Lifenet Insurance Company · TSE:7157
Lifenet Insurance — FY2013 Earnings Presentation
76 slides from Lifenet Insurance's earnings presentation, May 16, 2014
Slide 1: Investor Meeting Presentation for Fiscal 2013
Securities Code:7157 TSE Mothers Investor Meeting Presentation for Fiscal 2013 May 16, 2014
Slide 2: LIFENET is… Comprehensible, Cost-Competitive, Convenient
LIFENET is… Comprehensible Cost-Competitive Convenient Returning to the original purpose of life insurance – mutual support – Lifenet was founded with the goal of offering simple, convenient and competitively priced products and services based on the highest levels of business integrity. We offer th
Slide 3: FY2013 Key Highlights
FY2013 Key Highlights Ordinary income up 27% year on year Ordinary loss improved 28% year on year1 Turned operating cash flow positive with approx. 2.0bn yen on FY basis Solvency margin ratio maintained at a healthy level EEV as of Mar. 31, 2014 increased by 4.0bn yen Primary challenge i
Slide 4: Continuous Growth in Ordinary Income
Continuous Growth in Ordinary Income (JPY mn) 7,603 The number of 5,976 policies-in-force steadily increased 3,773 Year on year 127% growth FY2011 12 13 3
Slide 5: Decrease of Ordinary Loss
Decrease of Ordinary Loss Shrinking ordinary loss before deferred expenses and amortization (JPY mn) (JPY mn) 2011 2012 2013 Ordinary loss before deferred 1 expenses and (2,184) (1,664) (1,198) amortization Deferred (1,198) expenses 2,106 2,701 - 1 Improved 28% Amortization (1,664) year on year co
Slide 6: Cash Flows from Operating Activities
Cash Flows from Operating Activities (JPY mn) 1,976 Turned black for first time on fiscal year basis Continuously recording positive (35) operating cash flows from 3Q of (799) FY2012 FY2011 12 13 5
Slide 7: Solvency Margin Ratio
Solvency Margin Ratio1 3,499% Maintained at a healthy level, 2,266% while decreased due to the increase Average of 4 major 1,922% in policies-in-force insurance companies as of September 30, 20132 and investment 811% in Korean JV 12/03 13/03 14/03 (YY/MM) 1. The solvency margin ratio measures a li
Slide 8: European Embedded Value
European Embedded Value1 (JPY mn) 22,907 Mainly due to Value of 18,547 18,746 In-Force reinsurance 11,831 Business solution, value of in-force business 77%2 Adjusted Net Asset increase of March 11,075 31, 2013 12/03 13/03 14/03 (YY/MM) 1. Lifenet has fully adopted the EEV Principles, while also ta
Slide 9: Returning to Growth in New Business
Returning to Growth in New Business Challenges of the “Second Stage” as an online life insurer Challenges Actions to take ✓Enhance customer follow-up Customer change ✓Enhanced free consultation service ✓Continuously optimize smartphone Device change website ✓Launch renewed products Intense ✓Enhanc
Slide 10: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for Fiscal 2013 3. Challenges for Fiscal 2014
Slide 11: Mid-term Business Plan
Mid-term Business Plan LIFENET 2015 Management Goal Achieve 15 billion in Offer new products and ordinary income (FY 2015) services as an innovator Push the company toward to create a future of life profitability (FY 2015) insurance that resonates (Based on ordinary profit before amortization of d
Slide 12: Progress of Mid-term Business Plan (Ordinary Income)
Progress of Mid-term Business Plan (Ordinary Income) Aiming to achieve ordinary income of 15 billion yen, recorded 127% year on year (JPY mn) 15,000 Year on year up 27% 7,603 5,976 3,773 FY2011 12 13 15 11
Slide 13: Progress of Mid-term Business Plan (Ordinary Profit / Loss)
Progress of Mid-term Business Plan (Ordinary Profit / Loss) Aim to increase ordinary income and improve productivity, pushing the company toward profitability1 Turn profitable (JPY mn) (1,198) 2 (1,664) Improved 28% Year on year (2,184) FY2011 12 13 15 1. Ordinary profit before amortization of def
Slide 14: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for Fiscal 2013 3. Challenges for Fiscal 2014
Slide 15: Overview of FY2013
Overview of FY2013 Exceeded 200,000 policies-in-force Tackling challenges of the “second stage” as an online life insurer - Implement customer follow-up schemes - Continuously optimizing smartphone website - Enhanced claims and benefits payment services Entered into strategic alliance with Swi
Slide 16: Number of Policies-in-force
Number of Policies-in-force Achieved 200,000 policies-in-force (Feb. 12) 202,963 197,097 189,958 24,155 180,591 169,312 12,504 155,947 144,575 132,551 61,700 118,040 103,875 91,249 76,296 63,188 51,356 104,604 39,643 31,209 23,506 17,962 12,746 8,440 459 1,418 2,712 5,116 08/06 09/03 10/03 11/03 1
