Business Plan
Progress of Mid-term Business Plan Reasons for not expected to achieve Management Goal ─ Sales operation efficiency of online direct sales channel has not been improved as expected ─ Not fully utilized KDDI and other over-the- counter agent channels 34
Slide 36: Contents
Contents 1. Results for Fiscal 2017 2. Progress of Mid-term Business Plan 3. Challenges for Fiscal 2018 35
Slide 37: Challenges
Challenges Further growth of new business performance by utilizing three channels Enhance products and services by utilizing technology Continuous improvement of operating expenses efficiency 36
Slide 38: Utilization of Three Channels
Utilization of Three Channels Aggressive investment in marketing expenses Online Further sales promotion of Cancer Insurance direct Double Yell and other products sales Website enhancement to accommodate smartphone users KDDI and Lifenet to boost the products’ KDDI recognition and expand sal
Slide 39: Utilization of Technology
Utilization of Technology Support life of workers × child-rearing generation utilizing technology 働く人×子育て世代 Workers × Child-rearing generation Money Child Digital Technology Work -rearing Insurance FinTech InsurTech HealthTech Medical Health care Life support by insurance and related information/s
Slide 40: Continuous Improvement of Operating Expenses Efficiency
Continuous Improvement of Operating Expenses Efficiency Aiming to build low cost business conduct :Insurance premiums and other (JPY mn) :Operating expenses (JPY mn) :Operating expenses ratio¹ 84.7% 10,421 9,628 9,007 55.0% 8,372 7,507 47.4% 45.6% 42.0% 5,876 4,976 36.0% 4,942 4,131 4,047 3,815 3,
Slide 41: Business Forecasts FY2018
Business Forecasts FY2018 Keep on investing to accelerate business expansion moreover (JPY mn) Business (Reference) forecasts for Results for FY2017 FY2018 Ordinary income 12,000 10,962 Ordinary profit (loss) 0 (197) Net income (loss) 0 (249) 40
Slide 42: New Management Team
New Management Team Change of management team in anticipation of the next ten years Daisuke Iwase Ryosuke Mori Chairman, Director President, Representative Director Masayuki Nishida Masanori Sakasai Hitoshi Hatta Executive Vice President, Yasuhiro Koba Executive Managing Executive Managing Directo
Slide 43: LIFENET is…
LIFENET is… Comprehensible Cost-Competitive Convenient Returning to the original purpose of life insurance – mutual support – Plugged-in way to reach customers who need insurance products with necessary coverage 42
Slide 44: LIFENET Manifesto
LIFENET Manifesto I. Our Guiding Principles II. Life Insurance will be Comprehensive (1) We believe that our responsibility to society is to return life insurance to its (1) Our products will be simple and comprehensible. There will not be complex original state. Life insurance is for the customers,
Slide 45: http://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 46: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 47: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit FY2017 Statements of Operations Profit analysis Insurance premiums and other 10,616 Ordinary income Net premiums Expense loading Premiums income 10,421 Reinsurance income 194 Reinsurance income Investment income Interest and Gains on sales 317 Reversal of
Slide 48: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of March 31, 2018 (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 2,455.8% = <numerator> 20,614 ÷ < the denominator> 1,678/2 Cash and deposits Other liabilities 926 749 Insurance risk R1 1
Lifenet Insurance Company — FY2017 Earnings Presentation on 6ix