Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q2 FY2022 Earnings Presentation
23 slides from Lifenet Insurance's earnings presentation, Nov 10, 2022
Slide 1: Q2 Financial Results Briefing for the Fiscal Year Ending March 2023
LIFENET INSURANCE COMPANY Q2 Financial Results Briefing for the Fiscal Year Ending March 2023 November 10, 2022 [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 Q2 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 presentation
Please see page 2. These are the main points of today's presentation. First, annualized premiums of policies-in-force at the end of September 2022 increased 13% YoY to JPY22.9 billion, continuing a steady double-digit growth. On the other hand, the increase in the number of people infected with COVI
Slide 4: Performance of in-force business
See page 3. This is the performance of in-force business. Annualized premiums of policies-in-force, which correspond to annual recurring revenue, amounted to JPY22.9 billion at the end of September 2022, with 543,635 policies-in-force. Both the annualized premium and the number of policies-in-force
Slide 5: Movement in number of policies-in-force
Page 4 shows the movement in the number of policies-in-force. The bar graph, colored in green on the far right, is for Q2 of FY2022. The number of new business for the first half of FY2022 totaled 29,864, a record high on a quarterly basis. The surrender and lapse ratio was 6.3%. As you can see, we
Slide 6: Marketing efficiency
Page 5 explains marketing efficiency. The table below left shows the actual marketing expenses invested. The amounts for FY2018 through FY2021 are for the full fiscal year, while the amounts for FY2022 are for the first half of the fiscal year. Marketing expenses for the first half of FY2022 totaled
Slide 7: Marketing expenses and efficiency over five quarters
Page 6 shows changes in marketing expenses and marketing efficiency for the last five quarters. In Q4 of FY2021, marketing efficiency deteriorated significantly as a result of a significant increase in marketing expenses. Therefore, in the first half of FY2022, we have controlled marketing investmen
Slide 8: Operating expense efficiency excluding marketing
Next, we will discuss the efficiency of operating expenses excluding marketing expenses on page 7. Operating expenses, excluding marketing expenses, totaled JPY2.314 billion in the first half of the current fiscal year. The operating expenses ratio to insurance premium was 21.2%. Although insurance
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 the 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.
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: EEV and EEV per share
Please see page 11. EEV as of September 30, 2022 was JPY123.0 billion. The compound average growth rate (CAGR) of EEV since listing in March 2012 has been 20%. Especially the value of in-force business, which is unrealized future profits from policies-in-force for accounting purposes, has grown at a
Slide 13: Analysis of 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 September 2022. We define adjusted incremental EV as the sum of the three components of the change in EEV: the value of new business, expected existing business contribution, and operating ex
Slide 14: EV sensitivity 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 you can see, the sensitivity of the Company's EV to changes in interest rates and other factors has been limited as the Company's asset m
Slide 15: Summary of the balance sheet
Page 14 is the summary of the balance sheet. As of September 30, 2022, total assets were JPY68.065 billion, liabilities were JPY49.414 billion, and net assets were JPY18.650 billion. The solvency margin ratio, an indicator for an adequate level of payment capacity, is 3,187%, which is sufficient in
Slide 16: Growth in value of in-force business
On page 15, we would like to explain the growth in the value of in-force business. The number of policies-in-force on the left-hand side has been steadily increasing, indicating that the scale of our business is expanding. In addition, the value of in-force business per policy in the chart at the ce
Slide 17: Partnership with au Jibun Bank and Eisai
From page 16, we will explain our main initiatives. First, it is about partnership with au Jibun Bank and Eisai, which we announced in our Q1 financial results. In order to expand our business domain to group credit life insurance, we have entered into a business alliance agreement with au Jibun Ban
Slide 18: Business alliance with Sumitomo Mitsui Card
Next, please see page 17. On October 13, we announced that we, together with our subsidiary Lifenet MIRAI, have entered into a business alliance agreement with Sumitomo Mitsui Card (SMCC). As financial services are becoming increasingly digitalized, Sumitomo Mitsui Card is recognized as a core compa
Slide 19: Electronic insurance certificate and customer support
Please refer to page 18. In order to expand our services to a steadily increasing number of policyholders, we have introduced an electronic insurance certificate and second-contact registration system. These initiatives will enable our policyholders to use our services more conveniently. In addition
Slide 20: Voluntary adoption of IFRS17
Please see page 19. In the announcement of our FY2021 financial results in May 2022, we reported that we aim for the voluntary adoption of IFRS17 starting in FY2023. As we have announced, the two main points are that the Company expects to record continuous accounting profits from the first year of
Slide 21: Business environment in second half of fiscal year
Please see page 20. We would like to explain our recognition of the business environment in the second half of this fiscal year. As you have noted, since the first wave of COVID-19 outbreaks in 2020, our business performance has been heavily affected by the temporary external factor caused by COVID-
Slide 22: Revision of FY2022 business forecasts
Please refer to page 21. We have revised our business forecasts for FY2022 as described. First, at the upper part of the page, we have revised ordinary profit (loss) mainly due to an increase in payment of COVID-19 related benefits, which was much higher than the payment amount assumed at the beginn
Slide 23: Management policy
Finally, here is the management policy As I explained earlier, there is no change in our major policy of pursuing growth with the aim of expanding the scale of our business while maintaining a firm grasp of structural trends. We will continue to further expand the online life insurance market throug
Lifenet Insurance Company — Q2 FY2022 Earnings Presentation on 6ix