Slide 17: "Kazoku" Exceeded 100,000 Policies-in-force
“Kazoku” Exceeded 100,000 Policies-in-force Offering products to meet customer needs 104,604 101,982 98,920 95,058 90,407 84,786 79,839 73,721 66,606 59,474 53,081 45,626 38,881 32,547 26,095 21,221 16,516 12,760 9,121 6,121 3,642 291 974 1,891 08/06 09/03 10/03 11/03 12/03 13/03 14/03 (YY/MM) 16
Slide 18: Implemented Customer Follow-up Schemes
Implemented Customer Follow-up Schemes Encourage customers to complete application Points of contact after brochure request As of FY12 Launched in FY13 Request Birthday ＋ Enclosure Send brochure Enclosure Accepted …. E-mail …. Phone SMS Utilize SMS Letter 17
Slide 19: Enhancing Free Consultation Services
Enhancing Free Consultation Services Started consultation services by insurance planners Application ratio after 2 months Approx. 25% Approx. 10% Brochure Consultation Request Services 18
Slide 20: Continuously Optimizing Smartphone Website
Continuously Optimizing Smartphone Website Improved UI/UX and enriched contents 19
Slide 21: Application Growth via Smartphone
Application Growth via Smartphone Increased with renewed Smartphone website Jan. 2014 # of application via feature phone vs Smartphone Expanded areas for TVCM featuring SPH : via feature phone and Smartphone1 Oct. 28, 2013 : via feature phone only（May 2013～） : via Smartphone only （May 2013～） Renew
Slide 22: Enriched Claims & Benefits Payment Services
Enriched Claims & Benefits Payment Services To meet the core role and responsibility of a life insurance company Honest ✓ Interviews with customers who have received insurance benefits available Comprehensible ✓ Awarded the UCDA Awards 2013 “Easy-To-Understand” Award for Payment Procedure Informat
Slide 23: Strategic Alliance with Swiss Re
Strategic Alliance with Swiss Re Started continual discussion at Joint Committee with Swiss Re, LIFENET’s largest shareholder Swiss Re Lifenet Joint Committee Held regularly under the theme of product development and underwriting 22
Slide 24: Birth of Kyobo Lifeplanet
Birth of Kyobo Lifeplanet Commenced business operations in Dec. 2013 as the first purely online life insurer in Korea Lifenet Kyobo Life Experience and Well-established with knowledge of strong business base customer-focused online distribution Number of Kyobo Lifeplanet Policies-in-force Headquar
Slide 25: FY2013 Financial Results
FY2013 Financial Results Steady progress of mid-term business plan 27% increase in ordinary income 17% decrease in operating expenses 28% improvement in operating loss (before deferred expenses and amortization) Operating cash flow turned positive Steadily improved mortality margin Primary
Slide 26: Summary of FY2013 Results
Summary of FY2013 Results (JPY mn) Year on FY2012 FY2013 year Number of policies-in-force 169,312 202,963 119.9% Number of new business 60,685 46,237 76.2% Ordinary income 5,976 7,603 127.2% Operating expenses 4,976 4,131 83.0% Ordinary profit (loss)1 (1,664)2 (1,198) - Cash flows from operating act
Slide 27: Continuous Growth in Ordinary Income
Continuous Growth in Ordinary Income (JPY mn) 7,603 The number of 5,976 policies-in-force steadily increased 3,773 Year on year 127% growth FY2011 12 13 26
Slide 28: Suitable Operating Expenses Control
Suitable Operating Expenses Control (JPY mn) 4,976 3,984 4,131 Controlling marketing 2,761 1,948 Marketing expenses tightly 2,160 550 612 Customer service Operating expenses 446 System ratio1 55% 1,378 1,664 1,570 and other FY2011 12 13 107% 85% 55% Operating expenses ratio¹ 1. The ratio of oper
Slide 29: Insurance Premiums and Operating Expenses
Insurance Premiums and Operating Expenses Controlled operating cost properly, while steadily increased insurance premiums 3,902 (JPY mn) Insurance premiums Operating 1,710 expenses 1,572 2,029 2011/1H 11/2H 12/1H 12/2H 13/1H 13/2H 28
Slide 30: Decrease of Ordinary Loss
Decrease of Ordinary Loss Shrinking ordinary loss before deferred expenses and amortization (JPY mn) (JPY mn) 2011 2012 2013 Ordinary loss before deferred 1 expenses and (2,184) (1,664) (1,198) amortization Deferred (1,198) expenses 2,106 2,701 - 1 Year on year Amortization (1,664) improved cost (
Slide 31: Cash Flows from Operating Activities
Cash Flows from Operating Activities (JPY mn) 1,976 Turned black for first time on fiscal year basis Continuously recording positive (35) operating cash flows from 2H of (799) FY2012 FY2011 12 13 30
