Lifenet Insurance Company · TSE:7157
Lifenet Insurance — Q1 FY2022 Earnings Presentation
37 slides from Lifenet Insurance's earnings presentation, Aug 10, 2022
Slide 1: Presentation Material for Investors First Quarter for Fiscal 2022
Securities Code: 7157 TSE Growth Presentation Material for Investors First Quarter for Fiscal 2022 August 10, 2022
Slide 2: LIFENET is...
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: 1Q of FY2022 Key Highlights
1Q of FY2022 Key Highlights ◼ Annualized premium1 of policies-in-force up 14% YoY to JPY 22.1 billion ◼ JPY 278 million in COVID-19 claims ◼ EEV up 22% YoY to JPY 118.1 billion ◼ Business alliance with au Jibun Bank to launch group credit life insurance business ◼ Capital and business alliance with
Slide 4: Annualized Premium / 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 22.1 19.4 ◼ Continued 522,604 steady growth 16.4 458,539 13.6 387,775 ◼ Year-on-year annualized 11.5 321,829 272,830 premium 113.7%, number of policies-in- force 1
Slide 5: Policies-in-Force Movement
Policies-in-Force Movement ◼ Continues to grow in the medium-term while further acceleration is needed Number of policies FY2020/ FY2021/ FY2022/ 1Q 1Q 1Q New business Decreased 23,928 business1 (8,752) 27,553 in-force (8,959) business 522,604 28,136 (5,532) +14.0% 458,539 +18.2% 387,775 2020/03 ’20
Slide 6: Marketing Efficiency
Marketing Efficiency : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 82 86 ◼ Continued 75 2.0 2.1 a certain scale of 65 1.7 66 marketing 1.5 1.5 investment while carefully monitoring marketing efficiency (fiscal year) 2018 ’19 ’20 ’21
Slide 7: Marketing Efficiency (Quarterly)
【Ref.】 Marketing Efficiency (Quarterly) : Marketing expenses per new business (JPY thousands) : Marketing expenses / Annualized premium of new business1 98 86 76 81 ◼ Controlled marketing expenses 73 2.4 2.1 for 1Q compared 1.9 1.8 1.8 with 4Q of FY2021 ◼ Explore the right timing to re-boost marketi
Slide 8: Operating Expenses Ratio
Operating Expenses Ratio : Operating expenses ratio¹ (%) : Insurance premiums (JPY millions) : Operating expenses excl. marketing expenses (JPY millions) 19,835 ◼ Increased mainly 16,892 due to investments in 13,982 new initiatives 11,845 ◼ Aim to improve in the mid-term by further 21.3% business ex
Slide 9: 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 R
Slide 10: Adjusted Profit
Adjusted Profit ◼ Steadily recorded adjusted profit generated from in-force business while affected by COVID-19 claims The method for calculating adjusted profit Adjusted profit＝ⅰ) Ordinary profit（loss)＋ⅱ) Marketing expenses －ⅲ) Impact of modified co-insurance ±ⅳ) Adjustment based on standard policy
Slide 11: 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 Unrealized future profits/losses on policies-in-force Profit/loss
Slide 12: Strong EEV Growth
Strong EEV1 Growth ◼ EEV and value of in-force business have been growing at a CAGR of 20%2 and 33%, respectively since IPO ◼ EEV per share has also steadily increased ¥1,673 ¥1,695 ¥1,570 116,604 118,109 : Value of in-force business (JPY millions) : Adjusted net worth (JPY millions) 95,140 : EEV/sh
Slide 13: 1Q of FY2022 EEV Movement
1Q of FY2022 EEV Movement1 ◼ EEV growth driven by adjusted incremental EV including value of new business (JPY millions) 118,109 Operating Assumption Economic experience changes variances variances and assumption Expected 1 Value of existing (116) changes new business business contribution 232 1,003
Slide 14: EV Resilience to Financial Changes
EV Resilience to Financial Changes ◼ Limited sensitivity to interest rates and stock prices Jun. 2022 Reference: March 2022 End1 End Lifenet Lifenet Company A Company B Company C 4% 4% 1.9% 1.8% -0% -0.9% -1.0% -1% -2.0% -1.9% -4% 0.5% interest rate increase -5% -5% 0.5% interest rate decrease -6% -
Slide 15: Financial Condition
Financial Condition (JPY millions) (YY/MM) ’22/03 ’22/06 Total assets 67,820 67,935 ◼ Limited financial Cash and deposits 3,761 4,271 impact caused by Monetary claims bought 3,999 3,999 changes in Money held in trust 5,460 5,449 investment Securities 47,425 46,667 Government bonds 8,946 8,897 enviro
Slide 16: Growing Value of In-Force Business
Growing Value of In-Force Business ◼ Value of in-force business up 20% YoY, along with growth of value of in-force business per policy Value of in-force business Value of in-force business Number of policies-in-force per policy （Unrealized future value on policies-in-force） (JPY thousands) (JPY bill
Slide 17: Major Initiatives for 1Q
Major Initiatives for 1Q ◼ Launched exclusive limited plan Whole-life Medical Jibun 3 for Kakaku.com ◼ Ranked #1 in major PCWs Term Life Ranked 1st Two Products Ranked 1st for 6th Consecutive Year in the Most Chosen Insurance in Kakaku.com Insurance Award 20221 Ranking 2022 of HOKEN ICHIBA2 1. The a
Slide 18: Business Alliance with au Jibun Bank
Business Alliance with au Jibun Bank ◼ Aim to expand business area to group credit life insurance and strengthen partnership with KDDI Group's financial service businesses Overview of the alliance ✓ Start business around 2Q of FY20231 ✓ au Jibun Bank to change its underwriting insurer of existing gr