Slide 32: Mortality Margin
Mortality Margin (JPY mn) 1,437 Effect of Changing Calculation Formula 1,141 Steadily improved of Policy Reserves 501 mn 935 mortality margin in spite of increased 490 insurance payments FY2011 12 13 31
Slide 33: New Business
New Business (# in thousand) 60 60 Number of new 46 business down from FY2012 Number of policies per customer1 182% FY2011 12 13 168% 178% 182% Number of policies per customer 1. The ratio of new business / new customers of each half year, including additionally purchased policies by current cus
Slide 34: Marketing Expenses per Policy
Marketing Expenses per Policy (JPY thousand) 45 42 Resulted above 40,000 yen due to the slowdown of 35 new business FY2011 12 13 33
Slide 35: Historical Financials
Historical Financials (JPY mn) FY2010 FY2011 FY2012 FY2013 Ordinary income 1,827 3,773 5,976 7, 603 Insurance premiums and other 1,765 3,720 5,915 7,537 Investment income 60 47 51 57 Other ordinary income 1 5 9 7 Ordinary expenses 2,648 4,461 5,999 9,861 Insurance claims and other 154 410 575 1,196
Slide 36: Policies-in-force
Policies-in-force (# in thousand) 202 169 Number of policies-in-force 118 202,963 Annualized premium1 8.0bn yen 12/03 13/03 14/03 (YY/MM) 4.87 6.87 8.07 Annualized Premium (JPY in bn) 1. The amount of money equivalent to what is to be paid to have the insurance coverage for one year. All payment
Slide 37: Insurance Claims and Other
Insurance Claims and Other 2 times the (JPY mn) 1,124 number of Benefit insurance 423 claims payments with the increase in 520 policies-in-force 370 119 234 701 Insurance claims 44 insurance claims and 4,578 251 286 benefit claims FY2011 12 13 36
Slide 38: Provision for Policy Reserves and Other
Provision for Policy Reserves and Other (JPY mn) 2,961 Increase 93% year Effect of changing calculation Formula of on year with the policy reserves 501 mn increase in policies- in-force 1,535 Began calculations 1,063 based on the five- year Zillmer method after commencing business operations FY2
Slide 39: Fundamental Profit
Fundamental Profit (JPY mn) FY 2011 FY 2012 1 FY 2013 Increased expense 490 1,437 1,141 Mortality margin Expense margin(loss) (919) (1,219) (3,234) loss due to not Interest margin 37 27 3 recording deferred Fundamental profit (ref.) Insurance (391) 244 (2,089) assets premiums and other 3,720 5,915
Slide 40: Financial Condition
Financial Condition (JPY mn) 12/3 13/3 14/3 Total assets 18,861 20,450 21,188 Cash and deposits 428 353 418 Money held in trust - Added Korean - 1,000 Securities Government 13,800 13,488 14,154 JV stocks bonds 9,939 7,331 6,636 Local government bonds - - - Corporate bonds 3,721 5,982 6,547 Modif
Slide 41: Solvency Margin Ratio
Solvency Margin Ratio1 3,499% Maintained at a healthy level, 2,266% while decreased due to the increase Average of 4 major 1,922% in policies-in-force insurance companies as of September 30, 20132 and investment 811% in Korean JV 12/03 13/03 14/03 (YY/MM) 1. The solvency margin ratio measures a li
Slide 42: European Embedded Value
European Embedded Value1 (JPY mn) 22,907 Mainly due to Value of 18,547 18,746 in-force reinsurance 11,831 business solution, value of in-force business increased Adjusted 77% 2 as of March net asset 11,075 31, 2013 12/03 13/03 14/03 (end of month) 1. Lifenet has fully adopted the EEV Principles, w
Slide 43: Value of New Business (VoNB)
Value of New Business (VoNB) :Value of new business :Value of new business (Ultimate Unit Cost base) (JPY mn) 1,692 18% increased in Value of new business (Ultimate Unit Cost base¹) from 838 FY2012 788 709 620 Increased mainly due to the usage of 127 reinsurance solution FY2011 12 13 1. The expe
Slide 44: VoNB (Ultimate Unit Cost Base)
VoNB (Ultimate Unit Cost Base) Per new business FY2012 FY2013 for FY2013 (JPY mn) (JPY thousand) Certainty equivalent present value of future profit 5,795 4,442 96 －） Time value of financial options and guarantees － － － －） Frictional cost of capital (38) (28) (0) －） Allowance for non market risk (2,
Slide 45: EEV Improvement Factor Due to Reinsurance Solution
EEV Improvement Factor Due to Reinsurance Solution On the back of revision of Term Life, utilized reinsurance solution to manage risks in relation to lengthened term of insurance Due to the effects of the reinsurance solution, present value of future profit (especially “allowance for non-market
Slide 46: What is Reinsurance…?