Slide 19: Capital and Business Alliance with Eisai
Capital and Business Alliance with Eisai ◼ Collaborate in the medical and healthcare fields with Pharmaceutical Overview of the alliance ✓ Eisai to obtain Lifenet common stock through market transaction ✓ Through Eisai’s ecosystem, both parties will consider products and services to reduce the burde
Slide 20: Adoption of International Financial Reporting Standards
Adoption of International Financial Reporting Standards ◼ Aim for the voluntary adoption of IFRS 17 from FY2023 Main points • Expect to record an accounting profit1 from FY2023 • Capital adequacy2 and dividends will be regulated by statutory accounting standards (J-GAAP) even after the adoption of I
Slide 21: Schedule for IFRS Adoption
Schedule for IFRS Adoption Financial results for Financial results for Financial results for Fiscal 2021 in May Fiscal 2022 in May Fiscal 2023 in May ✓ Announced ✓ Disclose business ✓ Announcement of voluntary adoption forecast under financial results plan in FY2023 IFRS (planned) under IFRS (planne
Slide 22: Business Forecasts FY2022
Business Forecasts FY2022 ◼ Aim for double-digit growth in in-force business Annualized premium1 Policies-in-force (JPY millions) (Business forecast) New business Decreased business2 (Results) 24,400 21,511 (Business forecast) Surrender and (Business forecast) lapse ratio 4,400 6-7% +13% 2022/03 202
Slide 23: 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 24: 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 25: 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 26: Appendix
Appendix ) LiFENE] LIFENET INSURANCE COMPANY
Slide 27: Annualized Premium / Number of New Business (Quarter)
Annualized Premium / Number of New Business (Quarter) : Annualize premium1 of new business (JPY millions) : Number of new business 1,166 1,123 1,104 1,051 990 991 934 933 981 969 822 822 794 818 23,928 741 637 572 28,136 27,553 26,918 26,167 24,410 23,314 23,369 22,506 22,164 19,075 19,117 18,795 19
Slide 28: Surrender and Lapse Ratio (Quarter)
Surrender and Lapse Ratio（Quarter） :Impact of lump-sum recording of policies lapsed1 (%) :Surrender and lapse ratio2 without the above (%) 7.6% 0.5% 6.3% 6.0% 6.6% 0.0% 6.4% 0.1% 0.0% 7.5% 7.6% 7.1% 7.0% 7.1% 7.1% 6.3% 6.5% 6.4% 6.5% 6.1% 6.2% 6.0% 5.9% 5.5% 5.5% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Slide 29: Breakdown of Policies-in-Force
Breakdown of Policies-in-Force Component ’21/06 ’22/06 ratio Number of policies-in-force 458,539 522,604 100% - Term Life 222,984 255,049 49% - Whole-life Medical 125,342 143,126 27% - Term Medical Care 8,740 8,389 2% - Long-term Disability 60,602 64,946 12% - Cancer 40,871 51,094 10% Sum insured of
Slide 30: Life Time Value and Customer Acquisition Cost
【Ref.】 Life Time Value and Customer Acquisition Cost Key Metrics for a SaaS Company and Lifenet FY2020 FY2021 FY2022/1Q Annualized Premiums per Annualized Premiums per Annualized Premiums per ARR per Contract Policy-in-force Policy-in-force Policy-in-force (Annual Recurring Revenue) JPY 42,536 JPY 4
Slide 31: Condensed Statements of Operation / Fundamental Profit
Condensed Statements of Operation / Fundamental Profit (JPY millions) FY2021/1Q FY2022/1Q Change Note Increased due to growth in in-force business and reinsurance Insurance premiums and other 5,848 6,957 1,109 income from modified co-insurance. Other 93 243 149 Ordinary income 5,942 7,201 1,259 Incl
Slide 32: Three Surplus Factors of Fundamental Profit
Three Surplus Factors of Fundamental Profit 1Q of FY2022 (JPY mn) Statements of operations Profit analysis Insurance premiums and other 6,957 Ordinary income Premiums income 5,367 Net premiums Expense loading Reinsurance income 1,590 Reinsurance Other reinsurance income income Interest and Gains on
Slide 33: Solvency Margin Ratio Calculation
Solvency Margin Ratio Calculation As of June 30, 2022 ( (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 3,297.1% <numerator> ÷ < the denominator> 36,805 2,232/2 Cash and deposits Other liabilities 4,271…
Slide 34: EV Sensitivity Analysis
EV Sensitivity Analysis1 Impacts of changes in assumptions (sensitivities) Change in EEV as of Change in (JPY millions) Jun. 30, 2022 VoNB EEV and new business value as of June 30, 2022 118,109 1,003 Sensitivity 1a: 1.0% increase in risk-free rate (4,682) (117) Sensitivity 1b: 1.0% decrease in risk-
Slide 35: 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 ⅲ) Impact of ⅳ) modified co- Adjustment ⅱ) Marketing insurance based on expenses stan
Slide 36: 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
Slide 37: J-GAAP vs IFRS
J-GAAP vs IFRS Illustration image of accounting structure1 ■Current Statutory Accounting (J-GAAP) Year 1 Year 2 Year 3 Year 4 Year 5 ・・・・ Heavy initial cost for Revenue2 Revenue2 Revenue2 Revenue2 Revenue2 acquiring new business3 is recognized at initial Expense fiscal year. for acquiring new busine
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