What is Reinsurance… ? To cede all or part of the underwritten insurance risks to other (re)insurers for the purpose of risk diversification <Lifenet case> Insurance Reinsurance Policyholders Lifenet Reinsurer Transfer of “risks” Transfer of “risks” Insurance Reinsurance premium premium Insurance
Slide 47: Structure Breakdown of VoNB per Policy
Structure Breakdown of VoNB per Policy Increased mainly due to reinsurance solution, while insurance premiums per policy decreased VoNB per policy (Ultimate Unit Cost Base) (JPY thousand) Other variables 18 Reinsurance 2 12 11 Insurance premiums per policy Initial expenses decreased Decreased Ulti
Slide 48: EV Sensitivity Analysis
EV Sensitivity Analysis Impacts of changes in assumptions (sensitivities) on the EEV results Change in EEV as of Change in Value of March 31, 2014 New Business (JPY mn) EEV and New Business Value as of March 31, 2014 22,907 620 Sensitivity 1a: 1.0% increase in risk-free rate 1,010 154 Sensitivity
Slide 49: Marketing Expenses / Value of New Business per Policy
Marketing Expenses / Value of New Business per Policy (JPY thousand) Marketing expenses per policy 45 Well-controlled 42 marketing 35 expenses 27 Value of new business per policy 18 improved mainly 11 due to increase in Value of new business per policy value of in-force (Ultimate Unit Cost base)
Slide 50: Contents
Contents 1. Progress of Mid-term Business Plan 2. Results for Fiscal 2013 3. Challenges for Fiscal 2014 49
Slide 51: Transition to New Growth Stage
Transition to New Growth Stage Phase 2 (June 2013 - ) Changes in Representative Directors and Executive Officers More advantages of “online life insurance” for more customers Being an “innovator” in life insurance Phase 1 (5 years after business commencement) Birth of new business model, “on
Slide 52: To Achieve Mid-term Business Plan
To Achieve Mid-term Business Plan Aim to achieve ordinary income of 15 billion yen, pushing the company toward profitability based on ordinary profit1 15,000 (JPY mn) Focus in FY 2014 Launch renewal products 7,603 Enhance customer follow-up Optimize Smartphone website Enrich services for e
Slide 53: First Renewal of Core Products since Business Launch
First Renewal of Core Products since Business Launch Reduced premium while realized rich coverage 52
Slide 54: Term Life "Kazoku"
Term Life “Kazoku” Reduced premium for a wide age range of customers Highlights of revision ✓The lowest premium levels in the industry ; reduced both net premium and loading expenses ✓Extended insurance term to a maximum age of 80 ✓Began underwriting under the “exclusion of specific disabilities”
Slide 55: Launched New Whole-life Medical
Launched New Whole-life Medical Providing “Economy Plan” and “Recommended Plan” Start to offer shorter payment duration of premium 54
Slide 56: Whole-life Medical New "Jibun"
Whole-life Medical New “Jibun” Average of 24% decrease in insurance premiums in comparison to previous product Highlights of revision ✓Covers one-day hospitalizations ; uniformed 5 days’ worth of benefits ✓Unlimited payment days for hospitalizations due to the 3 major lifestyle-related diseases ✓B
Slide 57: New "Jibun" for Women
New “Jibun” for Women The first Lifenet product for women Highlights of revision ✓Extensive coverage for illnesses specific to women ✓Covers one-day hospitalizations; uniformed 5 days’ worth of benefits ✓Unlimited payment days for hospitalizations due to the 3 major lifestyle-related diseases ✓Ben
Slide 58: Price Comparison to Products
Price Comparison to Products Renewal reflecting the actual results since its business commencement (JPY) Term life“Kazoku” （30, male, coverage for 10 years/ 10mn yen） Before Renewal Difference Monthly premium 1,328 1,230 (98) Net premium 890 812 (78) Loading expenses 438 418 (20) Whole-life Medica
Slide 59: New Campaign, New TV Commercial
New Campaign, New TV Commercial Renewed for the new product launch 58
Slide 60: Renewal Brochure
Renewal Brochure Encouraging trend of brochure request The number of request for brochure (daily) Brochure request campaign 4/1 4/30 （MM/DD） 59
Slide 61: Application Trend after Product Launch
Application Trend after Product Launch The daily average of application is recording the highest in 6months Trend of daily average of application (Monthly as of May 11, 2014) 13/04 14/05 （YY/MM） 60
Slide 62: Application Trend after Product Launch
Application Trend after Product Launch Despite the premium reduction, average of premium per customer maintain the same standard Average of annualized premium per customer for application (Monthly as of May 11, 2014) Avg. 71,000 yen 13/04 14/05 （YY/MM） 61
Slide 63: Enhancing Follow-up Methods
Enhancing Follow-up Methods Enriched customer support for online application Affiliated insurance planners In-house insurance planners Face-to-face Online aggregators agents 62
Slide 64: Continuously Optimizing Smartphone Website
Continuously Optimizing Smartphone Website Clear trend of the shift to Smartphone Brochure request composition by device Application by device 100% 100% Smart- phone Feature- phone PC 0% (month) 0% 63
Slide 65: Enhance Smartphone and Customer Support
Enhance Smartphone and Customer Support Make the best use of functions as a “phone” Smoothened introduction to operators by UI improvement Enriched supportive function by tab- style footer 64
Slide 66: Enrich Customer Service
Enrich Customer Service 120,000 existing customers 121,745 118,454 Number of existing customers 114,731 (unit：persons) 109,835 103,816 96,923 91,125 83,999 75,622 67,316 59,835 51,051 43,214 35,899 28,497 23,047 17,751 13,698 9,804 6,595 3,965 341 1,097 2,083 08/06 09/03 10/03 11/03 12/03 13/03 14
Slide 67: Launch Free Online Health Consultation Service
Launch Free Online Health Consultation Service Create account by registering from “My Page” 66
Slide 68: Provided Added Value Besides Saved Premium
Provided Added Value Besides Saved Premium Enrich customer services and improve payment procedures Key highlights of customer service launch ✓ Medical certification submission no longer necessary for most medical policy claims ✓ Allowed insurance claims and benefits to be made in 2 days ✓Started t
Slide 69: Online Life Insurance Growth Potential
Online Life Insurance Growth Potential Existing consumers needs and market potential Online life insurers share (Lifenet, AXA Direct-Life) 0.18%1 Preferred Future Service Channels2 (%) Intention of life insurance contractor application channel3(%) 0.2 10.5 57.5 2.9 4.5 Online 43.1 44.8 29.3 Others
Slide 70: Diversity of Management Board
Diversity of Management Board Directors and Corporate Auditors in 30's to 70's including 2 women External board holds majority 69
Slide 71: Toward "2nd Stage"
Toward “2nd Stage” New leap beside customers
Slide 72: 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 73: 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 74: Appendix
Appendix oD) LiFENE] LIFENET INSURANCE COMPANY
Slide 75: Deferred Assets under Article 113 of the IBA
Deferred Assets under Article 113 of the IBA¹ Insurance company is allowed to record deferred assets under Article 113 of the IBA¹ for the first 5 years since business commencement (FY2012) Illustrative image of impact on P/L (focus on the relationship between operating expenses and deferred asset
Slide 76: Embedded Value and Value of New Business
Embedded Value and Value of New Business (Illustrative purpose only: Based on present value) Appraisal Value (AV) Insurance payments Premium for Value of in-force business is the present value future growth at the valuation date of future after-tax profits distributable to shareholders from in-force
Lifenet Insurance Company — FY2013 Earnings Presentation on 6ix